Why education will never, ever, put an end to poverty
I don’t think that poverty is unconquerable, but I am absolutely certain that education cannot do it. I also know that many, many people believe it can. I personally know and like many of them. But they’re wrong. And we as a society need to stop pretending that education is the solution, because lots of brilliant people pursue education to fight poverty, and they’re all wasting their time. Even worse, politicians avoid addressing poverty by claiming that education is the solution; they’re either lying or just completely misguided.
Let me be clear: education provides numerous benefits to the U.S. and the world. And there are lots of ways to diminish and alleviate the effects of poverty. But it’s time to stop believing that education and poverty are linked in the 21st century.
Why am I so sure?
Exhibit A. Let’s start by looking at historical data. Everyone agrees that the level of education of the U.S. populace has increased dramatically over the past half century. Finishing grade school was once the norm; now finishing high school has become standard, and more and more people are pursuing college degrees. In 1940, a quarter of Americans 25 years and older had a high school diploma. By 2009 that number was up to 80%. Americans with a college degree rose from less than 5% to over 20%. Evidence suggests that those numbers will continue to rise. The is no doubt about it: education is up.
Now let’s look at U.S. poverty data during a similar time period:
Notice anything? That’s right, dramatic increase in educational attainment, little difference in poverty rates. Yes, there’s a significant decline during the 1960’s, not coincidentally during a period of tremendous prosperity in the U.S. coupled with generous economic policy reforms designed specifically to fight poverty (Medicare, Medicaid, Job Corps and several improvements to welfare programs and Social Security). The Elementary & Secondary Education Act was also authorized in 1965, but I have a hard time believing that it had any immediate impact, and by 1970 the poverty rate decrease had flatlined.
This non-existent link between education and poverty is not limited to the US. Among developed countries, there is very little correlation between poverty rate and the level of education of the populace:
Poverty Rate & Years of Schooling in OECD Countries
There is a very slight negative correlation in these data (technically, an r-squared value of 0.175). I would argue that any correlation is more likely due to increased poverty limiting educational attainment rather than low levels of education resulting in higher poverty.
So nail #1 in the coffin of more education = less poverty is the last 50 years of history.
Exhibit B. What is the cause and effect relationship between increased education and decreased poverty? The simplest answer that most people give is that increased education results in increased wages, and a stairway out of poverty. The problem with this argument is that it is a microeconomic one, and poverty is a macroeconomic issue. At the heart of the disconnect is what logicians refer to as the composition fallacy, or what I think of as the baseball fallacy. In essence, the fallacy occurs when something that is true for a small group is incorrectly applied to a large group. For example: Major League baseball players earn millions of dollars per year (no poverty there). Lots of baseball players grew up in poverty, then worked their way out of it by signing huge contracts. Should we therefore advocate that all people become professional baseball players in order to get out of poverty? Obviously ludicrous! What is true for a few would not be true for all. Major League Baseball has a limited number of million dollar contracts. If there were millions of great ball players, but the number of contracts didn’t increase, then numerous people would still fail to get them, and the value of those contracts would likely go down. It’s a simple case of supply and demand. Increasing the number of educated workers does not mean that there will suddenly be enough jobs to support them. Which brings us back to the macroeconomic issue. The root cause of poverty is not lack of education, it is low demand for labor (especially for highly educated workers). The latest statistics from the US Department of Labor show that the majority of jobs in the US are still low-paying jobs that require low levels of education:
Jobs by designated education level of occupations, May 2013
In essence, education may determine who gets a job, but not how many jobs are available. The way to decrease poverty is to increase the number of good jobs. Education cannot do that, so there’s no way it can have a significant effect on poverty. Some argue that there are lots of good jobs that are vacant because of a lack of educated applicants. Not true, according to the Economic Policy Institute. And data from the US Bureau of Labor Statitics suggests that’s not going to change any time soon. Among the top 20 professions expected to see the most growth by 2022, only half pay more than the current per capita income of the US, and only 4 require more than a high school diploma.
Exhibit C. Okay, I believe I’ve made a strong case, except for one glaring question which I hope many of you have. Doesn’t increased education lead to increased job creation? In other words, aren’t educated people more likely to start businesses, develop new technologies, create whole new industries? This is certainly true, although lots of inventors and job-creators had little formal education (see Edison, Ford). At the very least, education helps to secure loans and capital to start businesses. Were this 2000, I might agree that education is a force for job creation. But the US economy is changing dramatically in a way that suggests technological developments are as likely — or perhaps even more likely — to result in job destruction as job creation. Work by two MIT researchers suggests that our economy is headed for increased productivity without new jobs, mainly due to automation. In other words, our economy will continue to grow, but the growth won’t create new jobs. You might argue that we’ve had technological advancements in the past which haven’t resulted in mass unemployment. This is certainly true, but current technological advancement appears to result in unequal distribution of the benefits of that advancement towards lower numbers of high-skilled workers, exacerbating the inequities of the labor market, and resulting in — you guessed it — higher poverty.
I rest my case. Okay, maybe I lied when I said that education will never end poverty. If enough people get a solid enough education to realize that economic policy is the only way to alleviate poverty, maybe we have a chance. Until, then, I’ll just keep working on one convert at a time.
Note: Much credit for this post is due to the work of W. Norton Grubb and Marvin Lazerson, two economists who have studied this topic in depth. Their seminal work, The Education Gospel must be credited as a source for much of my thinking process above.
