Indulge in the following fantasy. You wake up one morning, turn on your water faucet and out comes a stream of perfectly shaped nuggets that look like diamonds.
On further investigation find that all your water taps are spewing out what seems to be diamonds. You rush to your neighbor, who happens to be a jeweler. He assures you that the diamonds are indeed genuine but reports they are coming out everyone’s taps worldwide.
Diamonds suddenly have become as plentiful as water and water has become as difficult to obtain as diamonds.
One need not have a doctorate in economics to surmise that the price of water would skyrocket and its uses would become quite limited — no more lush lawns in Arizona. Correspondingly, diamond prices would plummet; and every mutt would have a diamond dog collar.
This simple but elusive principle is useful in making sense of salaries earned by college graduates. The typical petroleum engineering major with 10-plus years of experience earns $163,000 per year, while the typical child-and-family studies major with 10-plus years of experience earns $37,700. What does this say about the value society places on petroleum compared with the value it places on children and families? The answer is: very little.
I suspect that if the evil alien invaders gave us the choice of vanishing from the human race all petroleum engineering skills or all child care skills we would give up the former. That, however, is not what determines the salary of the respective majors.
Rather it is the value the last or marginal petroleum engineering major offers to her prospective employer that determines the general wages of all such majors. Likewise, it is the value of the last or marginal child-and-family studies major offers to his prospective employer that determines the general wages of all such majors.
Despite the high-sounding rhetoric from some members of the academic class, the fact that aerospace engineers earn $118,000 while culinary arts majors earn $49,700 says little about the social attitudes concerning food-prep workers, and the fact that statistics majors earn $99,500 while art majors earn only $56,700 does not in itself imply Americans devalue the arts.
Get over it: Supply and demand conditions determine wages.
My grandfather constantly told me “all work is honorable” as we rode to the golf course where I caddied for him. Basic golf caddying skills were abundant in those days, and young boys earned a paltry $2 per 18-hole round (about $15 today). All college majors are to be respected, but the fact that their use values in employment vary at the margin is hardly surprising and hardly a source of social injustice.
Of course, choice of college major by a prospective student should not be determined exclusively by future salary expectations. But it is not untoward, crass or somehow unethical to consider future salary when making one’s choice — and a college degree certainly seems to enhance young people’s labor marketability. Or does it? Stay tuned for the next column.
Cecil Bohanon, is an adjunct scholar of the Indiana Policy Review Foundation and a professor of economics at Ball State University.