Job Search - Part 2

A Maze of Credentialist Bureaucracy

For many years I’ve loved historical stories: novels, anecdotes, biographies. I remember being exhilarated by two Horatio Alger novels (Raggedy Dick and Mark the Matchboy, I think) when I was in elementary school. The idea of being a young man out in the world, striving to build a future through hard work and frugality and intelligence was immensely appealing. I think it drove many of my decisions (good and bad) when I was older. My sense was that nothing was too difficult… that any path or challenge could be pursued if a person had enough grit and competence. In many stories from older times you hear about businessmen or journalists or leaders who join (or start) some organization while young. Perhaps the owners or managers take a risk on these new hires, and the newcomers prove themselves through positivity and teachability and determination. They rise through the ranks and eventually become owners and managers themselves. The past century is full of these tales: people that have moved to a new city or explored a new career path, beginning work that very day and proving themselves through their work.

This is no longer possible in most of the economy. Our labor market has become more rigid, irrational, and encrusted with rules and costs than it ever was. I will begin with the largest factor: credentialism.

Do we live in a dystopia? It’s not the shabby totalitarianism of 1984, or the hedonistic planned society of Brave New World, but it borrows elements from both. People are still kind and hard-working and earnest. Traffic lights still work. Families still go on vacation. Academics still pore over social science data. Builders still build and teachers still teach.

Yet our universities seem to have completely abandoned the mission of teaching young social scientists to think critically and to follow the evidence where it might lead. If you disagree, ask yourself: a meta-analysis which clearly showed that racism was not a major factor in educational disparities or wealth outcomes… would it be funded? Published? Discussed? Allowed? The example of Roland Fryer reveals that it probably would not. Even if you believe those conclusions are invalid, surely studies will show a number of different outcomes and the data must be honestly dealt with? If you place some imperative above that mission then you are no longer engaged in social science-you are constructing an ideology. As time goes on your ideology will veer more and more from reality and require greater and greater levels of disingenuousness and coercion to keep the followers in line and the institutions complicit. As Hannah Arendt observed, totalitarianism is organized loneliness. It is also organized lying, a society built around hypocrisy and universally acknowledged deceits, corroding the souls of every person within. This is one of the great lessons of 1984:

“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”

Yet the example of Germany reveals how ‘dystopia’ is more of a process than a destination. One of my favorite writers on this platform is

eugyppius

, who devotes most of his time to covering the ongoing dissolution of German prosperity and culture at the behest of interests which conceptualize the wealth and safety and deep social trust of the German public as a kind of limitless well, from which all kinds of goodies can be drawn and distributed among clients. This benefits the clients and empowers and expands the power of those interests (activists, government ministries, agencies, non-profits) but Germany’s wealth and goodwill and patience is finite, as is every country’s, and the well is beginning to run dry. The managerial elite have desperately tried to pivot, using their media pawns to try to distract and refocus public attention on the specter of ‘right-wing extremism’ and ‘hate’. Regardless of the strength or constitution of right-wing fascist organization in Germany their operations have absolutely nothing to do with the catastrophic social problems of immigration and the horrible economic burden of the government-instigated energy ‘transition’ (effectively from nuclear to coal, as it turned out).

Further along in that process is certainly South Africa, the hope of African neoliberalism before one party rule, corruption, equity initiatives, the toxic political dynamics of envy and resentment, and profound underinvestment reduced it to a browned-out and violent pseudo-failed state. It’s now a sea of shanties and criminal gangs coexisting uneasily next to scattered archipelagos of development. Modern financial districts and walled-in mansion blocs dot a landscape of murder and neglect and shabby public services. The lessons of these two countries is that democracy (the nominal influence of the public on the government through elections and institutional mechanisms) is not enough to maintain order and prosperity in a nation. The rule of law and a moral and well-educated populace are FAR more important for the maintenance of those factors than democracy. In many cases (media manipulation, the encroachment of political power on society through equity initiatives, the expansion of public spending and the corresponding groans of impoverishment from the private sector, which is the engine for all wealth creation) democracy ultimately proves to be a terrible burden upon the lives and fortunes of the people. Democracy can grow dysfunctional when it exists to protect the prerogatives and privileges (which include credentials) of a well-educated aristocracy, and it can grow diseased when it is manipulated by too many interest groups for their own political and financial benefit at the expense of the builder and the police officer and the teacher and tax-payer and the citizen.

The lesson of these countries (and of history) is that it is important to take a frank and pragmatic view of cultural and political changes, and to constantly search for connections and costs, trying to understand causality. They are rarely as they are popularly believed to be.

I opened with my love of historical job search stories because those tales stand in stark contrast to modern society. I believed (and was taught) that hard work and competence and honesty were valuable currency in the competition for wealth and status. Certainly they are. As someone who is currently looking for work, though, there is something which is more important than all of these attributes combined: credentials.

Every policy change entails unintended consequences. If, tomorrow, the government mandated that women be paid an extra $10,000 a year across the board this would not enrich working women. It would lead to a massive drop in their employability and HUGE job losses. That kind of mandate effectively raises the price of female labor and therefore prices many (most?) women out of the job market. EVERY government mandate passed to protect or help a certain group generates these kind of effects. Maternity leave requirements very well might be good public policy… but they act as an effective rise in the cost of hiring women. If maternity leave costs a company $5,000 on average and a female applicant has a 10% chance (on average) of using that leave during their employment then women are now $500 more expensive to hire per person (on average), giving them a marginal disadvantage compared with men. This applies equally to sexual harassment rules and benefits and training requirements. Many of those rules might be great ideas and worthy policy changes but they come at a cost and in a situation where millions of actors (applicants, in these examples) are competing with each other those costs are passed along to them. There is no way to make companies bear this burden. That is important to emphasize. Further government intervention only distorts the market more, pushing companies out of business and creating more and more serious ripple effects. For any tax or regulation or hiring rule the first question should be: what are the likely costs to the various parties and what are some possible negative effects? If the answer is ‘none’ then someone hasn’t fully considered the changes… or they’re lying to you. Rent controls destroy housing stock and increase homelessness and lower supply and housing quality. Price ceilings disincentive producers from making and stores from selling goods and (ironically) increase shortages. (Something to bear in mind during this election season!). Regulations and taxes increase the costs of goods and services and those costs are passed along to the consumer. These are general and eternal economic realities and they exist for basically every market. One unfashionable effect of minimum wage laws is to raise the cost of labor (especially at the entry level) and increase unemployment, especially of young and and inexperienced and uncredentialled workers. The minimum wage laws of the mid-1950’s and 1960’s had a disproportionate effect on black men and has certainly driven millions into unemployment over the years. Perhaps that is a cost worth paying… but it is a cost. Again: anyone who claims that minimum wage laws do not have a negative effect on workers, or that costs can be completely pushed onto companies who are hiring applicants, is either misinformed or lying. Economists argue about the scale of the market distortions but none of them claim there is NO distortion.

The effect of minimum wage laws are mostly borne by young or inexperienced or marginal applicants, however. If there was a minimum wage law for doctors or pilots which doubled their typical salaries then many of them would quickly be unemployed. There is not. The effect of a much bigger change in the job market cuts through every class and most industries, however: the rise of credentialism.

Our economy can be roughly divided into two large blocs: private producers and public producers. Private producers must attract business from the market and so their decisions about who to hire and how to operate fundamentally depend on their effectiveness at providing goods and services. If they become less appealing, less affordable, less effective they immediately feel the effects and if these changes persist long enough they go out of business, to be replaced by better and cheaper competitors.

Public producers derive their income from the government and so there is little pressure to satisfy their customers. Certainly there is some minimum of quality beyond which there will be a negative reaction but this floor is much lower and more inelastic and so operations and hiring and pricing decisions can be more misguided or inefficient, and for longer. In short, more money can be wasted. $7.5 billion can be allocated, which only hundreds of thousands worth of product to show for it. Services can be unwieldly or unsafe or unpopular… for years. Employees can waste years worth of work hours and still easily make salaries and generous pensions. The kind of policy distortions I already described can make it nearly impossible to fire them.

There is a huge share of our economy which is public. Many contractors rely on public funds but still operate like private businesses, trying to observe the processes and imperatives which would maximize profitability. Many public employees perform dangerous and important jobs (soldiers, police, ambulance drivers). But there is now a huge and growing chunk of jobs and wealth which feeds off of public money. The organizations which generate these jobs produce almost nothing, or they provide some wildly overpriced public service. Universities fall into this category. Many of them are private but they are essentially subsidized through government aid and student loans, and that aid and those loans raise the demand for their degrees, massively inflating the price. Non-profits (now representing ~6% of the U.S. economy) fall into this category. They (often) oversee programs or perform studies or create initiatives which are of no real value to anyone… but once their parasitic relationship with the government begins they are driven to continue it, obeying their own warped incentives. Causes are promoted, problems are exaggerated, threats are wildly overblown. Many non-profits also rely on private donors (and the same incentives to exaggerate problems exist in this case) but a vast share of their operating money comes from the government. Government agencies also fall neatly into this category. Many of these agencies provide value but all of them waste money. This wastage must equal trillions of dollars every year in the United States alone.

Private producers must obey government laws and regulations as well, of course. Some of these regulations are explicitly designed to hurt private producers or artificially limit the supply of a good or service or protect public producers. Taxi and limousine commissions, laws against private mail services, and government grants to schools and hospitals fall into this category. As time has passed we’ve seen more and more private producers become more and more limited by government regulations. Now even purely private producers are hamstrung in a dozen different ways when it comes to hiring applicants. Applicants must have federal identification (for tax purposes). Background checks often must be run (to limit liability, civil law being another government imposition on the employment market). Hiring decisions are often distorted by additional imperatives: hiring female or nonwhite or veteran applicants, for example. More impactful than any of these is the rise of credentialism. Credentials are now massively important to employment, far beyond what these jobs should require. How long would it tale to train a nurse to do her job? It depends on the job, of course, but we have rough idea, because (like most jobs) much of the education occurs onsite. Of course nurses must have a thorough knowledge of anatomy and pharmacology and medical ethics… but not four years’ worth. In many states barbers and cosmetologists must pass long and intensive coursework to be able to practice their trades. Lawyers must pass through 3 years of grueling graduate-level study… most of which has nothing to do with any of their jobs whatsoever. Consider the public sector professions: teachers, professors, therapists, doctors, nurses, scientists. Certainly some of those require a college-level education but certainly not all of them. It’s rather shocking to consider how deeply credentialism has infected the American mind, all in the space of two or three generations. The idea of a teacher or a nurse or a therapist doing their job without a college degree seems deeply wrong.. but think about it: what does collegiate education add to the performance of these jobs?

In The Free Press, Joe Nocera recently wrote this week that:

It has occurred to me recently that during the years I spent in college five decades ago—yes, fifty long years ago—I learned absolutely nothing. I took out loans and worked two jobs during summer to pay the tuition, yet if I learned anything between the ages of 18 and 21, it was outside the classroom.

It certainly depends upon the degree and the institution how worthless campus learning is or is not but there are vast stretches of the American undergraduate and graduate landscape which are effectively adding no value to the economy. Education does not merely exist to add economic value, of course, yet the average American student is mostly motivated by the value of their degrees in the workforce. It’s a signal to employers that the applicant is perhaps more qualified than non-degreed competitors. This signal depends on colleges doing a good job of educating and sorting students. Too often, they no longer are. Writing about grade inflation at the two most competitive colleges in the U.S.,

Yascha Mounk

says:

In 1950, the average GPA at Harvard was estimated at 2.6 out of 4. By 2003, it had risen to 3.4. Today, it stands at 3.8.

The more elite the college, the more lenient the standards. At Yale, for example, 80% of grades awarded in 2023 were As or A minuses. But the problem is also prevalent at less selective colleges. Across all four-year colleges in the United States, the most commonly awarded grade is now an A.

It is clear that these students are essentially paying for a degree. They might have to attend a certain number of classes and do some work but the standards have fallen.

Yascha Mounk

again:

As Richard Arum and Josipa Roksa have shown in their book Academically Adrift, the time the average full-time college student spends studying halved in the five decades after 1960, falling to about a dozen hours a week. A clear majority of college students “showed no significant progress on tests of critical thinking, complex reasoning and writing,” with about half failing to make any improvements at all in their first two years of higher education.

Meanwhile, the most motivated members of the faculty and administrative bureaucracy are often not motivated by academic excellence or care for students. Rather, they are ideologues, radical utopians dreaming of a coming day when institutions will be dismantled and racism, sexism, patriarchy, and heteronormativity (along with police, jobs, borders, paychecks, tests, and standards) will be no more. In short, they are either deluded and brilliant, or they are idiots.

The private sector operates according to a different set of imperatives but even there employers are bigger and more corporate and more consolidated every year. Some of that trend is a natural by-product of hyper-technological consumerism and economies of scale. Some of it is an effect of invasive taxes and regulations, which are more easily borne by large corporations. These intrusions can often be bent in favor of the corporations. Restaurants and small building contractors and laundromats don’t have lobbyists: oil companies and Pepsi Co. do. When businesses must be shuttered to satisfy the hysteria of the Twitter mobs or to make feeble and cowardly politicians seem decisive and proactive it will generally be the smaller businesses which suffer most. The state and large producers almost always end up working for each other’s benefit. Voters would do well to mind this historical pattern.

Private sector producers can be divided into larger and smaller employers. The cut-off for policy-makers is often 50 employees or more (larger-the pre-Obama employer healthcare mandate threshold). Smaller producers are, as a rule, more attentive to the whims of the market and more nimble although (as I already stated) they are more easily ruined by new taxes or regulations or other authoritarian barriers to growth. They have access to less financing and usually operate with small margins (the free market constantly pushing competitors toward a profit margin of ‘0’). Smaller producers are far less concerned with degrees, which is what you would guess for small organizations who are risking big with every new hire. They cannot impose arbitrary hiring rules or follow the herd. The value of a college degree as a signal of industry and intelligence is beginning to fade everywhere and nowhere is it fading faster than among small producers. Can you do the job as advertised? Are you intelligent, honest, well-balanced, and punctual? Congratulations… you are a candidate. Only for roles where there is specific collegiate information or training (vet techs, for example, or accountants, or paralegals) are credentials a requirement. This should be the situation in every layer and corner of the workforce, but it currently is not. What is the situation among large private producers?

Large private sector employers also demand college degrees, even for the most pedestrian and trivial occupations. Do you want to be a banker or an office worker or an inventory manager? A degree is usually required these days. How did we get here? Why do degrees like ‘Art History’ or ‘Political Science’ (my own major) or even ‘Psychology’ have such value? It has almost nothing to do with the actual information or skills learned in service of earning the degree. Even law school (which I experienced for a single strange semester) barely relates to the day-to-day work of any lawyer. That information is learned on the job. Certainly there are useful standards and habits (and modes of thought) learned in law school… but not three years’ worth. There are many examples and many degrees which have only marginal or specific application to the job market but yet carry weight as an employment credential. I think there are two reasons for this.

The first reason is: rational calculation. An employer is only interested in an applicant’s potential value to the organization (or was, before equity-based hiring and selection rules… but that’s a topic for another essay). A college degree signals that the person came from a background that could afford or (even better) had the drive or foresight to finance a multi-year self-improvement project. It effectively eliminated the laziest, strangest, and most disordered members of the population (most of them, anyway). It might be a low bar to hit in terms of actual academic rigor in most cases but it still reflects years of sustained and graded effort. If there were degrees that were awarded for analyzing color palettes in art pieces or memorizing strings of numbers or re-writing books from front to back those degrees would have roughly equivalent value, provided they took years to earn and were expensive. The subject matter and the level of intellectual challenge is purely incidental.

The second reason relates to what

Bryan Caplan

has called an example of ‘social contagion’. That is: changing attitudes or habits or ideas which are transmitted at speed through a population without the active participation or deliberation of many of the carriers. People are (usually) more concerned with conforming to a group than they are with being correct and they will even adjust their understanding of reality to make it conform to the vision of their leaders and the incentives of their social structure (which explains the culture of North Korea, as well as the general misapprehension of widespread sex-based wage discrimination in the U.S., which is popularly believed and even considered inappropriate to question in many, many environments… despite being a myth). As certain large organizations (universities foremost among them) introduced college degrees into their employment requirements, others followed suit to remain part of the herd and possibly to seem more impressive in terms of class and selectivity. Hospitals, contractors, government agencies-then large corporations-began to require college degrees for unrelated jobs. There would have been a positive feedback effect: the more places asked for degrees the more likely others would add them as factors for consideration. Would you want to be served by the medical agency which only hired college graduates for their customer service positions… or not?

The growing number of college graduates (in absolute and comparative terms) in the years after the passage Montgomery GI Bill was a prime contributor, of course. No longer were degrees limited to the patrician, the brilliant, the professional, the elite. They became a normative fixture of middle class life and so their presence began to creep into the hiring equation. Unfortunately we now have a situation in which millions of possibly productive years and untold trillions of dollars are effectively wasted, in terms of economic value and now also in terms of cultural and psychological growth.

This kind of dynamic could persist as long as the degrees signaled something good, and nothing bad. We are quickly approaching a situation in which college graduates (from certain majors and institutions) will be less capable of doing good work and learning and persisting through challenges than their counterparts. If universities become environments which nourish personality pathologies and bizarre beliefs and unhelpful (for employment) emotions and behaviors… then college degrees will cease to be considered by large organizations in their candidate searches. They may even become a negative factor (not overall but for certain departments and institutions). If you ran a medical agency would you be more or less likely to hire a gender studies major from Harvard at this point?

It’s worth mentioning that credentialing doesn’t begin and end with college degrees. State governments and professional associations mandate courses and certifications and renewals which raise money for the states and associations (and the companies offering the ‘training’) and limit entrance to certain jobs, but do not appreciably improve the quality of the work performed. Surely customer feedback and the self-interest of employers could weed out incompetent barbers and cosmetologists and dental hygienists and acupuncturists? Keep in mind that the massive total weight of these requirements should be justified by the improvement in quality of the work performed, and the protection of the market against incompetent or dangerous workers (to be a net social benefit). I think this is rarely the case-rather it’s just another expensive and onerous requirement one must satisfy… before they can even begin work. It benefits incumbents (people already doing the job) by making the barrier to enter (and therefore compete with) the ranks of those already working higher and costlier. It raises some money for states and licensing agencies and creates a vast, artificial demand for educators in the subjects in question. The cost is an inflexible and expensive labor market, in which skill and employability are only factors for selection after the initial burden has been borne and the training bought, for months or years.

College credentialism has costs of a similar nature, but they are much, much larger. Anyone who immigrates or comes from a poor background or struggles with mental health issues or simply doesn’t like classroom work very much is effectively barred from most professions. Most people can only begin work in their 20’s, pushing back the ages at which people will marry and start families. It costs about 1-2 years (on average) of full-time employment for every man, woman, and child in America-a year or more in which a worker is not working or generating value, but is instead subsidized and experiencing a bizarre kind of extended childhood. The economic effect of student debt (which increases the aggregate demand for college degrees, pushing the costs higher and higher) is extreme and multifaceted. The transfer of wealth from the heartland and middle class of America directly to college campuses can be seen on any university today, from a distance. Why are education and medicine such growth factors for the American economy? Largely because of government confiscation and redirection of private wealth. EVERY rule and tax and regulation has unintended consequences, and they all have victims and costs. This is a fundamental reality which too few voters seem to grapple with. What are the costs, in a nation of 330 million, of requiring lengthy and expensive credentials which have no practical value before one can begin working in most jobs? The first day of most every basic economics course I’ve had introduces the fundamental principle of economics: TANSTAAFL, or ‘there ain’t no such thing as a free lunch’.

What are the real costs of our credential-obsessed system? It surely is not free.

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The author, when he worked at a warehouse (years ago-during COVID). Credentials were NOT important there… but have been essential to every subsequent job, despite the degree having absolutely no direct application to the work.