\n"}You can see the same priorities when students pick their classes. Students notoriously seek out \u201ceasy A\u2019s\u201d \u2014 professors who give high grades in exchange for little work. On the popular Rate My Professor website, students evaluate classes\u2019 \u201ceasiness\u201d but not \u201cusefulness\u201d or \u201crelevance.\u201d And when professors cancel lectures, students don\u2019t demand a refund, they celebrate. Because future employers don\u2019t monitor faculty attendance, every canceled lecture is a chance to party in the present without hurting job prospects in the future.
\nAcademics and administrators also sense the importance of signaling, even if they won\u2019t admit it. Why else would they bother to combat cheating? If school were merely a place for students to invest in their skills, cheaters would literally \u201conly be cheating themselves,\u201d spending time and tuition for naught. If, however, school is primarily a place to convince firms you\u2019re worthy of employment, cheating has a slew of victims. The cheater who successfully impersonates a good student doesn\u2019t just rip off whoever hires him. He also taints the prospects of all his peers who toiled for their degrees.
\nResearchers consistently find that most of education\u2019s payoff comes from graduation, from crossing the academic finish line. The last year of high school is worth more than the first three; the last year of college is worth more than double the first three. This is hard to explain if employers are paying for acquired skills; do schools really wait until senior year to impart useful training? Or consider how differently employers treat failing a class versus forgetting one. If you flunk a class, plenty of employers will trash your application. But if you pass that same class, then forget everything you learned, employers will shrug.
\nThese behaviors make perfect sense if \u2014 and only if \u2014 employers are eager to detect workers who dutifully conform to social expectations. In a society where parents, teachers and peers glorify graduation, failing classes and dropping out are deviant acts.
\nOne of the most glaring perversities of the modern labor market is credential inflation. While the education workers need to do a job is quite stable, the education they need to get a job has skyrocketed since the 1940s. Sure, the average job is more intellectually demanding than it once was, but researchers find that only explains 20% of the workforce\u2019s rising education. What explains the remaining 80%? Employers\u2019 expectations have risen across the board. Waiter, bartender, cashier, security guard: These are now common jobs for those with bachelor\u2019s degrees.
\nDespite all these tell-tale signs of signaling, many of my fellow researchers refuse to take the idea seriously. Sure, signaling seems to fit our firsthand experience. Yet why would profit-seeking employers base their decisions on mere credentials instead of potential to perform well on the job?
\nTo start, employers can\u2019t readily judge your job performance until they actually hire you \u2014 and they can only hire a tiny fraction of their applicants. If they ignore less-credentialed prospects, they may lose a few good workers but they save tons of precious time.
\nAnd once they hire, it usually makes sense to stand pat. Suppose a well-credentialed worker turns out to be mildly disappointing. Summarily firing him would be bad business, because replacement takes time, and time is money. A subpar worker may therefore profit from his credentials for years. Indeed, because few firms are run by unfeeling robots, even incompetent workers often enjoy handsome educational payoffs because their employers are too squeamish to dismiss them.
\nEducation is a weird industry. You study arcane subjects year after year, knowing you\u2019ll never use most of what you learned after graduation. Yet parents, teachers, politicians and researchers urge you to finish, promising ample career rewards for your efforts. Despite the many college graduates who end up working as waiters, the experts are, on average, right: Diplomas pay well. What experts misunderstand is why. Instead of scrutinizing what schools really teach, they rush to a just-so story in which schools transform low-skilled students into high-skilled graduates. Students, much closer to the action, see what\u2019s going on: As long as they have good grades and finish their degrees, employers care little about what they\u2019ve learned.
\nDoes it matter why education pays? At the individual level, barely. Excel in school, impress employers, profit; the recipe works. Socially speaking, though, the why is all-important. If, as experts preach, students are building a stockpile of precious skills, taxpayers are getting a solid return on their money. But if students\u2019 firsthand experience tells the real story, taxpayers are mostly fueling a futile arms race. Generous government support has caused massive credential inflation. Educational austerity is the simplest path back to an economy in which serious on-the-job learning starts during high school \u2014 not after college.
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