Are Liberal Arts majors dragging college grads down?

James Pethokoukis responds to the Wall Street Journal coverage of my analysis of entry-level wages of recent college graduates by implying that the erosion of wages earned by new college graduates is because there are too many Liberal Arts majors. Here’s the chart the Journal published:

The remarkable thing about recent college graduates is that the wages they earn early in their careers fell over the prior business cycle, 2000-07, as well as in the recession. This is the case for both men and women. As usual with Pethokoukis, he does not really supply any data directly on point. Instead, he lists a number of random items about college enrollment and STEM (science, technology, engineering and math) degrees as reported by Alex Tabarrok in a recent Chronicle of Higher Education story. In the piece, Tabarrok asks, “If students aren’t studying science, technology, engineering, and math, what are they studying?”

Since Pethokoukis doesn’t supply it, here are data on the distribution of fields of study by young college graduates, ages 18-29, in 2001 and 2009 from the Census’ Survey of Income and Program Participation (SIPP):

Degree field  2001  2009
Business 17.9% 19.6%
Engineering 6.2% 5.9%
Education 9.5% 8.8%
Math/Science/Computer/Architecture 20.1% 19.7%
Liberal Arts/Social Science/Philosophy 12.4% 11.4%
Literature/Communications/Language 8.5% 8.3%
Other 17.9% 19.7%
Misc* 7.6% 6.6%
Source: Analysis of Census SIPP data for 2001 and 2009
*Population where highest degree is a bachelor’s degree

There’s been no big change in the distribution of fields between 2001 and 2009 that could have led to the fall in wages of recent college graduates relative to those in entry-level jobs in 2001. There are somewhat fewer STEM graduates in 2009. However, wages should have been lifted by the expansion of business majors. To see how all of the changes in composition might have affected wages, I did a shift-share analysis of the field distribution in 2001 and 2009, asking, ‘How has the change in the composition of fields affected the average wage?’ If the 2009 composition (across 18 different majors) of employment across fields prevailed in 2001 at the  wages of each  field in 2001, then the average wage would have been … drum roll … 0.1 percent higher. That is, the impact of changes in the composition of fields over the 2001 to 2009 period was ABSOLUTELY NOTHING. The drop in entry-level wages happened within the particular fields of study, not because of the fields that students studied.

Are Liberal Arts majors dragging everyone down? The SIPP tabulations provided by Census do not have wage data by field for young workers but they do for all workers. The monthly earnings of full-time workers (using Table 4C in 2001 and 2009) with a Liberal Arts degree grew 19.8 percent in inflation-adjusted terms from 2001 to 2009. I suspect that Liberal Arts majors aren’t sabotaging America’s wages.

Oddly enough, I sort of agree with Pethokoukis’ bottom line. He says:

“And rather than pushing students to attend a four-year, brick-and-mortar college in pursuit of the BA, how about business-backed training and apprenticeship programs leading to a high-skill technical degree just like in Germany and some other northern European nations? … More education for all. But not college for all.”

As I wrote in the New York Times’ Room for Debate last week, College Is Not Always the Answer. My bottom line: “We need a nation that has and values all sorts of work and skills, which means providing decent pay and benefits for many types of jobs.”