Peter Cappelli, the George W. Taylor Professor of Management at the University of Pennsylvania’s Wharton School of Business, is a prolific author, advisor to governments and organizations, researcher, scholar and influential public intellectual. He’s been called one of the worlds most important business thinkers. In 2015, he took a break from his academic and management responsibilities to publish a book for the general public. Cappelli’s Will College Pay Off: A Guide to the Most Important Financial Decision You’ll Ever Make is a clearly written and accessible examination of the financial costs and financial benefits of an individual college education through the eyes of an economist.
Well positioned to write this study, Cappelli has expertise in a number of relevant spheres: human resources, employment trends, and educational policy. General statements, unsupported by research, about the big payoffs of a college degree provoked him into the effort. He’s keen on identifying the factors and issues that impact a student’s return on a college education.
Cappelli opens the book with a really good question: why do people with more education get better jobs? He provides broad information about the labor market from employers’ perspective and the job seekers, looking at decades of data. He makes the obvious, but often forgotten observation, that compensation is often a clear consequence of market conditions. If there are opportunities for particular kinds of employees, and few employees with those skills, then compensation will be higher. The challenge is that it is extremely difficult to anticipate the labor market five plus years into the future. Another factor is that education is not the same as a degree. All of the benefits accrue when a student completes. That means that savvy students have to be able to plan to complete, hedge their choices about majors and careers with imperfect information about future labor markets, and appreciate that what happens on average for most students is not a reliable guide to what may happen to any individual student.
Particularly helpful are Cappelli’s cautions about the claims made by institutions or particular programs, particularly when it comes to career focus. Specific career programs are not immune to changes in the labor market and can actually increase student risk. Programs that are tailored to meet particular career options may not be useful in other fields. Cappelli is spot on when he writes that it is “important to remember that a career is a marathon, not a sprint.”
How then does a college degree impact decision-making in the labor market? Cappelli identifies to major schools of thought. Human capital theorists argue that an education is what makes an individual useful on the job. Screening theorists take a different approach, claiming that an education (and that it entails) screens candidates to make for better hiring decisions. Neither approach is ideal. Things that students learn in classes often have indirect relationships with skills needed for jobs and for hiring managers. A student’s major may or may not have an impact on job skills. Some times internships and extracurriculars can play an outsize role. In brief, there are many factors to consider when thinking through a college education: if to attend, when to attend, where to enroll, how to pay for it, and what you do while in college all matter.
Putting all of this information within the larger higher education context is Cappelli’s next aim. He looks at completion rates across institutions and some broad trends in hiring and employment. Unsurprisingly, elite schools and those that include technology and engineering tend to have graduates with the highest salaries. He also points out that majoring in a STEM field does not necessarily guarantee a good job.
Cappelli emphasizes the ways that we can think about a college premium – the additional compensation that comes from an employee who has a college degree. It is not a guaranteed premium. He also notes – but spend little time discussing – that college graduates tend to be healthier, live longer, and be happier. He moves briskly through an analysis of what college costs and what the first job out of college might pay. Again, many different factors can be at play.
Cappelli’s conclusions are grounded in research, common sense and care for students, current and future. He sagely notes that as access and college enrollments have increased and diversified, so too have the qualities inherent in a more traditional college education: intense, comprehensive, and geared toward the education of a whole individual. Many institutions and programs – the larger education market, in fact – have moved to the promotion of a college education as a direct path to a job. That may turn out well, Cappelli notes, and it may not. A college education is expensive, especially in the United States. There is wide return on the salaries of graduates. It depends upon the student, the institution, and a host of choices and other factors. He also reminds us that what may be in the employers’ best interest may not be what job seekers want.
Will College Pay Off is a welcome work that can help students, families and educators. It debunks higher education myths and reframes some generally held “truths” about college. Most valuable, Cappelli’s book zeroes in on important and difficult questions that all college students should consider as they embark on this important decision. An informed student stands a much better chance of becoming an educated and successful student.
David Potash