The demand for higher education is soaring. So what’s wrong with the academic job market?

By Ask Foldspang Neve

As the aspirant white-collar youth of China, India and a number of smaller, emerging economies continuously demand more tertiary education, providers of such education often report that it is still more difficult to find employment. It seems the market clears at a much lower level than possible. Two issues make up the puzzle: a bottleneck formed by institutions and misperceptions about their prospects among (future) academic job seekers.

According to the Institute of International Education, an American think tank, there were 194,000 Chinese students in the United States in 2011-12, up from 158,000 the year before, or an increase of 23 %. Back in 2005-06, the number was only 63,000, adding up to a 307 % increase over six years.

For Indian students, the trend was also going up for, even though the increase was less rapid. In 2005-06, the plurality of foreign students in the United States were Indian, numbering 76.000. In 2011-12, that number had risen to 100,000, or a 32 % increase.

Those years of course were witnessed the transition of Western economies from overheating booms to long slumps. For Western universities, ‘overseas students’ can seem irresistible as they supply massively to budgets that have taken hits from public funding cuts or lower returns from trust funds.

The few years since the 2011-12 academic year witnessed the effects of the same recession reached (especially) India as well; a declining rupee made it less affordable for Indian students to go abroad (see table below). At the same time, India sought to expand its own number of universities. Thus, by 2012-13, the number of Indian students in the United States had dropped to 97.000. By contrast, the number of Chinese students has continued to soar, reaching 236.000 by 2012-13. This also coincides with a period when the renminbi was allowed to appreciate against the dollar, conversely making American education more affordable for Chinese students.

Exchange rates and foreign students - a partial relationship

Exchange rates and foreign students – a partial relationship

Sources: iie.org and x-rates.com.

However, the macro trend is still that more and more foreign students are seeking Western education despite fluctuations in the number of students from specific countries.

Looking at the relationship between supply and demand of education in non-Western countries explains much of this increase young people going abroad. In India, the nation’s most prestigious schools have now for some years had nominal acceptance rates below even the most selective American and European top-tier institutions.

The University of Delhi and the various branches of the Indian Institute of Technology (IIT) are consistently ranked among the top school in India for arts, sciences, and engineering (the latter of which fields has a much higher profile there than in most Western societies).

As the New York Times’ blog The Choice related in 2011, the acceptance rates of even the most selective American institutions can seem appealing to Indians otherwise competing for entrance to Indian institutions. In 2013, some courses, like computer science, required a perfect score of 100 % in the entrance exams at some of the constituent colleges of the University of Delhi; this has also happened several years before. A number of other programs with high (perceived) earning potentials had cut-offs at only a few percent below.

For the ITT, the soaring demand for higher education led undergraduate acceptance rate to dip below 2 % in 2011 as reported by the NYT. For comparison, the acceptance rate at Harvard University – currently the most selective American college – was 6.2 % in the same year (for the class of 2018, that number had dipped slightly, to 5.9 %). And for a more comparable institution, MIT, the rate was 9.6 %, or five times higher. All the same, the low rates of acceptance at the American elite schools have been the subject of considerable debate. It also is part of that comparison that while ITT and the University of Delhi might be prestigious in the Indian context, they are relatively poorly ranked universities on a global scale, whereas their American counterparts have both topped world-wide rankings.

With such an expanding market, and with that kind of competition, one should think that new competitors to older providers would continue to appear; or that current providers would increase capacity continuously. Whereas it is true that many state institutions in both Europe and the United States have increased the intakes quite rapidly over the last decade, the institutional setting as a whole is still remarkably unstirred.

The persistent low intake of students at elite institutions has both substantial academic causes as well as other, social reasons. Academically, many elite institutions provide, as part of their offering, not just relative selectivity, but also small absolute scale. The best examples are found in more prestigious American liberal arts schools and in the tuition-based Oxbridge system.

The other, social origins of educational selectivity, whether one prefers to think about them as signaling effects, i.e., in the language of economics, or as the replication of elite status, i.e., in the language of sociology (it should be said that for all other purposes than this, these two models are unlike), the value of elite education to the individual and her family is not least the perceptional changes graduating from such an institution engender in others.

But one thing is the question of why current institutions are going to expand. Another question is why so few new ones have appeared.  Exclusivity itself does not explain why Europe has only witnessed a single new institution, the London-based New College of the Humanities make an attempt to journey into the market for elite education (and then only while receiving much flak from the established British academic community, where many saw it as part of a wider commercialization of society). If one’s competitors are poorly ranked and still offer admission only to a tiny fraction of applicants, how can this not be a good market for future educators to enter? Getting a PhD these days should mean steady business.

If one has recently talked to just small samples of graduate students, it is clear that many feel at least uneasy about the job market they are facing upon graduation. Many recent or soon-to-be graduates report back on having sent surprisingly high numbers of applications out without success. This is true even for the student populations at the world’s top-ranked research universities.

A common explanation for this phenomenon is that graduate students have multiplied while research funding has stayed stagnant or that is has even shrunk. However, with such a market for tertiary education as the one developing in recent years, would it not make sense for the market simply to clear at a much higher level? How can simultaneous rises in the production of academics and in the demand for the services that academics provide lead to both steeply declining acceptance rates for students and worse employment prospects for doctoral candidates?

Poor job prospects with more customers?

These stock photos should meet up more often. Sources: gatech.edu and bbc.co.uk.

There is one (rather obvious) theoretical observation to make before proceeding. In tertiary education (especially), institutional capacity is key to the supply of education. Individual academics cannot, as in pre-modern Europe, set up shop and hope for great results; at least not when it comes to collegial appraisal (they might, as is common in France, tutor privately, which brings cash, but little recognition). As only institutions can award diplomas that are recognized by employers, the market clears between, on the one hand institutions and prospective students, and on the other, between institutions and prospective academics, but not between students and academics directly.

However, looking at the unemployment rates for PhDs, another point becomes clear: though important differences among academic fields and generations probably exist, prospective academics are, on average, still better off than any other group in society.

Notice that in the Atlantic article linked to above, it is claimed that “[t]he pattern reaching back to 2001 is clear — fewer jobs, more unemployment, and more post-doc work — especially in the sciences.”

However, the accompanying graph (see below) shows a period reaching back to 1991. At that point, unemployment-upon-graduation rates ostensibly were at c. 29 %; by 2011, they had risen to c. 34 %. In between, they had fluctuated between c. 32 % at its previous peak in 1996 and c. 27 % in 2001. Overall, a very slight positive trend in unemployment-upon-graduation might be detected, but it certainly is too small to be called out as a ‘bust’.

And as you will notice, the clearest trend is that a higher share of graduates have landed a post doc upon graduation, while fewer have a (professional) job. Which is, presumably, how the graduate population at large would want it.

Employment for PhDs in the US - upon graduation. Source: The Atlantic.

Poorer prospects? Maybe not. Source: The Atlantic.

The main reason for these high numbers are that they are supplied by schools who, in this specific data scheme, lose contact with graduates upon graduation. Thus, everyone who has not landed either a post doc or a professional position by the day of their graduation will be listed as jobless. Such a measure is bound to massively inflate numbers. More importantly, however, there is simply not enough of a trend to be detected to come to such dramatic conclusions.

As can be seen from the below table snatched from the website of the US Bureau of Labor Statistics, levels of education still work as a linear predictor of levels of unemployment. Thus, the 2013 rate of 6.1 % unemployment covered a range ranging from 11.0 % for those with less than a high school diploma to only 2.2 % for those with a doctoral degree. The conventional wisdom of the recession hitting those with the least education thus still seems to hold true.

Levels of unemployment are still very much predicted by educational attainment

Levels of unemployment are still very much predicted by educational attainment

In the West as a whole, the picture is roughly the same, although there are notable, if predictable, exceptions. In 2013, unemployment rates for people with theoretically based tertiary education ranged from 1.5 in still petrol-booming Norway to 10.4 and 11.4 in Spain and Greece, respectively. Most countries, however, experience unemployment rates for the highest educated hovering between 4 and 6 %. The EU-21 (which, of course, includes both Greece and Spain) average was at 5.1 %.

As unemployment rates for the lowest educated groups go beyond an astonishing 50 % in some OECD countries, the real differences in unemployment are still based on class divisions, not geography. Even if these OECD numbers do not differentiate between master’s degrees and doctorates, the picture in Europe is not far from that in the US, even if slightly less favorable for job-seekers.

One tempting conclusion would be that current grad students are not informed by unemployment statistics for their own group when they panic, but by a wider, dual narrative: that competition in the academic field is rising, propelled by greater intake to grad schools; and that of the wider recession (and political crisis) in the West, which, contrary to the above analysis, claim that the well-educated are hit as hard as the lower middle and working classes this time (by now, a rather common NYT trope; one could speculate that part of the reason for its persistence is that this story might resonate strongly with its readership whose children are often themselves college graduates and had, hitherto, thought themselves near-impervious to such hazards).

At the same time, however, the institutional bottleneck is probably a real phenomenon. That should also help explain why another threat to academic hopefuls, the practice of some universities to keep teachers in non-tenured adjunct positions endlessly, seems to be constantly rising. An increase in elite-level tertiary institutions would also entail a rise in faculty positions, because neither academic prestige nor a research-based education can be delivered by adjuncts who are not paid to conduct such research (or, for that matter, enough to live without food stamps). Now, that would be real change.

Ask Foldspang Neve is currently pursuing his PhD in sociology at the University of Oxford. Ask Foldspang Neve