While the federal government encourages young people to go to college by heavily subsidizing colleges and writing off many graduates’ student loans after 10 or 20 years (through income-based repayment plans that allow loan balances to be forgiven after 10 or 20 years of modest payments), it does nothing to encourage young people to get trained for decently-paid skilled trades and blue-collar jobs that have critical shortages of workers.
Campus Reform reports:
The ominous warnings of a void in trade professionals are finally coming to fruition.
Application rates to technical jobs that require vocational training dropped by 49% in 2022 compared to 2020, according to data from Handshake obtained by NPR. The US Chamber of Commerce in their 2023 economic projections predicts a “massive shortage of skilled workers.”
Traditional trades, however, can provide good-paying, stable paths for income. Employment data from recruitment board Indeed indicates that the national average hourly rate for carpenters is $23, with more experienced carpenters earning upwards of $34 per hour. Automotive technicians can earn between $25 and $70 per hour and plumbers can earn more than $90,000 per year.
Despite these high salaries, data from Handshake shows job postings for trades received only 5 applications per post compared to the 19 applications per post for white-collar positions, as NPR notes.
While the effects of this blue-collar crisis are becoming more apparent in today’s job market, experts have been sounding the alarm for years.
Mike Rowe, former host of the Discovery Channel’s “Dirty Jobs,” has long been a supporter of elevating vocational education. In February 2017, Rowe testified before the United States House of Representatives to advocate for an increase in funding for technical and vocational training.
Addressing the vocational skills gap in today’s job applicants, Body Shop Business reports that Rowe told Congress, “When we took shop class out of high school, we sent an unmistakable message to an entire generation of students…that a whole category of jobs was simply not desirable. Is it any wonder those are the very jobs that go begging today?”
But the devaluation of the vocational arts is not just a social prioritization problem. It’s also connected to the characteristics of young people entering the workforce.
As Campus Reform has previously covered, New York University professor and public intellectual Jonathan Haidt argues that Generation Z is generally weaker than previous generations due to a confluence of social media, victimhood ideology, and poor parenting.
Particularly blaming the perfectionism and unrealistic standards perpetuated by social media, Haidt observes that “when you look at Americans born after 1995, what you find is that they have extraordinarily high rates of anxiety, depression, self-harm, suicide and fragility.”
Applying these generational characteristics to the workplace, Haidt notes that managers find “that it’s very difficult to supervise their Gen-Z employees [and] give them feedback.” This makes career advancement difficult, especially for demanding blue-collar fields.
In other words, the scarcity of competent technical professionals is the result of raising a fragile generation that has been both dissuaded from and denied access to vital vocational and technical training.
There is a growing movement to re-emphasize trade schools …. to diversify options for students….Rowe agrees, arguing that the 4-year institution model depends upon “lending money we don’t have to kids who can’t pay it back to educate them for jobs that don’t exist anymore….Bad idea.”
The government has encouraged people who once would have become skilled and valuable factory workers to instead go to college and work in white-collar jobs, contributing to a severe shortage of the skilled workers needed by manufacturers. The Washington Post reported on this problem:
the country … needs more manufacturing work. But … many manufacturers say that, in fact, the jobs are already here. What’s missing are the skilled workers needed to fill them. A metal-parts factory here has been searching since the fall for a machinist, an assembly team leader and a die-setter. Another plant is offering referral bonuses for a welder. And a company that makes molds for automakers has been trying for seven months to fill four spots on the second shift. “Our guys have been working 60 to 70 hours a week, and they’re dead. They’re gone,” said Corey Carolla, vice president of operations at Mach Mold, a 40-man shop in Benton Harbor, Mich. “We need more people. The trouble is finding them.”
In recent years, government officials have depicted white-collar jobs for college graduates as the way to go. President Obama advocated sending every high-school graduate to college or some form of higher education, while denigrating training for blue-collar industrial jobs. He has sought to increase spending on colleges, while slashing spending on more useful vocational education that could lead to work in manufacturing. (See this New York Times story). “High schools, moreover, would rather focus on helping children get into four-year colleges than preparing them for vocational pursuits” like skilled factory work.
This has stigmatized even well-paying blue-collar and factory jobs, contributing to a critical shortage of the skilled workers needed by U.S. manufacturers. As The Washington Post noted, as senior skilled factory workers are retiring, no one is taking their place, since “many of the younger workers who might have taken their place have avoided the manufacturing sector because of the . . . stigma of factory work.” Our government’s prejudice against manufacturing and in favor of white-collar college degrees is causing serious harm to our economy. As The Washington Post highlights, “A recent report by Deloitte for the Manufacturing Institute, based on a survey of manufacturers, found that as many as 600,000 jobs are going unfilled.” One welder was quoted by the Post as saying,“A bunch of lazy Americans don’t want to get their hands dirty anymore.” “They want an office job.” Meanwhile, 12.8 million people are unemployed, many of them people with economically-useless college degrees in majors that teach few useful skills.
Growing government subsidies have encouraged colleges to raise tuition at a rapid rate, and to dumb down their courses to attract marginal students who once would not have attended college. Federal financial aid programs have helped cause skyrocketing tuition increases. Meanwhile, college students learn less and less with each passing year. “Thirty-six percent” of college students learned little in four years of college, and students now spend “50% less time studying compared with students a few decades ago, the research shows.” Thirty-two percent never take “a course in a typical semester where they read more than 40 pages per week.
While doing little to encourage young people to go to trade school to learn a useful skill, the Biden administration is encouraging everyone to go to college by announcing a plan to forgive up to $500 billion in student loans (a plan that the courts have temporarily blocked) and by changing income-based repayment plans to allow college graduates to pay a small percentage of income toward repaying their loans for 10 or 20 years, and then have the remaining loan balance forgiven (this is known as income-based repayment plans). These changes could cost taxpayers another $500 billion.
As the Washington Post has explained, income-based repayment plans encourage colleges to raise tuition like crazy, because “under income-based repayment, your payments vary with your income, not the size of the loan” you took out to pay for tuition. So you don’t mind borrowing more money, because as your debt increases, your payments remain the same (and the unpaid loan balance is written off after 10 or 20 years). As a result, if you are a student, your college will raise tuition more, and you will borrow more money to pay that tuition, knowing that taxpayers will some day pay off your IDR program loans.
At the People’s Policy Project, Matt Bruenig explains how those IDR plans encourage students to like taking on lots of debt (which will be written off in the future under the Biden plan) and colleges to like tuition increases fueled by debt:
Just as schools have new incentives to push debt loads higher in an IDR-dominant world, so do students. Above, I say that, for students planning to enroll in IDR, $15,000 of student debt is no different than $100,000 of student debt. But this is not quite right. A student planning to enroll in IDR actually benefits from taking out the maximum amount of debt possible.
Student loans are initially paid to schools to cover the tuition and fees. But what’s left after tuition and fees is disbursed as cash to the students, ostensibly to cover living expenses. In a conventional student loan, you have reason to live frugally and take out as little debt as possible. But if you are planning to go on IDR, then your incentives flip and you are leaving money on the table if you don’t take out the maximum loan possible.
Even if you don’t want to spend it living lavishly while in college, you could squirrel away the surplus into a savings account for later use, including for use in making your IDR payments after you graduate. Indeed, this is just a student-administered version of the LRAP scheme discussed above where student debt is used to pay off student debt….
A student that plans to enroll in IDR has no reason at all to care about the prices colleges are charging. To them, $15,000 of student debt is no different from $100,000 of student debt….
To see how this can play out in practice, consider the Loan Repayment Assistance Programs (LRAPs) that many law schools already have. Law schools provide a good view into this question because law graduates have been enrolling in IDR programs at high numbers for a long time and law schools have some ability to determine who is likely to use IDR upon graduation based on the kind of law they plan to go into.
Under the Public Service Loan Forgiveness (PSLF) program, law graduates that go on to work in the public sector, which is a lot of them as the public sector employs many lawyers, only have to pay 10 percent of their discretionary income for 10 years in order to have their debt forgiven.
Law schools figured out many years ago that, for a student who is planning to enroll in PSLF upon graduation, prices and debt loads don’t matter. Ten percent of your discretionary income is ten percent of your discretionary income regardless of what the law school charges you and how much debt you nominally have to take on.
Law schools also realized that they could make the deal even sweeter by setting up LRAPs that give graduates money to cover the the modest repayments required by the PSLF.
The LRAP schemes work as follows:
- The school increases their tuition.
- The student takes out federal loans to cover the tuition increase.
- The school squirrels away the debt-financed tuition increase into an LRAP fund.
- The school disburses money from the LRAP fund to cover PSLF repayments.
Through this roundabout process, the law schools effectively use student debt to pay off student debt and make their schools free, at least for these particular students.
Under the IDR scheme proposed by Biden, the regular IDR program will become a little more generous than the current PSLF program that the law schools have so effectively gamed. It’s impossible to say for sure how schools will respond to that, but schools have already shown themselves quite adept at optimizing within the financial aid constraints and not just the law schools.
At some point, it seems like expensive private universities will realize that providing tens of thousands of dollars of need-based discounts to certain borrowers who are likely to wind up on IDR does not make sense and that they should instead charge the maximum amount a student can cover through federal loans. As the law schools show, the surplus generated by that scheme could even be shared a bit with the students via an LRAP.
The White House on August 24 announced the Education Department’s intent to revise income-driven repayment plans in a way that would allow students who foolishly attend expensive colleges to largely avoid repaying their loans, by cutting their payments by well over half. As a result, many borrowers will pay only a trivial amount each month, and can stop paying anything at all after 10 or 20 years, no matter how much of their student loan balance remains. The remaining student loan balance will be written off, at taxpayer expense.
The White House “Fact Sheet” explained these changes, which will be very expensive to taxpayers:
The Department of Education has the authority to create income-driven repayment plans, which cap what borrowers pay each month based on a percentage of their discretionary income. Most of these plans cancel a borrower’s remaining debt once they make 20 years of monthly payments….the Department of Education is proposing a rule to do the following:
- For undergraduate loans, cut in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income.
- Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
- Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less.
As the White House explained, this would largely wipe out loan repayments by many borrowers who are “typical” of their occupation — it gives the example of one borrower who “would pay only $56 a month on their loans, compared to the $197 they pay now,” and another who “would pay only $61 a month on their undergraduate loans, compared to the $295 they pay now.” If you borrow a huge amount of money to attend a fancy college with palatial facilities, and end up with a steady job after graduation, then you should have to pay back more than a measly $56 per month.
This is a big subsidy for borrowing money, which will encourage students to borrow more to pay college tuition, no matter how fast their tuition increases. When federal subsidies make it easier for students to borrow to attend college, college tuition rises. The Daily Caller reported that “each additional dollar in government financial aid translated to a tuition hike of about 65 cents,” according to the Federal Reserve Bank of New York. So this aspect of Biden’s plan will cause college tuition to rise faster.