Credentials, Jobs and the New Economy

When people talk about for-profit colleges, they often do so with disdain. If you are concerned about vulnerable people making expensive educational decisions with little information, then you might disdain the “predatory” for-profit schools. If you think that a strong work ethic can trump all manner of troubles, you might disdain the “weak” people who go to a “predatory” school. What is interesting to me is how much disdain is spread among students and schools and how little disdain there is for labor markets.

More than any other kind of college, for-profit colleges are judged by their ability to get their students jobs. And, given their high dropout rates and poor job-placement rates, we often blame them for what are, in fact, labor market failures.

Today’s lingo to describe how we work is “the new economy.” This new economy has produced a new breed of for-profit colleges that constitute a parallel education universe I have dubbed “Lower Ed.” Unlike the mom-and-pop for-profit colleges of yesteryear, these for-profit colleges are massive corporations and have generated billions of dollars in advertising revenue for broadcast and digital media. From the start, they were quite clear with investors and regulators that their market niche was contingent upon deteriorating labor market conditions. Poor labor market outcomes for their graduates (and nongraduates) are part of their business plan.

Job data has become the grounds on which we not only judge the quality of for-profit colleges, but also wage regulatory battles on behalf of the public (consumer) good. Some of this emphasis is due to how we regulate for-profit colleges. The job-placement data is part of the federal gainful-employment regulation that, to summarize, says programs that advertise as pathways to jobs must actually lead to said jobs and provide job-placement data to help students make good choices about their education.

For-profit colleges spend a lot of money pushing back on gainful-employment regulations. Yet through interviews with for-profit college executives, I have discovered that gainful employment is treated more like an unavoidable cost of doing business than the heated political rhetoric would suggest. As one vice president of a national shareholder chain told me with a sigh, “Well, gainful employment is the cost of dealing with the feds.”

The public fights over job-placement data and gainful-employment regulations keep lots of people in business. Politicians look tough when they issue a statement in favor of gainful employment. Regulators relish press releases of cases filed against predatory for-profit colleges based on job-data manipulation. For-profit colleges look like they’re being led by the U.S. Department of Education to add a layer of expensive regulatory compliance against their will. They write to their investors and financial regulators about the “necessary requirements” of complying.

But does regulating job-placement data and gainful employment protect the public interest amid the turmoil of the new economy? It is hard to see how it does. The premise is simple: data makes for better choices. But this assumes that better choices are available, and I’m not sure that they are.

Consider Janice, a 28-year-old black registered nurse who worked in a hospital and enrolled in a for-profit college bachelor’s program. Janice was caught in the middle of a professionalization shift among nurses. Whereas the field had formerly only required a post-high school certificate in nursing, it was increasingly more common to earn a bachelor’s degree in nursing.

That kind of professionalization and educational inflation falls under the “declining internal labor markets” rubric of the new economy. Unlike in the past, when experience and subsequent licensures might be obtained through an employer -- in this case, a hospital -- the expectation now is that workers will increase their human capital at personal expense to “move up” the professional ladder. Janice’s choices for promotion were limited: she could hope for favorable reviews from a sympathetic management culture (a risky proposition) or earn a bachelor’s degree in nursing.

Janice described her workplace culture to me as one where people formed alliances with people who were similar to them. That meant the white nurses congregated with each other at work and sometimes socially. They attended the same nursing program and shared a common knowledge base, all of which felt like a form of exclusion to Janice.

Janice only indirectly attributed this dynamic to race, a distance that is probably similar to how that exclusion feels: ambivalent and hard to identify, but easy to feel. It could be about race only to the extent that so few black R.N.s had their bachelor’s degrees in nursing or had gone to the same nursing program as the nurses who had more management power. And that dynamic could be about race only to the extent that one might be less likely to have the financial means to enroll in the competitive nursing program. Because the program is one of the only ones in the local area to offer the degree, it is routinely at capacity. That means one could apply and be on a waiting list for a year or longer.

Janice felt that she couldn’t afford that kind of time off from greater earnings or promotability. Her ability to “afford” time could be about race and certainly about class and was likely about how all of those are always interacting at the same time. For Janice, time and access were expensive in ways that the debt she incurred attending a for-profit degree program in nursing was not.

Janice’s “choices” were instructive. In fact, of the 109 students formerly or presently enrolled in for-profit colleges that I interviewed between 2011 and 2015, no one talked about the context of their college choices in ways that would suggest that more accurate or clear job-placement data would have changed their circumstances or decisions.

Instead, they talked about a credential as insurance against risks they could not continue to bear alone. JJ, a military veteran at a for-profit college, was particularly exasperated by the nonchoices available to him. Community college was infantilizing. Traditional four-year colleges were impractical. Why should people who have served their country have to “start over,” was the gist of his argument.

I’ve led grown men in the battlefield. I’ve managed over $1.5 million of mission-critical assets at any given time. I’ve taken weeks strait [sic] of leadership development courses. I’ve been directly responsible for soldiers’ lives. I needed a piece of paper that would translate my expertise to employer terms.

What JJ really needed was to not need a credential at all. It was only when the conditions of the labor market devalued his and Janice’s experiences that they considered college. Job statistics won’t change the conditions of the labor market for people.

A Negative Social Insurance Program

Political wrangling over job statistics looks like action, but it is mostly a distraction. Sociologist David Brown has shown that credentials can be created without jobs to justify them. We produce risky credentials when how we work changes dramatically, and the way we work shapes what kind of credentials we produce. If we have a shitty credentialing system, in the case of for-profit colleges, then it is likely because we have a shitty labor market.

To be more precise, we have a labor market where the social contract between workers and the work on which college has previously relied has fundamentally changed and makes more workers vulnerable.

Substantial evidence suggests all of the changes have shifted new risks to workers. Employer tenure for young workers has dropped at the same time that part-time and temporary work has increased, meaning many workers expect to change jobs more frequently. Essentially, their employment is constantly temporary. As the rhetoric goes, the new economy values knowledge workers with cognitive skills, and degrees represent those kinds of skills. If that’s the case, the new economy has shed high-paid but low- to midskilled cognitive work in favor of high-skilled labor and low-wage, low-skilled labor. The best-case scenario proposes that this is a decade-long labor-market correction. The labor market will catch back up and millions will find themselves back in “middle-skill” jobs with middle-class wages and work conditions.

In this best-case scenario, workers have taken on debt waiting for the market to correct itself. Depending on the kind of debt and who took it on, it’s either manageable or crushing. And for the most vulnerable workers, the only way to remediate some of that debt is to accrue more of it by going back to school. If for-profit colleges like ITT are no longer around, then another form of short-term, on-demand credentials will respond to consumer demand by extracting profit from student loans and education savings accounts.

It is not an accident that financialized shareholder for-profit colleges expanded in the 2000s. Changes in how we work created demand for fast credentials. The federal student aid system made those credentials “cheap,” in the sense that students do not pay much for them up front. The new economy, by all accounts, will require all of us to maintain near-constant skills training so as to be employable and put a far greater onus on individuals to extend their education.

So far, our policy has been to rely on the student loan system to finance that onus. To the extent that has fueled for-profit colleges, our government response has positioned them as social insurance against labor-market innovation (or disruption, depending on your perspective). Let me be clear: these are all conditions that are expected to sustain, if not accelerate, individual costs for job retraining repeatedly over the working life course.

Our national response has been to increase public money to private profit-extraction regimes. That is, in effect, a negative social insurance program. Whereas actual social insurance, like Social Security, protects citizens from the vicissitudes of predatory labor-market relationships, negative social insurance does not.

A negative social insurance program positions private-sector goods to profit from predictable systemic social inequalities, ostensibly for the public good. How did for-profit colleges define their market? They said that greater inequalities in secondary schooling produced demand for higher education without a viable means for millions of people to attain it. They said that employers were less interested in providing in-house corporate training and more desiring of credentials to certify work experience. They said that the military and other public-sector employers were shedding jobs. These aren’t secrets.

If the new dominant work arrangement divests employers of the cost for their employees’ training or certification, workers will pursue certification and credentialing schemes. If we know the cost of those schemes is primarily funded through taxpayer-supported federal student aid programs, then we already have a mechanism for providing social insurance. But when we facilitate spending that benefits institutions that maximize cost to extract profit, we have perverted the public-good mission of social insurance.

Early in 2016, I attended a conference where people in education technology offered everything from online platforms for massive open online courses to financing schemes to help people borrow private money for short-term coding boot camp courses. In their presentations, they depicted a future of work where employers couldn’t find enough “on-demand,” “skilled” labor for “the jobs of the future.” They showed earnings gaps between those with credentials and those without. They described how inefficient graduate programs at traditional universities are because they ramp up too slowly, cost too much and take too long to finish.

Yet we know that tech jobs are disproportionately filled with white and Asian men and that the tech industry has demonstrated problems hiring and promoting women and ethnic and racial minorities. Like the early days of for-profit colleges’ Wall Street era, the new credentialism promises credentials in high-wage, high-demand jobs that have statistical discrimination baked into them.

New institutions and new credentials are by definition lacking in prestige, the kind of prestige that lower-status workers and students need for their credential to combat discrimination in the labor market. Opening the federal student aid spigot without paying attention to how this ends for the poorest makes us all vulnerable. And turning on the spigot is precisely where we seem to be going.

In 2015, the Education Department launched a pilot program to help people like those boot camp coders use federal student aid money to pay for their programs. Organizations that participate in the program could apply for a special waiver of regulatory and statutory requirements usually associated with gaining access to federal student aid. They didn’t have to offer a degree or a certificate, usually defined by some standard credit hour of attendance, or be accredited. This program -- the Educational Quality Through Innovative Partnerships (EQUIP) -- is said to encourage and reward “entrepreneurialism” in the higher education sector. The impetus? The jobs of the 21st century need mobile workers with specialized skills that employers will not pay for. It is the same pitch that shareholder for-profit colleges made to investors in the 1990s.

The proposed future of higher education looks a lot like the start of the Wall Street era of for-profit college expansion: occupational credentials in narrow fields, paid for through public financing schemes that start with exemplars of high-status white men in high-pay jobs and offer little hope for anyone else. By 2016, we knew how this ended for shareholders of for-profit colleges, but we’ve not yet fully counted the social cost. Meanwhile, one wonders how high student loan defaults, constrained choices, predictably poor job outcomes and negligible upward social mobility for those trapped in Lower Ed serve the public good.