College graduates and unemployment.Not a pretty scenario.

The idea of Occam's Razor tells us that the simplest explanation is also most likely the best and correct one.  A related idea is that if something walks like a duck, and quacks like a duck, it is damn well a duck.

All set?  I premise this posting with those observations because everywhere we turn, there is an ever increasing body of evidence that we are overselling higher education.  Even this blog has enough of those.  With all that evidence, one would think that that simple explanation fits.  But, it is so difficult to get people to acknowledge that.

In one of his recent columns, Paul Krugman came close to concluding about the oversell, but then veered off into a discussion of the economic stagnation of middle class.  And, yet, he himself provides additional evidence of the wasteful allocation of resources for higher education, when he writes:

Mark Thoma leads us to new research from the San Francisco Fed showing that recent college graduates have experienced a large rise in unemployment and sharp fall in full-time employment, coupled with a decline in wages. Why is this significant?
The answer is that it’s one more nail in the coffin of the notion that employment is depressed because we have the wrong kind of workers, or maybe workers in the wrong place.

Wrong kind of workers, and workers in the wrong place ... while college grads are unemployed or underemployed.  Add these and what do you get?  This is not the time to push more high school graduates into higher education, and yet that is precisely what we continue to do.

Krugman prefers to console himself with an explanation that this is demand side slump, which means that he probably thinks that stimulating the economy will somehow miraculously provide those millions of productive jobs for college grads.  I think not.  Though, in saying this, I fully recognize the futility of going against a recipient of the Swedish Central Bank Prize.  (editor: why don't you simply say a Nobel Prize recipient?  Because, it is not a Nobel Prize.)

Where are we in job losses since peak employment?  Check this out:

This is one serious slump we are in strictly in terms of employment.  By continuing to emphasize the overall growth in GDP, economists and politicians are misleading us about the depth of the problem.

Now, of course there is an element of the demand slump, and there is evidence for that--such as:

the corporate saving glut - no I didn't mean the 'global saving glut'. Furthermore, the corporate saving glut is manifesting itself into the labor market, creating high and persistent unemployment. ... unemployment is not structurally higher, it's that when firms do not reinvest corporate profits, the lack of income flow manifests itself into the unemployment rate.

Even if one wholly subscribes to this explanation, how does pushing more young adults to college help?