Graduate school enrollment has fallen during the pandemic; some observers are now challenging the fundamental value of master’s degrees or portraying them as mere revenue-generators for universities. Others have since countered that the return on investment for a degree should be more broadly evaluated than by using a debt-to-income ratio.
I believe that stepping back and viewing the issue from a more holistic and macro perspective will be helpful, and I’d like to consider the following question as a starting point:
Do bachelor’s degrees provide students sufficient knowledge and skills to thrive in the labor market?
To answer this question, we must put it in context. We are in the middle of a technology revolution that has not only changed lives for the better but has also had a profound impact on the labor market. Over the past few decades, constant improvement in technology’s price-performance ratio has made it cheaper and more productive and given firms good reason to take advantage of it. At the same time, labor costs have been gradually increasing.
As technology becomes cheaper and labor becomes more expensive, profit-maximizing firms invest more in technology to replace human labor. It is estimated that an additional 36 million U.S. jobs risk being disrupted, as they could soon be performed by machines equipped with current technologies. Alarmingly, it is also estimated that each additional robot will reduce employment by about 3.3 workers.
Related: Another pandemic-related threat to universities: Falling numbers of graduate students
And it’s not only “blue-collar” jobs. Research conducted by my colleagues and I found that jobs requiring college degrees have increasingly become susceptible to technology displacement, while the number of jobs that require graduate degrees has remained robust.
The goal of our study was to determine whether the technology and human labor of different educational levels are complements or substitutes for each other in certain jobs. We used industry-level data to estimate the relationship between technology and labor. If they are complements, technology use will increase the demand for human labor. If they are substitutes, technology use will reduce the demand for human labor.
We found that technology complements high-education labor (a master’s degree or above), substitutes for low-education labor (high school degree or below), and, contrary to our common belief, also substitutes for middle-education labor (bachelor’s and associate degrees). That is, the number of jobs requiring bachelor’s degrees or less is shrinking as those jobs are replaced by technology, whereas the number of jobs requiring a master’s degree or above is expanding along with technological advancement.
The data we used was from 1998 to 2013. I predict that the effect is even deeper today.
So, if an undergraduate college degree is no longer sufficient to fend off the technology invasion, what should our graduating college students do? College students should consider pursuing a graduate degree as a defensive strategy against technology displacement.
Related: Long disparaged, education for the skilled trades is slowly coming into fashion
In one sense, master’s degree programs have now become the new version of the bachelor’s degree programs that once led students to rewarding and stable jobs. Only 8 percent of the population now holds a master’s degree, about the same percentage that held bachelor’s degrees in the 1960s.
Our findings are at an aggregate level. At the individual level, not all master’s degrees are the same. While some programs are effective in fending off technology displacement, others may have reached obsolescence. The free market is efficient at determining which programs are most effective and which programs should be targeted for obsolescence.
In the long run, we can safely conclude that the graduate programs surviving in the marketplace are those that can help our students effectively fend off technology disruption and stay relevant. Master’s programs in the discipline I am in, business analytics (more generally, data science and data analytics), have survived market competition over the past decade and are still experiencing high growth.
In today’s rapidly changing world, when a bachelor’s degree has become increasingly insufficient to help students thrive in the labor market competition heightened by the technology revolution, we need more, not fewer, relevant master’s degree programs.
Students looking for a greater return on their investment should consider enrolling in such programs. In addition, universities should promote these programs both as contributing to their educational missions and generating needed revenue to nurture and sustain them.
In today’s rapidly changing world, when a bachelor’s degree has become increasingly insufficient to help students thrive in the labor market competition heightened by the technology revolution, we need more, not fewer, relevant master’s degree programs, revenue-generating or not.
Oliver Yao is the deputy provost for Graduate Education at Lehigh University, as well as the associate dean of Graduate Programs and the George N. Beckwith ‘32 Professor in Lehigh’s College of Business.
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