Well, are you assuming that no one applying for the McDonald's job has a degree? I think the situation has probably gotten to the point that there are so many "useless" degrees on the market, that it no longer even makes sense to talk about "fraction with degrees". So, let's try rewording it:
> but does anyone ever ask if the fraction of students with a particular type of college degree matches the fraction of available jobs requiring that type of college degree?
As an interesting aside, one advantage of providing a free university education is that you only need to provide it for as many students as you need to attain a certain degree. Need more doctors? Then provide more free slots for premed students. Need fewer lawyers? Then this year there aren't as many prelaw slots available.
Such a system may seem rather sanguine, but it's also worth noting that the rest of the world does not seem to equate career success with a happy life in the same way the US does.
It's hard to reliably infer causation from the correlation, but from the statistics I can find, even holders of "useless" degrees have significantly lower unemployment rates and higher wages than people who hold no degree at all.
In fact from what I can find the employment/wage gap between degreed and non-degreed people is actually larger in non-STEM fields. You can get work as a no-degree-having programmer or statistics guru, but if you're not technical, having no degree is a much bigger problem. Among miscellaneous jobs that often advertise that you need a degree: store manager, social worker, high-school teacher, most white-collar clerical positions in large companies, etc.
Sometimes any degree will do. It's not like IBM hiring an office assistant with "B.A./B.S. strongly preferred" is deeply interested in the content of a university literature curriculum, but they use it as a generic screen for some minimum threshold of literacy and maybe diligence. Companies seem to have no way of doing that screening themselves, so they outsource the job to universities, hoping that universities screen out the worst candidates.
True, but this is wasteful signalling and should be discouraged.
The degree advantages you describe are merely a way of redistributing jobs from those without the signal to those with it. No value is created, and some is lost due to the cost of giving people useless educations. The world would be a better place if no one had these useless educations, since employers would no longer be able to discriminate against those lacking the signal.
I have a technical degree, but I tend to disagree. There is a good deal of pure signaling involved, but graduates of humanities programs on average can write and research better after they graduate then previously. Heck, most can read or write better than my CS-degree-having colleagues. I also think there's considerable value to society produced.
In any case, it's easy for companies to solve that problem, if they see an inefficiency. If IBM thinks people without degrees are an underutilized/undervalued labor pool, they'll start hiring them. And if the market stops demanding degrees, people will stop getting them. Until then, it looks like a demand-side problem to me.
I'm confused what you disagree on - do you disagree that signalling is wasteful, or that the skills gained (and later forgotten) in "any degree, we don't care which one" are economically valuable?
By the way, a great way to test whether education is human capital formation or signalling is to consider the consequences of failing and forgetting. If you flunked out of college, would you have the same economic outcome as if you passed and then forgot what you learned? If so, then college is human capital, otherwise it is wasteful signalling. (Hat tip: Bryan Caplan.)
If IBM thinks people without degrees are an underutilized/undervalued labor pool, they'll start hiring them.
Unfortunately, in big companies, this is tricky due to agency costs. The hiring agent has different incentives than the company as a whole - if he does something non-standard, he will receive disproportionate blame if it fails, while the company will gain most of the benefits if it succeeds. If he conforms to the standard procedure he can avoid such risks.
This is a fairly well known problem in the economics of large organizations.
FYI, I ignore degrees when I hire. But if I worked at IBM, I might not.
I think the mistake you're making is you assume it's the skills (gained and later forgotten) that the employers care about, but in reality the college degree is just a filter, not unlike an IQ test. Sure, it sucks that it takes four years and costs $100k, but hey it's not the employers that pay so what do they care. (That's why degrees are less important for engineers, since you can filter eng candidates by asking them a few coding questions.)
(Not that this makes the situation any less deplorable.)
It's very interesting to read your second paragraph and then follow it up by reading about Hungry Academy: http://hungryacademy.com/
Essentially, Living Social has done just this. They decided that the talent pool was thin, and the usual means of finding new hires weren't cutting it, so they mixed a bit of unconventional hiring with a dash of unconventional education and came up with the Hungry Academy. It will be interesting to see if this is a continuing trend, though I can't say I exactly relish the idea of corporate sponsored higher education as the new norm.
> but does anyone ever ask if the fraction of students with a particular type of college degree matches the fraction of available jobs requiring that type of college degree?
As an interesting aside, one advantage of providing a free university education is that you only need to provide it for as many students as you need to attain a certain degree. Need more doctors? Then provide more free slots for premed students. Need fewer lawyers? Then this year there aren't as many prelaw slots available.
Such a system may seem rather sanguine, but it's also worth noting that the rest of the world does not seem to equate career success with a happy life in the same way the US does.