Blaming Low Wages on Bad Schooling Is a Neoliberal Myth

For the past 40 years, privately funded interest groups and lawmakers have promoted the idea that US schools are failing and causing economic dysfunction. The story provides cover for the real culprits of inequality: wealth-hoarding bosses.

Business interests and neoliberal politicians have argued that education is the only and best way to address inequality, providing cover to poverty’s real drivers: bosses who pay starvation wages. (Jon Cherry / Getty Images)

“Bachelor’s degree holders generally earn 75% more than those with just a high school diploma,” asserts a stats-packed CNBC article with the beleaguered-sounding headline “College is still worth it, research finds.”

“The future is STEM,” scolds an op-ed on the education website the 74, cautioning that American students are lagging behind Chinese students in their acquisition of data science — and it’s jeopardizing national security.

“The U.S. does not have enough high-skilled workers to meet demand for computer-related jobs, and employers are seeking immigrant talent to help fill that gap,” warns yet another data-heavy CNBC piece.

These sorts of pronouncements have attained a mind-numbing ubiquity, particularly in the field of education. We’re all familiar with those charts that grimly affirm what’s been drummed into American students for decades now: without college or an advanced degree, you’re toast. If you’re applying for a job in K-12, it’s usually a given that you’ll need to brag about your ability “to equip learners with the tools they’ll need to stay innovative and agile in today’s high-skills global economy,” or some similar arrangement of buzzwords.

On the other hand, my fellow highly educated millennials can point to numerous examples in our own lives or the lives of our peers that cast doubt on this hegemonic narrative of education as the guarantor of prosperity. How many bachelor’s or advanced degree holders do you know who have struggled to earn a living in their fields of study? That barista with a stats major, or that PhD holder stuck in adjunct hell. Even for those who eventually land stable employment commensurate with their credentials, the path is often a long and rocky one — certainly not reflective of the image of American firms so desperate for skilled graduates that they’re forced to hire H-1B visa holders.

This gulf, between the actual labor market and the sexy high-education market we’re taught to expect, is the topic of Neil Kraus’s book, The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement. In the book, Kraus, a political science professor at the University of Wisconsin–River Falls, provides a deeply researched account of the stunning extent to which we’ve been deceived by privately-funded think tanks, billionaire philanthropists, and lawmakers invested in promulgating illusions that justify the neoliberal order — while wreaking havoc on real students, educators, and schools.

Numerous authors, including Jon Shelton and Daniel Moak, have recently explored the entrenchment of human capital theory in our political discourse and the attendant efforts to blame widespread poverty on a flawed education system. Kraus takes aim at this same line of faulty reasoning, focusing on the counterfactual economic claims underpinning some of the most damaging aspects of K-12 and higher-education reform. He begins with the incredibly simple premise that employment opportunities and wage levels are determined by business interests and policy makers — not schools. So how did we get to this point where we nod and yawn when we hear that Americans are missing out on good jobs because we weren’t taught enough STEM?

Illusory Deficiencies

With the rise of neoliberalism, a series of changes disfigured the Keynesian mixed economy of the New Deal era: deregulation, free trade policies that encouraged the offshoring of family-sustaining union manufacturing jobs, tax cuts for corporations and the wealthy, and a regulatory climate in which shareholder interests were allowed to reign supreme. Kraus argues that elites needed a compelling story to distract the public from these fundamentally unpopular developments, justifying their outcomes as the painful but inevitable result of poor schooling.

Drawing on human capital theory, foundation-funded interest groups advanced “a permanent political campaign positing the chronic deficiencies” of both American education and American workers. During the 1980s, primed by official Reagan administration reports, major media outlets began chanting the mantra of failing schools that lock Americans into cycles of economic hardship. And as the next century’s folksy neoliberal presidents would go on to prove, fixing a punitive gaze on high-poverty schools could enable elites to project concern for poor people without having to offend the employers who cause rampant poverty. Abysmal wages for noncollege jobs were treated as a preordained fact of life.

This permanent political campaign that Kraus chronicles hinges on a series of false claims, including: that American students’ achievement is declining, while their peers in comparable nations surge ahead, and that this is due to our failing education system; that our economy is increasingly comprised of science, technology, engineering, and math (STEM) jobs, and that American K-12 schools and universities are particularly deficient in these areas; that there’s a widening gap between today’s increasingly high-education labor market and the embarrassingly low skill level of American workers; and that noncollege jobs are dwindling and will soon be filled by robots.

Is this sounding familiar? The wild thing is that lawmakers, interest groups, and op-ed writers have been hand-wringing about these precise claims for some forty years. The robots are always about to replace us.


The key to understanding American academic achievement is poverty. The strong association between socioeconomic status and test scores has been well documented, and it explains a great deal about how students measure up in our extraordinarily unequal society. But the education reformers pushing a narrative of national failure produced their striking statistics by ignoring this fact.

To give one example of this, the Reagan administration’s 1983 report A Nation at Risk (ANAR) posited that US student achievement had been eroding since the 1960s. If this were true, we can assume it would be visible in scores on the National Assessment of Educational Progress (the NAEP), which, due to the fact that it is uncorrupted by high stakes (punishments), is the most definitive measure of K-12 achievement we have. In fact, though, NAEP scores show a gradual increase in American students’ reading and math achievement during the late twentieth and early twenty-first century.

ANAR’s authors disregarded the NAEP, however, relying instead on SAT scores, which reflect only the fraction of K-12 students planning to apply to college. This group was rapidly expanding during the period of comparison, and shifting to include many more students from backgrounds of economic hardship (who, again, are at a test-taking disadvantage due to the many obstacles they face). Comparing SAT scores from the 1960s and ’70s revealed a lot about the changing demographic makeup of the college-bound population. But it was never a reasonable way to describe US K-12 achievement, generally. This tidbit illustrates the methodology of the fantasy economy campaign, which has relied on misleading data selectively deployed to support claims that would be repeated regardless of what official data actually show.

Likewise, the international comparisons that have reflected so poorly on US students are made by overlooking the critical fact that American students are much more likely to live in poverty than are students in other rich nations — and that thanks to our threadbare social safety net, US poverty seems to have a particularly corrosive impact on school learning. With our exceptional levels of economic inequality, we produce some of the highest-achieving students and some of the lowest-achieving students. Simply juxtaposing national datasets without considering the wide range of US scores obscures the primary role that money plays in enabling some students to be laser-focused on academics while many others are absorbed with matters of survival.

The Skills Gap That Wasn’t

The most remarkable of the fantasy economy campaign’s claims pertain to the supposedly ill-prepared condition of American workers. The alarming Reagan administration reports Kraus discusses were followed up by a steady stream of similarly alarming reports from think tanks, university research centers, and education reform organizations funded by business interests. These accounts, which have been endlessly echoed by pundits, include statistics showing that a growing majority of US jobs require college and advanced degrees, particularly in STEM fields, and that US schools are not producing nearly enough graduates to meet this high demand.

In reality, the vast majority of US jobs are low-wage service sector jobs that don’t require a college degree. Only two of our ten most numerous occupations require any postsecondary education — that is, according to Bureau of Labor Statistics (BLS) data, which Kraus points out are much more comprehensive and objective than the “alternative data” produced by privately funded organizations. The remaining eight are low-wage jobs in retail, fast food, home health care, customer service, and logistics.

The low educational requirements of the labor market have changed little in thirty years, and according to official projections, they won’t change much anytime soon. So the swollen share of Americans with college and advanced degrees are left to compete for a relatively small percentage of jobs matching their qualifications. In 2019, for example, BLS data show that roughly 41 percent of workers possessed a bachelor’s or higher, while only 27 percent of jobs demanded those qualifications. The nearly 16 percent of workers with a master’s or more were competing for less than 4.5 percent of jobs. This has contributed to widespread underemployment of college graduates, about one-third of whom never find work commensurate with their education.

The United States’ overproduction of bachelor’s and advanced degree holders — who were promised jobs that do not exist — is particularly pronounced in the murky category of STEM. Although we’ve been counseled that STEM is the future, and that American schools, universities, and students are falling short, the opposite is true. Per 2022 BLS data, only about 6.3 percent of all US occupations can be classified as STEM. Large numbers of STEM graduates are unable to find employment in their fields, and scientists’ earnings have stagnated, with their ranks greatly exceeding employers’ demand. All the while, bogus projections about the ever-increasing number of high-level STEM jobs have been used to deprioritize the liberal arts amid-programs of higher education austerity. At the K-12 level, STEM mythology has justified soul-crushing accountability measures based on student test scores.

American STEM graduates find themselves competing with H-1B visa holders, who disproportionately occupy science and technology positions. The H-1B is a temporary work permit that’s entirely at the mercy of employers (as Kraus notes, former secretary of labor Ray Marshall once described the H-1B employment relationship as “indentured”). This attractively tight form of labor discipline may be the real reason why employers have persistently lobbied for H-1B expansion. But they’ve built their case by referencing baseless claims about the supposedly inadequate supply of American STEM graduates.

Back to Reality

Kraus demonstrates with impressive detail how, through an incredible proliferation of official-sounding reports, privately funded think tanks and university centers have sought to convince Americans that night is day and up is down. With a flurry of frightening facts and figures that fly in the face of official data, organizations like Georgetown University’s Center on Education and the Workforce have endeavored to divert our attention from the true causes of economic hardship. “The good jobs are there,” they continue to insist. “American education simply isn’t preparing us for them.”

But as official data and our lived experiences continue to inform us about the real economy — the labor market in which we live and struggle to find decent college or noncollege work — Americans are beginning to rethink the value of a diploma. The decades-long period of rising postsecondary enrollment has ended, with today’s young people staring down dismal student debt-to-future earnings ratios. As Jennifer Berkshire and Jack Schneider recently wrote in Slate:

For young workers who graduated into the Great Recession, or who joined the workforce just as COVID was shuttering the economy . . . the idea that an additional investment in their human capital will protect them from layoffs or ever-concentrating corporate power sounds like a joke.

Berkshire and Schneider point out that while young people have cooled on college, they’re warming up to something that has a much better track record of improving wages: unions. Recent strikes, they note, have delivered hefty pay raises without any need for “upskilling.”

As long as business interests and neoliberal politicians were able to persuasively argue that education was the way to address inequality, they provided cover to poverty’s real drivers: bosses who pay starvation wages, and lawmakers and judges who do those bosses’ bidding. The good news is, we seem to be waking up to the fact that what ails us is not our individual human capital deficits, but rather an economy that’s stacked against us. The solution, then, must be a collective one.