Underemployed In China

“Li Sha, 23 and with a fresh college degree in wastewater management, meandered tentatively through the Saturday job fair at the China International Exhibition Center.” Thus begins a story published on Sunday (18 August) in the Los Angeles Times. Li wasn’t having much luck. There seemed to be jobs for “software whiz kids, Sichuan restaurant cooks, writers for the glossy monthly Wives of Servicemen.” But not for people with her training—even though she’s willing to work for just $330 a month, a little above the minimum wage.

Li and her environmental classmates aren’t alone. In China, 7 million people are earning college degrees this year, up from just 2.12 million a decade ago. Maybe this will pay off for China—but will it pay off for the students who earn the degrees? So far it hasn’t. “By some accounts, the unemployment rate for Chinese college graduates age 21 to 25 is 16%, nearly four times that of blue-collar workers,” the article states. In 2012, the average wage for college graduates in China was $412 a month, just 20% higher than the wage for migrant workers, according to the National Bureau of Statistics of China.

What’s going on? In a way it’s obvious, but it’s a point that’s often overlooked—even (or especially) by policymakers. Just because a society (China) needs more of something (environmental protection and improvement), that doesn’t mean you can earn a good living providing it. The needs of society do not directly translate into economic demand. And when you intervene in the market to make more of something—college graduates in China—you can artificially glut the market and destroy the incentives that draw in the best and the brightest.

China’s educational policy has focused on producing more graduates—and it has succeeded to the point where education no longer pays off in material attainment for the degree recipients. Similarly, many Western governments have pursued policies that have led to the training of large numbers of advanced-degree scientists. These scientists are extraordinary assets to their economies, but the economy lacks the capacity to fully utilize those assets.

So, what’s the solution? Here’s one: audacity and individual initiative. “Lai Zhangping, 28, graduated from Huaqiao University in 2009 with a bachelor’s degree in chemical engineering,” the article says. He took a job in Taiwan at a decent salary, but decided that because he’s from the mainland, he wasn’t likely to advance.

So this year, with friends, he opened a stall in Shanghai selling pig’s feet. Lai reports (via the article) that the business is earning $3300 to $5000 a month. His stand was featured in the Shanghai press, he says, and since then he’s gotten hundreds of inquiries about franchising the business. ” ‘I don’t feel any shame,’ ” he says. ” ‘I’m using my hard work to make money.”

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