By Callie Le Renard and Ángel Cabrera
It’s become fashionable to question the value of a college degree. Leave aside the fact that many leading the charge have diplomas on their wall from fine universities, the facts are simply not on their side.
In our forthcoming article in Innovations, we argue that the surest path to economic opportunity for youth is more education. In making this argument, we cite data from Schmitt and Jones that found that the odds of getting a good job—one that pays over $37,000 per year and includes employer provided health and retirement benefits—are three times higher for college graduates than for high-school graduates who didn’t go to college. College, however, doesn’t just lead to good jobs. It also helps create successful entrepreneurs, who then create more jobs and add value to the economy.
Several journalists and entrepreneurs have argued that you don’t need a college degree to start a successful business. Citing examples like Bill Gates and Mark Zuckerberg, they make the case that college doesn’t teach the skills needed to start a business. Here too, data suggests some caution.
To be sure, education is definitely not needed to start a business. The rate of entrepreneurship is in fact higher for individuals without a college degree among other reasons because the difficulties finding a good job forces them to. Given however that 50% of small businesses fail in the first 5 years, the key question is whether a college education can help you not just become an entrepreneur, but a successful one.
As it turns out, studies have shown a positive and significant relationship between the level of education of the entrepreneur and entrepreneurial performance, whether this is measured by growth, profits or the earning power of the entrepreneur him/herself. The gist of it is this: entrepreneurs with more education have more successful businesses.
Education is also important for the type of business launched by an entrepreneur. Entrepreneurial activity rates are highest in the construction industry and this does not necessarily require a college degree. However, if an entrepreneur wants to launch a high tech start up, for example, more knowledge will be necessary to bring his/her business to the state of the art. Most high school graduates aren’t prepared for jobs in the tech sector, and a degree will help get them there. Indeed, 92% of US born tech founders hold a bachelor’s degree or higher.
You sure can try to become a Steve Jobs, Michael Dell or Richard Branson. But your odds will be as high as you becoming Michael Jordan or Lionel Messi. Do you want to become an entrepreneur? We suggest a safer path: go to college first.