In my garage sit various parts of a white 1988 Mercedes 560 SL. A brown Toyota runs a red light and in that fraction of a second this collection of items lost all value to me. Now they sit gathering dust as they are shuffled around to make room for more valuable items. Meanwhile somewhere in the world, in a garage are parts for my latest project car, holding no more value to that amateur mechanic than my Mercedes parts collection to me. Ebay became a billion dollar company able to create value from this situation.
Damon Clark and Paco Martorell found that for students with equivalent test scores, achieving the designation of a diploma holder held no more earning power than those that did not earn the diploma. Essentially earning the high school diploma designation for the class of 2016 holds no value in our modern society. Why has the education establishment allowed this to happen?
Let us return to Economics 101 and “The Problem of Social Cost” that is: which action produces the least harm to the value of conflicting entities. The classic example is land use, grow corn or graze cattle? Cattle wander and destroy crops. The least harm solution is to build a fence. The question becomes who pays for the fence? The farmer or the rancher? Representative government makes the decision by enacting laws to moderate this conflict. As an indirect result it is government who determines which of these two activities has more value.
Government’s preferred method of inducing institutional change is regulation. Statutory enactments influence the value of pursuing a particular action. Florida mandated certain test requirements and the grading of schools. The achievement standard changed from completing the course requirements at a particular school to a score on a test and the percentage of students who graduated. Schools will now do almost anything to ensure a student gets a diploma. With graduation rates approaching 90% and flat test scores the diploma has decreased in value.
The student’s risk of failure has been removed from a teacher’s professional judgement and transferred to the documentation of the external standards. Students need only to demonstrate to any certifying agent achievement of the standard, there is no need to follow the outline of the professional teacher. If you fail, take the course again using this company’s computer program. The student’s investment has been transferred now from the school to the certifying authority.
The postgraduate payoff of investing 4 years in high school now comes from various programs. Success on the athletic field, achieving first chair in the orchestra or being elected president of the student government association are more valued by organizations. Independent organizations now provide the validity of learning for a price.
Very few students are admitted to a first tier college undergraduate program without the blessing of a corporate education partner. Judson and Hobson describe the Advance Placement program offered by schools doubling in the last 10 years and the number of students taking AP exams increased by 500%. American corporate structures have found a way of profiting off the diminishing value of a diploma thus steering public money away from the community school. My high school has spent over a quarter million dollars on outside agencies to certify various achievement of our students. That money could pay the salary of 4 professional teachers.

Damon Clark and Paco Martorell (April 2014) The Signaling Value of a High School Diploma
Journal of Political Economy Vol. 122, No. 2, pp. 282-318

Judson, E., & Hobson, A. (2015). Growth and achievement trends of advanced placement (AP) exams in american high schools. American Secondary Education, 43(2), pp. 59-76.