Updated Jul 2
There are different kinds of inflation and deflation involved.
Schools may engage in grade inflation to increase the number of people receiving high school qualifications.
This, in turn, deflates the value of those high school qualifications.
You could have a very intelligent, hard-working, highly literate high school student. But their classmate can barely read, can’t follow instructions, and has attitude/behavioural problems. And they both receive the same piece of paper, making it impossible to distinguish them.
So employers inflate credential requirements.
To show that you are that first person, you need to go further, and pursue higher education, and get a fancier piece of paper.
This also inflates the dollar cost that you must pay in order to signal even basic competence.
This incentivises going to university, so numbers of university graduates have also inflated over time.
More degrees in the system deflates the value of each individual degree. You have more competitors when applying for jobs.
There can be further inflation, when an employer has a stack of applications from people with bachelor’s degrees. So now they raise the bar and want a master’s.
More inflation ensues, with the education time and dollar cost for you to get that even fancier piece of paper.
Also, degrees aren’t all equal. A job listing may be very specific about the field that the degree needs to be in. Some might list a range of possibilities, and some might just say, “a science degree”.
A few job listings might just require, “a degree” and be open about the field. This is back to the issue of distinguishing yourself from the barely literate, poorly-behaved high school graduates. However, this openness will inflate the number of competing applicants. Thereby deflating the value of an individual degree in a random field.
I would expect that some arts, literature, history, women’s studies, etc degrees have relatively poor economic prospects.
Some fields may be cyclic in terms of supply and demand. Maybe you tell people that there is a shortage of certain degrees and workers (“If you want to be in demand, here is what to study”). Then, a large number of people take that advice, resulting in an oversupply a few years later, deflating the value of those degrees back down.
Lastly, the value isn’t just about average incomes.
One point is binary. If an employer requires a degree, then people lacking one don’t even get into the competition pool. Their CV will be filtered out by a computer. So it isn’t only the size of your paycheque, but maybe whether you are employed at all.
Plus, it includes working conditions, both physical and interpersonal.
A degree can get you into nice, calm, air-conditioned office, with other people who had the basic competence and self-control to get through the university filter.
Lacking a degree can religate you to much worse physical environments, surrounded by almost feral people (coworkers, the general public, etc).