The answer is that we're farther away from full employment than we think we are in the US. We think we're off by some 5% rounding error we can attribute to fric

The answer is that we're farther away from full employment than we think we are in the US. We think we're off by some 5% rounding error we can attribute to friction or economic cycles, but we're actually off by 20-25% (include: discouraged workers, our gigantic prison population, et al). For most people, extended schooling (for those whose parents can afford it) is a way to replace the marginal, vulnerable years with something that doesn't involve the stigma of being unemployed. For science PhD programs, there's even (meager) pay. Why are there so many law students who don't give a shit about the law? MBA-school students who just want to network and drink but don't care about business fundamentals? For these same reason as there are those surplus, academically unemployable PhDs. For most people, the alternative isn't "$800k seed round". It's no job or non-college job or some other situation that makes graduate school a better option. Of course, this floods graduate programs with people who shouldn't be there, often don't care to be there, and clog up the job market for everyone else with that degree.