Tuesday, July 6, 2010

The SubPrime-Like Government Push to Get Everyone a College Degree...

...is ruining a generation that has no idea how to work or find a job.  Even NYT gets it (partially), as this anecdotal story shows.

What NYT gets is that there are a lot of college graduates without jobs. What NYT doesn't get is that government is the cause.

The wholesale creation of degree factories, as a result of government sponsored programs, has diluted the value of a college education. 1. Because many more have them and 2. The quality of of knowledge by those who have graduated has declined dramatically.

On the demand side, the government manipulation of the economy has made it extremely risky for firms to take on new hires, as the firms don't know what the economy will bring, and they don't know what new regulations will be hoisted upon them and any new employees.

NYT very aptly titled its article: A New Generation, an Elusive American Dream. As I wrote recently, like the housing dream, "the college degree as the key to success dream" is dead.

There's going to be an entire generation of very disillusioned people coming out of colleges. They were promised the world, but they are getting a Big Fat nothing. Given that NYT sees it, you know it is starting.

If I were a recent college graduate, I would find myself a sales job. Selling vacuum cleaners, online world books, whatever. The one thing college students are never taught, even in marketing classes is solid marketing and sales techniques. In the college environment, sales skills are looked down upon.

They are looked down upon only because of ignorance in the college environment. As the economists Friedrich Hayek  and Ludwig von Mises taught us, not all information is ever given to one central planner. Information is diverse and spread across the planet. Sales is about disseminating specific types of knowledge to those who might find the information valuable. There are all kinds of people in sales, some good, some bad, but the best know how to find out who needs the information they have and they then know how to get the information to those who need it. College graduates are generally clueless about how to do this, and yet they have some very valuable information that they need to disseminate, i.e. information about themselves and their work skills.

Most students after years of brainwashing think that their skills will somehow be magically recognized and the path will be laid down for them, just as the path from pre-kindergarten to college senior was laid down. As Aerosmith might say, "Dream on." Life is a journey, not a graduate degree.

The better you know how to present yourself, whether it's looking for a date, or a job, the more opportunities will come before you. And sales is all about learning how to present yourself. You don't have to make a  career out of sales, but I would recommend a first job for a year in sales over an MBA any day.

And if you are good at sales, you will never have problems finding a job. The one thing companies are always in need of is solid sales people who know how to present their product to prospects.


  1. Sound advice. I have a son pursuing a degree in math and Mandarin. i tell him he should find sales work part-time or in the vacations: he prefers to shift boxes for minimum wage coz it's steady work. i am going to forward this article to him, see if he can see a little sense - i mean, he must be smarter than the good folks over at the NYT.

  2. These are excellent points. About 10 years ago I started saying that the college-educated would become the blue-collar workers of the 21st century.

    I am glad to hear you reccomending sales jobs. I have spent most of my professional career in 100% comission sales jobs and there is a serious shortage of people out there with good sales skills. Apart from union and state jobs, sales is the only field of endeavor that offers true job-security. Someone will always pay you to make them money.

    Also, your notion that college is being pushed the same way that sub-prime loans were pushed brings to mind a conversation I had with my wife and sister-in-law just yesterday while driving home from a visit with some old friends we hadn't seen in years.

    Now before I go into the details of this conversation, here's some quick background.

    I just moved back to my hometown of Columbus, Ohio 3 weeks ago. I have been away for several years and while I've been away, I have lived in a number of places. Columbus is a "new-economy" sort of town with lots of retail and insurance, as well as some finance and IT. There is very little manufacturing here. Most of the places I have been while away from here have been rust-belt towns, with the tourism-town of Pensacola, Florida thrown in for good measure.

    Now back to the conversation:

    The old friends we were visiting live in a far-north suburb that was actually farmland waiting to be developed by the then-burgeoning bubble-economy when my wife and I left town 12 years ago.

    While driving through the suburbs back towards the city, we passed an exit that was populated with no less than three degree-factory schools, two of which many people will know by name. Since it had been many years since we lived in a town that had this kind of school we took notice and immediately fell into a discussion of how these pseudo-schools have been yet another by-product of a bubble economy, and an unsustainable one at that with no real long-term future.

    Apart from technical or professional programs, the quality of education being offered at mainstream schools is bad enough as it is, but the graduates being turned out of these degree factories are far worse. And many of these graduates are non-traditional students, many of whom are working full-time and have a families to feed. They can't afford to pay for a worthless degree.

    I spent the last 5 years working as a headhunter in the manufacturing arena (I have recently left that job for obvious reasons) and I speak from experience when I say that a business degree (or worse, anything in the liberal arts) from even a reputable school offers a person virtually nothing in terms of increased desireability to a hiring authority in need of people even when times are good. As things get worse, these junk degrees mean even less.

    I really feel bad for the kids out there getting worthless degrees, but I feel even worse for the middle-aged folks with serious responsibilities getting who are being hosed by these degree factories.

    My wife and I wound up our conversation by deciding that as the bubble keeps deflating, these horrible pseudo-schools will thankfully go the way of the dodo when folks finally wake up to reality. And the quality of the schools that are left over will go up in accordance with the demands of the market.

  3. sales are not for everybody

  4. You can say that again, brother. Only the fortunate few, I guess.

  5. Selling is the most misunderstood occupation in the world. The average product, by the time it gets to market, is "sold" by salesmen 3-6 times.

    A salesman does 3 things--shows the features of the product/idea; then the benefits; and then asks for the sale. Salesmen are not born, but made, through learning. Those who dismiss sales do not realize that one is, in every situation in life, either "selling" or "purchasing."

    Og Mandino's two classics about "The Greatest Salesman" demonstrate clearly and concisely the above.

    Two people meet, one gets sold.

  6. I think this is more of a parent-driven bubble. these are the kids who listened to Mozart in the womb. They did extracurricular activities not because they were interested but to buff their college applications. There was huge pressure to be the smartest and get into the best schools. the schools responded with higher prices for premium colleges and creation of diploma mills for the rest.

  7. Learning to sell is a life skill. You need it to convince others to come around to your point of view in work, politics, religion, parenting, and many other important aspects of life.

    Selling is not telling. It is understanding how humans function.

  8. I would argue that a humanities or social science (except economics of course) degree from a state college is actually a hindrance in today's market. My wife has been looking for a job for about a year and recently a recruiter told her to remove her education from her resume since it could only hurt. And she has been working for 15 years.

    Another anecdote: I recently was recruited by a young woman for a contract position. On her linked in profile it showed that she had gone to University of New Hampshire for 6 years and majored in sociology. My opinion of her immediately sank. She was perfectly nice, but her degree in no way helped her work which consisted of looking at the programming languages that the job required, and then combing linked in for resumes of people that had those languages. She could just as easily have been doing what she did with just a high school diploma, if even that would be needed.

    I knew from looking at her education, that she probably went to New Hampshire and partied at her parent's expense for 6 years. Employers will know this when they see a humanities degree from a state school. They will also know that the person in question does not actually have any job skills or experience, and may possibly have a hostile attitude towards business in general.

  9. In high school I begged my parents to let me go to the vocational high school to learn how to fix cars. No son of theirs would do work like that. So I went to a "top" school and have wallowed in less than mediocre jobs ever since--even after a Master's degree. (Some one argue that being an airport director was not a "less than mediocre job" but considering how much I spent on college and grad school and how much I earned, yes it was less than mediocre.) I digress.

    It's time for me to put my money where my mouth is. I'm going to go back and learn how to weld or do plumbing or some other trade. Even as a "white collar worker" I always prefered to talk and hang with the tradesmen at work anyway. I reckon that I will be happy working with my hands and using my mind to solve real problems. I'll also be happy making more money than cubicle dwellers. Of course, they will look down on me for having dirty hands, but I'd rather have dirty hands an a balanced checkbook than to think I'm more important because my cubicle is 6x8 instead of 6x6.

    By the way, I can't belive that kid thinks it's a better idea not to work than to take the $40K a year job. Looks like he didn't learn much at Colgate except for an over-inflated sense of self-worth.

  10. I agree that this is parent-driven in part. Keeping up with the Jonses was never more expensive than it is now, but were it not for the easy-credit bubble we've been in, most middle-class parents would not be able to finance their kid's schooling the way they do now, and it would also be much more difficult, if not near impossible for kids to secure loans to finance school on their own.

    The rise in cost of a college eduation has greatly outpaced pricing increases in almost all other sectors of the American economy and it's little wonder as to why.

    Talk about one of the all-time great sales jobs ever:
    People have bought into the notion that you can't have a good life without a college degree. The real question is who is selling this idea?

    You can lay this problem squarely at the feet of the social engineers. Parents are accomplices, yes, but they are not the sole cause of the problem.

  11. From the horse's mouth...

    I attended a top 50 business school within the past 5 years. Between my dad and grandfather, they chucked out $80,000 to cover what my scholarship would not, so I could attend this Ivy League business school.

    To this day, I 100% REGRET having my parents overpay for my business degree. I could have EASILY gotten the same level of education -- and opportunity for jobs -- in my local hometown university.

    So if your kid starts giving you clap-trap about attending some overpriced university, DON'T GIVE IN!!! It isn't worth it.

    Secondly, about sales. I'm largely an introvert that prefers study and the slow life. After years of study and practice, I've been able to successfully run a six-figure small business, where I'm doing all the selling to prospects, as well as managing their experience at my business each day they're with me.

    My success rate is 70% to 80%, and my clients typically are with me longer than the contracted amount of time we agree upon.

    The secret to successfully selling anything is to first BELIEVE in the product/service you're selling. Be passionate! Then apply the sales techniques around the passion, and the rest will fall into place.

  12. the plain truth is that even if a college grad does earn more than a non-grad, the additional income will be used to pay off the college loans over many years. net net, the college grad is no better off and will probably be worse off.

  13. OG Mandino, "two people meet, one gets sold" is a recipe for short term gain long term famine. Two people meet both get sold is the goal for today and tomorrow!

  14. OG Mandino, "two people meet, one gets sold" is incorrect.

    "Two people meet, both get sold!"

    All value is subjective.

    With all sales transactions, both parties are "richer", have increased their wealth.

    The one who gives up his money is richer because he values the product MORE than his money.

    The one who gives up his product is richer because he values the money MORE than his product.

    BOTH, in their minds, have increased their wealth, and are richer.

  15. Degrees, like anything else, lose value when there is oversupply. I am no economist, but too many houses, too much money, too many degrees, it doesn't matter. Supply and demand, baby.

    Disclaimer: I have a finance undergrad and I'm getting my MBA for 10K (from an actual SCHOOL!), all paid in full by the US Taxpayer. Aside from the opportunity cost of not working my ROI is pretty much infinity. Thanks Navy!

  16. I agree that sales skills are valuable no matter what course your career takes but the value of a degree depends on the course of study. Spending four years to get a degree in history or English or philosophy is a waste of time and money. Just get a library card and go read. A degree in a hard science or technical field like engineering, computer science, medicine, will pay-off. Of course these are harder disciplines so they are not as popular. If you are interested in a degree in business one from state will teach you as much as the top business schools. I started at my community college to save money then transferred to a top university. The two years of high tuition I paid has paid off. Before college (1993) I made $16k annually. My first job out of college (1997) paid $40k. With hard work that has now grown to $91k ($140k with benefits). Without my degree there is no way I would have the job I do now.

  17. My best friend has a BA in Psychology and got her first job out of college in Sales. That lasted 2 years, then the company ended her position and closed the regional office (where she was the sole salesperson). She went to work for a client who was involved with several businesses, also as a sales person. That job lasted 2 years, and now she has been hired as a program coordinator for a local agency. The new position is like combining sales with case management duties. Lower pressure, better hours, less travel, higher base salary, but no commissions.

    The Psychology degree was part of the reason she got the first sales job - the rest of it was networking. She had met the company president while working as a waitress and he liked her personality, so when he found out she had graduated and was looking for work he offered her a position.

    I do not think I would be a good sales person, myself: I tend to look for what the customer actually needs, don't push extras just to pad the sales order, and don't have much in the way of personal ambition. I work in software implementation now, and my biggest gripe with our sales staff is that they try too hard to oversell the customer. I would rather implement 10 small customers who use our standard product suite than 1 big customer who requires massive customization.

  18. I sold books door to door for a summer in college, which landed me a co-op job for a manufacturing company, which in turn landed me another job in a rotational program to advance to management.

    It all started with sales. No one cared that I could wait tables, idiots do that. But to last an entire summer, working 80 hours a week knocking on strangers doors, not just anyone can accomplish that.

  19. Sales is unique in that it is business in its truest form. It is pure capitalism: a mutual exchange of goods, services or money where both parties perceive that they are getting something of value. And for that reason, anyone seeking to participate in our economic society (which is pretty much everyone) is well served by understanding the fundamentals of sales. All of us know someone who makes tons of money, and is maybe very well educated, but is always broke, getting ripped off or making bad business decisions. This is because neither Harvard Ph.Ds nor Director level jobs in corporate Generica are a substitute for an understanding of the true dynamics of buying and selling.

    Understanding the implications of this clarifies the whole greater topic. How many times have you lamented the price of something while buying it anyway? Are you aware that Warren Buffett WOULDN'T buy it, despite having about $20 billion more dollars in the bank than any of you? This is because he understands value and sales is about value. Capitalism is about value. Colleges and corporate jobs are about dollars, prices and < and >.

    Isn't this how most people look at the world: what is the cost and do I have more than that or less? If I have less, can I collect enough over time to have enough? And if I plan to do this, will the money I make at my job allow me to? If not will going to Harvard make me enough to? This is probably you. And the reason is that most of you only have experience in consumerism, not REAL value based exchanges. And this is a shame, because as I stated value based buying and selling is Capitalism. The "cost-meeting" that most of you do is the foundation of the perpetual-growth based model that Harvard economists swear by, but then can't understand our perpetual boom-bust cycles and recessions.

    Sales teaches you that sometimes cashflow beats big fiscal totals. Sales teaches you when quality beats quantity and vice versa. Sales teaches you to negotiate, maybe the greatest and rarest skill in the world to have working on your behalf. Sales teaches you that at ~$40K per year, Harvard is a horrible value because you could get 6 degrees from Ohio State for the same price and be infinitely more marketable. Sales further teaches you that even at that Ohio State is a ripoff because you can watch videos of every course offered at MIT online for FREE. In fact every single shred of information taught throughout the Ivy League can be found on Google in under 1 second for FREE. And its no more right or accurate coming from a Harvard grad than it is from Google. These are the lessons of sales, and clearly NOT things that Harvard or Yale will teach you. But they are things that will make or break you in the real world. Paying a lot of money in the hopes of making more at the end is a trap reserved for those ignorant to value based assessments. If I pay ~$40k, a year for Harvard and get a job making $80k, then the net gain is $40k. Meanwhile the guy who got a job in sales out of high school might make $50k for the 4 years I was at Harvard and always makes $50k more than the $0 he spent on college. A decade later he has made $500k. I have made $80k for 6 years, minus $200k in tuition and room and board for a total of $280k for the same decade. A sales person would say "hell no". Sheeple meanwhile focus on the part where they say "Harvard grads will make 60% more than their counterparts out of college". This is absolutely true in the example I gave, but who would you rather be after 10 years? Meanwhile the sales guy is living that much richer by NOT repeating the mistakes of the Harvard guy every time he buys a car, house, insurance, or household goods. Success is about what you NET not what you GROSS. Sales people understand this, "go to college" advocates don't. Do the math.

    Bill Gates left Harvard to go sell Windows. What more do you need to know...?

  20. I think people largely misunderstand the evolution of education. The problems began with the baby boomers that were a glutton on the economy by saturating it with degree'd types during prosperous times.

    The notion of a quality traditional education was about being educated and nothing more. The transition continued with the gen x'ers who were expected to go to college in order to get a job but not necessarily to become educated.

    This is when the decline in being educated began and students not caring about learning but simply becoming employable worsened and undergrad education in America became a big consumer fraud. The advent of online or what some are calling degree factories are one attempt by the market to solve these problems.

    This is the future, traditional education 4 yr brick & mortor only schools are dying. Quality is hard to find and this simply reveals what has always been the case: You get out of it what you put into it.

    An earnest education can be obtained anywhere but one must seek and thirst for education in the classical sense. Instead, we see generations simply viewing the diploma as a key and assume it means an education was obtained. It isn't so.

    People misunderstand that what education really is. People need to be educated but a college education does not mean this. And is not or never should be a driver to employment. A policy that guarantees a college education no matter how dumb you are is stupid itself. The government promising financing no matter the cost will only exacerbate the problem.

  21. People do not get what colleges and universities are.

    College and universities confer two kinds of degrees at four levels: associate, bachelors, masters and doctorate.

    The majority of degrees offered are theory degrees, which mean that what gets learned does not translate directly to work, except in academia itself.

    The minority of degrees offered are technology degrees. Technology means the study of techniques, of methods. Such degrees including engineering, accounting, performing arts.

    Technology degrees at all levels translate more directly to work. Those who earn such degrees can expect to get paid more money because they become qualified for exact jobs.

    For technology degrees, the more levels of degrees earned, typically, the higher the pay someone can expect to get for their work.

    Engineering or accounting jobs can be had by earning four-year degrees.

    Unless someone plans to work as a medical doctor, a lawyer, an engineer, an accountant, all of which require technology degrees; or as a college professor, which requires the highest attainement of a theory degree, no good cause exists to spend money on a college or university education.

    Many compete for the few jobs to become a high-paid college professor. To gain a near-guaranteed high-paying college professor job, you must earn your Ph.D. at one of these schools:

    Harvard, MIT, Yale, Columbia, Princeton, Penn, Chicago, Northwestern, Stanford, UC Berkeley, Caltech, UCLA, UCSD, Wisconsin, U. of Michigan, Carnegie Mellon, Cornell, NYU, Brown, Johns Hopkins, Duke.

    Earning a Ph.D. from any other university is a crazy gamble of high-risk and low payoff.

    Contrary to false beliefs, too many lawyers exist who have earned degrees from so-so law schools.

    Thus, most practicing lawyers, while charging a high rate for work, lack enough billable hours to have a high income.

    It is state licensure of the various states for the practice of law that inflates the hourly wage of lawyers and not that lawyers have law degrees.

    The list of universities above, more or less, are the same ones worthy of attending to earn a law degree, excluding a few, e.g., UCSD, which does not have a law school.

    Medical doctor jobs require significant expense in education. The more specialized one becomes, the higher the pay someone can expect.

    Colleges and Universities are churches whose clergy preach a creationism (Big Bang + Darwinism) based on naturalism metaphysics (no God is needed to explain anything).

    Becoming a member of one of the many churches is what keeps its clergy -- employed college professors -- in jobs. It is what keeps them paid.

  22. If you really want to get depressed about college degrees vs. jobs, google our congressmen and pundits to see what they studied and where. For example, Tom Friedman of the NYT has a degree in Mediterranean Studies. What the hell is that. Barbara Boxer a history degree. Carol Browner in charge of global warming for Obama has an English degree. None have learned enough to be competent at what they're doing

  23. I have no degree and I started in sales at 21. I am now 27 and I am making over $90K/yr. This has taken a lot of hard work... I am especially glad that I didn't waste my time on a degree when I see my friends still in school and/or unemployed.

  24. Paul is dead on. If you want to go to college to just generally open your mind to new ideas, then by all means do so. But if you are going just to get a degree that will assure you a job, then you are losing right out of the starting blocks. The reason is because, as Paul explains, the current system will implode in your lifetime. So why go into debt today to participate.

    All the information in the world is availalbe for free off the internet. So all colleges do for anyone is provide them a degree. That degree says that you have been exposed to some of the information pertaining to your discipline and demonstrated a general understanding of it. That's it! The information you get is not proprietary, it is public and universally available. The degree stating that you are familiar with it is insignificant, because you can familiarize yourself with any topic in the world by searching it on Google. Americans pump tens of billions of dollars into universities each year and the government loans billions of dollars for education each year, and its all to attain something that's ENTIRELY VALUELESS for the most part.

    Next time you hear some Harvard economist talk about why he can't understand the current recession, think about the hundreds of billions of dollars going to colleges for something of no value and the amount of time and money people spend paying off the debt for it. College educated economists always fail to see it this way. To a salesman its crystal clear. That's the lesson...

  25. at ~$40K per year, Harvard is a horrible value because you could get 6 degrees from Ohio State for the same price and be infinitely more marketable. Sales further teaches you that even at that Ohio State is a ripoff because you can watch videos of every course offered at MIT online for FREE.

    What a ridiculous oversimplification. My single undergrad engineering degree from MIT got me a great job. My employer doesn't recruit bachelor's grads from second-tier schools like Ohio State, so to have a shot at working here I would've needed to sink years into a Ph.D.

    Those MIT tuition dollars bought me small group tutorials from dedicated graduate teaching assistants who are among the best engineers in the world. And I learned even more by working together with my dorm-mates during a lot of late nights doing homework and labs.

    If someone is smart enough to work through an MIT degree program on their own online, he's probably smart enough to get rich some other way. For the rest of us, it's certainly not unreasonable to get a marketable degree (even if it's not engineering) from a well-regarded school (even if it's not MIT).

    I agree that I've never learned a damn thing about how to sell, though.

  26. Some more comments also with respect to the NYT article:

    The NYT makes the point that these current millenial grads are better educated than previous generations.
    This article points out that the level has declined instead, and it is correct, not the NYT.

    NYT also shows the disdain, someone like Scott has for manufacturing jobs, and not just because the lack an obvious future.
    One of the comments above points out, that this is because of an inflated sense of self-worth.
    Maybe, but the real cause is monetary INFLATION (yet again), also a product of our government.

    It is that inflation which caused the disastrous overweighting of anything finance related in this country, both as to its share of the economy, its share of total corporate profits, and most important in this context, its share of what is seen by many as the job career to aspire to (becaus of the remuneartion and general sexiness of the jobs therein).

    Less than 25 years ago, when people would talk disdainfully about the too-high executive salaries, it was industrial companies' management salaries and bonuses, that were the object of scorn.
    Remember Armand Hammer being pilloried for being the highest paid CEO in the US at Oxy, with a then leading 5+ million salary?
    How quaint that sounds!

    This vampire industry has been leading a generation of students astray in the type of job and career they were aspiring too.
    Who wants to be an engineer of real natural scientist (chemistry, bio, etc) any more, with the low salaries masters and phd grads get these days, and the ever declining jobs base?
    Even true for computer sciences etc, same trajectory.

    Finally, the optimistic attitude mentioned in the NYT article in these 18-29 year olds, is at least as much a product of seeing everything go just on way in the bubble years of these kids' youth, as it is due to anything they received from doting parents.
    They see that bubble development as the normal, and thus perceive anything else just a transitory phase that will go back to normal.
    Of course it will not.
    Once that realization sinks in, then for many, TSWHTFan.

  27. The sky is falling!
    The sky is falling!

  28. Just how long do you think the national debt is going to keep growing, Chicken Little?
    This is the problem with crony capitalism masquerading as a free market: the state decides standards of education, while the corporate execs get rich on corporate welfare-- and in turn use these subsidies to lobby for more.
    Has anyone noticed that that Consttution only permits Congress to lay and collect taxes for the GENERAL WELFARE-- NOT the special interest? However that's exactly what'a happening, i.e. special interests are all posing communist arguments why "what's good for my corporation, is good for America."
    In a pig's eye, it is! However that's the imperial judgment: just do as you're told and pay your taxes, and if you work REALLY hard then you can retire rich and have pie in the sky.
    People are so politically illiterate that they're like the three blind men touching the elephant in the room-- they're not afaid to mention it, because they can't SEE it!