Not all STEM subjects are particularly valuable in the labor market. Biology is one of the largest STEM areas, but pay levels at the BA/BS level tend to be low (perhaps because of the large supply of biology BA/BS graduates).
3 Likes
Highly selective colleges show a large early career earnings difference by major, with a similar type of pattern to not as selective colleges. If anything, there may be a more dramatic difference in typical earnings between majors at highly selective colleges than less selective colleges. For example, College Scorecard shows the following increase/decrease over median earnings (for the particular college) by major, without graduate degrees. While there are many limitations with College Scorecard, both Penn and Drexel show the same type of pattern, with the same majors being associated with higher and lower earnings. However, the gap between the highest earning majors and lowest earning majors seems greater at Penn and in general at more selective, private colleges than at less selective colleges.
Penn
Computer Science (CIS) – 170% Increased Earnings (highest earning major)
Computer Science (general) – 60% Increased Earnings
Economics – 40% Increased Earnings
Chem Eng – 40% Increased Earnings
Mech Eng – 10% Increased Earnings
Nursing – 5% Increased Earnings
…
Biology – 30% Decreased Earnings
Psychology – 40% Decreased Earnings
Classics – 50% Decreased Earnings
English – 50% Decreased Earnings
Fine Arts – 60% Decreased Earnings
Drexel
Computer Engineering – 40% Increased Earnings (highest earning major)
Computer Science – 30% Increased Earnings
Chem Eng – 20% Increased Earnings
Mech Eng – 15% Increased Earnings
Economics – 10% Increased Earnings
Nursing – 10% Increased Earnings
…
Biology – 10% Decreased Earnings
Philosophy – 20% Decreased Earnings
Psychology – 30% Decreased Earnings
Leisure & Recreation – 30% Decreased Earnings
Arts – 40% Decreased Earnings
Of course Penn grads in a particular major tend to earn more than Drexel grads. As I noted earlier, looking at such an average doesn’t control for differences in typical students at the 2 colleges. It’s not comparing students with similar " brain power and work ethic" at the 2 schools. It’s instead comparing high achieving and motivated students attending Penn vs typically less high achieving and less motivated students at Drexel. When controlling for such factors, studies tend to find much smaller differences in typical earnings. For example, the recent Chetty study found little difference in average earnings between students who were accepted from waitlist to Ivy+ and attended vs rejected from waitlist to Ivy+, then attended public. They did, however, find a significant difference in portion that earned $700k+ at age 30 (little difference prior to age 30).
2 Likes
Would you kindly expand on this? I can’t find it in any of his papers. I’m sure it’s an oversight on my part though. Thanks!
Do they? I’m not sure how accurate that is the in the US, but that certainly isn’t the case with employers here in Canada. They tend to be a lazy and unimaginative lot with every job listing demanding 2-5 years of relevant work experience meaning they’d prefer their competitors take on the time and expense of training new hires and then poach them. Of course this creates a problem when that’s the modus operandi of the majority of employers. No one wants to hire and train entry level employees. As a result there’s been an explosion of demand from students for co-op programs which tend to lend themselves best to professional and STEM majors though “experiential learning” opportunities are now starting to be offered more frequently in the social sciences and the humanities too.
I understand increasing demand from students for internships/co-ops is in large part responsible for the increased in selectivity of Northeastern.
I think it is fair to say co-ops (full-time paid positions, often multi-term, alternating with full-time school terms) remain a fairly niche path in the US among the sorts of students who attend relatively selective four-year colleges. Including because they often (although not always) delay graduation. Indeed, the fact this is such a large part of Northeastern’s branding is indicative of the fact it is not such a big deal at most other selective US colleges (although there are others known for coops, like Drexel and RIT).
So I can’t speak to Canada, but I think in the US, many employers still expect to have to do a lot of training of entry-level college graduates.
Internships, on the other hand, have arguably become at least a more common path to a first job after graduation, but there is nothing in particular stopping a HASS major from doing some interesting internships, and at least many selective US employers are willing to take on at least some HASS majors (with the other attributes they are seeking) as interns. And even then, plenty of US employers are going to hire people straight out of college who did not intern with them.
I was referring to the comments about a difference in “top 1%” earnings. I listed a figure based on current top 1% individual earnings in US, although skimming through the paper again, I see that they are referring to top 1% earnings among individuals who are age 33, rather than overall top 1%. Among age 33, top 1% is currently ~$350k. After attempting to control for individual student differences, they found similar average earnings, but more likely to be among the minority with top 1% earnings at age 33. Specific quotes are below
we find very small impacts of attending an Ivy-Plus on average earnings, consistent with the findings of Dale and Krueger (2002)
students admitted from the waitlist are 5 percentage points more likely to reach the top 1% at age 33 than those who are rejected
1 Like
Another interesting angle is what qualifies as a “selective” college and where the cutoff is in terms of selectivity and diminished job outcomes. I think “selective” usually refers to a college with 25-30% or lower admit rate. But this doesn’t always tell the whole story. Our state flagship, University of Washington, has an excellent reputation and has generally hovered around the 50% admit range. In fact, most kids admitted to UW have fairly high grades and scores and it can no longer be considered a safety school for many/most students–and job outcomes are strong.
When it comes to private schools, my D attended Santa Clara and they have excellent job outcomes even for non-STEM (D was an English/Comm double major and has a well-paying first job in her field of interest). Again, their admit rate has been right around 50%. I just received a school newsletter that said that SCU was just ranked number 8 among 100 colleges whose graduates go on to earn the most money (I think it was a Payscale study, but not 100% sure).
UW and SCU might be outliers, but I wonder if other schools that are less selective are still achieving strong outcomes, even if perhaps not as strong as Ivy+ grads over time. Obviously salary may not be the most important metric for many, but I think it’s clearly one key way that families are gauging the value of a degree from a given college.
In any case, clearly access to internships (or the coop model) seem to be a critical component to employment and while a college’s reputation might be a factor, I think this has a lot to do with the drive and talent of the student. While STEM fields get a lot of attention, companies need marketing, public relations, advertising, HR, etc., and humanities and social science majors can earn good money in these fields.
Perhaps the best combo is something in the liberal arts (be it biology, history, English, physics, philosophy, etc.), and something more “practical” (finance, business, marketing, communications, engineering, etc.). You learn to think broadly, and develop strong writing and research skills and have more concrete job skills that an employer can build on.
Thanks!
1 Like
That makes an incorrect assumption about engineering. Every ABET accredited program is required to have non-technical broad education classes. English, arts, humanities, ethnic studies and social sciences, accounted for 25% of my son’s mechanical engineering curriculum. In some programs that percentage is even higher.
4 Likes
I note admit rates are not really a complete guide to selectivity because they are as much a function of who applies as who is accepted. For various reasons some college have reasonably high academic standards but don’t get many applications from people who do not meet those standards. So they have a relatively high acceptance rate, despite having reasonably high academic standards.
Quite a few public universities fit into this category–they have reasonably transparent standards (or at least for in-state, and they are mostly in-state), most potential applicants know if they meet them or not, and if they don’t meet them they just don’t apply. But privates can be like that too, not least Jesuit colleges like Santa Clara, a variety of LACs, and so on.
Indeed when you think about it, a really low admit rate is the actual puzzle. That implies either very little clarity about admissions standards, or a lot of people applying despite not really having a realistic chance, or possibly some of both.
1 Like
I told my daughter that any college can be a “right fit” with the right attitude. Kids are there to gain marketable job skills, so it’s going to be more about major than the school brand name. A marketable major at a good accredited school will fulfill it’s purpose regardless of school. An unmarketable major will have trouble finding gainful work no matter where you go. So NO it’s not worth going into tons of debt for a college brand name.
2 Likes
Learning really doesn’t have a price tag, per se: it is valuable regardless of whether it is utilized in the workplace.
Knowledge is – if not power – at least helpful and enriching.
2 Likes
At that point though I would view it as a luxury and not an investment.
Note: I’m using that in the classic way where a financial return is expected, not simply as a synonym for spending.
2 Likes
It’s hard to put a price tag on the qualitative aspects of life. And many people, while not in a position directly related to their degrees, still use their degrees and may attribute some or much of their success to said degrees.
In my own life, my degrees have been useful (probably) in that while they did not land me my current job, they have certainly helped me to flourish in it:
- While I don’t work for a media outlet, I use my Journalism degree every day: composing emails, messaging, etc.
- While I am not a C-level employee or owner, I use (at least) the Marketing, Finance, and Org Behavior knowledge from my MBA to sell to and advise clients and to provide organizational advice when it can be helpful.
1 Like
I’m not denying that. There are many things that enrich us. While we would classify them as worthwhile expenditures, we wouldn’t call them investments. That’s why a college ROI discussion is so difficult and why I broke it into two pieces, money in vs money out, which is classical ROI, plus experience.
1 Like
I personally put a lot of value in the nonfinancial benefits of a good college education and experience, but I nonetheless agree with you that spending more to enhance such things is a type of “luxury good” spending in the standard economic sense:
I note, though, as explained there the usual contrast is “necessity goods”. And frankly, usually a lot of what college-educated professionals spend their money on is some form of luxury good, and only a fraction is a true necessity good.
Investments as usually defined in economics would be in contrast to consumption goods, and investment goods are what are normally known as capital goods, where the idea is they will be used to make consumption goods in the future. And in that sense, you can “invest” in the future production of luxury goods or necessity goods.
This may all sound hypertechnical but I think it sort of gets to the crux of the issue. Some of the nonfinancial benefits of a college education/experience are immediate, and some are potentially spread out into the future. And while none of that may count as a necessity, to the extent people are interested in higher marginal financial returns to their college “investment”, very often in practice they will end up spending most if not all of those higher marginal returns on other luxury goods.
So to me, all this comes down to a question of what sorts of luxuries you really prefer. Some people may prefer to spend more on educational experiences and the resulting long-term benefits. Some people may prefer to spend more on houses, or cars, or vacations, or cocktails, and so on.
But in that sense, the decision to first save money on college expenses, so you can then spend more in the future on houses/cars/etc., is still about luxuries. It is just a choice among luxuries. And that is fine.
2 Likes
Those things are intangible assets. More importantly though, there is no way to know in advance whether or not they will materialize.
I think this is most important when leverage enters the discussion. When someone has saved enough to cover the price, they can decide how they choose to spend it. It’s hard though to recommend debt when the weight of that is known and any added benefit is unrevealed, or worse yet, non-existent.
1 Like
Absolutely. I always think any “luxury” spending on colleges has to be comfortably affordable, which to me means either no debt, or at least very little.
1 Like
There are plenty of successful young people right now with much more than “very little” debt. They- and their parents of course- are financially savvy, understand how to read a repayment chart, and are prepared for a bare-bones lifestyle in the early years while they whack away at their loans.
This is really much more nuanced than your post suggests.
1 Like