Wage Gap Between B.S. and Master's Degree for Engineering

sakky · December 30, 2008, 5:51pm

I am just using the HBS MBA as a clear and egregious example of thousands of people leaving presumably lucrative jobs and taking on quite burdensome debt in order to get their degrees.

But to your point, I would still actually disagree. There are clear cases where people can and do quit their jobs and enter debt to get engineering grad degrees. Heck, I can think of quite a few at MIT who did this.

As for why or how this works, the key seems to be that they never intended to really go back to get engineering jobs, even after getting their engineering grad degrees. Instead, they were really looking for jobs that were more tech+management or tech+finance roles. For example, I know one guy who quit his job to get his MIT engineering master’s and then joined a venture capital firm where he can make 10x what he used to make as an engineer. I know another guy who founded a successful startup firm after graduating. I think we can all agree that they’re a whole lot better than if they had stayed at their employer and gotten them to pay for their degrees.

{Now, one might wonder why these people didn’t just get their MBA’s instead, whether at MIT or elsewhere, and the most common reason is that they didn’t get in. The top MBA programs want a lot of work experience, and a lot of people don’t have that but still want to advance their careers anyway.}

But even if it doesn’t work out, at least you give yourself the chance. For example, I know one woman who finished at MIT and then decided to go back to her old employer. People even asked her, if she was just going to go back, why didn’t she just stay working and go part-time at some other school local to her employer and get her employer to pay for it? Her reply was that, yes, financially she would have been better off. But she wanted to see all of the other job opportunities that MIT could offer her, and now she’s seen them and she decided that she would rather go back to her old employer. Yes, it was costly, but at least now she knows, and so she can go back with no regrets. That’s a lot better than living the rest of your life wondering ‘what if?’

The point simply is that it gets to a matter of personal ambition. I have always said that it makes perfect sense for some people to just get their employers to pay for everything. What I am saying is that other people are indeed best served by quitting and going back to school.

Sakky, when I was in elementary school, my mom (who’s a CHE) when back to school to get a masters. Her company payed for her, but since she was working full time, it took her quiet a while to finish.

Of course, this was many years ago, but I think it still works pretty much the same. from my understanding, the tuition they payed was like a benefit, just like health insurance or a 401K. They did it to attract their employees. Also, since it takes a while to get the degree if you work full time, the employee will have been at the company for a while anyways by the time they graduate.

Many companies have realized that their employees are their most precious asset, and will make a much bigger contribution if they are happy than if they are not. An employee who wants to leave but can’t because he would have to repay a loan is certainly not going to be a happy employee. Given the nature of engineering, it would often be the company who looses out because that employee surley won’t give his best work. For example, a design enigneer that is capable of producing very innovative work could just produce enough medicore work to keep his job. This could potentially cause a company to loose mega bucks, and would kill organizations who are the leaders in their areas.

Well, if employees really are the most precious asset of their employers, then that just begs the question: why not just pay them more? Since this is an engineering forum, this gets back to what I said before: if engineers really are such valued assets, then why don’t they get paid more, i.e. as much as the managers get paid? I guess that means that the engineers aren’t really that precious.

But anyway that’s a side issue. To the main point, I am not disputing the general idea that companies do want to invest in their employees education…if they stay. But why would you want to invest in somebody who isn’t going to stay?

Such a person wouldn’t even sign up for that loan in the first place, because he would know that he would have to repay it later because he doesn’t intend to stay. So this is a nonexistent problem.

In fact, this is precisely why my screening idea is so powerful. The only people who would sign up for the loans are precisely the people who intend to stay, because they know they will be around long enough to have their loans paid back. Those people who choose not to take the loans are either not really interested in advancing their education or who don’t intend to stay. Either way, it’s an important tool that the employer can use to ascertain the motivation of each employee.

aibarr · December 30, 2008, 5:59pm

Well, that’s fine, if you’re even remotely interested in working in finance. Personally, and I know a lot of people here in the engineering forum feel the same, if I had to deal with business and finance all day, I’d just as soon shove one of these sample bolts that I keep on my desk directly through my temple and be done with it all.

If you define “better” by “more income” then I agree with you. I define “better” by “happier, and still able to pay the bills,” and so I’m not sure without talking to each of those folks and seeing whether or not it was individually worth it for them. I went for my masters so that I could work autonomously on complex and socially worthwhile projects. I think if you define “better” how you define it, then your path is best, but if you define “better” how I define it, then it might not be the best choice.

carnelian · December 30, 2008, 6:06pm

Sakky, you are starting to make bigger and wilder leaps each time you post an “addendum” to your argument.

I also think that you are forgetting that employment is a give and take relationship. The employee contributes to the company, and helps it make money. In turn, the business “rewards” the employee with a salary. To attract better employee’s, they offer better benefits. Not everything is an investment; some costs are expenses that a business pays to attract good employees. I dont think that a business gets a return on health insurance or 401K plans, yet they are essential to attracting good employees. Similarly, a business may loose some employees whose education they payed for, yet for the duration of employement they had a good employee.

It’s obviously working to some extent because otherwise employers would quickly catch on, and it would be something totally unheard of. And I dont think that’s the case.

sakky · December 30, 2008, 7:49pm

Like I said, my examples are hardly restricted to just finance. You want to invent something and start your own company? Not easy to do that when you’re already working for one, especially because they may attempt to assert complete intellectual property (IP) ownership over anything that you may invent while you’re working for them, even if you don’t actually use company resources or company time to create your invention. {This is how MGA recently lost its case against Mattel: the inventor of the Bratz dolls was working for Mattel at the time of his invention, and so the courts have ruled that Mattel owns the rights to Bratz.} Incidentally, this is why so much entrepreneurship happens within the university environment, and in fact most (smart) universities will encourage their people to start their own firms, even offering university-generated IP through generous licensing terms, which is a far cry from what most companies will offer.

No, I define ‘better’ as a subjective term: it is doing what it is that you like to do, regardless of what they may pay. For example, if you know that you don’t actually like your employer, you probably don’t want to sign any binding contract with that employer.

I know a girl who worked in investment banking for several years and was offered full sponsorship to go to HBS. They would have paid for her tuition, gave her a stipend, the whole works. But she would have had to agree to go back to work for them. She declined, for not only did she not really like her bank, she decided she didn’t really like the investment banking industry as a whole. She’s going to work for a nonprofit. She took a major hit to her income. But she doesn’t care. She’s going to pursue success on her terms, which to her, no longer means money. {Granted, the fact that she banked a boatload of money from her former job probably makes this choice easier.}

The point simply is, I define success no in terms of money, but as doing what you want to do. For some engineers, that is indeed staying and working for one company that they like. For other engineers, it can mean starting your own company. It can mean getting a job at a different company that you enjoy, even if they don’t pay the most. {I.e. I know some engineers who turned down lucrative offers at other companies to take lower-paying jobs at Apple.}

The point is, you have to do what you want to do, and for many people, that means not being bound to their current employer. Let’s be honest. Many (probably most) don’t actually enjoy working for their current employer. Heck, aibarr, you had this experience yourself with your first employer.

Uh, bigger and wilder leaps? I hardly think it is a wild leap to imagine people milking their employers for free training and education, only to have them jump to a competitor afterwards. Is it really surprising to anybody that people will do this? Every employee wants free training. Every company wants somebody else to pay to train their employees. This is a wild leap of the imagination?

Nor do I think it is a wild leap to think that some people will quit their jobs to go back to school. Heck, it is not even a “leap”: it is reality, I see these people every day. They are hardly figments of my imagination.

There’s a big and quite simple difference between other employee benefits (like retirement and health bennies) and a training/education benefit. The payouts and the services provided all occur simultaneously. Even 401k’s do this: for if an employee leaves, he still takes his 401k with him. Sure, the employee can’t actually access the 401k until he retires, but he still builds up his 401k immediately and at the same time as the employer pays in. Hence, the time scale of the benefits and payouts are aligned.

But training is different. The benefits and payouts are chronologically misaligned. Companies pay for training now with the goal of reaping benefits later, after the training is completed. But that actually requires that the employee stay after the training is completed. What if the employee leaves right after the training is done? Then that was training dollars that were thrown right down the toilet.

Put another way, would any company invest in any long-term R&D project knowing that that project could just be snatched away and granted to some other company? I don’t think so. But that’s what we’re talking about here.

Hey, don’t get me wrong. I freely concede that there are a lot of stupid companies out there. The notion of providing your employees with a free education without trying to bind them to stay is hardly the most stupid practice I’ve seen in the world of business. Heck, exhibit #1 would be the business model of the finance industry in the last 6 years: egregiously overpaid bankers wheeling and dealing trillions of dollars in toxic securities to stupid investors, picking up giant fees and bonuses each step along the way. The shareholders of the banks all got screwed (i.e. look at Lehman shareholders), the entire world’s financial system got screwed, the taxpayers got screwed, but the bankers themselves don’t care. Everybody else is relegated to the poorhouse, but they don’t care. They got theirs and that’s all that matters to them.

So, sure, compared to that, what we are talking about is obviously small beer. But it just shows that foolish business practices can proliferate and linger for very long periods of time. Don’t be fooled by the economists’ models of perfect equilibrium - the world is never in perfect equilibrium.

Besides, I hardly see how my system is so objectionable anyway. Those employees who actually intend to stay are still going to get the free training. Hence, you can still offer the training benefit to attract employees. You just won’t attract those employees who are just looking for a free hit-and-run lunch, but you shouldn’t want to attract those people anyway.

sakky · December 30, 2008, 10:02pm

Let me summarize my position on what has evidently turned out to be quite the boondoggle:

*Should you get your employer to pay for your graduate degree on a part-time basis?

I think this question has actually been conflated with the related question of where you can/should get your graduate degree, for the truth of the matter is, many of the top engineering schools don’t really offer graduate programs on a part-time basis. For example, MIT offers part-time grad programs on only a highly restricted basis to a few certain companies who have made special arrangements with MIT. Caltech, similarly, allows part-time studying via only a highly restricted basis and only with certain employers. The upshot is that, unless you happen to work for one of these rare companies, then if you want to undergo graduate studies at MIT or Caltech, you basically have to quit your job because you have to be a full-time student.

In other words, the real-world choice that many people face if they want to get a grad degree is to either attend a local, part-time, probably low-ranked engineering program while keeping your job and having your employer pay the bills, or to quit your job to attend a high-ranked full-time program. To that, I would say that there is no one right answer for everybody. Everybody has to decide what is best for them.

That’s why I never said that I don’t think that everybody should have their employer pay for their part-time degree. Nor did I ever say that everybody should quit their job and study full-time. It all depends on what your career goals are, and which engineering programs you can get into. However, it has been asserted by some people here that everybody should do one or another. I cannot agree with that.

*But if you can get your employer to pay for a degree at a top school, shouldn’t you always do that?

The answer is still no. Much of that depends on whether you will be bound to your employer, and whether you mind being bound. Some people really enjoy their current employer and hence don’t mind being bound to them because they would have returned anyway. But some people don’t like their employer, and for them the freedom to be able to explore other opportunities is vital.

Now, sure, I agree that, in theory, you could still work for an employer you don’t really like, just to get them to pay for everything, and then pay off your bound contract if you decide to jump afterwards. However, a number of serious logistical issues come into play, the most important being the sheer longevity of that strategy. Doing this presumably means that you’re going to take a long time to finish your degree - obviously far longer than if you were to study full-time. A 1-2 year full-time master’s degree might easily take 4-6 years if completed part-time. Sure, your employer might be paying for that part-time degree, but I would say that spending the next 4-6 years working for an employer you don’t really like would be quite painful. We all have a limited amount of time before we shuffle off this mortal coil, and working for that many years for somebody you don’t actually like would be excruciating. At least for me.

But granted, maybe some other people don’t see this as a problem.

*Yeah, but what if I can get my employer to sponsor my full-time degree, and then just walk away from them after they’ve paid for everything, even if that means I have to pay them back?

Ok, sure, if you can find the few rare companies who are still willing to do that and you can also procure the large lump sum of cash necessary to pay them back. Again, remember, you probably won’t be able to borrow that sum through student loans because you will have already graduated by the time you need to pay back your former employer. But if you can somehow finagle that cash, then I guess you could do this. I personally think there is something unethical about that: to take a sponsorship deal knowing beforehand (or even just suspecting) that you won’t be returning. But hey, if you don’t feel any ethical qualms, I suppose you could do that.

But that leads to my next point below:

*Should companies pay for an upfront deal?

I have argued that they probably should not. A far smarter way would be for them to have the employees assume a (possibly company-arranged) loan, which then gets periodically amortized as long as the employee stays at the company. That way, you’re still providing your employees with an educational benefit, you’re still building your employees’ human capital, you’re still attracting those people who are interested in an educational subsidy…but only those people who actually intend to stay with you. I certainly agree that you don’t attract those people and you don’t build the human capital of those people who don’t intend to stay with you…but that’s the point. As a company, I don’t think you want to invest in those people. If you are going to make investments in people, it should be in those people who actually intend to stick with you. Not in those who are just going to take it and leave.

*Yeah, but don’t lots of companies do that?

Sure, and like I’ve said, companies do lots of stupid things. Just because a practice is widespread doesn’t mean that it’s not stupid. For example, for years, the Big 3 auto manufacturers made lots of overpriced cars with abysmal reliability and planned obsolescence. Everybody thought that cars were always meant to be inherently unreliable. When the tiny little firm Toyota announced that it wanted to produce small, fuel-efficient cars with a novel manufacturing strategy that emphasized quality control and continuous process improvement, the Big 3 laughed. After all, everybody knows that you can’t actually make a highly reliable car, right? The Big 3 aren’t laughing anymore.

Stupid, counterproductive business practices can propagate for a very long time.

aibarr · December 31, 2008, 12:51am

Sigh. Sure thing, dude. Happy New Year.

chaoses · January 5, 2009, 12:44pm

sakky,

You are taking MBA Harvard Business School and MIT as extreme examples. Many people would consider quitting their job to finish grad degree there if they get into those schools. Most people would quit their job because these programs are challenging, they want to focus to finish it with good grades, not because they want to quit so that they will have no restrictions after graduation. However, that’s like 0.001% of the people who want to go to grad school. The rest would find it useful to have their companies ‘pay’ for it while attending some state university next to their work place. That term ‘pay’ might be misleading too. Most companies do not PAY for your tuition up front. You have to pay for it and once you proved that you pass the course or the degree, you will get reimbursed. So even if you were to leave your company by the time you graduate, you will not have to PAY back, you just don’t get reimbursed. It’s not like you’re gonna have to find a large amount of money to pay back because your company already paid for you. It’s your choice, if you want to get back the money, you stay. You’re also free to go anywhere and you don’t have any debts because you already paid all your tuition by your own money.

rheidzan · January 5, 2009, 2:16pm

Not sure if it’s been brought up, but companies usually have a policy that if you get laid off or fired for any reason you won’t have to pay them back.

premed_dropout · January 6, 2009, 12:31am

The employee must be in good standing – i.e. not fired for incompetence or employee violations.

Also, a friend of mine left his old employer before his 3-year comittment had ended – his new employer paid off the old employer. (My friend brougt this up during the interview process, and the new company was willing to do this for him.)

OrderFromChaos · January 6, 2009, 1:26pm

The first thing that I ask in any interview is, “What is your company’s policy in regards to education?” I have turned down a couple of employment prospects due to their answers.
I am currently at a Fortune 400 company that pays up to $5,500 a year for tuition, and no binding contract. They only pay that amount since it is the maximum for tax deductions, so I cannot blame them. I pay the tuition up front and am reimbursed after I turn in my grades for the classes.

I plan on graduating this June with a MSEE fully paid for by my company since I was able to attend a state university which kept the cost down. After graduating I also plan on staying with my employer for 6 - 12 months to show my gratitude, and than decide what to do after that.

My employer also pays for seminars and conferences. Though this year they did cut back a little due to the economy. Another benefit, they will pay for project management training and certification, which can be a big plus when searching for new job prospects.

Wage Gap Between B.S. and Master's Degree for Engineering

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