The student loan crisis is really an underemployment catastrophe
medium.com
medium.com
It seems more fruitful to focus on what product is being sold through state-subsidized loans and if they provide the necessary value. Bloated administrations is largely to blame for the increased cost, and a middle class student getting a student loan they can't default on for a degree without earning potential is not a good choice.
It's sort of like taking stimulants when you're hungry.
I think many of our youth are "consuming" higher education because that's what they're expected to do.
> it's sort of like taking stimulants when you're hungry
I'd say it's more like teaching someone how to swim by tossing them off a boat, but with life preservers so they kinda squirm around and do alright but they ain't really swimmin
https://marginalrevolution.com/marginalrevolution/2019/05/bl...
...
> If bloat doesn’t work, what is the explanation for higher costs in education? The explanation turns out to be simple: we are paying teachers (and faculty) more in real terms and we have hired more of them. It’s hard to get costs to fall when input prices and quantities are both rising and teachers are doing more or less the same job as in 1950.
I can tell you from the data from my school the administrative costs have gone up substantially. Both from number of administrators increasing significantly. The average administrative staff wage is over 250k (I know that's not a lot in tech salaries, but that is HUGE where I am. Cost of living calculator says $663,545 compared to SF). Our president makes 700k (just under 2m equiv) and gets 60k/yr salary increase.
I'm sorry, I just don't buy it. 60k/yr is more than the average lecturer at my uni makes. A lecturer! Not a professor. Even the CS Professors only make like $120k/yr (highest I see is 220k, which are the heads and are Full professors). So you are telling me that half the admins are worth at least twice as much as the CS professors (ones that are required to bring in money? And a substantial amount I might add). All our STEM professors are paid about that (CS is on the higher side) and all of them are required to bring in money and as far as I'm aware are paying for themselves (with equipment) and their students (all our masters get funded because all the PhDs are filling research positions).
I can understand lab costs going up but I think putting all the blame, or even the majority, on the professors is ludicrous.
And you also need to consider that hiring more professors doens't always equate to less income. You hire more professors to get more students (who pay a significant amount). I'll buy the argument of hiring professors in subjects that don't draw in enough students to justify their cost, but that's a different argument and I would argue is definitely not the lion's share.
This is a big salary even in SF. What average admin staff is that?
(1) Average US physician income: $294k, dragged down by military and public health physicians.
I know your comment sounds witty, but it is lacking real value and really adds to the problem at hand. Surprisingly things are extremely nuanced and we try to just point to "simple solutions" we generally make the problem worse. Frankly because we are not considering the system and distracting ourselves from solving the problem (calling it done when we've only just started).
- people want to go to name brand/Well known schools
- The maximum number of schools that humans can remember in their brain is largely fixed
- The population is increasing
- Schools largely Don’t increase their enrollment size due to space and notoriety concerns
you combine all the factors above and you should expect the price of top-tier schools go up dramatically with population size
Most of the suggested solutions will not really do much to change things. Maybe requiring students to sign that they've seen job market studies for their chosen program and/or forcing non-compounding interest for student loans while still in college. Maybe even capping loan interest to 10% of income when direct withholding 15%. Optioning loans under cost/benefit would probably go a long way as well.
Children don't make wise decisions, especially not when they've been told for years that if they get a college degree everything else will just fall into place automatically.
Aside: based on some actions/headlines that consistently pop up in news articles (most recently Oberlin)... maybe we should start treating them like children. Also, maybe it's time to stop telling kids the world should be whatever they deem to be as "fair."
Beyond all of that, PARENTS should be raising their children. They seem to be too concerned about protecting their kids, instead of letting them know in deep specifics how bills/finances in the home work. There's no reason a 10yo can't sit with you when you pay bills, or look at a spreadsheet that outlines things.
It doesn't even take THAT much... I have most of my paycheck going into an account that bills get paid out of... most are set to autopay, except the largest ones (house/car payments). Every two weeks, when I get paid, I sit down and pay those bills due. The rest of my paycheck goes into an account that is for day to day expenses, and that's all I get for it.
In the end, it's not JUST the schools that are responsible for raising children, and the (US) government doesn't do a very good job of most things. Raise your children people.
That's not to say diversion of this sort wouldn't help at all, only that it is not a cure-all. I think we're simply approaching a point in economic history where fewer workers are needed to produce more value/gpd/products/whatever. I'm not sure what the solution to that problem is though.
With or without government subsidized loans, there is a jobs market issue.
Your choice are:
1. everyone can get a loan regardless of wealth, but they can’t file bankruptcy
2. Let banks only give student loans to qualified applicants (i.e. rich kids with co-signing rich parents) but permit bankruptcy.
I also don't think we're going to see a cure-all, but it's hard for almost any intellectually honest person in the non-elite parts of the higher-education industry to look at what's going on and think it's great.
I think we're simply approaching a point in economic history where fewer workers are needed to produce more value/gpd/products/whatever
Then we'd see soaring productivity, which we don't see: https://twitter.com/paulkrugman/status/1140259227908411392
http://www.scottsantens.com/our-paradoxical-economy-courtesy...
Additionally, even if we're not peering around the metrics for dynamics hiding behind them, there's the question of how much of the by-Krugman's-metric still rising (if not "soaring") productivity it would take to soften the labor market. I'd like to think he knows the answer to that question, but it isn't clear.
When you hear hoof beats think horses not zebras.
It depends where you are of course...
Many arguments emphasizing the disparity between real output vs. employment in manufacturing. Paul Krugman is wrong surprisingly often about these sorts of things. He cherry-picks one graph and says that this graph, combined with the opinions of cherry-picked esteemed colleagues, supports his conclusion, when ample evidence exists and is provided in near-real-time to refute it.
Not that surprising if you examine his incentive structure. It is best for him to misrepresent issues like this, QE methods during the Bush/Obama administrations, etc.
The US economy can't be fixed by educating more plumbers. The core problem is that the US has turned itself into a peacetime rationing economy. Essential services - healthcare, education, housing, financial support - are strictly rationed for reasons that are strictly unnecessary and economically destructive for the majority of the population.
The extracted value paid by individuals to the companies that provide and finance these services is effectively a privatised form of tax. It's vastly more onerous than the official tax rate, while providing no true public benefit - and no democratic representation.
More plumbers and electricians won't change this, because they'll still be working in a system where they'll have to charge unaffordably high prices to make a decent personal profit after the "corporate taxes" on health care and education (and personal housing) are paid.
Ultimately it's a political choice to run a starvation economy for most workers, and that won't change unless there's a political shift.
Which badly needs to happen. This is not about automation, and it's not about AI. There's a huge amount of productive work that isn't being done - new infrastructure, maintenance of old infrastructure, childcare, health care, education at all levels, housing, trade and building work, academic research and open-ended no-immediate-return blue sky R&D - because the political economy is biased against that kind of activity rather than for it.
It's fairly easy to measure how much money is produced per employee. That number grew 3% to 4% a year for most of the 20th Century, till 1973, when it collapsed. Since then it's average 1.5% a year (again, with a few good years in the 1990s, and with some up and down wobbles during the Great Recession).
The central fact is the big push towards automation in the 1930s and 1940s and 1950s simply had a bigger impact than the kind of breakthroughs we've had in the last 40 years.
The automation of the telephone systems, and the removal of all the women who worked as operators, was huge in the 1940s and 1950s (and a fantastic boost to the computer industry). The later boom in multiplexing made capital investments more profitable, but did not increase the amount of money made per employee.
The introduction of the modern combine tractors on USA farms lead to a fantastic increase in agricultural productivity in the 1930s and 1940s and 1950s and 1960s, and nothing since then has had a similar effect on agricultural productivity.
The introduction of digging robots transformed the coal industry in the 1930s and 1940s and 1950s. Mountain top clearance was another huge change in how the work was done. Nothing since the 1960s has had anything like a similar impact. In fact, the opposite is true, increased environmental protections have, if anything, decreased productivity in that sector, or at least slowed the increase.
And on and on.
The transformations in the early to mid 20th Century were huge. The more recent transformations have been small. The Great Boom gave way to the Great Stagnation.
Check out:
The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War
https://www.amazon.com/Rise-Fall-American-Growth-Princeton/d...
I've got an alternate explanation for the grandparent: the economy is undergoing a phase change from an industrial economy to an information economy, which will bring with it different assumptions about what an economy is. A future historian looking back on us from a century later will see steady growth in whatever metric they measure the economy in (likely volume of data produced) since about the 1970s. The fact that large sectors of the economy have shown negative productivity growth will drop out of the history books, because neither these non-software industries nor productivity as a concept will seem important to this historian.
I'm basing this on a thought experiment: what does the last major phase change in the economy (from largely subsistence-based agriculture to industrialization) look like now, and how do the metrics by which we judge it differ. The concept of productivity is basically nonsensical in a pre-industrial agricultural society - crop yields, of course, depend upon the wind, rain, and weather, and why would we expect them to increase in any non-random fashion? But real agricultural wages (likely a good proxy for productivity) skyrocketed between 1790 and 1810, and then declined by 20% [1, p 20] between then and 1850. To a farmer (that's most of society back then), their plight wouldn't look all that different from today's factory workers: the generation that came of age in 1850 did significantly worse than that of 1810. There was a bit of a bump when mechanized agriculture and meatpacking came out in the early 1900s, but this trend largely continued into the 1930s, at which point we basically stopped talking about small family farmers and got agribusiness instead.
But do we consider the 1800s a time of low productivity? No. We associate them now with the first and second industrial revolutions, which dramatically changed society and hugely increased productivity. "Industry" initially meant "the textile industry", because that was the first area that mass-production techniques were applied to. Over time these techniques spread until they took over the whole economy, at which point we could start measuring the economy by metrics like "productivity" that assume that innovation and capital can allow an individual worker to produce more than they could before. Former metrics like crop yields become an afterthought: as long as they're "enough", who cares?
If you start the clock at 1910 or even at 1870, you're looking only at the portion of history where the industrial economy is the economy. To get a better analogy to current conditions, you have to go back, before the Civil War, when the nascent industrial revolution is causing the collapse of plantations, slavery, seamstresses, tailors, whalers, and small farmers.
[1] http://old.econ.ucdavis.edu/faculty/gclark/papers/farm_wages...
Does that mean you want to force more people to become doctors and for healthcare institutions to overspend?
Housing is mostly limited by usable land and the rate at which construction can happen. For cities, building something often means tearing down something else. Near cities, for the most part are expanding as fast as housing can be built. What makes you think it's artificially limited?
If you average everyone, sure. But that's kind of circular reasoning. If you look at the elite employees of, say, the FAANGs, the tail of the distribution, their productivity is soaring.
This is like using a total number for "inflation" to assume that costs have not gone up. And yet...
https://ritholtz.com/wp-content/uploads/2018/02/pricechanges...
Childcare, hospital services, college textbooks, college tuition, childcare, and medical services way overindex the average inflation.
TVs, Software, Toys, Cellphone Service, New Cars, and Clothing all underindex the average inflation.
What do those sectors underindexing sound like regarding productivity and purchasing power?
EDIT: Also consider two other effects: We are automating productive jobs, and people are replacing those jobs with very low productivity jobs (service sector).
In other words, it isn't that education isn't unusually expensive, it's that everything else is unusually cheap. From the paper's conclusion:
"The Baumol effect is the best explanation for rising prices in education, healthcare, and other service sectors. In that sense, and only in that sense, is there something “wrong” with the service sector—namely, that it’s hard to increase productivity in services. Or we could equally well say that what’s right with the goods-producing sector is that it’s easier to increase productivity in goods. Whatever the explanation for this difference in productivity growth, however, it’s a difference, like the difficulty of domesticating huckleberries, that cannot be traced back to policy. We should neither ignore this difference nor make too much of it."
That's the paper's perspective. I'm not promoting it myself, but I did find it to be a sensible argument.
[1] https://www.mercatus.org/system/files/helland-tabarrok_why-a...
And it's because of this currency debasement that the price of everything else increases.
I know quite a few old ones and I know many many more who struggle with pain every day as they are my age and talk to me about it. ( IT being my 3rd career after welding and meatcutting ) I have many friends who are dropping out of the workforce and finding alternative jobs because they cant do the work.
Painting is hard work but its one of the less body impacting you can do. There are a few roles like that and yes, being active is a good thing.
In a similar vein, Apple takes in over $2,000,000 of revenue per employee, but Genius Bar employees are not taking that amount home. I mention this solely because it uses the same reasoning evident in your initial claims.
So yes... I think the average plumber in SF is making about $70k/yr. (so ~$300 per day worked, or $200 per day).
2) But, I'm not sure it's even true. We mostly got to where we are by having all the manufacturing done in 3rd world countries for pennies. It's not that it doesn't take a lot of hours, it's just that we pay little for it. Which is great, if you're one of those who has a job, but bad in lots of other ways.
3) Regarding automation, it should be noted that the manufacturing did not, by and large, go to the countries with the best robots, or even the most reliable electricity for automation. It went to where the environmental, health, and safety laws were laxest, and the cost of labor was lowest. This suggests that there is still plenty of labor that needs doing, we just are run by an elite that doesn't want to pay for it.
Shorten the work week and it is hourly workers getting screwed. Unless we think, for some reason, corporations will take it upon themselves to pay more for less, especially since the labor pool would be more competitive with increases in automation.
Funny this is exactly one argument that was used against the 40 hour working week!
Can you imagine if someone submitted a business proposal asking for a $100,000 investment or loan and the proposal was "think I'll take some classes and then figure out what I want to do with the rest of my life"? We need to end the insanity and turn the spigot off. Then the institutions will be forced to lower their prices and manage their budgets again. Maybe one day we'll get back to the point where a young person can pay for in-state tuition with a part-time job, like it was about 25 years ago.
The people taking malinvestment (student loans for unproductive means / negative ROI) are firmly in the middle class bracket, both lower/upper sides of it.
Or how about we just confront the problem dead on, remove the money and profit aspect entirely, and offer free college like dozens of other nations do, and have for many years, somehow without their economies imploding? Why must we sacrifice yet more of our society on the altar of profits? Fuck good investments. Fuck investors. Fuck this entire screwed up system that decides that anything that cannot be monetized is worthless.
the unemployment rate by major, assuming it wasn't already a bad investment due of the student lacking the skill or willingness to finish the studies.
Do you ever think about the possibility of people making art or studying history without going into tens of thousands of dollars of debt?
Even going past that, though, if studying History can't get you a job that makes enough to pay off your debt, then why does it cost so much in the first place?
People taking on too much loans for higher education is a multi-pronged problem. Loans have a place, and if people choose to mis-use a loan to study an "unproductive" subject, i expect that the fault lies with them.
however, when the loans to study law/medicine is in the 200k range, i find it hard to believe that the fault isn't with the university and vested interests in making money with the loans.
No such equivalent with a college student. 18-year olds for the most part aren't going to know for sure what they want to major in, so "a useful degree" at the time the loan is signed, might change 2 years in, when they actually have to declare a major.
heck, I even didn't use an absolute
> for the most part
I mean, I'm not a native English speaker but it seems pretty clear to me I was NOT talking about college output, quite the opposite actually.
Maybe I took that implication to an extreme end, but calling out trade schools for producing “corporate drones” absolutely bears the implication that you believe the alternatives are different / not as bad.
no? what kind of crazy dichotomic logic is that? you're way overthinking it.
> Do you think 99% of people who go to college
moreover college output has a lot more variation than trade school output, so assuming that the proportions of outcome are the same is as well something that was never claimed.
> You must understand
you just dropping things I never said and argue as if I said them, how does one go and debate or understand that? it was never my point to begin with!
jesus, 6 post ago I made one point: trade school aren't providing the titles one would go get to optimize for class mobility, heck, the rest isn't even a point of discussion really, the whole idea on which trade school are based on is to bake blue collar workers.
But if you keep significant government backing, then the student loans would get lot lover interest rates. Which is probably good for absolutely everybody.
If we have a mass of students learning no useful skills and divert them into useful fields, then the overall productivity of the economy will go up.
Obviously if everyone floods into a single field there's some limit: you can't productively employ 10x the plumbers without a matching increase in buildings.
But in general, better skills should lead to a better economy.
What do we do if a significant portion of the students who already aren't learning useful skills lack the neural plasticity to become productive in other endeavors? Or in other words, how do we incorporate humans into the economy when those individuals are objectively inferior at EVERY task compared to an automated (robot, AI, etc...) alternative? Especially as we consider things like climate change and austerity, and how humans are supposedly the greatest threat to overall environmental longevity?
It won't solve the underlying issue you address, but it will improve things, and waste less societal resources in the educational process too.
Since then we've tacked more gears onto automatic transmissions, hybrids have become more mainstream, sedans and wagons have been replaced with small SUVs as electronic doodads have proliferated. If you don't mind creaky plastic quality is about the same back deep into the 90s for cars that were on reasonably modern platforms in the 90s.
Cars these days don't age any better than cars from 20yr ago or the more modern cars of the 90s.
I guess anti-corrosion has improved but it hasn't improved by that much. You still have plenty of vehicles that repeatedly rust out in some spot because the salt gets flung there and the surface coatings aren't adequate to stop it.
In a growing fleet, new purchases expand the fleet and necessarily lower the average age. On the other hand, if production falls below replacement rates, the average age of the fleet will increase. Couldn't such a change reflect changes in demographics (number of new drivers added to population) or habits (amount of car-based travel) as much as car durability?
Also, wouldn't such fleet metrics be influenced by the lumpy history of natural disasters like hurricanes flooding densely populated coastal regions?
Everything else listed I would want to actively avoid in my next vehicle.
this says more about the vehicles you're interested in than the overall trend in vehicle efficiency. I get ~34mpg out of my hot hatch with a heavy right foot.
The backup cams affect my night vision. When I back out of a parking space at night, I'm hit with the glare. I need my vision to drive!
Humans adapt to adaptive cruise control, lane assist, auto parallel parking, partial autopilot, and any other safety feature. So we get more texting while driving and other dangerous behavior. https://en.wikipedia.org/wiki/Risk_compensation
bought a used 2016 last year for ... ~$12k? Small Focus, nothing fancy. Even that felt like a bit of a stretch, although... I'm getting more conservative with $ as I get older. It's also just 2 of us in the house - no kids, and I get that some people want/need larger cars to haul around kids and stuff. But seeing that an 'average' new car loan is $30k, my mind just... boggles.
Friggin' stupid. I can almost buy two rental houses for that price. At least one that can be in move in condition with a splash of paint and carpet.
The little indicators if someone in your blind spot is also a HUGE safety increase for drivers and bikers/scooters/etc.
Those should be as standard as seatbelts an airbags in 2020.
Most people are pretty poorly trained and now, often distracted, drivers.
A 2-year-old used car is usually within $1000~$2000 of the original selling price.
I think what you're seeing is that the cars getting advertised, and more specifically the cars that you want are more expensive than they used to be because auto makers are trying to boost margins in a shrinking market by pushing fancy features and higher-end models. But if you look at base-model sedans, they've stayed pretty close in price over the last two decades.
Here is their business cycle:
1. Purchase a used car from a customer for 80% of "fair market value."
2. Sell the car on a $0-down, 7-year note for 110% of "fair market value."
3. Undoubtedly the loan goes into arrears, and the dealer will disable the ignition system after a certain amount of time. The "owner" will be billed for the tow as well as multiple "recovery fees."
4. Sell the car again for 110% of "fair market value."
5. Repeat.
Multiple times I have been told "we don't want them to pay off the car; we make less money that way."
I remember one particular dealer bragging to me about the fact that he had sold a 2009 Honda Civic 11 times in 4 years. That is, 11 sales and 10 repossessions over the course of 4 years. The saddest part was hearing that over 70% of their car notes would go into arrears within 4 months.
"I could literally survive the next 10 minutes without buying this" is not the same thing as "if I don't buy this soon, my life will not be significantly worse off."
Poverty's not known for opening up options for people.
A perfectly efficient market will push the bids higher and the asks lower. Stocks for example only have a spread of a couple of pennies.
As the markets get less and less efficient, you become more reliant on middle-men to perform transactions. In the dark ages, people would pay 1-pound of gold for 1-pound of salt. In the case of modern society: bonds (and other derivatives) are less efficient to trade and therefore have higher bid/ask spreads than stocks.
Go away from financial instruments, and a 30% spread on bid/ask is actually reasonable. Play Magic: The Gathering? Buying/selling used video games? You're going to pay a pretty large spread.
------------
"Fair Market Value" is an estimation of the bid/ask spread. There really are two fair prices: the value the buyer is willing to pay, and the value the seller is willing to sell at. These two numbers are all that matters.
By definition, these two prices are fair. Because if they weren't fair, then the buyer (and seller) would reject the deal and the trade will fail.
80% to 110% isn't a perfect split between the buyer and seller, but its "within expectations".
You're doing fairly well if you can get a car dealer to buy your car for 80% of what they sell it for
The dealer is getting $4K (or more in the cases where they repossess the car and re-lease it) because the buyer often has few options on how to get transportation so they're implicitly forced to take worse terms (say, they need a car immediately to get to their low-wage job otherwise they are fired and forced into worse poverty). Of course, you can still say the car doesn’t have a value until a transaction takes place.
These socio-economics dynamics mean cars have much more of a spectrum of "value" than just one-off car purchases. Framed another way with the parent comment, buyers are often under implicit economic duress, it's just not duress forced by the seller.
I'm not strictly opposed to markets like subprime auto/personal loans, as often these markets would look worse without these options. But a lot of times people see supply-and-demand situations in very limited scope and miss external factors that influence choices.
It's wired directly into the ignition system. Despite having a computer engineering degree and enough experience to be reasonably confident in my ability to analyze unknown electronic systems, I spent a lot of time very carefully going through all of the connections to convince myself I wasn't going to brick my vehicle by removing the device. In the end it was pretty easy to yank the device. The hardest part was patching the ignition wire, which had been cut to install the device.
Conclusion from the previous paragraph? It's not that hard if you know what you're doing, but I'd bet that something like 99% of people wouldn't have a clue how to remove it even if they noticed it was there at all.
I recall buying a Honda back in the late 90s. Dealer tried to up sell me on having the VIN etched into all the windows. I declined. Drive the car home and realize it has the VIN etched in all the glass.
A still relevant earlier discussion: https://news.ycombinator.com/item?id=14476381
Perhaps mortgages should have longer terms too?
Note: while he quotes 60-80 years, the concrete is still in that 30-40 year timespan.
The distinction is meaningful as the comments earlier in the thread are talking about how long a new car will last before it needs work (beyond your basic oil changes, etc.). If you are willing to put money into major repairs and upgrades, there is no real reason why a vehicle cannot last centuries as well, as classic car enthusiasts can attest.
And now I’m wondering if the same dynamic is happening in education: schools increase tuition because govt-subsidized loans are easily accessible.
> Last year, FSA provided more than $120 billion in federal grants, loans, and work-study funds to approximately 13 million students at nearly 6,000 participating schools.
https://www2.ed.gov/about/reports/annual/2017report/fsa-repo...
The damage from existing poorly designed government subsidies should be fixed before we issue any more blank checks - otherwise we'll all be stuck paying for artificially inflated university budgets.
1) $122.5B is the total financial aid, not just loans. Per the table on page 8, loans amounted to $93.8B of that. The rest were outright grants.
2) The FSA no longer guarantees loans; it issues them outright. It's incorrect to refer to "federally-guaranteed loans" except in the past tense.
Best solution would be to not back student loans.
If we want college grads able to leave school and not be saddled with debt for the remainder of their lives, make college free. I'm not interested in hearing about how someone might dare learn something that isn't inherently profitable; I reject the assertion that just because something cannot be successfully monetized does not automatically make it worthless. Art, culture, history, all of these are more valuable to society at large than the highest valued startup. End of. Argue it.
It's worse, but opposite of the way you're thinking. Harvard/Yale/Princeton are basically free if your parents make less than about $65,000 per year. So, a smart ambitious kid with non-rich parents can graduate from a top school with an extremely strong network and have no debt. But an "average" kid with non-rich parents will have to work a side job or two, and graduate with substantial debt, all for a not particularly useful degree.
Or the kid could win the lottery, with effectively the same odds of success. That does not make this a good system.
Instead of band-aiding the bad solution, throw it out. Get a better one.
It's a deliberate program.
When a new market opens up, like say the internet in the 90s, then the investors and the people in charge will allow some of us to be overpaid for a while.
It's really not out of the goodness of their heart's. At that point they are focusing on market capture, and they need bodies to help them do that.
Eventually they find a way to make that market 'efficient' (read bad for everyone employed in it) and unless a new market opens up, it can be really bad for workers.
I can't think of a significant new market that's been opened up since the app bubble of 2010 or so.
We have a pretty long way to go before the computing market is efficient though (bonus: it'll probably be tied to the actual computational efficiency of computers at some point because the markets will all be traded by computers).
It's clear that being good at using a computer is a huge asset in modern society, so why don't we gear education towards it? Programming ought to be seen as vitally important as English and Maths.
I would assume going into some of the topics you suggest would lead to school getting swamped by insurance sales people.
Are people being deceived in some way into thinking that particular degrees are more marketable than they actually are?
Are degrees that are thought to be very marketable (and perhaps once were) no longer very marketable?
Are people knowingly choosing to do degrees that are known to be unmarketable?
All of those things are completely different problems. The article doesn’t give me any insight into what the problem might be, and doesn’t actually provide much more insight than I could have gotten from looking at two graphs.
The question is why are people completing unmarketable (or not sufficiently marketable) degrees? The article provides no insight into what the answer to the question might be. ‘Many degrees are less marketable than the used to be’ is one (partial) explanation. But it’s not the only potential explanation, it’s not obviously the correct explanation, and it’s not an explanation that the article provides any content to support.
For the pursuit of knowledge. Universities are not job training. You getting a good job with your degree is a bonus not the intend outcome for a university.
Today, that corresponds to pursuing knowledge if you don't need the money. If you do, pursue something that pays. (Pursue as much knowledge as you can work in around the edges, but the main focus has to be on something that pays.)
Would it make sense for the government to make a list of fields where they do back up student loans (which would probably be mostly STEM fields)?
Or remove the non-dischargeability and the govt backing at the same time, and let interest rates and lending requirements fall where they may.
My position is "Student, protect yourself." I take no position on whether the rules ought to change to protect students. (Perhaps they should, because 18-year-olds probably will get carried away with the romance of "pursuing knowledge" and ignore the way the real world works...)
edited for more information
But 1) this doesn't reflect the priorities of the vast majority of people, 2) this wasn't to the exclusion of paying attention to what's marketable (ie my other major), and 3) it beggars belief to claim that any significant number of people are intentionally taking on high debt loads in order to play-pretend being an unemployable philosopher-aristocrat.
Leaving aside whether society _should_ be providing the no-strings-attached opportunity for a broad-based education[1] as disconnected from economic productivity, it's beyond laughable to claim that students are actually making this choice en masse in the knowledge that their education is unmarketable.
A misguided and anachronistic belief in the marketability of arbitrary degrees is a far more plausible explanation.
[1] I certainly think it would be nice in the abstract, pending feasibility obviously
That doesnt change the fact that we have those programs in the first place for the pursuit of knowledge in the hope that it will benefit society. That benefit doesnt have to be an economic one. A degree in your native language has arguably little financial value, but you only have to look to countries like France to see how much a society still collectively values their language.
Investing in universities is historically something nations afford themselves in the hopes it will be of benefit to society. The idea of individuals investing into themselves is a rather American one. I would argue the only reason a large amount of US universities exist is because they have a special tax status and people get to take special loans to pay for their services. Alternatively you would just have companies providing job training. From the outside it looks like much of the problems with the US system stems from purposefully not communicating that difference to new students
edit: To word it differently, the sole purpose of the teaching arm of a classical university is to enable the next generation to introduce novel ideas into their fields. Thats what a doctoral dissertation is. You advancing your field and adding to the collective knowledge.
There's no reason to single this out as 'the question'. There are many interesting questions around student loans. The article singles out the question 'What caused the student loan debt load to get to the level of “crisis” in the United States?' There is no reason that an answer to this question needs to involve the actions of individual students. You could answer the question by talking about how states are reducing the % of tuition they they contribute to state universities, or the explosion of university administration, or how student loans are easier to get now than in the past.
That’s not to say there aren’t also other problems. But the problem this article is discussing is that people are completing college degrees that do not improve their employment opportunities.
It’s self-evident that if those college graduates who are underemployed had chosen different courses, then the problem would look quite different. The fact that developed nations have to import large amounts of skilled labour proves this (although you could make a solid argument that they import more than they strictly ‘have to’).
There’s likely a number of factors that contribute to this problem. Generally increasing enrolments seems like it would be having some level of impact. But this article does not even attempt to shed light onto what those factors might be, and how they might be weighted. I don’t know what I’m supposed to have learned from reading this that I couldn’t have picked up from just looking at the graphs it includes.
Not only is this not self-evident, it defies common sense and economics. If more people take professional degrees then the supply of those degrees increases and salaries decrease (and we're back where we started). That is, if there are enough professional jobs to go around which there aren't. You seem to think there are lots of professional jobs to go around, but I went to school with many engineers who struggled to find jobs after graduation. It seems like we're above the point of saturation in many professions.
Underemployment rates for non-farm jobs in the US, 2005–2018 — Unemployment of Recent Grads
Vs
Unemployment rates for non-farm jobs in the US, 2005–2018 — Recent Graduates
The drop in the Unemployment rate for “All Young Workers” since 2011 however is staggering.
IMO a non-dischargable loan should have a correspondingly extremely low interest rate, but I think there has to be a bright line drawn at forgiving principal except in the case of fraud on the part of the educator or the loan servicer.
Not surprisingly, this results in high delinquency rates!
The alternative is most people wouldn’t qualify for this level of debt, you would more highly subsidize cheaper public education, and private universities would have to rely entirely on endowments to provide financial aid to people who otherwise wouldn’t be able to afford to go.
At some point a $50k private undergraduate education (forget about $100k+!) is not for everyone, even if there are banks willing to write the check and put you into that kind of debt.
But think of the outcry if you were to limit the amount of educational debt someone could take on — for example by only making the first $20k non-dischargeable. It would fix the delinquency problem, drastically lower the total annual student loan rate, and cause private tuition prices overall to decline, but it would be called institutional racism.
I think we already went through this cycle with housing, when ~15 years ago politicians started saying that owning a home was a right and everyone should own one, regardless of ability to pay. Zero down, no income verification, guaranteed issue mortgages caused the housing bubble, and we see something nearly the same in education today saddling kids with debt way over their heads, except this time you can’t even walk away from it in exchange for a 7 year credit score hit.
The solution to structural racism is more scholarship money, not more debt. Pell and Social Security supplement grants have gotten really meager since when I went to school.
> I think we already went through this cycle with housing, when ~15 years ago politicians started saying that owning a home was a right and everyone should own one, regardless of ability to pay.
Ahh yes, this old card. Blame the poors for financial crisis. Buddy most of the defaults weren't from poor people buying homes. People with good credit scores leveraged that score to speculate, over 85% of the defaults were for investment properties. Most of the mortgage defaults were done by your doctors, lawyers, realtors, general contractors, and business owners who watched one too many episodes of home flipping shows and thought they could get in on a good deal.
I completely agree, scholarships and grants should be greater than the loan debt that a student takes on, and the maximum financial aid for a student should be capped annually in some way. There are simply too many student loans being made available to students that don't need them. I have a colleague that got a full ride through undergrad but managed to graduate with over two hundred thousand dollars in student loan debt. It is predatory lending to loan students more money than they need to cover their cost of education and cost of living (for a student).
“When the economy slowed, defaults went up across income spectrums. But while the chance of a low-income borrower defaulting increased from 6 percent pre-crisis to 12 percent post-crisis, the chance of a high-income borrower defaulting went from almost zero to around 5 or 6 percent. And the latter group was defaulting on bigger loans.” [1]
I think the homeownership rate over time also tells a story, but perhaps this is dwarfed by the rate of sales and the collapse of prices causing ~25% of houses to actually be underwater.
However if you look at Mortgage Origination by Risk Score over time [2] and Debt-to-Income ratio over time [3] there is truth to the claim that the overall portfolio of homeowners also changed in the lead up to the crisis.
[1] - https://mitsloan.mit.edu/ideas-made-to-matter/rethinking-how...
[2] - https://infogram.com/1pwez02vj1mld0fvlzvmn3r1k9s9y7x5zgp
[3] - https://infogram.com/1pk6ve560vyl93c97kvpwy5dymt3kz1rd5g
For-profit schools are "13 percent of the nation's college enrollment, but account for about 47 percent of the defaults on loans. About 96 percent of students at for-profit schools take out loans, compared with about 13 percent at community colleges and 48 percent at four-year public universities."- 2012 report [1]
[1] https://www.nytimes.com/2012/07/30/education/harkin-report-c...
There's no need for government subsidized education or broadening the job market. There's need of ditching bureaucrats and "Because we've-always-done-it-this-way" morons. Reward people for studying on their own, building their own businesses, networking, etc. rather than following the stupid system just to get two letters next to their name.
>Lots of student loans are also owned by pseudo government agencies or private companies with beneficial relationships with the Department of Education, such as NelNet Inc. (NYSE: NNI) and Sallie Mae (NYSE: SLM). Sallie Mae holds a lot of the loans made under the Federal Family Education Loan Program (FFELP), which was replaced by the federal government.
https://www.investopedia.com/articles/personal-finance/08121...
https://www2.ed.gov/about/reports/annual/2017report/fsa-repo...
Could a similar requirement be imposed which specifically required some substantial percentage of the money to go toward teaching payroll, specifically excluding administrator payroll, leisure activities, athletics, and building construction?
Or rather than that, just require schools to publish the percentage of tuition spent on actual teacher/T.A. payroll by department?
While more and better employment would help with the student debt, the fact is starting out in life saddled with what is essentially a home mortgage takes a huge bite out of the potential value of education.
And it carries a very high opportunity cost in that increasing numbers are avoiding school and or seeking options that do not put them in profound debt so early in life.
People want to do away with all the "useless" majors, which seems like a mistake to me. Colleges weren't about finding jobs until recently when companies decided to outsource training workers to these places. For our entire history colleges were places where people can learn about the world and different things. Suddenly shaming them for teaching literature when they have been doing it for hundreds of years is dumb. The answer is to just charge tuition relative to the cost of the particular education.
The root of the problem like many other macro problems [housing crisis, income disparity, etc] is well-intentioned but misplaced government subsidies.
https://www.cbpp.org/research/state-budget-and-tax/a-lost-de...
$50K per year for an English degree vs $50k per year for a Mechanical Engineering degree, the English majors are getting jobbed. Think about all the majors that don’t require the underpinnings of constant technology upgrades, or need the latest and greatest technology.
Too pessimistic?
To keep them moving, allow defaulting on loans, make the banks take the loss. They will stop issuing glaringly risky loans to the unqualified, preventing a 2008 style subprime loan crisis.
I can imagine no better symptom to show how utterly sick the current economic system is, than that it takes luck to find a job where one is helpful to others and paid well. Helping others in exchange for money is supposed to be the basis of the free market!
When I graduated, there were companies offering me 30-40k a year in cities like Seattle. I have friends that could tell you the same story, some who took the opportunity because of the entry level market being saturated.
Bootcamp graduates are often placed in incredibly exploitative contracting environments (often in companies that also underpay, abuse and threaten H1Bs) which are farmed out to larger companies looking to get work done cheap. Though this has just been my personal experience and that of my friends. They leverage desperation.
There are a variety of high demand and well paying jobs, but not everyone is interested in them, or even cut out for them.
Because the number of openings for entry tech workers is essentially infinite. (Wait, what?)
Because non-technical work is regarded as completely worthless and there is more merit in being a minimally-competent HTML-slinger.
That also fixes with the population issue since middle class Americans can't really afford to have kids.
As an H1B, I am paid squarely in the middle of the pay band of my co-workers that share my performance rating and ladder level. If you combine that with all the immigration-related legal expenses my employer is racking up, I cost more then the average employee, here.
I ask - just because there's some shitty headshops that illegally employ H1Bs at below-market rate, don't generalize that to the entire population of visa-holders.
Citation needed, because this is a sweepingly broad statement. To hire an H1B you need to pay the prevailing wage, usually at least $60k, which is more than an entry-level non-STEM college grad is going to be paid outside the Bay Area (it should still be increased to something like $90-95k IMO but that's a different issue).
In addition to that, there are thousands of dollars in legal fees. And of course the application has to win the lottery (which happens in April) and then be approved for the visa (which starts in October). Which means you have to wait at least 7 months after extending an offer for the employee to start.
It is not so hard to afford to raise kids somewhere else, say Salt Lake City or Syracuse, NY.
This is the "comparative advantage" that Adam Smith told you about. India can export kids to the bay area, but so can other parts of the U.S.
I think the best way to counter the abuse is to increase the premium ($100k+) and allow H1Bs to move between companies.
GP was asserting that it is cheaper to hire H1Bs than entry-level grads, which isn't the same thing as what you're describing.
> I think the best way to counter the abuse is to increase the premium ($100k+) and allow H1Bs to move between companies.
I agree re: increasing the minimum to ~$90-100k. Maybe apply a CoL based multiplier so it's $85k in, for instance, Tulsa but $135-145k in the Bay Area.
H1Bs are already allowed to move between companies. But the new company has to apply for a fresh visa, without going through the lottery, and it takes a few weeks, which is a hassle. Plus there's a risk of being denied or going into RFE. I think that rule could be tweaked to allow movement without approval if the offered salary in the new role is higher by a certain minimum percentage (like say 10% increase).
Every time I read something about the cost of having kids I'm looking for some idea of where these people live.
The single largest expense for kids is day care and that's only necessary if you have 2 working parents...and if one of those parents income doesn't more than justify the cost of daycare it's usually a better idea to have a stay at home.
People seriously take for granted the financial value that a stay at home parent brings to a home in overall cost savings. Expenses go up based on lack of time, more so than anything else. It affects your shopping, cooking, home maintenance, yard maintenance, eating out, fuel costs and long term child care costs (after school activities, day care, summer day camps, etc) that you have to worry about when you keep needing to free up time so that you can get to work.
And all of those expenses are higher in densely populate areas where there's more demand for all of the "good" activities.
But it often comes down to a matter of pride to have a stay at home parent.
Edit:
Personally, I think the whole financial independence movement is pretty interesting, and sometimes I get myself through the day by viewing it as my wife being financially independent. Which is halfway there as far as things go.
It compounds in both directions and gets amplified by the continued lack of time due to balancing home and work commitments. Usually it takes a couple of years of exhaustion before people come face to face with the realization that things would be much easier of one person was a stay at home.
The formula is trickiest in the middle. At the higher end, a lot of couples will hire a nanny that can provide many of the same benefits as a stay at home. At the lower end, the decision is fairly easy.
It's in the middle where it's toughest to come to grips with it.
I have no idea how other ppl here afford kids and manage to save. We spend $30k on day care and another $12k on health premiums alone.
Also, our work health insurance is shit, so $200 gets taken out of my paycheck each week for that, which puts it right around the $12k you mentioned.
Daycare is stupid expensive. Healthcare is stupid expensive. We handle the former by having my wife stay home. The latter is just an unfortunate fact of life.
I really don't know how much it costs to live on the coasts, but on a developer salary you can live very comfortably in the Midwest (Ames, Iowa here).
My wife and I are in the same position. We pay $209 a month for “healthcare” coverage that has a $700 yearly deductible. If either of us got sick or injuries we would be totally screwed. The US system is broken. We have massive wealth inequality, an educational system in crisis, and a toxic political system.
I agree that healthcare in the US is completely broken. It is in fact one of my favorite things to gripe about to anyone who will listen or who happens to be in my vicinity at the wrong moment.
I think our current "out of pocket max" is somewhere around $6k/year. The bill for having twins blew through that pretty well. When we had our first child, our deductible was roughly twice as much and I think we maybe just scratched the out of pocket max. Those insurance premiums were only a third of what we pay now though, which was a better trade off in my opinion.
Would we be financially ruined by running into something like that again? No. Would we be majorly inconvenienced? Yes.
- $100-$199 is middle
- $200-$499 is upper middle
- $500-$999 is lower upper
Etc.
That’s the scale I’ve always used (household income).
Most millennials fall in the lower middle or middle bucket.
- 61% of incomes are below lower middle
- 26% of incomes are lower middle (median being $61,822)
- 10% of incomes are middle
- 3% (nearly) of incomes are upper-middle
- <1% is remaining…
Data from https://dqydj.com/income-percentile-calculator/
Caveat, this is individual income, and you're talking about household income, so not quite the same for couples where both work.
https://fred.stlouisfed.org/series/MEHOINUSA672N
Your lower-upper class is a subset of the top 1% of incomes.
https://dqydj.com/united-states-household-income-brackets-pe...
~40 years ago this "middle class" standard of living was readily attainable for anyone who diligent, reasonable intelligent, and willing to work hard. Not only that, it was standard for such a lifestyle to be achievable with only one household member working. Now the much more common circumstance is that both adults work, many of the above living conditions are barely achievable, if at all, and many families are one financial hiccup away from disaster.
We can debate over the various reasons for this change in the economic landscape for working people, but there is no debate to be had over the reality of it. The change has been substantive. Its much, much harder for the average working person today to live comfortably and raise a family than it was just a few decades ago.
Also, the social safety net in the US isn't great, but it definitely exists. You can be a pretty big screw up and still have a roof over your head. You just won't have much else.
If I told you I was going to beat you up and steal your money every night, it doesn't mean you should just smile and accept it as inevitable, even if that's really my plan.
>We still live like kings compared to most of human history.
We have more collective wealth than any time in human history, and more collective wealth than we did ~40 years ago when working people had the living conditions I described above. As far as I'm concerned, there's no "good" or "acceptable" reason that the artificial system ("the economy") that we designed and continue to maintain, that has resulted in far worse living conditions for the average American, should not be changed so that our collective wealth is more evenly distributed among those who participate in our system. Especially dishonest and (more frequently) ignorant people will blame the, "free market" for the massive (and growing) disparity in wealth, but there is nothing about our economic system that is "free". From our central bank to our byzantine "regulatory" structure to our legal system to our tax code to currency control and beyond, we have a financial system that is tightly controlled, regulated, and guided by powerful, entrenched interests at the upper echelon of the financial world. It isn't even useful to draw a distinction between governmental and non-governmental entities at this level, because they are the same. Our economy has been guided and controlled by a rotating door of corporatists (or whatever other adjective you choose to describe our economic oligarchs) to ensure wealth consolidation.
We can either recognize the problem - that our whole system has been off the rails for some time and is horribly broken - or we can continue down the same path of the rich getting richer and the poor getting poorer until we reach a breaking point. Hopefully we choose the former path but unfortunately the latter seems more likely.
I didn't say smile and accept it. I said "adjust your lifestyle". The rules changed, so how you play needs to change with it.
If you tell me you're going to beat me up and take my money every time you see me, I'm going to make sure we don't cross paths.
My point is that there is no reason to be surprised at what is happening because people have been telling us that is what will happen.
The fact is, there are a bunch of people who are in effect living a life of "He told me he'd beat me up and take my money every day, and sure enough every time I see him, he beats me up and takes my money, but maybe tomorrow he won't!"
When someone shows you their cards, take advantage of it, is all I'm saying.
You also have to eliminate all tax-benefits that americans receive that foreigners don't. And then you have to make public all wages of american citizens, to equal the information asymetry
Would you rather hire an entry-level domestic worker for the same salary as an experienced foreign worker?
There's free specialized education available on the internet for anyone who is an autodidact.
Uh not really.
I've been a front-end developer for almost ten years. When I first started out, yeah, you could teach a monkey to build a static site. Most of the jQuery I knew was copy and paste, easy stuff.
Now? You need to be an expert in Javascript, Object Oriented programming, CSS preprocessors, NPM and various build tools, template languages, responsive frameworks and at least another dozen or so technologies people are using to create dynamic websites. This doesn't even scratch the surface of what you need to know if you're interested in developing mobile apps.
Web designers don't have it much easier. You need to be completely fluent with every Adobe tool and Apple Sketch or any collection of wireframing software. Toss in deep knowledge of font pairings, color theory and you need to have expert level knowledge of CSS. You're not a "web designer" anymore either. You're now a UI/UX developer.
And did I mention that every single one of these technologies come and go faster than mumble rappers on Soundcloud? So once you've taken a year or so to learn BackboneJS, poof then Angular and ReactJS comes out, and now you have to pivot to those languages. Oh, you're company loved Angular but the new guys like ReactJS? Oh too bad, now we're going to use React instead. Oh you just interviewed for a new role, but they're in love with VueJS, do you know that too?
The bar is higher because development in general has become exponentially more complex and continues to get more complex every month. Specialized Education overseas really has nothing to do with it. At the rate technology is changing on the front-end side, there's just no way education can keep up.
English majors, telephone company employees who were getting a bit old to climb poles, bright high schoolers who got trained in the military, science grad school dropouts, etc etc, and somehow code got written.
1. https://www.uscis.gov/working-united-states/temporary-worker... 2. https://en.wikipedia.org/wiki/Software_engineering_demograph...
Previously, one with all Germans: https://void4.github.io/allgermans/Germany.html
I just Googled and found this article: https://qz.com/949589/the-h-1b-visa-cap-tells-you-very-littl...
... which indicates that about 500,000 H1B visas are currently valid. If those were to all go to tech workers, that would be about 1/7 of all software developers, which is definitely enough to move the needle on compensation, access to entry level jobs, and so on.
My H1B extension still has ~2 years left on it, but I moved back last year..
But, sure -- it's not nothing. But go look at the stats.
Honestly I think even the quoted 85,000 number would be enough to move the needle, but 250,000 certainly would be.
Just a couple of "thought experiments"... if there are 3M software developers with on average a 20 year career, about 150,000 would be entering the workforce at any given time. If it's true that H1Bs compete with entry level workers for jobs, 85,000 visas would certainly have a felt impact.
Also, about why I think even 85,000 would affect the entire market... even a relatively small amount of additional workforce can shift the balance of market forces significantly. Again, as a thought experiment, let's say there are 100,000 jobs for software engineers and those software engineers are worth $200,000 to the companies that employ them. For simplicity, let's say additional software engineers beyond 100,000 are absolutely worthless to the company. Assuming we have 95,000 software engineers looking for jobs, they find themselves highly in demand and able to negotiate from a strong position for high salary, benefits, and so on. If we add another 10,000 engineers somehow, from any source (including increases in the local training of engineers), suddenly there are more engineers than the market demands, and a race to the bottom could begin (assuming all engineers were equal). Obviously there is also a skill distribution so the most highly skilled engineers would be less affected than those less skilled, but as you get closer to the bottom of the distribution, you'd be more affected by the changes to negotiating power even if you're more skilled than some of the new entrants.
Obviously the above is not a rigorous analysis, which could and should be done, but is just a thought experiment to show that it's POSSIBLE that a small number of new entrants could affect the market.
See also https://www.khanacademy.org/economics-finance-domain/ap-macr...
If anyone knows of good resources for estimating the supply/demand curves for software engineers, I'd be interested in reading them.
https://www.investopedia.com/news/h1b-visa-issue-explained-m...
That number may even be better for your argument, because 65K/yr entry level programmers entering a 4000K programming market seems huge.
Indeed, many of those companies wouldn't be around were it not for immigrants, since they not only work for companies, but also found them and of course purchase their products and services.
I think his point has some validity since H1Bs can replace local workers with lower paying H1B substitutes. Yes, this isn't allowed but it happens all the time.
There is not a fixed lump of labor to be divided up.
Overall, immigration has been a net boon to the US's economy, including the creation of many jobs.
And a lot aren't. There's a reason you throw away outliers in statistics.
How do you know that? I doubt this claim. Plenty of people still teach themselves programming and get jobs.
Once that works, you can advance further and ban free open-source, including platforms like Github. Free labor is the enemy of high wages. You can increase salaries even more by regulating licenses and limiting how many people can be software engineers or write code at all.
And then you can keep going, and ban high use of computing power: you will need more labor to compensate the inefficiencies of wasteful, environment harming, computer processing.
Success is guaranteed!