I’m always puzzled when people or some websites claim they can calculate ROI for a college education. How? The cash flows post-graduation are not only uncertain but subject to changes that can’t be known a priori throughout one’s career. There’s no way to quantify such uncertainties either approximately or probabilistically.
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And typically there the cash flows pre-graduation aren’t known either (at least not on a one size fits all basis). Different kids pay different amounts at the same school. That will impact the ROI.
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I do know people who work in those fields. For the most part, with a few exceptions, the vast majority earn far less than their STEM (especially T, E, and M) peers. Many are planning to go back to school for a more marketable degree.
A lot of uber successful business development and marketing people study psychology or sociology. And very few of them are independently wealthy because those aren’t fields rich kids go into…
Not true in my experience – lots of kids of wealthy business people I know go into those fields post-grad, largely facilitated by their parents’ connections.
Out of interest, how many people do you actually know who are have been in the workforce for long enough to make this decision? I would guess that most of your working friends are only a year or two post colleges, and in a pandemic. Tech jobs were affected less than other jobs, especially before vaccines became available. However, much of that is temporary, but for new graduates it would seem that this was a permanent situation.
Parents connections help for a young grad selling aircraft engines? You know “wealthy business people” who work in business development and sales support for Siemens, Caterpillar, Danaher? You know rich kids who got jobs and are leveraging their parents friends to be successful selling CT-scan equipment to major hospital systems?
Wow. You sure know a lot of a-typical rich people! They are not the norm. And selling multi-million industrial systems does NOT depend on who you know; social networks are totally irrelevant. Even if your rich friend’s parents are golf buddies with the CEO of a large hospital network, the notion that this corporate leader would pressure the procurement department to buy, based on a friendship- is totally ludicrous. That’s how CEO’s lose their jobs.
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Could a lot of this be true, simultaneously?
E.g., Some folks w/humanities degrees do end up in lower-level, lower-paying jobs (I have seen that, unfortunately). Others with humanities degrees also end up making tons of money in upwardly mobile, interesting work (I’ve seen that too). Some kids do benefit from their parents’ connections (have heard several explictly tell me this as a mark of pride!). Others have zero parental connections and still do extremely well.
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Why is it surprising that some people make life choices that end up making them successful financially while others make different choices? Regardless of what you major in- there are so many other inflection points in life.
I have contemporaries who took 15 year maternity leaves and are SHOCKED that their high paying careers did not stand still for them. It is upsetting (profoundly) to leave a career in publishing, commercial banking, advertising, etc. where you were flying high- and discover that those industries have changed in some pretty fundamental ways. And that your 5 day a week gig teaching yoga at the local community center is not paying you your former 6 figure salary. And that the on-ramp for your former career involves starting all over again.
That’s a life choice which has nothing to do with majoring in STEM or comparative literature.
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But the former is MUCH more likely for lower/middle-class unconnected college grads who majored in the humanities at non-elite schools than the latter scenario.
That’s really the missing link - well it’s been called out.
It’s 80/20 or 70/30 - no one is saying you can’t major in classics or literature or sociology and make a great living.
They are just saying the odds are stacked against you.
My son just called - he got an internship offer in upstate NY (not a big city but a large company) for $24.33 an hour - as a Junior in MechE. I doubt the English major is pulling that.
That will go to the same after school - the English major may not even have found a paid internship.
No one is saying that with hard work, dedication, luck and all the rest that this individual won’t be successful.
But if you put 50 humanities out and 50 engineers out and you graded for a successful career (whatever that is) - of the top 50 or that 100, probably 35-40 would be the engineers.
Of course there are examples of even GEDs becoming rich…it’s more a general theme that I think people are seeing/espousing vs. an absolute.
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There are plenty of kids that get great finance jobs without using family connections. My daughter is one of them, and so are many of her friends (both men and women). No doubt family connections may help, but they really are not necessary. Full disclosure: I work in finance, but the entire extent of my help was telling her to read “One up on Wall Street” back when she was a freshman. I don’t have any connections in the area of finance she works in, but even if I did, she would have refused my help.
On the other hand, college pedigree helps a great deal, at least for her area of finance (investment banking). I estimate that there are 30 universities and LACs that are considered recruiting “targets” and students from them are seriously considered. Students outside can break through, but it’s tough. In addition to lacking the pedigree, they also lack the advantage of clubs that teach the subjects the finance companies care about, and a helpful alumni network at the target companies.
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Exactly. UMC folks on websites like CC love spouting the exception to the rule in obedience with American exceptionalism/individualism. But let’s face it – overall, for most humanities grads, the odds are slim and the pickings are slimmer. It’s pretty rare to see a humanities college student get a paid internship during college, but I see it all the time for STEM folks.
Oh for sure. And I’d like to add that the “non-target” students who do manage to break through in BB IB almost always tend to be finance/econ/math/CS majors – only Ivy plus kids really have the luxury of majoring in something irrelevant while still having a fighting shot (although finance and consulting firms are increasingly favoring quant majors).
I’ll give a real world (in my life) example of a non stem major, who is 28 years old, and doing extremely well. He is D1’s bf. He graduated with an English degree (psychology minor) from a very good liberal arts college and works as a consultant for one of the big accounting firms. He just received a huge bonus and a 25% raise for all of his hard work during Covid. His clients love him! He has also spent his free time the past two years writing a novel. He had no idea what he would do with his major, but loved what he learned in college and was able to get a great job after graduating. People take many different paths from what they major in during college to what they end up doing in their careers.
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If you think education is expensive - try ignorance. A few years back Professor Doug Webber compiled a dataset of lifetime earnings by college major. It’s true that engineering majors had the highest median lifetime earnings but almost any major including Theology had better lifetime earnings than the average high school graduate.
Here’s a Dashboard of Lifetime Earnings by College Major prepared by Jon Boeckenstedt.
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It would be nice if they provided more information about their methodology. They refer to some Webber papers, such as the one at https://ecommons.cornell.edu/bitstream/handle/1813/74794/WP152.pdf?sequence=1&isAllowed=y , but don’t go into detail about which aspects of the methodology are used.
The referenced Webber bases lifetime income from a longitudinal survey of kids who graduated in the 1970s. A lot has changed in relation to the earnings associated with different majors since the 1970s, particularly in CS. It also groups all of STEM in a single category, even though different STEM majors often have very different typical earnings. Fortunately, the latter seems to be corrected in the tableau graph. One positive is that the linked pdf include a control for “ability” (using test score), rather the common assumption that all students are the same and ability/background has no influence on earnings. A comparison of earnings premium for graduating after controlling for AFTQ score is below. I am using table 7 at the end, comparing the earnings for the major grouping to “some college.”
Highest Quintile Ability
+50% Earnings Premium for STEM Degree
+34% Earnings Premium for Business Degree
+29% Earnings Premium for Social Sciences Degree
+12% Earnings Premium for Arts/Humanities Degree
Lowest Quintile Ability
+51% Earnings Premium for STEM Degree
+45% Earnings Premium for Business Degree
+32% Earnings Premium for Social Sciences Degree
+15% Earnings Premium for Arts/Humanities Degree
I don’t disagree with this, blossom. I think we are all coming at this from different angles, highlighting the many aspects that are relevant to career success (and the various ways success might be defined). Bottom line - it’s complicated. But I think it’s possible to ascertain general trends (e.g., engineers will have on average higher salaries after graduation than English or Psych majors) - without excluding other factors, such as aptitude, interest, cost of living, personality traits, etc.
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I’m reading “The inequality machine, how college divides us” by Paul Tough, which is an interesting read. He references MIT economist David Autor’s work on the college wage premium. His data seem to indicate that the growth of the college wage premium in recent decades is primarily driven by the increased salaries of high earners with graduate and professional degrees. It is also driven by the fact that the average income of Americans without bachelor’s degrees has actually fallen since the 1970s. So college graduates with a BA might seem upwardly mobile due to the declining prospects of those with less education. It’s a sobering fact that a non-professional BA these days might be more of an insurance against moving down the socioeconomic ladder than an aspiration to move up.
Paul Autor’s work can be found is Science, May 23, 2014. His paper is “Skills, Education, and the rise of earnings inequality among the ‘other 99%’”. I have access to it but I’m not sure it’s available to all. I got Paul Tough’s book at my local public library.
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Again, this is what we call an incredible exception.
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FWIW, Webber says he’s updated his earnings estimates in 2019 using the two most recent waves of the American Community Survey (ACS). My understanding of this data is there is a college earnings premium (a college degree pays off) under most scenarios no matter the college major.
That is true as well, and I neglected to mention that. However, this is just another extension of those connections. These firms hire from those colleges since those were the colleges attended by the top people (and middle people) at those firms. Because of legacy and because wealthy families have a leg up in admissions to these colleges, these connections have solidified. One one hand, it benefits graduates of those colleges, no matter what their SES, but it also shuts out the graduates of colleges attended by 99.9% of the bottom 80% of the population by income.