Academic average is over sentences to ponder

by on June 16, 2016 at 2:41 am in Data Source, Economics, Education | Permalink

The percentage of new doctorate recipients without jobs or plans for further study climbed to 39% in 2014 from 31% in 2009, according to a National Science Foundation survey released in April. Median salaries for midcareer Ph.D.s working full time fell 6% between 2010 and 2013.

The reason: supply and demand.

And this:

Ph.D.s still earn a significant premium over others in the labor market and their overall rate of unemployment remains low, though a growing number are taking jobs that don’t use their education. At the same time, their median incomes have been falling. Computer scientists earned $121,300 in 2013, down from $129,839 in 2008; engineers saw a drop to $120,000 from $125,511 and social scientists fell to $85,000 from $90,887.

Here is the WSJ piece, via the excellent Samir Varma.

1 Justin Kelly June 16, 2016 at 2:59 am

I reckon the largest component of College/University Education is rent seeking, degrees are required for any professional business certification now (BI, PMP, CISSP, CPA, CMA). The next largest component might be networking, taking classes from adjuncts who are really scouting for workers. After that would be the degree itself, as a certification that you know something…. but education? Actual education has got to be the smallest component of getting a degree.

2 dan1111 June 16, 2016 at 3:12 am

Back when I was applying to colleges for an undergraduate degree, I received dozens of pamphlets advertising various institutions. It was really striking that practically none of them mentioned learning as a reason to pick them.

3 Ray Lopez June 16, 2016 at 3:57 am

@JK – it’s called ‘signaling’. A while ago AlexT and TC had a short video on this topic, with AlexT taking ‘your’ stance, that education is all about socializing and signaling to employers you are smart, while TC took the stance that you actually lern something in college.

Me? I’m the next wave: the rentier class. All you need is looks and a whole lotta money, preferably from inheritances (minimum net worth $1M) and a low cost location like the Third World Philippines. But don’t believe me…I don’t want the competition. Stay in your cubicle, work hard, and pay your taxes. Good boy.

4 Jan June 16, 2016 at 5:11 am

Exactly. For those who inherit significant sum from their parents’ DC investments, there’s really no point in going to college. For what? You can always go to Saturday football games and get drunk without ever having been a student. Even if you end up venturing a little off the beaten path and get kidnapped in Mindanao, they are only receiving about $100,000 for a westerner these days. Well worth it for some interesting adventure!

5 Ray Lopez June 16, 2016 at 7:14 am

Hey Jan, thanks, but I did do signaling, made $0.5M “on my own”, found out though my clients love me, I took work too seriously (a lot more than my clients; I can’t tell you how many times I saved their bacon), and find retirement before age 50 is quite pleasant–especially if a rich aunt leaves you money and you discover, like Magellan but hopefully without his bitter end, the Philippines! I’ve never been to Mindanao, but knowing my business minded parents, they would never pay $100k ransom. No way. I’ve not asked them for money since age 18 or so. I recently found out that $50k given to me from them that I thought was a gift was in fact a loan, and they want it paid back. And they’re worth > 10M USD. Rich people worship money. Family comes second sometimes, and/or if you want a piece of their fortune you have to play by their rules (which means not leaving DC for me, and marrying some boring Washingtonian).

6 Jan June 16, 2016 at 7:32 am

Joke lang! Didn’t mean to hurt your feelings. They say the first 1/2 million is the hardest!

Also, I’m not a lawyer, but I think if they gave you that $50,000 before you were 18 (i.e the last time you asked them for money), you probably have a good case that you don’t have to pay it back. What are they going to do, disown you? Sounds like it would be a blessing.

7 Mike W June 16, 2016 at 11:01 am

You sound bitter toward your parents. As a parent with a net worth north of $6M I see where they’re coming from. Maybe they just don’t like you and see no reason you should inherit their wealth just because of an accident of birth. Maybe it’s not that “rich people worship money” but rather that “family comes second” because they prefer cats.

8 Justin Kelly June 16, 2016 at 3:54 pm

@Ray there is something to what you say, but inheritance is not necessary. Being “white” is/was usually enough, but some of those places now require you to be white AND have a degree. Another option is to be retired: I might return to expat life upon retirement if I can convince the wife.

9 mulp June 16, 2016 at 3:16 am

Can’t have wasteful R&D developing new drugs, materials, batteries, solar and wind, etc technology that destroys the rent seeking possible with things developed in the 90s that are controlled by a declining number of huge corporations focused exclusive on share holder value, code for slashing labor costs and gaining monopoly control to extract high rent and inflate the prices of control over a declining quantity of capital assets.

10 rayward June 16, 2016 at 5:41 am

In academia, it soon will be Goodbye, Columbus! Why would young men and women pay extraordinary amounts for a degree whose reward doesn’t match the cost – and the effort. And that goes from the bachelor’s degree to the PhD, demand for the latter a function of the demand for the former. In business, it soon will be Goodbye, Silicon Valley! And Hello, Shenzhen! Do so-called tech companies really need PhDs to create and sell advertising? And flying cars and spaceships to Mars? On the other hand, in the low tech world of the low country where I have a home, there’s plenty of demand for engineers (mechanical, chemical) with the knowledge and skill to keep the ubiquitous chemical plants operating. That’s right, in the low country we produce chemicals as well as retirement communities. And contaminated rivers and land that require engineers to clean up the mess. Want a job? Get an engineering degree from Georgia Tech. Each year it’s rated one of the best values in higher education. Of course, working in a dirty chemical plant may not have the same appeal as working in Silicon Valley.

11 Bill June 16, 2016 at 8:52 am

I have an answer to your question: Why would young men and women pay extraordinary amounts for a degree whose reward doesn’t match the cost?

Answer: Because they are foreign students who hope to get a green card or hope the immigration laws will change.

12 Lord Action June 16, 2016 at 11:38 am

+1

In many, many cases, they’re really selling immigration slots.

Uncle Sam should cut out the middleman.

13 dsgntd_plyr June 16, 2016 at 2:07 pm

this is such an obvious solution it will never be adopted. set a cap, then auction visas. or adopt the idea of requiring a bond and/or insurance (steve sailer has a post about this).

14 Lord Action June 16, 2016 at 2:56 pm

I find it really aggravating that there’s this problem crying out for a market, and on one side you’ve got the closed-boarder folks crying out for zero-quantity, and on the other the open-boarder folks crying out for zero-price.

Guys, we have ways of solving problems like this.

15 Urso June 16, 2016 at 5:33 pm

Give me your wealthy, your well-rested, your pampered few…

16 ruhkukah June 16, 2016 at 6:06 pm

GO YELLOWJACKETS!

17 Engineer June 16, 2016 at 5:56 am

Computer scientists earned $121,300 in 2013, down from $129,839 in 2008; engineers saw a drop to $120,000 from $125,511

What are the salaries for non-PhD engineers in comparable positions? My guess is that they are about the same.

The main (only?) benefit of an engineering PhD is that you get to do more interesting work for the first few years after you graduate.

18 anon June 16, 2016 at 7:40 am

In fields with high starting pay its not always a positive signal when people stay in school.

19 Lord Action June 16, 2016 at 10:24 am

In my engineering experience, it’s the A- students who stay for PhDs. They have to be quite good to get into top school PhD programs, but not so good that really great industry opportunities are staring them in the face.

The thing about being an engineer is that you can do a whole lot more with more money. Places like MIT and Stanford have money, but nothing like industry money.

Also, most engineering jobs open to undergrads and masters students are on some kind of management track. The PhD is a way of avoiding that and staying more technical, but in some ways that’s a negative signal rather than a positive signal.

20 corporate slave wandering down fluorescent hallway June 16, 2016 at 10:24 am

these income stats are of course false, bogus, fake and just a bunch of lies

21 HL June 16, 2016 at 4:34 pm

180

22 chuck martel June 16, 2016 at 6:24 am

A salary of $120,000/year is the same as $60/hr. Boo hoo. How much should some professional student that never lifts anything heavier than a ball point be paid anyway? If he’s an engineer a major portion of his output will have to be reworked by lowly “object manipulators” out in the field. The current educational system, a remnant of late medieval Germany, is no longer relevant since all information is easily available to anyone, not just to students in the classrooms of genius academics, who write books that put their knowledge in the public domain.

23 Jan June 16, 2016 at 6:42 am

So is this what progress on our goal of more STEM grads looks like?

24 Cliff June 16, 2016 at 11:47 am

PhD |= STEM

25 Jan June 16, 2016 at 11:57 am

Did you read the article and the accompanying chart? This is true for STEM and many of the examples, including the one Tyler pasted above, are STEM fields.

26 Bob June 16, 2016 at 6:34 pm

Sure, they are STEM fields, but what’s really going on is not that there are few jobs in STEM in general, but that a Ph.D is not really worth the equivalent years of experience, even if it was free.

Few Americans get a Ph.D in computer science unless their plan is academia. Facebook will hand you a 100K bonus, right out of school, for signing in with them!

Now, if there’s a complaint to be made about the STEM talk, is that it’s to broad. Science doesn’t pay, and we have a glut of people. Technology and Engineering, not so much. But we count a PhD in biology, who will not have very special career prospects, in the same bucket as those CompSci graduates that we can’t get enough of.

27 Lord Action June 17, 2016 at 9:08 am

You see people talking about STEAM, where the A is for Arts. Which is silly beyond belief. Adam Savage is among them.

It should really be just TEM. The S is a bit of a crap-shoot. It depends on getting a lot of details right.

28 required June 18, 2016 at 10:33 pm

In any STEM field, Ph.D. makes less money than Master, except for Economics Major.

29 required June 18, 2016 at 10:34 pm

Note that Master and Ph.D. in Economics are STEM, but BA / BS in Economics is not STEM.

30 Axa June 16, 2016 at 6:58 am

Mobility…..Ph. D. knowledge and skills are so specific that demand for them may be on the other side of the world. The people I know with Ph. D. and good salaries are not at home with childhood friends.

31 Moreno Klaus June 16, 2016 at 4:50 pm

True story bro. I am about to finish, and I already accepted my fate 🙂

32 anon June 16, 2016 at 7:44 am

My dangerous question is, with the huge increase in PhD volume, how has quality faired? Is admissions reaching further down the IQ curve for candidates?

The same applies to “college men” more generally.

33 too hot for MR June 16, 2016 at 10:31 am

I wanted to ask a similar question, specifically: does affirmative action operate in PhD programs the same way it does elsewhere in higher ed.?

I’d hope that at that level there’s still hard meritocracy intact, but I have my doubts. I’d guess that there’s some sort of hidden bifurcation, where the meritocracy candidates specialize in certain competitive fields and the A.A. candidates still muddle through and get their tickets stamped. Of the course the market for PhD’s won’t be entirely blind to this.

34 prognostication June 16, 2016 at 11:42 am

My observation from inside the system is that most good PhD programs still will punt you at quals or comps if they regret letting you in. There’s still a modicum of quality control. I think that is increasingly untrue of bachelor’s and even master’s degrees.

35 prognostication June 16, 2016 at 11:42 am

I should add that I think the AA framing is unhelpful and what I said is generally true regardless of background.

36 Jan June 16, 2016 at 11:51 am

Do you know what percent of Stanford’s CS undergrads are minorities?

37 Jan June 16, 2016 at 11:52 am

Actually, let’s say non-Asian minorities. 😉

38 Jan June 16, 2016 at 11:50 am

I don’t know how big the increase in grad volume has been, but yeah, I am guessing the average IQ or whatever metric of innate ability has almost certainly gone down. If that’s true, then what you might look at is the average salary of the top tier of PhDs. Are they also making less and/or finding it hard to land a job out of school? If so, then something else beyond diluting the pool is probably going on.

39 bellisaurius June 16, 2016 at 7:49 am

Happy tyler used stem stuff to get that argument off the table. So, this is mostly on the top end. I looked at starting engineer salaries from a randomly selected schools (ie, first page google result), and compared 2008 and 2013 to get apples to apples:

http://engineering.vanderbilt.edu/news/2009/engineering-tops-2008-list-of-majors-with-highest-average-starting-salary-offers/ and http://engineering.vanderbilt.edu/news/2013/best-paying-college-majors-are-mostly-in-engineering-nace/

The listed ones show a ball park increase of 5-10% over the time period. So, there’s work, but imaybe not what companies are considering PhD work (or that’s the way retirements are shaking out..)

40 Bill June 16, 2016 at 8:57 am

I have the same question of the value of a Ph.D but it is from a different perspective.

Ph.D’s are big specialization silos, and what is valuable is someone who can combine, at a high level, several disciplines: a computer scientist who has a masters in chemistry that can do computational chemistry and modeling; an MBA graduate who has an advanced engineering degree; a mathematician with signal processing knowledge who has an advanced degree in materials science and can design medical implants.

The problem is too narrow specialization and not enough cross discipline specialization.

For the same amount of time to get a Ph.D you could get specialization in two areas and a job.

41 Dave June 16, 2016 at 1:48 pm

I had the same thought. From what I can tell, most PhDs try to get jobs in areas that don’t match their extreme specialization, so they are then competing against people who don’t need PhDs.

Another thought is that maybe the number of PhDs is increasing? It seems like there’s not much use for more than maybe 25 schools even offering PhDs in any given field…

42 Engineer June 16, 2016 at 9:15 am

Ph.D’s are big specialization silos,

And most of the time the demand for the specialization has gone away before you turn 40.

A colleague with a doctorate has recently added various practical skills including professional certifications to his linkedin.

43 Hadur June 16, 2016 at 9:37 am

I know somebody who just graduated from a PhD program in history. During the PhD, they taught themselves how to code, for the purpose of using computers to analyze data – I believe his PhD thesis involved analyzing records of taxes received by the central government of a certain long-gone empire to make conclusions about which regions were doing well at what times.

Upon completion of the PhD, this person immediately took a job as a software developer.

44 JWatts June 16, 2016 at 10:50 am

So he turned his Social Science degree into a STEM degree.

45 Lord Action June 16, 2016 at 10:59 am

It’s not that crazy. That’s more or less what an undergrad degree in economics is these days: a statistical programming degree with a side of business.

46 Edward Burke June 16, 2016 at 9:46 am

If the venerable law of supply and demand continues to hold any relevance, how can any social scientist with a doctorate be earning a median income of c. $85,000 annually in 2013 or 2016? The unabashed nonsense and dubious (when not odious) views foisted by “social scientists” in recent years suggests that the criterion of gullibility has been unjustly dismissed from calculations for sociology remuneration.

Economists need to investigate “the gullibility premium” at work in academic remuneration (primary, secondary, post-secondary, graduate, doctoral programs and schools all), then for comparison purposes learn whether (or to what extent) a gullibility premium is wildly inflating the median incomes of actors and actresses, athletes, popular musicians, journalists, and other entertainers before attempting to extrapolate sound conclusions to the pay schemes of our political class, since they occupy the bottom rungs of our glorious entertainment industries.

47 Tokarev June 16, 2016 at 10:07 am

Clearly we need drastically more H1-Bs, as we simply can’t train enough STEM grads. There are grant applications rotting in the fields!

Honestly, I wish this idiotic higher ed bubble would just pop already.

48 corporate slave wandering down fluorescent hallway June 16, 2016 at 10:26 am

it won’t go away as long as the edu-propagandists can get away with posting false income stats, like those posted above

49 AnthonyB June 16, 2016 at 11:35 am

Science magazine finds the jobs survey grossly misleading:
http://www.sciencemag.org/careers/2016/05/employment-crisis-new-phds-illusion

50 SMN June 16, 2016 at 11:37 am

Those wage rates seem very high? Are they the wages directly after graduating from a PhD.?

Here in Ireland a lecturer would start on 36,000 euro, that’s about 40k USD gross.

By age 40, they could expect to be earning from 55,000 euro, say 63k USD, or else up to 70,000 euro if they are more successful, 80k USD.

51 prognostication June 16, 2016 at 11:45 am

At a university, a starting Assistant Prof (lecturer-equivalent) in most fields I’m aware of would make anywhere from 45k to 80k depending upon field and institution. I think most of those salaries are private sector.

52 Lord Action June 16, 2016 at 12:03 pm

Surely not in a technical field?

I Googled “Georgia Tech Assistant Professor Salary” to get a middle-of-the-road number and it came out at slightly over $100k. And that averages in East Asian Studies and Music with the technical people.

I’d be shocked if the engineering faculty weren’t starting north of $150k. How are they going to compete with the late-20s pay for a good engineer who declined a PhD program without paying in that range?

53 prognostication June 16, 2016 at 12:27 pm

I just looked at my institution, a large and fairly selective state school. Mean/Median Assistant Prof salaries in the College of Engineering are 86-91k, and that includes the cost of living bumps that a 4th or 5th year prof has over a 1st year. So I don’t think my 80 estimate was wildly off.

54 Lord Action June 16, 2016 at 12:31 pm

Wow! Thank you.

55 prognostication June 16, 2016 at 12:31 pm

And on the lower end of the range I gave, I know that there are people in my field (a social science, so not the bottom of the barrel for salaries) whose new TT offers at institutions that have rigid state pay scales were around 60k. From what I know, if you’re in liberal arts and at a small, low-prestige regional institution, I’d imagine your starting pay could easily be below 50k, although I can’t imagine myself taking such an offer.

56 Enigneer June 16, 2016 at 12:32 pm

I’d guess they can compete on the basis that a LOT of people want the university life, and are willing to accept less money in return for the other benefits – of which there are many. Newly minted PhDs are at least roughly familiar with university life, they see more status there than working for TI or Ford, probably are not attuned to financial aspects of career planning, and inertia – that’s what PhDs are supposed to do.

I entered STEM PhD program with a Masters (many years ago) for some of these reasons. I quit and went to work after a few months – I concluded that getting into the program met my “demonstrate to myself I can do it” goals, and was ready to get on with life. Never looked back, or felt bad about the decision. But I can still see, walking around campus, its a very nice place to work/live. Its easy to see how many would be attracted to the lifestyle.

57 Bob June 16, 2016 at 6:42 pm

Ireland, not unlike Southern Europe, pays badly.

Starting salary differences between Madrid and North Carolina in computer science: 2x. A rookie programmer in NC makes more than a seasoned veteran in Madrid. Probably double that again for San Francisco. The UK is competitive with NC in dollars/pounds, but the difference in cost of living still makes US employment far more lucrative.

58 dsgntd_plyr June 16, 2016 at 2:02 pm

the solution to this problem, obviously, is to increase the number of h1bs we issue.

59 Tom Davies June 18, 2016 at 6:39 am

Columbia is the place to go:

“at Columbia University, Ph.D.s are taking classes in using Twitter to better communicate their work to nonacademic audiences.”

Comments on this entry are closed.

Previous post:

Next post: