And the actuaries shall eat

In the debate on unemployment, Ryan Avent makes a common move (related post from Matt here, and Fabio here and Adam here), though I think an incorrect one:

It is remarkable to me how readily old, successful professionals dismiss the labour-market difficulties of young adults as the product of their poorly-chosen majors and general lack of ambition, and on what flimsy evidence they’re prepared to base these views. There are now 3.3m unemployed workers between the ages of 25 and 34. That’s more than twice the level in 2007. There are over 2m unemployed college graduates of all ages; nearly three times the level of 2007. There are many millions more that are underemployed—unwillingly working less than full-time or unwillingly working in a job outside their field which pays less than jobs in their field. As far as I know, the distribution of college majors didn’t swing dramatically from quantitative fields to art history over the past half decade.

The general form of the argument is: “only x changed, therefore x is the cause.”  A supply and demand graph, with the shift of one curve, shows that argument to be false.  The net effect of the shift will depend, for one thing, on the slope of the other curve, plus whether the other curve has been shifting (more slowly) all along.

A similar kind of argument is applied to the eurozone.  Since “things were fine” in year ????, the current crisis can’t be about structural problems in the underlying European model, yet in part it is, for reasons of resiliency and robustness.

Going back to unemployment, labor market opportunities for college grads have been eroding — except for the elite — in absolute terms since 1997-2000, well before the collapse in AD.  If those same grads are highly willing to be geographically mobile, highly willing to consider actuarial training, and highly willing to take tougher courses and study where the jobs are (doesn’t have to be tech subjects, some of those are failing too), the unemployment response to a given AD shock will be much lower.  But they aren’t, so it isn’t.  I’ve seen only small adjustments in the ambition and flexibility of college goers, not enough preaching about TGS I suppose.

In an era where both monetary and fiscal policies have underperformed, looking at both sides of the market is essential.

You can even give this all a Keynesian take (though I would prefer a TGS framework).  Since 1997-2000, there is downward pressure on lots of wages, but morale matters and labor market incumbents retain a favored position.  Though some wages fall, employers resist that downward pressure, and pass along a lot of the burden of adjustment to new job seekers.  Even if that original downward pressure on wages is smallish, new job seekers have to make big adjustments in their career plans, majors, ambitions, etc. to get through the door at all.  They didn’t.

That’s the same argument that Keynesians cite and indeed insist upon in other contexts.  It is somewhat harder to see when you start with a slower erosion in real wage opportunities, rather than a sudden AD shock, but it doesn’t make sense for Keynesians to dismiss it.

The real issue, I suspect, is that many people are allergic to arguments which appear to “blame” the job seekers, rather than government inaction, but it’s not about blame one way or the other.  It’s about the desire to have a fuller and better model, with richer causal chains, and to see through all the variations to a deeper level.

To put it rather immodestly, my arguments are a lot stronger than many people think!


It's hard to blame people for not studying to become actuaries when most people haven't even heard of actuaries.

The education system didn't just get worse yesterday either.

Actually a lot of people have heard of actuaries. It USED to be the fact that it was an unknown profession but these days the entry level is clogged with people. I know a number of former classmates who became or tried to become actuaries. It used to be 2 exams passed would get you a job for sure and now it's more like 4 exams plus internship experience. Some of them made it, but I know at least one (who has last I heard at least 3 exams passed) who has been told by recruiters that they literally have no chance at an actuarial job because the entry level is just clogged.

I don't know, the 2 exams thing worked for me (within the past 2 years) and seems to have worked for the other people my firm is hiring. When I tell people I'm an actuary I almost always have to then explain what one is.

I've heard and seen completely differently. Even my friends in the field who did get good jobs all tell me that without 4 exams and some internship experience it's pretty tough to break in. At the university I went to the actuarial program was literally pack to the gills - easily a few hundred people in the program.

As some one studying for the actuarial exams, the exams are hard.

It now takes 5 exams and a number of college courses (called VEE) for the entry level actuarial title.

From what I read on the actuarial message boards, many of the people applying for entry level work have not taken the time to pass *any* of the exams, nor work as an intern (nor even flipping burgers during the summer).

As for work experience, I'm a developer, and my previous employer sold software for accountants and actuaries. But it looks more and more like the pension side of the business is melting down pretty fast, so those actuaries are looking for work in other actuarial areas.

Requirements for ASA (the lowest level):

This is more accurate. The actuarial field isn't what it was - perhaps there are some exceptions but it's become highly credentialized in general.

I don't know about this. I am currently a student (no actuarial internship experience) and soon to be a working entry-level actuary, as I was recently offered a position. I have two exams passed and a Master's in Economics. I know many others that have also been offered positions at various firms, most of which have a Bachelor's in Actuarial Science or Mathematics and have passed no more than 3 exams. Many of the things being said in the comments section are [at least from what some may claim to be my short-sighted perspective and anecdotal (true) evidence] false.

why is this post-97 or unique to the recent recession? in my " reality bites" generation, a lot of the ivy league liberal arts grads in '94 had trouble finding jobs in the jobless recovery of the time, and people graduating in recessions had the same issue. a year later the market had recovered and/or people had gone to law school. and yes I knew people who became actuaries then.

it's hard for me to believe this isn't a normal phenomenon made worse only by the length of the recession and lack of entry level wall st jobs.

Or to put it more accurately (perhaps ?), the theory behind your arguments is more convincing than the way you sometimes yourself in blog posts.

I am COMPLETELY with you on this.

I read your past articles on this subject, and they all confirmed my impressions and my thoughts I have been expressing to friends and my family since 2009, when I got my first job after graduation.

Yes, the recession, yes the poor quality of government actions, yes, the crisis... but you can do something about it, if you plan your life with common sense and without neglecting the choices you make today. You can reduce the impact of the AD shock, as you said.

This was my experience too. I'm a 2009, and I got a job right outta college. Had a ton of debt too, but I can't blame anybody but myself for that. Sure, government policies encouraged borrowing and raised tuition created an environment of blah blah blah, but in the end, I was the one to sign my name to those loan papers, and I was the one to spend the income I earned from my meager jobs on fun luxuries rather than paying the loans down while they weren't accumulating interest or in repayment. I could easily have made some payments or gotten another job. I probably had about 10 or more hours of downtime and fun every day that I could easily have filled partly with more work so that I wouldn't have so much debt today. Live and learn.

Tyler is correct. Anyone in the US who doesn't have a job can move to North Dakota and get one in a hurry. It'll pay well too. The unemployment rate in parts of ND is below 1%

And how long do you believe those jobs will be there? And how much room is there for advancement? It might be a good desperation move, but it sounds like an awful career move. Long-term jobs are going to come from cities, not resource extraction in the middle of nowhere.

That's the whole point. Once ND dies out be ready to move to whatever is the next goldmine. Flexibility and mobility is the key. Lifelong jobs were a quaint feature of the last generation.

What's wrong with resource extraction jobs? The middle-east has sustained them for 40+ years now. Mining towns in Australia work well too. North sea oil rigs have been around for longer.

I don't see the value judgement that renders city-jobs somehow superior to resource extraction.

The US has enough Nat Gas to achieve complete energy independence in about 10-15 years.

the jobs that come from setting up that infrastructure are generational in nature, not short term.

The jobs will still move though. It hardly requires as much staff on a functional NG well than during Exploration, drilling and start-up.

If you have any skills get into resources! In Australia if you can weld, or stick bits of wood together, and are willing to work in remote locations, you can earn USD300k easily; up to USD500 if you really want to and have some decent experience.

In other words you can realise a sociology major's career earnings in a few years.

Tell that to somebody who's been working oil wells in Midland or Bakersfield for 40 years. Not only does resource extraction in the middle of nowhere create long term jobs; it might even, God forbid, give you actual, marketable job skills that make you employable in the big city, unlike that anthropology degree. Unless the singularity hits and you become immortal, the world is going to run on hydrocarbons at lot longer than you (or your great grandchilldren) will be alive.

If you're an executive assistant, office manager, dental hygienist, nurse, high school teacher, etc. then your job is portable. Moving to where the labor market is extremely tight (and leaving when it slows down) seems like a pretty effective strategy. Especially if the alternative is "staying where you are and remaining unemployed".

I’ve worked at jobs in a boomtown and getting a job is easy. It’s finding a place to live that’s difficult. When I say “place to live”, I don’t mean a nice place to live with a swimming pool and gym. Apartment complexes? Full. Hotels? Full. Dumpy motels that are typically inhabited by people recently released from halfway houses after serving their jail terms? Full. Campgrounds? Full. Roommates? Already have a guy sleeping on the couch. Full. Sleep in your car? In minus 5 degree winters? Are you kidding? Illegal. You’ll be thrown in jail, but you’ll have a warm place to sleep. That is, if the cop doesn’t just beat the snot out of you and leave you for dead in the minus 5 degree winter. Not an option.

Sounds like there's a job for someone to provide housing.

Craig, you posted the exact same thing on a post yesterday. Please come up with new material.

You can't sleep in your car this time of year.

A related argument, as I said before, is how in a recession all sorts of chicanery and fraud, from bad accounting to embezzling is discovered. Similarly, bad investments start losing money, and the least efficient jobs are cut.

All those things are able to be sustained in bad times, as there is always lot of ruin in a country. None of them individually cause the recession, even if things might have been marginally better off without them. But people are still advised to avoid them in order to prepare for the bad times.

Of course, in the other thread, someone accused me of thinking that everyone should major in STEM fields simply because I think that we've had some misallocation. Certainly not; what I most complain about is unrealistic expectations of some students. A good economy can subsidize plenty of liberal arts majors going into consulting or other fields that don't really use their majors, but in a bad economy, it's best to have a field that more directly prepares you for a job.

Presumably that same person accuses those who say that there was overbuilding in some cities during the housing bubble of wanting residents in those cities to be homeless.

If I think it's a problem that PhD programs in the humanities graduate far more students than there are jobs, that doesn't mean that I think that the humanities should be abolished.

They don't get it. They need to separate two things. I'm not saying people shouldn't do something they like. But some things they had better really really like. They need to like it so much they'd do it for free, because they might have to.

Or like it so much that they can become the best at it.

And bailouts slow the process which lengthens the recession.

It's not your argument. It's your conclusion. Why should we accept a world where "elites" can do as they please and still end up with a wall street job, while "other" college grads have to increase their "flexibility and ambition"? What basic economic principle yields that viewpoint? Why, for example, can't we start out with the premise that we have an oligarchy that blindly populates its ranks with Harvard grads of *any* major (trust me, Morgan and Goldman or Kinsey recruiters applied no penalty to those who "only" majored in skill-less fields like 'government' or 'pre-law'--quite the opposite, as those majors typically graduated with "above average" grades! not many summa cum laudes out of EECS, but on Wall Street who cares?), that allots massive amounts of capital to useless pursuits like finance, and that must be dismantled if we're ever to generate productive investment in future industries or have broadly merit-based employment?


Engineering is a far more difficult field than government or "pre-law", not least because in that and other STEM majors, there is one correct answer to the questions one is tested on, so faculty generally can't inflate the grades of their students on a whim. While I'm not saying what you denounce here never happens, Wall Street knows SCL grades in government and pre-law are a joke; the average STEM grad is considerably smarter than a SCL government grad. I'm not saying what you denounce never occurs, but it's less common than you think. The most common undergrad degree for Fortune 500 CEOs

No, that isn't fair. A good way to start rectifying it is to give away as much as you can to those with far less privilege than you.


@ mw "What basic economic principle yields that viewpoint?"

A one word answer(to keep it as basic as possible): Signaling.

For once, I agree with Tyler.

What I call it is a short-range cognitive time-horizon. Any argument that boils down to "It used to work, so it should still work" is a big tip-off. People who think like that seem to struggle a lot with long-run time-horizons. That means they're equally as unlikely to believe that the behavior of the last two decades led them here as they are to believe that today's bad choices will have any impact on their lives twenty years from now.

Furthermore, it is virtually impossible to convince people otherwise. There are infinitely many alternative explanations that adhere to shorter cognitive time-horizons, to the point that people with short-run vision are far too well-equipped to explain away a long-run series of events with a series of rationalizations.

Frankly, I think this explains the appeal of Keynesianism and Monetarism, and the unappeal of Austrain School economic theories. If you try to explain to someone that today's events are an inevitable result of a hundred-year process and all they can say to you is "Are you saying that this graph doesn't depict a nominal GDP shock?" then further dialogue is irrelevant. At the very least, people discussing an issue have to agree on scope of the question.

Ryan, I like your idea of long-term accumulation of effects, but I think you overstate your point when you say "inevitable result ..."

The world is very complex, and results are influenced by long-term processes AND short-term (somewhat random) stimuli. I think the key to your observation, which I agree with, is that we can't ignore long-term influences simply because they're gradually accumulating, unlike "shocks." And in fact, if a long-term trend reaches a "tipping point" (i.e., the elbow in a graph where stable equilibrium becomes unstable) many will see the tipping point as a "shock," and fail to recognize that is was merely a tipping point in a long-term trend.


No disagreements here! :) I wasn't speaking to any particular situation when I said "inevitable results," I just meant that some situations are indeed the inevitable result of lengthy processes that sometimes extend beyond one's own lifetime, and that if a person can't incorporate long periods of time like that, he/she will never really understand the issue.


I think the "short term" thinking would be to NOT go to college because of the current college unemployment rate. And, I'm not saying you are saying this, although the 'it used to work argument" may lead some people there. We can be as faulty on the short term in reacting to a recession--and make a bad long term decision. To the young person, you can look at it this way: This is your life, you don't go around twice, if you don't go to college or take any education you will have picked your future, and if there is anything no one disputes, high school only statistics look pretty poor even against current college statistics. Think of it this.

I suppose I'm suggesting that "not going to college because of the current college unemployment rate" is actually long-term thinking, not short-term thinking. If you're already thinking about your job prospects four years in the future, your cognitive time-horizon is at least that long. I admit, a twenty-year horizon is probably a little better, but still.

Even the notion that "you only live once" is a long time-horizon (life-long!).

What I'm talking about are the people who end up in college just because college is the next step after high school; they have to pick a major, so they just pick something that they can stomach because they have to go to college and study something; they take on student loans because they have to pay for college somehow...

They end up without good job prospects after school and feel like somehow they've been cheated out of something. They dutifully adhered to the "next step after college," so what went wrong?

Ryan, whether it is long term or short can be measured by averaging over a business cycle. If it is, college then still wins over no college.

Bill, all I can say is, I don't think you gain insight into anyone's cognitive time-horizon by averaging economic decisions over a business cycle. As an adherent to Austrian theories, I think there are a number of problems with that approach.

I agree, but I think most young people are not extremely experienced in evaluating labor markets. They rely on their limited insights and what other, older people tell them. Often, the experiences of older people are the equivalent of what used to work and not what will work in the future. It may not be that people are assuming that what has worked in the past will work in the future as much as they only have the past to rely on.

This leads me to my major objection to Tyler's point. A lot of the criticism of college graduates relies on hindsight. All of these people should have become actuaries, because actuaries are currently in demand. This sort of criticism is little different from the dubious advice that older workers give to younger workers about what once worked in the past. To give but one example, it used to be that airline pilots were well-paid and very much in demand. The job was interesting, not extremely taxing and respected. This resulted in people flooding into the profession to the point where wages for starting pilots can be below $20K a year and layoffs and furloughs have become commonplace. The future is difficult to predict and people should not be harshly condemned for failing to do it well.

It's not that hard guys. All I did was pick the hardest major offered on campus. You can also go back to school later. I hear that can be done too.

On the other hand, are there ever any good job prospects for a philosophy major with no other job skills?

It doesn't take perfect hindsight, it just takes a little understanding that when you walk out of your dorm room that last time, someone will want to pay you to do some kind of work. If the only work you know how to do is read books/articles and write theses, then you have basically earned yourself a degree in reading comprehension.

Yes, there is "more to a philosophy degree than reading comprehension," but you don't get a job based on what YOU like about your degree, only what your EMPLOYER likes about your degree. Philosophy majors are often hired by employers who respect philosophy. But they'll never wind up at an investment bank or consulting firm without some other demonstrable skill-set.

This doesn't require hindsight, it requires foresight.

This is almost purely anecdotal, but I've found that consulting firms and software companies (and especially the former that specialize in consulting the latter) are far more likely to hire a philosophy major than any other non-STEM major, and, surprisingly enough, perhaps more likely to hire a philosophy major over a math major. Granted, this is coming from someone with a rather hardcore analytic philosophy background, but I think that the smart, industrious philosophy major is probably better off than the smart, industrious, say, history major.

Part of the reason philosophy is often the default example of a useless degree is that philosophy majors are ridiculously bad at marketing their degree and, by extension, themselves. And that, as you say, is a result of a lack of foresight. It's neither philosophy's nor the market's fault that you actually expect any prospective employer to care about your study of Hegel.

An aside: One misguided professor of mine actually suggested that anyone would be impressed with a candidate who had understood The Phenomenology. Unfortunately, some students actually believed him...

IIRC the recent link someone had to major and SAT score had philosophy at the second spot right behind physics.

The problem with philosophy is all the philosophers.

You're actually proving my point. If you can market your own abilities, then you probably have some sales skills going for you over and above your philosophy degree. People who already have good skills have more flexibility over their choice of major.


I do basically agree with you. My point was just that the problem with philosophy degrees isn't philosophy, per se. It's that people with philosophy degrees generally have no clue as to how to put the skills philosophy engenders to actual, pragmatic use. And professors are often no help in that regard.

Overall, smarts, industriousness, and persistence (the value of which most undergrads woefully underestimate) trump pretty much everything else. Except for having attended an elite university. Virtually nothing trumps that.

I'm not sure who I'm disagreeing with, but the problem is people who can do philosophy can also do other stuff with philosophy as a hobby.

I do have to say that a lot of college students, not just philosophy majors, are terrible at marketing themselves. I think often the problem is that they don't realize they even should be thinking about the job search as early as they need to be.

At my undergrad business school, the fact that every single one of my peers knew that you needed to check out the field-related clubs, sign up for career services this semester, get your resume written up and looked over, look for an internship that semester, etc, basically peer pressured me into building up a relatively attractive resume and interview skills. My friends in the liberal arts college generally weren't even thinking about jobs after graduation until a few months into senior year, at which point I'd already interviewed & accepted a job offer. Of course there are ambitious students in every major that know how to get the job they want or have mentors that do, but if you're going to college because that's just what you do after high school (and I will fully admit to being one of those students), the steps to actually starting a career aren't all that obvious.

See how people do not even agree with a position that you believe to be self-evident--that majoring in philosophy is a bad economic decision? What majors teach marketable skills and how marketable will those skills be in the future? Even were we to assume that nothing but income mattered, these questions would not obvious.

They're not obvious because they are case-dependent. In general, it is always a bad idea to study something that you don't believe signals much to your future employers and always a good idea to do the opposite. If you already have some useful skills, like the ability to write computer code or fly an airplane, then you have more flexibility over a major.

What? There is a huge difference between the major airlines and regional airlines. Of course if you go to a crap flying school and go to work for a regional airline you are not going to make much money, I do not think that has changed either. If you are a pilot in the military and then become a pilot for a big airline, you are still going to make bank- because you have actual skill that is difficult to obtain.

From the WSJ:

On average, starting pay at major airlines is $36,283 –- about double where many regional airlines start pilots, but darn low for mid-career professionals who likely take a pay cut from regional airlines to latch on to a major carrier.

Yeah, that is definitely "bank."

Although I agree with the thrust of your post, the actuarial field is probably a bad example. Entrance into the actuarial profession, even at the entry-level, is highly driven by a student's performance on a series of exams created and administered by the profession. Someone who majors in actuarial science probably did very well on these exams.

Here's the catch - those exams are graded on a curve (the SoA denies it, but it's the worst-kept secret in the profession; they call it "normalization" of scores or something like that). So even if actuarial science went from the 150th most popular major to #1, *there would be no more employed actuaries* than there are now, since the number of people passing the early exams, which is the real barrier to entry, would not change.

Having said that, one can make an interesting comparison between "pass actuarial exams" to "graduate with STEM major." From the post the other day, the number of STEM majors is not increasing, and plenty of students who start a STEM major (perhaps responding to the accurately-perceived incentives of going into those majors) do not complete it.

So is the limiting of STEM graduates a result of application of a forced-curve in college, as with the actuarial exams, or is the limiting of STEM graduates a result of the inability of large portions of the 18- to 19-year old population to master college-level STEM subjects? If the former, then fix the undergrad-level STEM departments. If the latter, the change has to start earlier - an excellent place to start is with recommendations from Lockhart's brilliant "A Mathematician's Lament":

The math required in STEM is orders of magnitude more complicated and completely different from the math required for TE jobs. Hell, I'm in graduate school and I spend significant time and brain bandwidth trying to figure out how to shoehorn fancy math into my work for pure signaling.

What's a "TE" job?

It's what these jobs SHOULD be called - TE, because there are no jobs for Science and Math (SM) graduates.

STEM minus the S&M

Does the average TE person even know what 'order of magnitude' means?

I don't know, but in my math class in college infinite series were a big deal. Then in my final math course, the professor exclaimed "everything you have learned has been designed to prepare you for this subject"

I should have stood up and shouted "this is exactly what is wrong with academia!" and stormed out, except it was a pre-requisite.

it was funny to see lawyers try to answer that over on a year or two ago. The most common answer was "double".

freaking lawyers.

Here’s the catch – those exams are graded on a curve (the SoA denies it, but it’s the worst-kept secret in the profession; they call it “normalization” of scores or something like that).

The SOA normalization is not a curve. It calibrates the difficulty ranking of the new questions introduced into the test pool by looking at how the current cohort did on the old questions relative to how prior cohorts did on the old questions.

I agree that nobody says, "We need to pass more this year, set the bar 10% higher." But between the perennial discussions of "how fast are actuarial students getting through exams" and the complexity of the normalization process, the E&E Committee has a lot of leeway to act.

When normalization isn't enough, every 7-10 years they do a massive redesign of the program to ensure that the "correct" number of students are getting through at an appropriate speed. If suddenly the number of people taking exams increased tenfold, even if there was no "normalization" so that the number of people passing was also increased tenfold, I guarantee that they would remove VEE and increase the difficulty and number of exams required for Fellowship until the labor supply again met labor demand.

And shouldn't the 0.0% unemployment rate among students of actuarial science support that in the past, the profession has found *some way* to limit supply?

They limit supply by making sure almost no one knows the profession even exists.


Lots of people know about actuaries - in the past it was largely unknown but today it's very well known amongst young people.

I'm working on yet another bachelors degree, and the business school is now pushing "risk management" and they've stopped pushing the actuarial program (which has since been demoted to a certificate in statistics).

Even if the number of actuaries does not increase, and individual's employment prospects may increase by choosing to enter that field rather than, say, literature.

Yes, but if you take and pass the exam, then someone else (who would have otherwise passed) now fails, and in the aggregate, employment is unchanged.

"in the aggregate, unemployment is unchanged." I don't think so. One person switches from unemployed art major to actuary--going from zero productivity to a large amount of productivity. The person who gets pushed out of the actuarial field as a result doesn't suddenly become an unemployed art major. He or she still has marketable math skills and moves into another productive field instead.

One person making him/herself more productive, and all else being equal, will grow the economy.

I agree with the second order effect in the actuarial case. But then it doesn't extend quite as well to the general question of whether having more students enter STEM majors improves the economy - a "washed-out" actuary is more productive than a graduate of art history, but a "washed-out" intended STEM major is probably not more productive than a graduate of art history.

In fact, the "washed-out" intended STEM major probably *is* a graduate of art history.

Oh yeah Marketable math skills - SO VERY MARKETABLE

More likely the washed-out intended STEM major is an Economics graduate

Not sure I buy that. The SOA "normalization", as I understand it, is designed to ensure a stable percentage of exam-takers pass, in order to control for "hard" vs. "easy" tests from one sitting to the next.

If more people take these exams, I believe more people will pass.

Wait, so is it possible to just take the exams and (if you pass with the curved grading) be eligible for actuarial employment? Or do you have to go through BS (double meaning) classes as well, irrespective of what you know?

Just take the exams, pass & you can get a job.

No you can't - you need a degree in a relevant field - no employer is going to hire an actuary without a degree anymore it just doesn't happen

How about an engineering degree?

If you pass the exams. I mean you DON'T need the degree to do the job - but we live in a world of extreme credentialism so you need a degree to put on your resume to satisfy the HR rep looking at your resume. If you have some kind of special connection so you can bypass HR maybe you don't need a degree at all.

Even with the exams though it's hard to get a job as an actuary without having experience as an actuary (just like every field) - so you need internships, etc. plus the exams

Anything quantitative is fine. I got in from CS/math.

I'd say having a programming background is important for the actual job of an actuary. The stats stuff is mainly used for passing exams but it sounds to me like there's a lot of programming in the actual job and almost no use of the math.

There was actually a great deal of debate around this at the last exam redesign. A decade ago, it was possible to take the first two exams in high school and if you passed, you could probably get a job. But now they have this concept of "Validated by Educational Experience" which is supposed to make it easier for students to get through the stats and prob basics by passing college courses. A lot of actuaries did not like this rule; it basically required the student to pay for college courses where it was never required before.

I haven't kept up with the minutiae of the current E&E process, so I don't know how it currently works. Check out for details.

It looks like you have to take at least a professional practices/ethics course, but otherwise, this is interesting and worth a look.

The "BS classes" might be the VEE requirements, depending on what you call BS. Depending on your college, you'll need to take 1-2 classes in each of 3 subjects: statistics, ecnomics and finance.

Simplest requirements:

Most of the young actuaries I know are from China with bachelors in engineering. If there were a larger home grown supply, more of those jobs would probably be filled with Americans.

Moreover, I think this is a good example field because it's one that few people plan to go in to (I only met one person in college who planned to be one); many actuaries did something else and then switched in to it when their first plan didn't work out. For example, my mother was an anthropology major (and PhD), so when it came time to get a real job, she studied some calculus, took the exams, and became an actuary. I'm sure some of today's unemployed humanities majors could do it too.

I think Tyler is right on with his post.

No Tyler is wrong the days of being able to get an actuarial job with One or two exams are LONG OVER. It's a 4 exam minimum now plus proper internship experience

I think of it as the signal of quality from a BS has been watered down. A mixture of graduation of poor students and lax education standards due to poor incentive structure in that market created it. There are costs for a firm to consider an candidate, so they want to know the candidate has a high chance of being good prior to interview/training. I've seen highly qualified on paper candidates come and go at my firm. They looked great on paper but really all they were good at was signaling quality and sucking up time and other resources. Often they are foreignors.

On another note, you're in a much brighter mood today CBBB. Perhaps you have been reinvigorated by the idea that you still have a lot of control over your future standard of living?

I'm in a terrible mood, I don't know where you got the idea that things have brightened up. Any way this is what I'm talking about - there's always an excuse to why people aren't getting jobs but it's NEVER the real reason - there are no jobs

That's right. There are no jobs. None at all! Zero. Zilch. Zippo! Not a single job to be had anywhere! I guess anyone who gets a job nowadays must have stolen it from its previous holder.

on that subject, the company my wife works for hired a young woman who claimed to be her 2010 college class valedictorian. Thing is, that university doesn't have valedictorians, and my wife was the person in the class who got the closest thing to that honor.

Pretty annoying to see liars getting rewarded that way.

"Hey, Tyler, this guy's heart's stopped. Should we give him a shot of juice?"
"Nah, that sort of thing can wait. Your mind is so crude. The real thing to focus on
right now is the idea that he might still have been experiencing some intermittent
cardiac activity if only he'd decided ten years ago to live the healthy life of a hermit yogi
in North Dakota."

So what you're saying is, "In the long run we'll all be dead."

Nah, there is a big difference between diagnosis and prognosis. Prognosis without accurate diagnosis is irrelevant. What could is having open-heart surgery every couple of years if you don't make a lifestyle change? Those surgeries are a waste of time if you continue to ignore the bigger question.

What I'm saying is that Tyler is taking a second-order issue and saying "look, over there!" to deflect attention from obvious remedies.

Not exactly. If the economy re-froths, people may be able to get away with low return skills once again, but only until the next downturn, that is. And it is very conceivable that low-return skills compounds our globalization problem. If we have to start trading with Chindia it is not going to be by trading them psychological counseling or comparative literature.

Fine, so you apply appropriate countercyclical policy now and deal with any skills issue when AD recovers. No-one's particularly denying that some students could have made more practical choices. It's Tyler who hopes that pushing the meme that people are committed to denying this, will help deflect attention from the availability of immediate policy levers.

Countercyclical policy like NGDP targeting?

Cliff: For example. Or even, you know, spending some money.

Counter-cyclical re-training?

But Tyler is really overplaying this "students aren't studying useful subjects" angle. It's simply not true - there's plenty of people with so-called "useful" STEM degrees unemployed out there.

I wish Tyler had overplayed it about 5 years ago when Krugman was jonesing for a housing bubble...oh snap!

It's not really clear to me why a structurally-deficient, low-employment economy necessarily gets on a higher growth track than a structurally deficient, high-employment economy, at least from the new-grads perspective.

In the low-employment economy, actuarial work is moderately competitive but fiscally-rewarding work, and un-demanded fields are a highly competitive shit-shows, so on the margin people become actuaries.

In the high-employment economy, un-demanded fields are moderately competitive and paid adequately, and actuarial wages are skyrocketing, employers are providing paid training, etc, so on the margin people become actuaries.

It's the same story starting in different equilibria. And yes, on the one hand, unemployment is a strong incentive for the unemployed to switch careers, but the prospect of unemployment is an incentive for the employed not to switch careers. And there are always going to be more employed people than unemployed, so I'm not convinced the high-employment economy doesn't end up getting people into actuarial work faster than the low-employment scenario.

But if you viewed counter-cyclical "remedies" as being a large part of the problem, then you might feel differently.

You used the example of a failing heart. I'd rather use the example of heroin addiction. As painful as it might look to endure the withdrawal symptoms, the only way an addict will recover is to stop taking the drugs. Yes, you can alleviate the withdrawal symptoms by taking more heroin, but you're only worsening the problem. To kick a bad habit, you have to stop imbibing.

Government, in all its forms and every incarnation of counter-cyclical "remedy" is the drug, the problem, the root cause. People need to take their licks, admit that they made some dumb choices and move on. You don't help anyone when you bail them out. You enable them to avoid direct negative consequences for bad speculation, and merely encourage them to make the same mistake again... all at the expense of the general public. How is that a remedy?

I like the heroin addiction analogy! But only because you don't know what it says.

A heroin addict doesn't recover when the addict "stops taking the drugs," but when the addict finds something to replace whatever need was driving the addict to use heroin. Family, work, religion, friends, whatever replaces heroin. Simply "not taking drugs" never stops the addiction. Every recovery program offers the addict something to replace that addiction.

Just like with addiction, your offer to the unemployed of a replacement of government action with "nothing" will accomplish . . . nothing. Except suffering. Their will be hordes of unemployed for years. If their suffering makes you feel better that you avoided "dumb choices," then awesome for you.

Hopefully someday you won't be 55, looking at another 15 years of work, and suddenly laid off with no chance of making more than a fraction of what you were used to living on. I don't think you have the stomach for it.

"Going back to unemployment, labor market opportunities for college grads have been eroding — except for the elite — in absolute terms since 1997-2000, well before the collapse in AD. If those same grads are highly willing to be geographically mobile, highly willing to consider actuarial training, and highly willing to take tougher courses and study where the jobs are (doesn’t have to be tech subjects, some of those are failing too), the unemployment response to a given AD shock will be much lower. But they aren’t, so it isn’t. I’ve seen only small adjustments in the ambition and flexibility of college goers, not enough preaching about TGS I suppose."

Could labior market opportunities for college graduates been eroding since 1997 for other reasons? I see Nick offers one, in the case of actuaries, in the comment above.

"A fuller and better model, with richer causal chains" - the long run time horizon is still somewhat like an unexplored country, of which we get the occasional reports from explorers who go there but don't really know what that country consists of. It's a place where we all get to recreate wealth with our own minds and reconnect with one another economically and socially, but how do we get there? Sometimes when we talk about that other country in the context of the present day conversation, it's as if we can't even find a way to really connect our thoughts to the concerns in the present discussion, but do not want to have to discuss the subject in the limited way that it seems to present itself. Even so we seem to get closer to that horizen in little bits and pieces on a daily basis and it is a journey well worth continuing even if it is so hard not to see what actually lies in the distance.

If you wanted a job when you graduated you should have learned the value leaching, rent seeking, skills of finance. If everyone did that we'd be well on our way to a brighter tomorrow.

But Michael, the value-leaching rent-seeking creators of the recent crisis didn't study the skills of finance; they studied the skills of mathematics and computer science. Then the smartest among them figured out that they could make more money ... MUCH more ... by applying those skills to finance.

Have you looked at the resumes of the peeps at the finance firms? Not a ton of math and science majors over there. Just lots of Ivy. The argument is that we're losing those valuable math guys to finance, and there's some, but not as much as you'd think.

I think people confuse Quants with Investment Bankers. MOST people on Wall St. are NOT Quants - they're just guys with Ivy League degrees in the humanities or something who get the job because Investment Banking is much more about schmoozing at country clubs then writing trading algorithms.

The scene is fast changing especially after algorithmic trading......

I don't know how much it's changing - they still seem to hire a lot of MBAs and those guys are mostly idiots.

Except there's considerable evidence that there is no shortage of STEM workers and in fact in most fields a considerable oversupply. By the estimates I've seen something like a 3 to 1 ratio of STEM graduates to STEM jobs. It's even worse at the PhD level. And that's been true for years.

All the evidence points to a purely positional story. STEM majors are seen as smarter than non-STEM majors, so they'll be hired preferentially for many jobs even though their specific skills are unnecessary. That keeps the unemployment rate of those majors low, but it doesn't reflect any particular demand for STEM skills. More students shifting into STEM majors would shuffle around who ends up unemployed at the end of college, but wouldn't change the unemployment rate.

It's a mistake to evaluate STEM's monolithically. Some STEM majors are in great demand others not so much. STEM ( does have iffy majors like anatomy, astronomy and aerospace physiology and comparative psychology.

I'm 80 percent convinced that there are too few STEM majors and that society is hurt when people who could do STEM choose not to, and the people who make that choice are themselves especially hurt by the badness of the choice.

But, Jonathon's point is the source of my doubt. More bluntly, what if the issue is that STEM majors are smart and Art History majors are dumb, on average? You'd get a pretty similar looking set of employment outcomes. And moving dumb people into STEM majors is not going to make them smart.

There may be too few STEM majors for the good of society, but that's largely being driven by the lack of STEM jobs. If society wants more scientists and engineers, it should create more jobs for them. In my experience none of my fellow physics PhD students left the field because they suddenly decided they didn't like physics. They left the field because they didn't see a plausible way to create a decent life for themselves in the field. They typically left the STEM fields totally because management consulting and finance firms expressed at least a minimal level of interest in physics PhD's unlike any other STEM fields.

There may be specific fields where you can find evidence of a shortage of workers to fill jobs, but overall I've never seen any evidence that there is a STEM worker shortage. Almost all reports of shortages or declining US scientific or engineering competiveness talk about numbers of students, but make no effort to compare that to the number of available jobs.

Exactly - it's a fundamental lack of jobs not because there aren't enough workers who can do those jobs.

What is your nomination for the type of industry and training that creates jobs?

No. It is the boom-bust hiring cycles in industries that hire madly, then lay tens of thousands of engineers off. Those sort of job-shedding binges discourages students from entering "hard" tracks like engineering and thus suppresses the supply of engineers for about a decade.

As an anecdote, my first bachelors was in electrical engineering. After getting laid off from my first engineering job, no one I contacted wanted to hire "used" engineers and only 2 decades later am I working again at an engineering company. But this time as a programmer.

No industry is creating a significant number of jobs right now that's my point. This idea that it's all due to lack of proper education, training is just a big myth.

What's a shortage? It's a price that's higher than it could be. The market is clearing, or at least it's pretty close to that. I think there's an argument that the price for engineers is higher than it would be if people made more rational college major decisions. And the collective we would be better off if they did, 'cause a society with lower priced engineers would do more inventing. And the people who would have been English majors working at Starbucks, they'd be better off too with their better choices. If the price of engineers fell, there would be more people employed as engineers.

You have to admit that a physics PhD is not what someone goes into when they are seeking likely remunerative employment. You picked about the worst, or at least riskiest, STEM choice you could have. I don't think that changes the overall point much. Even within STEM there are choices you make and they matter. But as an example, the physics PhD is great. It's not a very useful degree, but it's a great flag that the person who got it is smart.

I really doubt an increase in the number of engineering graduates would lower the price of engineers all that much - employers only want the best of the best top A students and so an increase of the number of STEM graduates by X would only increase the employable supply of STEM graduates by maybe 0.05*X, which is an increase I guess but not necessarily a large one.
This is another problem too I mean when you get down to it really only engineering degrees have any chance at employment which is why I think STEM is an idiotic term because Math and Science degrees are very useless.

So there's a shortage in any field where people aren't being paid the minimum wage?

The ratio of people with STEM degrees to STEM jobs is a lot higher than in many fields where people are paid considerably less. In other words, there's a much greater numerical shortage of teachers or nurses than there is of STEM workers. What appears to keep STEM pay high is that STEM degrees are seen as a signal of intelligence in competing for non-STEM jobs. Thus STEM wages are effectively set by the non-STEM wages a STEM degree holder could earn, minus a penalty for the privledge of working in STEM.

This means the marginal STEM degree holder (ranked by passion for STEM) isn't going to change the STEM wage at all. They wouldn't pay the STEM wage penalty and so they'll be competing for non-STEM jobs, which they would've been competing for if they didn't get a STEM degree in the first place.

> So there’s a shortage in any field where people aren’t being paid the minimum wage?

There's a shortage in any field where the unemployment rate is near zero, which is close to true for STEM.

I don't take that to be a ridiculously bad thing, I take it to mean that there is STEM work going undone that there would be demand for at lower prices.

Incidentally, I don't think that lower prices would necessarily mean current STEM folk would get paid less. It could mean lower prices because the industries involved hire more people as technicians, for example, so the mix shifts lower.

I often think engineering makes poor use of lower skilled people, which is somewhat in alignment with CBBB's expressed thoughts on the situation.

Jonathan, you nailed it. Good post.

Several reasons make this different from prior recessions for young persons.
1. Persons who could retire, aren't. Scared by the social security and medicare debate.
2. Government employment during this recession declined. (You can go to de Long's website to see the composition of employment over past cycles for verification.) In the previous recessionary period (2001) it increased. Government jobs are often a foot in the door job--you may not stay, but at least it is a job.
3. College has become more expensive--you used to extend your stay in college by a semester or a year, waiting for the economy to turn around.
4. Young soldiers are leaving the military, and competing for jobs that would go for younger people. Military recruitment increased after 2001.
5. I don't know what elite Tyler is talking about here: "Going back to unemployment, labor market opportunities for college grads have been eroding — except for the elite — " The elite that I know are the kids of a dad who has his own business and employs his kids. The top 10% of graduates are still having placement problems.

The thing that amazes me is that the amount of student loan debt per student in real dollars has tripled since 1991. Students today are being screwed.

It is bullshit to say to students that they should have picked a major better 4 years ago. Hindsight is 20/20. Students will scramble to get into desirable majors but by the time they graduate, the major isn't that desirable anymore. Petrochemical engineering is famous for such booms and busts.

To defend students that graduate with weak majors, there are a lot of jobs that now require a college degree that didn't use to require one 30 years ago. It really doesn't matter what degree those graduates have because the job really doesn't require any of the skills that college provides.


I agree with you when you say that a number of jobs have been upgraded to require college degrees--probably more than necessary. It used to be policemen were not college graduates, for example. But, non-public employers must see something in college graduates with general degrees as well.

Wait, I thought one portion of Tyler's book said that America should invest in its creative advantages and now it seems like we should all instead learn how to suck it up and become actuaries in North Dakota or else. Seems inconsistent and horribly depressing.

There's a difference between "what America should do" and what strategy should be adopted by an *individual* American who wants to secure his or her future.

For the individual seeking secure employment the sound advice seems to be: 1. Study something that's employable, 2. Be willing to move to where the jobs are.

And many many people are doing both 1 and 2 and there are still no jobs for them.

Really? I don't find that to be the case. If you have a degree (or certificate, or skills, etc.) in a "hot" field and move to a "hot" area (for that field) and aren't a doofus then it seems pretty likely you'll find a job.

There's over 15 million unemployed. They entire population of North Dakota is less than a million. How are they ALL supposed to be oilmen?

There are less than 100,000 actuaries. How are all the unemployed supposed to be actuaries?

There are 3 million nurses. How are all the unemployed supposed to be nurses?

There are millions of people out of work. There is NO WAY they could all have chosen "perfectly." If you have a job, you are LUCKY. LUCKY. That's it. There are literally not enough jobs, no matter how "hot" the field, no matter how "hot" the area, for everyone.

Blaming the unemployed, and their purportedly poor "choices," for why they are jobless is simply repulsive. Luxuriate in your feelings of superiority if you must, but if I were you I'd remember that the sun rises on the wicked and the just alike. You're time will come.

Yeah but there's NO particularly hot locations and no particularly hot fields especially if you're a more recent graduate with limited experience - employers aren't as desperate as people around here claim.


This is exactly right - these people pick 1 or 2 fields and then say "well everyone should just switch into those fields". Becoming an actuary is REALLY hard and takes a REALLY long time - I think people on this blog have this idea that if you have a STEM degree the exams are trivial - no the exams are REALLY rough and you need to pass 4 of them to even get an entry level job.

"How are all the unemployed supposed to be actuaries?"

Nobody's saying everybody needs to be actuaries or live in North Dakota. You point out that there just aren't enough jobs. My point is that in some fields and in some geographies it's the opposite; there aren't enough workers. More folks need to think strategically when they're deciding which school to attend, what degree to work towards, and where to live once they graduate.

"monetary and fiscal policies have underperformed"
I strongly believe that there is a Diminishing Marginal Utility ... in government.

One reason the last recession(s) are lasting so long, and so jobless, is that government is already too big. Besides the terrible regulation, which is not talked about enough, there is also the crowding out in the capital markets -- with too much capital stuck in gov't bonds, where it is current consumption more than investment.
All gov't spent money is, fundamentally, tax funded and thus "win-lose", whereas all honest (a BIG caveat) capitalist deals are win-win for those making the deal.
As gov't expands, it crowds out positive wealth-increasing activities.

Education has a lag. If there is high demand for actuaries today, many people will start now to study to become actuaries. By the time they graduate with all their friends, there will be a surfeit of actuaries but a shortage of, say, computer programmers.

This voilates our sense of fairness - these young people would have done everything "right" (i.e. pursued a degree in a field with demand, just as Tyler wants them to) and end up severely in debt for their degree, and without any jobs available in their field. This is the complaint of many "99%" folks.

In strong-AD environments, this can be papered over as high demand for workers pulls people into fields for which they aren't exactly trained. In MASSIVE prolonged recessions, like our current situation, this is intensely painful.

In the long run, a system that consistently violates peoples' sense of fairness will not last.

I doubt that a massive horde of people are starting now to study to become actuaries. Observably, people's choices in education are not designed at maximizing employment at all. There has never, *ever,* been a massive shortage of American History majors and it remains a very popular course of study.

But there's really no shortage of actuaries - particularly at the entry level. On top of that the only reason you learn any math and stats in an actuarial program is to pass the exams - on the job you won't use any of that at all. The reality is any shortage of actuaries that exist is purely an artifact that is the creation of the super-credentialist examination process instituted by the profession itself.

Sorry, using "Actuaries" in the way I assumed Tyler was, as a generic placeholder for "in demand job". I have absolutely no idea whether actuaries are actually in shortage, so feel free to substitute whatever you see fit.

Well my point is there's really nothing you could substitute into the "in demand job" category.

Oh, and "American History" is just the first phase of a few degrees - it's like taking biology as an undergrad to become a doctor. You take American History to become a lawyer or a journalist, or to work in Washington.

That is to say - there are few jobs called "Mathematician", but no one thinks math is useless to study.

No one thinks it's useless except most employers out there.

Tyler's argument is a simple fraud. He writes: "Going back to unemployment, labor market opportunities for college grads have been eroding — except for the elite — in absolute terms since 1997-2000..." and I agree with that fact.

Let me make clear the fraud in a way simple enough that even libertarians can understand it.

If you are playing musical chairs, and the number of chairs is declining, no matter how much you exhort players to study competitive chair occupation, there will be more and more unseated players. You can blame the players in whatever manner you want, but the real reason there are unseated players is the nature of the game, which is removing seats.

If you want to increase the number of seats, you need policy to modify the game. We need public policy to create more demand for workers.

That might be true except that it is highly likely that a engineer will contribute to more new jobs than a non-engineer.

We just got done talking about people who wanted STEM so bad that they majored in it being as far as we can tell artificially shuffled into second-choice majors (or not even second choice as a fallback position is probably even less rational than a first choice). We are looking at higher pay and lower unemployment for some majors versus others. Colleges don't really care because student loans don't really care because the burden on major selection is, as it should be, all on the student.

What do you think policy is? What do you think will increase the chairs? What kinds of skills would be required even for government-directed stimulus projects?

It's highly likely that you pulled that opinion out of your ass.

By your analogy, Tyler's implying that there are, in fact, some unoccupied chairs. This post of his really did emphasize that *some* part.

So let's follow this through. There's a 100 people that want to sit down, and only 85 chairs. Tyler (and you) are saying there's no problem because, although 20 people are standing, there's still 5 chairs for those 20 people to sit in?

Please tell me that's NOT the point of Tyler's post. Please tell me that the "solution" here is that things are cool if only 15 people have to stand, because 5 people could have made better choices and found a seat.

Isn't your shtick kind of getting old by now, Mike_Huben? Isn't it time to retire the act?

Good point! If only we could go back to the '50s when there were so many more jobs for engineers and computer programmers.

Mike Huben is the intellectual equivalent of a child molester.

as a liberal, i sort of agree; i frame the argument around the reluctance of many biz people to fire employees
in the real world, esp in a small biz, letting someone go is traumatic for both parties , so managers are reluctant to tell people you fired. in good times, a biz can carry the dead weight, but not in bad
however, once you have laid people off, a) there is no corresponding guilt pressure to rehire them, and b) as a defense mechanism, the laid off become lazy nere do wells who deserve it

In the foreseeable future, government is already in the process of contracting, but the challenge is finding the markets that people losing these middle class jobs are actually going to utilize. That's why improved monetary policy can help if private interests retool for a changed marketplace. Capital need not be stuck in government bonds if local businesses can recreate their own zoning and regulatory structures that take away the unnecessary restrictions to growth in their own towns.

Y'know, Becky, things done by unconstrained businesses lead some of us to believe that not all those zoning and regulatory structures are unnecessary.

Right. Thank god we are not dealing with a concurrent treehouse bubble.


I am suspicious of the claim that labor markets for college grads were eroding since 1997-2000 (I do not see a basis for that claim in the links). My son graduated in 2008 and based on prior graduating classes, expected a good market. I think the market was peaking around the time he graduated and took a nose dive. He found an OK job which he worked at for a year or so, and then found a much better job.

College graduates have run into a job market where employers are holding the line on hiring until things shake out a bit. That obviously hurts the new entrants. Many are finding jobs, nonetheless. This, too, shall pass and I urge those newly graduating to persevere and be resourceful. Help is coming in 2012.

You, my friend, are an unreconstructed optimist.

Until things shake out a bit? 2012??? Your son is a very lucky man. Help is coming in your dreams.

Over on the actuarial boards we make fun of this finding since its so obvious to everyone how much harder to entry level actuarial field is then it was a few years ago. Students need more exams and more internships for worse jobs.

I'm an actuary that majored in English. I got my first job as an actuary right out of college in the summer of 2006. I just completed the last exam this past May. I got lucky & then I worked hard & now I really enjoy what I do. The best thing about the actuarial profession is that the entry level exams allow you to signal competence effectively at a relatively low cost. The worst thing about the profession is that the exam process is long & less relevant to actual job performance the further you go.


You completed all the tests in 5 years? Is that even possible? You can only test every 6 months right?

A real-live actuary, what are the odds?

Yes. True on both accounts. I even failed two exams along the way.

I should say it was a very arduous process that I didn't enjoy while I was in it and continue to dislike on the other side. I studied an average of 600 hours a year for 5 years on top of working full-time. The only reason I could do it was because my wife was in med school (so equally busy) and I had 4 hours of commuting by train every day. If someone starting out asked me for my advice, I'd tell them to go learn computer programming instead.

A certain amount of blame can be aimed at administrators who repeatedly told me employers were looking for "completion" and it wouldn't hurt me if I got an artsy degree. They would later try to sell me on a communications grad degree. No thanks.
I wish I'd been older and wiser when I started school. At 18, questions about AD and TGS weren't exactly on my mind.

I'll second the older and wiser comment though I'd really like to push the clock back much earlier to middle school.

Related to your post, not many engineers end up becoming guidance counselors and the profession likely attracts people with liberal arts backgrounds. Those same counselors want people to "discover" themselves without adequately explaining the implications of trying to enter the labor market without a strong and analytical skill set.

Honestly, I think a lot of this is just and adjustment. College as a form of self discovery was an affordable luxury a little over a decade ago but isn't now. At some point the business model will need to change.

There has been a secular change in the US economy. From roughly the late 1990's to 2008, enormous resources were funneled into activities that produced no real economic wealth--namely housing and finance. These industries absorbed entry-level candidates with generalist/liberal arts degrees across the academic spectrum. The kid with the history degree from Podunk U sold mortgages at the local bank. The kid with the history degree from Princeton went into Sales and Trading on Wall Street. Those opportunities are gone now and likely never coming back.

The resulting short-fall in government revenue reduced hiring in the public sector, another favorite employer for generalist/liberal arts degrees. Perhaps this a temporary AD-related thing, but I doubt it. Most government work is routine and administrative in nature, which can be done with a greater reliance on IT. The more intellectually demanding work can always be shopped out to contractors. The economic crisis only sped up the inevitable: namely, IT reducing government payrolls.

The people at OWS are the bottom of the barrel from a hiring point of view. They have likely been permanently displaced from white-collar work by the graduates who were described in the two paragraphs above. The McDonald's applications tossed from the Chicago Board of Trade shed a lot truth on the situation: the OWS crowd is now better suited for service industry jobs.

The fact that so many of them have college degrees is a reflection of rampant credentialism, which I think is a byproduct of TGS. In a "buy-and-sell-each-other's houses" economy little real wealth creation, firms will often try to differentiate themselves in nominal ways. One way is the "Our people are smartest!" approach. Hence, the kids with history degrees from Harvard being hired on at Goldman Sachs to do power point and spreadsheets. Compare this to the IT sector, where is a great deal of wealth-creation, yet ironically, there is relatively little credentialism if not an outright disdain for higher education.

If the OWS crowd is to be faulted for anything, it is not realizing the rules of the game have permanently changed. And if they are to be protesting anywhere, it should be at their alma maters, many of which betrayed their naivete and trust.

Interesting theory concerning the relationship between the rise of non-wealth creating industries and credentialism.

You underestimate the degree to which Goldman Sachs, and other financial sector companies, are involved in the IT sector. And I don't mean by doing IPOs for Groupon.

> And if they are to be protesting anywhere, it should be at their alma maters, many of which betrayed their naivete and trust.


I probably had the biggest laugh of my college experience the day I walked into the "career office." They all but told me to Google things. I ended up getting my first real job from a Craigslist ad.

I think you're making a common error about education and the economy. The education of the labor pool doesn't significantly affect the jobs available; if all the art history majors had studied electrical engineering, they would now be unemployed electrical engineers rather than unemployed art historians (there's not exactly a long list of funded EE projects that companies are holding back on hiring for). To the extent that it might do anything, it would just lower the wages of EEs.

I agree with this.

Plus, STEM majors have a high drop out rate. What is the "intent to treat" unemployment rate for students who started out in a STEM major? How about for students with the same SAT and high school grades that pick STEM or non-STEM majors? Those are the questions that are relevant to a student picking a major.

Even business majors have about a 6% unemployment rate. There isn't much that the students could have done.

Actually, the actuaries will starve.

As we move towards pools, rather than individual underwriting and actuarial assistance, there will less of a demand for actuaries.

And, actuarial work ups can be done in India.

Before you read further, answer this question.

1. How many actuaries are employed in the US ------- Put down your pen.

2. From the BLS:

"Actuaries held about 19,700 jobs in 2008. About 55 percent of all actuaries were employed by insurance carriers. Approximately 16 percent work for management, scientific and technical consulting services. Others worked for insurance agents and brokers and in the management of companies and enterprises industry. A relatively small number of actuaries are employed by government agencies.

Job Outlook About this section

Employment is expected to grow much faster than the average for all occupations. Competition for jobs will be keen as the number of qualified candidates is expected to exceed the number of positions available."

This is a good point. Plus, how many new college graduates can North Dakota absorb? Neither of those numbers is going to significantly cut down on the unemployment rate.

Well Cowen and many of his supporters are just grasping at straws - it's ALL gotta be the young people's fault it just HAS TO BE somehow...someway...

Why do people keep doing that?

Because it helps satisfy their ideological beliefs

It probably depends in large part on how responsive the profession is. Increased computing power is opening up lots of interesting new ways to analyze risky endeavors. Not all of these avenues are likely to prove fruitful, but as long as insurance remains a profit-seeking enterprise, there will be tremendous pressure to look for new ways to quantify uncertainty & take advantage of it. If members of the profession only ever want to evaluate pension funding levels, then yes, they will starve, but if they can position themselves as skilled interpreters of data, there is probably a lot of room for growth.

You could be Schumpterian about this and say that, with expert systems, over time this occupation too shall pass unless they have a real good guild system in place that requires the actuaries to do everything by hand. Certainly on the health side you would see a change as we move towards large pools, as the law of large numbers reduces variability and you no longer need individual policies and very specific underwriting standards developed by an acutary. Who knows. 19,000 people in a profession is not very many, and they don't die every year.

1) Not all actuaries are health actuaries

2) The health reform law will lead to increased work for health actuaries in the short term. In the long run, who knows, it'll probably be a reduction since it will cause insurers to consolidate and eventually all the stupid crap in it will cause a collapse and a move to single payer. Even then ... there are a lot of actuaries making a living working on medicare products.

I didn't say all actuaries are health actuaries. The rest I basically agree with--over time, when you bid for pools, and the pools are large and there is no risk of adverse selection, the law of large numbers takes over when the pool is a random selection.

We know your cynicism is boundless. Where are your solutions?

Here we go again with the baseless assertions that young people aren't mobile or aren't willing to study "hard" subjects.

Look, it's clearly a matter of both/and. Many tens of thousands of young people study the wrong subjects -- I see it every day at University: the plucking of the low hanging fruit of Arts degrees, I mean -- without picking up the analytical skill-sets they need, and without sufficient forethought re: the potential and actual diminishment of plum public sector jobs (Federal and Provincial Gov't jobs), and many are unwilling to live in the Canadian hinterland. But there has also been a decrease in the number of jobs, yes.

What part of Canada isn't hinterland?

When I was in university the technical subjects were jammed packed with students - engineering, CS, chemistry, biology, etc. Sure there's a lot of arts students but there's a ALOT of science students too and no jobs for them.

Canada sucks.


"new job seekers have to make big adjustments in their career plans, majors, ambitions, etc. to get through the door at all. "

Your underlying assumption, and its a big one, is that there are jobs available. In a job scarce scenario, the rational response isn't to retrain (why trade opportunity costs for non-existent rewards) but to lobby the government (low risk, higher payout). FYI, the actuarial world has gotten more credentialized in the last few years (adding addtional tests for the same entry level job) and the pool of applicants is much bigger. Plus the fact it takes 3-5 years to become an associate-level actuary its not exactly low hanging fruit.

Ph.D. in the humanities, very willing to relocate, ever-increasing publications, and willing (as my publications show) to greatly expand my areas of expertise -- still unemployed. Nor have I been able to get a position since I graduated, in 2004. Literally hundreds (thousands?) of applications, and only 2 phone interviews. The reason?

Have you thought about pursuing employment outside of academia?

yes. So far, nothing. Any suggestions? Surely someone needs a Ph.D. in the humanities, M.A. in English, B.A. in recombinant gene technology who publishes on spontaneous order theory.

You got a BA in that major? Or a BS?

It's a B.A. because I took a foreign language.

The reason you're unemployed, Troy, is that you have no employable skills.

Hope that clarifies things.

Tyler, your paycheck depends on the demand for BAs in a social science from a mid-range public university. Does anyone here think that a BA from George Mason - 20k/y at a school with a 39% 4 year graduation rate - is an investment that doesn't come with significant risk for an 18 year old?

The ability to write 5 page essays on public choice economics is not actually a super valuable skill in today's workforce - not any more valuable than the ability to write a 5 page essay on Picasso.

I'm pretty sure you can find some students in pretty crappy economic situations without taking a trip to Zuccotti.

I know eh I love how an ECONOMICS professor is ragging on students for supposedly not studying sciences (even though huge numbers of them are).

Engineers rarely do rag on people for not studying engineering. My father-in-law is an electrical engineer who has had stable work since he entered the work force. He would not recommend the profession to anyone.

Indeed, I do not know too many professionals, except for professors, who actively encourage people to follow in their footsteps. Most acknowledge their professions, be they medicine, law, engineering, accounting, scientists or veterinarians, are not what they used to be and are more difficult and more arduous than ever to practice. Work has become very cyclical, more highly regulated and, with the exception of a few people at the top, less remunerative.

Well it is true that professions have become way too regulated and credentialized. Actuaries are a perfect example of this in fact, realistically there's an awful lot of people out there who could do the job of an actuary - physics, math, stats grads but the profession has setup this extremely long examination process which ultimately focuses on material that isn't going to really be used on the job at all.
When you start seeing these conversations go "Well these kids need to go to university...err...and study a STEM field...ahh but not just any STEM it should be engineering....err...but...not electrical engineering....or...mechanical those ones have poor prospects...." maybe it's time to sit back and re-examine this idea that people don't have jobs because of a lack of skills.

That's a really good point.

....or is it that the grass be greener at the other side of the pasture and all that?

This calls for some poetry (I know a number of you are poets in your copious spare time):

Get up, get up and die
I want to see you suffer and cry
I know, it's what I crave
I want to see you six feet in a grave

What do you think?

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