Author Archives: jstepman

Generation Jobless

The Wall Street Journal has been focusing on youth unemployment and other economic issues pertaining to 20-somethings.

This video segment, called “Generation Jobless: Major or Money?” does a good job of breaking down some of the increasingly important decisions students have to make when choosing their major.

It seems like there are, of course, a lot of reasons for getting a major in the hard sciences like math and engineering. However, the lack of a good primary school education and competition makes a degree in the hard sciences difficult for many American students.

Take a look at the video.





Staying Put

One of the results of a down economy is that people are often reluctant to pull up stakes and move, the Associated Press reported this trend to be true in the current economy.


The report confirmed that young Americans that are staying close to home, unwilling or unable to bear the cost.


That Americans aren’t moving just ads to the evidence that the country is stagnating. Businesses aren’t hiring, banks aren’t lending, young adults can’t find career building work, and people aren’t leaving their hometown.


What was also interesting from the AP report is that young college graduates are staying in those college towns that they got a degree in. To a certain extent this makes sense because they stay in a place more comfortable and familiar with many close contacts. At the same time, being stuck in an environment that is already highly competitive and oversaturated with talent may be holding many graduates back.


What do you think? Do you find it easier right now to stay in your home town to find employment, or would you branch out if you could?

New Books Highlight the Value of Education Outside of School

It may seem counterintuitive to think that the most successful people are the ones that chose to forgo a formal education, but this has often been proved to be the case. Clearly after Steve Jobs died there was an increased interest in how he lived his life and became one of the most successful and innovative people in the world.


The new Steve Jobs biography by Walter Isaacson has clearly gained a lot of attention. People just want to know the secret to this innovator’s success.


How is it that a man who dropped out of college after only one semester could achieve such spectacular success? The answer wasn’t that he ditched educating himself, he just ditched the institution.


What many students who enter institutions of higher learning often fail to do is understand that the education received in school is incomplete. To take advantage of an education one must go above and beyond what is learned in a classroom.


That is what makes the college dropouts turned billionaires successful. It’s not dropping out of school to have more leisure time and less work, but to work harder and pursue a passion beyond what can be taught in any school. You also can’t be afraid to fail.


A new book by Michael Ellsberg called, “The Education of Millionaires: It’s Not What You Think and It’s Not Too Late,” talks about how current college students are not getting enough out of their degrees and shoveling out money for an education that won’t serve their interests down the line.


The book talks about how schools train students for middle management jobs that are simply disappearing. The skills that are most important for a highly successful career in the future are in creating a small business, but how many people learn about that as an undergraduate in college?


While clearly colleges provide many opportunities for success, they rarely push students to take risks or be truly innovative. This task falls mostly on the individual. In a time of great economic stress and stagnation, it’s the risk-takers and the innovative that are most likely to pull the country out of it.

The Student Loan Crisis on the Big Stage

Just last week I wrote on Pick Your Future about the growing and out of control student loan industry, and it seems like the issue has reached the highest levels of government.

The Obama Administration released a plan to deal with this problem and to set things right, but is it truly a solution? As with all contentious policy proposals by presidential administrations, there is always a deeply political element to every plan endorsed.

The politics behind the plan are far less important to regular people than what will actually happen with the policy.

All the way back in 2010, there was a massive federal intervention into the student loan industry. This was intended to get costs under control and ensure that the next generation has easy access to the highest levels of education in this country. Banks were given huge subsidies to lend money to students across the United States, even in situations where there is a high risk of default. The intent was to ensure access to education for student from low and middle income families.

There were certainly people who were critical of that plan at the time, but the opposition was only mild because it wasn’t seen to be the critical issue of the day.

Essentially the banks have no financial risk because the government will simply step in if a large amount of loan recipients default. In many regards the situation sounds similar to the housing bubble that burst in 2008, nearly bringing down the American economy. Obviously, nobody wants that to happen.

So the latest plan will cap student loan payment to give students a little more leeway and cash in their pockets. But an Atlantic article peeked into the numbers and showed that the money staying in student’s pockets remains rather miniscule. The savings would be around $10 a month. That’s not exactly a bonanza.

Simply pushing the loan industry to forgive unpaid student loans could make student debtors happy in the short term, but would be financially ruinous in the long term. An education requires money and someone, somewhere will have to pay for it.

The problem with what amounts to a bailout of students and the student loan industry, is that it merely tries to cure a symptom to a much larger and deeper problem. Unfortunately the “cure” might make the problem even worse than what we had before.

If there is a comparison it would be like how doctors in the 18th century used to bleed their patients and give them mercury to clear their system when they became sick. The result was usually that the patient became more sick or even died.

The costs of education for either students or other members of society are becoming prohibitive and that is the huge problem the nation is facing. The reason that so many students can’t pay back their loans right now is because they can’t find a job even after receiving a high priced degree.

There is sure to be much more information to come as the situation develops.

Get a World Class Education… In Rural Kansas

I have been focusing a great deal on the problems facing students and college graduates a lot lately and the news has mostly been depressing. So I want to write about a more positive story to show that it isn’t all doom and gloom in this country.

A story appeared on about the remarkable success of a group of rural elementary schools in Kansas. Apparently, schools in the Waconda Lake area of North Central Kansas produce students that score better than 90 percent of student from developed countries. Across the board the students outperform most of their American peers.

The average student at the Waconda school district of 385 kids scores better than 90 percent of students in 20 developed countries on math and reading tests, according to The Global Report Card, published in the journal Education Next. In fact, Waconda is the second highest performing school district in math in the country, after Pelham, Massachusetts, an affluent community that is home to Amherst College.

That remarkable success comes in an area that is agricultural, rural, and fairly impoverished.

What I found interesting is that the success of these districts wasn’t linked to any specific reforms, unique testing methods or high teacher salaries. In fact the teacher’s salaries were amongst the lowest in the state.

The conclusion drawn from the story was that parent involvement, a tradition of success, and lack of a communication barrier were the main reasons that these schools have produced such successful students. It also couldn’t have hurt that the schools had tiny classroom sizes and a high level of direct teacher-student interaction.

I think that conclusion is correct and that those factors contribute the most to success of young students, leading them to greater success later in life. Money means a whole lot less than tradition, culture and ease of communication.

Student Loan Industry Getting Out of Hand?

If this story in USA Today doesn’t show that there is a degree bubble in American higher education then I don’t know what does. It highlights the challenge young Americans face when they graduate, and the exploding amount of debt that college students have accrued in just the past five years.

The numbers are incredible:

The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.

Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what’s owed on home loans and credit cards.

The article mentions the difference between this bubble and the catastrophic housing bubble in 2008. The difference is that, unlike in housing, the opportunities to declare bankruptcy and walk away from student loans are far fewer. Students will shoulder this burden throughout their lives.

There has been an increase in for-profit schools that tend to take on high-risk students in large numbers, so that is one of the reasons for the increase in student debt, but that can’t explain all of it.

I don’t know if there is an easy answer to this problem. A lot of the best jobs require a degree, but the degree itself is no shoe-in. I think it speaks to how American institutions are in flux and how there needs to be a greater focus on cost-cutting and economizing in education. Using new technology to bring education to students at a fraction of the cost is certainly one alternative.

Some schools, like the University of California-Berkeley, are posting video lectures online for free. While the classes themselves may be free, students still don’t receive the credentials to use in a job hunt. Unfortunately, the credentials are often the only reason people even go to college. Universities are gatekeepers every bit as much as institutions of education. The process of getting into the school and getting through the process is more of the test than the courses.

Still, with all of the current economic problems, higher education cannot and perhaps should not remain immune. The changing circumstances might be a perfect opportunity for reform and improvement. That is how the American economy has worked and is one of the reasons why it is so dynamic.

The increase in loans for degrees is deeply worrying if those degrees are not consistently translating into success. It’s similar to how the United States is racking up debt right now to spend money and pull itself out of the recession, but is still barely growing at all. Those trends are troubling to say the least.

What do you think? Are there any reasonable ways to reform education without breaking the system, or should Americans just accept the higher cost and hope that things turn around?

The Universal Decline of Universities

If you are a young, 20-something American then you probably have or are working to get a college degree. In the last 50 years the number of Americans with a college degree has risen dramatically to the point that it is the norm instead of the exception.

An article in National Review, called “Don’t Occupy Education”, had an interesting take on education and the Occupy Wall Street movement. The author, Charles Cooke, states what he believes is the problem:

It was, until a few years ago, possible to draw a direct line between the possession of a university degree, and a better paying job. This was not the product of a timeless ironclad equation, but because the default was not to go to university; to have a degree thus set one apart from the crowd. But if everyone has a degree, then nobody does.

The fact is that a large number of recent graduates are unemployed and frustrated that the opportunities available to them require little more than a high-school diploma. A bachelor’s degree just isn’t what it used to be.

The promise of a degree in the American economy is deeply alluring. At one time an American with a degree had a dramatically higher earning potential than the rest of the population. The cost and debt to obtain a degree was high, but would pay dividends down the line.

Pushing young Americans to enter academia and the professions in large part led to a decrease in manufacturing and blue-collar jobs.

The change was for the most part positive and put the country ahead of the world in technological advancements and innovation. The domination of American universities is nearly complete, occupying 45 of the top 100 spots in the Times Higher Education ranking list and nearly half of the top 200. This list may even be underrating the domination of American schools because it the list was created in a Europe.

While more Americans have flocked to join the white-collar world of expertise and technicians, the traditional manufacturing industries have gone into a slow, sad decline. Blue-collar towns like Detroit were hit hardest as American car companies became uncompetitive and eventually bankrupt. Its decline was because of a combination of factors some within and some outside of the control of workers, companies and policy makers.

American manufacturing has been operating using mid-twentieth century norms. Uncompetitive levels of pay and benefits for workers couldn’t work in the highly competitive globalized world that America operates in today.

For the American consumer this increased competitiveness has been a good thing, as products are cheaper and often of a higher quality, but have left many others struggling to compete in the changed environment.

While a degree has been a gateway to greater opportunity and an engine of American innovation and growth, the times are changing again. In the current economy, the recently graduated strain to find any kind of gainful employment. They often struggle for years with low-paid or unpaid jobs.

These difficulties are not just for those with a bachelor’s degree, but extend even to those with law degrees and higher degrees. Many law firms today are not giving new lawyers the same pay and opportunities that were nearly a given in the past.

It is hard to go through nearly a decade of work in higher education to take a greatly diminished job. Being strapped with a mountain of debt makes it worse.

The rapid change in economic circumstances will undoubtedly create a shift in how Americans approach the economy. If any country can make a dramatic shift it would be the United States; a country with the most powerful and dynamic economy that the world has ever seen.

Like the housing bubble, the degree bubble is bursting and leaving a lot of middle class Americans dealing with the mess left behind.

If there is an answer to fixing the mess it could be in making the economy more diversified, something that has been lessened by the dramatic shift of recent generations to the knowledge and service industry. Better tapping into the vast natural resources like oil and natural gas, made possible by those advancements in technology, is an important first step.

The great Founding Father of the United States, Alexander Hamilton, who perhaps understood economics and finance better than anyone in his generation, once said of economic diversification in his famous Report on Manufactures,

When all the different kinds of industry obtain in a community, each individual can find his proper element, and can call into activity the whole vigour of his nature. And the community is benefitted by the services of its respective members, in the manner, in which each can serve it with most effect.

Tapping into energy resources, creating a pro-growth business environment and cutting down on legal red-tape has made states like North Dakota particularly successful in even the most catastrophic national economy that America is dealing with today.

Americans now, like always, must learn to adjust to rapidly changing economic circumstances. Higher education will continue to be important, but Americans must learn to deal with its limits.

Mark Twain, once said,”I have never let my schooling interfere with my education.”

The times are changing. It’s time to put our Yankee ingenuity to the test.