Future Income Risks
I think that when I was in high school and thinking about what to major in, I wanted to continue studying something that interested me. However, I feel that after attending high school in a relatively wealthy town in New England, there was a lot of pressure on what college people should attend. Throughout the application process, I know a lot of my peers were extremely stressed about attending the best possible school they could get into with regard to prestige. For me personally, I knew that I wanted to attend a state school, either UMass Amherst or the University of Illinois, because they were good schools, and my parents would be able to support me throughout the process with the in-state tuition. I had applied to some Ivies, but my parents made it clear that they would not be able to financially support me. I do not regret my choice. I think that for statistics and economics the University of Illinois has good rankings, a rigorous program, and is able to satisfy my needs without paying approximately 90,000 dollars a year. Some of my friends who attend prestigious schools admit they regret it. Yes, they have that label of an Ivy, but it is 45,000 dollars later. Obviously, this is a subjective measure of risk. Some people may argue that private universities invest more in their students, which could be true.
For me personally, I almost always knew I wanted to do something math-related. I hated theoretical math including calculus, but I truly enjoyed statistics classes I took in high school. Luckily for me, statistics and economics are considered a stable field, meaning there are ample job opportunities that have relatively decent pay. However, I know that many of my friends said they hate math and science, so they chose to study classics, history, English, and other disciplines. Many people suggest not studying these fields since job opportunities are limited. This is an example of increasing risk: regardless of the average pay, the variance of salaries is very large. Many classics majors are unemployed; however, professors and researchers who complete excellent work are paid very well to publish their findings. Same with top professors in these disciplines. Going back to the point about university choice, one of my high school friends is attending the University of Chicago as a classics major, and she is paying a lot of money with little to no guarantee of a job. This is a risk preference: she chose to pay a lot of money and be in an unstable field. Her return to education is extremely variable.
Obviously, when applying to jobs, the probability of being declined is lowered with experience in the field. This is objective; people with no education are less likely to obtain a well-paying job than those with experience. I do think that summer internships and RSOs on campus are helpful. For example, in one of my internship interviews the HR recruiter asked me about University Band and I had a great conversation about music, something he had participated in throughout college. I think that experiences outside of your specific major can exemplify elements of character. However, these are uncertain probabilities, as many recruiters have not responded or noted those bullets on my resume. With educational RSO or involvement, I feel that it is almost expected. My dad works for a consulting company, and he told me that whenever he interviews potential interns, he generally does not ask about RSOs related to their major because it seems redundant. He said throughout the interview training, they encourage employees to find out more information about character because it is a stronger indicator of a student's work ethic. This is variable throughout different companies, but I think that this can also be subjective. This ties back to my band example. My dad admitted that when an intern talked about club tennis, he was immediately more interested as he played club tennis in college. Therefore, it is uncertain whether you will end up with an interviewer who has more in common with you, and I think this is actually a big factor. People may vouch for you more.
Also, I think it is important to note that family connections play a large role in the type of job students obtain after graduation and their salary. Deloitte is considered a well-paying and respected company, and I recall my friend telling me she spoke with them at career fair and told her to apply next year since they only accept juniors. However, a friend of mine received an internship there the summer at the end of freshman year. Her mom works there. Clearly, connections can go a long way in determining your future success. I think this is objective probability in some sense. Trends demonstrate that students who come from middle and upper class backgrounds generally do not have to work in college, have more stability, and are more successful compared to the average lower class person. Many of them cannot attend college because of financial constraints and burdens. Therefore, when finding a job, social class plays a big role. Along with this, US citizenship status plays a role: many companies indicate they cannot sponsor employees from different countries. With this, the risk in having a proper payoff to education is attributed to many factors that are not in one's control.
For me personally, I almost always knew I wanted to do something math-related. I hated theoretical math including calculus, but I truly enjoyed statistics classes I took in high school. Luckily for me, statistics and economics are considered a stable field, meaning there are ample job opportunities that have relatively decent pay. However, I know that many of my friends said they hate math and science, so they chose to study classics, history, English, and other disciplines. Many people suggest not studying these fields since job opportunities are limited. This is an example of increasing risk: regardless of the average pay, the variance of salaries is very large. Many classics majors are unemployed; however, professors and researchers who complete excellent work are paid very well to publish their findings. Same with top professors in these disciplines. Going back to the point about university choice, one of my high school friends is attending the University of Chicago as a classics major, and she is paying a lot of money with little to no guarantee of a job. This is a risk preference: she chose to pay a lot of money and be in an unstable field. Her return to education is extremely variable.
Obviously, when applying to jobs, the probability of being declined is lowered with experience in the field. This is objective; people with no education are less likely to obtain a well-paying job than those with experience. I do think that summer internships and RSOs on campus are helpful. For example, in one of my internship interviews the HR recruiter asked me about University Band and I had a great conversation about music, something he had participated in throughout college. I think that experiences outside of your specific major can exemplify elements of character. However, these are uncertain probabilities, as many recruiters have not responded or noted those bullets on my resume. With educational RSO or involvement, I feel that it is almost expected. My dad works for a consulting company, and he told me that whenever he interviews potential interns, he generally does not ask about RSOs related to their major because it seems redundant. He said throughout the interview training, they encourage employees to find out more information about character because it is a stronger indicator of a student's work ethic. This is variable throughout different companies, but I think that this can also be subjective. This ties back to my band example. My dad admitted that when an intern talked about club tennis, he was immediately more interested as he played club tennis in college. Therefore, it is uncertain whether you will end up with an interviewer who has more in common with you, and I think this is actually a big factor. People may vouch for you more.
Also, I think it is important to note that family connections play a large role in the type of job students obtain after graduation and their salary. Deloitte is considered a well-paying and respected company, and I recall my friend telling me she spoke with them at career fair and told her to apply next year since they only accept juniors. However, a friend of mine received an internship there the summer at the end of freshman year. Her mom works there. Clearly, connections can go a long way in determining your future success. I think this is objective probability in some sense. Trends demonstrate that students who come from middle and upper class backgrounds generally do not have to work in college, have more stability, and are more successful compared to the average lower class person. Many of them cannot attend college because of financial constraints and burdens. Therefore, when finding a job, social class plays a big role. Along with this, US citizenship status plays a role: many companies indicate they cannot sponsor employees from different countries. With this, the risk in having a proper payoff to education is attributed to many factors that are not in one's control.
I didn't understand some things you said in the first paragraph. You went to high school in New England but you get in-state tuition at Illinois? If that is true, some further explanation is needed to demonstrate how that's consistent. For example, your family move from New England to Illinois during your senior year in high school, but since you were so far along you were allowed to finish up high school where you started. I don't know this to be the case, but something like that is needed to make sense of your post.
ReplyDeleteLet me give you now a different angle and ask how this played out for you. Suppose that actually there is a lot of learning between students, informally, outside of classes but also outside of RSOs, in what you might call bull sessions. This is not stuff you'd put on your resume at all, but it would make you much more resilient in conversation ---- provided your had enough other students who were open to the same thing and articulate enough to engage you and push in your own thinking and conversational style. Where would you be more likely to find that sort of environment?
In the language of our class, if you had a high level of general human capital, might it serve to protect you from certain income risks, regardless of your major (or which university is listed on your diploma).
Now let's change perspective again. Much of what you wrote was indirectly about the income risk associated with the first job after college, or maybe through a few years after that? But suppose you thought about a longer time horizon - 5 years, 10 years, or even more? What skills will you need longer term to be able to manage income risk? Or put differently, what is the half-life of your degree from Illinois having value and when will you need to retool or find that what you learned as a student no longer has much worth in the market? If you anticipate such retooling will happen are there things you can do now that would make that easier?
Let me ask one more general question. This is about the spending side. Are there ways to keep spending under control so that if your income fluctuates you can still manage things? Are there any actions you can take now to keep spending manageable in the foreseeable future?
Sorry about that confusion -- my family owned property in Illinois so I was able to get in-state tuition.
ReplyDeleteI agree, there are certainly indirect ways in which we can enhance conversational skills or have more topics to talk about with interviewers. For example, in the service fraternity APO that I am involved with, we have to obtain 4 leadership points every semester. A week ago I attended a talk about Data Science with a computer science professor, and I found it very interesting. I could use some basic ideas he discussed indirectly during interviews to further demonstrate my interest in the field. These environments do exist with educational RSOs, which do help with interviews.
Again, I agree. High level of human capital can help find a job. My friend at the University of Chicago is publishing works about classics with a professor. Because she is motivated and a smart person, she is able to be successful.
I think that after graduation, I will attend some form of grad school to help lower the risk of my degree not being as useful. My brother graduated from the University of Illinois 3 years ago with a degree in computer science, and he is currently applying to grad schools. He said that he is unable to be promoted to higher positions without grad school. It will help amplify his skills and reduce the risk of being unemployed or not obtaining the best job possible. Also, throughout his job at Motorola, there are workshops with new coding programs so that he can stay up-to-date. The company pays for employees' grad schools because they value higher education and more advanced skills.
I think the best way to manage things with a fluctuating income is to ensure you are always saving an ample amount. I recently read an article about how millennials spend more money on coffee than what they earn. With this, I try to spend less money on things that might not be necessary in the moment but can really add up. I used to live by a coffee shop and would buy it almost every day. Just by purchasing a Keurig I saved on that. Saving in different methods will certainly be helpful too.
Hey,
ReplyDeleteI agree with you that job opportunities for science-related majors are abundant comparing to classics majors. And also in my opinion whether the high tuition fee of Ivies pays off depends on what the person values and his or her financial situation. If he or she values education quality (not necessarily means other schools are worse at academy), prestige, networking with "smart students" and at the same time are able to afford the high tuition, Ivies might be a good choice.
People cannot read the future of their own, but they can try their best to reduce the uncertainty with respect to future by seeking their potential. The more opportunities the person owns to get to know him or herself, the lower the future income risks will be.
Hey,
ReplyDeleteI agree with you that job opportunities for science-related majors are abundant comparing to classics majors. And also in my opinion whether the high tuition fee of Ivies pays off depends on what the person values and his or her financial situation. If he or she values education quality (not necessarily means other schools are worse at academy), prestige, networking with "smart students" and at the same time are able to afford the high tuition, Ivies might be a good choice.
People cannot read the future of their own, but they can try their best to reduce the uncertainty with respect to future by seeking their potential. The more opportunities the person owns to get to know him or herself, the lower the future income risks will be.
I'm sorry I was not able to login when I first wrote the comment "anonymously"
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