Monday, June 29, 2009

Go to College

My mother told me that back in the Depression, the boys who usually quit high school without graduating to go work in the steel mills of Chicago got the word from the mills to stay in school. Their fathers were having a tough enough time holding onto their jobs, and there was no room for newcomers. So a generation of boys who might have ended their education with the 10th grade graduated from high school instead. Thus paving the way, once military service was over, for that same generation of boys to go to college on Uncle Sam’s nickel, and move up in the world to white-collar work. Some of them undoubtedly ended up running the very factories in which their fathers had spent their whole lives laboring.

Today, a lot of people question whether bothering with college is worth the effort, since so many recent graduates are not finding wonderful, high-paying jobs the moment they graduate. (Not that this is unusual. That was the situation when I graduated from college, too. Every job I applied for got thousands of resumes. Still, eventually, I found interesting, well-paid work that related to my degree.) Right now, many more college graduates are being let go from good jobs. Is college a good investment in the future?

My answer is a resounding yes. The U.S. Department of Labor issues statistics on the lifetime earnings of persons who have attained various levels of education, and as you can see the more college a person gets, the higher the person’s income is likely to be. And a person with a college degree earns twice as much over a lifetime as a person with only a high school diploma. Sure, these are averages, and this chart is in ten-year-old dollars. But the nature of these differences holds steady. And, although we still have serious gender and racial differences in earnings, the way people leap over those barriers is through education. The statistics plainly support that fact, too, although I haven’t found that chart on the Bureau of Labor Statistics site this time around.

Nothing is certain in life beyond death and taxes, but education is the gift that keeps on giving. Thousands of manufacturing jobs that required little prior education have been lost to this country and will never return. Education at the college level prepares people to enter a fluid job market. As much as anything can, and that’s a big caveat. We are now supposed to be the CEOs of Me, Inc., and plan our futures ourselves, not expect some paternalistic company to give us lifetime employment. How well is that going? It’s too early to tell, because of the massive displacements of workers from outsourcing and globalization, plus the wretched downturn in the economy. But the basic idea, to navigate your own ship of lifetime work, makes sense. And college can give you the skills to do it. For the rare individual, high school is enough of a launching pad. But statistically, the more schooling you have, the better off you will be financially.

Not everybody should go to the same kind of college or major in the same kinds of subjects, but nothing helps if there are no jobs, which is the general situation right now. America has an abundance of highly educated, versatile workers, and not enough jobs for us. It also has an abundance of highly skilled, non-versatile workers, and not enough jobs for them, either. So what can we do? Stay in school. It’s the only occupation at which it is entirely respectable to be broke, to wear shabby clothes and not have a car and live in a dump. Granted, there are a lot of college students financing an affluent college experience through credit cards, but by and large, being of modest means while a student is the norm. College is a good place to hide out during an economic storm. And, duh, you could learn something that leads to a career.

Unlike the ads you see and hear, college is a not a scam. Paying tuition to a trade school for a "highly-paid job in the computer industry" or for a "highly-paid career in home staging" is a scam. So is being a network marketer or a phone sales person, usually. (See my recent post for why you don’t want to become a network marketer.) Training to be a hairdresser often is a scam; it's a common fallback of indifferent students, and then they discover they're no good at that, even though they love to fool with their own hair. And the jobs aren't out there. And the tuition does not even qualify for the Hope Credit. Training to be a plumber requires pull to even get an apprenticeship; you usually have to be somebody's relative. (I have never met a plumber’s assistant yet who wasn’t somebody’s nephew.) And the world only needs so many plumbers, plus you can get killed doing it. The same goes for electrical work. Or cleaning gutters. It doesn’t take a degree to clean gutters, but one misstep could leave you unable to stand, sit, or walk, let alone work. That’s another reason that people go to college, to aim for employment that will not kill them. Coal mining can kill you. Factory work can kill you. Pushing papers and spending all day on a computer at most can give you paper cuts and wrist trouble. But it will not give you black lung, cancer, or asbestosis. The biggest physical risk at a white-collar job is obesity.

There will always be more workers than managers in any organization, but the most skilled navigate to the top. For white-collar workers, the risk of not proceeding to a managerial job is chiefly to income. And that can be remedied through job change, more education, career change, etc. College gives people the opportunity to gain the basic and some of the advanced skills to become a boss instead of just a worker. Of course the reality is that few will become bosses. But it's still better to aim for the top than for the bottom. And college is also the stepping stone to a wealth of interesting careers. The fact that none of them appear to have any vacancies at the moment should not deter anyone from entering or completing college. There always are times when the supply of educated workers in any field is higher than the demand. But everyone does eventually get absorbed into the economy. And having a college education simply gives you better odds for a better level of integration. Not to mention many networking opportunities.

What about majoring in fields that have few job prospects? Like medieval literature, or archeology, or philosophy? Is that wasted time? No, because college is not trade school. An education is more than a collection of specific job skills. It is the basis for lifelong learning. And there will be a few people who do follow their interest in philosophy, say, into a lifelong career. Will you be one of them? First you have to go to college.

Sick of school? Plan to take a year off. The gap year is an established tradition in other countries. Young people explore volunteer opportunities, work on farms, travel, or whatever. And then, having tasted a bit of the world, they go to college to get ready to take a place in it. Been out of school for decades? Go back. We all know people who have returned to college in middle age. By then, your focus may have sharpened and you’ll have a good grasp of what you want college to do for you, and how much effort you’re willing to put in. As we get older, many people allow their lives to narrow. Education can expand your horizons just at a time when you think there is nothing new to be learned.

You might well ask where the money comes from to finance a college education. We have all heard of people stuck with enormous college loans who could never find work that would pay the loans off. But plenty of people finance college without that issue, often by picking schools with modest tuition, or by getting creative about financing. There are grants and scholarships that some students obtain, and work study programs, and employer funding of career-related courses, plus part-time, evening, and weekend classes specifically aimed at adults who already have jobs. The possibilities are endless.

And that’s really the bottom line on education: the possibilities are endless. So what are you waiting for? Look around you and sign up for a class today.

Monday, June 15, 2009

Cash for Clunkers Redux

It looks as if this idea—turning in older, less fuel-efficient cars and getting a government rebate with which to help finance a new one—might be passed into law. Conceived to clean up the air by removing old cars with bad emissions from the roads, this idea has now been transformed into a method of helping the failing American auto industry. But will it help Americans? Is what’s good for General Motors still good for the USA?

I’ve already considered this issue as a theory (see my post “Old Cars for New Debt” from August 19, 2008), but now I get to check it out as a reality. A friend of mine has a ten-year-old American-made car (paid for) with 130,000 miles on it. My friend has to use premium gasoline to run it (ouch). And my friend has just had some repairs done that weren’t cheap. But all the recent repairs don’t add up to anything like an average new car payment.

That’s the problem. My friend could benefit from this new law—in theory. But my friend does not have the income to make a monthly car payment. Not this year, and certainly not for four years or more. Another issue is that my friend’s car already gets around 20 miles to the gallon, even though it is a station wagon. To get substantially higher mileage per gallon without going to a luxury vehicle, my friend would have to get a much smaller car. Which would not fulfill my friend’s needs for transportation. My friend routinely hauls a lot of stuff around in the car. But there’s still the problem of not being able to make a monthly car payment.

What about going down to a compact car and not hauling anything? Inconvenient, but a much cheaper car. The Chevy Cobalt and the Ford Focus (both 30+ mpg) are two American brands to consider, and maybe, with incentives, could be purchased at around $15,000. But even with 0% financing on a five-year car loan, the car would cost $250 a month. My friend does not have an extra $250 a month; luckily, car repairs are running much less than that.

Plus there’s the fuel economy issue if my friend tries to stay with a car big enough to haul. The Ford Flex, a big station wagon costing around $30,000, gets 17 miles per gallon in city driving, the only kind of driving my friend does. The Pontiac Vibe, at closer to $20,000, gets only 27-29 miles per gallon, an improvement, but a 0% five-year car loan for that would mean a monthly payment of $333. Even more out of reach for my money-starved friend.

Do I seem to be going around in circles? That’s because people don’t drive ten-year-old cars just for the fun of it. They drive them because they cannot afford to buy newer and more expensive vehicles. I’m not against a government discount. But the people who will benefit most from this are the ones who have a second or third car hanging around the driveway that they seldom use, who can afford to buy a brand new car. Not my friend’s situation, and perhaps not yours, either.