00:00:00
Peter Cappelli: But having said that,
there are still a lot of jobs where they make that a hurdle. You know,
certain nursing positions, for
00:00:08
example, like to be an RN, you
have to have a college degree, right? So it's not perfectly
easy to bypass the college
00:00:18
route. But breaking your neck to
try to get a college degree when it doesn't suit you and you
don't have the money.
00:00:26
Dan Loney: Welcome to the Ripple Effect, the
podcast that takes you on a journey through the minds of
Wharton faculty. I'm your host,
00:00:33
Dan Loney. And in each episode,
we'll be diving deep into the inspiration behind the
groundbreaking research that
00:00:39
Wharton professors have
conducted, and exploring how their findings resonate with the world today.
Dan Loney: Conventional wisdom
00:00:46
says that if you want a great
career, you probably need to go to college. But that may not
always be the case. In fact, the
00:00:54
decision of whether or not to
spend the money for a college education is one that is drawing
even more attention than ever
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before. That's an area studied
by our next guest. Peter Cappelli is a Professor of
Management here at the Wharton
00:01:07
School and Director of the
Center for Human Resources. He wrote about this topic in his
book, <i>Will College Pay Off?</i> And
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he joins us right now. Peter,
great to see you again. How are you? - Good. Thank you, Dan.
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- So the decision of whether or
not to spend the money seemingly has taken on a much higher level
of importance, especially in the
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last few years. Would you agree
to that? - Yeah, I think that's -- I think
that's right. I mean, it's been
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an issue for a while. But I
think particularly when the economy went down after the
Great Recession, during the
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Great Recession, and afterwards,
and a lot of people with college graduates -- and college graduates
weren't getting jobs, it didn't
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seem like necessarily such an
obvious thing to do anymore. - What are the the decisions -- what
are the factors that people have
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to really bring into play here
when they're making that decision right now? - Well, you know, I think you need
to be serious about whether you
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care about the financial return
on this. So lots of maybe upper middle class people don't care
so much. They believe this is
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part of the process of their kid
learning and developing, and they think they're going to go to
graduate school at some point
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anyway. And so they're not
particularly concerned about the market value of the degree. So
do you care about that? If
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you care about it, then one of --
the first thing you have to think about is, will my kid
graduate from college? Now, this
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sounds like an obvious thing.
And everybody I know said before their kids went to
college, well, my kid will
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certainly graduate, and they'll
do it in four years. And I can tell you that neither of my kids
did graduate in four years,
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right? So if you go to
college and you don't graduate, it is not worth going in terms
of the financial return from it.
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People have long known this,
they call it the sheepskin effect, and that means that if
you go to college and don't
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graduate, you don't make very
much more money. If you hang around and actually graduate,
then you get, you know, a bigger
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bag. So there is a difference
between going to college and being a college graduate. And
one of the things you have to be
00:03:23
kind of clear eyed about is, do I
think my kid will actually graduate? And if so, you know,
are they ready to go to college?
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And if so, how long do I think
it will take? There are little calculators that will help you
decide this, believe it or not,
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based on the experience of
generations of prior kids. So I'd say that's the first big
thing to think about.
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- So does the greater level of
risk in this process fall on the shoulders of the parents or on
the child themselves?
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- Well, I guess it depends how
guilty the kids are going to feel this. The parents are
usually the ones bearing the
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financial risk. But you know,
the kids often feel a lot of pressure to get a good job
afterwards. And they know their
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parents sometimes were
struggling to send them to college. And so they feel a
lot of psychological pressure.
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And, you know, I think the
question is, what kinds of things could they do to make
sure that they can get maybe a
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better return, or at the very
least not get a lousy or no return from their college degree,
and yet not give up working on
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the kinds of topics and majors
that really suit them. - Now you bring up an important
component there, the major in
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which an individual studies if
they do go to college. That becomes very important in making
sure that you are making the
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right investment in the right
major. And I guess, to a degree, it's also the right college that
you're actually select thing
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with that major as well. - Yeah, I think on the major
fronts, we have spent an awful
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lot of time trying to persuade
people that everybody should get a STEM degree. But it turns out
that a rather large proportion,
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and I knew the number on the tip
of my tongue, I can't -- it may come to me by the end of our
session here, about the
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percentage of STEM graduates who
end up not working in STEM jobs. And it is huge. I think it
was close to a majority. Or
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maybe it was a third, I've
forgotten. But it's a really big number of people who get STEM
degrees end up never working in
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those fields. So the idea that,
you know, if I get a STEM degree, I'll obviously get a
job. First of all, that's not so
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true. It's true that if you're
an engineer, you probably will. It's true that if you're in
healthcare, you probably will.
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If you're a biology major, or a
science major, even a math major, not so clear you will
get a job in that field, right?
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So that's the first thing to
think about. It is no guarantee. I would say the thing we don't
give enough attention to,
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thinking of the return, is how
complicated are the majors that I am thinking about pursuing in
the college of which I'm going
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to, or think I'm going to, right?
So what does that mean? That means if a kid gets
frustrated with a major that
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they chose, can they easily
transfer to a different major, or is it going to be
prohibitively difficult? There's
00:06:35
a great advantage in going to a
school where, if you don't like the major you thought you were
in, you don't have to change
00:06:40
schools, you can just transfer
into another major or another department. But the other thing
you can look at pretty quickly,
00:06:48
it doesn't take much time, is
look to see how complicated the major requirements are,
particularly in a smaller
00:06:57
school, in -- often in state
universities as well. If you look at the major, you can see
that, you know, you have to take
00:07:06
courses in a particular
sequence. You can't do this one until you have that one, and
this one is not offered very
00:07:14
often, and it's always the same
person offering it. And if that person goes on sabbatical or
something, you can't complete
00:07:21
your major, right? And
particularly, so if you switch into that department, this
happened to one of my kids and
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he ended up having to take
another year. So you know, how easy is it to switch
majors if my kid has a different
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view? And they often do. They
rarely end up doing what they thought they were going to do.
And then if I'm in a major, how
00:07:43
clear is it that I can finish on
time? How many likely roadblocks are there to that? And the more
complicated the major is, the
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more roadblocks. - You mentioned STEM. So are there
majors that you see out there
00:07:58
right now that seemingly are
better aligned? And obviously, part of this is an
individual decision. But are
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they better aligned for, in
general, the mass to be able to matriculate through the four
years and be able to find a job
00:08:14
right now? - Yeah. So I think, just get cut to
the end. What's the best advice
00:08:19
on this? The best advice is to
be able, in the last year or so of your degree, to see what is
hot right then and take a couple
00:08:30
of courses in that field if you
can get them. The problem with timing the labor market is that
if I am going to start college
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right now, okay, it'll be four
years before I graduate. What is hot in four years is unlikely to
be hot right now. So the classic
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story of this is that a few
years ago, the hottest job in the US for kids graduating was
petroleum engineers. And then it
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completely cratered when oil
prices sunk. Then oil prices rise back up, suddenly, it's a
hot thing again. Then it craters.
00:09:08
And, you know, it could be you
strike it lucky, but part of the problem is that so many kids
go into those fields when
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they're freshmen, because they
see what the job market is like then, and then they kind of
oversupply it. So it's like a
00:09:25
cobweb problem in
microeconomics, you know? So it's really, really difficult to
time that, and it's hard to know.
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If you get into engineering, you
know, it has been safer. But even there, if you get into like
computer science stuff, computer
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programming degrees, not so hot
right now, right? If you're working on something in AI, ooh,
super hot. But you would never
00:09:49
have known that three or four
years ago, right? So the ability to adjust at the very end
matters a lot. Smart employers
00:09:57
are not so concerned about what
your major is. They want to know what courses have you
taken. And some of that could be
00:10:05
certifications that you get not
even in your college, right? If you're a philosophy major, and
you have the right kind of
00:10:12
certifications, and you've taken
some very practical courses that are marketable, you'll probably do
fine.
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- And in some cases, on the other
side of this, if you don't go to college, there are still careers
out there where you can do very
00:10:26
well without spending the large
sum of money in getting the college education. You can still
have a great career, own a business,
00:10:36
whatever it might be. - Yeah, I think that's true. It is
still the case, despite all this
00:10:43
talk about skills-based hiring.
You know, skills based-hiring means basically let's forget
about the degrees and things and
00:10:49
just see, can you do the job,
which you would think employers were always doing, but they were
not. And the reason, despite the
00:10:57
talk about this, it's probably
not going to matter much, is that testing to see whether people
actually have the skills takes a
00:11:04
lot of time and effort, and
they're not willing to do it. If, on the other hand, you can
demonstrate that you have these
00:11:11
skills, that's super valuable.
So in some fields, where you could be an apprentice, like in
craft fields, I mean, craft
00:11:20
trades, electricians, carpentry,
plumbing, you know, that stuff, those are pretty well paid jobs
now. They don't suit everybody.
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I mean, if you really think that
you're a big thinker and want to work in conceptual stuff, don't
become a plumbing apprentice,
00:11:38
right? Just because the job is
going to be good for you, right? In terms of market. There are,
particularly on the tech side,
00:11:45
and particularly in healthcare,
jobs that are pretty good that you can get without a college
degree. But having said that,
00:11:52
there are still a lot of jobs
where they make that a hurdle. You know, certain nursing
positions, for example, like to
00:12:00
be an RN, you have to have a
college degree, right? So it's not perfectly easy to bypass the
college route. But breaking your
00:12:12
neck to try to get a college
degree when it doesn't suit you and you don't have the money,
just because you think it's
00:12:19
necessary, is probably not fair
either. - Peter, thanks very much for your
time, all the best. Peter
00:12:26
Cappelli, who is a Professor of
Management here at the Wharton School, and also Director of the
Center for Human Resources.
00:12:33
- Thank you for listening to the
Ripple Effect. We hope you found this episode informative and
engaging. Don't forget to
00:12:39
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so that we can continue to bring you the best insight from the
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