2013 February 10 Sunday
Downward Mobility For Generation Y In Job Market
The fading American dream.
Generation Y professionals entering the workforce are finding careers that once were gateways to high pay and upwardly mobile lives turning into detours and dead ends. Average incomes for individuals ages 25 to 34 have fallen 8 percent, double the adult population’s total drop, since the recession began in December 2007.
As I've laid out in many previous posts, I see compelling reasons why this is going to get worse. Rising natural resource extraction costs, decaying demographics, less low hanging fruit for doing innovation are a few of the reasons. You needto raise your game if you just want to stay at the station in life you've reached.
The law schools graduate almost twice as many lawyers as there are legal jobs. Do not go go law school unless you can get into one which has really high admissions criteria. The non-brilliant have bleak prospects in law. The prospects for architects are also bleak.
I've argued previously that the idea that immigrants have wiped out the value of STEM degrees is false. Here I will flesh out some evidence for this assertion. With or without immigrants the value of a degree in chemistry or biology is low. The number of academic jobs for Ph.D.s is far fewer than the number of Ph.D. holders in science. But the "E" in STEM offers many well-paying possibilities for anyone willing and able to pursue the right degree. Overall engineers in the United States are paid a lot more than the average.
Over 12,000 engineers from the U.S. responded to the online salary survey between April 1, 2011 and March 31, 2012, providing insights into salaries and job market. The survey data revealed that the average total annual income, including commissions and fees, for an engineer in the U.S. in 2012 was $103,497, nearly 4.0% higher than the $99,738 figure reported in the 2011 survey.
These are not upper class salary levels. But they are at least upper middle class salary levels. That's what you need in order to live what most people would rate as a middle class lifestyle. If you choose your field wisely you can go even higher.
The engineering jobs that offer the highest compensation are in ocean ($169,000), followed by cost management ($129,500), petroleum ($127,043), safety ($125,000), minerals and metals ($121,000), and fire protection ($116,000).
What's not revealed here are the advantages of being great at what you do. Top notch software developers can make a few hundred thousand dollars per year in the right firms in Silicon Valley.
You can cheaply start learning some skills that will raise your market value. It takes time and brains to do the learning. Most will not want to make the effort. But if you are willing and able to make the effort you can insulate yourself from huge developments that threaten to cause large declines in Western living standards. We've lost some major advantages and now live in the great stagnation. Adjust to this. Change your life to acknowledge what has changed.
By Randall Parker at 2013 February 10 07:03 PM
What top-notch people "can" earn in "the right" firms is irrelevant to the average trend; there's always been some people at the upper end of anything that makes a good or excellent salary, even if salaries overall are deteriorating.
GDP/capita is *up* over the last decades, even after compensating for inflation.
If people are nevertheless making a lower average salary, it means that the money is distributed differently, to their detriment. And this does indeed seem to be the case. Look at salaries-as-percentage-of-GDP for the last 3-4 decades, it's been falling steadily.
The situation for average folks will continue to deteriorate, unless *that* trend can somehow be bucked. But nobody is even offering suggestions for how to achieve this.
Here are some recent data on STEM unemployment, based mainly on this study from Georgetown University:
Information systems 11.7%
Mechanical engineering 8.6%
General science 8.2%
Computer science 7.4%
The unemployment rate for chemistry and biology graduates is lower than for mechanical engineering and computer science graduates. Of course, as you point out, certain targeted engineering fields have great job prospects. And a chemistry or biology degree is most valuable when it gets you into medical school.
Immigration may not be the main cause here, but it sure doesn't help. As Dr. Rubenstein points out:
As usual, there is an unmentioned immigration dimension to this problem. The current immigration inflow is notoriously disproportionately unskilled. But there were about 8 million legal immigrants with BAs or higher in the U.S. 2010—and even an estimated 1.2 million illegals with BAs or higher. These are my own calculations based on data from Census Bureau (foreign born college graduates) and Pew Hispanic Center (% of legal and illegal immigrants with college degrees).
Immigration policy also exacerbates both ends of the college squeeze:
Financial aid is siphoned from native-born American students via state-level DREAM Act-type legislation, which mandates in states charge in state tuition for children of illegal aliens.
It is conservatively estimated that:
a. about 1 million illegal immigrants would eventually qualify for the proposed federal DREAM benefit and,
b. each will receive a tuition subsidy averaging $6,000 per year. Taxpayers will thus cough up an added $6 billion per year for the tuition subsidy—six billion that could have helped defray college costs for American students.
And, of course,
another million new graduates will eventually be able to compete with American recent graduates for jobs.
You link to an article mainly about people who thought a law degree was a ticket to a high income and got burned. How do you know the same thing could not happen to engineers? The market looks good now but no better than it was for lawyers twenty years ago. Even if the average salary for engineers holds up how do you know what fields will pay off in the long term?
I think the lesson is don't pay a lot for a degree in any field because no occupation has a lock on high incomes for decades.
Isn't the real lesson here "go to med school" where the low end of comp starts around $150k?
Interesting tool. I realized I'm doing a lot better then I thought given my young age.
> You can cheaply start learning some skills that will raise your market value.
Yale has recently started offering free courses online, and of course MIT has been doing it for years.
In addition to learning new skills, it's good to learn the mannerisms and ideology of the upper classes to get ahead in life (for those who weren't raised in this milieu).
Engineers make more than bio and chem majors by a wide margin. Unemployment rate differences of 1 or 2 percent are nothing compared to differences in yearly income that are in the tens of thousands of dollars. My software developer friends all make over $100k and some excellent ones make over $200k and great ones much higher. That's way better than the average Ph.D. in biology.
Even 20 years ago lower ranked law schools were overselling the benefits of a law degree. Now software developers have automated some legal work and some of the work has moved abroad.
Peak demand for petroleum engineers is probably in this or the next decade. But engineering overall? Unless the economy collapses there'll be continued value in designing stuff. Of course, artificial intelligences could and probably will some day make engineers useless. But not for the foreseeable future.