This post is a little bit off the path of a direct investment market or economic topic that I generally write. However, the observations do have implications for the employment market and how future college graduates might improve their employment prospects.
We are entering that time of year where students are celebrating their graduation from high school and college. Having recently attended Indiana University's graduation and talking with some of the graduates, it was evident that not all seniors were successful in securing a job. Prior to the IU graduation, I attended the academic signing day at the high school in our community. The academic signing is where the top graduating seniors, i.e., those achieving a 4.0 or higher grade point average during their 4-years of high school, announce their college choice and intended major. The common thread for both functions I attended is the selection of ones major is an important decision and can significantly impact one's marketability upon graduating from college.
For the high school seniors going on to college, the end of their college days are a long way off, at least 4-years, and a lot can change economically that affects the job market. However, I was surprised at some of the intended majors announced by some of these top high school seniors. Several of the majors announced by the graduating seniors fell into an area of study that currently has one of the highest rates of unemployment.
Several recent articles in the Wall Street Journal touch on some of the issues facing college graduates. It may seem obvious, but one important factor is the major pursued by college graduates. In many emerging economies, students in those markets select majors in either a hard science or engineering. Degrees in these fields provide one with an education that qualifies them for a number of job disciplines, even jobs that are not directly tied to the area of study. The WSJ article, "
To the Class of 2012," notes a number of today's graduates lack factual knowledge due to the education community's focus on teaching "thinking" skills at the expense of having students learn facts. As noted in the article,
"Many of you [college graduates] have been reared on the cliché that the purpose of education isn't to stuff your head with facts but to teach you how to think. Wrong. I routinely interview college students, mostly from top schools, and I notice that their brains are like old maps, with lots of blank spaces for the uncharted terrain. It's not that they lack for motivation or IQ. It's that they can't connect the dots when they don't know where the dots are in the first place."
The article went on to note,
"In every generation there's a strong tendency for everyone to think like everyone else. But your generation has an especially bad case, because your mass conformism is masked by the appearance of mass nonconformism. It's a point I learned from my West Point intern, when I asked her what it was like to lead such a uniformed existence.
Her answer stayed with me: Wearing a uniform, she said, helped her figure out what it was that really distinguished her as an individual."
The other Wall Street Journal article,
America and the Value of 'Earned Success', highlighted the author's path after he left Spain a number of years ago. In Spain this was unheard of since many job functions were guaranteed for life. If the job did not pan out, they found ways to qualify for lifetime disability paying the same salary as their job. When the author and his wife arrived in the U.S., they both ultimately landed jobs. The individual notes,
"In the end, I concluded, what set the United States apart from Spain was the difference between earned success and learned helplessness (emphasis added)." The author goes on to note,
"The link between earned success and life satisfaction is well established by researchers. The University of Chicago's General Social Survey, for example, reveals that people who say they feel "very successful" or 'completely successful' in their work lives are twice as likely to say they are very happy than people who feel 'somewhat successful.' It doesn't matter if they earn more or less income; the differences persist.
The opposite of earned success is 'learned helplessness,' a term coined by Martin Seligman, the eminent psychologist at the University of Pennsylvania. It refers to what happens if rewards and punishments are not tied to merit: People simply give up and stop trying to succeed.
Learned helplessness was what my wife and I observed then, and still do today, in social-democratic Spain. The recession, rigid labor markets, and excessive welfare spending have pushed unemployment to 24.4%, with youth joblessness over 50%. Nearly half of adults under 35 live with their parents. Unable to earn their success, Spaniards fight to keep unearned government benefits.
Meanwhile, their collective happiness—already relatively low—has withered. According to the nonprofit World Values Survey, 20% of Spaniards said they were "very happy" about their lives in 1981. This fell to 14% by 2007, even before the economic downturn.
That trajectory should be a cautionary tale to Americans who are watching the U.S. government careen toward a system that is every bit as socially democratic as Spain's.
Government spending as a percentage of GDP in America is about 36%—roughly the same as in Spain. The Congressional Budget Office tells us it will reach 50% by 2038. The Tax Foundation reports that almost 70% of Americans take more out of the tax system than they pay into it. Meanwhile, politicians foment social division on the basis of income inequality, instead of attempting to improve mobility and opportunity through education reform, pro-growth policies, and an entrepreneur-friendly economy.
These trends do not mean we are doomed to repeat Spain's unhappy fate. But our system of earned success will not defend itself."
For the graduating high school seniors and college seniors continuing their education, certainly pursue a field of study that you are passionate about, while at the same time making the education pursuit a rigorous one. Don't simply focus on classes that inflate your GPA if the course truly does not increase your factual knowledge. A rigorous course of study could mean the difference between "earned success" and "learned helplessness."
