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37.5% of Graduates Work in Jobs Requiring No Degree; Who is to Blame? Solutions?


By Mish   Follow   Wed, 28 Nov 2012, 3:43am PST   7,748 views   60 comments   Watch (1)   Share   Quote   Permalink   Like   Dislike  

Student-Loan Delinquencies Surpass Credit Cards, 37.5% of Graduates Work in Jobs Requiring No Degree; Who is to Blame? What About Solutions?
http://globaleconomicanalysis.blogspot.com/2012/11/student-loan-delinquencies-surpass.html
Mish

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TechGromit   befriend   ignore   Fri, 30 Nov 2012, 11:17am PST   Share   Quote   Like   Dislike     Comment 21

Peter P says

Kevin says

I don't have a degree but I make in excess of $300000 a year as a software engineer.

Good for you. This illustrates my point nicely.

BTW, you are only middle class.

If 300k a year is middle class, than I'm living below the poverty line only making 100k (combined me and my wife).

Bellingham Bill   befriend   ignore   Fri, 30 Nov 2012, 11:40am PST   Share   Quote   Like (3)   Dislike     Comment 22

LOL, $300K is NOT middle class if it can be kept up.

What separates the middle class from the upper class is that the upper class no longer has to rely on wage income to survive, they have money "working" for them, collecting money from other people.

Ten years of $300K salaries with $200K/yr put away will have a $2M asset cushion at the end of it.

At 3% net returns that is $5,000/mo of interest income, plenty to be no longer reliant on wage income and thus no longer "middle class".

$300K/yr is a rocket ship out of the middle class, LOL

Kevin   befriend   ignore   Fri, 30 Nov 2012, 1:45pm PST   Share   Quote   Like (1)   Dislike (1)     Comment 23

By the traditional definition of "middle class", I am, indeed, middle class.

Lower class: Poor people, working poor, those who are a paycheck away from losing everything (or already lost it)

Middle class: People who are well off but must continue to work in order to maintain that status. Financially independent to a point; they can survive if they lose their jobs for a short while but can't survive on existing wealth alone.

Upper class: Rich people. They never need to work if they choose not to, because they can live comfortably off of interest / dividends / rents on their assets.

I'm not sure WTF me being middle class has to do with anything though. My whole point was that saying what a "requirement" for a job is is a very fuzzy concept. On paper, being a software engineer "requires" a degree in an appropriate related discipline. In practice, many of us don't have degrees.

There actually aren't that many professions that truly require a degree. It's pretty much just the ones that require licenses to practice (law, medicine, education, etc.) It's a damn shame that we ask kids to commit to paying tens, if not hundreds of thousands of dollars for an education that they don't get much out of it.

Now, I did go to college for 5 years. I just dropped out because I wasn't learning anything new. I worked full time as a software engineer during that entire period, and my college education (or lack thereof) has never even appeared on my resume.

I don't want to sound anti-education. I just don't think the current university system is the best way to educate people.

Bellingham Bill says

Ten years of $300K salaries with $200K/yr put away will have a $2M asset cushion at the end of it.

Nobody who makes $300k can put away $200k a year if they actually want to enjoy their life during that period. My federal taxes alone are about $65k; total taxes maybe $72? Much higher if you live in a state with an income tax.

This is married filing jointly + a sizable mortgage interest deduction. If I were single or didn't own a home, my taxes would be much higher. In WA I'd be looking at $90k; in CA or NY it would be around $115k.

To save $200k I'd have to get a second job!

Peter P   befriend   ignore   Fri, 30 Nov 2012, 3:15pm PST   Share   Quote   Like (1)   Dislike     Comment 24

TechGromit says

If 300k a year is middle class, than I'm living below the poverty line only making 100k (combined me and my wife).

The middle class has a wide range.

If your money is not making you money, you are in the middle class.

If you cannot live off the interest of the interest (duplication intended) of your capital, you are in the middle class.

If you spend more money on food than on political contribution, you are in the middle class.

Peter P   befriend   ignore   Fri, 30 Nov 2012, 3:15pm PST   Share   Quote   Like   Dislike     Comment 25

300K is not even upper middle class.

Peter P   befriend   ignore   Fri, 30 Nov 2012, 3:31pm PST   Share   Quote   Like   Dislike     Comment 26

Bellingham Bill says

Ten years of $300K salaries with $200K/yr put away will have a $2M asset cushion at the end of it.

In all likelihood IRS will be knocking on your door.

Kevin   befriend   ignore   Fri, 30 Nov 2012, 6:37pm PST   Share   Quote   Like   Dislike     Comment 27

Peter P says

300K is not even upper middle class.

Traditionally (ie. the British way of measuring these things), the rarely-used term "upper middle class" has little to do with size of income, but rather refers to people who's income is decoupled from an employer. This includes independent professionals, small business owners, large farmers, landlords, etc.

A VP at a big company earning $1M a year may not qualify but a partner at a law firm or an independent consultant earning $250k would.

When referring to incomes (the american way of measuring), though, every categorization that you'll find used commonly would certainly categorize my income as upper middle class.

Using income as a guide is beyond useless though. Based on my W2 for 2011, I was in the top 1% of income earners. Of course, amongst the 1% I'm in the very bottom, earning less than a quarter of what people in the 0.1% earn. There are about a million and a half of us in this country.

That said, I still don't know what the fuck you're going on about. We're talking about education vs occupation, not who qualifies as middle class.

Kevin   befriend   ignore   Fri, 30 Nov 2012, 8:20pm PST   Share   Quote   Like   Dislike     Comment 28

John Bailo says

What it really comes down to is do we want to rebuild the Meritocracy...that artificial system of rewards that would allow someone to claim a job and salary simply by completing the accredited degree.

"Rebuild" what? The thing you're speaking of never existed.

Factory jobs have disappeared, and people were told that in order to get a good, middle class job, they now need to go to college. So they go to college. When they graduate the only jobs available that they are qualified for only require HS level education.

It's the loss of factory jobs that screwed things up, not some shortage of professional jobs. The professional jobs simply never filled the gaps left by factories. The free trade pushers were full of shit and now we're all paying the price.

John Bailo says

You get a Biology degree, a B.S. and it automatically qualifies you for a national position in that field, much a like kind of mini-tenure.

And how exactly do you fund this? There simply isn't enough demand for workers at that skill level in most fields.

The fact is, too many people are going to college in pursuit of too few jobs that require the education. Fewer kids should be going to college, and more should be working those clerk, sales, data entry, and other service jobs right out of highschool.

I'd argue that the bachelors itself is becoming a fairly useless thing. The majority of professions that require college education to perform require something more.

Want to be a physician? Get an MD
Want to be a researcher? Get a PhD
Want to be a lawyer? Get a JD

There are still a few professions where a bachelors is both necessary and sufficient (accounting and nursing come to mind), but not many.

John Bailo says

The alternative is the lottery style society that we now survive in.

It's not a lottery, it's a free market wet dream.

zzyzzx   befriend   ignore   Sat, 1 Dec 2012, 8:21am PST   Share   Quote   Like   Dislike     Comment 29

Bellingham Bill says

Ten years of $300K salaries with $200K/yr put away

I don't see how it's possible to put away more than 100% of your after tax salary.

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 9:03am PST   Share   Quote   Like   Dislike     Comment 30

zzyzzx says

I don't see how it's possible to put away more than 100% of your after tax salary.

Well, $300,000 is at the level when you can shelter a lot of it.

~$40,000/yr into corporate IRA, family of 4 gets $20,000 exempted, MID + Prop tax is another $25,000 deduction, so a $300k income might come out to $215,000 taxable, avoiding the 33% bracket altogether and paying $50,000 in federal income tax. Plus the $13k for FICA and $9000 for Medicare, bringing total tax burden to $72,000 and leaving $228,000 as disposable income.

Part of the $200,000/yr in savings was the mortgage pay-down, btw. On a 15 year loan, $1500/mo of the $5000 PITI would be principal paydown, $20,000/yr and increasing as the loan is paid down.

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 9:07am PST   Share   Quote   Like   Dislike     Comment 31

Kevin says

It's the loss of factory jobs that screwed things up, not some shortage of professional jobs. The professional jobs simply never filled the gaps left by factories. The free trade pushers were full of shit and now we're all paying the price.

http://research.stlouisfed.org/fred2/graph/?g=dlx

is interesting and showing that mfg and professional has swapped since 1990.

So not entirely "full of shit", but there's zero net growth in 20 years, when population has grown 25% since 1990.

Ironman   befriend   ignore   Sat, 1 Dec 2012, 9:09am PST   Share   Quote   Like   Dislike (1)     Comment 32

zzyzzx says

Bellingham Bill says

Ten years of $300K salaries with $200K/yr put away

I don't see how it's possible to put away more than 100% of your after tax salary.

He's having problems with his calculator today...

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 9:13am PST   Share   Quote   Like   Dislike     Comment 33

Call it Crazy says

He's having problems with his calculator today...

You would be very ill advised to bet your life that plenty of people aren't legally seeing $250,000 of disposable income on a $300,000 nominal gross.

Let me remind you that your team's Captain Capitalist -- Romney -- paid a 14% tax rate in 2011.

On a $300,000 base that's $260,000 disposable, LOL.

rooemoore   befriend   ignore   Sat, 1 Dec 2012, 9:17am PST   Share   Quote   Like   Dislike     Comment 34

Mish's solution to all problems: Every man for himself!

Peter P   befriend   ignore   Sat, 1 Dec 2012, 9:58am PST   Share   Quote   Like   Dislike     Comment 35

rooemoore says

Mish's solution to all problems: Every man for himself!

It is a real solution. If not the only natural solution.

Peter P   befriend   ignore   Sat, 1 Dec 2012, 10:00am PST   Share   Quote   Like   Dislike     Comment 36

Bellingham Bill says

Let me remind you that your team's Captain Capitalist -- Romney -- paid a 14% tax rate in 2011.

On a $300,000 base that's $260,000 disposable, LOL.

He said $300K SALARY.

New Renter   befriend   ignore   Sat, 1 Dec 2012, 10:12am PST   Share   Quote   Like   Dislike     Comment 37

Kevin says

I don't have a degree but I make in excess of $300000 a year as a software engineer.

"Requirements" are fuzzy.

I know of a few people in or recently have been in your income range with nothing more than a high school diploma. On the other hand I have a BS, MA and a Ph.D. and I only make $100k as to most of my Ph.D. colleagues.

Clearly there is an inverse correlation to education and earning potential - damn you to hell you lying sack of $#!& educational industrial complex!

If $300k/yr is middle class does that mean I quality for section 8 and food stamps?

New Renter   befriend   ignore   Sat, 1 Dec 2012, 10:16am PST   Share   Quote   Like (1)   Dislike     Comment 38

CaptainShuddup says

Nobody says

Welcome to slavery.

From 1%

It's not the 1% (who ever in the hell that is, I still can't get an answer)

This is greedy Liberal educators that want a mansion and yacht to teach kids useless liberal arts subjects.

Gee I had no idea Elmer J. Fudd, millionaire was a greedy liberal educator:

http://en.wikipedia.org/wiki/Hare_Brush

Kevin   befriend   ignore   Sat, 1 Dec 2012, 10:17am PST   Share   Quote   Like   Dislike     Comment 39

Bellingham Bill says

Call it Crazy says

He's having problems with his calculator today...

You would be very ill advised to bet your life that plenty of people aren't legally seeing $250,000 of disposable income on a $300,000 nominal gross.

Let me remind you that your team's Captain Capitalist -- Romney -- paid a 14% tax rate in 2011.

On a $300,000 base that's $260,000 disposable, LOL.

If you earn $300k from capital gains, sure.

But we aren't talking about that.

Peter P   befriend   ignore   Sat, 1 Dec 2012, 10:18am PST   Share   Quote   Like   Dislike     Comment 40

New Renter says

If $300k/yr is middle class does that mean I quality for section 8 and food stamps?

You wish.

I do believe that if we want a social safety net, it should be available to everyone. Currently, the welfare system discriminates against people with so-called "high" incomes.

FortWayne   befriend   ignore   Sat, 1 Dec 2012, 10:19am PST   Share   Quote   Like (1)   Dislike     Comment 41

Very few jobs require degrees. Degree is just a piece of paper from an education industrial complex vouching that you have paid them enough money for them to consider you a graduate.

Kevin   befriend   ignore   Sat, 1 Dec 2012, 10:32am PST   Share   Quote   Like   Dislike     Comment 42

Peter P says

New Renter says

If $300k/yr is middle class does that mean I quality for section 8 and food stamps?

You wish.

I do believe that if we want a social safety net, it should be available to everyone. Currently, the welfare system discriminates against people with so-called "high" incomes.

And handicapped spots discriminate against the able bodied!

Peter P   befriend   ignore   Sat, 1 Dec 2012, 10:37am PST   Share   Quote   Like   Dislike     Comment 43

Kevin says

Peter P says

New Renter says

If $300k/yr is middle class does that mean I quality for section 8 and food stamps?

You wish.

I do believe that if we want a social safety net, it should be available to everyone. Currently, the welfare system discriminates against people with so-called "high" incomes.

And handicapped spots discriminate against the able bodied!

Yes.

The goal is to have automated cars so that every one can be dropped off right at the door. Hopefully, people will not get too fat.

Your example represents a temporary technological deficiency, not a philosophical difficulty.

Every time you let someone decide what someone needs, you are moving one inch closer to this bullshit:

From each according to his ability, to each according to his need.

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 10:38am PST   Share   Quote   Like   Dislike     Comment 44

Kevin says

But we aren't talking about that.

somebody making $300,000 clearly has the resources to structure their income to not be 100% labor.

That *is* $144/hr, every hour.

oh yeah, that reminds me, health expenses are tax deductible too.

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 10:41am PST   Share   Quote   Like   Dislike     Comment 45

Peter P says

Every time you let someone decide what someone needs, you are moving one inch closer to this bullshit:

you do realize the nordic countries + Germany just destroy your minarchist ideology, right?

And that your absolutist minarchist ideology has never worked anywhere in the real world, that it is an attachment to, basically, fiction?

And that it's going to be increasingly irrelevant as this decade and century progresses?

APOCALYPSEFUCKisShostikovitch   befriend   ignore   Sat, 1 Dec 2012, 10:43am PST   Share   Quote   Like   Dislike     Comment 46

In 5 years upper middle class will mean you can buy slaves to manually load your ammo to prep for free fire fights with starving neonazi cannibal tribes. That class designation will be closely aligned with control of land and water required to cultivate yams.

Peter P   befriend   ignore   Sat, 1 Dec 2012, 10:49am PST   Share   Quote   Like   Dislike     Comment 47

Bellingham Bill says

you do realize the nordic countries + Germany just destroy your minarchist ideology, right?

It may work for a while in a closed system.

With globalization, this will not work.

Whether the world actually made progress in the past century is still up for debate.

Peter P   befriend   ignore   Sat, 1 Dec 2012, 10:54am PST   Share   Quote   Like   Dislike     Comment 48

BTW, Germany made a lot of money off luxury exports: e.g. cars and yachts

Just count the number of 300'+ mega-yachts launches in the past decade. Each can cost up to $150M - $500M.

Brands like Leica/Audi/BMW/Mercedes are exceedingly popular in China.

If was not because of "wealth disparity" elsewhere, do you think this was possible?

If they did not share a currency with countries like Italy, will their exports be so strong?

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 11:23am PST   Share   Quote   Like   Dislike     Comment 49

Peter P says

If was not because of "wealth disparity" elsewhere, do you think this was possible?

globalism or not, the bottom line is that well-ordered economies EASILY create more wealth than they consume, and we all don't have to work at Chinese wages to get to this happy state. Quite the opposite in fact.

I've listed the various trillion-dollar rents that are ripping velocity out of our paycheck economy. You ignore this central imbalance since your ideology has no answer for it, other than letting the "free market" seek more rents.

But free market capitalism can only bring certain forms of wealth onto the market.

Rent-seekers avoid these areas and find other monopolies, either natural monopolies like land, energy, "last mile" distribution, or licensed "professional" monopolies like health, legal, financial services.

The nordic states have their own problems -- sky-high leverage into housing valuations is the main one AFAICT, but that is actually to be expected since the one thing they are not doing all that well is taxing land (though the Norwegians are capturing the resource rents of their oil sector pretty well, and even "sterilizing" them by moving them into global equity and bond positions.

Germany + the nordic states interest me in that they offer real-world examples of how government doesn't, actually, screw things up in a "mixed-economy" way.

Perhaps a government of 330M operating as well is simply impossible. I'm beginning to think so, actually, and am in fact making ready my departure from this place again. Where to go, exactly, is the tricky bit. Probably be Japan I guess. At least they've got a $3T+ global capital buffer to burn through for a while.

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 11:25am PST   Share   Quote   Like   Dislike     Comment 50

Peter P says

Whether the world actually made progress in the past century is still up for debate.

spoken like a true conservative, LOL

Peter P   befriend   ignore   Sat, 1 Dec 2012, 11:28am PST   Share   Quote   Like   Dislike     Comment 51

Bellingham Bill says

globalism or not, the bottom line is that well-ordered economies EASILY create more wealth than they consume, and we all don't have to work at Chinese wages to get to this happy state. Quite the opposite in fact.

But your examples do not prove the point. Can those economy be scaled to a large and DIVERSE culture?

A society should not seek to benefit everyone. It should allow anyone to have a shot at becoming a beneficiary.

I agree that rent-seeking should be scrutinized, but that phenomenon itself is frequently an artifact of over-regulation.

Bellingham Bill   befriend   ignore   Sat, 1 Dec 2012, 11:44am PST   Share   Quote   Like   Dislike     Comment 52

Peter P says

A society should not seek to benefit everyone. It should allow anyone to have a shot at becoming a beneficiary.

False dilemma fallacy

http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socialism.html

Fixing the US's economy isn't all that impossible. We just need to back out the mistakes we've made since 1994 if not earlier.

But cutting the military by $300B/yr, altering our entire health system to match Canada's (hell, we should just merge it with Canada's, LOL), doubling taxes on everyone, and printing $10T to knock the dollar halfway to parity with the yuan are political non-starters.

Instead, we continue the standoff.

but that phenomenon itself is frequently an artifact of over-regulation.

regulatory capture, yes

Kevin   befriend   ignore   Sat, 1 Dec 2012, 1:50pm PST   Share   Quote   Like   Dislike     Comment 53

Bellingham Bill says

Kevin says

But we aren't talking about that.

somebody making $300,000 clearly has the resources to structure their income to not be 100% labor.

That *is* $144/hr, every hour.

oh yeah, that reminds me, health expenses are tax deductible too.

I still don't understand what you're saying.

I've never had more than a few thousand in LTCG. I suppose I could if I really gave more thought to this stuff, but I have more important things to do with my time than min/maxing investments.

I will concede that it might be possible for someone with a lot of determination and a bit of luck to make it to the upper class while making $300k/year. Accumulating rental properties, high dividend stocks, acquiring businesses that don't require being hands on would all work. But that's a lot more effort than it's worth.

If I ever become upper class, it will be because I started a successful business, not because I had some masochistic saving plan.

Peter P   befriend   ignore   Sat, 1 Dec 2012, 2:36pm PST   Share   Quote   Like   Dislike     Comment 54

How many rich people got rich because of savings from salaries?

I bet the number is exactly zero.

Kevin   befriend   ignore   Sat, 1 Dec 2012, 3:46pm PST   Share   Quote   Like   Dislike     Comment 55

Peter P says

How many rich people got rich because of savings from salaries?

I bet the number is exactly zero.

Nah, there are people who work their way up executive ranks and wind up with 7+ figure salaries who get rich just by saving. It's not many people, but enough.

msilenus   befriend   ignore   Sat, 1 Dec 2012, 3:52pm PST   Share   Quote   Like   Dislike     Comment 56

Bellingham Bill says

Peter P says
Whether the world actually made progress in the past century is still up for debate.

spoken like a true conservative, LOL

That position is more properly called reactionary.

Peter P   befriend   ignore   Sun, 2 Dec 2012, 1:34am PST   Share   Quote   Like   Dislike     Comment 57

Kevin says

Nah, there are people who work their way up executive ranks and wind up with 7+ figure salaries who get rich just by saving. It's not many people, but enough.

You will be amazed how quickly one can burn through a $1M salary.

Most rich executives got there by stock options and bonuses, which are really derivatives on the underlying businesses. These are part of the compensation package but they are NOT salary.

Kevin   befriend   ignore   Sun, 2 Dec 2012, 3:47am PST   Share   Quote   Like   Dislike     Comment 58

Peter P says

Kevin says

Nah, there are people who work their way up executive ranks and wind up with 7+ figure salaries who get rich just by saving. It's not many people, but enough.

You will be amazed how quickly one can burn through a $1M salary.

Most rich executives got there by stock options and bonuses, which are really derivatives on the underlying businesses. These are part of the compensation package but they are NOT salary.

Yes, most executives with 7 figure salaries also get lots of equity and it's hard to separate them. The point is that some people do get rich purely through working for somebody else. It just isn't many people.

Buster   befriend   ignore   Sun, 2 Dec 2012, 4:06am PST   Share   Quote   Like   Dislike     Comment 59

I have met many people like Kevin who make handsome salaries without the benefit of a degree. However, statistically speaking, those without a degree don't do as well financially compared with those that do. This is why you see many folks seeking out degrees. With this in mind however, it is true that some degrees with very practical applications, seem to have a better ROI. e.g. Engineer vs. Art History Major. http://www.bls.gov/emp/ep_chart_001.htm

Peter P   befriend   ignore   Sun, 2 Dec 2012, 4:11am PST   Share   Quote   Like   Dislike     Comment 60

Buster says

However, statistically speaking, those without a degree don't do as well financially compared with those that do.

Or perhaps it is simply self-selection.

Statistically speaking, those without a Rolls Royce don't do as well financially compared with those that do.

With tuition and opportunity costs, a degree is not necessarily cheaper than a Rolls Royce. LOL!

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