Author: william b. conerly ph.d.

Alternative Paths to College Education: First Learn a Job

By William B. Conerly, Ph.D.

The old advice about college isn’t working anymore. College graduates (as well as “quituates”) face poor job prospects in many cases, as well as high student debt. A college degree is not the meal ticket it once was, especially unfortunate at the time when loans have to be paid off. Young men and women need to consider an alternate path.

I wrote an article for Forbes that got a great deal of attention: “The Six Courses That Will Make Any College Grad Employable.” That advice is still right for a student in college, but let’s address the younger person: Maybe you should not go to college right away.

University professor and social critic Camille Paglia made some very pointed comments about college in a recent Reason TV interview. (The entire interview is long and somewhat rambling, but Paglia makes strong points about the weakness of the current higher education model.) She said that young people need to learn how to make a living.

An alternative model is to get job skills first, then head to college for a broader perspective on the world through science, history, and literature. Here’s how that might work.

There are many jobs that pay decent money with just a little training. The health professions have many, such as phlebotomist (the person who draws blood for tests). Many computer-related jobs can be had with a year or two of applied schooling, or even disciplined self-study. Local community colleges have counselors who are familiar with training requirements for different jobs. The construction trades have apprenticeships with a three-to-five-year path of paid work plus free training, ending in journeyman certification in a trade. Instead of getting out of college with debt, the apprentice ends with no debt, work experience, and a job.

My parents feared that if I didn’t go to college straight from high school, I’d never go, or at least never finish. My father got two years of college under his belt before military service in World War II. When the war was over, he had a wife and family and never went back to school. He didn’t want that to happen to me or my siblings. However, back in the 1950s a college degree was a meal ticket. To acquire one, the student needed some combination of brains, ambition, and family connections, all relevant to career success. There were so few college grads that to have a degree was very distinctive. Today, degrees are much more common and thus mean much less.

Even the most talented high school students should consider going out on their own before heading to college. My parents ran into financial difficulties just as I was finishing high school, and I received no money from them. I probably had a better relationship with them than any of my classmates had with their parents. The difference was that I could do as I pleased, but I sought their counsel and advice. They acknowledged that they had no say-so, because they were not footing the bills. We got along quite well in my college years.

I was very motivated to study economics and make a career in the field, but many others go to college without such a clear goal. College is simply too expensive, though, for a find-yourself experience. You can find yourself with positive cash flow working a job.

After the young person has a starting job, it’s time to think about education. It’s not easy to work full time and go to school part-time, but plenty of people do it. Starting a family later in life helps. Learning a construction trade makes a lot of sense for an 18-year-old. Working in hard labor makes less sense 30 years later. Before the body objects to carrying heavy loads, it’s time to transition to carrying a clipboard. More schooling gets the tradesman into management, estimating, or sales.

“Follow your passion” is common advice, but often dangerous advice. If your passion is finance or computer programming, I heartily agree. One can make a good living while having fun. If, however, your passion is Roman history, it’s going to be very tough. The solution is to find a way to earn a living while keeping your passion as a hobby. I know people who work full time and paint in their spare time. One guy, whom I’ve written about regarding business models in art, is transitioning from art-as-a-hobby to art-as-a-profession. He is making the transition with both money in the bank and a good head for business, which help tremendously to succeed as an artist.

A technical writer I once worked with quit her corporate job to wait tables in a restaurant. I was mystified, but she explained that the job had been great for producing volumes of boring text, which helped her write clear prose. But it was time for her to pursue her passion of writing fiction, the next great American novel. She needed to make money, but have more time for her own writing. She also needed a job that was less intellectually challenging, so that she could go home to a pretty cerebral activity. Waiting tables fit the bill. It has a fairly high hourly rate, but bad hours and part-time work. Jobs like this work well for people trying to balance passion and money.

One final way to look at college uses an economist’s approach. Some purchases are consumer goods, motivated by pleasure. Think movies, party dresses, vacations. Other purchases are investment goods. For a company, this includes factory equipment, trucks, or office buildings. For a family, an investment might be a washing machine (avoiding putting quarters in a laundromat), a basic car (to get to work in), or a house (to avoid paying rent). Borrowing money for an investment can be okay, but borrowing for a pure consumption good is not smart. Now, what is college? A person majoring in engineering is buying an investment good. A person studying Russian literature is buying a consumption good. Borrowing for a pure consumption good does not make sense.

This advice is doubly important for the poorly performing student. College requires even more self-discipline than high school. Unless there is a major change, the poor high school student becomes not a college graduate but rather a flunktuate.

College is great for some people just out of high school, and great at a later time for others, and a very bad idea for yet others. Every high school student should consider work options before embarking on an expensive college experience.


 

William B. Conerly, Ph.D. is the principal of Conerly Consulting, an economic and financial consulting firm, and chairman of the board of Cascade Policy Institute, Oregon’s free market research center. A version of this article was originally published on Forbes.com.

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Oregon’s Minimum Wage Debate: Disadvantaged Youth Are Crucial Issue

The Oregon legislature is considering raising the minimum wage over the next few years from $9.25 per hour to as much as $15. What the minimum wage means for disadvantaged youth should be the central question of this controversial topic. Plenty of middle- and upper-class teenagers take their first jobs at the minimum wage, working part-time or summers. I don’t much care whether they make five dollars an hour or ten or fifteen. They’ll be fine.

There are also some older people working at low-skilled jobs. A higher minimum wage doesn’t really solve their problem, which is low skills. However, many people parlay on-the-job learning into higher-paying jobs. Combine that with some more education and these folks should be all right.

Disadvantaged teenagers and youth in their early 20’s concern me, however. For them, the minimum wage is a big issue.

When my own kids were going out to their first job interviews, their mother and I prepped them well. We both had experience in job interviews and we helped our kids succeed at theirs. Many disadvantaged youth lack parents with good work experience themselves, so they go into their first job interview with no coaching. Which kid do you figure gets the job? It’s usually not the teenager who stares at his shoes instead of the manager’s eyes, who stammers and is unsure of himself and is surprised by simple questions.

Put this into a business context. Suppose you are trying to sell a product that looks inferior on the outside. You are sure that your product’s functionality is as good as the better-looking competitors, but yours doesn’t present itself as well. What would you do?

A business manager’s first thought might be to cut the price. Other approaches are to offer free samples, introductory discounts, special coupons, and so forth. These marketing techniques could get buyers to try your product.

The disadvantaged youth is not allowed to do any of these things. The wage cannot be lower than the legal minimum, no unpaid work is tolerated by our laws, no discounting or trial offers are allowed. The kid who interviews poorly is in trouble.

This is the worst kind of trouble for both society and the young person. We need disadvantaged youth to get jobs and learn the soft skills every employer wants: following instructions, getting along with others, serving customers. The first job is vital for learning those skills. (I recall learning a lot in my first job: to get along with people I didn’t much like, to take direction from a boss I didn’t respect, and to accept that I had to do the worst tasks because I was the newest employee. These were all valuable lessons.)

To help disadvantaged youth, we need to let them compete. That means a low or zero minimum wage. Employers will provide more coaching and help for workers just starting out if that’s what it takes to get workers at a low wage. And that is exactly what will help disadvantaged youth in the long run.

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Freedom First

On July 4 we pay homage to the founding of our country. I wonder, however, if we are living up to the vision and courage of our Founding Fathers.

Freedom was the key to their view: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

Of course, security was a concern to our Founding Fathers, as evidenced by their statement in the Declaration of Independence that governments are instituted to protect rights. They knew that rights need to be protected. The Constitution is explicit about the President being commander-in-chief and Congress having the power to declare war, so security was on their minds.

Yet, while our founders were aware of the value of security, their decision to revolt placed freedom above security. What could be more dangerous than revolution against the strongest power in the world? A revolutionary war invariably causes death, not just to the rebels but to innocent civilians as well. The founders made their decision: Freedom must come first.

What could happen to a revolutionary? Those who took up arms against the Crown were at risk of being killed by a royal musket ball. Even those revolutionaries who were too old for combat risked capture and a royal noose. Their security was not at all enhanced by defying the Crown. Yet, defy it they did, imperiling their lives.

What about economic success? Our founders considered economic gain to be a worthy goal. Many of them had entered into business, as merchants or developers. A few were wealthy and most were well to do. What could be more threatening to economic welfare than a war fought at home? Some may claim that war is good for the economy; but it’s never claimed when the war is being fought amid one’s own farms, factories, and stores. The Revolutionary War was not a profit opportunity, but a cost that our founders were willing to pay to secure freedom for themselves and their families and succeeding generations.

One might suppose the founders believed a successful revolution eventually would lead to greater security, but that assumption could not possibly survive a serious cost-benefit analysis. A bloody civil war is invariably devastating to the economy. The direct risk from the Revolutionary War was great, and normal police protections are often lost during times of war. One can imagine a Founding Father thinking that in the long run, freedom would be good for the economy. None were so foolish as to think that a revolutionary war would be good in the short term. The Founding Fathers risked their fortunes and livelihoods in the cause. Today, with our very slow economic recovery, politicians are grasping at any straw that might boost people’s standard of living. Our founders, however, traded their own economic welfare for a higher value.

Today, we wonder how many of our civil liberties we must give up to be safe. We wonder how much freedom of choice we must give up to have “affordable” health care. We seldom wonder what price freedom is worth. Our founders calculated that cost carefully when they pledged, in support of the Declaration, “our lives, our fortunes and our sacred honor.” It is for us living in 2013 to be worthy of the sacrifices our Founding Fathers made back in 1776.

The key to the founders’ decision is found at the end of the Declaration of Independence that we celebrate this week: “And for the support of this declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.”

What would happen today if we were in a similar crisis? Those in political power now would quake at the thought of a single life lost here at home, if that life might have been saved through reduced liberty. Those in political power would say, “It’s the economy, stupid,” if a protection of liberty might have an impact on the economy. As for the third price pledged by our Founding Fathers, “our sacred honor”―it is highly valued in homes across the country, though not so much by many in leadership.

Today, let us rededicate ourselves to the fundamental principle of freedom, a principle more important than safety or wealth. Let us be worthy of our Founding Fathers.

William B. Conerly, Ph.D. is the principal of Conerly Consulting, an economic and financial consulting firm, and chairman of the board of Cascade Policy Institute, Oregon’s free market research center.

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The Principles of Economics You Did Not Learn in ‘Principles of Economics’

Please join us for Cascade’s monthly Policy Picnic, led by our Chairman of the Board, Dr. Bill Conerly, on Wednesday, June 19th, at noon.

Bill is a former college professor turned corporate economist and consultant. He will lead a discussion on some fundamental economic principles that are seldom discussed in classrooms and textbooks, even by friends of the free market.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to ten guests on a first come, first served basis, so sign up early. To RSVP, email Patrick Schmitt at patrick@cascadepolicy.org or call 503-242-0900.

Sponsored By

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Sailing Competitive Seas

By William B. Conerly, Ph.D.

I picked up my beer at the yacht club’s bar and went out on the deck to watch the last few boats come in. It had been a good day’s sailing. We finished the race in the middle of the fleet, but we had a couple of new stories to tell. When John grabbed the chair next to me, I was all set to talk about the wind shift that had helped us at the end. John, though, had other interests.

 

“Tell me, Doctor, what are we going to do about these Japanese imports?” John asked.

 

I sail on the weekends; Monday through Friday I’m an economist. Even though I love economics, I didn’t want to spend the whole cocktail hour talking about it.

 

“Did you do the race to Drake’s Bay three years ago?” I asked. Without waiting for his answer I began my story. “After we rounded the point and turned north, a light fog set in. It wasn’t thick enough to be dangerous, but we couldn’t see the other boats.”

 

“I remember that one,” John said. “I never did figure out where the wind was that day, but everyone else seemed to find it. I think I was third from last.”

 

I continued: “After about two hours we happened to sail close enough to another boat to see her. It was Fred’s boat, which is pretty competitive with ours. We sailed side by side, about a hundred yards apart, and she was pulling away from us.”

 

“You should have been able to keep up with her,” John said. “You’ve beaten her plenty of times.”

 

“That’s what we thought. So we started looking around and decided to ease the Cunningham a bit.”

 

Racing a sailboat isn’t as simple as letting the wind catch the sails and push it along. The sails are airfoils, like airplane wings, but with an added complication: Being made of fabric, the curvature of the sails isn’t fixed in place. We have thirteen separate controls that will change the sail’s shape in one way or another.

 

The Cunningham is one of those thirteen.

 

“It was hard to tell at first, but it looked like we were no longer losing to her. We put two good fellows on the sheets—and we started to gain ground. We even got a little ahead of her.”

 

John asked if we had kept our lead. We hadn’t. After we got moving a bit faster, the other boat picked up speed. It took them 20 minutes to find the trick, and I don’t know what they did, but just as we were feeling confident, they got their boat moving definitely faster than ours.

 

“Rob looked up at the mainsail. You know how he’s so quiet. He softly said, ‘Maybe there’s too much mast bend. Can we let off on the backstay a bit?’ The mast looked fine to me, but on the rare occasions when Rob talks, we all listen.

 

“We eased the backstay a little, and then watched the speedometer. We picked up a tenth of a knot in no time, and started to gain on them.”

 

“Sounds like a game of leapfrog,” John remarked.

 

“It was. Pretty soon we couldn’t find any more gains out of sail trim. But watching Fred’s boat helped us spot a tired helmsman right away. I had been steering for 45 minutes when they pulled out on us. I felt fine, or thought I did, but when Murphy took the wheel he brought our speed right back up.”

 

“How did you finish the race?”

 

“First and second. Turns out we were the only two boats to have been in sight of anyone else for most of the race. We took second, which is too bad, but that was one of our best finishes the whole summer.”

 

“It sounds to me like you have that other boat to thank for your good finish, even if they did beat you.”

 

“Exactly. A speedometer tells you how fast you are going, but it doesn’t tell you how fast you could be going. You need a competitor to tell you if you have greater potential. It’s easy to think that you’re doing your best, but usually you aren’t. Besides,” I continued, “we were able to learn a trick from him. When the wind turned light and we were wallowing in the swells, we saw that he had vanged his boom down hard. We weren’t used to doing that, but we gave it a try and it helped.

 

“All the other crews thought they were doing their best, but they couldn’t see the other boats because of the fog. I know most of the other crews and they’re not lazy. It’s just hard to be fast when you’re out there by yourself.”

 

John finished his beer and stood up. “Well, Doctor, I’ve got to run. Thanks for the story. But I really would like to sit down some time and talk with you about the danger of foreign competition.”

 

“I thought that’s what we’ve been talking about,” I replied.

William B. Conerly, Ph.D. is the principal of Conerly Consulting, an economic and financial consulting firm, and chairman of the board of Cascade Policy Institute, Oregon’s free market research center. An avid sailor, he races his sailboat Strange Bird as often as he can.

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Taxing the “Wealthy” More Will Cost 36,000 Oregon JobsBy Bill Conerly

QuickPoint!Bill Conerly
I estimate that raising the maximum tax rates on personal income, including capital gains, to eleven percent will cost the Oregon economy 36,000 jobs by 2015. The job losses will continue to accumulate beyond that year. This analysis does not incorporate job losses due to higher corporate income taxes.

The estimate is based on a model of state employment growth that incorporates data for all 50 states for 26 years. It exploits tremendous variation in tax practices from one state to another, and within individual states across time. The model was developed for my 2005 analysis of Oregon’s capital gains tax. (See “Generating Jobs and Income Through a Capital Gains Tax Reduction,” Appendix 1, Equation 3, available at http://www.conerlyconsulting.com/pdf/Capital_Gains_Report.pdf.) (more…)

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Why I’m Not Gloomy About Our Economic Future

Bill ConerlyCascade Commentary

Click here to read the full report in PDF format

Summary: The U.S. has survived much worse policies and attitudes than our current economic crisis. A country can take many setbacks before it crumples, so here are three action steps I recommend in planning for the future. (more…)

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Was the Sub-Prime Mortgage Crisis Caused by Lack of Regulations?

William B. Conerly, Ph.D.Cascade Commentary

Summary

Did lack of government regulation create the subprime mortgage crisis? Most likely, more regulation would have increased the problem. (more…)

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Business Taxation: A Loose Cannon on a Dark Night

William B. Conerly, Ph.D.Cascade Commentary

Summary

The slogan, “Business should pay its fair share,” misses the point. No business ever pays any tax. People pay taxes, and exactly which people pay a business tax is hard for economists to determine. (more…)

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