Grad school and opportunity cost

Okay. Not that we really need yet another voice in this never-ending lament about the state of graduate education in the humanities, especially from someone who’s still a year out from the job market, but I am feeling strangely compelled to weigh in. There’s a nice round-up of the current rehashing of the should-you-or-shouldn’t-you question here, so I won’t bother recapping the whole thing. Besides, it should all feel more than familiar to anyone who’s been paying attention to this argument for the last decade plus.

What I want to talk about is opportunity cost, because this is the argument that has struck me as most compelling about why one shouldn’t go to graduate school. The standard line goes, not only do you spend six or more years earning just enough to keep you afloat (or even worse, incurring debt), but you sacrifice the experience, earning power, and salary increases you would have had if you had remained in the workforce. That means you come out of grad school with a PhD, sure, but probably without a job and less the six plus years’ experience and earning power you would have accumulated had you remained in the work force. This post estimates (and I use the word estimates generously) that opportunity cost to be a million dollars. This one provides anecdotal evidence that puts the cost around half a million.

I find this argument compelling because I would like to have some retirement savings some day, and right now I don’t have any because I stretch my graduate stipend a long way, but not far enough to start a 401K. And the idea that instead of having saved the absolutely necessary minimum safety net for myself, I might be actually preparing for the future is very appealing. But it’s not necessarily accurate. Here’s why (and here I’m expanding on Mark Sample’s comment here):

0. I’m assuming here that one is going to graduate school without debt. That’s a big assumption, and one that I know isn’t true of many people. But I’m a firm believer that undergrad debt is to be avoided at all costs for exactly this reason: coming out of undergrad with little to no debt frees you up to take career risks. And the one thing everyone can agree on is that graduate school is a career risk. Similarly, I assume that the graduate program you enroll in is fully funded. Because, again, not incurring debt by going to graduate school frees you to take career risks.

0.5. I’m also assuming we’re talking primarily about people who go to grad school immediately or a few years out of undergrad, rather than those who are making a later career change. The hypothetical argument about opportunity cost isn’t applicable to the latter group, as they’re well able to calculate the specific opportunity costs for themselves.

1. The arguments about opportunity costs tend to offer hypothetical alternative careers. Hooters manager is popular. Sometimes people mention law school, but these days that’s a terrible example. Sean Takats uses his career at IBM as an example. The implication always seems to be that someone in any career will be building earning power over the course of six or seven years. That’s not so much the case, though, particularly for people starting a career with a BA, particularly today. My younger sister graduated literally at the top of her class in 2009 and couldn’t find anything other than part time jobs for two years. She’s in grad school now earning an MPP, and will have more job options and make more money when she’s done. But with just a BA, she and her friends were all struggling to find jobs. Some people get lucky or have connections and land a career (as opposed to a job) right out of undergrad, but that’s certainly not the norm. But the idea that there’s this land of alternate careers that recent graduates are walking away from is ridiculous.

2. Even if there was a land of lucrative, stable careers to run off to, we can’t assume that’s what people considering graduate school would do.  Before I decided to go to grad school, I was all set to get a master’s in library science and become a children’s librarian. Wish I’d stuck to that plan–I’d really be raking it in. Of my grad school colleagues, many of them were teaching high school before going to grad school. One was working in a youth shelter. People are drawn to graduate school because they’re interested in certain kinds of work that they’re likely to end up doing even if they don’t get a PhD. And those kinds of work tend not to pay so well.

3. That’s not to say all my colleagues were out saving the world before grad school. Another friend made a ton of money in real estate. She took something like a 90% pay cut to come to grad school. But she was working 90 hour weeks and was miserable. She still works a lot, but she enjoys it. Another friend worked for a health insurance company and made quite a bit of money. But man, is she glad to be doing what she’s doing now.

4. Finally, I don’t think we should look at the years in graduate school as wasted, career-wise. Graduate training develops many relevant, marketable skills. You may need to have a bit of luck or to know the right person to land a job outside of the academy after you get your PhD, but you need to have a bit of luck or know the right person to land any job. Seriously. Job hunting is hard for everyone these days. You’ve got to be ready to promote yourself and your skills and your contributions. But you know what, you’d have to have been able to do that in the hypothetical land of alternate careers. Because all those claims about raises and promotions assume that you’ll be good at your career out there in the non-academic world and that you’ll be able to promote yourself and articulate your contributions and network, etc., etc. Those are the same skills that will turn six years of graduate training into a set of marketable skills.

Okay, I’ve said my piece, although not as coherently as I’d like. I don’t want to imply that there aren’t a million problems with the academy and hiring and graduate training. But (and this is my increasing pessimism speaking) there are a million problems with everything in the American workforce. There is no land of jobs for everyone, and free market capitalism is crushing us here in the academy, but it’s crushing everybody else as well. We can talk about opportunity cost, but we also need to acknowledge that the alternatives to graduate school have their problems as well.

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One response to “Grad school and opportunity cost

  1. This is the best post I’ve read on the issue. Where, indeed, are all the highly paid positions floating around for recent (under)graduates to snatch up? The whole prior discussion on opportunity cost assumes both that humanities graduates are remotely employable and that, EVEN for those with enough foresight/ parental financing to intern regularly throughout their undergrad education, these hypothetical well-paid career jobs are abundant and easy to land. Of my humanities-focussed friend circle (graduating 2010 from various top 5 UK/global universities), very few have landed anything particularly remarkable job- or salary-wise. Having just completed a masters (UCL, distinction) to complement my Ba (also UCL; first class), sat in my room for 5 weeks applying for jobs (no luck whatsoever – and we’re not just talking ‘career’ roles here – even the local bars are inundated with CVs), I’m currently weighing up PhD study. In a way, assuming I secure funding (no small feat in itself, alas), it’s a no-brainer. When you have absolutely zero prospects, an extra few years of free education can’t hurt. Even if it’s just to avoid the existential rot that comes with long term unemployment. Or working in Starbucks for £6 per hour while living in central London. Cebula may well caution against grad school, but for many of us these days it’s the least-worst option. Every pathway is covered in shit.

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