Q & A

Q: Does the USA have enough STEM majors?

A: Yes. In fact, we have too many.

For those who don't know, STEM stands for "science, technology, engineering, and math." A STEM grad is usually the smart kid who is a whiz at subjects like math and chemistry and tends to have better job prospects than an art history major. It is popular to blame current college grad woes on the fact that many of these kids take soft majors that don't result in marketable skills. So, the meme has gotten started that if kids just turn to these harder majors that all these problems with the higher ed bubble will be cleared up. This is simply not true.

Politicians love to do the STEM chant. They've been doing it since the 50's. They always say that the USA has a massive shortage of highly skilled smart people in these areas. Now, the primary reason they go on about this is because the USA is really big on defense spending. Defense projects are technical projects, and they would prefer that only red blooded Americans work on these things. But foreigners are utilized all the time, and those same people can take those same skills and knowledge back to their own countries. These are countries the US may later be blowing straight to hell. It would really suck if a foreign predator drone started strafing US soldiers.

The USA does not lack for STEM grads. These are harder majors, and the people that choose to go into these fields tend to be wicked smart. But supply meets demand. It actually exceeds demand. I learned this while in college and delivering pizzas with a chemical engineer. At the time, comp sci was the hot major, and grads in that area were pulling down eye popping starting salaries. By the end of the decade, that had dried up. While watching a recent video exchange between Glenn Reynolds and Virginia Postrel, Postrel who graduated in the early 80's talked about how chemical engineering was the hot major in her day, but that demand dried up when she graduated from college. I will now explain why things are like this.

Technical fields are going to be the most dynamic part of any economy. When a new product or field emerges, naturally, there is high demand for smart people trained in those fields. But since it is new, there are few people who actually have that training. Since demand is high and supply low, salaries are large, and people flock to cash in on the gold rush. As equilibrium occurs, those salaries go down, and there is unemployment in that field. This was the surprise that I got when by the end of the 90's those same comp sci majors weren't making anymore than I was making with my English degree and many of them were unemployed. Many of their jobs were outsourced to India, and the tech bubble had collapsed.

You can have a bachelor's degree in chemistry, biology, math, or all three, and you are not getting a job with that except maybe as a schoolteacher. If you get your master's or Ph.D. in those fields, you might be able to become an adjunct professor at some college. But if you major in something like pharmacy, it is a completely different story. Those jobs pay well. Demand is consistent. The same can be said for nursing or medicine. Why do those fields which pay well not have the same issues as our pizza delivering chemical engineer? The answer is volatility.

Healthcare does not heat up and cool off like tech sectors. Because demand is constant and growing slightly with the increase in population, greater equilibrium is maintained between supply and demand. Now, consider this generation's current hot major--petroleum engineering. This major has taken off mostly because of political instability in the middle east. The same thing happened back in the 70's with geology majors. By the 80's, those geology majors were out of work. As demand has grown for domestic oil supplies, petroleum engineers are making huge dollars coming up with solutions for extracting oil from areas that were shunned before. This would be the oil sands in Canada and shale oil here in the USA. But if the politics or demand shifts the other way, you will see those same high paid petroleum engineers out of work.

If all of this seems like one big casino, it is. When politicians say that we need STEM majors, this is akin to saying that you should have bet on red instead of black. The reality is that your story seems more unfair when you tell the customers at Starbucks that you are an electrical engineer instead of a philosophy major. The STEM shortage is mostly hype, and if you think you won't be unemployed if you take one of these majors, think again.

The richest irony I witness is how people so skilled at math completely miss the most elementary of statistical principles. The most basic one is that you can't make everyone above average. The other one is reversion to the mean. The mean is like a black hole that wants to suck you back into the fat portion of the bell curve. The upside of this phenomenon is that you can be completely homeless and get your shit together really easily if you are willing to work. The downside of this phenomenon is that your high paying job may disappear on you ultimately rendering you homeless unless you are willing to humble yourself and take a lower paying job. Most people are average, and this is no tragedy except for those who consider themselves above average. This would be the bulk of college grads.

I see it all as a pendulum. Your music major is riding on the very bottom of the pendulum with the greatest swing while blue collar people are high up with less swing. STEM majors are somewhere in the middle. Most music majors end up broke, but a few go on to make millions in the music industry. The same is true in art or writing or what have you. We consider those majors to be incredibly stupid not based on possible earnings but on probable earnings. J.K. Rowling is the richest woman in England which isn't bad for an English major. But she was also on welfare at one time. Most English majors end up on welfare or working at Starbucks. On possible earnings, the arts and humanities are the way to go. On probable earnings, you should become a skilled laborer such as a welder, a machinist, or a truck driver. Healthcare professions are also in this range of probability.



This crude drawing illustrates what I am getting at. I put "McDonald's" at the top, but you can put Starbucks or Dunkin' Donuts there as well. This is the job without risk. There are plenty of them whether it is waiting tables, tending bar, or working in some store at the mall. The demand for these jobs is overwhelming. The skills for these jobs are basic. The result is equilibrium. Water is worth more than gold in terms of survival, but the ubiquity of water makes it cheap while the rarity of gold makes it expensive. But this is all relative to demand which is fluid. In the desert, you will gladly trade an ounce of gold for a bottle of water.

In order to make more money per unit of exchange, you must assume more risk. You can always work more hours to make more money, but if you want to make more money per hour, you have to take on more risk. This means choosing to pursue a Ph.D. in petroleum engineering instead of going to medical school and hanging in there for almost a decade until you achieve that goal gambling that this major will pay off with greater earnings than a doctor can earn. If you graduate during a time of cheap oil, you are fucked as you struggle to pay off student loan debt. If you graduate now, you are laughing at the people who said you were stupid eight years ago. But the fact is that you would have been just as well off borrowing that money and buying stock in ExxonMobil or futures contracts on the price of crude. It is essentially the same bet.

If all this knowledge seems disheartening, it shouldn't be. The marketplace is a motherfucker for those seeking to be above average, but it is kind to us average people. There are people gambling their entire lives and destinies in an effort to bring me cheap gas. There are other people making similar gambles to bring me good music, movies, books, jeans, or what have you.

The people behind the STEM meme are pushing the idea that STEM is simply a safer bet. No, it isn't. Blackjack has better odds than roulette, but no one tells the roulette player to head to the blackjack table. STEM is the blackjack table. If you don't think our system can't produce a bunch of unemployed scientists and engineers as easily as it produced unemployed philosophy and political science majors, think again. There is a reason all those math majors went to the derivatives market. This is because they couldn't find real work in technical fields, so they created work for themselves playing the financial equivalent of musical chairs. All that brilliance married to all that stupidity. It boggles the mind.

Whenever someone makes a career choice, they are making a mathematical calculation whether it is conscious or not. The government has a bad habit of fucking up the real numbers here through financing and propaganda. But if you can look past that bullshit, you are left with a simple proposition. Do you want greater reward with greater risk? Or can you settle for lesser reward with lesser risk? When I talk to people, the vast majority of them don't want eye popping salaries. They want security. They want a middle class life without worrying about paying the bills or being out of work. Making a lot of money would seem to provide this security, but it doesn't. This is why lottery winners, celebrity athletes, and movie stars have such a bad habit of going broke. The same behavior that made them winners also serves to make them losers.

STEM majors are firmly in this same category of millionaire athletes and rock stars. People may scoff at this, but I have two words for you--STOCK OPTIONS. I have lost count of the number of stories of millions earned and lost during the tech bubble. More bubbles will come, and STEM people will experience the same crap over and over again. It will be boom and bust. This is what happens when you ride the pendulum swing. If you don't have the stomach for this sort of thing, you need to reassess your tolerance for risk.

I get asked over and over again about what smart kids in college should do, and I always point to healthcare. Become a doctor, a pharmacist, or a registered nurse. Even people without the brains or the money can find very good work in respiratory therapy, physical therapy, or dental hygiene. If all of this seems boring, it is. That is the flip side of the STEM issue. We know why art history majors pursue their degrees. Art is fun. Well, STEM fields are fun, too. And the primary reason those people go in those fields is because of that fun. Medicine is not as fun. This is because you have sick people who have a bad habit of shitting the bed and dying.

Over the course of my adult life, I have found that the jobs that are most consistent in terms of employment and earnings are the ones that are the least glamorous. I have been on both sides of the fence, and I find that people are either starry eyed or sober when it comes to life. The sober ones are the ones who become doctors, nurses, and plumbers. The starry eyed ones are the kids in college who think they are going to pay off six figure student loan debt with six figure jobs that don't exist. STEM is on the starry eyed side of things. The world needs dreamers, too, so I'm not going to say they should be stopped. But they don't need encouragement or subsidy anymore than gamblers need a line of credit at the casino.

I encourage people to settle for average. This goes totally against those motivational posters you see in people's offices. But to a generation that had homes foreclosed on them or struggling under massive student loan debt, average is looking really good right now.

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