PandoDaily is reporting on the “Series A crunch” in which companies that have raised seed funding now are discovering (presumably to their utter amazement) that actual venture capitalists aren’t as stupid as the angels who gave them their first bag of cash, and, given the opportunity to invest in their pointless companies, the VCs have decided to politely decline. Thus, now we are facing a “nuclear winter" (!) where thousands of companies will go out of business.There's a deeper issue here and I'll just cut right to it: STEM careers are not an economic silver bullet. More importantly, they never have been and they probably never will be. While it is empirically true that STEM careers are on average higher-paying technical professions that are less likely to get obsoleted by robots in the near future, there isn't a limitless supply of open jobs for STEM majors when they get their diploma. And despite what is popularly claimed, there aren't hordes of employers desperately seeking STEM hires.
The simple truth is that grouping any and all college majors related to STEM into one category complicates the picture more than it should. And that the term itself, "STEM" unnecessarily invites vague definitions of what types of careers and college majors qualify as STEM. Fortunately, the U.S. Immigrations and Customs office keeps a list of applicable job categories. And while it's popular for us to think of "nerds in lab coats" when we hear "STEM" it includes things like "business statistics" and "wildlife biology."
In any case, let's get back on topic. The President, Congress, and even private industry (see: Bill Gates) have all touted STEM careers as the penicillin for our ailing economy. Further, they continuously argue at a near panic that India and China are graduating engineers/scientists/job stealers at an alarming rate. And yet, the actual numbers suggest this is patently false.
Let's focus, for instance, on my home ground of engineering. If there was a shortage of engineers, then one or both of two things would happen: the average salary would go up (finite supply + high demand = higher price) and/or the available supply would go down (i.e. low unemployment). Yet, neither of these are occurring. The average salary for engineers has not increased much in the last ten years, barely keeping up with inflation. And while unemployment for engineers is low, it's not zero. Nor is it really even that much lower than the average unemployment rate across all career fields. The unemployment rate for electrical engineers in 2010, for example, was 5.4%. This is twice the estimated unemployment rate during "full employment."The national average unemployment rate for anyone with a bachelor's degree at that time was 5.1%, and no one is talking about this.
Meanwhile, the evidence mounts that a glut of technically-savvy people doesn't guarantee an economic boom:
Here’s some stunning, Earth-shattering news: You know all those hundreds of incredibly stupid startups that have been raising seed money in Silicon Valley despite the fact that the people running those startups have no experience doing anything, ever, and have no idea at all how to generate revenue (let alone profit) with their lousy ideas, because, in fact, there is no way to make money with their lousy ideas, because in fact their ideas are lousy?
What really offends is that smart young people have been conned into thinking that starting a company is akin to buying a lottery ticket or rolling dice at Las Vegas -- the odds are long but you never know, you might get lucky and strike it rich. So make something up, throw it out there, and see what happens. "Spray and pray," it's called.There's two more things I want to say about this.
First, STEM careers are a good choice for the right people. If you have a curious mind, are a hard worker, like solving problems, like math and science, etc etc. Then by all means go into STEM fields. But let's not pretend like a market flush with STEM graduates will guarantee American Dominance nor should we act like its the ticket to a flush economy. We have a pretty good crop of STEM graduates right now, we did before the recession, and we did before that, too.
Second, there will never be a substitute for good, honest, hard work. Why are we pretending there is a STEM graduate shortage that doesn't exist while there IS a shortage of skilled laborers. Our culture pushes this idea that "everyone should have the chance to go to college" but the truth is maybe 30% of people actually should. Not to offend the other 70% of you, but you'd end up dropping out anyway. Or you'd get a degree you'd never use (and student loan debt galore). Or you'd get a job because of your degree and you'd hate that job.
Whatever the case may be, our culture completely marginalizes skilled non-collegiate labor. High school guidance counseling is entirely focused on helping students find the right college. Students with a C-average are routinely pressured into college.
Meanwhile, a machinist that can run a 3-axis mill can pull in $60,000 a year, easy. That's a decent paycheck for anyone, regardless of how many sheets of paper you have framed on your wall.
But we've got this cultural idea that a guy running a mill is a sub-human. But any mechanical engineer worth his salt will tell you that a good machinist is worth every dime.
Look, I could go on and on about this. And I'm not trying to downplay the opportunities STEM graduates have. I just want people to understand that the kid with an IQ of 103 might make a really good HVAC technician, and he'd make $50k doing it, and he might be really happy. But conscripting every kid with an iota of scientific interest into going into STEM majors in college is a huge mistake on the front end and the back end.
Stay tuned for part 2 of this topic, in which I chart the unemployment rate of engineers against the unemployment rate of "anyone with at least a bachelor's degree." I think you'll be surprised what we find.
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