Opinion and Investing Column and Banking & Finance and Education & Workforce Development

HICKS: Most majors pay off, but some a lot more than others

August 28, 2010

A while back, a spiteful little argument erupted on campus between a columnist at the student newspaper and a professor.

The student, it seems, referred to the professor’s field as a “hobby major.” The professor responded by calling the student a “neo-fascist-capitalist.” It is the temper of debate only a college or middle school locker room can sustain.

Godwin’s law was clearly at work there. However, the question: “Which majors will perform best in this economy?” is a good one. It got me thinking about how college preparation translates into employment, and what students and taxpayers need to know.

There’s a public-policy dimension to degree choice because taxpayers subsidize college education through direct payments to students and universities, and through subsidized loans. The reasons for doing so are both because education generally benefits society above the benefits an individual receives, and because there are direct regional spillovers from a university to the economy.

These spillovers come from the effects of science, technology, business education, social sciences and the creative endeavors of those in the humanities. Universities need all of these, but the demand for trained graduates in each field differs. For example, we need more early-childhood educators than economists.

The only real way to allocate people to the right job is through free choice in markets. Wages are the clearest market signals of demand for particular skills, but student loans make it easier for students to ignore markets until after graduation.

Fortunately, there are studies about income for college graduates by degree. A Department of Labor study reported that, of all college graduates, only starting salaries in humanities and “specialty” majors were below the national average for all workers. But, within a decade, these workers saw more than a doubling of earnings, and more than a quarter finished graduate school.

So, even college graduates with degrees in the lowest-paying major at graduation were earning, on average, more than $50,000 within a decade. Not a bad hobby.

A second indicator to students isn’t earnings, but in which fields graduates of each major work. The best students will always find work within their fields and many will change jobs because their occupation is less fun than they thought—but students in majors where a high proportion of graduates are working outside their field need to know the risks of this decision.

Science, engineering, business and health care graduates have high rates of related jobs. Humanities, history, psychology and the social sciences all have almost two-thirds of graduates working outside their field in three years.

So it is clear that markets favor any college degree more than none. There is clearly something important about the totality of what is learned in college, but, if you want to apply all those upper-level classes in your major, you’d better study hard or pick the right field.

And, by the way, that impertinent youngster was named the top student columnist in the country, but writing was only his hobby. He decided to become a well-paid capitalist instead.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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