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06 September 2012

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Lydia

I was pointed in this direction by Melanie Bettinelli via Facebook. What a nifty discussion. Well, I'm nine years out of Catholic college. I went because, honestly, that was "what one did." I studied English, and loved it. However, and it's a big however, I also accrued a WHOLE lot of debt, got married immediately after school, worked fairly cruddy little jobs (because even the Catholic schools in major cities weren't looking for girls with English degrees to teach), and had a baby. While I have managed to earn a little money on the side using my degree and training as a professional literate, I have to say that it would have been better for me educationally, emotionally and spiritually to have taken a year or two in between HS and college to study a trade. I would have had more practical skills to fall back on, and not have limited myself to either teaching or working in a bookshop or Starbucks. This is anecdotal, of course, but it may shed some light on the "non-conventional" post-secondary route. My younger siblings started out on the college route. One studied art history at the same university I attended. She couldn't finish because of money concerns and very sensibly decided against taking out loans. She now works odd jobs, and as a theater tech and is slowly but surely making ends meet. My brother also began at the same university, studying history. He decided that academia was not the place for him, and ended up in the USMC. After his time there he decided to become a firefighter and I believe he is also planning to take classes and finish up his degree with his military benefits. My youngest sister had no desire to go to college. She's brilliant, well-educated (we were all homeschooled), and a professional flamenco dancer. She worked hard at her art, learned the ins and outs of the business aspect and is doing pretty well for herself. And, she's happy. Me? Well, I just wish I had felt like there were other options for a nice upper middle class girl. My parents, being artsy bohemian types, always encouraged me to explore other options but there weren't any laid out on the table-and I was an 18 year old who needed to see my choices and be encouraged to take a non-conventional route by someone I trusted. I chose the conventional route, and while I don't regret my education, I do regret not being fully informed about consequences for attending private college with loans and a liberal arts degree.

Darwin

A thought on lost time and wages:

I add to that: it's not just "lost time" -- lost time in the workforce represents lost wages, lost savings, lost interest on those savings, lost experience that could have been leveraged into higher income now. It's not just that they failed to gain economic benefits. They really lost an economic good.

I think this is worth taking into account to an extent, but it needs to be weighted carefully, and in a way that it's often hard to do at the time.

Obviously, if you go to college full time and don't work, you don't have much of any income for that period. (Arguably, you might count scholarship grants, etc. as income, so it's not necessarily zero, but you see what I mean.)

So, say that Bob goes to college for four years, gets his degree in philosophy, and when he gets out he gets a job as office help for $14/hr.

Bill learns to hang drywall and starts making $14 within a month of Bob going to college, so Bill is making money the whole time Bob is studying, and by the time Bob gets out, Bill is making $17/hr and has four years experience.

Now, you could say that Bill is 128,960 into his lifetime earnings before Bob even gets started.

However, it might be a lot more accurate to see Bill's real advantage as simply being the actual assets (savings plus saleable possessions he owns) he has, plus his increased earning power and experience.

This still puts Bill ahead, but it may not actually be by that much. Someone who is 22 years old and making $17/hr working in construction is unlikely to actually have many saving and assets. He's likely spending most of what he makes. So Bob doesn't really need to make an extra $128k over the insuing years to feel like he's "caught up". He just needs to get to where his income and his assets are similar to those of Bill, which may not actually take all that long.

The fact that so many people go through such a period of extended adolescence these days helps to flatten out the early years of the earning curve. Even having lost 3.5 years to college (I worked full time my last six months in college) I found myself through much of my early 20s being told, "Stop trying to rush it. You're doing well for someone your age." People I saw who'd either been in college longer or just fooled around and not taken a serious full time job until their mid twenties, didn't necessarily have huge amounts of "catching up" to do, because in jobs which are primarily learned on the job, a lot of what's required for those roles is at least some basic appearance of maturity and confidence -- something you can't necessarily get more of by starting at 18 rather than 22.

Darwin

Ack. Somehow my italics didn't come through. The second paragraph of my comment is a quote from the post.

[I added italics to it -- bearing.]

bearing

"Someone who is 22 years old and making $17/hr working in construction is unlikely to actually have many saving and assets. He's likely spending most of what he makes."

Is someone who is 22 years old and making $14/hr working as office help any *less* likely to be spending most of what he makes?

Bob may not take "all that long" to get to where his income and his assets are similar to those of Bill -- if he saves more and spends less. But where's the assurance that he will?

bearing

It occurred to me to add: Our peer set largely influences the standard of living we expect to have.

Bill's peer set works in construction, like him.

Bob's peer set works in an office. If Bob is "help," then many of Bob's coworkers probably make more than him. They may drive better cars, wear better clothes, talk about their vacations.

Who's more likely to be discontented with his standard of living and spend beyond his actual means?

Darwin

Is someone who is 22 years old and making $14/hr working as office help any *less* likely to be spending most of what he makes?

Bob may not take "all that long" to get to where his income and his assets are similar to those of Bill -- if he saves more and spends less. But where's the assurance that he will?

I would tend to assume that neither one would be saving much or buying any valuable assets. So my point is mostly that it's mostly when Bob's actual income catches up to Bill's that will matter to the two of them -- not what their respective lifetime earnings are.

Here's the thing, if you run it forward for ten years and assume that Bob scores some nice promotions and job changes and is making 66k by the time he is 31, while Bill continues to make slow but incremental progress and is making 54k as an experienced construction manager by the time he's 31, Bill's lifetime earnings will still be 80k higher than Bob's, but Bob is likely to feel better off since he actually makes 12k more per year.

Who's more likely to be discontented with his standard of living and spend beyond his actual means?

Honestly, I don't know. I used to have a lot of cousins in construction, and it's certainly not a profession immune to the urge to buy expensive new crew cab trucks or jet skis or tequila soaked vacations to Mexico. While there's the advantage of not mixing with people who make 3-4x what you make, there's the disadvantage of a culture that puts a high emphasis on consumption. It would be interesting to find some data on savings rates by profession.

Bearing

"it would be interesting to find some data on savings rate by profession."

I agree!

BadKnees

When picking a profession for the long term, it is important to consider that some blue collar work will wear out the body. Looking at average retirement/disability age by profession is likely an important factor. Lots of policemen and carpenters retire on the young side.

GeekLady

What I especially resent in my career education is that no one told me I could enjoy staying home with my son this much. I would have chosen a much more work from home friendly path had I thought it was an alternative.

Mark

I agree with Darwin that many of the blue collar folks I know did not invest their early earnings and have not reaped the "nest egg" benefit of getting into the work force 4 years before there college peers. My oldest is a saver and I have no worries that income in the first years would fail to produce savings for him, for children who do not tend to save a career path with delayed but larger earnings might be better. Our advice has to be tailored to each child.

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