A friend pointed me to Thomas Friedman’s column advising new college graduates to start companies and/or work for startup companies. He goes to advocate that the Politburo, Gosplan, and Premier Obama allocate more resources to startup companies in their next Five Year Plan.
This seems like terrible advice to give a young person who is heavily laden with student loan debt. A person with big debts that cannot be discharged in bankruptcy is not a person who should be taking risks. Given that government jobs pay twice as much, on average, as private sector jobs (source), and carry a much lower risk, and are more available (graph), wouldn’t a kind-hearted older person advise a fresh college graduate to work for the government?
Stats:
- Bureau of Labor Statistics says that the Washington, D.C. metro area led the nation in job growth (June 2, 2010 release).
- Federal workers love their jobs, with only 0.1 percent quitting per month compared to 1.7 percent in the private sector (table)
[Friedman does not seem to be advising young people based on his personal experience. Friedman is an employee of the New York Times Company, a 160-year-old enterprise with more than 10,000 employees. Friedman achieved an additional level of financial security by marrying the heiress to a multi-billion dollar real estate development fortune. Wikipedia does not show that Friedman ever worked for a small company.]
The wife’s family company: “The family’s trust declined in value from $3.6 billion to $25 million.”
So I am not sure it’s fair to call her an heiress to a multi-billion dollar fortune. The company went Chapter 11.
Colin: She was one of the wealthiest young women in the United States at the time of the marriage. General Growth did go bankrupt in 2009, but most billionaires have at least some assets other than their stock in one company. Should one of Thomas Friedman’s children join a startup company that fails, I don’t think that the kid will then have trouble paying off her student loans. Advice appropriate for the children of present or former billionaires is not always advice that children of the middle class should follow.
Except most of us recent grads are dismayed with the state of politics, which tends to bleed over to the generalized “government”. I can’t think of any friends (and a quick Facebook search concurs) that graduated with me last year, or that graduated this year, who are working a government job. Students aren’t graduating with enough experience.
I graduated, moved across the country, and started my own firm with another recent grad. We didn’t make millions. But we got lots of experience, and paid our bills. A year later, I was able to walk into the doors of more established firms with actual business experience and not be tossed to the side with other recent grads. Now, granted I was a humanities major — but I know plenty of business grads who are working low-level customer service jobs. (And it turned out that having some intellectual wherewithal that the Humanities dept helped me develop was a huge step up when looking for “real” employment.)
If they had taken a year to even attempt running a small business, I argue they would be in a much better position in the job market (private or public).
Having starting my own business immediately out of college was a very large challenge, but one that I persevered through. I find that most college graduates are finishing programs that seriously lack real world experience, or are instructed with out dated material.
I had to opportunity to sign up for a cyber security job with the NSA after graduation, but it was not really what I envisioned my live to be like. How do I come home and tell my wife what I did that day when it is all classified?
No Thanks.
Maybe now college students’ interest in engineering would increase? I personally know of a number of people who have graduated with degrees in ME/EE/CS. A few are lucky enough to be hired full-time, but many others are hired as “interns” and “Co-Op’s”, doing the work of full-timers, but without the benefits or the job security. It’s not ideal, but still more palatable. But to imagine fresh engineering grads starting their own companies and succeeding is difficult, especialy in EE and ME.
Maybe this is one of those scenarios where a piece of advice is good as long as other people follow it, but not truly applicable to oneself. Kind of like the speed limit.
Philip,
This post seems to be a bit incongruous with your own success. According to your webpages and resume (located at http://philip.greenspun.com/narcissism/resume for interested readers), you started multiple companies over the course of your career, went into semi-retirement quite early in life with a presumably very favorable financial position, and purchased multiple airplanes and helicopters. You talk about owning very high-end camera equipment and have offered personally funded (I presume) employment and flight training to students on multiple occasions.
Yet you suggest that young, bright, motivated college graduate should take up a government job based on low risk and reasonable wages, but with a near zero chance of funding a lifestyle even remotely close to your own (travel, airplanes, other toys).
I’m curious what hindsight on your own experiences would lead you to make that suggestion? Do you have friends who were on a similar course to your own but were ultimately unsuccessful, destitue and miserable? I would presume that anyone who loses big on a risky venture while young would still be sufficiently motivated during mid- to late-life that they could make up for losses by landing an above-average salaried job and still build up reasonable retirement savings.
Adam: Wow, you make me sound like a real bore at a dinner party. Let me tell you about my Canon EOS system….
In looking at my personal experience, I don’t think that you adjusted for risk. It is true that I have earned roughly as much per year as some of the higher-paid California highway patrolmen or Massachusetts state troopers. However, their earnings were risk-free; as soon as they joined the force at age 22 they could be fairly certain of what their earnings would be at age 35 and of their pension upon retirement at age 42. If you look only at successful entrepreneurs and say “this is why people should be entrepreneurs” your conclusion will be tainted by sample bias. It is just like saying “Look how great a career Tom Cruise has had; young people should become actors (and/or Scientologists)”.
Do I have MIT 1982 classmates who have been involved in multiple startups and who have never had a success? Of course! You won’t find their glorious careers chronicled in the alumni magazine, but I see them at parties. They are certainly not as cheerful as the folks I know who went into lower risk careers such as medicine or government.
Could a successful government worker afford my lifestyle? I don’t see why not. Our government worker collects $250,000 per year while working hard for 20 years ($150,000 base salary plus some overtime) and then a $150,000 pension for the rest of his or her life, during which time he or she may enjoy leisure time or begin a second career as a government contractor. If he or she lived like a graduate student through his or her mid-30s, there would be plenty of savings to buy a $2,000 camera or a share in a $150,000 airplane.
It doesn’t take enormous wealth to travel, as you imply. In fact, the most common occupation of folks I’ve met traveling is public schoolteacher. Hundreds of thousands of senior teachers get paid perhaps 2-3X the average American salary and work just 9 months per year so have plenty of time to travel. How risky is it to become a senior teacher? Start at age 22 and wait ten years (perhaps adding an online degree or two in the meantime).
You’re also not adjusting for the fact that I grew up in a different era. Tuition was $5,000 per year when I started at MIT. I graduated MIT with about $7,500 in student loan debt and enjoyed a starting salary, in 1982, of $42,000 per year. My first job after college was at a company with 4000 employees (Hewlett-Packard). As the Internet had not reached India or China at the time, I did not have to compete for a job with workers in lower wage countries. http://en.wikipedia.org/wiki/Containerization shows that container shipping was still developing in 1982 when I graduated from college, which means that few American industries were exposed to foreign competition because the cost of shipping was so high.
A person who wanted a guaranteed minimum income, a fat pension, no risk of termination for incompetence, and unlimited health care but also yearned for the possibility of a big financial success could take a government job and spend 2 percent of income on either lottery tickets or publicly traded stock options (an out-of-the-money put option on BP, bought on April 19, 2010, would probably have gone up 1000X by now).
There are a lot of good reasons to start a company, but “is a better job than working for the government” is not one of them.
I know this is trite, but police officers do face the risk of dying or becoming disabled at work.
Luke: Police officer does not appear on http://hubpages.com/hub/10-Deadliest-Jobs-in-the-United-States ; it is true that retired public employees can have an up to 97 percent disability rate (see http://www.nytimes.com/2008/09/21/nyregion/21lirr.html for how nearly everyone who ever worked at the Long Island Railroad is now on a taxpayer-funded disability pension), but their disabilities do not prevent them from playing golf every day.
So now Friedman is on to startups, huh? He’s certainly very enthusiastic about engineering careers, concluding that the only real problem with engineers in America is that there aren’t enough of them. He talks dismissively about the luddites who question a public policy based on adding workers to a field with stagnating wages, but I’ve never heard him mention objective research (such as a recent report from the RAND institute) that clearly shows that engineering and science careers are not producing wages competitive with law, medicine, or (as phil likes to point out), government work.
It’s not a surprise, though. Engineers and scientists *do* produce wealth for others, as do startups. Reminds me of that onion article I read a few years ago “Report: 98 Percent Of U.S. Commuters Favor Public Transportation For Others”
Friedman is a journalist who probably never studied science and married a wealthy woman who favors engineering careers for others. Barak Obama is also a good example of a lawyer who encourages others to study science (though unintentionally, his example encourages young americans to become lawyers who encourage others to study engineering.)