Today's post is inspired by the discussion over US visas for foreign workers, and the argument from high-tech companies that there aren't enough new US grads in STEM (Science, Tech, Engr, Math) to fill the open positions. Specifically, I'm reacting to the "data" in this article, which says what we've all suspected for the last 15 years: US companies can't find qualified people who will are willing to work for what the positions pay.
My gut reaction (no data to back this up other than personal experience) is that new US grads have a disadvantage that a lot of foreign grads historically haven't: student loan debt. If a new US grad leaves school with $50k-$150 in student loans, that's a strong disincentive to take risks. Instead, a monthly loan bill will demand that students quickly find a reliable source of income. Additionally, cost of living in traditional areas where STEM companies congregate is high. In my case, it was the Silicon Valley in 1996, when I was "lucky" to pay $1200/mo for a 2-bedroom apartment.
The "mythical" Silicon Valley startup mentality had the motto, "work any 80 hours a week you want," and didn't care what your education level was as long as you got the job done. Now, startups are less work-intensive, but early stage positions still offer very little income. If these companies want to attract the "best and brightest", one way to do it is to increase applicants' openness to risk.
A relatively recent idea has been the "hacker hostel" model, in which startup incubators come with not only office space, but sleep space. While that reduces the monthly expenditure for a new hire, it has its own disadvantages, including being appealing primarily to early-stage companies (read: the co-founders are the ones sleeping on the couch).
A more long-reaching solution would be to drive the cost of education back down. Forbes reported in 2012 that education has risen 500% since 1985, while the consumer price index was only 115%. There's a pretty picture here (note: data from same source). While there was some re-structuring a couple of years ago, in which some colleges switched from mixed financial aid to grant-only, that story has fallen out of the media, and costs haven't really been affected. Furthermore, the global economic downturn has reduced spending on eduction (at least in the US), driving tuition & fees higher, even in state schools.
A reduction in the cost of education is a likely driver to innovation specifically because it will reduce the p2p driver that killed so many startups. In business, p2p for a VC-backed firm was "path to profitability", insisting on rapid repayment of investment by bringing products to market early. In education, I'm using the term as "path to payment", repayment of student loans. If we want graduates to work for less money, then let's make it possible for them to do so.
