from
Every day I get e-mails from entrepreneurs seeking to raise money for their ventures. Because I’ve been an entrepreneur and know how hard it is, I try to read each one and respond.
The other day I received a message from a gentleman named Rares Dumitrescu. He starts by saying he has two opportunities to discuss with me and then launches into his pitch: “We’ve raised $180,000 so far from friends and family, therefore we’re well on our way towards getting out a demo in the coming 1-2 months.” He goes on to talk about the team, financing, and growth plans with a link to the product. All par for the course.
Then comes this: “The second opportunity that I have for you is that I am looking for someone to buy my 2021 Sport+ Manhattan Orange Lexus LC500 for roughly $81,000. This is not a financial opportunity. This is an immense opportunity for the soul… Worst case scenario if I'm wrong, you've thrown $81,000 down the drain. But let's face it, you've probably done worse.” He concludes: “it would be a shame if only money would be what stopped us from achieving immortality.”
This e-mail is a perfect example of something that wasted time and energy because of how the opportunities were ordered. If he’d simply started with the 2021 Sport+ Manhattan Orange Lexus LC500, I wouldn’t have felt compelled to read further. (Lots of reasons: lack of interest in flashy cars; would have searched for Rares Dumitrescu and found he’s a Romanian fencing coach who won a sabre world championship in 2009; finely tuned meter for crazy.)
The “Dumitrescu” e-mail brought to mind something else that could be improved by reordering: the high school to college to work orthodoxy. It’s a progression that’s causing incalculable harm, and not just because our ability to calculate is impaired, as demonstrated by the precipitous decline in NAEP math scores.
High school to college to work arose about 50 years ago and became gospel only 25 years ago. An immediate impact has been cutting paid employment for high school students in half. By focusing on what looks good on a college application, we’ve fostered a golden age of extracurricular activities, organization-starting, and service learning (particularly on trips to exotic locales). The casualties are ice cream scooping, lawn mowing, waiting tables, and lifeguarding during the summer, after school, and on weekends.
At a minimum, sacrificing paid work at the altar of college admissions has been shortsighted, particularly since the good folks who work in admissions offices say we’ve gotten it all wrong: they welcome and respect work experience (but perhaps only because they’ve had it up to here with applicants writing about transformative volunteer experiences in Costa Rica).
But it’s worse than that. High school students are already socially delayed. Thanks to smartphones, social media, and Covid, today’s teens have spent much more time sitting in their room interacting with their phones than teens five or ten years ago. So Gen Z is less well-versed in understanding social cues, less practiced in the art of compromise in order to get along, and less likely to have developed presentation or communication capabilities. And that’s a problem when companies continue to complain about a lack of soft skills in new hires.
Bigger picture, the high school to college to work progression has resulted in market failure. Selecting a postsecondary education program – or any education or training program – is a process beset by asymmetric information. The problem of information asymmetry was best explained by economist George Akerlof in his Nobel Prize-winning 1970 paper The Market for “Lemons”. Used car salesmen clearly have greater access to information about the cars they’re selling than potential buyers. So what seems like a terrific used car could easily turn out to be a lemon. (2021 Sport+ Manhattan Orange Lexus LC500, anyone?)
Akerlof recognized that asymmetric information “was potentially an issue in any market where the quality of goods [or services] would be difficult to see by anything other than casual inspection.” Higher education is today’s version of the 1970 market for used cars. While colleges and universities probably have a pretty good sense of employment outcomes from the degrees they’re selling, prospective students have no earthly idea. And if colleges don’t know, it’s willful ignorance. (Who could possibly figure out employment outcomes? Let me think… Researchers! And where might they be employed?)
Thousands of colleges continue to enroll students in programs highly unlikely to produce a return on the investment of tuition, cost of living, and opportunity cost (i.e., what students could be earning by working full time rather than going to school). See the recent report on Bay State College, a college with two campuses in Massachusetts owned by China’s Ambow Education, on a State Attorney General investigation into student complaints that “they were misled about the schools academic programs and charged for courses that didn’t exist or were canceled suddently.” Or last week’s Beacon Center list of 24 programs offered by Tennessee public universities that leave students with more debt than income two years after graduating. (This in a state with two years of free community college.) Not to mention students who enrolled at Columbia University believing it was the #2 school in the country, only to find that, as a result of data provided to U.S. News that was either “inaccurate, dubious, or highly misleading,” they had chosen not #2 but #18 (the Ivy Beleaguered).
I’m not so worried about Columbia students. But much of what ails American postsecondary education can be boiled down to uninformed buyers. The problem is that the young, inexperienced, unemployed, and underemployed job seekers who most need the leg up purportedly provided by schools like Bay State or East Tennessee State are making bad decisions as a result of information asymmetry. The results of millions of bad decisions are unaffordable student loan debt, underemployment, impeded socioeconomic mobility, and social and political disorder. A side effect is keeping bad colleges and programs in business.
How do we reduce market failure? How about homing in on the source of the problem: uninformed buyers. How to do this? Get as many as possible on career paths. Then, once they’re on their way – once they have other options besides college – let them make (presumably) better decisions about how to get the additional education they’ll need. And this means responding to the disorder of high school to college to work by reordering: high school to work to college.
***
A new norm of full-time work immediately after high school could allow graduates to gain:
The problem with this new paradigm is that the jobs that come to mind are the same jobs available to high school students, namely ice cream scooping, lawn mowing, waiting tables – to which we might add retail stores and Amazon warehouses. They’re not jobs with career paths, or at least not attractive ones.
But this is a solvable infrastructure problem. Imagine an America with:
In the coming months, I’ll be writing more about how we can scale these earn-and-learn models. For now, consider that rather than spending $400B on student loan forgiveness, it might be more progressive to invest some of that money in strategies like these.
Think about what college decision-making would look like in this America. Probably like the decisions that working adults in good jobs with career paths have been making for decades. Working adults already in good jobs drove the rise of online master’s degrees and the subsequent fall of such overpriced programs in favor of faster + cheaper credentials. For this population, no one is particularly worried about completion, affordability, or employment. One reason is they have more resources. But another is they’re making better decisions based on better information about what they want and what a college program will do for them. It’s closer to a fair (information) fight.
So let’s prioritize putting high school graduates on career paths – high school, then jobs with career paths, then formal postsecondary education – reversing the high school to college to work order we’ve had for 50 years. For those who hit a wall, what’s the worst case scenario? They’ve had work experience and training and incurred no debt. They’d restart a college search from a better place, with better information. I think this is what Virginia governor Glenn Youngkin has in mind when he says he wants every high school student to graduate with a credential that will allow them to “immediately be prepared to go right into life.” I disagree with many of Youngkin’s education positions, but I don’t think he’s wrong on this one.
***
George Akerlof found a used car market where bad cars were “driving out the not-so-bad driving out the medium driving out the not-so-good driving out the good.” Due to information asymmetry, the used car market was a fraction of what it might have been in the absence of market failure. The result was consumer flight to a place of information refuge: the new car market with famous brands like Ford and GM standing behind product quality. This is where we’re heading in higher education: demand shifting to the most famous brands. And because elite schools aren’t preparing to scale capacity, that’s a recipe for frustration and failure.
Changing this dynamic is a matter of conscience, consequence, and sequence. Once reordering takes hold, we’ll go a long way to solving the first problem: paid employment during high school will become much more common, if only to gain valuable work experience for a first full-time job. And fewer of those full-time jobs will be private college admissions counselors and Costa Rica service learning instructors.
Reordering postsecondary education might mean more kids living in parents’ basements when they're 18 and 19. But for most parents, that's preferable to having them in the basement when they're 24 and 25. Or to having them trying to sell you their car – a car that won’t be nearly as flashy as the 2021 Sport+ Manhattan Orange Lexus LC500.