Student Allowance Cuts A Mixed Blessing

I plan to finish my undergraduate degree in economics this year. I have no intention of pursuing post-graduate studies. But even if I did, the student allowance cuts would have made it a financial impossibility.

So in this regard, student allowance cuts are a mixed blessing. They stop people who can’t afford to pursue post-graduate studies from pursuing it. If you can’t get a full scholarship, perhaps you shouldn’t be enrolled in post-graduate study anyway?

But for areas of study that have been flooded by a mass of undergraduates, pursuing a post-graduate degree seems to be required for entry into the “profession”.

Areas of work like teaching, psychology and the sciences are competitive because a lot of people are scrambling for the decent jobs. These students forgot to look at market salaries before choosing their major.

Even worse, because of the “everyone can be an astronaut” thinking indoctrinated in high school students around the country, they didn’t look at the market salaries before even considering university.

All claptrap about university being great for making you a contributing citizen aside, no one would attend university if you didn’t expect a higher income afterwards. University would still be reserved for the children of the wealthy to bide their time before taking over family estates or businesses.

Both National and Labour have glossed over the reality that your background has far more influence on your success in life than any one will admit in polite company.

No one wants to admit that their parents are helping them survive low paying jobs in competitive industries. I am grateful to my parents for helping me a lot over the past few years, many aren’t that fortunate.

The truth is without some level of parental support and guidance, you are screwed. You choose the wrong courses, don’t realise the importance of internships and dress inappropriately for interviews.

Cultural competency is far more important than many people realise. This is why many IT folks get crap salaries – they dress like crap and don’t play the game. Thinking that only your skills and value creation matter is childish in the extreme.

We need to stop the production line of undergraduates studying what they want. A lot of middle class students are pursuing lines of study better suited to aristocratic undergraduates at Oxbridge.

I read a lot of stuff outside of the curriculum. In a way, it has handicapped my ability to take university seriously. I deeply regret the decision to attend university without fully thinking through how it would play out in the medium term.

I’m currently reading “Anna Karenina” by Tolstoy and Nassim Taleb’s “Antifragility”. I’m working through the “Algebra” series on Khan Academy. I’m building a basic web application in AngularJS and trying to figure out how to deploy it via Windows Azure with a node.JS backbone.

On top of that, I write my blog and am writing a basic eBook on due diligence for investors. I plan to publish it before university starts back in March and sell PDF, MOBI and ePUB copies.

University has helped me with none of this. University has, in fact, retarded my ability to do interesting things. I passed the “point of no return” a long time ago, where I have to finish my degree because the unreliability of freelancing and self employment means I might have to resort to the labour market if my other projects don’t work out.

In a way, stopping students from blindly progressing with post-graduate study by way of restricting their ability to finance it, should function as a “reality check”.

I know a lot of fellow students whose heads are truly in the clouds. They don’t realise that even if you do win the graduate job lottery, you are more likely to work in a call centre than a C-level suite.

But we can’t forget that the architect of this “reality check”, Steven Joyce, studied zoology. Some people are more equal than others?

Who Do Employers Compete With For Labour?

The common assumption is that employers compete with each other for labour. This is true for the currently employed or recent graduates. They have to deliver a salary that reflects the level of work expected and what the workers themselves want from an employer. It’s a two way street despite what some lobbyists would have you believe.

This ignores the alternatives to the labour market that are available. These include working in the cash economy, payment in kind, living off benefits or from family support.

I’m not casting value judgments here – I’m simply saying that in order for an employment offer to be competitive it has to substantially exceed that available from WINZ or StudyLink.

No potential employee will care about you if you are offering a rubbish wage. They’ll clock in and clock out just as they should – you’re on a different planet if you think employers arbitrarily lowering wages and moving towards casualisation doesn’t have blowback in labour productivity trends.

One of the reasons employers are struggling to plug the mythical “skills gap” is they’re not offering wages that are competitive with alternatives on offer, primarily from the welfare budget.

If the labour market was functioning healthily, and entrepreneurs were creating lots of new jobs to replace those lost in the recession, going back to university for another degree would be a financially irresponsible decision.

Foregoing a $40,000 salary for another 2 years of StudyLink would be blatantly stupid. But in the current environment, part-time and casual employment is significantly more likely than full-time graduate employment in the field that you studied.

There is a funny idea that students go onto post-graduate study because they want to. That might be true for many.

But the reality is that without Studylink many students would starve. They can’t even get low-skill part-time jobs to help them through university because the low skill labour market has become a numbers game.

So returning to study is actually a way of earning an income and putting food on the table. Not all students receive parental support or have the connections to get decent summer jobs.

The great tragedy of this whole debacle is that my generation has a lot of resentment towards the baby boomers at the top.

We don’t want much – contrary to popular belief – but it really irritates me how myths like “word harder” or “just get a valuable skill” persist.

The mathematics mean that not only can most graduates not look forward to full-time graduate employment, they can’t look forward to any employment that justifies the direct costs and opportunity costs they’ve spent on their wonderful university education.

There are 175,000 people unemployed, over 300,000 on benefits of some sort and over 100,000 students receiving student allowance.

These numbers aren’t going down anytime soon. The time for action is now. Aggressive job creation policy is a must by making it far less risky to experiment and find patterns of sustainable specialisation and trade.

And no, training wages and eliminating employment rights are not what I mean by “making it far less risky”.