In recent years, many top universities have tried to guide their students into careers other than finance.
In 2008, Drew Gilpin Faust, the president of Harvard University, went so far as to give a speech to graduating seniors asking them to stand fast against Wall Street’s “all but irresistible recruiting juggernaut.” Tufts University is paying the student loans of graduates who go into public service.
The efforts seem to be failing. In December, the New York Times’ Catherine Rampell asked Harvard, Yale and Princeton for data on the professions their graduates were entering. As of 2011, finance remained the most popular career for Harvard graduates, sucking up 17 percent of those who went from college to a full-time job. At Yale, finance accounted for 14 percent of the 2010 graduating class and at Princeton, 35.9 percent of those who had jobs at graduation were headed into finance.
At Harvard and Yale, at least, the numbers have drifted down in recent years. Harvard’s 2008 class sent 28 percent of its gainfully employed graduates to Wall Street, while Yale sent 26 percent. Whether the recent decline reflects an enduring change or a recession-induced blip remains to be seen. I’m betting blip, but perhaps I’m wrong.
Yet even the lower figures for graduates heading to Wall Street are sort of weird. No high school senior gets an acceptance letter from Harvard and begins thinking about the exciting life he or she will lead constructing credit derivatives. Yet that’s where many students end up. Even after the financial crisis. Even after the bailout of Wall Street. Even after the dominant cultural metaphor for Goldman Sachs became a money-sucking vampire squid.
Explanations for why so many Ivy League graduates rush into finance — along with law and consulting — tend to fall into two camps.
The economic determinists say this is no mystery. Finance, law and consulting pay high salaries — much higher than most other options on the table. It would be strange, given the financial incentives, if these graduates weren’t going into such high-paying fields.
The social determinists say these students are simply following their tribe. Finance, law and consulting employ smart, high-status individuals in desirable urban locales. Because Ivy League graduates are smart, high-status individuals who generally want to work and live among people like themselves, it makes sense that they take the road more traveled.
These two camps are not mutually exclusive. You can follow the money while you follow your friends. But I’m young enough to know these graduates, or at least a lot of their recent predecessors. In conversations with them, I’ve come to favor another explanation: Their educations are failing them.
In effect, Wall Street — like law, management consulting and Teach for America — is taking advantage of the weakness in liberal arts education.
For many kids, college represents an end goal. Once you get into a good college, you’ve made it, and everyone stops worrying about you. You’re encouraged to take classes in subjects like English literature and history and political science, all of which are fine and interesting, but none of which leave you with marketable skills. After a few years of study, you suddenly find it’s late in your junior year, or early in your senior year, and you have no skills pointing to the obvious next step.
What Wall Street figured out is that colleges are producing a large number of very smart, completely confused graduates. Kids who have ample mental horsepower, an incredible work ethic and no idea what to do next. So the finance industry takes advantage of that confusion, attracting students who never intended to work in finance but don’t have any better ideas about where to go.
It begins by mimicking the application process that Harvard students have already grown comfortable with. “It’s doing a process that you’ve done a billion times before,” says Dylan Matthews, a senior at Harvard who was previously a researcher at the Washington Post.
“Everyone who goes to Harvard went hard on the college application process,” he said. “Applying to Wall Street is much closer to that than applying anywhere else is. There are a handful of firms you really care about; they all have formal application processes that they walk you through; there’s a season when it all happens; all of them come to you and interview you where you live, etc. Harvard students are really good at formal processes like that, and they’re less good at going on Monster or Craigslist and sorting through thousands of job listings from thousands of companies whose reputations they don’t know. Wall Street and consulting (and Teach for America) turn applying to jobs into applying to college, more or less.”
But that’s only half of it. The bigger draw, explained a recent Harvard graduate who majored in social science and went to Goldman Sachs for two years, is what Wall Street is selling to potential applicants. “It’s about squelching anxiety in general. It checks the job box. And it’s a low-risk opportunity. It’s a two-year program with a great salary and the promise to get these skills that should be able to transfer to a variety of other areas. The idea is that once you pass the test at Goldman, you can do anything. You learn Excel, you learn valuation, you learn how to survive intense hours and a high-pressure environment. So it seems like a good way to launch your career. That’s very appealing for those of us at Harvard who were not in pre-professional majors.”
In other words, Wall Street is promising to give graduates the skills their university education didn’t. It’s providing a practical graduate school that pays students handsomely to attend. Sometimes, the enrollees end up liking their job in finance, or liking the lifestyle that it affords them, so they stick around. Sometimes, they don’t.
So it seems universities have been looking at the problem backward. The issue isn’t that so many of their well-educated students want to go to Wall Street rather than make another sort of contribution. It’s that so many of their students end up feeling so poorly prepared that they go to Wall Street because they’re not sure what other contribution they can make.
My hunch is that we have underemphasized the need to learn skills, rather than simply learn, while in college. The fact that Teach for America — which pays almost nothing and can place its hires far from cosmopolitan hot spots — is one of the few recruiting systems competitive with Wall Street suggests that graduates are open to paths that aren’t remotely as remunerative and aren’t based in New York or San Francisco.
To read Ezra Klein’s previous columns, go to washingtonpost.