Professor Mark J. Perry's Blog for Economics and Finance
As a followup to this CD post, the Political Calculations blog has this recent post on starting salaries for 2008 college graduates, and you can easily sort the data. Econ grads at $53,000 fall just below engineering and computer science, and way above all of the business majors like accounting, finance and marketing.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
12 Comments:
For most people "starting salary" in the US (where I have worked in the past) is also ending salary.
College graduates are hired at what is called "saturated level" in order to attrack the best talent. After that, people are getting increases based on performance.
I think this is a much better system than the European "700 or 1000 euro a month generation". Although increases are higher in Europe, people are discouraged to get a job and brilliant students end up working at bars or as taxi drivers where they can make more money and talent is lost.
This still helps brain drain to the US. However, people should not get fooled. The starting salary will be all they will get unless they perform well. It is like a risk premium for attracting talent. Not everyone deserves it.
How bizarre that Econ grads can get such good salaries. What on earth are they good for? We all know economists can't predict much.
To: E. Harokopos: I can assure you that globalisation works also in this are and your judgment is misplaced. "Brilliant Econ graduates" can be sure to get a starting salary of min GBP 35-40K in London.
Too many people probably make career choices based on what is *hot* and high-paid at the moment without considering that things may be different in a few years.
Who wanted to go into chemical engineering in 2000?...everyone was desperate to do something in "tech," which was mindlessly defined as "computers." Now, there is a chem engineer shortage and high starting salaries to match.
To anon: London is a New York collony.
For an economics major to get a good paying job out of college is a fine example of the practical application of economics. You might consider it the true final exam for a new economist.
To: Harokopos: You need to come over to London to get your US-skewed perspective straightened. (I can buy you a dinner, if purchasing power is a problem. And I bet my 2008 bonus that your taxi driver will not be LSE graduate).
Anon: I don't dissagree. I have been to London many times and had lunch at Cipriani's. I said London is different from the rest of Europe. Salary policy is like in US than in the continent.
No Econ or eng graaduate will get $50K a year in any country in the continent, you know that.
But, this salary policy carries a high risk premium. Offering high starting salaries to college graduates defeats what every experienced professional knows, the 80/20 rules, the fact that 20% of the new hires will end up contributing to the 80% of the revenue.
However, the policy if founded on the premise that just a few individuals make the difference and they must be attracted to their field rather than let them drop out to other professions.
My point was that continental Europe policy is wrong in longer term.
To: Harokopos: Good we are closer to an agreement ;-)
I roughly agree with your way of thinking, the '80/20 rule', etc.
I desagree, however, with your diagnosis of Europe's salary policy for two reasons.
* First, I don't think salary policy in the US and Europe is that much different at all. Goldman Sachs, Google, Coca-Cola, IBM, GE, BMW - do their salary policies differ between Europe and the US? No, because they are global. (And I guess we are not talking about SMEs because they obvisously pay much less ... in Europe as well as in the US ;-).
* Second, I disagree that corporates in Europe pay "too high" salaries. Is $50K salary high? Consider purchasing power;
a) gallon of gasoline/diesel in Europe is c. $8.00, ie, almost double of the US price,
b) food is roughly also almost double of the US price,
c) nice flat to rent is about US$ 4000/month in any major European capital.
So, in terms of purchasing power, you should think about the "European $50K salary" as about $25K salary in the US - is it high?
But, I agree European policies are wrong in many aspects ... as are the US policies ;-)
"...Coca-Cola, IBM, GE, BMW - do their salary policies differ between Europe and the US?"
I let out financial firms for obvious reasons. Yes, not only salaries differ from country to country, but also product prices according to country index.
US companies pay high risk premium for attracting that genious out of many newbies. It works but it is not a fair system, as many incompetent people end up making the same money with competent ones in the firts few years before they are laif off.
European still believe in company loyalty and won't pay risk premium but want to see proof of performance. This results in a more fair system but side effect is losing talent to US.
Someone must look in between the two extremes. The side effects are many in both sides.
> "Brilliant Econ graduates" can be sure to get a starting salary of min GBP 35-40K in London.
Yes, but then they'd have to eat English food all the time.
:o)
Old Joke:
Heaven and Hell are just like Earth, but in Heaven and Hell, you get assigned your job based on your nationality --
In Heaven, the French are the cooks, the English are the cops, and the Germans are the engineers.
In Hell, the French are the engineers, the English are the cooks, and the Germans are the cops.
:oP
> c) nice flat to rent is about US$ 4000/month in any major European capital.
So, in terms of purchasing power, you should think about the "European $50K salary" as about $25K salary in the US - is it high?
Cities are an inappropriate comparison. The salaries there are inherently higher in the USA, too -- often due to the same sort of misguided socialistic policies like rent control and local sales taxes.
I don't know what it's like where anyone else is, but this area (metro area 250k, one very large public university dominates the area), experienced computer programmers can't be hired for less than about 50-60k. Fresh out of college, sure, you can get them for less, but it takes them 2-3 years to get enough salt under their belts to be halfway decent anyway.
Post a Comment
<< Home