Given that I turned down five-figure a month job to carry on with my $500 a month internship, I thought I should share my perspective on $10,000 a month internships article that recently appeared in the Business Times. Statistically speaking, $10,000 internships are special with the average salaries for permanent workers being around the region of $4,000 a month.
It's easy to fall into the trap of becoming envious of folks who get such lucrative internship stints but I expect only a few such positions to be so financially rewarding. Even if there are $10,000 a month internship, they are usually reserved for the smartest, most well-balanced, and possibly the most well-connected graduates from top universities around the world.
The root of this phenomenon is scarcity.
This is the same thing which drives the controversy over Singapore's policy to cap graduates at 30% the cohort population. A lot of unhappy Singaporeans, are angry that the government wants to limits degrees for only 30% of the population.
Here are some ugly truths which I'd like to share on this blog.
a) Captain Obvious : Degrees are more valuable when they are limited to a few.
Degrees are not for everyone because the value of a degree is tied to signalling rather than skills development. To put it in a nasty way, a graduate is not hired based on his ability to do complex tasks in the workplace. He is valued for his general intelligence relative to his cohorts. This is why a Medieval History major from Oxford can command a bigger pay-check than a Masters in Engineering from local university.
This is the reason why JC and universities are such perverse places which seem more obsessed with evaluating someone rather than training them. For example, in both law schools, students would rather study the notes left behind by our seniors rather than the slides presented by our professors.
( I actually think that my daughter's jotter book is better organised than the notes from some professors I encountered in University. )
The best jobs in a capitalistic economy do not require any skills but prefer to select a person based on his ability to pick up new concepts and present it to others in a coherent way. MNCs want smart people who can be moulded to fit their company culture through a rigorous management associate training program. Skills can be easily taught once you have the right recruits.
Otherwise our top companies would just recruit from our polytechnics instead and save a lot more money for their shareholders.
b) Limiting degrees protect the interests of capable non-degree holders.
Less obvious is how this benefits the non-degree holders.
The first benefit is that for non-degree holders is that they are not pushed to over-invest their time for just another piece of paper with low signalling value anyway. Why pay $70k-$80k and 3 years of your life to study a local private degree just to get by with a $2700 starting pay ? A degree will not magically catapult you to a comfortable middle class lifestyle. A diploma holder may start with a lower pay but they also start earning money at a younger age which also gives them more time to compound their investment portfolios.
The second reason is that it improves the signalling value of non-degree holders. If only 30% have degrees and you do not have a degree, it can mean that you could be in the (top) 31st percentile which is still not too bad in the grander scheme of things. Good SMEs may treat their best workers like gods and may still groom you for the C-suite because no sane company would discriminate against 70% of the population.
However, if 90% of the population have degrees, no one would happily employ a non-degree holder without a nasty chat their HR manager. The big firms would simply recruit candidates with a strong honours classification. The population would then start to demand for for more distinctions to be granted to graduates.
So we don't really need more degrees than the jobs that MNCs and a large part of the public sector provides. A better question would be how to promote a comfortable middle-class lifestyle for folks with a diploma ( Maybe we can talk about this in a later article or a talk ).
c) There is a solution out of this obsession with signalling for degrees - Engineering school !
After reading this, a lot of folks who get shafted by the education system will then bitch and whine about its obsession with signalling and why higher academic institutions simply don't focus on developing skills instead and have companies hire for folks who can do their jobs.
There is a class of degrees which has more skill than signalling value. In surveys done in the US, the branding of engineering degrees matter the least in labour statistics. Because folks who want to be engineers are so rare, most engineers will face little discrimination from branding of their degrees if they can graduate with an engineering degree and are willing to do technical work.
But how many Engineering degrees are actually being offered in private local campuses ? You can google that yourself but I expect the supply to match the demand.
d) Lifelong learning will trump IQ, EQ and our obsession with degrees.
If you accept my argument about signalling of degrees, you might become even angrier at the government for pushing for more skills development. Is this drive for life-long learning a scam?
Life-long learning is not a scam. It's a only way forward for survival.
Degrees have signalling value but the depreciation of a paper qualification is getting faster with more technological disruption. For degree holders, the value of their paper will be much lower in a few years time and have to spend the rest of their time picking up new skills and following industrial trends.
Because quite a number of degree holders will be unable to maintain the value of their professional credentials, the employment market will be a hot place for a non-degree holder to compete by a committing to a lifelong learning regime. The dropout rate for a Coursera course is 90+%, finish one data science specialisation and you are signalling your value to a potential employer.
Last words : It's about the middle-class lifestyle, what it takes to get there and few will succeed in the end.
You know what the Hard Truth is ? The middle-class lifestyle will remain elusive regardless of your efforts to get a degree.
The final problem for a lot of folks I met ( many who do come from local private schools ) is this paradox which, I think, will doom them to a mediocre lifestyle forever.
On one hand, they demand that some kind of free access should be given to them to get a degree which I think is understandable. But on the other hand, they see it just as a piece of paper with no intrinsic value. A degree is just a paper to set them free. They are being held back for the lack of one paper. Otherwise, they would already be as rich as Warren Buffett.
What about knowledge ? What about cultivating an open mind ? What about seeing connections between different disciplines ?
Without that innate curiosity and an open mind, I observe that many fellow Singaporeans will just regress to the most heavily marketed lifestyle choice on social media which is based on credit and conspicuous consumption.
But a life of the material is a lot harder to sustain than the life of the mind.
For these people, a degree is just a route to a nicer handbag and better car.
They don't get it,
They won't make it.