Robyn Gee on Monday, May. 21st
Peter Thiel, prominent venture capitalist and founder of PayPal, recently claimed on 60 Minutes that plumbers make more money than doctors. So why bother with higher education? It’s expensive, and you can get an equally well-paying job without it, goes the rationale.
Turnstyle previously reported on the Peter Thiel Foundation’s gifts of $100,000 grants to young people under the age of 20, to drop out of college and pursue their entrepreneurial endeavors.
But is it really true that plumbers can out-earn doctors?
Vivek Wadhwa, writing in the Washington Post, offered a critique of Thiel’s message. Wadhwa checked in with the economist who made that claim in 2011, Laurence Kotlikoff. While progressive taxes, opportunity costs and Social Security work in a plumber’s favor, Kotlifoff’s calculations actually presupposed several things to arrive at these conclusions:
…That the doctors went to elite institutions for undergraduate and graduate degrees and then worked in a lower-paying medical specialty such as pediatrics or general practice. And he assumed the doctors financed their entire education without scholarships or other assistance. The calculations also did not take into account the far greater likelihood that a plumber could be unemployed or injured on the job, either of which could prove catastrophic to his or her earning power.
Thiel also makes the argument that the cost of college leaves students with debt that seriously depletes their earnings after graduating.
However, I recently interviewed Lauren Asher, director of the Project on Student Debt, who said less than one percent of college students graduate with more than $100,000 of debt, and a third graduate with no debt at all. According to Asher, a four-year college education is still the best investment a young person can make, even if they have to take out some federal loans. Wadhwa agrees, saying college is one big R&D lab to help you figure out how to navigate life afterwards.