Gary North's REALITY CHECK
Issue 374 August 31, 2004
WHY THE JOB MARKET IS SLANTED IN FAVOR OF COLLEGE GRADUATES
College graduates make more money than non-graduates, unless
the non-graduates own their own businesses. Why? Your first
guess is probably incorrect. So is your second.
In this report, I am going to reveal a few of the dirty
little secrets of what I call the college racket. This will get
me into trouble with politically correct readers. But at this
stage of my career, I don't have many politically correct
readers.
Have you thought about going back to college in order to
earn more money? Have you thought that you should send your
child or grandchild to college -- again, for monetary purposes?
Look before you leap. Then leap smarter.
COLLEGE AND SUCCESS ON THE JOB
In the August 24, 2004 issue of "Early To Rise," the editor
summarized the findings of a pair of authors who argue that the
reason why college graduates make more money than non-graduates
is that the college experience gives graduates the opportunity to
develop habits that help them in the business world. These
habits include:
showing up on time
paying close attention to assignments
completing assignments on time
doing more than the minimum required
struggling with difficult tasks
organizing tasks by priorities
http://snipurl.com/8r7p
To which I would add:
going to fraternity parties and smoking whatever
the two authors were smoking just before they
compiled this list
Let me discuss in greater detail the reality behind this
list.
Showing up on time . . . for the first two weeks of the
term, after which, having gotten a reputation for showing up on
time, the student then cuts 50% of the remaining classes, and no
one notices -- especially in classes of 300 students, which are
common for freshman and sophomores.
Paying close attention to assignments . . . beginning
approximately 24 hours before -- make that the night before --
the assignments are due.
Completing assignments on time . . . approximately 15
minutes before they are due, probably handed in by the student's
roommate because the assignment-completer is snoring after an
all-night writing session.
Doing more than the minimum required . . . such as adding a
couple of footnotes to the term paper that the student downloaded
from http://www.term-papers-on-file.com or one of a dozen rival
companies.
Struggling with difficult tasks . . . such as tapping
buttons on the cash register at Wendy's, where the student earns
the money needed to pay for all those term papers.
Organizing tasks by priorities . . . fraternity party on
Friday night, football game on Saturday, sorority party on
Saturday night, recovering from a hangover on Sunday.
The main reason why anyone would believe that these habits
are best learned at college is that he spent way too much time in
college.
APPRENTICESHIP
Re-read the list. Which of these habits could not be
learned in an apprenticeship program in a medium-size business,
preferably in a field that interests the student?
showing up on time
paying close attention to assignments
completing assignments on time
doing more than the minimum required
struggling with difficult tasks
organizing tasks by priorities
He would be doing relevant work related to his interests.
He would receive instruction from a mentor who really knows how
the job should be done.
Added benefits: he would be making a small salary. He would
learn how to budget his money. He would make the break from his
parents at his expense, not theirs.
I call this win-win-win: apprentice, employer, parents.
Why should any rational person believe that these habits are
learned best in a non-profit, sheltered environment that is run by
bureaucrats whose top priority in life is attaining tenure -- the
ultimate shelter from the free market? Which of these habits is
learned best in 50-minute classes, three days a week, with a
four-week vacation between terms, a one-week Easter vacation, and
a three-month summer vacation?
If these habits are best learned in a college environment,
then why doesn't any business on Earth adopt a collegiate format
to promote its workers up the corporate chain of command? Why do
businesses use weekend seminars, week-long conferences, and other
time-constrained formats?
The envelope, please. And the answer is: "Because non-
collegiate formats produce profitable results."
SCREENING FOR BOREDOM
The typical business has routine tasks that are used to
screen candidates for higher positions. These tasks require
little personal initiative. They require the list of skills we
have already read about.
A businessman reduces his cost of hiring someone to do these
tasks by hiring a person without much experience, because most
people have already gone beyond these basics if they are even
remotely successful. They are not entry-level workers. They can
charge more per hour.
The businessman also wants to hire someone who will not quit
the crummy entry-level job. He wants continuity.
He looks for someone who has done boring grunt work without
complaining, and has finished the work.
A college graduate has shown that he has been willing to
suffer enormous boredom, broken only by weekend parties, for five
or six years. (Very few students get through in four years, as
their savings-depleted parents will tell you in private.)
Here is someone who has survived years of a system designed
by bureaucrats to produce bureaucrats. He has either been
subsidized by his parents (50% of college students) or else has
paid his own way (that's the one I want to hire). He has put up
with years of academic nonsense spouted by left-wing bureaucrats
who could not hold a regular job in industry, let alone run a
business.
Here, in short, is a certified drudge. Better yet, he has
been certified at someone else's primary expense: parents,
taxpayers, and donors with more money than sense.
Back to the list. Which of these is not learned in high
school?
showing up on time
paying close attention to assignments
completing assignments on time
doing more than the minimum required
struggling with difficult tasks
organizing tasks by priorities
Anyone with a B-average has done all this. Anyone with an
A-average has done it even better.
Then why not hire students just out of high school? Why not
hire them, put them in a college-degree-by-examination distance
learning program, split the expenses ($6,000/$6,000, total), get
some work out of the students in entry-level positions, see which
ones are actually productive on the job, keep the students in the
company for four to six years because of this minimal, corporate
tax-deductible academic subsidy ($6,000), and gain their loyalty
-- a commodity in short supply?
Why not? I have no answer. I know that's what I would
recommend if I were the head of the personnel division in a large
company.
Would you rather have a college graduate on your staff who
learned the business in your firm while getting his degree by
correspondence or night school, or would you rather hire a
graduate who may have downloaded his term papers, spent his
weekends in an alcoholic haze, and spent his parents' retirement
plan?
SCREENING FOR BRAINS
In the controversial book, "The Bell Curve," the authors'
main argument -- ignored by most on the book's reviewers -- is
that America's elite three dozen universities attract the elite
students: the top 2%. These students are then educated in the
same academic outlook. The danger, the authors wrote, is that
this process discourages intellectual diversity. The best and
the brightest think alike.
Before the mid-20th century, no societies in history had
skimmed off their brightest young people in order to run them
through the bureaucracy. There were always bright people down on
the farms. The brains were distributed geographically and
socially. No longer. They go to elite colleges and get hired by
elite businesses. Or they start their own businesses. They
associate with people like themselves. They support the same
sorts of causes. One of the main ones is to give to the alumni
associations.
"The Bell Curve" also committed a major offense. It
reported on the effects on corporation hiring policies of racial
legislation: non-equality before the law. There are state and
Federal laws against businesses' use of employment tests that
screen for brains if the tests screen out racial minorities.
"The Bell Curve" stated the obvious: these tests do in fact
screen out disproportionate numbers of certain politically
protected racial minorities. "The Bell Curve" was savagely
attacked by political liberals for saying what everyone else
knows is true.
So, elite businesses that want to attract the best and the
brightest hire from the elite universities and a handful of
professional schools. The schools administer the tests at their
expense. This is how the old boy network works today.
Non-elite businesses that want to hire reasonably competent
people hire graduates on non-elite universities.
Why do they specify "college graduates only"? Because if
they didn't, the Equal Employment Opportunities Commission would
take them to court for racial discrimination. The EEOC's
argument: "If this job does not require a college degree, then
any favoritism shown to college graduates is a disguised form of
racial discrimination and illegal." So, businesses that would
otherwise promote from inside the company dare not do this. They
therefore discriminate against non-graduates.
Businessmen know, for example, that a Ph.D. in economics or
an MBA from one of the best business or management schools has
imparted little or no practical knowledge to their graduates. It
takes five years of on-the-job experience to make them useful.
About all they learn of immediate value in grad school is how to
use Microsoft Excel, which is the digital grandchild of VisiCalc,
which a Harvard Business School student coded for the Apple II
computer as a way to get his classroom assignments done faster.
Companies are not hiring the mathematical, arcane drivel that
these students have learned. They are buying the brain power
that was required to master academic journal articles written by
tenured professors who could not hold a job in private industry
at their present salary level.
Oh, yes: one more thing. The business gets indirect access
to the digital Rolodex that the student presumably acquired while
in school -- a list of the best and brightest. The graduate is
part of a network. Businesses lease these networks by hiring key
students.
College screening is how the NBA and the NFL have recruited
players for decades. Unlike baseball teams, which use a farm
club system, the NBA and the NFL have used colleges to screen the
biggest and the fastest. They let colleges make big names out of
key players. Then they bid for the services of these players.
The result is skewed hiring racially. Hardly any white guys, no
Jews, and no Eskimos.
One of these days, the EEOC is going to take the NFL and the
NBA to court. If you believe this, you probably also believe
that college is where students learn to pay close attention.
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A BETTER WAY FOR MOST BUSINESSES
The way to become a good manager is to spend years under the
direction of a good manager.
Any firm with a good manager should try to hire student
interns who are not out of college. They should apprentice under
this manager. This may mean offering summer jobs to students
recommended by professors at a community college or local
university. Or it may mean adopting an apprenticeship program
that involves paying a student half of the expense of earning a
college degree by correspondence/Internet. Or it may mean
recruiting on campus in a conventional way.
The key is to leverage the business's most skilled managers.
The multiplication of managers is the way to increase the
company's rate of return on investment.
This is what large companies in theory do, but corporate
bureaucracy seems to dip such programs in cement. I don't think
entrepreneurship can be taught, but skilled management can. Out
of systematic training through apprenticeship to skilled
managers, a few entrepreneurs will emerge. A business should
joint-venture projects with these people. The 3M company does
this. The most famous result is Post-It notes.
I would rather hire a non-graduate who has initiative,
screen him on the job, and get him enrolled in a local college
part-time or in an on-line degree program at one of the handful
of distance-learning programs that cost under $4,000 a year. I
have written about this before.
A BETTER WAY FOR MOST COLLEGE STUDENTS
Instead of going to college full time at 18, a wise student
will seek employment by a company on a part-time basis and take
his college work by examination. His college degree will cost
him $12,000 instead of costing his parents $35,000 to $140,000.
He can pay his own way through school. He can gain his
independence at 18.
He will be trained on the job by people who know how to make
a buck. He will have a four-year to six-year head start on his
peers. At age 22 or 23, he will have a college degree and work
experience that will impress a would-be employer. He will be in
a position to rise in the existing chain of command because his
employer knows he is now a marketable commodity in the business
world. The employer will have to pay him more money.
Very few students do this, and very few parents even
consider asking their college-bound children to do this. By the
way, 60% of all students who start college fail to graduate with
a bachelor's degree. The money spent by their parents on
tuition, books, room, and board goes down the drain. Talk about
a high-risk crap shoot!
If parents would set aside half of the money they planned to
spend on a child's education and give the child this money as a
college graduation present, the parents would be far better off,
and the new graduate could make a down payment on a house or
start a business.
CONCLUSION
College graduates make more money because they have been
screened at college, at their expense or their families' expense.
Then businesses pick up the newly minted graduates and stick them
in low-paid, entry-level jobs. (I am not speaking of engineering
graduates.) The screening process is bureaucratic, which large,
bureaucratic companies appreciate. In the case of the elite
universities, the screening process is IQ-based, which the
premier companies appreciate. "Racial discrimination? Us?
Perish the thought! We are ready to hire as many of Those People
that Harvard or Yale or Princeton can produce."
A cost has been imposed by this government-regulated
employment system on people without a college degree. They are
not given a shot at entry-level jobs.
Most companies that screen exclusively by a college degree
are bureaucratic companies. They place more emphasis on
obedience than innovation. This is not the kind of company that
an innovative person should work for.
If I were 18, or if I had no college degree, I'd earn one as
cheaply and as fast as I could, probably by correspondence, while
working part-time at a firm in a field I was interested in. I
would learn the business while getting paid. My goal would be
starting my own company in (say) 10 years -- or taking over the
one that has employed me.
Every system has loopholes. This includes the collegiate
system. I have outlined my recommended strategy in a free
report, "Never Pay Retail for a College Education." Order it by
sending an e-mail to:
[EMAIL PROTECTED]
If you don't have a college degree, you can earn one. If
your child doesn't have a degree, he or she can earn one. Earn
it cheap, fast, and on the job. It rarely matters what you
majored in. It only matters that you earned the degree. The
degree a screening device, not a training device.
************
APPENDIX 98
Abraham Case Study #420 comes from a sales motivation
consultant. He is a specialist in the mortgage market.
When I started my consulting business I was not sure
what the best way to build my business would be. The
first thing I did was utilize direct mail. I was on a
very limited budget and figured this would be the
fastest, most economical way to get the word out. After
studying your vast library of direct mail pieces, I
recognized that using a "question" as part of my
headline would greatly enhance my results. The headline
read: "Do You Want Your Loan Officers To Stop Quoting
Interest Rates and Start Increasing Your Profits?"
The first benefit of using this headline is that it
addressed one of the biggest complaints stated by
mortgage company managers and owners. I took your idea
of identifying what the biggest complaint is of my
target audience, and created a headline that
specifically addressed their concern and identified the
result that they were seeking.
The headline counts for 80% of the response rate for the
offer, direct-mail experts estimate. It can, when compared with
a truly bad headline. I'm not sure it's 80% when there is a good
offer and snappy ad copy. But it's high. A bad headline gets
the ad tossed out or skipped over.
The second benefit of this marketing plan was that I
also followed up with phone calls within 1 to 2 weeks
of the mailing. The headline allowed me to easily
remind them of what the mail piece contained. Because
of the headline, many people remembered receiving the
mail piece therefore making it easier for me to start a
dialog with them.
This is an expensive marketing campaign. Follow-up calls
consume time. But he was selling an expensive service, so he
needed additional selling.
Another tremendous tool I use in all of my marketing
materials is Risk Reversal. I got my first client
because of using this strategy. My client had been
sent the marketing piece with the risk reversal on it.
After many tries, I finally got him on the phone. After
doing a brief explanation of my services on the phone I
asked him if we could sit down and discuss it further,
he agreed and we scheduled a meeting. Just before we
hung up, I reminded him that I had a money back
satisfaction guarantee.
There is nothing better than a money-back guarantee except a
double-your-money-back guarantee.
When I met with him and his top managers, one of the
first questions he asked me was to tell him more about
my satisfaction guarantee. My risk reversal proposal
was simple. I told him if he was not completely
satisfied with my training services upon completion of
the program, simply return all of the materials and he
would owe nothing, period. He asked me if there was a
catch, I said what catch could there be, you are not
going to pay me until after the program was delivered.
This program was a 6 day on-site training program for
$5,000. This was more than he ever spent on a trainer
program before. I know that the only reason I got the
opportunity to sit in front of him was because I took
all of the risk away from him. I made it easy for him
to say yes and by offering the risk reversal, it also
displayed confidence in my ability to deliver. The
client paid me in full half way through the program!
He must have been good, because a $5,000 refund is tempting.
But if you're not really good, don't get into the high-ticket
seminar business.
Today, as before, every brochure has the risk reversal.
Every letter to past, present and future clients
contains the risk reversal as a "PS" or "PPS" at the
bottom of the letter. No other trainer in the mortgage
field has this risk reversal and I know I have gotten
so many new clients because of this unique offer.
You can see the advantage he has. He is the only guy
willing to make the offer. This sets him apart from the
competition.
Then came another tactic: referrals
When I started my training business I did not know many
mortgage company owners that I could just walk into
their office. What I did know were attorneys that
represented mortgage companies. I proceeded to meet
with my attorney friends and get them to not only give
me the names and phone numbers of key people at each of
their mortgage company clients offices, I got them to
pick up the phone and call them. These phone calls gave
me tremendous credibility and opened doors for me
faster than I ever could have imagined. Using someone
else's database and connections is a tremendous way to
build credibility quickly amongst your potential
clients.
The second part of referral systems is the easiest one
of all to implement. Asking for referrals from your
existing clients has been what moved me from working
just in my local market place, to developing clients
throughout the United States.
. . . I advise them [clients] that part of our
agreement is that once they are satisfied with my
services, I expect them to give me at least 2 qualified
referrals to other clients that they feel can benefit
from my training services. In addition to the names, my
client is expected to call the referrals and introduce
me. This system works like a charm and consistently
provides me a constant stream of new clients. . . .
To create your referral system you must let your
prospects know what is expected of them in the
beginning of your relationship. You must also
continually remind them that referrals would be greatly
appreciated. If your customers understand the rules of
engagement in the beginning, the likelihood of them
complying and giving you the referrals that you need to
grow goes up tremendously. Make sure you deliver more
than is expected and the referrals will never be a
problem!
-------------
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