There are currently six prominent paths for achievement-minded recent college graduates: financial services, management consulting, law school (still), med school, and grad school/academia. The sixth is Teach for America, which continues to draw approximately 5,000 graduates (and 50,000 applicants) a year from universities across the country.
Here are the stats from national universities over the last several years:
If you add up the numbers, you’ll see that these six paths account for between 50-70% of top university graduates in the US. Relatedly, the top destinations for graduates from these schools are New York City, San Francisco, D.C., Boston, Chicago and L.A., all of which are hubs for professional services. At my organization, we sometimes joke that smart people are doing six things in six places. If the strength of our economy and society was determined by the academic excellence of our coastal professional service providers, we’d be in great shape.
Why is our talent so concentrated? Former Yale professor Bill Deresiewicz recently published a book, Excellent Sheep, which argues that elite college students are being trained to advance and compete with little regard for higher concerns. In my mind, it’s in large part a question of access and resources. The banks and consulting firms have massive recruitment budgets and spend millions a year seeding and building talent pipelines (as does Teach for America). Law school, med school, and graduate school are very easy and obvious to access and apply to. How much would the brand “Harvard Law School” be worth if it belonged a private company? Plus, the government will provide you tens of thousands of dollars in education loans to attend professional school if you get in. (I know this from personal experience—I attended law school and borrowed over $100k no questions asked, signing various forms when I was 21.) Meanwhile, Businessweek projects 176,000 unemployed or underemployed law school graduates by 2020 and the unemployment rate among PhDs is as high as 40%.
One of the byproducts of this situation is that we’re not forming as many new businesses. In 1982, companies that were less than five years old made up almost half of all American companies. By 2011, that number had declined to slightly more than a third. Over that same period, the percentage of America’s workforce employed by new companies dropped from over 20% to less than 11%, and in 2008, for the first time, the majority of US workers worked at companies with 500 or more employees. New firms accounted for all net job grow in the US from 1977 to 2005 and generated 13 times more patents per employee than larger firms. We need more new companies to grow but we’re not getting them.
Of course, some former bankers/lawyers/consultants/doctors/professors/teachers will go on to start successful companies. But they’re likely going to have to go against the grain to do so. The people and institutions around them aren’t designed to encourage them to start a business. Quite the opposite. Making someone a highly-paid professional in a high-cost-of-living city and surrounding them with other folks doing the exact same thing isn’t exactly a recipe for entrepreneurship (I know this from experience too, having left a large law firm, Davis Polk and Wardwell, to start a dot-com that failed in the first bubble). Most of the major entrepreneurs of this age—Howard Schultz, Bill Gates, Jack Dorsey, Reid Hoffman, Jon Oringer, Barbara Corcoran, etc.—were not products of our professional paths. This isn’t a coincidence.
Another byproduct of the six paths is that we have less diversity of thought. Academics kind of think a certain way. So do lawyers. And bankers. And consultants. And doctors. Having most of our top students being trained in the same handful of ways might be good in some ways—we might break fewer things. But it might make us less likely to build new things too.
Where our talent is going shapes our economy and society.
Imagine a new path—one that led graduates to work with entrepreneurs in small growth companies in Detroit, New Orleans, Providence, Baltimore, Cleveland, Cincinnati, St. Louis, Philadelphia and other cities around the country. They’d help those companies expand and thrive, creating more jobs and opportunities. They’d certainly think differently as a result of their experience. And perhaps they’d be in position to start or lead a company themselves in the coming years.
We don’t need six paths. We need 600 or 6,000. The sooner we open things up for our young people to determine their own paths, the better off we’ll be.