The question of what to major in during college will often get another question in response: “Well, what job do you want?” On the surface, it seems that what a person studies in college should relate to his or her planned career path, but it turns out that it’s very hard to predict how those two things will interact with each other.

Peter Cappelli, a professor of management at The Wharton School of the University of Pennsylvania, studies hiring and the American workplace. His latest book, Will College Pay Off?, looks at the complexities of the job market for college graduates as well as the fallacy of treating higher education as job training.

These days, college is still sold as a ticket to the good life, yet many American graduates simply can’t afford to pay back their loans. In his book, Cappelli tackles a fundamental question: Is college a good financial decision?

I recently spoke with Cappelli about how he thinks about college in relation to the job market. The transcript of our conversation has been edited for clarity.


Bourree Lam: How did you decide to write this book?

Peter Cappelli: What began to worry me, particularly in the context of education, is the arguments suggesting that it was an unqualified obvious thing that everybody ought to go to college, or that it paid off enormously, and that you were crazy not to go—which just seemed a little odd to me because the evidence about the payoff from college was not completely straightforward.

For example, things you think we would know—like why it is that college grads make more money than high-school grads—we actually don’t have a very clear answer for. Is it because they are better off before they go to college? We know that that’s generally true: Kids who go to college have resources, they’re smarter, they would have done better even if they didn’t go to college. We know that the ability to graduate from college signals something that simply getting into college doesn’t signal. Then there’s the idea that you might actually learn some things useful to employers.

But if you look at what employers say, at least about bachelor’s degree folks, they’re not particularly interested in the academic material that you learn in college anyway. So, answering the basic question of why [college grads] make more money is not completely obvious to me. Yet, you would think, listening to the rhetoric, that it was absolutely a slam dunk that you’d make more money because of all the things you're learning in college and that it’s obvious you should go.

In particular, the reason that I was worried about this is that you get lots of people who are going to college who are really struggling to go. And the reason they’re going is because they have been persuaded that it’s going to pay off financially. There’s a big concern that a lot of people are getting into big financial trouble on this promise that these college degrees are really going to pay off.

Lam: Has this always been the way people talked about college? Is it a recent phenomenon to look at college as a financial decision or an investment?

Cappelli: A lot of these ideas are driven by, not academic research per se, but academic frameworks. And the human-capital framework in economics is that education is an investment and there’s a payoff from it. That got picked up by people in policy who were arguing about how we’re going to pay for college. The implication or extension of that argument was, “Well, individuals should pay for it because they’re benefiting from it.”

That argument, which we didn’t hear so much 30 or 40 years ago, is pervasive now—that you should pay for the things you benefit from. As in, cut back on the government investment in these things because it pays off for the individual who paid for it. So once you head down that line, and then policy adjusts to it, there have been pretty dramatic cutbacks at the state level in funding for the universities, which is where 80 percent of U.S. kids go to college. Income has gone nowhere for parents, and college costs have gone up. The cost has gone way up; the ability to pay is flat. You as an individual now are being told you should go because it’ll pay off.  It’s a changing way of thinking, but it’s also a necessity for a lot of people because if it doesn’t pay off and they borrow the money to go, they’re in big trouble.

Lam: One of the pieces of this that I found so interesting is when you talk in your book about the futility of students trying to predict the job market and pick the “right” major. Should students be thinking about job prospects this way when they’re picking majors in college?

Cappelli: I think the short answer is no, but they absolutely do. It’s almost presented to you like you’re nuts if you don’t. The problem is we really don’t know, and even to the extent to which we know, one of the things we’re pretty sure of is that our ability to make long-term predictions is terrible. So if you’re a 17-year-old, and you’re picking a college and you’re picking it based on the field you want to go into—for the average kids it’s about five years before you graduate—but if you’re picking your major then, it’s six years later that you’re in the job market. The odds that you’re going to be right are close to zero.

Lam: Why is that?

Cappelli: Well, one reason is that the economy bounces all over the place in terms of jobs, particularly for these jobs that we hear are “hot” all the time, like tech jobs. The reason that they’re hot is precisely because you can’t predict them. And it’s not like all tech jobs are hot—that’s a myth. It’s not like all engineering jobs are hot—they’re not. The ones that are hot vary every few years, and the reason they’re hot is because something happens to increase demand like a new technology. Take petroleum engineering, for example, which is a hot job because of fracking. Nobody saw fracking coming 10 years ago.

Lam: Or the iPhone.

Cappelli: Yeah, there weren’t that many petroleum engineers, or the mobile-app [industry], which is the hot thing in IT, people didn’t see that coming and so suddenly they need a lot of it. They don’t have very many people who can do it, so the job pays like crazy. But you wouldn’t have known that going into it, and so the next thing that happens is that the kids on college campuses all start pouring into those programs and even if the jobs are still there when that huge cohort starts to graduate they dampen down the demand. So then it’s no longer hot anymore.

One of the concerns I raise in this book is this proliferation of these very vocational majors, like casino construction or these sorts of things, because you’re really taking a huge risk for error. If casinos aren’t hiring the year you graduate with a casino construction degree—what are you going to do? You'd be better off with a liberal arts degree, partly because you would have learned more. The other thing about these majors is that they’re not costless to pursue, these very vocational majors, because there’s a bunch of things that you could have been learning that you’re not.

Lam: Is this what you mean when you say that the labor-supply chain is dysfunctional?

Cappelli: Yeah. A few generations ago the employers used to look for smart or adaptable kids on college campuses with general skills. They would convert them to what they wanted inside the company and they would retrain them and they’d get different skills. They’re not doing that now. They're just expecting that the kids will show up with the skills that the employer needs when the employer needs them. That’s a pretty difficult thing to expect, because of these kinds of problems. So the employers now are always complaining that they can’t get the people they need, but it’s pretty obvious why that’s not happening.

Lam: You made a point in the book that where a person graduates—the geographical region where your college is—matters more than people expect. What makes you think that’s true?

Cappelli: My colleagues who study this say it's true. And you can kind of see it if you talk to different employers and see where they recruit. It's surprising that many companies target certain schools and not others. It's not that it's impossible to get a job from a college that's not on their list, but it's a whole lot harder. How would you know they're hiring, if they don't come to your school and haven't talked to anyone from your career office and said they're looking for people? ... A lot of employers only recruit regionally, so if you're not in that region you're not going to get that job.

Lam: Tell me about what you call the “Home Depot approach” and why it's problematic.

Cappelli: This is about the skill gap. The Home Depot view is that people think employees are kind of like widgets, and jobs have these really clear definitions, which are kind of like the size of a bolt. Say you need a petroleum engineer, and it's completely defined exactly what that is. If you don't have exactly those skills you won't be able to do a job, like only a ¾-inch bolt nut will fit on a ¾-inch bolt. When you get into the workforce it's absolutely not true. If you look at most of the people who are in computer programming, for example, they have no IT degree—they just learned how to program. Maybe they had a couple of courses in it, maybe they were self-taught. In Silicon Valley, the industry was built with only 10 percent of the workforce having IT degrees. You can do most of these jobs with a variety of different skills. I think what's happening now is that people have come to think that you need these degrees in order to do the jobs, which is not really true. Maybe what these degrees do for you is they shorten the job training by a bit, but that's about it. And you lose a bunch of other things along the way.

Lam: So what are employers actually concerned about when it comes to fresh grads?

Cappelli: What they say in the surveys about graduates or young people is that the kids aren't mature enough. That's not exactly new. A lot of this goofy generation stuff is really just that, it's older people looking at younger people saying, "Kids today!"

Lam: What is maturity defined as in this context?

Cappelli: Conscientiousness mainly: Show up on time, work hard, care about what you're doing, be a self-starter—it's motivation basically.

Lam: I just feel like it's so natural to worry about these things. Even as I was going through college, I was worried about getting a job and how to present myself to employers. What advice do you have for those graduating or just starting school in terms of how to think about this in a way that's more based on the reality of how these markets work together?

Cappelli: Well, I guess I would say that first of all you can't completely control these things. There's an awful lot of randomness and luck. The diminishing returns set in really quickly when it comes to how much planning is going to pay off, and how many job-hunting skills are really going to be useful. I think we worry far more about this than is useful—there's just not a lot you can do about all these things. This is a marathon, not a sprint. The first job is not the end, which I think is difficult for people to hear.

Lam: It is hard to hear, because we read reports saying that, for example, for the generation that graduated around the Great Recession, not getting a great first job is going to dampen your lifetime earnings.

Cappelli: Well it's true, on average. I think that's something important to remember: These reports are always on average, and not many people are average.

That doesn't mean there are things that can be done. What happens to you later is probably much more important to the outcomes than what happens 20 years before. For example, kids who didn't get the best job out of college, or didn't go to the best schools, there's a million ways, particularly in the U.S., to distinguish yourself and get the best jobs later on. The importance of what you did the year you graduate starts to diminish year by year. It might still matter a bit, but what you've done recently matters way more.

We probably worry far more about that than what we're actually learning and experiences that might be useful to us. Certainly if you look at what employers are saying, they really like what people have done more than I think the academics do. They really seem to value work experience, internships, volunteer work, extracurricular activities. If you look at the data, they care more about those things than your classroom experience.

There's one piece of bad news on this though. As the comedian Steve Martin said, "Just be better than everybody else." That's probably right, although the problem is that not everybody can be better than everybody else.

Lam: When I bring this research to a personal level, I keep on thinking about supply and demand and how everybody's trying to play this game where you try to aim for a field of work that has less competition for jobs so you can stand out.

Cappelli: What you put your finger on is that to a lot of people, what's really important is not really whether they're going to do well or poorly—it's "Am I doing what it looks like I'm supposed to be doing? Am I doing something that my friends and family will believe is a success?" And that's perfectly fine. I'm much more worried about the folks who have to get a good job because they have to pay off their loans. People who feel they have to chase these degrees that seem to offer a hot job, there's no evidence that it's going to, and they're chasing that because they have to.