Posts tagged ‘PayScale’

October 9, 2013

Second-tier status can mean second-tier salary for grad school

by Grace

The decision to go on to get a graduate degree should be made with specific career goals in mind.  Among other factors, a school’s reputation affects post-graduate job opportunities and salary.  From a MarketWatch story titled “10 things grad schools won’t tell you” comes this advice.

“Our second-tier status may hamper your career — and your pay.”

“The name of your school matters a lot,” says Katie Bardaro, lead economist for PayScale.com, a website that compiles compensation data. Indeed, salaries can be much higher for grads of top schools, especially for people getting M.B.A.S and law degrees, says Bardaro. Data from PayScale shows that the median pay for M.B.A. grads two years after graduating from the University of Pennsylvania Wharton School is $125,000 a year, growing to $167,000 by the time they were 10 years out of school. M.B.A. grads from the less highly regarded University of Massachusetts Boston Campus earn a median $62,300 annually two years out of school, and that pay grows to $75,400 when they’re 10 years out. The University of Massachusetts didn’t respond to requests for comment.

People considering graduate school who don’t want to attend or can’t get into or afford a brand-name school should look for schools with notable alumni in their industry, says Bardaro. Such alumni might bring cachet to a school that isn’t necessarily Ivy League, says Bardaro. And if the program has a strong track record of placing people in a certain industry, that could also boost the student’s chances of finding a well-paying job, she says.

When my husband was deciding where to go for his MBA, one of the most important factors was a school’s reputation for helping its graduates find employment in specific sectors and locations.  Given the recent devaluation of an MBA, today it’s even more important to determine carefully the return on the time and money for a business school education.

Here is some advice from Megan McArdle.

… When young people ask me whether they should get an MBA, I give them the same advice that I got in the late 1990s: unless you can get into a top 10* (or have a very specific job that you know you can get by attending a regional program), then don’t. You’re too likely to end up with massive debt and no very good prospects for paying it.

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July 30, 2013

Professional certification may sometimes help career growth

by Grace

The question of how much value certification adds to career growth has not been definitively answered.

Many professional certifications seem to add little value in terms of career opportunities.  I got a hint of that when I typed “certifications are” in the Google search box, only to see these four Autocompletes pop up.

certifications are useless
certifications are worthless
certifications are a waste
certifications are bullshit

Human resources certification
While the future of certification as an option to a college degree is yet to be decided, there is evidence that some types of certification programs may help.  Human resources is one area where this is true.

PayScale reviewed the impact of the PHR and SPHR certifications on the careers of HR professionals and found that acquiring the certification sweetened the careers of most HR positions. Either certification led to faster career growth and higher median pay. The positive impact of the credentials could be seen across job titles, industries, genders and geographies.

20130722.COCHRCertification2

Penelope Trunk thinks this could be explained by the overly cautious temperament of human resources professionals.

… I don’t know what to make of this, except that LinkedIn has research to show that human resources attracts people who are most averse to risk. So it makes sense to me that people who are scared of risk would need to trust a certificate rather than their instincts when making a hiring decision.

Another consideration is that the PayScale study, since it did not seem to correct for many other factors, may simply reflect correlation and not causation.  Perhaps the smartest, most capable human resource professionals are also the ones who tend to seek certification.

AOL CareerBuilder gives us a list of 8 Professional Certifications In High Demand, but while most seem legitimate I question how all of these made the cut.  It makes me wonder if sponsored endorsements were involved.

1. Professional project management
2. Foreign language
3. Corporate training
4. Desktop support administration
5. Personal fitness training
6. Professional sales
7. Web design and development
8. Certified clinical medical assistant

Sales?  Having some experience in the field of sales and marketing, I would be surprised to learn that many sales professional are relying on a certificate for career advancement.  Typically, sales professionals are judged by their numbers, not by proof of completing a certification process.

On the other hand, I know someone whose employer strongly values the Professional Project Management (PMP) credential.

July 3, 2012

College ROI results by PayScale for Bloomberg Businessweek

by Grace

College ROI (return on investment) figures produced by PayScale for Bloomberg Businessweek are calculated using a different method than the one used by Georgetown University’s Center on Education and the Workforce, which last year calculated the median value of a four-year degree at $2.3 million.  This number is in sharp contrast to PayScale’s median calculated ROI of $353,182.

The PayScale methodology differs from most others in several key respects. Instead of using lifetime earnings, it starts with earnings over a 30-year period. From that figure, we deduct the earnings of a typical high school graduate (since most people who don’t go to college would still have earnings, albeit at a much lower amount). In our return on investment (ROI) calculation, the “investment”—or total net cost—is the amount spent on college over the actual time it takes students to graduate, whether four, five, or six years. Finally, our ROI figures are adjusted using each school’s graduation rate. After all, if you don’t graduate, you’ve made an investment with very little financial return. The result is a return that reflects what incoming students can reasonably expect from their investment.

The net cost of college used by PayScale reflects the subtraction of average grant aid from gross costs.  Payscale also started using a better comparison point for measuring the pay of college graduates against that of high school graduates.

… But starting this year, we made a second change that has the opposite effect: using 75th percentile high school graduate pay (instead of the median) to calculate how much each college’s graduates earned over and above the pay of high school graduates. We believe the 75th percentile more accurately reflects the pay of individuals capable of winning acceptance to college or who spent a few years in college before dropping out.

The self-reporting aspect of using PayScale salary figures has been criticized, but a BusinessWeek editor defends their validity by pointing out that they are generally consistent with numbers reported elsewhere.

Not surprising that engineering schools and Ivy Leagues have highest ROIs

Nearly a third of the top 30 schools were engineering schools, including the top three institutions: No. 1 Harvey Mudd College, No. 2 California Institute of Technology, and No. 3 Massachusetts Institute of Technology. All three schools had 30-year ROI well above $1 million, a claim only 11 schools could make. On average, engineering schools had ROIs of $603,362, more than double the ROI for liberal arts schools ($245,943), more than triple that of business schools ($141,014), and more than 26 times that of arts and design schools ($22,328).

The only schools that fared better than engineering schools were those in the Ivy League. Seven of the eight Ivies are in the top 15, and the average ROI for all eight was more than $1 million. While costs for these schools are high, several factors worked in their favor, including generous financial aid and excellent graduation rates—both in terms of how many students ultimately graduate and how long it takes them to do so. The weighted net cost to graduate was $84,241—less expensive than half the schools on the list, and half the cost of the most expensive.

Negative ROIs

On the other end of the spectrum, there are 191 schools where graduates had negative ROI. At Fayetteville State University in North Carolina, where only one out of three students graduates in six years, in-state grads earned $289,000 less over 30 years than a high school graduate earning at the 75th percentile, after deducting the cost of the degree. For out-of-state graduates, the figure is $338,000.

At all 191 schools with negative ROI, graduates actually fared worse than those who dropped out after a few years—the financial benefit of earning a degree was so meager that the added expense it entailed was simply not worth it. At these schools, at least from an ROI perspective, dropping out was the smartest thing to do.

Among the schools with negative ROIs are several schools specializing in art and design.  In a different category is Lewis & Clark College, with a negative ROI of $78,400.  It ranked 71 on the list of National Liberal Arts Colleges by BusinessWeek and has a total cost of attendance that approaches $55,000.  Its website highlights some recent recognitions – tops Peace Corps rankings … Sierra Club picks Lewis & Clark as “Coolest School” in Oregon … national recognition for beautiful campus.  I guess “coolest school” does not necessarily correlate well with high ROI.

To view the complete 2012 college ROI ranking, click here.

Related:  SmartMoney’s college ranking based on ROI

August 19, 2011

SmartMoney’s college ranking based on ROI

by Grace

SmartMoney’s college ranking system is based on schools’ Return On Investment (ROI)

For decades, the best-known college rankings have tried to encompass everything from alumni giving and “academic reputation” to dorm amenities. But a few years ago, SmartMoney stripped all that away in favor of a simpler benchmark. With help from PayScale, a Seattle-based compensation-data company that maintains salary profiles of 29 million workers, we collected median pay figures for two pools of each school’s alums: recent grads (who’ve been out of school for an average of two years) and midcareer types (an average of 15 years out). For each class, we divided the median alumnus salary by tuition and fees (assuming they paid full price at then-current rates), averaged the results and, finally, converted that result to a percentage figure. The outcome: a measure of return on (tuition) investment that we’ve dubbed the Payback Score. For example, a hypothetical grad who spent $100,000 to attend college and now earns $150,000 a year would score 150. The higher the score, obviously, the better.

Another imperfect college rating system
SmartMoney’s system, like all the others, is far from perfect.  In addition to ignoring financial aid, it does not account for course of study, graduate school attendance or lower tuition paid by in state students.  Only the 50 top-priced schools are included in the ranking.  So while it does  give a generalized view of  the financial value of the listed colleges, your own situation can be very different.

Georgia Tech had the best ROI measured as average alumni salaries divided by the tuition and fees they paid.

Ivy League beat by public schools even though their salaries were lower.

This link – Colleges That Help Grads Get Top Salaries – has the interactive list with specific information for all colleges.

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