Back by popular demand, the question of just how compelling the
financial incentives are to get a degree at HVCC and pursue a career at
GlobalFoundries, but with a twist! A few
numbers, graphics and conclusions - hang on, it's gonna get wild!
Please click here for the introduction
and index to this
series of articles. In a previous article,
we examined, in very simple terms, just how compelling the financial incentives
are to sign up for HVCC’s semiconductor manufacturing technology A.A.S. program.
Due to the feedback we received on the piece and various requests, we
are revisiting the analysis and adding a couple of new twists.
This time, we compare the HVCC option versus a traditional 4-year
degree. As it turns out, it is the
element of uncertainty
that is the key to the discussion and results! Furthermore, the findings of the
analysis also present an interesting perspective on how to focus our educational
resources and workforce development dollars with respect to this
Let’s begin by once again putting ourselves in the perspective of an
outgoing high school student who is contemplating her options post-graduation. This
time, however, our subject (“Christa”) is interested in comparing two different
post-secondary options. Christa is a
reasonably good student but no science/math genius. She has struggled through the years
academically in those subjects but, through proper motivation and hard work,
has earned satisfactory grades. She has
had some exposure to advanced manufacturing through her high school and knows a
little about the career opportunities available. Her neighbor works at GlobalFoundries and
encouraged her to check out HVCC and the Rochester Polytechnic Institute (RPI).
Christa has ruled out RPI as she is probably not a good fit, but thinks
she can hack HVCC with some tutoring. On
the other hand, her parents have strongly encouraged her to pursue a traditional
4-year college degree. She has checked
out a few public 4-year schools that offer reasonable in-state tuition and thinks
she is most interested in a degree in the liberal arts. So, she sees her options as: (a) an A.A.S.
degree at HVCC versus (b) a four-year public university liberal arts degree.
As with our previous case, Christa has been told by her guidance
counselor that if she completes HVCC, she can expect a starting salary of about
$40,000, rising over four years to roughly $52,000. Tuition will run her $4,000 for two years,
unless she can get a scholarship. Christa
has priced out a four-year degree at SUNY-Albany and thinks it will cost her
roughly $9,500 per year for
in-state tuition plus some course fees, with modest annual increases over
the four years (say 3%).
Christa is not quite sure what she wants to do in the long term, but
she is thinking about becoming a teacher or maybe a social worker. She is not sure what exactly she will
choose or what she will make in the long run, but she thinks she might make between $40,000-50,000 a year
starting out. Christa thinks that she will get the same initial bump up in
salary over the first four years of her career (i.e. $12,000 spread out across
four years) as in the HVCC case. But, she is worried
that she is being optimistic and may not be able to find a good job right away. She has
heard about students taking 5 or more years to complete a “4-year” degree and
about graduates who are having trouble getting their careers underway. On the other hand, she has heard about the 4-year degrees
leading to great work opportunities and career pathways, possibilities for education at the Master Degree
level or beyond, and her parents have shown her studies about how important
education is to long-term income and wealth.
[A final note: as with the previous case, we assume Christa is
currently 19 years old and will probably work until the age of 65. After the initial bump, her wages will rise
about 3% a year, roughly the rate of inflation.]
Christa is having a tough time thinking about her options because of
uncertainty around what she will major in and what she will do long term. Is she going to figure it all out and find a
good, solid path to career success? Is
she going to float around for a few years?
THE MIDDLE CASE
So, for now, she is just going to assume that she ends up somewhere in
the middle of her range for the 4-year degree program. Below is a bar chart showing Christa’s
cumulative earnings for the next five years.
In blue are her earnings if she went the route of a 4-year liberal arts
degree, paying $9,500 in her first year and rising thereafter with inflation
for four years. In year five, she starts
her career with a salary of $45,000. Over
the first five years, therefore, Christa-Liberal Arts has earned a total of $5,000
net (having paid $40,000 and made $45,000).
In red is the alternative, paying tuition of $8,000 total over two years,
followed by wages of $40,000 at age 21 and rising to $46,000 by the time she is
23. Therefore, during the first five
years, Christa-HVCC has earned at total $121,000 (wages minus tuition) – quite
a bit more than Christa-LA’s $5,000. In
green is the differential between the two scenarios, namely a big gap favoring Christa-HVCC
over the first five years, due mostly to the fact that Christa-LA is paying two
extra years in tuition and is earning two fewer years of salary.
The picture does not change much when we expand the
timeframe to ten years. Both Christa-LA
and Christa-HVCC have gotten raises of $3,000 per year for the first four years
of their career and then 3% per year after that (Christa-HVCC of course
starting that progression earlier).
Christa-HVCC’s cumulative 10-year earnings total $387,549 versus
$273,966 for Christa-LA. This is just a
little smaller than the gap at the 5-year look.
Taking the same assumptions as above (i.e. 3% annual raises out to
retirement at age 65), a different outcome appears. Christa-LA earns slightly more on average
than Christa-HVCC each year. At the very
end of her career, Christa-LA ekes out a final gain exceeding Christa-HVCC just
Really not very interesting. But
wait --- what about risk? Will she
finish her degree in four years, five years, or more? What will her degree be
in? Christa does not actually know what she might be earning
post-graduation. Will she find a
job? Will she find a job in her
field? What is her field? What might she be actually making over her
lifetime? Will she experience periods of
unemployment or career change? So,
Christa wants to know the range of her outcomes based on a positive (“high”)
and negative (“low”) assumptions.
THE LOW CASE
So, what could go wrong for her?
Let’s assume it takes her five years to complete her degree and she
never quite figures out exactly what she wants to do. She ends up majoring in French but decides
she does not want to become a teacher.
After graduation, she is a bit unfocused in her career search and it
takes her a year to find something and that “something” is a job that ends up
only paying $35,000 per year. She still
figures she will get an initial “bump” in salary as she gains experience, after
which only inflation adjustments.
Below is a chart showing cumulative career earnings between
Christa-HVCC and Christa-LA Low Range.
Christa HVCC has earned about a million dollars more over her lifetime.
THE HIGH CASE
And, on the high range? Just to
keep it simple, let’s assume Christa earns her degree in four years, finds
focus and a solid career path, and it immediately hired into a position at
$55,000 (i.e. above her estimated range).
Below is the same lifetime earnings chart showing that Christa-LA High Range
has earned about three-quarters of a million more over her career.
SUMMARY AND FINDINGS
What does it all mean? First and foremost, it shows just how
complicated the decision making process is.
Even this seemingly complicated set of examples is actually quite
simplified. First of all, we are only
focusing on the economic considerations involved and not the question of
aspirations and personal tastes. But we
are also just viewing a very limited set of possibilities—a career as a
semiconductor technician versus a few generic counterexamples. What about a career in the skilled
trades? What about an advanced degree? Perhaps
this shows just how important guidance, focus and, for that matter, dumb luck
is on a person’s overall career outcome!
Below is a line chart that shows all five cases together in terms of
lifetime earnings. We have not only
Christa-HVCC, but also the low-, mid- and high-range of the Liberal Arts track
and the original high school diploma-only case.
A number of things immediately pop out from the chart. As mentioned above, there does not seem to be
much difference in outcomes between HVCC and the mid-range 4-year degree
program. However, both are vastly superior to the
low-range and high school-only tracks. Secondly, the most obvious and extreme differences
are observable in the very short term (i.e. first five years) and over the very
long term (i.e. career, as compounding takes place). Things
are murkier in the middle, particularly in the 5-10 year timeframe. Therefore, getting high schoolers to change
focus from the short term to the long term could make a difference in their
Perhaps more important than the numbers, however, is the story it tells
us in terms of targeting our workforce development efforts. It seems that the biggest payback, both for
the individuals and for society as a whole, is taking those high schoolers who have
little or no focus in their career path and getting them into a post-secondary
Critically—that program does not have to be a 4-year college
degree as seems to be the default option presented to high schoolers. In fact, the 4-year program may present a higher set
of risk factors than a 2-year program. The 2-year path has a real economic logic behind
it—why risk the low-range outcome (i.e. poor focus leading to extended
education expenses, lag in career start and sub-optimal earnings) if you can
hit the A.A.S. target?
To read other articles in this series, visit our Blog Library.