2 laws for every college student: Supply, demand

Last month I had the joyous opportunity to attend my daughter’s college graduation ceremony at Georgia State University. The building her ceremony was held in could have, in my estimation, held the entire population of most metropolitan areas in America. Everywhere I looked there were equally happy parents and friends of these graduates.

When the ceremony began, the graduates were called up in departmental alphabetical order. Handing out diplomas in this fashion gave the casual observer an opportunity to notice the relative popularity of various majors at Georgia State.

It was also an opportunity to witness a reality that I am not sure dawned on the students who were graduating.

For example, when the degrees in psychology were announced, I counted well over 100 students lined up to receive their diplomas. Mathematics had five people. The physics diploma was handed to a grand total of one young man.

I wonder if the psychology people at any point looked around and thought, “Gee, this is a lot of people I am going to have to compete against out there in the real world.” By the same token, I laughed as I saw the physics guy get his diploma, and I hoped he was thinking, “It is time to get paid.”

Simply put, all the students at that ceremony, a few seconds after they graduated, should have been on their phones Googling the laws of supply and demand. After all, no matter how hard they worked or what their grade-point averages turned out to be, they will all come face-to-face with these two immutable laws of economics.

The law of demand will teach them that if they majored in something for which demand is small or falling, they will not make much money and might have a difficult time matching their diplomas with jobs in their chosen fields. This is why we often read about the large number of people with degrees in things like anthropology who end up working in jobs that did not require an anthropology degree — or $50,000 in student debt along the way.

The law of supply will be even more potentially brutal. The scores of students with psychology degrees are going to find out that this degree is not as hard to obtain as math or physics degrees. Therefore, with a greater supply of labor leaving our nation’s universities every year, they can expect to see far more competition and the realization that their skillset is not particularly rare. Lack of rarity tends to lead to lack of sufficient earnings to pay off student debt, buy a home and start a family.

The math and physics graduates are in the enviable position of having degrees in areas where demand is strong and growing, while supply is small. They will be able to command far greater compensation, will be matched with jobs that fit their degrees, and will be able to pay off any debt incurred at a much faster rate.

I realize, as most economists do, that money is not everything. Many social scientists have pointed out that the nonmonetary benefits of work can provide great “compensation” and much more rewarding careers than simply working for a big paycheck.

However, to the extent that money is still used to pay bills and obtain things we want, all college students should become familiar with the basic laws of supply and demand so they can select majors that hopefully will lead to rewarding careers, while simultaneously creating a level of income that alleviates the day-to-day stress of life.

Ignoring these laws only raises the odds of debt, disappointment and financial struggles years after the diploma is earned.

My daughter listened to these words years ago and is preparing to move out West and work as a physician’s assistant upon leaving graduate school. She currently plans to work in underserved communities, but she knows she is also going to be paid very well in her field of study.

Here’s hoping that more young people will fight student-loan debt by picking majors that the economy values.