Edudammerung

My prediction for what’s going to come for higher education, and particularly the job market is that a repeat of 2008-2009 is the best case scenario. As many of you will recall, the 2008-09 academic year job market was surprisingly normal, in part because the lines were approved before the crash. Then there was essentially no job market in the 2009-2010 academic year as private schools saw their endowments crater and public schools saw their funding slashed in response to state budget crises. By the 2010-2011 academic year, there was a more or less normal level of openings, but there was a backlog of extremely talented postdocs or ABDs who delayed defending, which meant that the market was extremely competitive in 2010-2011 and several years thereafter. A repeat of this is the best case scenario for covid-19, but it will probably be worse.

The overall recession will be worse than 2008. In 2008 we realized houses in the desert a two hour drive from town weren’t worth that much when gas went to $5/gallon. This was a relatively small devaluation of underlying assets, but it had huge effects throughout the financial system and then sovereign debt. Covid-19 means a much bigger real shock to the economy. In the short run we are seeing large sectors of the economy either shut down entirely or running at fractional capacity for months until we keep R0 below 1 and for some industries more like a year or two. Not only is this a huge foregone amount of GDP, but it will last long enough that many people and firms will go bankrupt and they won’t bounce back the second quarantine is relaxed. We also have large sectors of the economy that will need to be devalued, especially anything having to do with travel. I also expect to see a trend away from just-in-time inventory and globalization and towards economic autarky and a preference for slack over efficiency. This too will hit GDP. Just as in the post 2008 era, expect to see a weak stock market (which will hit endowments) and weak state budget finances (which will hit publics). We may even see straining of the fiscal capacity of the federal government which could mean less support for both tuition and research.

That’s just “economy to end tomorrow, universities and colleges hardest hit” though. However there are particular reasons to think universities will be distinctly impacted. Universities are not the cruise ship industry, but we’re closer to it than you’d think. In the post-2008 era, universities made up funding shortfalls by treating international students (who as a rule pay full tuition) as a profit center. That is basically gone for the 2020-2021 academic year. The optimistic scenario for covid-19 is that a couple months of quarantine drives down infections to the point that we can switch to test and trace like many Asian countries. Life is 95% normal in Taiwan and that could be us with enough masks, thermometers, tests, and GPS-enabled cell phone apps. However part of the way Taiwan achieves relative normalcy is that on March 19 they banned nearly all foreigners from entering the country and even repatriated citizens are subject to two weeks of quarantine. The is a crucial part of a test and trace regime, as demonstrated by Singapore (which has a similar public health response to Taiwan) switching from test and trace to mass quarantine after new infections from abroad brought infections above the point where test and trace is feasible. The US State Department has already warned Americans abroad to come home or we might not let you back. Travel restrictions are coming and will mean the end of international students for at least one academic year.

Most likely we are looking at 2 to 3 years without a job market, not just the one year with no market as happened post-2008. But as in the post-2008 job market, there will be a backlog of talented fresh PhDs and so it will be absurdly competitive to get a job. During the Cultural Revolution, China suspended college entrance exams as a way to exclude applicants from “bad class backgrounds” (e.g., grandpa was a landlord). When the Cultural Revolution ended China reinstated exams and so there was a huge backlog of students who could now apply, which made the matriculating class of 1977 extraordinarily competitive. There will be no job market until the 2022-2023 academic year, give or take, and then for several years thereafter you’ll need several articles or a book contract to get a flyout at Podunk State.

OK, so we have a few years of nothing, and then a few years of an extremely competitive market, but the PhD inventory should clear by the 2026-2027 academic year, right? And this means that if you’re in the fall 2020 entering graduate cohort or want to apply for the fall 2021 entering graduate cohort you should be fine, right? Well, no. Birth cohorts got appreciably smaller in 2008 which means by the time the covid-19 recession and its PhD backlog clears, there will be a demographic shock to demand for higher education.

My suggestion to all grad students is to emphasize methods so you’ll be competitive on the industry market, which will recover faster than the academic market. That’s right, I really am telling you to learn to code.