We're just blogging it . . .
Americans are feeling the effects of the financial crisis — whether it's because of a dwindling 401(k) or a home that's lost value or a job that's not so secure. But how do their individual situations connect with the bigger picture, and what can they expect in the coming months and years?
Simon Johnson, a professor at the Massachusetts Institute of Technology and former chief economist of the International Monetary Fund, helps put listeners' personal situations into a larger global context. Johnson joins Planet Money's Adam Davidson to field a question from Phil and Jenn Sandifer.
Phil Sandifer: We're both graduate students at the University of Florida. I'm in the English department.
Jenn Sandifer: I'm in the chemistry department.
Phil: We own our house; we have for a year and a half now, and we're working on finishing our dissertations in the next two years or so.
Jenn: We live basically on graduate-student stipends and student loans. Owning the house is really helpful because we actually rent out part — a separate one-bedroom, one-bathroom apartment that's part of the property — to someone else to help defray the mortgage for us.
Adam Davidson: What are your concerns? Is it the job market?
Phil: The job market is definitely a big concern. I'm in the humanities, and humanities Ph.D.s are badly overproduced. Nationwide, there's a 25 percent or so higher rate [of Ph.D.s produced than jobs available]. My department does better than most, in that most Ph.D.s get professor jobs. It's still just a brutal job market, and it gets a lot worse when you're trying to get a second academic hire in a field at the same general place.
Jenn: And the other problem that we have is that we've put a lot of work into the house, so we have a lot of credit card debt because we're trying to do this on not a whole lot of money. We've had many plumbing disasters. Luckily, Gainesville has been pretty insulated from all of the effects of the housing market crashing. But we're still worried about recouping the costs of what we put into the house in the last two years.
Adam: Simon, you always applaud people getting more education. Does that apply to Ph.D.s in English?
Simon Johnson: Yes, absolutely. Humanities has been a tough market in which to get an academic job for a long time. But on the other hand, Ph.D.s, in general, do quite well. You can pick up a lot of general human capital along the way. Two Ph.D.s and owning real estate in a university town is a good thing. Typically university towns are based on the student population and the incomes of the professors and the staff. That sector looks pretty robust. I don't think the long-term future of universities is at all in question right now.
Adam: Jenn, I'm guessing your job-market potential is a little better than your husband's?
Jenn: It is definitely a little better. If I was willing to work in industry, which I would if I had to support our family — I don't want to, I want to teach chemistry — then it would be even more wide open.
Adam: Phil, what are you writing your dissertation on?
Phil: I'm working on media studies, basically demonstrations of new technology. I just finished a chapter on 3-D movies, and I'm moving on to the Nintendo Wii.
Adam: You certainly have the option of going into the entertainment industry or some kind of media job. Is that something that you'd be open to?
Phil: It's certainly not my first choice. Next year I'm going to go on the job market for academic jobs — English and communications departments. If that doesn't work out, I'll drop back five and punt from there. But an academic job is definitely what I want.
Adam: Simon, are these jobs cyclical? Universities have pretty steady funding I would think; are academic jobs dependent on the business cycle?
Simon: They can be, at least in the short term. Public universities receive money from the state, and there could be cuts in that funding. I suspect that one of the steps the federal government will take in the coming months is to act to replenish state coffers. It could be the case that some departments will have hiring freezes; they just want to be cautious and hold back, so the timing may matter.
Phil: When you're in a bad job market, I understand that a lot of people go back for more degrees. Doesn't that create more demand in academia?
Simon: Absolutely correct. It's a good thing to do in a recession, if you have the money and the interest. I'm not sure they all get English degrees. And we have good demographics: a lot of kids who are going to want to go to college and a lot of immigration. That's good for the university sector. The value of having a university education in the U.S. continues to go up and up. Finding ways to promote education is going to be at the top of the agenda of any president and any politician in this country.
Adam Phil and Jenn, have we reassured you?
Jenn: I feel everything is word of mouth. Being in academia is more insulated from all of this "economic crisis." It's all well and good for a whole bunch of Ph.D.s to say that, but it's nice to hear it from an economist.
Phil: Mostly we talk to other paranoid grad students who are trying to reassure themselves that they'll get jobs while drinking heavily. So hearing from a professional is good.
For more information about Simon Johnson's MIT class about the economic crisis, go to baselinescenario.com. To participate in an Economist House Call and get your personal situation diagnosed and put into a global context, contact NPR's Planet Money at email@example.com.