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Sun February 5, 2012
Stopping the 'brain drain' of the U.S. economy
Originally published on Sun February 5, 2012 2:39 pm
Yale University student Marina Keegan received an email last May from Bridgewater Associates, one of the world's largest hedge funds, offering her $100 if she said why she didn't apply for a summer internship.
Keegan, an English major, decided to take Bridgewater up on its offer.
"It was only sort of once I was inside the room when I realized ... maybe I'm helping them perfect their recruiting machine, which is exactly what we were doing," Keegan tells weekends on All Things Considered host Guy Raz.
Bridgewater confirmed that it does hold these focus groups. It's a small but telling window into the way big banks and consulting companies recruit at top-tier schools.
Ever since she got to Yale, Keegan was bombarded with emails from banks, consulting firms and hedge funds, begging her to consider working for them; same with her friends.
At some Ivy League schools last year, up to half of the graduates went into finance or consulting, a move that could have a profound effect on the economy in the years to come.
Shortly after Keegan went to the Bridgewater focus group, she wrote about it in a Yale student magazine. She found out that a quarter of her classmates were heading into banking and consulting. She was surprised and even a little angry.
A Campus Backlash
Craig LeMoult of member station WSHU reports that Keegan was not alone in her anger, and that the sentiment has fulminated into protests on some of the most elite campuses in the country.
Student protesters recently got into a Goldman Sachs recruitment session at Princeton University to tell student attendees they were listening to a "carefully crafted recruitment pitch" and that they could "do better for society."
Similar protests have been held at Harvard University, and at Stanford University, where Teryn Norris was a student. Norris and a classmate wrote an op-ed in the student paper.
"When we, sort of saw the Occupy Wall Street movement rise this fall ... we felt like it was a really important time to step out and say this is how we think this is impacting universities across the country and why it's relevant to students today," Norris tells NPR's Raz.
After he wrote the op-ed, Norris teamed up with a politically focused network for young people called Our Time to expand on that idea. They started the Stop the Brain Drain campaign to call attention to the issue and encourage public service and entrepreneurship as an alternative to the financial world.
So far, more than 1,400 people have signed a petition on their website supporting that goal. Norris stresses, however, that they're not against all financial institutions.
"The problem is that when you've got 20 to 30 percent of some of the top talent in this country going into a sector that is not necessarily contributing to economic and social productivity," he says. "That's a problem for the country at large and it's something that we should all be concerned about."
According to university surveys of the class of 2010, more than half of respondents from the University of Pennsylvania are working either in finance or consulting. At Harvard it was 49 percent, and more than a third of respondents at Cornell University started out their careers in the field. Norris says so many idealistic young people start college wanting to change the world.
"Then four years later, they go to work for Goldman Sachs and JP Morgan," he says. "What is going on there? I think that's what we're trying to figure out and trying to address."
Goldman Sachs declined to be interviewed for this story, but Morgan Stanley sent a written statement saying:
"Because a healthy banking and capital markets system is vital to economic growth, joining the industry at this time is a unique chance to shape how we contribute to a healthy economic environment."
The Stop the Brain Drain campaign is only partly about the demand for new finance employees. It is also targeting the supply, and that focuses its attention on the career-development centers at the top universities. The campaign says the schools are too focused on funneling graduates into these jobs.
Economist Paul Kedrosky with the Kauffman Foundation says elite schools sending a bigger share of their graduates into finance and consulting is not new; they've been doing it for at least two decades.
Kedrosky tells NPR's Raz that what's different now is that those students have essentially used their talents to grow the financial sector in ways that are unhealthy for the overall economy.
"It's grown as a proportion of the economy in a way that we haven't seen since the years leading up to the Great Depression," Kedrosky says.
The other thing that is happening, Kedrosky says, is that the financial sector is drawing in scientists, engineers and mathematicians and moving them to a use that no one really ever imagined. He says it is one of the reasons why the rate at which new companies are created in the U.S. has flatlined.
"These entrepreneurs ... [are] getting yanked off into the financial sector never to be seen again," he says.
There's good news, however, as Kedrosky points out that last week's jobs numbers showed a sharp decline in employment in the financial sector and an increase in areas like manufacturing.
"We finally saw the beginnings of a contraction, not to do with the crisis, but to do with the restructuring and a change in the role of financial services," he says. "It points to a much happier future for the U.S. economy."