Many seniors are graduating this fall or next winter. It is a good time to be retrospective and evaluate whether they have a fruitful undergraduate study. A question one could ask is: is my undergraduate degree a good investment?

One way to answer this question is to look at the employment data as a reflection of market evaluation. According to a report by PayScale on College Salary, both the starting salary and mid-career salary are showing that undergraduate degrees in liberal art are correlated with relatively less salaries, compared to undergraduate degrees in engineering, actuarial math or statistics. Two liberal arts degrees that have the best employment data are Government and Economics. The starting salary is $42,000 for Government and $48,500 for Economics, and the mid-career salary is $95,600 for Government majors and $94,900 for Economics majors. However even those two degrees are unsatisfactory compared to Electrical Engineering (starting salary of $63,400 and mid-career salary of $106,000) and Computer Science ($58,400 and $100,000) not to mention Petroleum Engineering ($98,000 and $163,000).

Let’s take University of Michigan as an example to factor in the costs. Let’s assume a student enters U of M and study for four years (4 fall term plus 4 winter terms), enters job market immediately after graduation, gets same salary increase every year, reaches mid-career salary after 3 years, and continues to get salary increase at the same rate. We further assume the discount rate is 5% and apply a discounted cash flow analysis to six different majors: two best paid liberal art majors, Government and Economics, two typically paid liberal art majors, Psychology and English, and two typically paid engineering majors, Electrical Engineering (EE) and Computer Science (CS), and here are some results:

• It takes about 2.5 years (after graduation) for EECS majors to earn their full tuition back, 3 years for Government and Econ majors, and 4 years for Psychology and English majors.

• The salary gap is big at the beginning, but quickly shrinks as you stay at industry and accumulate working experience.

The analysis does make the employment situation for recent liberal arts college graduates looks a little bit better, but it is still counterintuitive. Aren’t the skills most wanted by employers, such as communications, critical thinking, and presentations, exactly the focus of training in a so-called traditional liberal arts degree? Why college graduates holding an undergraduate degree of liberal arts are earning less salaries both in the entry level, and in mid-career? What exactly made the difference between employment of a liberal arts student and his friend graduating from the department of engineering, math or statistics?

First of all, curriculum design is an important reason. Education and training in an engineering degree do a better job to prepare students for future engineering jobs. College of Engineering puts weight on projects in addition to theories. Some course projects are even sponsored by firms from industry, and thus very well recognized by other firms in the same industry. On the contrary, an essay or a term paper in a liberal arts class can hardly be a convincing experience to recruiters. To make up the gap between theory and practice, liberal arts majors need to participate in research assistantship, internships and well recognized competitions.

Secondly, the job market are in increasing demand of interdisciplinary talents, which puts liberal arts majors at disadvantage. For journalists to cover energy, they need to have at least basic knowledge in energy forms, generation and transformation; for public policy makers to design technology-promoting policies, they have to understand technologies; for lawyers to win patent infringement litigation in the Smartphone War, they have to understand all different things about smartphone as well. Nowadays, there are plenty of pure hard-science jobs but there are not much pure liberal arts jobs. It is easier for a pure hard-science major to gain skills trained in liberal arts education but it is much more difficult for a pure liberal arts major to do so vice versa.

Third, the standard deviation for salary is larger for a liberal arts degree than for an engineering degree, because engineering and statistic students learn hard skills that meet hard demand, for example how to master a software. Thus engineering and statistics students depend less on the reputation of their college, while liberal arts students rely more on signal effects of their college. Since PayScale constructs its report on 10,000 colleges and universities, the employment situation would be better for liberal art fresh graduates from top universities, for example University of Michigan.

In respond to the reasons are suggestions for current liberal arts majors to maximize the benefit from a liberal arts degree. First, try to build on soft skills such as critical thinking, team work, leadership and so forth through internships and extracurricular activities. Second, have a second major, or minor, or even some courses on mathematics, statistics and hard-science. Third, get into a good college or university because signal matters sometimes. Finally, despite our focus on employment in this article we want to make it clear that university education is not just about employment. A liberal arts degree helps student understand history and culture which will benefit students in the long-run and the benefit cannot be captured by employment data or salary numbers. After all, university students need to find out their own interests and passions, working hard not just to look for a job, but to find a career.

Hilda Li

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On October 1, Healthcare.gov, launched to a resounding thud. The core element of Obamacare is that many people can buy health insurance through a national healthcare exchange. Healthcare.gov was designed as the platform for people to do this. On the opening day, the marketing of the plan was so successful, that there appeared to be voracious demand. However, from its launch, Healthcare.gov was plagued with errors. This meant “a mere 1 percent of the 3.7 million people who tried to register for a federal exchange in the first week were actually able to enroll” according to Millward Brown Digital, a consulting firm.

These failures have led Ezra Klein, one of the foremost proponents of Obamacare, to dub Healthcare.gov a “failure”. Additionally, it has led Obama and many of his key officials to publicly apologize. Despite these apologies, Healthcare.gov is still not operational. What went wrong and what are the ramifications?

According to David Auerbach, a software engineer, who wrote a piece in Slate, the failure of the Healthcare.gov was a failure to assign ownership of the “end-to-end experience”. In other words, no individual or individual contractor was responsible for making sure the entire system worked effectively. Thus, instead of a full-scale comprehensive test of the system, individual pieces were tested separately without any idea of how the system would work as a whole. Worse, when the system failed, it was unclear who was liable and how the problem should be resolved.

In response, President Obama has called in the “Best and the Brighest” to fix the problem, which is ironically the title of a book of how “a bunch of smart guys blundered the country into the Vietnam War” (Matt Yglesias). This ignores the implications of another famous book entitled The Mythical Man Month, which states that in a complex software projects adding manpower oftentimes only makes the project more complex. Despite a “tech surge”, the website remains broken with hope of it being fixed “by the end of November”. However, despite these problems the initial fallout has been limited.

During the launch of Healthcare.gov, America was in the middle of its first government shutdown since 1995. Thus, the government shutdown was the main story, instead of the failures of Healthcare.gov. While both parties took a hit from the shutdown, the Republicans approval ratings fared far worse. This provided Obama with a cushion.

As part of Obamacare, many plans in the individual market were no longer legal, as they provided insufficient coverage or were no longer profitable for insurers. This meant that many individuals who bought healthcare directly from insurance companies were notified of the cancellation of their healthcare plans, despite Obama’s promise that “If you like your [healthcare] plan, you can keep it”. Had the exchange been operational this would have only been a minor problem, since people would’ve been able to replace there existing plan. However, many individuals who trusted Obama felt worried and betrayed.

What have been the ramifications for this catastrophic failure? Not much. While Obama’s approval ratings and the approval ratings for Obamacare are down, the failure of Healthcare.gov did not have major ramifications on the 2013 Elections. For example, some claimed that this failure nearly cost the Democrats and Terry MacAuliff, the gubernatorial race in Virginia, but he still won. However, while the fallout so far has been limited, Obama and his new health care plan cannot afford any more failures.

Zach Winston

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In May 2010, the state of Michigan raised $178 million through leases to extract minerals on public land, the majority of which was natural gas. This amount nearly totaled how much the state of Michigan raised in the previous 82 years. Given Michigan’s recent economic woes, it’s obvious why fracking is attractive. The main mechanism for extracting this gas is called hydraulic fracturing, colloquially known as “fracking”, which has revolutionized the natural gas industry in the US and has led some to refer to the US as the “Saudi Arabia of Natural Gas.” However, as hydraulic-fracturing has become more mainstream, environmental and health issues have surfaced in lay and scientific media, the most high profile of which was a documentary, Gasland. Michigan organizations, such as letsbanfracking.org, have decided to campaign for a ballot initiative to impose a moratorium on hydraulic-fracturing. Given the benefits of fracking, a moratorium is not the answer, but these concerns cannot be dismissed. Therefore, while fracking in Michigan has and will continue to have tremendous benefits on the local economy, the environmental and health concerns cannot be neglected.

As is detailed in Gregory Zuckerman’s excellent book, The Frackers, fracking is the synthesis of two drilling processes: horizontal drilling and hydraulic fracturing. Horizontal drilling allows drilling companies to reach natural gas wells in shallow beds of rock far below the ground.  Hydraulic fracturing involves injecting wells with a “mixture of water, sand and some chemicals” to fracture rock.  This allows for the ability to extract natural gas from several smaller wells along the bed of shale rock.  Both of these techniques have been used in isolation for decades.  Over the past 10 years, these two processes have been combined to create what is now known as “fracking”, a technique, which has revolutionized US domestic natural gas production.

As recently as 2006, Cheniere Energy, predicting that the US was running out of natural gas, made a $1.5 billion bet on a natural gas import terminal. However, over the past 7 years, production in the US has increased by nearly 30% and the price has plunged from $5.84 per million BTUs in October 2006 to $3.59 per million BTUs in 2013.  The company has since reversed course and is building a terminal at great expense to export natural gas. Additionally, in 2009, Exxon Mobil acquired XTO Energy, one of the largest natural gas producers at the time, for $31 billion. Clearly, major players see a lot of potential in this industry.  After the bankruptcy of Detroit and the major auto companies, Michigan is looking to cash in.

Fracking benefits the Michigan economy through three main channels – jobs and investment in Michigan, royalty payments to landowners, and royalties, fees and taxes to the state government. According to the a report by the Graham Sustainability Initiative, natural gas production and servicing employs approximately 2,000 people in Michigan. These jobs tend to be higher skilled jobs paying above-average salaries. The majority of the firms that frack in Michigan are Michigan-based and tend to buy many of their inputs, particularly those who are servicing wells, in Michigan.

In exchange for the right to drill on an individual’s property, natural gas firms are required to pay lease fees and royalties to the private landowner. While it is not broken out explicitly for natural gas, in 2010, royalty and lease payments to private landowners for all mineral rights were $81.5 million. Finally, the state of Michigan receives money through royalties, which are “one-sixth of revenue on gas sales,” fees and rent for leases on wells that are on private property, and a 5% tax on drilling on private leases. The most lucrative year on record for the Michigan government was 2010, during which time these brought in over $270 million for all natural resource extraction.

Despite these benefits, people worry about the costs of fracking, which generally include the environmental and health-related costs. Some of the environmental costs include contamination of drinking water and methane emissions. The documentary Gasland shows evidence of people who are able to light their tap water on fire, which the documentary claims is due to fracking.  In this case, the water is not safe to drink, and individuals are required to drink bottled water. However, there still is not definitive evidence of whether this is caused by fracking. In addition, people worry about the potential of the chemical compound, often referred to as the “cocktail” in fracking to pollute groundwater. There is not much evidence that this is happening on a widespread basis, however it remains a concern.

Methane emission is a more concerning byproduct of fracking. While natural gas has half of the carbon emissions of coal and a third of the carbon emissions of oil, leaks of natural gas, methane, are 25 times as damaging as carbon. These leaks are primarily due to old piping infrastructure that hasn’t been properly maintained and the excess natural gas that firms aren’t able to use that they can’t burn off or “flare”, particularly given the current low price of natural gas. According to a recent report by the Environmental Protection Agency, natural gas is still better for the environment than coal, however the evidence is not conclusive.

Fracking will continue to have a transformative effect on the Michigan and American economy. While there are clear benefits to fracking in terms of jobs and money, the costs need to be taken seriously. Thus, while prices remain low and until there is concrete evidence that the benefits of a dramatic surge in fracking in Michigan clearly outweigh the costs, growth in fracking should be limited. There is no rush.

Zach Winston

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