Like many of my junior classmates here and across the country, I’ve been spending most of my time looking for a summer internship. Because I’m applying for internships this semester, I feel like I’m taking seven classes instead of four, and I know many of my peers feel similarly. One of the greatest challenges is finding a paid internship. Our parents have now paid two full years’ worth of Brown tuition — which is, stupidly, now even more expensive, though I’ll leave that for another columnist — and they expect us to start earning a bit of something.
Paid internships are a hot commodity, and, naturally, we want to be employed where the pay is the best. As my research has shown, the highest pay for undergraduates tends to be in finance and business, though these salaries often seem disproportionate to the value they actually provide society.
As is true in any capitalist society, jobs with the highest salaries attract many of the smartest and most talented people in the country. The problem is that we’re incentivizing the wrong jobs. I’m not saying that financiers, hedge fund managers and stockbrokers are doing nothing, but shouldn’t we be incentivizing teachers and nonprofit leaders instead of paying Wall Street employees $10 million per year to invent ways to create money?
I recently listened to a TED talk by Dan Pallotta, the founder of a former for-profit charity fund. He theorized that if he ran a nonprofit the same way he would run a for-profit business, he would attract greater talent and generate more money for a good cause. It turns out he was right, and here’s why.
The most important reason is that compensation is vastly different in the for-profit and nonprofit sector. To put it in Pallotta’s words, “We have a visceral reaction to the idea that anybody would make money helping other people. Interesting that we don’t have a visceral reaction to the notion that people would make a lot of money not helping other people. You want to make $50 million selling violent video games to kids, go for it. But you want to make $500,000 trying to cure kids of malaria, you’re considered a parasite.”
Tens of thousands of the best and brightest minds in the country head straight for the for-profit sector every year, because they are unwilling to sacrifice a better, more financially stable life for themselves to benefit a good cause. Can we blame us?
Pallotta’s for-profit charity was able to do things that no other organization had done before. He took a publicity hit in order to attract bright and talented people to work at his organization, and their talent paid off. In 2002 alone, his company netted $71 million for breast cancer research after all costs were accounted for. Unfortunately, the company subsequently went out of business. Despite the massive sums it raised for major research ventures, the media coverage of Pallotta’s business model was overwhelmingly negative, causing most of his investors to pull their support.
Pallotta was able to make a business out of helping people because of his careful approach to talent acquisition. But more importantly, Pallotta’s story speaks to the kinds of solutions we need to make nonprofit organizations and other sectors more effective and productive in the United States.
Apart from a small sample of truly dedicated graduates from top universities, it’s incredibly difficult to find college graduates willing to make a financial sacrifice in the interest of helping others. Ask yourself right now — would you take a $300,000 a year salary at a nonprofit over a $500,000 salary at an investment bank? If we could find a way to better incentivize jobs that create so many positive externalities, we could seriously benefit as a nation and society.
The defense budget in 2012 was approximately $680 billion dollars. There are about 7 million educators in the United States, who make an average of $65,800 per year. If we reduced the defense budget by 10 percent and committed all $68 billion towards supplementing teachers’ salaries, we would raise the average teacher’s salary to $75,000 per year and still spend $340 billion more on defense than the entire European Union combined. Whereas that $68 billion might mean we have one fewer military base in the Middle East, that same $10,000 per teacher could mean the difference between high- and low-quality education for thousands of students in underprivileged school districts. While moving money from one sector to another is never this simple, it’s just one example of how we can incentivize highly qualified people who may otherwise be bankers to consider teaching.
I don’t expect this argument to change the goal of your job search. Money is money, and if we can accept an internship with high wages, it’s definitely in our best interest to do so. But if we think critically about redirecting money to underfunded sectors and applying lessons from Pallotta’s business model, we may have a chance to eventually overhaul the system and contribute to the common good.
Daniel Delaney ’15 can be reached for comment at daniel_delaney@brown.edu.
ADVERTISEMENT
