Virginia May Have to Offer In-State Tuition to All US Students

According to today’s Free Lance-Star, Virginia Attorney General Mark Herring has unilaterally decided that illegal immigrants who live in Virginia must be given in-state tuition rates at all state institutions of higher education.

A similar argument arose a few years ago when I was in Colorado and I became aware of a federal law that said if any state offered in-state tuition to illegal immigrants, it had to offer in-state tuition to all US citizens. So according to federal law, no Virginian institute of higher education may charge out-of-state tuition to an American citizen. I did a quick internet search to be sure and found a summary that affirmed my memory.

However, given the negative impact this would have on higher education budgets, I doubt Virginia will willfully follow federal law. It will be interesting to see if any out-of-state American students sue Virginia over this clear violation.

Startup May Disrupt Makeup Industry

Most brilliant ideas look obvious in hindsight. Grace Choi had such an idea when she realized 3D printing technology could be applied to makeup. She is working on Mink, a product that may greatly disrupt the makeup industry if it can deliver quality makeup. There is no theoretical reason why this will not work, 3D printers can use the same materials used in makeup provided by established companies – both at the high end of the market and ingredients for the cost conscious consumers. So let’s assume Grace releases Mink as a quality product that works as described.

I expect this will do very well with not only the target group (girls 13 to 21 years of age), but many women may also adopt. So long as Mink can provide quality equivalent to that of the established market, I believe Mink’s print-your-own makeup concept will succeed and dramatically disrupt the current makeup market. I expect Grace has already considered these options, but here are several ideas that would help Mink succeed. Product-wise, I’d recommend a software feature that allows Mink’s customers to scan colors (ideally with a smart phone) and then print that color of makeup without the need for a fancy art or photography program.

Market-wise, while some people will love the ability to print their own makeup, others will not want to buy and master yet another device. For these customers, there are two other business models Mink should consider. First, they could market a version of their makeup printer to department stores themselves. These stores could then print custom makeup for their regular customers, delivering better customization while reducing inventory. Second, Mink could also pursue an affiliate model where Mink certified specialists could resell makeup to their friends and acquaintances.

Female Demographics in the News

The Wall Street Journal has recently published two interesting articles regarding female demographics.  One had to do with women who decide to be full-time homemakers.  29% of all mothers with children under 18 stayed at home, the highest number recorded since the late 1980s.  85% of married stay-at-home mothers are doing so by choice, not necessity, much higher than other demographic segments.

The other article discussed the findings about income difference between genders.  It took them a bit to get to the meat of the findings, but they did a good job summarizing it.  Men and women in the same fields with the same experience tend to make the same amount.  However, genders tend to make different decisions during their career (e.g., men are more likely to pursue life-threatening occupations that pay more and women are more likely to work part-time or stay home for several years when a child is born).

Taken together, these articles and other findings indicate that at as long as my daughters are well educated, they will have ample opportunities to either work at a career, work at building a family, or a combination of both.  Obviously there is still room for improvement, but the data provides ample room for optimism.

Technology and the Future of Higher Education

As part of UMW’s Domain of One’s Own initiative, I have been participating in weekly talks and readings about internet tools, what digital learning means for scholarship, and how it can and will impact teaching.  In talks, most of those I have heard greatly appreciate the ability for technology to facilitate communication – for learning, for teaching, for collaboration – but are skeptical that technology will ever significantly compete with the traditional higher education model of a teacher and students together in a classroom.  It doesn’t matter if the classroom is real or virtual, the model will remain the same and these technologies may greatly compliment the current model, but will not enable effect substitutes.

I wonder.  Granted, the skeptics certainly have plenty of ammunition.  For instance MOOCs – massive open online courses – have not (yet) become the substitute for higher education that many of its advocated claimed.  One of the most appealing forecasts about MOOCs was that they will bring “top-notch courses to the world’s poorest citizens and reshaping the way all students learn” (Scientific American, 2013).  True, it has this potential, but the evidence shows that this is currently more theoretical than realistic.  In a recent study of University of Pennesylvannia, Edmunds (2013) found that “83% of surveyed students already had a two- or four-year post-secondary degree” and that the education gap was even greater for students from other parts of the world.  Other studies also show very low completion rates, averaging under 7%.

For the sake of argument, let’s assume that neither element changes for these massive open online classes.  Most enrollment will consist of the already highly educated and that completion rates will remain very low.  Would this eliminate MOOCs as a viable option?  No.  I’ll tackle the completion rate first.  Low completion rates do not mean MOOCs are not effective.  Let’s say I teach Principles of Marketing to 100 students a semester, two semesters a year, and 95% complete the class with a passing grade.  In one year, 190 students would have completed my principles class.  Now let’s say I carefully design a MOOC, complete with recorded lectures, interactive homework assignments, and computer simulations that allow the students to put the theoretical lessons of the text into practice.  Judging by the results of others, I expect it would be safe to estimate 4,000 people a year register (registrations 10 or 100 times larger are not unreasonable in this context if the university promotes the MOOC).  So, continuing to use conservative numbers, if only 5% of my MOOC students complete the class, 5% of 4,000 is 200 people who have gained the required skills, higher than the 190 that completed my regular principle classes.

So despite low completion rates, MOOCs may allow me to reach more students who will complete my class than traditional methods.  I suspect the low completion rates have two components.  First, it the low cost (many times free) of registering for a MOOC.  As any first-year student of economics could tell you, if you lower the price, you will have more demand.  So it is reasonable to assume that the current MOOC studies with very low completion rates may be partially explained by the fact anyone can register.  If you did not pay for the class, you also are less likely to feel bad about dropping the class.  Second, I also believe the medium does hinder completion for many people.  While the people writing the MOOCs are very comfortable with PCs, that is not necessarily true of the students.  The fact that it requires ample self-discipline and computer skills to complete a MOOC may explain the finding that most MOOC participants already have a degree.  So if this does not change, what does this imply?  With these limitations, MOOCs still show great promise for upper-division classes and continuing education for the self-disciplined with computer skills.

Keep in mind that MOOCs are just one option technology provides.  McGraw-Hill is a leader among textbook producers when it comes to interactive supplements to their textbooks.  They claim that by integrating the use of their online homework modules they can increase the class average by half a letter grade or more.  This is a substantial claim and I decided to put it to the test this semester in my Principles of Marketing class.  I replaced my normal homework assignments with Connect homework the students must do online.  Since the computer does all the grading, I allow the students to resubmit their homework as many times as they want until they are happy with their grade.  Since I set up Connect to use question pools, the students who try again, get a different set of questions and activities covering the same material – thus preventing people from quickly answering wrong answers, writing down the correct ones, and resubmitting.  The average of my first exam was indeed up half a letter grade compared to last semester.  One set of exams is hardly conclusive evidence, but since it is in line with expectations, I am optimistic and eager to see how the class does throughout the semester.

Since McGraw-Hill owns the textbooks and is creating very interesting ways to learn (the questions are not limited to basic test questions, but require students to drop and drag constructs into models, analyze video cases, and otherwise interact with the material in ways they previously could not), they are well positioned for the future.  I wonder if my grandkids will graduate from McGraw-Hill University.  Whatever the future holds, I am skeptical about the skeptics dismissing challenges to the current model.  While there will always be a place for traditional higher education , I expect it will not be the only model.  Rather, it will compete and complement multiple ways of learning and students will be able to choose the method that best fits their needs and resources.  Time will tell, but I predict my grandchildren will have multiple viable educational avenues to pursue of which some will be fully automated.

Site Update

Hard to believe that my cohort’s domain training is almost complete.  It has been a very worthwhile experience and provided time for me to consider how I want to use my site.  While I expect this will change over time as I become more experienced, I now have a good idea of what I want to accomplish this year.

Using the tips provided in class (Thanks Tim!) and others (Thanks Jim, Martha, Ryan!), I have set up feeds from sites I like to read (see the Currents tab above) and from those of my students (Student Posts).  I gave them the same look and feel as my main site, but am experimenting with how much of their posts to show.  Under the Currents in Marketing, the posts are abridged – interested readers can go to the original site for more – whereas the Student Posts section shows the entire post.

I’ve also created placeholder tabs for items I will eventually add to my site.  I’d appreciate any feedback on the layout or any other suggestions people may have.

Proudly Borrowed From Others

One of the many benefits of participating in UMW’s Domain of One’s Own project is the interaction generated between an expert from the Division of Teaching and Learning Technology and other colleagues.

I didn’t post on last week’s readings because I was already familiar with that particular subject and didn’t read anything new to me.  Nothing new, no new thoughts.  However, in the discussion Professor Mackintosh mentioned how he was experimenting with using a collaborative wiki to build a set of notes for his class.  He has since described it on his blog.  I’m now giving serious thought to incorporating this technique into some of my more advanced classes.

This exercise highlights one of the values of the program.  Even if I did not learn anything from a particular reading assignment – nothing against the reading list, it just happened that I was familiar with last week’s topic – having a dedicated time for discussing how to improve our teaching with technology is bearing fruit.


Solid Advice for Philanthropists

Too many people want to spend your money.  Don’t let them.

James Piereson wrote a great column urging innovators not to succumb to the urgings of people like Bill Gates and Warren Buffett, state and local governments, and other people who think they can spend your money better than you can. Mr. Piereson highlights the example of Robert Wilson, who gave away $500 million of his own money to the causes he supported while rejecting Bill Gate’s desire to influence his philanthropy.

Wilson wrote Gates “When I talk to young people who seem destined for great success, I tell them to forget about charities and giving.  Concentrate on your family and getting rich–which I found very hard work.  I personally and the world at large are very glad you [Bill Gates] were more interested in computer software than the underprivileged when you were young…  Which rich people reach 50 and are beginning to slow down is the time to begin engaging them in philanthropy.”

Not only does this make sense from a financial point of view, it makes sense from a long-term view of helping the world.  I admire some of the great things the Gates Foundation has done to make the world a better place, but none of these efforts come close to the benefits Gates helped usher in with the rise of the personal computer.  This does not mean people should be selfish – I personally am teaching my children the 10/80/10 rule of giving 10% of their income away, living on 80% or less, and saving 10% – but that while people are young and creative, they should maximize their creativity.

Mr. Piereson’s philanthropic advice may be summarized as “Donate to causes you care about, think long term, and remember it is your money.”  Let’s hope people read his words and follow his advice.

Thoughts and Findings on Minimum Wage

I was asked to write a column about the minimum wage for The Free Lance-Star.  It appeared in yesterday’s paper, and I thought I’d post it here as well.  The column is virtually identical, but I took advantage of the medium to include hyperlinks.

Should we raise the minimum wage?

That depends upon what we are trying to accomplish.

If the goal is to ensure that each person who has a job earns enough to support himself—and possibly a family—on it, then yes we need to raise it. However, we need to realize that any decision to raise the minimum wage will also reduce the number of people employed and adversely impact firms.

Businesses will either have to pass along the increased costs by raising prices or make other adjustments (include closing for firms that are currently operating on the margin). With today’s minimum wage, larger stores still find it more economical to buy self-service check-out scanners than pay a person. If you increase the cost of hiring people with low skills, you increase the incentive to automate these jobs.

If you doubt organizations react to changes in the law, consider one obvious response to the Affordable Care Act, commonly referred to as Obamacare. The law mandates health care coverage for everyone who works at least 30 hours a week at organizations with more than 50 full-time people.

So how did many large organizations—including the State of Virginia–react to this law? They no longer allow their part-time workers to work 30 hours a week (Click here for a list). So these folks still don’t have coverage but now either earn less or have to juggle multiple part-time jobs to make ends meet.

The other factor to consider is that minimum wage is mostly paid for jobs requiring little skill. However, the experience gained by working these jobs is crucial toward preparing people for future jobs that require more skills and education. For example, when I was 12, my first job paid below minimum wage—I had a bicycle paper route for an afternoon paper and was paid for each paper I delivered. Newspaper delivery people are among the many exceptions to the federal minimum wage law.

While I didn’t realize it at the time, being a paperboy taught me several key lessons. I learned to be responsible and to manage my time. It didn’t matter if I wanted to play when came home from school, I had to deliver the papers on time or people would complain and I’d be fired.

In addition to the job requirements (mostly fold the papers and deliver to each subscriber’s house by 5 p.m.), spending time working also forced me to be more efficient with my other time. By the time I finished my route, cleaned up, and had supper with my family it was about 6:30 p.m. before I could start on my homework. My parents were supportive of my having a paper route, but they made it clear if my grades suffered, I would have to quit.

I also learned firsthand about taxes—my reaction was similar to that of Rachel from the TV show Friends when she got her first job, “Who is this FICA guy and why is he getting all my money?” Despite Uncle Sam taking his share, I learned the relationship between working hard and having money to spend.

Shortly after I turned 14—the minimum age to work for most jobs outside of school hours—I found a job at a local bookstore and quit my paper route. I could work full-time in the summers and part-time during the school year. I made the minimum wage of $3.35 per hour. Considering inflation, it was similar to today’s minimum wage of $7.25 per hour.

Minimum wage jobs are more than sufficient for entry-level jobs, if the person being trained has someone else paying their living expenses. Since my parents paid for my necessities, $3.35 per hour—even after taxes—was more than sufficient for me to pay my own personal expenses and save money for college. The skills I learned from these low-skill entry-level jobs helped me progress to better paying jobs that required more skill, experience, and education.

The current minimum wage is not sufficient as a living wage, but is more than sufficient as a training wage. I agree with the goal of ensuring all families have the necessities to thrive, not just survive, but this may be better handled by reforming our social safety nets which drastically penalize people if they work. Raising the minimum wage will make it even more difficult for people to find their first job where they can learn key skills that will help prepare them for more challenging and better paying future jobs.

This is not just my opinion. In one of the most comprehensive reviews—if not the comprehensive review—of minimum wage studies, David Neumark and William Wascher (Minimum Wages, 2008) found three key findings.

First, increases in the minimum wage decreased the number of jobs for those currently earning minimum wage and for those trying to enter the job market. Second, increases in the minimum wage do not reduce the percentages of families near or below the poverty line (although several studies have found that it increases these percentages given the loss of low-skill jobs). Third, researchers found that when the minimum wage was increased, the motivation for those with low-paying jobs to continue with their education decreased, thus reducing their long-term opportunities for obtaining better jobs.

These clear consistent findings—replicated at different times by different researchers—make a strong argument for eliminating the minimum wage entirely. Raising the minimum wage will decrease the number of entry-level jobs available for those wanting to enter the workforce, will not help (and may harm) poor families as a group, and will reduce the likelihood of those with low-skill jobs going back to school.

Changes in Economic Environment

In my Marketing Principles class, I teach my students that the economic environment is one of the uncontrollable variables that businesses must monitor and – to the extent they can – manage their reactions to changes in it.  As an example, Friday’s Wall Street Journal had an article on how international airlines were now restricting ticket sales in Venezuela.

The airlines are doing this for several reasons.  First of all, the value of the Venezuelan bolivar is dropping (yet again).  Second, Venezuela has laws restricting how these airlines can move their profits out of the country.  Currently about $3.34 billion (US dollar equivalent) of the airlines profits is sitting in Venezuela – according to the WSJ, they could lose up to 45% of this just in currency devaluation.  Third, there is a large black market for currency exchanges where people pay much more than the government rate in bolivars for obtaining harder currencies such as the dollar.  So visitors to Venezuela were taking advantage of this, converting their home currency to bolivars, then stocking up on airline tickets.

And these are problems associated with doing business in just one country.  Imagine the complexities of doing business with most of the countries in the world.