TIME Career Strategies

Global Internships: The New Key to Getting a Job

Job seekers on their way to meet employers at the 25th Annual CUNY big Apple Job and Internship Fair at the Jacob Javits Convention Center on April 26, 2013 in New York City.
Spencer Platt / Getty Images

As if paying for college wasn't enough, now students are paying to get a high-value internship that will give them an edge in the job market.

The debate over the value of college that billionaire Peter Thiel sparked three years ago hasn’t gone away. Yet most adults continue to place a high priority on saving for college, and a growing number of families are doubling down on education—paying for high-value internships on top of a degree.

Youth unemployment remains high—about 13% globally. Thiel and others argue that it’s foolish to go into debt for a diploma when so few appropriate jobs are available for graduates. Better to start a small business or learn a trade.

Statistics say otherwise. The Pew Research Center found that a typical adult with a bachelor’s degree will earn $1.42 million over 40 years—$650,000 more than someone with only a high school degree. The cost of college and lost income while in school narrows the gap slightly, to $550,000. Pew also found that adults with a college degree fared better in the Great Recession.

There is no denying that crushing student loans may bear on graduates for years, and that those who go into debt but fail to graduate are especially hard pressed. But for most people education works, and the good news is that through online courses the price will come down markedly over the next decade, and may even become free.

So it’s no surprise to see parents and young people continuing to place a high priority on higher education and the pre- or post-graduate internships that boost employment prospects. Among families that have saved anything for college, 85% say it is one of their top three priorities and 60% will save more this year than they saved last year, according to a Fidelity Investments survey. They are saving monthly (81%), or earmarking their tax refund (37%) or a bonus or pay raise (36%), and redirecting funds that had been used for day care or another expiring expense (29%).

On top of this, families have begun budgeting for global internships, a trend that universities and a cottage industry of placement firms has furthered. “The data show that international internships are highly regarded by employers,” says David Lloyd, founder of the Intern Group, which has placed young adults from 80 countries in positions around the world. “The kids who will be successful today are those that take themselves out of their comfort zone and develop a global mindset.”

This means going beyond simple study abroad programs to employment in a foreign country that will build a young person’s contacts and context, Lloyd says. Such programs are especially popular in the U.S., where more than a third of Intern Group alumni reside. Lloyd says that 88% of those who take part in his firm’s programs find work at a graduate level job within three months and that 95% say the program was good for their career.

These internships start at around $3,500 for a six-week program. Some last six months and are more expensive. But, says Lloyd, “employers worldwide prize graduates with global experience and international cultural awareness.” The right internship gives graduates a decided edge.

Hilton Hotels is among companies that prize internships, and at the 2014 World Economic Forum in Davos announced an Open Doors campaign to help 1 million young people “reach their full potential” over the next five years through global apprenticeship and other programs. “These are a huge deal,” says Jennifer Silberman, vice president of corporate responsibility at Hilton Worldwide. “Young people are at a competitive disadvantage if they don’t get this kind of experience.”

Indeed, McKinsey found that half of college graduates are not sure that their education improved their job prospects and that 39% of employers say entry-level jobs go unfilled because young people don’t have the required job skills. An apprenticeship, says Silberman, “lets us identify high-potential workers and fast-track them.” The travel industry is projected to create 73 million jobs the next 10 years, and most of them have career potential, she says, adding that it’s not unusual for an apprentice to be offered a full-time job and then get their first promotion within six months.

You don’t necessarily need a college degree to become a concierge or housekeeping manager, which is kind of the argument Thiel and others make against going into debt to go to college. But even in the services-heavy travel industry there are lots of marketing, technology and management jobs that require higher education—and where a high-value internship really helps.

TIME Inequality

Time to Talk About Inequality

U.S. President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington
U.S. President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington January 28, 2014. Larry Downing / Reuters

It isn't just a social issue—it's putting the future of the U.S. economy in peril

Economic growth is up. Unemployment is down. The housing market is in recovery. So why didn’t President Obama’s State of the Union speech strike a more economically triumphant tone? In a word, inequality. It’s bad, and it’s going to get worse. The forces of globalization and technology tend to wipe out middle-income jobs and favor those at the very top of the socioeconomic ladder. A new McKinsey Global Institute study found that 230 million white collar jobs, representing some $9 trillion in income, will be transformed or even eliminated by computers in the next decade. As Eric Schmidt, the former CEO of Google, put it recently at the World Economic Forum in Davos, “We’re in a race between computers and people–and we need to make sure the people win.”

Inequality matters for lots of reasons: It makes countries less economically and financially stable, it dampens growth by keeping wages and spending low, and it reduces social mobility. It also just makes us feel bad. Behavioral economics tells us that our sense of well-being isn’t absolute but rather is pegged to how the Joneses are doing. That’s why it’s no surprise that a new Pew study found that fewer and fewer Americans identify themselves as middle class. Yes, we have a recovery, but it’s a bifurcated one. There are jobs for Ph.D.s and burger flippers but not much in between. The rich are indeed getting richer: the top 1% took 95% of all new wealth created in the U.S. from 2009 to 2012. Six of the top 10 fastest-growing job categories are $15-an-hour service gigs. And median income has fallen not since the crisis and recovery but since 1999–that was the last time the American family got a raise.

While the President talked a lot about the middle class, he used the word inequality only three times in his hour-plus address (as opposed to 26 times in a similar talk last December; his message people had clearly decided it was too negative). But it was the subtext of the speech, which was almost entirely devoted to policy ideas designed to bridge the wealth gap. Their efficacy, assuming he can see them through, will vary. Yes, raising the minimum wage is a good idea, but mainly at the margins; it increases spending power and seems fair, but it doesn’t create the sort of middle-class jobs we need. Sure, free trade helps U.S. exports, but again, it doesn’t necessarily create more jobs. Indeed, as Nobel laureate Michael Spence has shown, net job creation in areas of the American economy most open to trade has been basically nil since the 1980s. Immigration could bring in more skilled labor. But that’s also a marginal change, not a structural shift in our economy.

The most economically promising part of the President’s speech centered on education, in particular transforming secondary education by bolstering science, math and technology skills and linking educators with job creators. In last year’s SOTU, the President pushed ideas like the six-year high school model rolling out in New York City and Chicago, which allows companies such as IBM, Microsoft and others to help design the curriculum that kids need in order to become employable. Students also graduate not just with a high school diploma but also an associate’s degree. This year, it’s clear Obama wants to take that idea national, which makes sense in a world in which the majority of the 14 million jobs created in the next decade will require at least two years of college, if not more.

Getting businesses, which are more flush than ever, to play a greater role in what have traditionally been public-sector arenas like education is absolutely essential. But education is a long-term proposition. As Warren Buffett once told me, “We can’t educate ourselves out” of the inequality problem in the short term; that’s why we’re going to need some wealth redistribution in order to buffer the next few years of job destruction and evolution. While the President called for the closing of some corporate loopholes, we need to have a serious conversation about raising the capital gains tax, ending deductions that favor debt over equity and disproportionately reward the rich, and increasing incentives for firms that put more money into R&D and less into share buybacks or overseas bank accounts.

I also wish the President had talked more about long-term entitlement reform. The truth is that businesses in the U.S. are investing, but only in short-term assets (meaning those that mature over 15 years or less). After that, corporate investment drops off a cliff, which many experts take as proof that business doesn’t believe in the country’s ability to come up with a realistic budget and growth plan after that point. It’s a telling metric–and one Obama only scratched the surface of in his SOTU speech.

TIME Davos

No, Iran’s Rouhani Doesn’t Tweet

Iran's President Hassan Rouhani speaks during a session at the annual meeting of the World Economic Forum in Davos, Switzerland, on Jan. 23, 2014 Denis Balibouse / Reuters

Time to stop imagining he's some kind of hipster-cleric and judge him by what he does

What to make of the revelation that Hassan Rouhani doesn’t write his own tweets or Facebook updates? If he had been a Western leader, it would matter very little: after all, you have to be exceptionally credulous to believe President Barack Obama or Prime Minister David Cameron write all their own social-media messages. It’s generally expected and accepted that they have people to do that for them.

(MORE: Whom to Watch at the World Economic Forum in Davos)

But Rouhani is different. To many in the West (and not a few Iranians) the Twitter account @HassanRouhani has been a big part of the Iranian President’s appeal. It made him seem in touch with the modern world, a quality not associated with Iran’s recent leaders. It also made him seem simpatico with the aspirations of young Iranians. (The account has over 170,000 followers.)

Think back to the tweet last year from @HassanRouhani wishing Jews a happy Rosh Hashanah, and the frisson of excitement it sent around the world. The impression it gave was that this new Iranian leader was a very different quantity than his predecessor, who had suggested Israel should be annihilated and who questioned whether the Holocaust had taken place. Other tweets from the same account suggested that Rouhani favored more freedoms for Iran’s women, another departure from the norm.

(MORE: Iranian President Tweets Friendly Message to Jews)

Those who believed those messages came directly from the man had their bubble burst on Thursday. During a meeting with a small group of journalists at the World Economic Forum in Davos, Rouhani responded to a direct question with the confession that he doesn’t write the pithy messages on the social-media accounts associated with him: those are written by “friends,” he said.

The meeting was meant to be off the record, but when asked by journalists if he would allow that confession to be placed on the record, Rouhani readily agreed. (This was tweeted immediately by some of us in the room … I’m reasonably sure none of us have “friends” to do it for us!)

So what? The assembled journalists never got a chance to ask the President if he had wished Jewish people a happy new year, or whether he thought Iran’s women should have greater freedoms. But he didn’t suggest that his opinions diverge from those of the “friends” who write his tweets.

(MORE: The 5 Most Important Questions for the Davos Elite)

Here’s where this leaves us: we can all now stop paying attention to @HassanRouhani, and instead focus on Hassan Rouhani. Goodness knows there are plenty of ways in the real world to measure his performance as President. For the West, the most immediate test is in his ability to keep Tehran’s end of the bargain in the six-month freeze of its nuclear program that went into effect earlier this week. There’s also his readiness to make a long-term deal that reassured the world his country will not seek nuclear weapons. For Iranians, his credentials as a reformer will be judged by his ability to deliver on the promises he made during the election campaign last year. Will he, for instance, make it possible for them to have Twitter and Facebook accounts too?

At his formal address in Switzerland this week, Rouhani said most of the right things: Iran would honor the six-month freeze and sincerely seek a permanent agreement with the six world powers, he said. It would seek a peaceful resolution to the civil war in Syria. He also promised economic and political reforms that would help to unleash the potential of Iran’s youth.

He said these things, not his “friends.” Time now for the real Rouhani to please stand up.

MORE: Rouhani’s Real Test

TIME Davos

Will Japan and China Go to War?

Shinzo Abe
Japanese Prime Minister Shinzo Abe speaks at the World Economic Forum in Davos, Switzerland, on Jan. 22, 2014 Michel Euler / AP

Japan's Abe worries a conflict could be sparked by something unexpected

Could Japan and China be on course to military conflict? Asia hands all over the Pacific Rim have recently been forced to contemplate the possibility by the bellicose war of words between Beijing and Tokyo over territorial disputes, increased military spending and a visit by Japan’s Prime Minister Shinzo Abe to a controversial shrine for Japan’s war dead. But even those who game out the direst scenarios tend to add, “Surely not …”

Surely the world’s second and third largest economies have too much to lose from a war, even a small skirmish? Surely the rest of the world (and especially the U.S., the biggest power in the Pacific) would restrain both sides before it came to actual combat? Surely two modern nations won’t allow historical grievances and perceived slights to push them into war? Surely not.

But when Abe met with reporters and editors at the World Economic Forum in Davos this afternoon, he was at some pains to avoid the expression, “Surely not.”

(MORE: Chinese Envoy Calls Japanese PM Abe the ‘Biggest Troublemaker in Asia’)

Instead, Abe warned that something entirely unexpected could become the flash point for conflagration. “There may be some conflict or dispute arising out of the blue, on an ad hoc level … or inadvertently,” he said. He didn’t offer any examples, but in a different context pointed out that 2014 will mark the centenary of World War I. That calamity, the gathered journalists needed no reminding, started with an unexpected event: an assassination in Sarajevo.

It didn’t help that Abe offered no plan to tone down the tensions between the Asian giants. “Unfortunately, we don’t have a clear and explicit road map,” he said. It might help, he suggested without much conviction, if Beijing and Tokyo established a “military-force-level communications channel.”

And what would he expect the U.S. to do if the two countries came to blows? Abe skirted past the question of whether he expected Washington to take Japan’s side, but said he was already seeking closer military ties with the U.S.

(MORE: Forget Trade Talks, Biden Is in East Asia to Stop a Potential War)

He did, however, defend his visit to the controversial Yasukuni Shrine. Many Asian countries, including China, say some of the war dead who are commemorated there were war criminals, responsible for horrific acts during Japan’s occupation of much of East Asia. Abe said he was not the first Japanese leader to visit the shrine, and that his predecessors as Prime Minister had collectively visited it 65 times. Critics of his visit simply misunderstood his intentions, he said.

China would have the most to lose from war, Abe suggested, pointing out that conflict would slow the economic growth that the government in Beijing needs to preserve its legitimacy. The Prime Minister made no mention of the cost to his own country, but allowed that a Sino-Japanese war would disrupt the world economy.

TIME Davos

Davos Debate: Are the Markets Any Safer?

The Nasdaq MarketSite, in New York City, on Aug. 21, 2013.
Mark Lennihan / AP

“Are Markets Safer Now?” is the title of a panel I’m looking forward to attending Wednesday at the World Economic Forum in Davos. Five top financiers and financial experts, including hedge funder Paul Singer and Stanford professor Anat Admati, author of the “Banker’s New Clothes,” will duke it out over whether the financial system is any more secure now than it was in 2008. I suspect that Admati, with whom I spoke with for my recent “How Wall Street Won” story, will agree with my take – it isn’t.

I won’t recap that argument, which basically deals with the problems since 2008, here. Instead, I want to offer three deeper, historical reasons for continuing financial sector instability, and how they’ve led to a system in which business now serves banking, rather than the other way around.

  1. The move from a partnership structure to a public company structure. Banks used to be organized like white shoe law firms—they were a collection of individuals who divided the profits of the business, but also had personality responsibility for its losses. With the move to a corporate structure, that individual responsibility was lost. While the reason for taking outside investors and making banks bigger was often to increase lending, and thus help Main Street, the practical result was ultimately to increase leverage (why not take more risk when you aren’t personally responsible for it?) and destabilize the system. It’s yet another argument for making banks smaller and dividing them along business lines (we’re not lacking capital in the financial world these days, but high quality, truly client oriented advisory services and top-tier research – I suspect boutique institutions offering more of that would do a brisk business).
  2. The cult of shareholder capitalism. We’ve come to see shareholders as the sole “owners” of businesses, but there’s an argument to be made that their claim to true ownership of a business is weak, which is why they have to be awarded voting rights in the first place. Shareholders certainly deserve an important seat at the table, and can play a key role in policing management, but they also have a strong impetus to encourage decisions that boost share price above all else – and that can lead to short termism (since the 1990s, the rise of share buybacks, which almost always bolster stock prices, has coincided with a decline in R & D spending in corporate America). The Street pushes this short termism, and rewards it with higher share prices (that is, until a lack of investment begins to erode corporate market share).
  3. The fact that corporate compensation is based largely on stock prices. Even if we shifted to a Germanic system of “stakeholder capitalism” in which a broader group – labor, and civic leaders, as well as management and shareholders – were considered “owners” of a business, to the extent that everyone gets compensated with stock options (particularly in packages that vest quickly, and have no claw back provisions for bad decision-making) the problem of short-term thinking at the expense of long-term investment remains.

A smart source recently pointed out to me that capitalism, which always awards a much greater share of the global pie to owners rather than laborers, only works if the capitalists invest in production, thus creating more jobs and giving some of the pie back to labor. These days, many of them are sitting on cash, and/or giving it back to themselves. Seems like a recipe for instability to me.

TIME

Whom to Watch at the World Economic Forum in Davos

A technician checks the light in the Congress Hall before the start of the annual meeting of the World Economic Forum (WEF) 2014 in Davos Jan. 21, 2014
Denis Balibouse / Reuters

As the World Economic Forum (WEF) kicks off Tuesday in the snowbound Swiss town of Davos, more than 40 heads of state and government will be competing to make a lasting impression, for themselves and their countries, among the 2,500 participants. Here are five who will have a head start:

Maryam Rahmanian for The Washington Post / Getty Images

Hassan Rouhani
Depending on how things are progressing in another part of Switzerland — Montreaux, scene of the Syria peace talks — Iran’s president may be just a little distracted during his Davos debut. But the purpose of his trip is to take advantage of the momentum from the Jan. 20 start of the six-month nuclear freeze agreement between Iran and the six world powers. Rouhani’s message: As the negotiating parties begin work on a long-term deal, Iran is open for business. It isn’t really: most of the economic sanctions imposed by the U.S. and Europe remain in place. But Rouhani’s trip is mostly about optics. Iran, he will be saying, is no longer an international pariah. He delivers a special address on Thursday.

Benjamin Netanyahu
Gali Tibbon / AFP / Getty Images

Benjamin Netanyahu
Israel’s prime minister follows Rouhani (a few hours later) with a discussion on Israel’s economic and political outlook. Netanyahu will keep up his rhetoric about Tehran being an unreliable negotiator. Don’t buy the peace deal, he will say, it’s just a smokescreen that allows Iran to build nuclear weapons. But that message didn’t get much traction at the U.N. General Assembly in New York City last fall, where Rouhani’s charm offensive won the day. Netanyahu is unlikely to find many takers in Davos.

Enrique Pena Nieto
Omar Torres / AFP / Getty Images

Enrique Pena Nieto
Mexico’s president is one of the WEF’s Young Global Leaders, and his country is making a splash at Davos this year. He will be seeking to capitalize on Mexico’s growing economy, which has recently become the country’s dominant narrative, overtaking the usual stories about drug cartels and kidnappings. If potential investors are impressed by energy, Pena Nieto will display plenty of it: he will deliver a special address and participate in two panel discussions, all on a single day, Thursday.

Dilma Rousseff
Evaristo Sa / AFP / Getty Images

Dilma Rousseff
The president of Brazil makes her first appearance in Davos just as tough questions are being asked about her country’s economic prospects. Three years of lackluster growth have some wondering if Brazil should lose its place among the BRICS. There are doubts, too, about the country’ ability to host soccer’s World Cup this summer. Top all that off with lingering fears of political unrest, after last year’s massive street demonstrations. Rousseff delivers a special address on Friday.

Shinzo Abe Jiji Press / AFP / Getty Images

Shinzo Abe
Japan’s prime minister has stirred things up in Asia over the past couple of years. His country’s economy has been doing remarkably well, but Abe’s aggressive rhetoric and military muscle-flexing has annoyed China and South Korea, while winning some praise from other Asian nations that see Japan as a bulwark against an increasingly militaristic China. The Chinese president and prime minister won’t be at Davos, but perhaps South Korea’s President Park Geun-Hye will have a cautionary word or two? Abe and Park both speak on Wednesday.

TIME Davos

One Stat to Destroy Your Faith in Humanity: The World’s 85 Richest People Own as Much as the 3.5 Billion Poorest

A worker prepares a logo for the World Economic Forum inside the Congress Center ahead of the World Economic Forum 2014 (WEF) meeting in Davos, Switzerland, on Sunday, Jan. 19, 2014.
A worker prepares a logo for the World Economic Forum inside the Congress Center ahead of the World Economic Forum 2014 (WEF) meeting in Davos, Switzerland, on Sunday, Jan. 19, 2014. Bloomberg / Bloomberg via Getty Images

The world’s 85 richest individuals now own as much as the poorest half of the 7 billion global population, according to a report released by Oxfam on Monday.

The leading anti-poverty charity called on the global economic elite gathering in Davos this week for the World Economic Forum to “counter the growing tide of inequality” and prevent a static future in which only the rich have access to the best education and healthcare.

“It is staggering that in the 21st century, half of the world’s population own no more than a tiny elite whose numbers could all sit comfortably in a single train carriage,” said Winnie Byanyima, Oxfam Executive Director.

Working for the Few examines economic inequality’s potential to undercut democracy in developed countries and exacerbate corruption in underdeveloped nations.

The report calls on governments to crackdown on international tax dodgers and invest in public institutions such as healthcare, as well as implement progressive taxes and eradicate opaque political structures that encourage corruption.

While the World Economic Forum in Davos provides the world’s super elite with a forum to discuss the global economy, the group is far from deaf on issues pertaining to inequality. Last November, the WEF warned that financial inequality threatened to undermine social stability and security on a “global scale.”

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