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Backgrounder: I engaged in the comments on this article about student debt at Stuff. Unfortunately comments closed partway through quite a long entry so I'm putting those thoughts here.
Preceding conversation
Marsden comment unposted
Once upon a time businesses were required to educate their employees, else they would have had no skilled staff at all.
This unwillingness to invest in training your own staff which has become endemic; probably dating back to the first days of public education when employers first decided that since the government was going to pay for training their potential employees it was a cost they no longer had to care about. And since the government has stopped paying all, rather than step back up to address the need themselves they now claim exactly as you do that it is up to the employee to shoulder the cost of the training; knowing that they will be able to use the threat of giving the job to someone who will work for less (read "is more desperate") to "negotiate" the wage or salary lower than the skills are fairly worth to the business.
This expectation that the government will pay for training; this determination to only employ people who are already educated - and often who are already experienced - is the reason despite our high unemployment rate and a glut of educated un-and-under-employed so many businesses are are crying out for skilled staff (as often mentioned in this publication and others). By requiring the prospective employees to take the gamble on what qualification might get them a well-enough-paying position after a year or more of study you guarantee that either
- there will be a glut of graduates with the skills you need (good for you because it forces the amount you have to pay for those skills down - but at the same time you constantly risk your employees leaving for a better paying position and having to pay the cost of replacing them)
- OR a shortage either because the public education is not actually providing the specific skills you are looking for or because few decide acquiring those skills are worth the risk of not having a job at the end of it, in which case your business suffers through having to pay highly for those skills or simply finding them unobtainable.
> .as a business owner if I offer to fund an employees study there is NO guarantee that they will stay..my investment is effectively lost.
Not really - you get the benefit of that employee's increasing skill level throughout the period where they are both working for you and gaining their qualification; you get to leverage those skills directly into the specifics your business without the need for any sort of settling in or induction period; even if they do move on you hopefully have the opportunity to have them find a similarly skilled replacement from the cohort they have gone through the qualification with (and who will be able to tap them socially for institutional knowledge about your business again cutting down the amount of time spent coming up to speed).
As returns on investment go up-skilling your employees is almost always going to pay off. Even though as you said at the beginning of your comment:
> it can take years to get a return on a business investment, and despite a business owners best intentions or efforts, there is no guarantee of success
~~~
Snark didn't make it into the final draft about what it says about his experience running a business with the attitude that he can't trust his employees not to leave. Snark didn't even reach the draft about the "painlessness" of losing 12% of your paycheck each month especially if your degree is not earning you a 12% premium on wages.
Preceding conversation
Matt N texas
Will Matthews, please explain to me why your or any persons student loan is any different, to my business loans ?...I have taken out loans for equipment, equal to or exceeding an "average student debt"...I have assumed all the risk and reward that comes with starting and running a business......no one is proposing to "wipe my loans"......why do you think that a person who borrows to fund higher education, with the intention of earning a higher income, should be subsidized by the taxpayer, as apposed to a business operator, who is also using borrowings to access a higher income ?.........thank you in advance for advocating that I receive the same treatment as a student (sic)
Marsden
Absolutely, the difference is in that taking out a business loan you are (presumably) in a position to immediately begin repaying down that debt and have done the numbers to indicate that the equipment will increase your immediate earning capacity immediately.
In taking out a student loan you are probably looking at at least 3 years before it has any effect on you earnings (in fact as laid out in the article you are looking at a very restricted income and probably taking on higher priority debt in the interim as well) before you can begin repayment, and that is /if/ you can find a position in a field where your degree adds a significant premium to your earnings. It is a massive gamble on an unpredictable future job market, but for many of the students I know (including many who already have previously "sought after" qualifications) the hope and a prayer is simply a better option than continuing to be stuck on the unemployment "benefit" (even with existing qualifications) in the current hostile job market.
Marsden
Additionally as I someone has noted in a more recent comment you would have been able to depreciate the value of that equipment on your books, thus offsetting some of your taxable income. Not possible with education, although perhaps is business owners could do that they would be more encouraged to invest in helping their employees gain relevant qualifications.
Matt N texas
Not really correct....it can take years to get a return on a business investment, and despite a business owners best intentions or efforts, there is no guarantee of success..or an "immediate " return as you seem to think...business income can be as unpredictable as any job....in addition equipment can offen require ongoing costs,repairs etc...purchasing an existing business does mean an instant income stream, as apposed to starting a business from scratch, however business loans have to be paid back starting with the first month after inception regardless of cash generated.
As for depreciation...some depreciation is as low as 2.5% per year. For 30-40 years...hardly a boon to a budding business, and if you're luckily enough to have made a profit, tax will be payable....by contrast students have a great system, they can borrow without having to repay until they start achieving an income...and then it is painlessly repaid via a paycheck deduction to the IRD...simple.
Now the last part of your comments, are impractical, as a general rule businesses are not really required to educate you....as a business owner if I offer to fund an employees study there is NO guarantee that they will stay..my investment is effectively lost..it is preferable to have the employee fund and achieve their own education, and if those qualifications are what I need or desire to operate my business, then I shall offer a salary or wages as negotiated.
It is plain to see you have not operated or owned a business
Marsden comment unposted
Once upon a time businesses were required to educate their employees, else they would have had no skilled staff at all.
This unwillingness to invest in training your own staff which has become endemic; probably dating back to the first days of public education when employers first decided that since the government was going to pay for training their potential employees it was a cost they no longer had to care about. And since the government has stopped paying all, rather than step back up to address the need themselves they now claim exactly as you do that it is up to the employee to shoulder the cost of the training; knowing that they will be able to use the threat of giving the job to someone who will work for less (read "is more desperate") to "negotiate" the wage or salary lower than the skills are fairly worth to the business.
This expectation that the government will pay for training; this determination to only employ people who are already educated - and often who are already experienced - is the reason despite our high unemployment rate and a glut of educated un-and-under-employed so many businesses are are crying out for skilled staff (as often mentioned in this publication and others). By requiring the prospective employees to take the gamble on what qualification might get them a well-enough-paying position after a year or more of study you guarantee that either
- there will be a glut of graduates with the skills you need (good for you because it forces the amount you have to pay for those skills down - but at the same time you constantly risk your employees leaving for a better paying position and having to pay the cost of replacing them)
- OR a shortage either because the public education is not actually providing the specific skills you are looking for or because few decide acquiring those skills are worth the risk of not having a job at the end of it, in which case your business suffers through having to pay highly for those skills or simply finding them unobtainable.
> .as a business owner if I offer to fund an employees study there is NO guarantee that they will stay..my investment is effectively lost.
Not really - you get the benefit of that employee's increasing skill level throughout the period where they are both working for you and gaining their qualification; you get to leverage those skills directly into the specifics your business without the need for any sort of settling in or induction period; even if they do move on you hopefully have the opportunity to have them find a similarly skilled replacement from the cohort they have gone through the qualification with (and who will be able to tap them socially for institutional knowledge about your business again cutting down the amount of time spent coming up to speed).
As returns on investment go up-skilling your employees is almost always going to pay off. Even though as you said at the beginning of your comment:
> it can take years to get a return on a business investment, and despite a business owners best intentions or efforts, there is no guarantee of success
~~~
Snark didn't make it into the final draft about what it says about his experience running a business with the attitude that he can't trust his employees not to leave. Snark didn't even reach the draft about the "painlessness" of losing 12% of your paycheck each month especially if your degree is not earning you a 12% premium on wages.
