Time to go back to school?

So you are a confused college student who is having a hard time finding a job in the aftermath of the great economic recession. Should you go back to school for your Ph.D. in order to hide out until the job market gets better?  Thomas H Benton has an interesting article addressing this question for those interested in the humanities Ph.D.'s but who aren't sure that they want to go into academia.
The ranks of new Ph.D.'s and adjuncts these days are mainly composed of people from below the upper-middle class: people who believe from infancy that more education equals more opportunity. They see the professions as a path to security and status.

Again and again, the people who wrote to me said things like "Nobody told me" and "Now what do I do?" "Everybody keeps saying my doctorate gives me all kinds of transferable skills, but I can't get a second interview, even outside of academe." "What's wrong with me?"

Well, the job markets sees a few things wrong with the typical Ph.D. student compared to someone who has similar levels of IQ, openness and conscientiousness but managed to avoid getting sidetracked in graduate school.

1. They are signaling that they are not the type of person who wants to deal with the real world outside of the bubble of academia.

2. For graduate students in technical fields, they are demonstrating that they prefer prestige status over monetary opportunities. There is also the potential for status clashes with superiors in the workplace.

3. In younger Ph.D. students, the Ph.D. track is often chosen because no other track was readily apparent.  Choosing this track only to go into the workforce later on suggests that they don't really think about how the world works beyond one or two steps.

4. They spent all of their time learning how to become a professor, gave up on that, and are now competing with peers who have put the time into figuring out how to create value in the market. 

The Ph.D. drop out is much better positioned than the student who delays entering the real world by finishing their thesis. However, there are some positions such as in biochemistry where in order to have influence in the real world an advanced degree is more beneficial than harmful.

Tyler Cowen has some additional thoughts on why people get Ph.D's in the humanities.

2 responses
I'd say #2 is not very accurate even for fields outside of biochemistry. The street cred from a PhD in some computational/tech-fields and in some sciences (materials, chemistry) is very worth it. Certain PhDs are also viewed as strong signals for mathematical competence. I don't know how oil/aerospace companies view PhDs (in earth sciences, etc), but I suspect its not nearly as bad as you think it is.

With that said, I do think humanities PhD's are relatively worthless from a commercial standpoint and should only be undertaken if you truly love the field. But in my experience, provided you study something of commercial relevance, technical/scientific PhD's can actually be a career booster.

The typical PhD from a top school is impressive, but so is someone who got into a top school's program and decided not to go. 7 years later, the guy who didn't go is going to be more impressive than 95% of the PhD students looking for work on the job market. Getting a PhD in a technical field like CS also cuts off the rightward skew of being part of a succesful start up. They are stuck doing a supposedly low risk activity (low risk to their status at least, higher risk to their careers) at a time period when they should be taking the most risk with their career.

Sure, there are some types of research that can actually work for PhD majors looking to get on the job market later (as you mentioned petroleum engineering is a good example where the PhDs will likely be in high demand), but that is the exception and not the rule.

For the rule, look at Wall Street where the PhD quants are sent to fiddle with their equations until it gives them the answer that guys who entered the industry right out of college want.

Unless the industry requires a PhD for the worker to have an impact it is probably a bad idea. At the very least, most of the people getting their technical PhD's who plan on going into industry should understand that unless their current research is ground breaking then dropping out with just their Masters is probably their dominant strategy. They get the bump up in school name recognition if they needed it and can be productive for 3 to 5 more years of their life.