Ezra Klein talks to Kevin Roose about Young Money and how Wall Street recruits so many insecure Ivy League grads:
Ezra Klein: My big takeaway from your book was that Ivy League graduates aren’t going to Wall Street because they love risk and want to make a ton of money. They’re going because they hate risk and are terrified about what to do next and Wall Street has figured out a way to calm their anxieties.
Kevin Roose: Wall Street invented this new way of recruiting in the early 80s. Before that they hired like any other industry. If you wanted to be a banker you applied for a job at a bank and they hired you or they didn’t. But in the early 80s Goldman Sachs and others figured out they could broaden their net and get lots of really smart people if they made it a temporary position rather than a permanent one.
So they created the two-and-out program. The idea is you’re there for two years and then you move onto something else. That let them attract not just hardcore econ majors but people majoring in other subjects who had a passing interest in finance and didn’t know what else to do. People now think going to a bank for two years will help prepare them for the next thing and keep them from having to make these hard decisions about the rest of their life. It made it like an extension of college. And it was genius. It led to this huge explosion in recruitment and something like a third of Ivy League graduates going to Wall Street.
EK: This seems really at odd with finance’s vision of itself as a world of capitalist cowboys.
KR: We think of Wall Street as being full of these crazy risk takers. But in a lot of schools it’s these scared organization kids going to Wall Street. One thing Wall Street does that’s really smart is they actually tell you way earlier than other industries if you got a job. They’ll let you lock the job down in the fall of your senior year. So you can take that job on Wall Street or you can gamble on getting something after you graduate.
EK: One of the other programs that uses that model is Teach for America. And it’s amazing, anecdotally, how often you see college seniors deciding between making huge money on Wall Street or making almost nothing with Teach For America. It really suggests to me that this isn’t nearly as much about the money as people think.
KR: The lesson of that is you don’t have to pay people a ton of money to come to your program after college if what you’re giving them still offers prestige and structure and the sense that they’re not signing up for something forever. Teach for America has really approximated the banking model without the money. If what you’re seeking is short-term rewards there’s no way you’d choose teaching in the Mississippi Delta over working at Goldman Sachs but there’s something calling people to do work they find meaningful.