Networking and Future Career Benefits

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That's B a R U c h. edu slash unstoppable On the outskirts of the University of Illinois Urbana Champagne campus, you'll find a stately brick mansion built in nineteen oh seven The porch is flanked by a pair of ornamental lions, painted in gold And the property's craftsman architecture has earned it a place in the National Register of Historic Places Th things that go on inside. are a little less dignified. We get like Chili cheese dogs for breakfast Oh yeah, just partying Pretty fun time That's Anthony Anderson. Anthony, we call AA. I call him Tross because we called him like he was like double albatross. I don't even really know where that came from, but I just call him Tross all the time. And that is Charlie O'Neill. He has a few nicknames of his own Chuck Chaz. Yeah, Chaz is definitely stuck. R'Neil is in there. I think that's like my snapchat username. Albatross and Chaz are members of Sigma Alpha Epsilon, the country's largest college fraternity. Its purpose, according to its mission statement, is to make its brothers into true gentlemen Gentlemen who may or may not shatter an occasional window while hosting a rager There's just a lot of things that, you know, we don't necessarily break. O people break when people come over. Chairs, beds, tables, windows, mirrors, I mean, anything and everything It turns out that all that partying can pay off College students who joined fraternities had substantially higher incomes than those who did not And this occurs despite the fact that they have lower grade point performance in college decision to specialize more in building social capital is probably the right strategy for who they are. Forree Economics Radio Network. This is the economics of everyday things. I'm Zachary Kraacking Today, colloege fraternities College fraternities are structured kind of like franchises At the top, there are over a hundred national nonprofit organizations Each one has its own Greek letters, insignia, secret handshake, and set of bylaws Some are organized around particular religious faiths or professional aspirations But most are what you wouldd call social fraternities The typpe that throw big rush parties and tailgate at football games. Those national organizations oversee individual chapters More than five thousand five hundred of them in all. on eight hundred college campuses around the country And being a member of one isn't cheap Faternity chapters are run by students who are initiated as brothers and assigned roles within the house like president and treasurer. att the Urbana Champagne chapter of Sigma Alpha Epsilon. Chaz is the head of recruitment and Albatross helps plan meals. These students are responsible for raising the chapter's funds and managing the budget, which can range from tens of thousands of dollars to over a million dollars a year Which is a lot to ask of Fp boys I would definitely say our house is little dis organized when it comes to those kind of things. So there's definitely a big variety of where money might go If I had a great understanding of where all of our money went, you know, I would be very happy. When a chapter needs help It often turns to a specialist I'm Daniell Logan. I'm the owner of Paternity Management Logan offers services like accounting, budgeting, debt collection, and property management to fraternities at the University of Florida And it's not always a pretty job When I get a new client and I walk in, it is a huge mess usually. I don't know about you, but nineteen. twenty to twenty one year olds managing. Over a million bucks scares me That money comes from dues paid by fraternity members A brother at the University of Florida might pay around four hundred dollars per year directly to the chapter two hundred to the national organization And a hundred dollars or so to the Inter Faternity Council or IFC. That's the governing body for all the frats on a campus They'll pay around two thousand dollars for meals, fifteen hundred do for maintenance and utilities, and another fifteen hundred do in social and activity fees That's almost six grand And it doesn't include rent for those who live in the house Some frat houses are owned by the university or by individual landlords. But it's also common for properties to be owned by the National fraternity itself throughrough a house incorporation run by alumni In the US, fraternities collectively own around three billion dollars worth of real estate All those mortgage payments and property taxes are covered by the fraternity brothers who live there The chapter has to pay rent to the housing corporation, no matter how many guys are living in the house or not. So it's in their best interest to fill the house and make sure that they have enough rent Albatrross says that his total cost to be a member of Sigma alpha Epsilon at the University of Illinois runs around fifteen thousand dollars a year. And if a fellow brother doesn't fork over his share of the costs, Others in the house might take vigilante action Do things like go to their dorm room and take their Xbox, you know, kind of hold that hostage until they pay it Like things like that or just like, you know, every time you see someone in the vent with a drink and they just like slabap it other hand and you're like, up, sorry I didn't pay for Logan has a more formal approach for dealing with delinquents We keep new member forms and sign documents. when they join the fraternity. It says, Hi, my name is Joe. I agree that I want to be a member of this fraternity. I understand that I'm going to be paying dues my entire undergraduate career And if I don't pay them, I realize I'm going to get sent to court So As unfortunate as it is, if they don't pay their debt, we do the same thing that if you didn't pay, you know, any other debt would do. We'd have to send you over to the collections attorney. Collecting dues from your bros might not be a chill vibe It's important Because in a frooth house, there are always things to pay for. punch a hole in the wall. Any houses that have drywall, that drywall gets repaired constantly Doors get kicked in quite a bit When we came back from winter break, the pipes bursted everywhere, flooded people's rooms Someone set off a fire extinguisher as well, so that was also a big fee Things get stolen from our courtyard all the time to like speakers. We have tables back there that you know go missing if people forget to put them back in bigiggest expenses though or to cover a frat's liabilities. Insurance firms categorize fraternities in the same risk class as toxic waste dumps cararnivals and amusement parks. There are only a few specialized firms that offer coverage to Frats It's not cheap And each house has to cover its share Typically, national organizations procures it and then bills it to the chapters. I've seen them as high as seven hundred dollars per person per year and as low as two hundred dollars per person per year. It depends on how many times they've gotten in trouble to be honest. A fraternity is typically required to secure at least a million dollars in coverage to protect the fraternity, individual members, and the university in the event of an accident So if somebody gets injured, say they're having a party at the fraternity house and somebody I had a house that had an inflatable slide and too many guests were going down the slide at the same time. The slide deflated and we had a guest that had a severe head injury and had to go to the hospital. In that case, the National organization had the fraternities back. They' going to contact the liability insurance company, make sure that all the documents are turned in be the liaison between the chapter and the insurance provider But if a chapter does something especially stupid and illegal, The national chapter will often try to distance itself. and insurance companies may refuse to pay out O the past fifty years, hundreds of fraternity members and pledges have been killed or injured during hazing rituals and initiation ceremonies which often involve heavy drinking Faternity members are also three times more likely to commit sexual assault than their peers And fraternities can be held liable for offenses committed on their premises or at their events. Repeated lawsuits have collectively resulted in tens of millions of dollars in settlements Faternities have taken steps to curtail these risks. There used to be Six or eight weeks that you could have the men be what were called pledges And now for many national organizations, they're getting rid of the pledge period altogether. And they're saying, know, you need to initiate these guys and bring them in as brothers within forty eight hours That's to try to avoid some of these hazing allegations that have come out over the past several years Most national organizations also forbid chapters from using dues to pay for alcohol But Frapp brothers are resourceful I'd say for the most part, we usually just kind of do a big slosh. like everyone puts like ten dollars together and you know then comes a pretty decent amount Logan says that after covering its expenses, a well run fraternity should have around thirty thousand dollars a year left over Those funds are discretionary And social chairs like chaz Usually use them for events The vast majority of our fund goes toward Barn dances. And then if you're familiar with what block is on every Saturday, we're paired with a sorority and you know paying for block would go toward free cover at whatever bar There's a wide range in what a fraternity's discretionary budget might be. You'll have some fraternities who have a discretionary budget for the entire semester that's ten grand. and they'll have to figure out how to have those sorts of parties with that limited amount I have a fraternity whose social discretionary budget this semester was one hundred thirty eight thousand dollars That kind of money can lead to some questionable decisions I had a house that spent forty thousand dollars on a DJ to have a party. I'm like forty thousand dollars is a lot of money, man. Let's not do that again There are contracts that they'll sign for buses to take them to a big national away game. And so they'll sign these eighty five thousand dollars contracts for buses and hotels But sometimes, a fraternity has to spend some money to maintain its place in the hierarchy of Greek life There definitely is a social order and a social ranking. The for fraternity throws the best parties and has the best homecoming courting and homecoming pair and all of these other sorts of small nuances the fraternity can kind of change tears. It can extend to its members, in their Greek life and in their real life later. Huring kind of investment decision to join a fraternity partly a decision to take some time away from your academic work, knowing that this will hurt your grades but also knowing that the social skills, the social capital that you build, will have value That's coming up. The economics of everyveryday Th is sponsored by Mint Mobile Mint mobile plans are only fifteen dollars per month. Wondering what's the catch But there isn't one. There are no gimmicks and no gotches. 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Seriously All look it And we trust you to make smart decisions After all, you listen to this show see terms at disiscover. com slash credit card The first college fraternity in the United States was established at the College of William and Mary in seventeen seventy six It was originally a secret society H purpose was to help members form deeper social and professional networks But the fraternity system we know today It didn't really take shape until fifty years later at Union College My name is Stephen J. Schmidt and I am the Kenneth B. Sharp prorofessor of Economics at Union College in Schennected in New York Schmidt's school is often called the mother of fraternities In the eighteen twenties, it was the birthplace of Kappa alpha, sigmahi, and Dlta phi The first modern Frz. That heritage is partly what inspired Schmidt and several of his colleagues to write a twenty eighteen paper exploring the economic and academic consequences of the Greek system. The big question that this paper is about is if you join a fraternity, will that be financially beneficial to you prolonged period of time after you graduate the college Schmidt surveyed more than three thousand seven hundred alumni at a liberal arts college in the Northeast Some of whom were inf fraternities, and others who were not He collected data on GPA, income and a variety of other criteria She also used a bunch of fancy econometrics to limit selection bias becausecause it's possible that men who join college fraternities tend to be from wealthier families than those who don't What Schmidt found was surprising. The finding is that College students who joined fraternities had substantially higher incomes than those who did not We find an effect of about thirty six percent and that this occurs despite the fact that they have lower grade point performance in college. theirir grade point averages when they graduate are about zero point two five lower on the traditional zero to four scale. So Almost a plus minus of a grade thirty six percent boost in earnings is quite substantial. If you think of a graduate of a college typically going out and making something like sixty thousand dollars A year. Then if you get a thirty six percent increase, that's more than twenty thousand dollars a year every year for your career So if you make twenty thousand dollars extra a year and you do that for forty years, you know That's a hundred thousand dollars. There is an enormous financial incentive to Join a fraternity. Greek members make up less than three percent of the US adult population Yet, they' historically accounted for eighty five percent of Fortune five hundred executives and three quarters of US senators They've made up eighty five percent of Supreme Court justices since nineteen ten And the representation in Washington doesn't stop there. They even have their own political action committee dubbed the Frat Pact It's raised millions of dollars over the past thirty years to lobby for pro Greek causes, like fewer hazing restrictions and more tax breaks for fraternities So how is it that fraternity members have amassed so much money, power, and status Schmidt has a few guesses The first is that navigating the constant problems that arise in a house with thirty or forty other people helps them develop soft skills that are highly valued in business and politics Are you good at working with other people? Can you get a group of people together to work on a common objective Those kinds of things don't usually show up in your grade point average It could also be that fraternity brothers are just feeding off of each other's shared interests If you're around a bunch of other guys pursuing a career in banking, You're more likely to pursue that path for yourself There's another theory being in a fraternity brings you into a network of other people all across the country, all around the world these days, when you get into the workforce, that access to that fraternity network may be making you a more valuable I employee than you would be otherwise. it may be that