Lion of the Blogosphere

Career tracks and merit

Libertarian-economist types believe that income is perfectly correlated with merit, and that merit is perfectly correlated with value creation. Because the unregulated laissez-faire market is so awesome. Everyone will earn exactly according to the value they create, which will incentivize maximum value creation and lead to economic Nirvana.

In the real world, income is determined by career tracks. It is easily observed that the primary skills valued by employers are skills that can only be learned on the job. The employability of a college graduate without the right work experience is extremely low. It’s hard for college graduates to find jobs, and when they do find a job it pays only a fraction of what experienced employees in the best career tracks get paid. (Whether or not people truly learn valuable skills on the job and don’t learn any valuable skills otherwise is open to debate. I am only explaining readily observable employer behavior.)

Thus the key to earning a good income is to get into a good career track so that one can acquire the career track record required to earn a high income. People who don’t get into good career tracks are screwed over by the American economy.

Libertarian-economist types will no doubt stress the merit-based aspects of getting hired into career tracks, but there are many more factors that are unrelated to value creation ability.

  • Coming from a socioeconomic environment where one would learn about the importance of attending prestigious colleges.
  • Coming from a socioeconomic environment where one would be directed towards scholastic and extracurricular endeavors that will look good on a college application.
  • Coming from a socioeconomic environment where one learns about the importance of internships, and has the financial ability to work for free.
  • Coming from a socioeconomic environment where one has social connections (often through parents) that give one preferential treatment in getting hired.
  • Being physically attractive, which helps a lot on job interviews.
  • Having a “good” personality, which helps a lot on job interviews. (“Good” means good for doing well on job interviews which may or may not also be good for contributing to an employer’s profits.)
  • The randomness of people who are not even considered old enough to drink beer making decisions about college majors that determine the course of their whole lives by limiting the career tracks they can get hired into.

The only objective merit-based determinant of career track is college grades. But this is only one factor among many that determine career tracks.

On the other hand, it should be noted that intelligence (as measured by IQ tests) is NOT normally a merit-based determinant of career track because employers don’t give IQ tests, and the College Board won’t even help you out here by sending your test scores to employers. Unless people use their intelligence to get into a prestigious college, select a lucrative major, and get good grades, their intelligence won’t help them make money in a white-collar career. And nothing I wrote in the previous sentence is contradicted by anything that Herrnstein and Murray wrote in The Bell Curve.

Written by Lion of the Blogosphere

July 21, 2014 at 11:09 AM

Posted in Labor Markets

60 Responses

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  1. It’s kind of weird how much employers value work experience in their hiring. If they can hire someone smart and motivated, the experience thing takes care of itself within a relatively short time even for fairly complex jobs. I guess since it’s hard to screen for “smart and motivated” they just default to something tangible they can point to.

    Jokah Macpherson

    July 21, 2014 at 11:14 AM

  2. “Libertarian-economist types believe that income is perfectly correlated with merit, and that merit is perfectly correlated with value creation. ”

    Strawman. Most libertarian-economists believe that markets have problems, but whatever government does is likely to make it worse. This is like saying “Liberals believe markets are evil and government can achieve perfect justice if taxes are high enough.”

    Hepp

    July 21, 2014 at 11:53 AM

    • Yeah, that’s right. Absolutely no one has claimed that there’s perfect correlation between these things. That’s ridiculous

      Foseti

      July 21, 2014 at 3:30 PM

      • Clearly they BELIEVE that the correlation is close-enough to perfect that the imperfections are not relevant to understanding economics.

        Lion of the Blogosphere

        July 21, 2014 at 4:07 PM

    • Economists do not believe that your pay equals the value you personally create. Econ 101 is that you get paid the value of the least productive person with the same skill set as you. This is because your boss can always replace you with that other person, so there’s no reason to pay you more than him, and of course there’s no reason to pay him more than his value to the company.

      This is the Econ 101 explanation for why unions work, for example. Negotiate in effect that your company not hire that last bunch of less productive people, and wages for everyone will be higher. Maybe you have to wait a week for the union guy to show up and change that light bulb, but boy will you appreciate it when he does. And put it in the contract that the janitor definitively is not allowed to change bulbs, because then next thing you know electricians’ wages are getting pushed down to the level of janitors’. (I’m not saying this is realistic, necessarily. Just that this is an example of a time when we teach in econ 101 how to get a big raise without creating more value yourself.)

      So I guess economists would back you up here – get on the career path with the well compensated people, Don’t put yourself in a position where you could be replaced by a low wage person. I can’t speak for all libertarians, but I doubt many would disagree with you either. I doubt there’s anyone out there saying “Just be the best janitor you can be and your boss will pay you more than any electrician!”

      Libertarianish Economist

      July 22, 2014 at 7:45 PM

  3. There has been lot of talk about unpaid internships. I believe in furure we will see lot of jobs that don’t pay salary, but the employee has to pay to the company to be allowed to work there. Employees and college graduates are willing to pay lot of money to be able to work and get work experience. Companies will also benefit because they will get free workers and also payments from them.

    hxxxa

    July 21, 2014 at 12:01 PM

    • Well most unpaid internships have to be paid for in the form of college tuition.

      ScarletNumber

      July 21, 2014 at 4:32 PM

  4. I knew somebody who was “on track” for top management at one of the public companies out here outside the bourough of Manhattan. Very good business mind, well-connected. He got cross-wise with somebody higher up the totem pole … and that was that. Out the door and couldn’t find anything else that wasn’t a demotion and would get him “off track.”

    This guy had a whole future he was banking on as a high-level executive so when this happened it just blew up his whole world–he knew he was done. He kind of lost it and did some really stupid things that got him sued. I think he ended up buying some franchise businesses. He had one of those huge, heavily mortgaged Executive McMansions that dot the landscape around here. No idea how the family ended up.

    My impression is that high-level corporate advancement is the same crapshoot as Big Law. Unless you can check off a long list of very wealthy, well-connected parents, Ivies, brains, credentials, right-place-at-the-right-time, etc., you really shouldn’t set your sights that high.

    The Anti-Gnostic

    July 21, 2014 at 12:06 PM

    • Credentials and brains are low on the priority list. The problem with Lion is that he failed as a law graduate and never worked in BIGLAW, so he’s making assumptions. I worked in BIGLAW as a support staff, non-attorney, and life in the big firms besides the long strenous hours are all about politics, which includes modern day flattery or brown nosing. To make a long story short, BIGLAW has a lot of nasty people who will back stab you if you’re not careful, and being smart but not all that likeable, can’t get you fired if someone who is less competent but well appreciated, rags on you to the partners.

      JS

      July 21, 2014 at 12:44 PM

      • * can get you fired

        JS

        July 21, 2014 at 12:51 PM

    • The guy you knew was an idiot. Don’t ever piss off people above you. Maybe one level above you once in a while, but never two levels or higher.

      I’ve been working in banking for almost 15 years (I just commented in another post). I’m middle, close to upper management. I got here by attending a good NESCAC school, dressing well, being in shape, being articulate in speaking and writing, doing a good but not great job, not pissing off management, learning a niche skill (mine is a foreign language, which is the primary business language at my employer), getting an advanced degree paid for by my old employer 10 years ago, etc. Hopefully I’ll jump up to upper management next year, but who knows?

      I definitely am not the hardest worker nor the smartest, yet I’m one of the best remunerated at my company.

      This is my n=1 experience.

      DdR

      July 21, 2014 at 1:41 PM

  5. Do you have to be attractive or can you have a distinctive look? Say like a young Jack Nicholson or Steve Buscemi? If you are unattractive, would it help to wear a high end cologne?

    Dave

    July 21, 2014 at 12:12 PM

    • If you are unattractive, go into fields that have more objective based measurement such as specialty surgery, pathology, or professional athletics.

      No one cares if you look like the elephant man if you can hit .400 or have the skills of richard steadman/james andrews.

      uatu

      July 21, 2014 at 7:24 PM

      • That’s even more difficult than faking attractiveness. There’s got to be an easy fix like cologne or weird facial hair. There’s this one vlogger I watch who doesn’t have as masculine a chin as he would like. So to add weight he grows a chin-strap goatee that fades into his jawline for definition. Tom Selleck is handsome because of his mustache. Steve Buscemi looks better with a goatee. I admire a non-handsome man who shaves his face. It shows courage. I wouldn’t hold that against him in a job interview. It’s not always about how good a person looks. It can’t be that base. When we look at a person’s face, they’re communicating with us without them speaking. There’s no way it’s just about looks. That’s a kid’s view of the world. And that vlogger, he knows his demographic is younger. Let’s hope the people giving us a job interview aren’t teenagers.

        Dave

        July 22, 2014 at 11:16 AM

  6. The first paragraph is a major straw man. It’s more accurate to say libertarians believe income should be correlated with merit, not that it actually is. Of the capital L libertarians I know (and the leaners like me), not one thinks we have anything approaching an unregulated laissez-faire market economy and they’d probably agree with everything in the rest of the post, just not regard it with the resignation you do.

    J1

    July 21, 2014 at 12:17 PM

    • I agree with you (and Hepp). Leon does himself a disservice with that strawman. Which, by the way, he’s claimed more than once. No libertarian I’m aware of would claim that the market is a perfect allocator of merit and value. That would require everyone to have perfect knowledge of their decisions.

      destructure

      July 21, 2014 at 2:02 PM

      • They SAY that when I make the post that way, but otherwise they arguments betray their TRUE thinking on that matter. Libertraians will never condemn rich people for getting rich while not doing anything useful for society. They will always insist that they were rewarded by the market for creating value.

        Lion of the Blogosphere

        July 21, 2014 at 2:14 PM

      • Lion, I see libertarians, Tea Partiers, and conservatives complaining about “crony capitalism” all the time. See the fight over import/export bank, which they are trying to get rid of. See also David Bratt, a libertarian capitalist who blamed big business for wanting immigration to drive wages down.

        Hepp

        July 21, 2014 at 3:11 PM

      • LotB,

        Which libertarians do you follow regularly? Of the ones I follow, all talk about the ill-gotten gains of wealthy people all of the time, so we libertarians are curious as to which weird cross-section you’re following.

        You may not recognize when they do because they never use the muddy term “value transference” and tend towards intelligent affability and dispassion instead of the mouth breathing rage that Elizabeth Warren Leftists exhibit when they’re yammering about wealthy people.

        runindogs

        July 22, 2014 at 7:03 AM

      • The standard belief of libertarian economist types like Gregory Mankiw is that taxes on the rich should be lowered because taxes on the rich discourage value creation, implying the belief that billionaires are so rich because they single-handedly created billions of dollars of value.

        Lion of the Blogosphere

        July 22, 2014 at 8:19 AM

      • LotB,
        Mankiw is a Keynesian supply-sider. Is he the only “libertarian” that you follow?

        runindogs

        July 22, 2014 at 3:42 PM

  7. strong post

    vic

    July 21, 2014 at 12:38 PM

  8. America’s careerism is unsustainable and will implode.

    Eradican was right and I kind of realized it as well. — Unskilled Proles who want to remain in this country and have a comfortable life should get into the armed forces or law enforcement. It’s dangerous in the process, but it beats sitting at home being unemployed.

    JS

    July 21, 2014 at 12:50 PM

    • I agree that law enforcement will not be automated, and that the military will continue to have a lot of manpower for political reasons, because it’s the only make-work program that Republicans will get behind.

    • * want a comfortable life

      JS

      July 21, 2014 at 12:54 PM

    • The Military isn’t for unskilled proles. It seems to be a good fit for above-average males (OCS) or those just outside of the ivy ug caliber (military academies). Doing your 5 years and getting out to go work in ‘make work defense private sector is remunerative. Staying in and coming up within the officer corps is also prestigious.

      .gov work isn’t just for nams – lots of above average whites with prolish tendencies leech off just as much.

      uatu

      July 21, 2014 at 7:29 PM

      • Serving in the military is considered “working” in the armed forces.

        .gov work seems to be the best gig in town now that private sector jobs are getting scarcer and they pay less than a liveable salary.

        Let’s face it, most jobs suck and working in America suck so bad for a country that prides itself as a 1st world nation. Long hours for a lot of routine work that should be cut in half. But keep telling proles otherwise, because they love to believe working hard is what makes life meaningful.

        I really love automation take full effect on most of our lives because people will not change their unevolved thought patterns.

        JS

        July 22, 2014 at 11:53 AM

      • It’s not as bad as working in Japan.

  9. This is why I hate the East Coast. In fact, your whole blog is one constant reminder of why I hate the East coast.

    chainsmoker

    July 21, 2014 at 1:31 PM

    • Correct! Northeast is all about career climbing.

      JS

      July 21, 2014 at 5:33 PM

    • While the Pac NW has lots of things going for it that lion readers would love, the women are dogs compared to acela corridor. Look on OkCupid sometime to get a sense of the female dating market population as a whole. NYC, Boston, DC (even philadelphia) women are much more attractive and educated with refined taste compared to seattle and portland.

      I don’t think lion’s musings are irrelevant for further down i5 in SF or LA. I can’t comment about SD.

      uatu

      July 21, 2014 at 7:32 PM

      • Correct. Women from the Northeast tend to be a lot more attractive than those from the Northwest.

        However, America has an overweight problem and far too many women wherever, look like they need a diet.

        JS

        July 22, 2014 at 9:19 AM

      • SInce NYC has a large transplant population, I noticed many of the ugly women are from very prole states. Met a few women in NYC originally from the deep south such Alabama and Louisiana, and they look terrible.

        JS

        July 22, 2014 at 9:22 AM

  10. “In the real world, income is determined by career tracks. It is easily observed that the primary skills valued by employers are skills that can only be learned on the job. The employability of a college graduate without the right work experience is extremely low. “

    That’s why minimum wage laws are bad. Min wage laws would be better described as discrimination against people who’s skills aren’t sufficient to justify the minimum wage. An employer may be willing to hire someone who’s skills justify $5/hr but not if they have to pay them $8. What if someone doesn’t have skills that justify $5/hr? How is that person supposed to increase his skills if he doesn’t get that job in the first place? That’s why unions are always pushing for higher rates and min wage laws. Because it restricts the number of people who can enter the field and gain the skills to compete with them in the future. Its no different than the AMA restricting the supply of doctors to keep medical fees higher.

    **

    PS: Other than the strawman arguments about libertarians, I think this is an outstanding post.

    destructure

    July 21, 2014 at 2:14 PM

    • This is one of those nonsense libertarian arguments about how making employers may more money to employees somehow hurts the workers. The only time libertarians ever care about the little people is when we are talking about raising the minimum wage.

      I guarantee that there will be no massive increase in unemployment the next time there’s a minimum wage increase. This is a safe guarantee because it hasn’t happened in the past.

      Lion of the Blogosphere

      July 21, 2014 at 2:23 PM

      • “I guarantee that there will be no massive increase in unemployment the next time there’s a minimum wage increase. This is a safe guarantee because it hasn’t happened in the past.”

        In that case let’s raise the minimum wage to $100/hr so everyone can be rich.

        destructure

        July 21, 2014 at 6:47 PM

    • Depends on the size of the increase – a lot of min wage jobs are at the threshold of being replaced by automation cost-wise. As you’ve noted yourself, automation will increasingly replace workers in low paying jobs, then start moving up the pay scale. Leaving the min wage where it is won’t slow that process, and increasing it will accelerate the process.

      J1

      July 22, 2014 at 5:42 PM

  11. LotB: Thus the key to earning a good income is to get into a good career track so that one can acquire the career track record required to earn a high income.

    Absolutely. As I’ve shared before, due to a couple of layoffs, a couple of missed/blown opportunities, the “Great Recession,” and my own failure to get on a good career track , my current salary is the same as it was in 1999. I haven’t had an unsuccessful career, it just could have been a lot more lucrative, and at this point further upward mobility is non-existent. Nonetheless, due to consistent, conservative investing and expense control, I am a self-made (liquid) millionaire at age 50.

    E. Rekshun

    July 21, 2014 at 2:18 PM

  12. The prestigious college doesn’t have to be HYP, it just has to be well regarded in the field you want to work in and the area (geographical) that you want to live in. If you don’t know what field you want to work in, or where you want to live then either get into HYP or don’t go to college yet until you do.

    Anonymous

    July 21, 2014 at 2:25 PM

    • This has been my observation. Attending a well-regarded program at a locally respected college will open the doors to a very comfortable life. The VAST majority of people are not seeking, or even contemplating, national or international prominence.

      I have dealings with a group of professionals in a small college town (pop. is approx. 8000) in an east coast state. The town is movie-set beautiful, the surrounding countryside is exquisite, the residents are the sort of educated bobos David Brooks loves (86%+ white) and the cost of living is moderate. My impression is that for these people being a big fish in this sort of small pond is heaven.

      Why shouldn’t this scenario be what most of us aim for instead of throwing ourselves against an impenetrable fortress like Manhattan?

      vinegary

      July 21, 2014 at 8:58 PM

      • Because many people love status signaling. They would rather take abuse to garner status than to have it easier.

        The best college town in North America is probably Montreal, which has all the amenities rivaling that of NYC.

        It seems like Manhattan is the bar to set and always have been. If you can dominate in NYC, then everywhere else seems like a walk in the park.

        JS

        July 22, 2014 at 12:01 PM

      • Frank Sinatra said something like that in a song.

      • However, it seems like the wealthy globalists will be taking over NYC, especially with its real estate market.

        It’s too bad we don’t have international folks telling liberals to get lost. NAMs are at the bottom of the barrel when it comes obsolescence in our global village.

        JS

        July 22, 2014 at 12:25 PM

  13. “Libertarian-economist types believe that income is perfectly correlated with merit, and that merit is perfectly correlated with value creation. ”

    Nah. I suspect that you’re confusing recognizing people’s assessment of value with claiming a perfect correlation to merit. Libertarian-oriented economists are well aware of the distinction.

    rob

    July 21, 2014 at 3:38 PM

  14. Unless people use their intelligence to get into a prestigious college, select a lucrative major, and get good grades, their intelligence won’t help them make money in a white-collar career

    Are you sure about that Lion?  In my humble opinion, the world is full of high IQ people who got rich despite attending a mediocre college, if they even attended college at all, and a lot of rich ivy league grads would still have become wealthy had they not went to top schools because they have brains, work ethic and powerful parents.

    Getting credentials probably helps a lot, but even among people with similar education, high IQ folks make more money: 

    http://brainsize.wordpress.com/2014/05/24/even-among-college-graduates-iq-and-income-are-correlated/

    pumpkinperson

    July 21, 2014 at 4:45 PM

  15. I just though of a good idea. Wouldn’t it be great to come up with a cologne specifically for proles? It could be called Prologne.

    Dave

    July 21, 2014 at 5:24 PM

  16. As I have said time and time again, Lion is MUST READ if you are in 8th+ grade or are parents of children.

    All prole HS guidance counselors should be reading Lion and dispensing wisdom if the prole kids in their schools don’t get it at home from their parents.

    I am not all that different in intelligence from my siblings, but I was naive in the ways of American higher education and career tracking whereas I gave my younger siblings Lion-esque advice (prior to me even stumbling onto HS/Lion) and they are all ‘killing it’ in choice career tracks which lead to success.

    That said, even if you lead someone to a choice career track, it doesn’t meant it’ll work out as many choice career tracks are NOT self actualizing. One of my siblings is in a choice career track and wants to quit to become an urban farmer.

    One thing Lion does better than sailer and everyone else in this type of blogging is he has kept on hammering away at this specific topic regarding college and career track choice/optimization.

    As for IQ testing, some employers do give them – McKinsey’s PST is g-loaded and CIA testing is very g-loaded (atleast for NCS and DI – I don’t know if DST computer types/engineers/scientists get tested). Oddly enough I don’t think the State’s FSO or FBI Agent testing as being that g-loaded. FSO is more prep-able/domain knowledge based and FBI Agent testing is weird…easy but weird.

    If McKinsey can test, other firms can as well – it is a function of spending the money to get your test validated as being non-discriminatory. Every f500 firm can afford iq testing if McK can.

    uatu

    July 21, 2014 at 7:08 PM

    • The problem with Lion’s advice – obsolescence!

      The world will be a very different place and perhaps a scary one in 2020. I really don’t understand why commentators are beating the elite career track subject to death.

      JS

      July 22, 2014 at 3:42 PM

      • And there are boomer types who comment here. They really have no clue!

        JS

        July 22, 2014 at 3:42 PM

  17. Long story short…Western civilization is developing into a soft feudalism with one of the key differences being our medieval forbears made no pretense every member of society was equal.

    Oswald Spengler

    July 21, 2014 at 8:01 PM

    • “Western civilization is developing into a soft feudalism with one of the key differences being our medieval forbears made no pretense every member of society was equal.”

      Yes, and that’s exactly the reason why a lot of aristocrats actually supported the end of the monarchy in Europe during the XVIIIth to XXth centuries. They saw the transition to bourgeois democracy as better for their long-term interests than maintaining old-fashioned aristocracy.

      Thomas

      July 22, 2014 at 12:33 AM

  18. In any particular case, your race may not accurately predict your IQ. But, as a group, your average IQ will be predicted accurately by your race. The same is true here. My success as a trial lawyer was not guaranteed by my IQ and law school success, but, persons with my IQ and performance in law school perform well above average in their careers. The Lion needs to quit being a victim.

    John Reynolds

    July 21, 2014 at 9:26 PM

  19. Guys Lion’s age who did 2 years in the regular army after high school then joined the NYPD are retired now, with gold-plated benefits.

    Dave Pinsen

    July 22, 2014 at 1:41 AM

    • Yep. In 1983, at age 20 and half way through my BS Computer Science degree, as a back-up plan I took the firefighter exam for my hometown Boston suburb. I did quite well on the exam and the mayor called me down to city hall to offer me the job. He said, “I know your going to college. This job pays $8 per hour, are you sure you really want this job.” While $8 per hour was decent pay for a 20-year old in 1983, I declined the job offer and was removed from the hiring list, and went on to finish my BS, MS, and MBA. The other guys that were not going to college and accepted that firefighter job and retired in their mid-40s collecting $50K+ annual lifetime pensions. I’m still working.

      E. Rekshun

      July 22, 2014 at 11:27 AM

  20. Lion is completely right about career-tracking. The signaling that is done through the right college and the right internships for heavy-duty fields like ibanking and consulting really matters, no matter how well you may do the work.

    Being smart enough to handle some career-track without the credibility generated through status signaling means you will never get through the door.

    map

    July 22, 2014 at 1:52 PM

  21. Way to call out libertarians on their true beliefs about value creation, Lion. Love it.

    FWG

    July 22, 2014 at 2:22 PM

  22. As Leveraged Sellout wrote a long time ago, this is the career tracks that non-prole, but non-toos non-nams dream about:

    uatu

    July 26, 2014 at 9:30 AM


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