Your value in the marketplace is in direct proportion to the importance and complexity of the problems you can solve and solutions you can provide to your customers. Put another way, you can’t earn a brain surgeon’s salary with a talent level that qualifies you to be a convenience store clerk.
This principle applies to organizations and economies, too.
Apple reported second quarter revenue exploded by 83 percent in 2011. Some analysts believe that its revenue could grow by 50 percent per year through 2012. Apple isn’t the only player in the markets that it serves. It is simply the best at providing a solution that customers want and are willing to pay a premium to buy.
The U.S. economy, unfortunately, isn’t Apple. We don’t provide, as a national economy, products and services that solve problems or provide solutions that people are willing to pay the prices we need to support the wages we want.
Yes, there are exceptions in highly specialized fields. But looking at the big picture, the global marketplace is dictating the price it is willing to pay for the talent we provide.
It pains me to say this, but there is no reason to pay more for the goods and services produced in this country compared to similar goods and services produced in other countries that pay their workers less money.
Our economy, in the macro sense, is being paid for the value we provide, and it just isn’t that much. As a result, wages are stagnant. When wages are stagnant, growth is stagnant. Here are three reasons why:
1. The rise of technology. The steam engine enabled the industrial revolution by overcoming the limitations of people and horses in the production of goods. It allowed organizations to be more productive, and it made certain jobs obsolete. The transformational impact of technology on productivity and jobs is a fact of life. While it enables new jobs, it decimates others.
2. The rise of globalization. There are two types of jobs: those that must be done locally and those that can be done anywhere. Jobs that must be done locally – like healthcare, fast food, education, and public safety – have grown in the United States. Jobs that can be done anywhere have, for the most part, left the United States or suffered wage stagnation because we are competing against an international pool of workers who can produce the same product at a lower wage. The result is a downward pressure on wages from increased competition both globally and locally.
3. The decline of talent (knowledge and skills) that allow us to differentiate ourselves. The Organization for Economic Cooperation & Development ranks students worldwide in the critical skills of math, science, and reading. In 2010, the U.S. ranked twenty-fifth in math, seventeenth in science, and fourteenth in reading. China ranked number one in all three categories. Hong Kong ranked second in reading and science and third in math. In South Korea, ninety-three percent of high school students graduate on time. In the United States, the number is seventy-five percent.
What We Can Control
Technology will continue to advance. Globalization is not going away. The only factor we – both individually and collectively – can control is our talent.
The easy answer is to throw more money at the public education system. As in most cases, easy isn’t the same as best. According to the National Center for Education Statistics, expenditures per student grew by 32 percent from 1994 to 2008. The problem with public education will not be solved by the traditional solution of throwing more money at the challenge
There are those who blame the teachers. There are bad teachers in every district, but they are in the minority. My experience is that the vast majority of teachers want to do a great job. They need the time, tools, and support from parents and administrators to do so.
There are those who blame the teacher unions. Every organization, public and private, gets the relationship with their workers and unions that they deserve. Wages, benefits, and working conditions are negotiated. There are unions that create barriers. On the other hand, why is no one asking who created the environment where educators feel so undervalued that must engage in adversary behavior to the detriment of student education?
The public education system is only as effective as the expectations of local communities and the quality of the leaders they put in place to guide their districts. The local school board sets the policy; hires the superintendent; and determines how money will be spent. We have to demand better performance from them.
Let’s Get Personal
Transforming the public education system is a long-term solution. That doesn’t help someone who needs or wants to earn more today.
Blaming technology and globalization won’t change anything. Passing protectionist laws might have a limited impact in specific situations, but that will not have a significant impact.
The only thing you can control is the value you bring to the marketplace. You must continually grow your knowledge and skills. Your personal economy will grow when the importance and complexity of the problems you can solve and solutions you can provide increase.
Next week will complete this series on growth with a look at the importance of confidence and swagger.