How To Escape the Purgatory of Minimum -Wage/Part-Time Jobs
In the age of automation, what’s scarce are problem-solving skills.
Readers responded positively to my recent essay on the emerging economy and jobs: A Teachable Moment: to the Young Person Who Complained About Her Job/Pay at Yelp and Was Promptly Fired
Many young people are stuck in the purgatory of minimum wage and/or part-time jobs: that raises the question: how do you get out of minimum-wage purgatory?
As I point out in my book on jobs and careers in the new economy, Get a Job, Build a Real Career and Defy a Bewildering Economy, issuing 500,000 MBAs does not automatically create jobs for all those graduates: credentials don’t create jobs.The conventional answer is, “get another college degree.” Perhaps this once had some value, but this now yields rapidly diminishing returns due to supply and demand: everyone else seeking an escape from low-wage/part-time purgatory is pursuing the same strategy, so there is an oversupply of over-credentialed job seekers.
What creates jobs are opportunities to earn high profits via developing profitable skills. Not all businesses are highly profitable; low-margin businesses don’t make enough profit to pay high wages.
Take a high-skill person and put them in a low-margin setting such as fast-food prep (very fast-paced and hard work), and their labor can only generate a limited value for the employer.
Value and profits flow to what’s scarce. Low-skill labor is not scarce–it’s abundant, hence, the low wages paid for low-skill work. Workers with credentials are no longer scarce, with the exception of physicians and nurses and a few categories of advanced degrees such as computer science.
What’s scarce are opportunities to earn big profits. Those who have never started a business or operated a business always assume a busy restaurant (for example) is very profitable–but this is not necessarily true. A restaurant with high rent, high labor costs, and high overhead expenses could be losing money even if it’s filled with customers every night.
Not only is it not easy to earn a profit, it’s getting harder by the day. Rents are soaring, permits and fees are soaring, regulationary compliance costs more, taxes are higher, minimum wages are rising and competition in most sectors that aren’t protected by the government is fierce.
Employees have to generate a substantial profit for their employers, or the employer will go under. Even large corporations that report big profits are slashing payrolls, trimming bonuses and benefits, and demanding more free labor (though they don’t call it that) from remaining employees. Executives who fail to top profit estimates are sacked.
What’s scarce and what’s abundant? Answering these questions helps us understand the economy and why high wages and profits flow to what’s scarce.
If there’s only one grocery store in town, access to fresh food is scarce, and that store can charge a premium. If there is only one plumber in town, the plumber can charge a premium equal to the travel time that would have to be paid to plumbers in other towns.
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