Market value of skills

0:00- [Instructor] So here we have a picture of a doctor, a plumber, and a fast food worker. And what I want you to think about is who do you think makes the most money, who makes the second most money, and who makes the least money? Well, you don't always know, well, first of all, just by looking at someone, but if we're seeing a doctor, I think most of us would think that they are making the most money, most, and that maybe the plumber is in between, so I'll say in the middle, and that the fast food worker, right over there, is making the least.

0:39But a question I have for you is, why do you think that is? And if that is the case, why wouldn't the fast food worker just trade their job in to become the plumber, or even better trade their job in to become the doctor? What do you think is stopping them? Well, as you can imagine, the discussion we're having is the market value of skills, and skills have a lot in it.

1:04We're talking about things like knowledge. We're talking about things like education, which hopefully goes hand in hand with knowledge, but you can get knowledge outside of formal education, and you could get a lot of education, but maybe not as many times, or maybe not to the same degree to have knowledge as someone who maybe has a lot of experience, or who's seen a lot.

1:26And I guess related to that, it depends what skills you have that knowledge and education around. There might be some that there's just a lot more demand for than others. And maybe related to that, experience. Where is that experience? Not all experience is being valued equally by the market.

1:46Now, related to education, actually I could put a separate one. I'll put training right over here that you could think of as more on the job, or more hands on, although it could be closely linked to education. And then of course, also closely linked to education, maybe it would be in the same bullet, but I would put credentials.

2:04And if you look at these three, the doctor, in most cases, is definitely going to have the most education. A doctor is, after high school, going to college for four years, and then four years of medical school, and then depending on what they specialize in, they could be doing three to eight years of residency, and fellowship, and specialization.

2:27So they have a lot of education and similarly, they have a lot of training. They have a lot of credentials. And then, as part of their training, hopefully they're getting a lot of skills, experience, and knowledge. And so in this situation, it's not a coincidence that the doctor will be the most highly paid.

2:47And you might say, well, what's stopping one of these other two folks from becoming a doctor? Well, that's a pretty big barrier to say, wow, I have to go to school for a lot longer. And it's not just sitting in school, you have to do really well in school an get good grades, and get into medical school, and then get into a residency.

3:02It is a long road. And so, it's not surprising that the doctor is highly valued. Now, there might be people with similar amounts of training that might be really hard to come by. For example, you get a PhD in philosophy, you still might not make as much as this doctor, you might not even make as much of a plumber, because maybe that's a situation, and there might be different examples where this is true or not true, where society isn't saying, oh, we desperately need more PhDs in philosophy, but they are saying, we desperately need more plumbers.

3:35So even though someone is maybe more educated than that plumber, the plumber might be making more because there's more demand. So it's not just about education or how many years you've been working on, it's also how much demand there is in society. But, moving on to the plumber, the plumber's probably in between the two.

3:53The fast food worker, there's very little education that you might need for most of these jobs. They're oftentimes people's first jobs, so they're not really requiring a ton of experience. They oftentimes will train you on the job, and skills on the job. Credentials, maybe a high school diploma, or maybe not even a high school diploma.

4:13So these are the least there. And then the plumber's in between. You can have, you need, usually, you definitely need some knowledge, skills, experience. You definitely need training, maybe through some type of an apprenticeship, maybe some types of credentials.

4:27You have to be certified in certain areas to be able to work on people's plumbing. And so, once again, not a coincidence that the plumber is in between. Now, some of you might be thinking, okay, is the amount someone gets paid always equal to, let's say pay? Is this equal to social value?

4:49Well, this is an interesting debate, but I think most people would say maybe a little bit, but not really. Because we can definitely find folks that create incredible social value, say, and that's a question mark there, that's hard to read, say a school teacher who might make less than say, a social media influencer, but sometimes the quirks of society will pay that social media influencer more, and maybe that social media influencer, there could be good influencers, but there might be ones that are in some ways are making people feel bad about themselves, or making them want stuff that they don't need, while that teacher is really empowering folks.

5:27So my personal opinion is that pay does not necessarily equal social value. In fact, it's not hard to think of examples like I just gave you, where someone's social value could be much higher than someone else, whose pay is actually higher. But this is just for you to think about, that the pay is associated with at least how much the market values something.

5:49And we could debate whether the market should or shouldn't value someone that much, but it's a way of just saying, all right, there tends to be some relation between things like what I have listed here and how much someone gets paid in most circumstances.