The Kobayashi Maru Test and the Job Market   (May 11, 2012)

The conventional pathways in the job market aren’t working any longer; the alternative is to exit the no-win scenario.

The Kobayashi Maru test of Star Trek fame is a classic no-win situation. Star Fleet Academy students are given command in a no-win scenario: either ignore a distress call of a Federation ship inside the Klingon (enemy) zone or enter the zone on a doomed rescue mission and lose your own ship in a hopeless battle against vastly superior forces.

Captain Kirk evaded the no-win choices by reprogramming the computers to enable him to win. I think the job market can be profitably viewed as a Kobayashi Maru test: the conventional either/or choice--do something you dislike for job security or go to grad/law school for an advanced degree--is a false choice.

Let's start with some sobering facts. Although what classifies as "essential" is open to interpretation, the secure jobs will likely be the essential ones that maintain the core infrastructures of everyday modern life: water, sewage and electrical systems, the energy complex, public safety and health, agriculture, railways, network security, etc.

How many jobs are essential is anyone's guess, but it is certainly less than 100% of the 140 million jobs that currently comprise the job market. My own guess is 20%, based on the Pareto Distribution (the 80/20 rule). Even if we stipulate 50%, that still leaves a lot of surplus jobs.

Some essential jobs are supposedly going begging, but in general supply exceeds demand. Certain skilled blue-collar trades are apparently short-staffed: pipefitters in oil refineries, for example. It may be a misalignment of people who want the work and the location of the work, or a dearth of apprenticeships in these trades, or some other factor.

This shortage of qualified workers is the exception, I think. In general, supply and demand works like this: when demand exceeds supply, costs/wages rise. Then people respond by entering the lucrative field until supply exceeds demand, and prices/wages decline.

A lot of people are assuming the healthcare field will be permanently short of workers, but if enough people reach this conclusion then qualified labor will be in oversupply. The same can be said of MBAs and a number of other degrees that are widely viewed as "meal tickets" to a secure job. Since millions of other people are pursuing the same path, there is now a glut of MBAs and lawyers.

The problem is that the job market is not causally aligned with education. If we encourage a million students to get PhDs in physics and biochemistry, that doesn't mean the economy will magically create 1 million jobs in these fields. These fields are small not because there is a shortage of qualified labor, but for other reasons: the limitations of Research and Development funding, the limited market for products in these fields, and so on.

While a highly educated workforce can do a wider range of work, it doesn't necessarily follow that the economy has more higher-level jobs. One of the key reasons for the confidence that higher degrees were secure "meal tickets" was their relative scarcity: there are relatively few PhDs in math, relatively few physicians, etc.

But this belief is implicitly based on unlimited funding. When funding goes away, then there is suddenly a surplus of once-scarce "knowledge" workers. As more people get college educations and advanced degrees, the scarcity value of those degrees declines. In many fields, the scarcity value is zero: there is an abundance of people with degrees and a shortage of paid jobs.

That which is unsustainable will go away. As I noted yesterday, devoting 17% of our GDP to healthcare is so wildly out of line with what other nations devote to healthcare and with the surplus generated by our economy that we can safely conclude that U.S. "healthcare" costs (a.k.a. sickcare) will shrink by about 50% in the decade ahead. Either wages will be cut or people will be laid off, or some combination of both.

The only other alternative is to print money with such abandon that it loses most or all of its value. In that case, someone may earn $100,000 but that will at best cover a month's groceries.

That which is unsustainable will go away, and so basing career choices on unsustainable systems is like reckoning you can beat five Kingon warships with your single vessel.

If security is the goal, there will be stiff competition for "essential" jobs, as everyone else sees these as secure, too. This is where graft and corruption come in handy; in corrupt locales, the few plum secure positions are passed on to family members or those who paid a hefty bribe.

If you want to make a lot of money in the Status Quo, the competition will also be fierce. Although various people reach somewhat different numbers, it is generally agreed that the top 1% of earners garner about 20% of the nation's total income, the top 5% pull down about 33% of total income, and the top 10% harvest around 40%-50%. The top 25% skims about 65%.

The top 25% of taxpayers--34 million workers out of a workforce of 160 million and 140 million wage earners--pay almost 90% of all Federal income taxes. Where Do You Rank as a Taxpayer?

An adjusted gross income (AGI) of $66,193 or more puts you in the top 25% of earners. The top-earning 25% of taxpayers reported 65.81% of all AGI and paid 87.30% of total federal income taxes ( $755.9 billion).

If we look at wealth, the top 20% own 85% of the nation's private wealth.

What is striking is how concentrated the earnings are in the top of the pyramid. Those between 11% and 20% earn between 15% and 20% of total income, less than half what the top 10% earn.

That means almost half the national income flows to the top 10%--14 million earners out of 140 million. (As noted here recently, 38 Million Workers Made Less Than $10,000 in 2010-- Equal to California's Population The Atlantic magazine).

Most of the top 10% are those you'd expect to be there: corporate managers, physicans, attorneys, business owners and high-level knowledge workers such as researchers and professors. But the pool of people with these credentials and training is far larger than the top 10%: competition is fierce.

When competition is fierce, you not only have to possess the requisite drive and perseverance, you also have to love the trade. If you're just hoping for a secure job but could care less (or even actively dislike) the work itself, you will probably lose out at some point to someone who wakes up excited to go to work.

I am not in the top 10% nor am I in an essential field. I am one of the other 70%. For me, it's enough to be useful and avoid being a burden to others. In my view, life can be very good indeed in the bottom 70% if you have a very low-cost lifestyle that enables you to live on a modest income.

I recently received a request from a young man for my two cents on a career choice he faces. He explained that he has two opportunities: Option 1, gaining acceptance to the local nursing school, and Option 2 an exciting new MBA program that focuses on sustainability and the green economy that cost $55,000, to be funded by student loans. The goal of this option would be a career in clean tech. Since he already has a bachelor's degree, the nursing school's cost would be considerably less.

My two cents of advice was to seek a third path. Since I have started and operated small businesses and hired a lot of people, my perspective is that of an employer as well as that of a potential employee:

I suppose this may sound like cheating, but I view the choice you present as a bit like the Kobayashi Maru test in Star Trek-–a no-win situation.

It seems clear you are not attracted to the day-to-day work of nursing, so you would be unlikely to feel fulfilled in that career.

You seem enthusiastic about the MBA but $55K in debt for a program whose practical impact in the real-world job market is unknown is risky. I would find out as much as possible about the curriculum of this MBA program and then set about learning it all on my own. No credential will be issued, but if you can actually do the work, then somebody who has moxie will hire you over the person with the credential.

Perhaps you can apprentice with some real clean-tech company in the real world based on what you learned on your own. I personally would be much more impressed with someone who learned a curriculum on their own and avoided debt entirely than with someone who loaded up with debt in a conventional fashion. If someone can creatively solve the problem of learning without acquiring a mountain of debt, then they will probably be pretty good at solving whatever problems I have in my business.

Or I would start a dialog with the school and say you’d like to take the program but can’t borrow any money—are there any jobs on campus they could give you? I would email the professors directly and start a dialog with them—how can I do this without debt? People rarely ask outside-the-box questions or make outside-the-box suggestions, and as a result alternatives don’t get explored.

You already have a B.A., so that is sufficient evidence of your academic ability. Having hired people myself, I am always looking for the self-motivated person who can do the work, regardless of their credentials or lack thereof.

In general, the conventional pathways aren’t working any longer. They may seem to be working, but that’s a temporary illusion. The most important skill is to be able to get the work done in a competent manner without imposing needless difficulties on your colleagues and those who are paying you.

Here's what you get if you play the Kobayashi Maru test as programmed: a $200,000 education and a $700/month job I've Got A $200,000 Education, A Great Resume And An Empty Inbox, or a PhD and a $700/month job The Ph.D. Now Comes With Food Stamps.

Will an unconventional approach succeed? There are no guarantees that any approach will work; security is always contingent, and all we really have is opportunity. Failure is an integral part of how we learn.

Nobody knows what the future holds, so in my view the most secure strategy is not to look in the rear view mirror for an elusive security but acquire a broad spectrum of skills. This quote from Charles Darwin embodies this perspective: "It is not the strongest of the species that survives, nor the most intelligent, but the ones most adaptable to change."

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