A recent discussion with some local high school students further reinforced my opinion that our educational system fails miserably when it comes to teaching students about economics in general, and about how Alberta’s economy works, specifically.
For many years now, our public education system has avoided discussions of such topics as free enterprise, capitalism, and of course, that most nasty of all words: profit. Unfortunately, by refusing to teach such topics, these same teachers are leaving students totally unprepared for life in the real world. After graduating, these students are expected to survive in the marketplace by playing a game whose rules they don’t know. They don’t know the game nor do they understand the responsibilities they are expected to manage. If ever there was a recipe for disaster, this would be that recipe.
While this column is far too short to permit a thorough study of economics, we do have the space to review one key concept – a concept that will determine the total compensation these same students will earn in their lifetime. Everyone who is completing their education and planning for their future simply must understand that the rules of supply and demand apply to employees just as much as they apply to timber, minerals and energy.
Employers, by necessity, need to consider potential employees as simply a product, and the question they need to answer before they hire anyone is whether the product will generate more revenue than it costs to employ them, or will costs be higher than revenue? Only when revenues exceed costs will the employer be confident in offering a job.
This whole issue of jobs has been so thoroughly misrepresented by politicians and the media that it’s a miracle anyone understands the issues. When evaluating a potential employee, an employer needs two key pieces of information: what skills does the potential employee possess and what is the value of these skills? A few examples should help:
A medical doctor specializing in brain surgery not only has a key skill that is in short supply, it’s also a skill that customers will pay a lot of money in order to access. This combination results in a very well-paid surgeon, simply because he or she has a skill that his company (in this case, the hospital or clinic) needs, a skill that carries a very high price tag. Conversely, a professor of ancient Turkish poetry also has a very rare skill, a skill that took him countless years to develop. However, the employer quickly realizes that there is virtually no demand, anywhere on this poor planet, for knowledge of Turkish poetry. The employer realizes the professor is likely to cost far more than any potential revenues the professor can generate, and the result is no job offer.
An even worse position is the candidate who possesses only modest skills and a poor education. While there is a need for people to pump gas, wash cars and dig graves, the reality is that the employer has a virtually unlimited supply of these poorly-trained individuals available to choose from, and can likely dictate the price he will pay for these services. The rules of supply and demand apply. The surgeon lives well, as the demand for his valuable services exceeds the supply, while the fellow pumping gas lives poorly, as there is an almost inexhaustible supply of people capable of doing the low value work he is performing.
By now, hopefully the light bulb has finally come on. All those lectures from Mom and Dad about getting a good education were true. But for those of you who still aren’t fully convinced – keep this fact in mind: there are only 24 hours in every day, and over the long term, most of us likely can’t sustain more than about 10 hours a day of continuous work. Since we are limited to these 10 hours, doesn’t it make a lot more sense to pick a job that’s going to pay you $100 per hour, rather than one that pays you $10 an hour?
Brian is a St. Albert resident and author of the upcoming book Our Sunday Cousins.
