Capitalism in education

Not to be confused with the concept of for-profit educational institutions, which are crap scams.

Economic theory is rooted in a particular perspective, and looks at the labor market from the point of view that employers are the demand-side and workers are the supply-side of an equation.  Employers compete for workers under this paradigm, while workers may choose to work or not, but always work for the wage that is equivalent to or higher than the value they place on their free time.  It is little wonder, then, that my economics teacher in high school was unable to articulate a reason for students to stay in school beyond the chart that showed average incomes of workers who had achieved various education milestones.

You've seen the chart, where high school dropouts make a salary below the poverty line, while those who graduate make more, and those who go on to college make even more than that.  Topping out the list are those who earn masters and doctorate degrees.  His chart had actual numbers, a concrete way to lay out your future, right?

Why was it that the more schooling you received the more money you made?  That was never explained in his dry, verbose lectures.  We spent a few minutes on the chart, then learned the rest of the semester why markets were wonderful.

It wasnt until I came across some European economic literature (probably rooted in Marx) about welfare states in Europe that I fully understood labor markets.  One key point jumped out at me: workers compete against each other for work.  By applying the principles of traditional economics, supply and demand, to the labor market from that perspective, my high school economics teacher's chart made sense.

Under the traditional labor market model, as I previously wrote, employers are the demand side of the labor market while workers offer a supply of labor for various prices.  Employers compete with one another to offer the best package of wages and benefits to entice workers off their couches and into employment.  Workers can always (and do) opt out of the labor market when they choose to do so.  Employers cannot opt out of the market, because they always require labor. 

I fundamentally disagree with the crux of what I've just written; yes employers compete against each other, however workers cannot opt out of the labor market.  That employers must entice workers into the labor market neither reflects the reality faced by most workers nor concedes how paltry the few welfare tools are that allow them to attempt to opt out.  I do not know a single person who can quit their job and take a year off on a whim; even women who have babies must return to work quickly, otherwise the household requires a huge upheaval to make her staying home realistic.  The theory, however, is a cornerstone of modern economics so it isnt going anywhere.

The employment (rather than labor) model I have cobbled together is done so from the prespective of the worker.  Employers are the supply side of employment, while workers are the demand side of the equation.  As the number of workers in competition for employment increases, wages will fall.  This makes perfect sense, as the more competition for employment the larger the pool of labor to the point of a surplus, where wages fall to the lowest bidder, in effect.  Naturally the fewer workers competing for employment the higher wages will be.

Now imagine the salary chart as tiers of employment under capitalism.  The bottom rung, those with the largest number of workers, also has the lowest wages.  This follows because the work done by the least-skilled workers can be done by anyone, thus the pool of possible talent is everyone on Earth.  We see this level of employment in sweatshops in places like Asia; kids are doing this work because it requires so little skill or knowledge.  How does a worker move out of this pool of workers and make a better wage?  By acquiring additional skills that the others lack.  This is the equivalent of the high school graduate; a student has completed more math, reading, and science skills than a dropout and thus has more skills than one who did not stay and acquire those tools.  By continuing education to college, the student is assumed to have acquired even more skill sets and participates in an even smaller pool of workers competing for the same jobs.  Continuing education beyond college narrows the competition further, resulting in even highers wages.  Ultimately, the goal of workers should be to move into employment that can not be done by anyone else on Earth, resulting the highest wages imagineable. 

In short, workers compete against one another for jobs, and the more skill sets you acquire through education, the more money you'll make because you'll be competing against fewer workers.  It is  simple but not taught to students--this is how to succeed under capitalism.

One reason why its not taught might be that these skill sets can be acquired outside of institutional education.  Witness Bill Gates and the other whiz kids of his generation, few of whom graduated college.  They created a job description so specific, requiring skills that only they had, that they were billionaires in their 30s.

Trade schools also offer opportunities to acquire skill sets, and in America for the longest time trade schools were associated with labor unions.  No conservative administration would suggest a path to success for students that might empower organized labor.  This is no longer true with the flurry of private trade schools producing mechanics and medical assistants; perhaps it is finally time to let students in on the secret to success.  It is also time for school boards and state departments of education to gear their schooling programs towards this idea of skill-set achievement, and the myriad ways such achievement could be confirmed beyond standardized tests.

What are the implications to schooling from the perspective of acquiring skill sets, versus the traditional model?