Business, Not a Job, Should be the Goal

Teachers, administrators, and well-intended family members inundate young people with the urgency and necessity of “getting a job.” Go to school, work hard, get good grades, go to college, and then get that job.

What is a job? We can think of it from a technical, economic perspective. To “have a job” means to be an employee. The imprecise term for employee in the economic lexicon is laborer. Any aggregate of laborers is known as labor. You hear about “labor costs” to a business, “labor turnover,” and so forth.

Labor is a factor of production also known as an input factor or production good or sometimes just an input. It isn’t the only input. The other class of inputs is known as capital. Capital is basically all the non-labor stuff that goes into the production of a good or service. Think of machines, factories, offices, equipment, trucks, and so forth. Capital and labor are the two primary classes of production goods.

Production doesn’t happen on its own. Another entity is required to marshal the various inputs in an organized fashion in order to achieve a goal. That entity, in economic language, is called the entrepreneur. The entrepreneur is an individual. The goal of the entrepreneur is ultimately to sell the result of his production process — his finished product (or service) — to a consumer.

With this technical language in mind, we can address the prudence of pouring into our young people the necessity of becoming an employee. This is tantamount to ushering fresh, young minds into the labor class. Is there anything wrong with that?

Consider that entrepreneurs face a dilemma. They must ensure that the costs of production are sufficiently less than final sales revenue — the sum total of sales proceeds — in order to make the venture profitable. Two obvious implications, in no particular order, arise. First, entrepreneurs would prefer to offer a product or service to the consumer at a high sales price, other things equal. Second, entrepreneurs would prefer to employ a production process at a low cost, other things equal. This second implication is the root of a potential problem.

One cost of production is the wages — or payment — due to labor. Excessively high wages cause production processes to cost more than the revenue that the entrepreneur earns. Therefore, when we press upon young people the importance of “getting a job,” what we’re saying is that our young people should aim to enter a class within the economic system to which entrepreneurs would prefer to pay less, other things equal. If we want the best for our young people, does it make sense to encourage them to prepare for less?

The well-intended are familiar with this dynamic even if only at low resolution. How does their advice to young people change given this idea that entrepreneurs would prefer to pay their laborers less?

Here advanced or “higher” education enters the picture. We tell our young people to pursue attainment of unique skills. If a young person has a unique skill, then perhaps he may distinguish himself from other laborers. He may even be of exceptional use to an entrepreneur. Consequently, the entrepreneur may cut the uniquely-skilled laborers’ wages last, or even raise them, if the demand for the given laborer from other entrepreneurs is sufficiently high. This is what it means for a “good” boss, employer, or entrepreneur to pay competitive wages. If an entrepreneur pays his uniquely skilled laborer too little, that laborer may seek higher pay from a different entrepreneur who recognizes his unique talents.

In economics we call this uniquely skilled laborer specialized. In fact, capital goods may be relatively specialized too. This just means that certain capital equipment performs more efficiently than other capital equipment for a given purpose. Likewise, specialized labor performs given tasks in a production process with greater efficiency than the less specialized. The most specialized input factors — be they capital or labor — provide the most unique benefits to a given production process.

Here’s the twist. The most specialized entities throughout the entire economy are the entrepreneurs themselves. Human beings are the most unique, least understood component of all potential economic processes. Each is full of unique, specialized potential. In religious vernacular, God blessed every individual with unique gifts. From a secular view, the unique nature of human beings is evident in our DNA. No two of us are alike.

If we want our young people to succeed, and if we know that in order to be successful they must specialize, and if we know that entrepreneurs are the most specialized among us, why do we encourage young people to “get a job” instead of become an entrepreneur?

My point isn’t to bash jobs. Jobs can be great avenues for training and developing an individual’s unique gifts and abilities. But a job should not be the end-goal. In fact, our message to young people should be the very opposite. Entrepreneurship should be the end-goal, and a job should only, if anything, be a means to that end. A young person who can discover his innate gift, his special talent to offer the world, without getting a job first is ahead of the game.

There are some practical reasons why employment as a laborer is less preferable to entrepreneurship. First, the laborer is dependent on the talents of someone else — the entrepreneur or entrepreneurs who justify the existence of the company in the first place. This reliance on another’s unique value-creation abilities constitutes delegation of control by the individual laborer over his own future. Other things equal, an individual would prefer greater control over his future to less, so this loss of control is a cost, not a benefit. Therefore, the notion of a “job with benefits” requires contortion of basic meaning. The phrase is painfully backwards.

Second, the opportunity cost to a young person of devoting his efforts to the cause of another entrepreneur, instead of to development of his own unique abilities is exceptionally high, other things equal. Young people are relatively unencumbered compared to their older counterparts. They have fewer obligations to care for family, greater energy, and a higher cognitive capacity to learn new skills. Rather than encourage young people to push their limits and discover their gifts, we usher them into employment at the very time in their lives when they are most naturally suited for personal exploration.

Third, the sooner a young person discovers his unique talents, the more time he will have to develop them and specialize even further. Entrepreneurs who start young, everything else equal, stand to contribute the most to society, find deeper fulfillment for themselves, and usher in greater prosperity for their own families. Instead, the cultural standard is to “get a job,” have a long career, and only then start a business. As if this is the preferred path! Again, there’s no question that if a given field is relatively hyper-specialized, then an individual may choose to work as an employee to further develop his own potential to contribute to it. But this should be the exception, not the norm, and certainly not the main message to young people.

The thesis here should not be taken as an overthrow of the reigning paradigm, but a fulfillment of it. If we understand that specialization is the key to prosperity, then we might as well start by encouraging young people to pursue the entrepreneurial path first. At the very least, a young person who has been regularly encouraged to pursue development of his own unique talent will be a better off — more highly specialized — when it comes time to enter the culturally venerated job market. On the other hand, a young person may actually discover his unique talent in due time, capitalize on his own self-understanding, and contribute by orders of magnitude more to society than he ever would as a member of the mass labor class.