Sticky Wages

Fortunately I went home for the weekend where I could recount and get some insight on all three experiences our prompt inquires about.   I am actually going to start by talking about both of my parents who together have gone through all three experiences.

                My dad has been through a few rounds in the business world, none of which have knocked him out.  My dad was laid off of work a number of years back when the company he worked for was bought out. Given the choice of relocating to Seattle, with three kids finishing up high school, or staying in the area he chose to stay. I do not think he regrets his decision. He had developed a strong resume and had the skills to open his own startup consulting LLC.  He used the time to go back to get his MBA at University of Illinois. I have been able to see this operation come full circle as he now has a job where he is no longer self employed. For my example of someone who has carried a steady job I can look to my mom who has worked in a relations position for Aspen Group for a few years.

                It is a fairly strange period of unemployment/ self employment.  Because of the unemployment he used the opportunity to improve himself by staying proactive and improving his education.  As I said he got a non self employed job recently. You might think that his MBA made a significant improvement in getting the job he desired, but it seems that he feels the pay really is not that amazing or better in comparison to his old job. Where he did have to adjust was in the position he wanted. He waited for a while for the position he wanted to open up but he was told he was simply next in line for when that person left. He appreciates the safety of money but he really seeks after a level of challenge and responsibility that tests his skill set.  Wages were fairly sticky throughout the time. It is difficult to tell exactly what effect adding an MBA / self employment experience had on the process but it obviously was a point of interest to employers.

                Then there are the self employed years my dad had. I do not know the actual impact sticky wages had as there is much more to take into context. Starting up a consulting LLC will have its own issues of its own, especially since it was in its earliest stages. The downturn was difficult, but it did not seem to have a huge affect on my dad’s business matters.  He was still able to find clients. Who knows? Maybe he could have had much better business, but if you never experience good economic years, how do you know what you are missing?  It appeared to be just a tougher startup process. I am sure that it had an affect here or there that I have no idea occurred. (Dad-feel free to comment if you want)

                Then there is my mom who had a steady job. The downturn affected her differently as a number of employees from her company were laid off. People in the company had to absorb weaker bonuses than normal and cut down on some of the luxuries. She is their main relations employee and has a valuable set of relationships with important clients.  Her company was heavily affected, as they deal with construction. But if your work is valuable enough, they will keep you.  She has a real drive and passion that make her a strong employee who is worth the money.

  

Incentives

                After thinking for days I arrived at my topic…

I decided to start with a small policy from my childhood. Sometimes your parents have things they really want you to be good at that you have no desire to pursue. Let me introduce you to my reading program growing up.  My mom was a big encourager of our learning process and understood the importance of kids who could read well. Reading has obvious benefits as a skill and as a way to improve critical thinking and your own vocabulary. We were paid as children a penny a page to read books and when we finished the book we would collect our bounty. It would usually come out to about two dollars. I read quite a few books while this policy was in place, but there was an issue here of not being able to truly monitor if I was reading and she made us discuss what we read before she gave us our rewards. I do seem to remember skipping boring parts of books in order to increase my reading output. A second incentive process that I never quite reached occurred in little league baseball. My Dad said that if I ever hit a homerun he would buy me a Nintendo 64. As a kid as much as I desired the reward I simply did not know the process for getting stronger, or hitting the ball that extra amount. Once I realized this would probably never happen the incentive became just an interesting thought and nothing really to strive for. I would not say my performance fell because of that but there was a level of excitement that left me.

                I understand these are not quite the same as a grading scheme but they are interesting stories that show some moral hazard and a failed incentive system.

In my classes there have been some incentive schemes while grading. I have been in a number of classes where your attendance is a huge portion of your grade. These are most often lectures, so I do understand there is a different dynamic.  In those that are not lectures, I often simply show up and enjoy by listening. I will say that my favorite class ever was stylized in this very manner. I did not have my head lost in some note taking. I simply enjoyed the passion displayed and practicality of the information. He made me think, he did not drill memorization that could be forgotten after an exam.  Some grading schemes that have failed my learning miserably are those that consist of a few exams and nothing else.  Especially if the teacher is bad, boring, etc., and the material was required and nothing of interest, I can guarantee it goes in one ear and out the other… and that’s only if I am not dozing off.  My performance does suffer but my actual learning experience (or lack thereof) makes the class a waste of money. In all honesty it has a ton to do with pursuing thing you actually like, then incentive schemes mean nothing, but there are skills and knowledge that should be learned even if they are not exciting because they might be useful one day. These are where structure and incentives play their largest role, in my opinion. Even bad teachers can force me to learn through a strict grading system.

I don’t really think that there is much to be done as far as risk aversion in the classroom. Sure I will complete the extra credit offered but I don’t feel as though I go too far beyond that as far as dealing with grades.  I might suggest that the real risk aversion that I do occurs when registering for classes. That is where I do my best to select professors and courses that A.) Fit my vision B.) I can do well in. The real risk aversion occurs early. I have also taken more classes than required so I can just drop one if I do not enjoy it or do bad on an exam.