October 13, 2011

Your Work is Your Worth

How do you measure your net worth? Is it by your bank account, your investments, your car, your house or your possessions? Those are the traditional measures, and many people starting out in their careers tend to think of themselves as having a long way to go before reaching financial security. It is especially hard to think of yourself as having established any form of wealth if you are carrying student loans or other debt.

Before the recent economic crisis struck, most Americans spent beyond their means, buoyed by what is called "the wealth effect." People spent because they knew they had secure assets - homes and 401k accounts - assets that they thought would inevitably grow in value and protect them in the future.

Given today’s realities, very few people can feel comfortable or believe that they are secure and of relative wealth. The harsh reality is that homes and 401k accounts have failed to maintain their value and can no longer be looked at as security for the future.

A TIME magazine article offered the headline: "Jobs Are the New Assets." What the article highlighted is the view that "human capital" is your most important and enduring source of security. It is what you know and what you can do - your education and your training - that provides you with security. It is your earning power that determines your financial worth. The stream of money you obtain from employment is your most important asset.

In times of economic growth, we tend to think that it is land, machinery, infrastructure and capital investment that keeps the economy growing. Economists will tell you, however, that in a modern industrialized society, 75% or more of the economy is based on human capital. It wasn’t the bankers on Wall Street that made the economy grow during the last few decades. And it wasn’t just the advances in technology. What makes the economy grow are productivity gains resulting from a skilled and educated workforce - a workforce comprised of individuals who are devoted to their work and who find meaning and satisfaction in their vocational accomplishments.

If you are out of work today, it is obvious that you appreciate the significance of work relative not just to your financial security, but also relative to your sense of self and your sense of purpose in life. If you have been laid off or cannot find that first job, you know full well how important work is.

I like to tell people: "you are not qualified to be permanently unemployed ... I promise you will find the perfect job if you do the work."

What the current crisis tells us is that we all have to re-think what we want out of life. We all have to re-think the question, "what type of work am I willing to do?" This does not mean that you should abandon the quest to obtain work that is personally satisfying, that makes the best use of your skills and that satisfies your work interests and values.

What it means is that we cannot take our careers for granted and fail to pay attention to what is happening in the world around us. Your best insurance policy against unemployment is to keep yourself well informed.

What it also means is that whether you are working or whether you are seeking, now is the time to engage the process of self-assessment. In the same way that you might look at your bank account or your investment portfolio, you need to be constantly aware of your skills, your interests, your expertise and your motivations. You need to know what is important to you in life and in your career. Knowing that is what is going to keep you on the ball.

If you are young and starting out, and even if you are burdened by educational debt, you need to understand that it’s not what you own or drive or have in the bank that will make you secure over the long run. What will make you rich is what you know and what you can do, and finding an environment where you can apply the knowledge and skills you are most motivated to use.