Human capital is “the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor and talent.”[i] We all have human capital, but we do not all have the same amount. A college graduate might have a lot of human capital, while a high school drop-out has little human capital. Another way to consider human capital is to consider the uniqueness of a person’s skill. Like other commodities, “the price of a certain skill bears no inherent relation to its social value, only its scarcity.”[ii] Nobel Prize winner Robert Solow put the concept of scarcity in this way: “There are a lot of good economists, but there is only one Roger Clemens.”[iii] The amount of our human capital is thus the accumulation of our intelligence, education, experience, skills and talent. So, Clemens has a higher human capital than Solow because Clemens’ skills as a pitcher are scarcer than Solow’s economic skills.
To succeed in the world, our generation will need to increase our human capital. According to the Bureau of Labor Statistics, millennials will change jobs fifteen to twenty times in their lifetime. [iv] And, even more alarming is that some of the jobs we will hold have not been created yet, and some of the technology we will use has not been invented! With that kind of uncertain future, what can millennials do to prepare themselves? Millennials can get a broad education that develops their intellect, creativity, charisma and entrepreneurial vigor. One example of a millennial who increased his human capital is Mark Zuckerberg. Together with fellow students, Zuckerberg launched Facebook from his dormitory at Harvard University. Zuckerberg began writing software in middle school but he was not just a computer nerd. He was well schooled in the Classics with a reputation of quoting from the Iliad and he majored in Psychology as well as Computer Science in college. While he did not complete his degree at Harvard, he did increase his human capital by a landslide. When inventing Facebook with friends, he increased his scarcity because no one before him had created a social networking site to that degree. His new invention caused a spree of other genius’ to create yet other social media outlets.
Zuckerberg’s parents, both professionals, typically sent him to the best schools and invested “heavily in the human capital of their children.”[v] But contrary to Zuckerberg’s success, not all millennials are as lucky and bright as him. But we can increase human capital by improving the education of all millennials in America. Some Americans believe our average human capital has decreased because of certain groups but in reality, “It isn’t some other group bringing down our average; it is all of us.”[vi] One economist suggests that if we “invest” in our human capital, the predicted return is a healthy 10%.[vii] And what’s more, human capital is an “economic passport,” meaning that you can use it in different places around the world. [viii] While America is a global superpower, to keep that status, we need to increase our investments in human capital and give millennials—our future leaders—the economic passport to be productive citizens in the global economy.
[i] Charles Wheelan, Naked Economics: Undressing the Dismissal Science (New York: W.W. Norton & Company, 2010), pp. 127.
[ii] Charles Wheelan, Naked Economics: Undressing the Dismissal Science (New York: W.W. Norton & Company, 2010), pp. 128.
[iii] Charles Wheelan, Naked Economics: Undressing the Dismissal Science (New York: W.W. Norton & Company, 2010), pp. 128.
[iv] Jeanne Meister, Job Hopping is the New Normal for Millennials (New York: Forbes, 2012).
[v] Charles Wheelan, Naked Economics: Undressing the Dismissal Science (New York: W.W. Norton & Company, 2010), pp. 135.
[vi] Nat Malkus. “Not as Smart as We Think.” U.S. News & World Report. March 29, 2016. Accessed June 22, 2016. http://www.usnews.com/opinion/knowledge-bank/articles/2016-03-29/us-must-face-our-human-capital-deficit-compared-to-the-rest-of-the-world
[vii] Charles Wheelan, Naked Economics: Undressing the Dismissal Science (New York: W.W. Norton & Company, 2010), pp. 128.
[viii] Charles Wheelan, Naked Economics: Undressing the Dismissal Science (New York: W.W. Norton & Company, 2010), pp. 128.
Image: July Edition – 3 Innovation Ideas – Any Takers? July 13, 2013. Innovative Ideas for a Connected Society. Edited by Word Press https://innovationtracker.wordpress.com/2013/07/13/july-edition-3-innovation-ideas-any-takers/