The discussion taking place here actually reflects a much broader issue, and problem, than most in the discussion, and the country, probably realize. This is just food for thought.
Here is an excerpt from a recent article in the New York Times that adds perspective and makes some points relevant to the discussion here.
MAGAZINE | February 26, 2012
It's the Economy: Why Are Harvard Graduates in the Mailroom?
By ADAM DAVIDSON
More industries are following Hollywood's lottery system, offering potential wealth in exchange for terrible hours and low pay.
In their book “Freakonomics,” Stephen J. Dubner and Steven D. Levitt explain, among other things, the odd economic behavior that guides many drug dealers. In one gang they described, the typical street-corner guy made less than minimum wage but still worked extremely hard in hopes of some day becoming one of the few wildly rich kingpins. This behavior isn’t isolated to illegal activity. There are a number of professions in which workers are paid, in part, with a figurative lottery ticket. The worker accepts a lower-paying job in exchange for a slim but real chance of a large, future payday.
Deep thoughts this week:
1. Hollywood is the most glamorous lottery-style business in the U.S. economy.
2. It’s hardly the only one.
3. But now the Plan B jobs are evaporating.
It’s the Economy
Adam Davidson translates often confusing and sometimes terrifying economic and financial news.
This more or less explains Hollywood. Yes, the Oscars may be an absurd spectacle of remarkably successful people congratulating themselves for work that barely nudges at the borders of meaningful human achievement. But it’s also a celebration of a form of meritocratic capitalism. I’m not talking about the fortunes lavished on extremely good looking people; no, I mean the economic system that compels lots of young people to work extremely hard for little pay so that it’s possible to lavish fortune on the good-looking people. That’s the spirit of meritocratic capitalism!
Hollywood is, in some ways, the model lottery industry. For most companies in the business, it doesn’t make economic sense to, as Google does, put promising young applicants through a series of tests and then hire only the small number who pass. Instead, it’s cheaper for talent agencies and studios to hire a lot of young workers and run them through a few years of low-paying drudgery. (Actors are another story altogether. Many never get steady jobs in the first place.) This occupational centrifuge allows workers to effectively sort themselves out based on skill and drive. Over time, some will lose their commitment; others will realize that they don’t have the right talent set; others will find that they’re better at something else.
When it’s time to choose who gets the top job or becomes partner, managers subsequently have a lot more information to work with. In the meantime, companies also get the benefit of several years of hard work from determined young people at below-market pay. (Warner Brothers pays its mailroom clerks $25,000 to $30,000, a little more than an apprentice plumber.) While far from perfect, this strategy has done a pretty decent job of pushing those with real promise to the top. Barry Diller and David Geffen each started his career in the William Morris mailroom.
Hollywood is merely the most glamorous industry that puts new entrants — whether they’re in the mailroom, picking up dry cleaning for a studio head or waiting on tables between open-call auditions — through a lottery system. Even glamour-free industries offer economic-lottery systems. Young, ambitious accountants who toil away at a Big Four firm may have modest expectations of glory, but they’ll be millionaires if they make partner. The same goes at law firms, ad agencies and consulting firms. Startups explicitly use a lottery system, known as stock options, to entice young people to work for nothing. Wall Street, however, is a special case. It offers extremely high entry salaries and enormous potential earnings.
Even professions that can’t offer as much in the way of riches operate as a lottery system. Academia, nonprofit groups, book publishers and public-radio production companies also put their new recruits through various forms of low-paid hazing, holding out the promise of, well, more low pay but in a job that provides, for some, something more important than money: satisfaction. In the language of economics, these people are consuming their potential wages in happiness. (Honestly, economists talk this way.)
This system is unfair and arbitrary and often takes advantage of many people who don’t really have a shot at the big prize. But it is far preferable to the parts of our economy where there are no big prizes waiting. That mailroom clerk at Warner Brothers may make less than a post office clerk (maybe even half as much), but the latter has less chance of a significant promotion. Workers in retail sales, clerical settings, low-skill manufacturing and other fields tend to have loose, uncommitted bonds to their industries, and their employers have even looser commitments to them. These jobs don’t offer a bright future precisely because they don’t require a huge amount of skill, and therefore there’s no need to do much merit-sorting. ...
Adam Davidson is the co-founder of NPR’s Planet Money, a podcast, blog and radio series heard on “Morning Edition,” “All Things Considered” and “This American Life.”
The entirety of the article can be found on the New York Times web site.