THE TRACKS THEORY EXPLAINED
How do people wind up in the jobs that they do? The tracks theory explains it. Once people wind up on a career track, they tend to stay on that career track for the rest of their lives. Switching costs are usually very high if it’s even possible to switch at all.
Middle class and upper middle class workers face two important junctions in their career tracks. The first junction occurs at the age of 17 to 19 when they decide what college to attend and what to major in. The second junction occurs when they obtain their first job out of college. Once a person gets a first job, he obtains experience at that job, so forever after he is valued based on the track he has landed in.
I previously blogged about the importance of the first job. Workers who graduate during a recession have permanently lower earnings because they are less likely to start out on a good career track.
Graduate school offers the possibility of two additional junctions: selecting a graduate program and the first job obtained after completing the program.
IQ AND CAREER TRACKS
I previously blogged about how IQ has little or even sometimes a negative correlation with income after highest level of education is accounted for. The tracks theory explains why IQ is of so little importance. Once a person gets onboard a track, he just follows the track regardless of his IQ.
Take for example my high school English teacher, Frank McCourt. Even though he scored in the 99th percentile on the verbal section of the GRE, he probably got paid exactly the same as every other New York City public high school teacher with the same number of years of service.
Higher IQ opens up the possibility of more career tracks because the person with a higher IQ qualifies for better educational opportunities. But, perhaps more often than not, the 18-year-old chooses a career track that’s not optimal for making money. For example, the 18-year-old who is smart enough to get onboard the BIGLAW track may instead opt into the teaching track and wind up being a modestly paid schoolteacher for the rest of his life. (But I should add here that the average schoolteacher certainly has higher total compensation per hour than the average non-college graduate—it’s not a horrible career choice at all for the student who isn’t capable of handling a more intellectually demanding college major.)
I previously theorized that higher IQ students are at higher risk for selecting interesting sounding but economically unrewarding majors. Lower IQ students tend to seek more practical majors that lead to jobs because they aren’t interested in the learning part of the college experience anyway.
IQ is more helpful for getting a degree than it is for getting the crucial first job after graduating. Colleges look at an IQ test (the SAT) as one of the criteria for admission. (But leadership is just as important, and lack of leadership can prevent high IQ young people from getting into degree programs they are otherwise perfectly intellectually qualified for.)
Employers don’t look at IQ tests when making hiring decisions. Sometimes they look at grade point averages which are weakly correlated with IQ. I once recall reading about a study which found that tall male college seniors received, on average, more job offers than male seniors with high GPAs. This is consistent with my own findings that men who are unathletic or short earn less money.
Once a person is admitted to a career track, it’s not clear that high IQ provides much additional benefit. In most career tracks compensation is more related to years of experience and not actual competency on the job. IQ may have little to do with promotions. The guy who gets along better with the person making the promotion decision is the one who will most likely be promoted. Higher IQ people may be less likely to get along well with their bosses because they are unable to hide how stupid they think their bosses are.
Being a mid-level manager doesn’t seem any more intellectually demanding than being a bottom level worker. I’m sure a person whose IQ is just average for his profession can get several promotions before his merely average IQ becomes a handicap, if it ever does. (I believe that eventually a person with a good personality but only average IQ will be promoted to a position where his merely average IQ causes him to make bad decisions which harm the company. This is the Peter Principle in action.)
CAREER TRACKS AND LABOR MARKET INEFFICIENCY
It should be obvious how inefficient it is for an 18-year-old to be forced to decide his career track for the rest of his life. What does an 18-year-old really know about anything? How does he know what he wants to be doing when he’s 36, twice his current age? To top that off, he’s given incomplete and sometimes even wrong information about how the job market works.
How many 40-year-olds look down another 25 years of their career track and wish that their 18-year-old self made better decisions? Society has determined that the 18-year-old lacks the maturity to drink beer, yet the same 18-year-old is given the choice to decide his future career track for the next 47 years.
I am sure that our national productivity is much lower because people are matched to career tracks based on the whimsical decisions of 18-year-olds and discrimination based on factors like lack of height or athletic ability. It’s completely random whether or not a person with a high level of ability will get mated with a career track where his ability can be best used and where his ability will be economically rewarded.