Gary Becker
What they pay to teach you is what you cannot take
The line falls on the day you leave
Human Capital, 1964 — chapter II, on-the-job training: general and specific
Is what I am good at worth anything elsewhere. There is a computable answer, and it is in who paid.
What actually happened?
In the 1960s the American military had a recruiting problem: first enlistments were easy, re-enlistments were not. Becker used it as his example. Much of what the services teach is usable in civilian life - machinists, navigators, pilots - and the figures ran backwards: the more civilian-type skill a man had been given, the less likely he was to sign on again. The services are the conspicuous exception, which is exactly why they show the rule so clearly.
He cuts training in two
General training is useful in many firms besides the one providing it: a machinist trained in the army is worth the same to steel and aircraft firms, a doctor interning at one hospital to any other. Specific training raises productivity only here - his examples are astronauts, fighter pilots, missile men.
Writing code is the first kind. Knowing which internal service in this company must never be touched is the second.
Nobody pays for the half you can carry
In a competitive labour market general training lifts what other firms will pay you by the same amount, so the firm providing it captures none of the return and will not fund it. You fund it, through wages below what you were already worth while training.
We invest in your growth often means the salary is held down, and the gap is the tuition.
Part of your current price holds only here
Specific training the firm will fund, but it fears you leaving, so it pays above your outside offer and shares the return. Cost and return are split, and what holds you is arithmetic. In a footnote he quotes Marshall on the head clerk worth several times his salary here and half of it anywhere else.
Before weighing an offer, split your pay: the part the market pays, and the part only this employer pays.
Teach it broadly and they leave sooner
The military numbers run the wrong way round: more civilian-usable skill, fewer re-enlistments. It pays for general training and then cannot match outside wages, so it loses at both ends. First terms fill easily; second terms do not, because by then the outside price has risen.
A firm funding portable certifications either has another hold on people or is training the competition.
They are not the first out in a downturn
It follows that quit rates and layoff rates both fall as specific training rises. When demand drops, the untrained and the generally trained go first, because their product merely equalled their wage; the specifically trained started above it and are still above it.
Whoever survived the last round may not be the ablest, only the hardest to replace.
How do I use it today?
Where you are: you are weighing whether to go, and the sentence in your head is whether you would still be worth this somewhere else.
Ask first: of my current pay, how much does the market pay and how much does only this employer pay - and of what they have spent on training me these two years, how much can I carry out of the door.
Where it goes wrong: reading it as none of their training is worth having, so leave. He never says specific training is worthless; it is the source of the premium you draw here. He says it does not travel, so it belongs among your reasons to stay, not in your market price.
Lines to keep
What they rush to pay for is what you cannot take.
Teach it broadly and people leave sooner.
What holds you is not loyalty but the unmatchable part.
Same situation, other people are asking
I don't know if I can stay here much longer.I don't agree with where this is going. Do I stay and soften it?I'm unhappy here and leaving is the only move I can picture.Is what I'm good at worth anything anywhere else?Should I leave this job · all 5 questions →If this one named what you are going through,
send it to someone who needs it, or keep it somewhere you will find it again.