The secret to earning more money may be to have a skill that is uncommon—but valuable—in your job. One of the most powerful ideas in workforce education is return on investment: the money a worker or student spends on improving their skills should pay off in additional pay or advancement. This idea, which also goes by the name “arbitrage” in financial circles, may seem obvious but it is fundamental as workers try to reskill or upskill to boost their careers.
This way of thinking about credentials isn’t new. The classic example has been the longstanding fact that workers with a bachelor’s degree earn more than those without one. Therefore paying tuition and taking out loans to go to college makes economic sense. Only in recent years, as the problems of student debt and underemployment have arisen, has the ROI of a bachelor’s degree been in question. Even then the return depends a great deal on the major involved.
The skills in question don’t have to be exotic or require a specific credential (although that may help). But they do need to be a skill that sets you apart from others in the same job, not to mention a skill employers are willing to pay to get. Knowing which skills pay off in a specific occupation is the kind of knowledge provided by real-time labor data.
Here are several examples of salary premiums at work:
These are three different occupations that don’t have a lot in common. Neither do the three skills:
· Budgeting is usually associated with executive and management positions;
· Salesforce is a customer resource management software program used in sales, marketing, and customer service;
· Printed circuit board (PCB) design is used to lay out circuits in physical form.
But what they do have in common is that they carry a return on investment. It doesn’t, for example, cost $7,000 to learn how to use Salesforce. There are also multiple ways of learning these skills besides getting a degree. Workers can take individual courses, train online, or attend short-term “boot camps” to pick up these skills.
As Big Data techniques allow for more precise knowledge of the labor market, making these ROI calculations will become a more integral part of corporate talent planning, educational strategy, and the plans of individual workers to get ahead. That means less guesswork in hiring—and more opportunities for workers.