Why How You Learn, Affects How Much You Can Earn
Formal education isn’t everything — you need a different focus for learning if you want to earn more
You may have heard before, ‘learners are earners’ or ‘readers are leaders’. But what often goes unsaid here, is that how you learn is equally as important as what you learn. There are some key things that you need to remember if you want to get the most out of your job.
I’ve just started a new job and came to realise the importance of how you learn, not just what you learn.
I’ve seen too many young engineers, graduate and then immediately start a Masters straight away. They think that they need to have a Master’s degree to get entry into any job market, or to maximise their potential value. I’m here to let you know that while a formal education is an entry requirement for many jobs, it should not be your sole focus as it doesn’t provide the return on investment you may think it does.
My Master’s has not helped me in any way to position for higher earnings. I can say, however, that the diversity of my experience and my opportunities to learn from other great people has directly contributed to my earnings.
I’ll cover some information from the World Bank on education and income, define some terms about how you learn, and then give you a different reference model to focus on once you are employed and why that Master’s is probably not your best investment.
Education and income
To give it a little less formality, it means that for each school category you graduate from, you out-earn the cost of that education by about 10% more than if you hadn’t continued your education. i.e. You spend $40,000 going to University, you could earn $44,000 more — once you’ve finished and found a job.
While I am making a point that there is an over-reliance on education and how it affects your earning potential, it is worth stating some of the facts — this bit has some charts.
The World Bank has released a report analysing this information from 1950 to 2014 across 139 countries and showed a strong causal link between formal education and income. This report is a little challenging to navigate, so I have extracted some of the high points.
They use an estimated ratio (the Mincerian ratio named after economist John Mincer) that indicates a return on investment for education, similar to investing in bonds or stocks.
It shows that the global average since the year 2000 for schooling is 8.6 years, and the return on that investment is 9.1%. The cost calculation for the return on investment captures the schooling costs, and the earnings lost to undertake that schooling, etc.
To give it a little less formality, it means that for each school category you graduate from; i.e. primary school to high school or high school to graduate degree, etc. You out-earn the cost of that education by about 10% more than if you hadn’t continued your education.
Created by Author from World Bank Data sourced here
Illustrated in the graphic, if we consider the global return on investment for education from data collected in this century, you can see that there is an increasing return for education. This is elevated due to the effects it has in the middle and lower economic countries. But, as you can see by the spread of dots on each year of education, the return is not tightly coupled to the average return.
If we instead focus on only the higher economic countries (according to the World Bank and where many of us are fortunate to live) across this same period. You can see a slightly decreasing trendline, but the results appear slightly more consistent with that average.
Created by Author from World Bank Data sourced here
Additionally, the World Bank has separated the analysis into gender and identified that the return is higher for females, with the average return for education for women at almost 10% (an increase by nearly 2% in the last 20 years), while for men it is reasonably stable at 7.9%. This disparity is most prevalent in lower economic countries.
This means, if you are a female in a developing country, education is essential, and the World Bank recommends that global primary schooling (where the greatest returns are made) should be prioritised.
However, if you live in a higher-income country, that Masters degree or Doctorate may not give you the earning edge. The extra few thousand dollars in your paycheck will have been hard earnt.
What they neglect to factor, because it is hard to quantify, is the effect of learning while in your job. Formal education is only one aspect of education relevant to how much you can earn.
How you learn
There are many theorems and descriptors on learning methodologies and types. I will cover a few here, and then discuss why you should reconsider which part of your education should prioritise.
Formal learning is the type of learning just covered; formalised education and training courses. When people speak about learning, this is the type they are most often referring to — one where goals and objectives are explicit at the onset of the learning program.
The formulaic learn, test, repeat is tried and tested. Each year of your formal education journey, the scope of knowledge learnt expands. But the breadth of expertise remembered stays relatively constant. You will gradually forget the things you no longer use or were not imprinted in the learning process.
I use the tennis balls in an open tube example, you put new information in one end (another tennis ball), and something falls out the other end. There are ways you can expand the capacity of your tube, and everyone’s is different, but throughout your education, it will remain reasonably constant.
Social learning is the type of learning that happens via exposure. You participate in a meeting and see how people interact, and you learn the way you should act in that scenario in the future.
It is primarily focussed on ‘behaviour modelling’, and acquired through observing and imitating others. It is developed through interactions with peers and role models.
Social learning is about modelled behaviours, and these are important for navigating employment and identifying the practices and skills required to reach the next level in your career journey.
For this reason, I use a personal advisory board and mentors to continue to seek opportunities for learning from those with different skill sets and styles. This style of learning remains imprinted for longer. It is part of the reason habits are hard to break.
Experiential learning is the learn by doing style. It is working in a new field, or on a different project and getting to understand how it all works by examining it closely.
While it is frustrating at the start, the experiential learner gets to understand information at a deeper level by piecing together how it all works for themselves.
The people that have learnt this way know how to navigate new situations because they have an understanding of the cause and effect within the system.
It is not just enough to discover how something works; it is essential to reflect on that knowledge and then propose a hypothesis on how the system might react if it was operated differently. This ‘reflection’ phase after doing something is vital for remembering.
I call this the incompetence-confidence cycle. You feel incredibly frustrated at the beginning, completely incompetent. Then you get some basic skills and knowledge, and your confidence grows until you become sure that you can handle it. Then you start to learn something new and realise you’re back at the beginning.
The three E’s you should focus on
I’ve just started a new job, and they have a method of communicating career growth that is novel, at least I have not seen it conveyed in this way before. The company use the model of Three E’s; Experience, Exposure and Education.
They believe that you should prioritise your career growth in these three areas, and they think you should prioritise them at the magic ratio. This magic ratio, widely used in learning and leadership development, has begun to appear in theory on marketing and social media campaigns.
The magic ratio of 70, 20, 10 defines the amount of focus that should be placed on career development opportunities.
Within the company, they prescribe that your career growth goals should focus 70% on experience, 20% on exposure and 10% on education. To say this another way, they want to identify how you’d like to experientially learn as the critical aspect of your growth plan. Then social learning through exposure opportunities, and lastly, education through formal training.
In my previous jobs, I have seen a lot of focus placed on training courses. A mentality of ‘get the certificates’.
Some people play it out a little differently and focus on new tasks and challenges or exposure to the best opportunities, and in my experience, it is those people who accelerate their career.
They have realised that the entry requirements are required, but after that, you are required to learn from outstanding people in new and exciting projects to gain the most significant benefit.
So, when you’re setting your annual goals each year, think critically about what experiences and exposure you would like to gain before you think about what training courses and education support you’d like.
It is those moments when you finally solve a challenging problem with a fantastic team; you will have something to put on your resume.
It is experience and behavioural qualities that will provide you with the greatest return, not an additional qualification.
So, when the opportunity comes up to go and do a week-long course or take a week working with a different team, choose the week of experience and exposure. Because, in the long run, it will provide a bigger return.
Remember, without reflection, experiential learning loses its value. So take notes. This will aid you down the track when you are composing your resume and the stories that will accompany it when you are seeking that promotion or higher-paying job.
This article was originally published by Leon purton on medium.
Inspired by life. Leadership, Growth, Personal Development. Engineer and Sports Enthusiast. Top Writer in Leadership. https://medium.com/@spurtapurton