Unemployed college grads, unrealized losses, and getting someone to write my blog

I really, really want someone else to be writing this blog entry.  I want it so much I’m willing to pay for it, which is why I’ve been trying to hire a ghostwriter for the longest time.  Seems like a pretty decent gig: I’ll pay you a decent wage, and you spend 30 minutes talking to me a week, then 30 minutes writing up a post based on what we talked about.  Sweet.

Quick privilege check.  Yes, it is profoundly bizarre to me that I am now in a place where I can afford to pay someone to do my writing for me.  No, I’m not asking them to do my thinking for me.  But the entire service industry, from restaurants to cleaners, is based on the idea that we can pay other people in order to save time.  Feel free to think I’m an asshole; let’s move to the fun economic/psych theory bit.

So if I want to pay someone actual money to do this job, why the heck am I still the one writing this blog entry?  Because sending kids to college has created a labor model that prays on some of our worst psychological tendencies and results in many open jobs and many unemployed young people, a state that theoretically shouldn’t exist (and an excellent example of why psychology > economics, when viewed in the classical sense).

It all starts with the lovely economic action “to realize a loss”, a shockingly accurate term, though I doubt it was for the reasons economists intended.  The “loss” part is hopefully clear, so to differentiate a realized loss from an unrealized one, imagine I bought a stock yesterday for $100.  Today, they announced some bad news and the stock went down to $80.  Now I’ve lost $20 but until I actually sell the stock, it is unrealized – it is a loss only in the theoretical sense.  It is the moment when I sell the stock that it becomes realized, when the paper loss becomes a tangible one.

This is what makes folks hold on to stocks for way too long, even when they are in sharp decline: they don’t want to convert an unrealized loss into a realized one, because it is psychologically painful.  So they’ll keep holding the stock, even though doing it means they lose money (this, by the way, is why most unsophisticated investors should not pay too much attention to their stock portfolio and just ride the general up-and-to-the-right trend).  And it is why I said economists got it accidentally right: people are, quite literally, trying not to realize that they’ve lost something.  Desperate tricks we play with our brains FTW.

So why am I nattering on about losses when this rant is supposed to be how I can’t pay someone to ghostwrite these blog entries?  Because theoretically, the person I need is a college grad who doesn’t have a job.  And in massive, massive droves, our college graduates are desperately trying not to realize a loss.

I’m not saying college is a loss; far from it.  What I am saying is that in a purely rational world, it is better to be paid something than it is to be paid nothing.  But if your expectation is that you are going to be paid $40K (because you went to college, after all), then anything less feels like a loss.  And taking a job that pays less is precisely that act of realizing a loss, which has cost people so much in so many financial domains.

Now there are some college grads who are living at home and using their unemployed time to do all sorts of wonderful things.  They’re teaching themselves skills like coding or volunteering in interesting and innovative ways that benefit us all.  They are holding on to the stock not out of a fear of realizing a loss but because they can, through hard work, actually make it more valuable.  They can prevent the loss or at least minimize it, not just on paper but in reality.

But having tried to find a ghostwriter and with a number of false starts with various candidates, I’m rapidly realizing that this may not be the case with all, or even most, of our unemployed graduates.  Instead of making choices that are about investing in the future, holding on to a stock because they can work towards its rise, they are inventing excuses not to accept jobs that don’t pay full-time, high dollar salaries simply because they want to avoid that feeling of loss.

The economic downturn, as it is so politely called, hurt a lot of people.  Families lost houses, jobs, hope.  We all know the stories and I don’t have to belabor them.  But in a desperate attempt not to let it hurt them, there are some young people who are going to make it much, much worse.

So if you’re reading this, take my money.  Or someone’s money.  Even if it is less than you believe you deserve, less than the golden promise that you earned your education for, less than you want or need or deserve.  Work worth doing, for pay worth having, is a loss only if you measure it against the expectations you had.  If you measure it against what you are making now, it is a gain.  Not theoretical but realized each and every time you exchange your meaningful work for meaningful money.  Your challenge is not to avoid the loss but to find the meaning.

(Update: As Matt Dyor points out, this also happens with older workers who refuse to take a step down in pay.)

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