Month: June 2022

The Compounding Conundrum of Building Human Capital

Invisible Skills

“The future is all about skills. Like money, early investment in skills also has a compounding effect. So, invest your time and energy in learning new skills to exponentially improve your life.” This is the career advice I have for young individuals. Notably, several influential books of our time emphasize the compounding effects of money and skills. “The Psychology of Money,” “The Atomic Habit,” and “The Almanack of Naval Ravikant” all underscore the importance of starting early and investing to unlock the magic of compounding. However, while much is said about the strategy for investing in visible skills, what about the invisible skills that often go unrecognized? In the career maze designed for men, women find themselves investing prime years of their youth in acquiring critical skills related to human survival: protecting and nurturing babies and raising them to become independent individuals. These invisible skills are hidden, undervalued, and often overlooked.

The Journey of Acquiring Invisible Skills:

The journey of acquiring these invisible skills is intense for women, particularly in the days and months preceding childbirth. It is expected that women, as mothers, quickly adapt to managing the needs of newborns while also adjusting to the changes in their own bodies. Despite any preparation, research, or experience with children from friends and family, nothing fully prepares mothers for the intensity and effort required in childcare. On-the-job training becomes the only means to learn these skills. In rapidly depleting joint family structure, every woman who becomes a mother takes has no option but quickly acquire these entirely new skills. For most women, the learning curve is steep and stressful, demanding immense physical, mental, and emotional effort. Unfortunately, this learning opportunity is predominantly reserved for women in households worldwide, while most of the fathers conveniently escape the demands of acquiring these childcare skills without significant impact on their lives.

For the critics: The critics argue that the disparities in skills and responsibilities between men and women stem from inherent biological differences. It is true that women’s biological ability to bear children and feed them through their bodies naturally necessitates their role in childcare and caregiving. But all the other activities other than feeding, are as much a new skill for women as much it is for men.

The Invisible Skills’ Compounding Effect:

In an ideal world, investing time and energy in building human and hence social capital, especially in the early years, should have a massive compounding effect. Early childhood is a critical period for brain development, with over 85% of the brain’s architecture being formed by the age of five. However, the reality is different. The investment of time and energy by women in childcare is often seen as an erosion of their skill base, both in the market economy and household economics. Instead of recognizing the compounding impact of these new skills, the perceived erosion of previous skills valued by the market diminishes opportunities for paid work. Consequently, women end up shouldering most of the unpaid work burden, with their skill enhancements and time investments going unacknowledged and unmonetized. The tasks and skills required to accomplish childcare work remain invisible—the critical skills of nurturing and building human capital are invisible skills of the invisible hands. Not surprised that their contribution is not even factored in a country’s GDP.

For the Critics: The critics argue that women voluntarily choose to prioritize family and childcare over paid work based on personal preferences or traditional gender roles. They suggest that women’s decision to invest in invisible skills is a matter of personal choice. While personal choices do play a role, it’s important to recognize that these choices are heavily influenced by absence of alternative childcare, societal expectations, norms, and systemic biases.

The Disparity and Its Consequences:

It is truly fascinating, albeit unsettling, to witness the normalized unstable equilibrium in our society. Women, comprising half of the human population, are expected to acquire certain skills simply by being born into their bodies, yet these skills are quickly disacknowledged and de-recognized by the world. Men, the other half of the population, have no incentives to learn these skills because these are not even considered skills. For men, these invisible skills neither contribute to their productivity nor aid in wealth creation. On the other hand, for women, the invisible work of unpaid childcare tenure leads to time poverty and exponentially reduces their wealth and ability to care for their own health. Globally, women are among the poorest in their old age.

Women often find themselves dropping out of or reducing their participation in paid work around the time when they could multiply and build upon their accumulated market skills and wealth. While the wealth curve rises for their spouses and male counterparts during this period, it descends for women with a negative multiplier effect. Statistics on women’s presence in the corporate ladder clearly demonstrate the missed opportunities for compounding their investment. The “Women in the Workplace” by Mckinsey report reveals that women’s representation drops from close to 45% at entry-level jobs to 30% in mid-level positions. Unfortunately, the majority of women do not recover from this phase of no-income and low market skills due to their absence from paid work, resulting in a gradual erosion of their wealth as they age. In countries like India, a mere 3.6% of women hold board chairperson positions, indicating both the absence of women in paid work and the depletion of their wealth as they grow older.

For the Critics: Critics argue that the market economy values certain skills more than others, and therefore women should focus on acquiring skills that are in demand and offer higher economic returns. They claim that the devaluation of invisible skills in the job market is a result of supply and demand dynamics. While the market economy often assigns higher value to certain skills, what about the accrual of future societal benefits of investing in invisible skills? Nurturing future generations, building social capital, and promoting overall well-being are essential for a thriving society but the market suffers from dyscalculia in assessing the value of skills beyond their immediate economic returns.

Invisible skills are the cornerstone of building human capital, yet they remain hidden, undervalued, and unacknowledged. Men’s absence from these invisible, unpaid childcare and household tasks is a reflection of societal expectations and traditional gender roles. But their absence is much bigger missed opportunity for personal growth and connection with their own children. How do we encourage men to actively participate in caregiving and domestic work for their healthy relationship with family and society as a whole? How do we build a future where the compounding effect of skills extends to all individuals, regardless of gender, and where invisible skills are seen, recognized, and given the value they truly deserve?

I leave these unanswered questions here.

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Notes:

1. The Psychology of Money By Morgan Housel
2. The Atomic Habits By James Clear
3. The Almanack of Naval Ravikant By Eric Jorgenson
4. Invisible Women: Exposing Data Bias in a World Designed for Men By Caroline Criado Perez
5. The Developing Mind By Daniel J. Siegel
6. https://www.cdc.gov/ncbddd/childdevelopment/early-brain-development.html
7. https://developingchild.harvard.edu/science/key-concepts/brain-architecture/
8. https://www.ilo.org/asia/media-centre/news/WCMS633284/lang–en/index.htm
9. https://www.weforum.org/agenda/2016/04/why-economic-policy-overlooks-women/
10. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7688061/
11. https://www.forbes.com/sites/avivahwittenbergcox/2020/05/10/4-phases-of-womens-careers–coping-with-the-crisis–the-30s/?sh=d4b2cdd4fc8d
12. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/women-in-the-workplace
13. https://www.un.org/esa/socdev/ageing/documents/PovertyIssuePaperAgeing.pdf