DOING NOTHING COSTS THE MOST

In 1982 I knew people who had lost $50,000 jobs and refused to accept $40,000 jobs, preferring to remain unemployed because it would “cost” them 10 grand. I then saw the flaw in their thinking.

When your alternative is $0, taking the $40,000 job costs you zero. Not taking the $40,000 job costs you exactly $40,000.

The speaker continued.

Imagine you had a $50,000 job you hated and there was a $40,000 job you would consider bliss. Not taking the pay cut means you are unwilling to pay $10,000 for bliss. But if you lose the high paying job, not taking the blissful job costs you $40,000.

So, when nobody is paying you a cent, it costs you nothing no matter what you choose to do. Remember that, during hard times, needs go unmet, so there is more work available than normal. And if you are unemployed, the cost of taking ANY job is zero. Because so few people know this, you have even less competition for doing the work that needs to be done.

I thought back to my summer job teaching the class. The economy wasn’t so hot in the waning days of the Vietnam War.

If things had been booming, the book author could have easily sold his books, so the opportunity cost of giving them to me would have been higher, and he might not have. If the computing center had been overbooked, they might not have given me free access, and IBM might have insisted on being paid $10,000. The parents of my students might have preferred to spend a few grand on sending their spawn to a “gifted and talented program” instead of entrusting them to an uncredentialed 19-year-old.

And, had someone been offering me more than minimum wage, I probably would have taken their job.

The argument was convincing. But, what should I do differently in the future?

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