From 18th March, 2006:
When I first came to London to seek my fortune, was taken out to lunch by a family friend with about three decades more experience than I. She cheerfully told me that I wasn’t worth the salary that my brand new job was paying me. She was right, as it happens, since I was an extraordinarily bad management consultant, but she was betting against the odds. The typical young person is worth more than he or she is paid. Young people who feel that the odds are stacked against them turn out to be right.
Older workers, on the other hand, tend to be overpaid relative to what they produce. This is not because they are less productive than the young – although many important skills do start to decline at the age of thirty, or even earlier – but because they are paid so much more. Decades of economic studies have produced the conclusion that average wages increase with age almost until retirement, yet average productivity seems to be flat or perhaps even declining after the age of fifty. (The studies are not unanimous, because productivity is very hard to measure and, of course, the averages hide huge variations from job to job and person to person). Perhaps my plain-speaking mentor was paid five times as much as I was, but if she was only three times as productive then I was the bargain basement employee.
Continued at timharford.com.