The Ability Ladder

We need a framework to categorize human abilities so that we can talk about work and education with clarity. I introduce the “Ability Ladder” to help us understand what is meant by a “skills gap” and explain the difference between education and experience.

The World of Work

The global economy is worth over $100 trillion and is composed of unique markets for thousands of goods and services. However, the foundational market that supports all other markets is the labor market. Here, humans contribute their unique talents to produce goods and services. In exchange, they receive money to support themselves and their families.

Philosophically, every human being is a unique individual. Economically, as part of the labor market, we are inputs of production who sell our time and energy for a price based on the number and level of abilities we each possess. Workers signal their abilities to employers using letters, resumes, credentials, degrees and interviews. Employers identify the abilities they require for a job and communicate them to potential employees using job postings, recruiters, and employee referrals. The efficiency of the labor market is determined by how simple or difficult it is for workers and employers to find one another, evaluate abilities possessed vs. abilities required, and agree to work together.

We Need an Ability Framework

Because human abilities are the foundation of the labor market itself, we need a framework to describe them. We also need a framework to enable us to use the same language for discussing problems (e.g. the “skills gap”) or proposing solutions (e.g. apprenticeships) to problems with the labor market.

Below, I’ve created a mutually exclusive, collectively exhaustive framework called the Ability Ladder. The Ability Ladder is a hierarchy of Natural Abilities and Learned Abilities that each person possesses.

Natural Abilities are the result of genetics and socio-cultural influences (e.g. our childhood experiences). There are three natural abilities:

• Physicality is the degree to which you are physically capable of participating in the actual work environment. This is the foundational human ability that enabled hunter gatherers to do the work of finding food. Today, nearly every job in construction, mining, or agriculture requires a certain level of physicality to lift, carry, stand, or walk.
• Personality influences the work you find intrinsically interesting and the tasks you’re intrinsically suited to perform. Personality is best understood using the Big 5 personality traits model. The Big 5 traits are Openness (curiosity vs. caution); Conscientiousness (organized vs. careless), Extraversion (outgoing vs. reserved), Agreeableness (empathetic vs. detached), and Neuroticism (nervous vs. confident). However, employers also use their own psychometric evaluations, including MBTI and DISC, to evaluate similar attributes. To understand the importance of personality, imagine the relative success of a salesperson low in trait extraversion vs. high in trait extraversion. A poor proxy for personality in corporate culture is “cultural fit”, a term often used to describe how a job candidates personality would fit within the corporate culture.
• Intelligence is your overall intellectual horsepower and problem solving ability. The most common “measure” of intelligence in the U.S. labor market is the rank of the college where you received your bachelor’s degree (e.g. Harvard vs. State University). Your acceptance to this college was based primarily on your SAT scores and high school GPA, themselves crude measures of intelligence. The value of intelligence ability in the labor market is substantial as evidenced by the millions of dollars every year that students (and their parents) spend on SAT prep to get into the highest ranked college. (Note that while it is common to use college ranking, grades, or test scores to separate people into different groups, it is far from certain that these “measures” of intelligence actually represent anything more than the ability to perform well in specific environments and specific tests, and say very little about an individual’s ability in the real world. See for example, Nassim Taleb’s discussion of IQ, which he calls a “pseudoscientific swindle”.)

Learned Abilities can be attained and enhanced throughout your life. Every book, class, and work experience, contribute to the learned abilities you bring with you into the labor market, and include:

• Knowledge are the facts in your head, including math and scientific theories, the names of people, places, and things, and the concepts and mental models you use to make decisions.
• Skills are the ability to apply knowledge in the real world. You apply your knowledge of addition and subtraction to the skill of creating a formula in a spreadsheet. You use your knowledge of logic and a specific programming language to the skill of writing computer code.
• Tools are aids used to apply skills in the real world. You use a hammer to pound a nail, Excel to build a financial model, or Python to write code.

The Language of Ability

Each person has a unique combination of natural and learned abilities. This combination is called a “talent stack”, a phrase popularized by Scott Adams, creator of the Dilbert comics. On the other hand, people typically refer to abilities gained at school as “education” and abilities gained at work as “experience”. This is the difference between say, having a bachelor's degree in computer science (education) vs. having worked as part of a team to commercialize a new software product (experience).

Properties of the Ability Ladder

The Ability Ladder has the following unique attributes:

• Each step forms the foundation for the subsequent step.
• The more ability layers a job requires to be completed, the more money you can earn to complete that job.
• The more a job requires a higher level of a single ability, the more money you can earn to complete that job.
• Most entry level jobs are gated by education (abilities gained in school), whereas higher level jobs are gated by experience (abilities gained over time by working).

Beyond the Framework

You can apply this framework to the real world to highlight real problems and potential solutions in the world of work and higher education. Here’s are some examples:

Education bundles: College degrees are a simple bundle of two ability certifications: intelligence certification (rank of college), and knowledge certification (college major and classes taken). Most people conflate the two, but they are in fact separate. In the future, we are going to see these two ability certifications “unbundled”, and its impact on the world of work will be substantial.

The “skills gap”: When employers can’t find workers to help them, this is often referred to as the “skills gap”. However, as we’ve seen, skills are one of only six abilities an employer requires to complete a job. Hence, are labor market imbalances the result of a “skills gap”, a “knowledge gap”, a “tools gap”, or a lack of workers with sufficient physicality or intelligence to do the job in the first place?

Job postings: Employers signal their interest in abilities using job postings and interviews. However, employers rarely break down a job into the component abilities required. For example, many employers state a requirement for a college degree, when in fact a more specific ability bundle is al that is necessary.

The Ability Ladder provides a framework for thinking about each of these topics and uncovering new insights that can help us explore these real world problems.