Wednesday, July 29, 2015

Start your own company and you can award yourself any salary you like.

Doesn’t that sound delightful?

“Well, there, fine sir. We are extending you an offer of employment with an annual salary of…oh, just fill in any number!...we think you are the bees knees. And please forgive our use of bees knees- an expression that even your grandparents though was dated..Yeee haaa”

It sounds super-snarky but I do say the line about "starting your own company" a couple of times a year to people looking for a job or to change jobs. I say it because they’ve convinced themselves they should be paid a king’s ransom but they possess zero economic justification.
(they’ve also convinced themselves that I just graduated from the 3rd grade- and not with high honors)
What people are paid doesn’t come from some arcane formula. Like water, money/salaries will find its own level. Supply and Demand in any labor market is driving this bus. The brain surgeon makes more than the retail clerk. The lawyer who wins cases AND brings in new clients makes more than the lawyer who wins cases. The Project Manager with a long track record on getting projects done on time and at or under budget gets paid more than the Project Manager whose record is less.
I’m not sure it works in a Planned Economy but with free markets, you get paid what the market says your worth. Any monetary value is where buyer and seller agree to meet, no exceptions. If you want to get paid more, the market will let you know if you’ve earned it. Might take a while- often you’ve got to hustle. Sometimes, people will come to you and announce your worth more. Ask them what qualifies them to make this assessment. Do not accept incomplete and vague answers.

My work includes advising people on the market and what people’s compensation looks like. Too many of the people who also do what I do haven’t the vaguest idea on what they are talking about. Again, be careful-even suspicious.