Why Proper Pay Matters

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Why Proper Pay Matters

November 24, 2012 · 4 comments

In response to last week’s 2% raise post, commenter jmc had this to say:

I don’t understand the ideas of “demanding” and “accepting” things from your employer. You agreed to work for a certain wage, if you don’t want to work for that wage anymore, look for a new job.

Here’s where you’re wrong, jmc: You agreed to work for a certain starting wage, not a perpetual wage. This is why many employment ads list their pay as “Starting at $XX.XX/hr.” As your experience and knowledge of your job grows, so does your value to your employer. If your value goes up, doesn’t it make sense that they should properly compensate you for that increased value? That is where the “demanding things” that you mentioned comes from. If you are a quality, knowledgeable worker with a few years under your belt, you are much more valuable than someone walking in off the street. Your boss knows this. Turnover and training are expensive, and the company will be much better off long term by keeping quality employees around. It’s much cheaper to hand out a 5% raise than it is to hire someone else and wait a year for them to reach the same productivity and job knowledge levels.

Furthermore, every manager with half a brain knows that a happy employee is a productive employee. While raises do not offset any problems in the workplace that make for unhappy and unproductive employees, a complete lack of raises will in even the best of workplaces lead to unhappy, and therefor unproductive, employees. When employees say to their supervisor something like “I’m doing $10/hr worth of work,” you’ve got a real problem on your hands, and it just so happens that I’ve heard that phrase uttered quite a few times in my 4 years with this company.

On top of that, we mentioned inflation in the last post. As the cost of supplies, materials, product, and generally running the business goes up, a company raises it’s prices to compensate. It only makes sense that labor costs should be subject to inflationary increases as well, as employees are also consumers of the products and services every company churns out. I can’t find a link to it right now, but when Henry Ford doubled his employees’ wages, cut their schedule to 40 hours a week, and gave them two days off a week, he wrote a letter to his fellow industrialists suggesting that they do the same. Not only did he cite the increased productivity of a shorter work week and the higher skilled workers that he attracted with the increase in wages that we usually read about, he also brought up the fact that everyone’s employees are also their customers, and those employees need more time off and higher wages in order to purchase and enjoy the very products they are manufacturing day in and day out. Ford had a huge workforce; if he didn’t pay them enough to buy a Ford of their own, then who would?

Employment is a two-way street. Unless your building has a revolving door out front with a sign advising people not to let it hit them in the ass on the way out, employees are assets, just like anything else in the building, and as those assets appreciate in value, you have to pay for them properly.

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{ 4 comments… read them below or add one }

JoeTaxpayer November 26, 2012 at 1238

Jake, if I got the story right, Costco has a similar positive attitude. They offer wages above “the going rate,” benefits that allow for Costco to be the primary employer for the two wage family, and reasonable scheduling, including holidays off. From my experience shopping there, the employees seem to like their jobs.


jmc November 27, 2012 at 2055

But it’s not your decision what your wages are….. so it’s silly to talk about what you will or will not “accept” and what you will “demand”.
Let me ask you this, (btw don’t take this personally, ‘cuz I’ve been reading your blog from the beginning and I really like it (especially the Ron Paul truck;) ), if you decide that you don’t “accept” this 2% raise that percisely are you going to do about it? My guess is that you are gonna go ahead and “accept” it……
Also, don’t you have any kind of gratitude to your job at all? Didn’t you read about how other people (namely me) are getting a 0% raise and a cut-in-half bonus? I don’t know about you, but I’m always more concerned about those who have less than me (like people without jobs at all) so I don’t march around complaining about our tiny bonus like alot of men around my job do, ‘cuz I know that it is a lot worse for some people!


Ken November 28, 2012 at 0030

Yes, you do decide what you wages are. Two people decide: you and your employer. If you don’t like your wages (or anything else about your job) and your employer can’t meet your requirements – you can always (try to) find work elsewhere. It is not silly to discuss what you will accept or demand. It is a negotiation between you and your employer.

Of course, your employer willingness to increase your wages depends on a lot of things: how much value you provide to them, how difficult they think you’d be to replace, whether they think you’d actually leave over it, how well they are doing overall, whether giving you a raise means they’d have to give others one too, etc. And whether you’d actually leave depends on the job market, how happy your are at this job, etc. But it IS your decision too – not just your employers.


Kara December 4, 2013 at 1238

I’ll add to Ken’s comment that if you find yourself in a position where you can’t bring an equal power of negotiation to the table, it might be time to ask why not? What skills are are you lacking, what personal development is missing, what experience do you need to put yourself in a position to negotiate from an equal footing?

The “other people have it worse” argument is simply flawed logic. I am supposed to take less or accept less because other people have it bad? That’s like saying I can’t have a donut because my sister is diabetic. Undervaluing myself doesn’t help anyone else have it any better. (And for the record, I was able to buy $500 worth of gifts for children and families in need this Christmas because I negotiated a higher rate of pay and better benefits when I got my new job back in August.)


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