Monday, August 22, 2016

Your Worth

Capitalism is the most efficient form of society when there is scarcity, as long as people understand supply and demand.  Unfortunately, for a lot of people, when it comes to themselves, they do not and their confusion has understandably turned to anger in the past twenty years.

I read this sad story on r/sysadmin.  Relevant part:
Well there's a problem. I was averaging 55 hour weeks and stage 4 burnout. I begged my coworkers for help but nobody lifted a finger. They didn't want to be pulled into the politics of this customer and they see what they do to me. I was left to crash and burn. 
And later:
I stopped working on them. My boss went out to headhunters to replace me. They cheapest came in >$100,000/year. Which is more than I ever made. The boss doesn't pay himself that much.
However it finally came down to me being fired.
It's common to see the word exploited in conjunction with capitalism, but it's more correct to label the situation as ignorance.  The market rate for that job is >$100k yet he was working for a lot less than that.  Before you are overcome with rage at capitalists' exploitation of the proletariat, what's a parallel of this?  It's the one store where everything is 20% cheaper than elsewhere with no drop in quality.  If that store goes bankrupt or is much less profitable than its competitors, do we feel bad about it?  No.  In both cases, neither parties knew their worth.

For the price of anything, in this case labor, the minimum that it will cost for employees to supply it is what they need to survive.  If food + clothing + shelter is more than what businesses are offering, zero labor will be supplied.  On the other hand, the maximum cost of an employee's labor is whatever profit the employee will bring in by working.  Between those two demarcations is the true "profit" to be shared between the employer and employee.

An article from Pew: young people (millennials) are more likely to live with their folks than any other living arrangement.  Keep this part in mind:
Similarly with earnings, young men’s wages (after adjusting for inflation) have been on a downward trajectory since 1970 and fell significantly from 2000 to 2010. As wages have fallen, the share of young men living in the home of their parent(s) has risen.
The popular thesis is that due to monopsony, asymmetrical information, and lack of leverage, employees have been getting shafted seven ways to Sunday and thus employers--read: capitalists--have captured the vast majority of economic profits.  I'm not saying these reasons are wrong, but can this correlation be read in reverse?  As young people live at home rather than strike it out on their own, their expenses are lower and thus what compensation they need from their job is a lot lower.  Why bother negotiating for a higher salary when you don't have rent?

Hang out on r/personalfinance and you will hear the same story five times a day.  Someone feels exploited or overworked or underpaid and asks for help.  The advice always revolves around communicating your value to your supervisors, as if they don't know.  Do you go to the supermarket and listen to your grocer harp on about how much value their grapes will give you if you pick it over their competitors?  The real answer is: how much are your peers getting paid doing that same job in that same zip code.  If you suspect it's more than you, do this:
  1. Research what your job title/responsibilities are worth on the open market.  It's as easy as googling  "X salary zip code xxxxx"  
  2. Start going on job interviews if you notice that the difference is large.  Don't let your employer know yet.
  3. After getting a job offer with a much better compensation, go back to your boss and say you did your research and noticed that you aren't getting paid the market rate.  If he doesn't give you a raise right away, just leave.  If he starts acting suspicious, just leave.  Actually nine times out of ten, you should leave as most of the time if you are being underpaid by a lot, your boss knows and that the cost of turnover is less than however long it took your dumb ass to figure it out.  But regardless, now you have two options.
  4. Congratulations, now you are being exploited by capitalism whereas before you were just being exploited for being stupid.
Tl;dr: Whatever your motto is at work, change it to Fuck you, pay me.