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Paying employees and labor Paying employees and labor
by Joseph Gatt
2020-08-03 07:11:42
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Common question: how much should I pay my employees? How much should I get paid? Here's a quick answer.

-Employees have three features. They have skills. They have work experience. And they have training/degrees/diplomas.

-The rest is a matter of “definition” and a conflict of definitions between employers and employees, which result in conflicts during salary negotiations, which can result in “lifelong employees” or “employee attrition” and “high turnover rates.”

Here's a table that kind of sums things up.


Employer definition

Employee definition

Social “norms” or “conventions.”


-He could value those and pay more for certain skills.


-He could be a jerk and pretend the skills are useless even when he needs them on the job.


-He could argue that the skills are not needed, thus pay less.

-If employer values skills and pays more for them, employee tends to be satisfied.


-If employee values a skill that the employer takes for granted, the employee is going to have to try to push forward and convince his employer that the skills are indeed useful and that he should get paid more.


-If the employer says that the skills are not “needed” the employee is going to have to find arguments for the skills being needed “in the future.”

-Certain skills, especially scarce skills, tend to pay well.


-Certain skills are rare and valuable, but not recognized by society, thus don't get paid that much. Example: writing. So few people are great writers. Lots of people can type, but few people can write beautifully. Yet a lot of times writing is equated with typing.


-Some skills used to be valuable but no longer are (French is a great example, used to be a real valued skill, but not so much over the last 20 years). Some skills used to be “useless” but have become useful out of the blue over the years (Chinese would be an example, software designing and coding are another example).


-He could value experience and pay you more for that.


-He could claim that your experience is “irrelevant” even when it is relevant.


-He could claim “not to need” your experience, and that he could hire someone with no experience.

-If the employer values your experience and pays you more for that, you are happy.


-Some trades are just “dead ends.” Example: teaching. Most teachers get paid the same amount their entire careers, with little regard to their experience.


-In the non-for-profit sector, experience tends not to amount to much. Same goes for the low-skilled trades. But in the high-skilled, for profit sector, you will have to find arguments that value your experience.

-The common idea when it comes to experience is:


It's not what you did, it's more about who you met and worked with.


Some argue that experience doesn't amount to much in salary negotiations because you will be dealing with past problems, not future problems.


The idea is to “sell” your experience as part of your “training” and the “skills” you gained and the “network” you worked with.

Training, degrees, diplomas

He could value your training and pay you real money for that.


-He could downplay your training as a “4 year vacation.”


-He could claim your training is irrelevant to your job.

If he values your training, great!


-If he downplays it, you're going to have to find arguments when it comes to how the training helps get the job done, and is scarce and hard to find.


-If he claims training is irrelevant to the job, you're going to have to convince him that it will be relevant in the future.

-Society believes in “elite” education and tends to believe that not all diplomas are equal. Harvard tends to get more praise than any community college.


-Country where the training and diploma were obtained tend to play a role, an American diploma tends to have more perceived value than a Nigerian diploma.


-In some countries, you automatically get paid more money for your “degree” because it gives you access to the “alumni network.”

-Problems with salary negotiations.

emplo001_400-Asymmetric information. Your employer knows you from your resume, but can't always test your skills and claims.

-Asymmetric information: your employer knows the workplace. As a job applicant, you don't know the workplace. The only information you have is the information in the job advertisement. So your employer could “downplay” you and your skills during salary negotiation, and once you start working, you will realize that your skills and experience really are relevant when the claim during negotiations was they were not.

-Most companies have pay scales. Even though salaries can be negotiated, a lot of companies will have caps. A lot of times they have ceilings but no floor. That is chances are you'll be underpaid, not overpaid.

-Being overpaid can be a trap! I once got “overpaid” at a company (most people were getting paid 300 dollars a month and I was getting 1,900 dollars a month). Now to me, provided I speak 9 languages and have plenty of skills, I thought I was rather underpaid. But my employer used the “overpaid” excuse to “overwork me” and to “humiliate me” to the point I almost withdrew 1,900 dollars from my bank account and thought about spreading the 1,900 one dollar bills on the floor and my boss's desk. I kept the money, quit showing up without a resignation letter.

-”Competitors” are important. If you get a job and your employer feels that you have nowhere else to go, chances are he will underpay you. If you get a job and your employer feels that you are two clicks away from getting a better job at his competitor's company, chances are he will try to pay you as much as he can.

-Pay is not everything! If you're really good at your job, your employer will tend to try to prevent the rumor from spreading. Because if competing companies find out you do a terrific job, they will want to hire you. So when you speak 9 languages like me and the rumor is not spreading like it should, your employer can end up treating you like a prisoner. In my case, I wasn't allowed to go outside the company, was left out of meetings, had to give up the password to my personal email, and my boss would follow me to the toilets (or we always peed at the same time, strange coincidence). You get the idea.


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