Finding market-rate salaries can be difficult, especially as pay rates increase rapidly in entry-level jobs. We know that you’ll make more money if you jump companies, which makes no logical sense–your current company should pay up. But they don’t increase salaries enough for current employees, although they will pay for new hires. Why?
Well, many reasons, one of which is it’s hard to change jobs, so they know it has to really suck for you to start looking. And two, the market rates fluctuate, so they aren’t sure what it is until they look for new hires.
Today I stumbled upon this post on LinkedIn, demonstrating a sincere lack of understanding about how businesses work.
First of all, not everyone has the same expenses as everyone else. Someone may have chosen to attend community college and a local state school with no student debt. Someone else decided to attend a ritzy school with $120,000 in student loans. Someone may live with roommates or at home, while someone else bought a house, they can’t afford.
For those who are fans of working from home, one employee may live in a rural midwest while another lives in a tiny apartment in Manhattan that costs three times as much as the midwest mansion.
The company isn’t required to change salaries based on other people’s life choices. And it’s not exploitation, either.
People take jobs for one reason: It makes them better off.
Now, what better off looks for people vary. A better work-life balance at a lower salary may be better for someone highly paid. Someone drowning financially may take a shift opposite their spouse to save on daycare costs. But no one takes a job that makes them worse off. You get no job if you prohibit people from offering jobs that don’t pay rates high enough to afford Netflix and a mortgage (I rent, thank you very much). Does that make anyone better off? No.
No business can survive if its employees don’t produce a good return on their investment. If I run a widget factory and I can sell these widgets for $10 each, I can’t afford to pay you $15 an hour to make one widget. It doesn’t matter how high the rent is in your town or how many student loans you have. The business just won’t run. But, if I offer $7.25 an hour (the amount of time it takes you to make one widget), I just may be able to afford to hire you. (Overhead, materials, marketing, salespeople, etc., all have to come from the money I receive from selling widgets.). Chances are I can’t afford even that.
So what do I do? Kelly Tucker would have me shut down my business. That isn’t much help to anyone. Instead, I’d look for people who could make three or four widgets in one hour. Then it’s possible that $15 an hour would be a fair wage. The person who can only make one? It’s not the business owner’s responsibility to give them the skills necessary to get a job that pays enough to cover a mortgage.
The business is responsible to
- Pay the agreed-upon rate, including any necessary overtime
- Comply with all state, federal, and local employment laws
It would be great if they were also nice, and morally, they have an obligation to do so. But there’s no legal obligation to do so.
The goal of a business is to deliver a profit for its shareholders.
Period. Full stop.
If the business pays a competitive wage to its employees – meaning if it can attract talented, qualified people to fill open positions, the business leaders are fulfilling their obligations.
Paying more than the rest of the firms in the market can create a competitive advantage. It can enable the hiring of better talent. It can make the company an employer of preference. But that is a STRATEGIC decision the leadership of the business should consider.
I agree. It would be nice if businesses just wanted to throw money at me so I could buy a house, but it’s my responsibility to develop skills that give me the income I need. A business is not obligated to pay me more than the market rate. (I’ll happily accept the above market rate, but a company has no legal or moral obligation to do so.)