At various times in our life we’ve all had jobs where we feel either overpaid, or underpaid for what we deliver. If we ask any rational capitalist what they’d prefer, you can be certain they’d rather be over paid. Who wouldn’t choose a cosy, comfortable gig with good pay and easy output?
I’ve been in both places personally, and over the years I’ve been thinking about personal economics and relative happiness. I‘ve come to the conclusion that I’d rather be underpaid. Which seems crazy and irrational, but when it is considered in the context of what delivers real happiness it does make sense. My primary view on happiness and contentment in life is that it is not based on now. Rather, it is based on our expectations of our future position. This is most easily explained by considering how I’ve personally felt when I’ve been in these two juxtaposed earning positions.
When overpaid:
While being overpaid we know we are not creating justifiable value for our cost. We feel like we have tricked someone in the system. It feels like we are eventually going to be found out. We know this because the economic system doesn’t support it in the long run. The system loves and rewards efficiency. Which in turn puts us at risk of being, replaced, removed or made redundant. We know this and it starts to effect our psyche. We stress over it and start to worry about our future. And even worse, we don’t progress intellectually, we decline in confidence and effort. Or much worse, we become lazy and complacent – enjoy consumption instead of contribution and start to feel entitled. But in reality, the future looks darker than the present.
When underpaid:
When we are paid below market rates we know we are valuable. We create more than we cost. It makes us feel valued as contributors, even if we know they are getting the better end of the financial deal. But it also makes us hungry to prove our worth. We want to show them or make them realise what we deliver. And in order to do this we work harder and become hungry. It too effects our psyche, but in a much more positive manner. We believe in ourselves, and set on a path to prove ourselves. The Zen part about being underpaid is that we can sleep a lot better at night. We can do this because we know the market needs people like us, and very often pay more for it. So we have clear exit paths if they are required. Our minds and the world open up to the possibilities of our skill base. The future looks brighter than the present.
It’s much the same when we found a startup. We know that we must create value before we can extract it. Which is really what we should aim for in all things we do – deliver more than we take back. In fact, we should be thankful if we live in a perpetual state of over delivery. That way we can ensure that we will always have a valued place in the market.
Mm this has me thinking Steve. How do we come to value the work in the first place, ie. how do we set the yardstick against which we say we are under or overpaid? One person may charge $100 for a service that someone else provides for $500. So it’s going to be relative, according to our values, ideas, anchors.
What makes sense to me though is this notion of ‘value’ though and the desire to contribute. I am AT ONE with you that we “deliver more than we take back”. It seems to be the precursor for happiness or wellbeing anyway, not that we do it for that reason. I’ve just come to this blog courtesy of Trevor Young and look forward to reading more of your work.
Thanks for the comment Dionne. For sure this is an interesting topic and the post could not really be regarded as the only answer or view. But I was really just trying to point out the value of expectations, value creation, and comfort in your own self.
Steve.
There is no such thing as being overpaid or underpaid. The market will pay what it perceives to be our value. It’s up to us if we take it or not or increase our perceived value.
http://www.businesszerotosuperhero.co.uk
I feel this comment requires a retort for obvious reasons.
If there was no such thing as a person being underpaid the following would never happen*:
– A pay rise for recognition of performance, effort or output
– Annual pay adjustments
– Bonuses for achievements made
– People leaving for a similar job / role for a significant pay rise
– Companies realising they don’t pay market rates and adjusting after staff leave
* I could go on, but the point is clear.
If there was no such thing as being overpaid, these points below would never occur:
– People being made redundant, due to poor output
– People being sacked for not delivering to expectations or KPI’s
– Companies restructuring to more efficient staffing arrangements
Yes – I agree that we can increase our perceived value, but your arbitrary comment fails to consider that markets adjust ‘live’ and are never in a state of pure equilibrium, as such moments occur when people are not paid their market value at both ends of the scale.
Steve.