how to be highly compensated

How to be Highly Compensated – and Common Misconceptions

My wife and I both work in analytical corporate roles surrounded by similarly afflicted people. Every workplace has it’s grievances, and among the universal complaints is the “I’m underpaid” fallacy.

Everyone thinks they’re underpaid. When I worked service jobs in college I made what seemed like a lot of money for very little work. People complained. When I was an intern I robbed my employer of knowledge and experience while simultaneously getting paid an hourly rate that embarrassed me slightly. The work I was doing was utterly simple, I’m positive I cost more than I was contributing. Still though, my fellow interns complained.

When I caught that first full-timer complete with my very own fake four walls I was once again aghast by my pay. I didn’t even counter-offer, didn’t even consider it. Poor naive me, I hadn’t figured out yet that every one everywhere is underpaid.

Why People Think They Should be Paid Alot

I’ve heard a lot of belly-aching through the years from people with the woe-is-me’s. Even my dear sweet friends catch the infection from time to time and start in on how they’re so poorly treated despite their mammoth contributions.

The excuses for why someone thinks they deserve higher pay generally fit in one of three categories:

  1. My job is really hard
  2. No one else can do what I’m doing
  3. I’ve been here a long time

Let’s take a closer look at these.

1. My job is really hard.

I run with a lot of accountants and engineers, so #1 is what I hear most often. It’s true that accounting can be very complex, dare I say difficult. It requires a lot of background education, usually 2 degrees and a theoretically hard to pass exam. Accounting rules are so complicated that if a lawyer wants to focus on tax they need to get a special designation (LLM) and go through another full year of law school!

The problem is, difficulty is all relative. There are 650,000 active CPA’s in the U.S., which isn’t a ton, but it’s plenty. Being a CPA doesn’t make you a rare animal. To be a CPA you have to be decently smart, but if you’re the median CPA it means 325,000 of your peers are smarter than you. The accounting world doesn’t need 325,000 genius accountants, it needs 10,000 geniuses and 640,000 peons. You may be smart, but you’re a peon, and peons don’t command the big money.

There are a bit over 1.5 million mechanical engineers in the U.S. If you’re one of them, in all likelihood you’re average at best (the people at the top of their field don’t read blogs about identity crises). Being an engineer is more analytically demanding than, say, an ice cream scooper, but that guy has his own problems. An engineer’s work can also be relatively easy, depending on who you’re comparing against. The smartest mechanical engineer in the U.S. thinks the average engineer’s work is akin to kindergarten art class. You’re not special.

2. No One Else Can Do What I’m Doing

Yes they can, see above. You may feel like a unicorn because you’re a CPA and no one else from your high school is, but the fact is, ya basic. A lot of people can do what you’re doing. The reason no one else at your workplace can do what you do is because they hired you! If you weren’t there, they’d just hire someone else and be absolutely fine.

The ice cream scooper might look around and think, “man, if I wasn’t here, none of these people would get their ice cream, I should be paid more”. That’s crazy, but it’s what entitled cube workers think all the time.

If no one else at your workplace can do what you do, that’s called job security. That makes your paycheck steady, it doesn’t make it big.

3. I’ve Been Here a Long Time

This one gets me. Whoooooo gives a shit.

Listen, I would love if loyalty were rewarded like it were Ford Motor Company in the 1950s, but those days are gone. The company knows the only reason you’ve been there a long time is because you got no where else to go. Why should they pay you more when you’re going to keep coming back anyway?

Who Does Get Paid A Lot

For symmetry, here are three categories highly paid people fall into:

  1. Directly create revenue
  2. Highly specialized in a needed skill
  3. The buck stops with you

1. Directly Create Revenue

This is why there are used car salesmen that make more money than you. If you can create sales, you’ll get a piece of the action.

I don’t know how to go into more detail on this, it’s just the way it is.

2. Highly Specialized in a Needed Skill

This sounds close to the false reason of “no one else can do what I do”, but it’s distinctly different. The no one else fallacy fails to take into account that your company is trying avoid redundancy, no one else can do what you do by design.

Being irreplaceable is a whole other ballgame. If you are truly highly specialized in a needed field, then you’ll be highly compensated because employer’s are competing for your services. It’s very basic market economics, when demand > supply, the price is high. If it’s very difficult to replace you then you’ll be highly paid. And I do mean very difficult.

If you’re an engineer at GE that helps design jet engines you’re probably reasonably hard to replace. That won’t get it done though. You have to be the one who provides the ultimate answers, the push-comes-to-shove type of answers. That girl is the one making the big bucks because she’s the one other jet engine companies want.

The caveat that the skill must be needed is important. I might be the most skilled underwater yodeler in the world, but if no one cares I’m not going to get paid.

2b. You do a needed job that nobody else wants to do.

My parents live in a remote community that doesn’t have a sewer system, which means all the houses have septic tanks. Septic tanks require regular emptying and some degree of upkeep. Septic Steve is the go-to provider for their neighborhood and that dude makes hella cash. I’ve watched (and smelled) him work and it doesn’t look terribly difficult considering how much he charges, but in the 20 years they’ve lived there, not a single other operator has come in trying to undercut him.

3. The Buck Stops With You

I have an engineer friend that was once pretty deep in an I’m underpaid rant when he said “if I make a mistake on this airplane design people could die”. That was his justification.

That’s a half-truth at best. Yes, if he designed a wing-less plane people in it would die. But the thing is, it would never get made. People review his work – like a lot of people. If a plane does drop out of the sky, no one is gonna be calling his name out on CNN. The person at his company who gets trotted out in front of Congress when something goes wrong, they’re the ones getting paid.

It’s one thing to take pride in what you do at work; it’s great if you’re a creator, coming up with ideas all by your lonesome. But don’t confuse origination with responsibility. Someone higher up is signing off on your work babies, and they’re the ones rightfully getting bank. It won’t due for your boss to say “well it was Gertrude’s idea”, no one is gonna care.

In Conclusion

We have a tendency to develop opinions of self-importance. It might be a good idea to take a big bite of humble pie and reflect that you might not be so special. There are two reasons it might be important to do so:

1) you can accept your lot and appreciate the great opportunity you have. Even if you don’t meet one of the three categories to merit high pay, you can still earn a respectable wage. I don’t think it’s a stretch to say it’s easier to be happy when you’re content and accepting vs slighted and undervalued.

2) if you really think high pay is the key to your happiness… start positioning yourself into one of the 3 categories. It doesn’t matter what attributes you think deserve high pay – the people with the money get to decide that. If your happiness is tied to income, then it’s tied to the market forces that dictate pay.

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