Saturday, February 24, 2007

Salary envy, making more money and managing your career

I found and interesting article on salary envy by Reben Navarrette of the San Diego Union Tribune. Here is what they said along with my comments. moeny salery

Remember when it used to be considered impolite in America to talk about how much someone earned? Its a scary thing when you start to get into salary comparisons. Hopefully you are not stuck in a minimum wage job. Now there are times when it seems that's all Americans talk about. The bottom line is that you need to look at the average salary for your particular job along with years of service. The guy with more years in most cases should be making more but not always. One thing that has tongues wagging lately is executive compensation. Apparently, a lot of Americans are concerned about what Fortune 500 companies and Wall Street firms pay top executives to perform or – in the case of lavish severance packages – go away. You know the bottom line here is when you do talk about salaries with others it still causes problems. Most people do not make the same wage in an office environment. I have found lots of cases where one person was new to the company and the other guy was there for 10 years. Guess who was making more? The new guy. Now how does the dedicated employee feel. You really have to watch who you discuss salaries with. Instead of talking with your friends about wages and salary you should discuss it with a knowledgeable recruiter or consult for a free salary calculator the will provide you with and estimate of what people in your region make for a particular type of job. Below is an example of what you will find this one is for a program manager job. It really doesn't matter what type of job you have you can find everything from a teacher salary to a nurse salary you will be able to find a comparison of your salary here.moeny salery

Some of the sudden interest in what executives are making might be tied to a new populism. Television talker Lou Dobbs insists there is a War on the Middle Class which is the title of his recent book. Democratic presidential candidate John Edwards, a millionaire trial lawyer, recently blasted “big insurance companies” and “big pharmaceutical companies” as well as “big oil.” And Sen. James Webb, D-Va., in his response to President Bush's State of the Union address, warned that “the middle class of this country, our historic backbone and our best hope for a strong society in the future, is losing its place at the table.” I agree in someways that it is very tough on the poor and the middle class. However, before we go trying to thro out our economic system take a look at the GDP per capita for the US. We are still have one of the highest GDP per capita in the world. Why do you think so many people want to live in the U.S.

Whatever the reason, the media were awash in stories this past December about record year-end holiday bonuses on Wall Street. Goldman Sachs CEO Lloyd Blankfein pocketed $53.4 million. In all, last year's bonuses for Wall Street executives totaled $23.9 billion. Then came the story about former Home Depot CEO Bob Nardelli and his severance package, which weighed in at a gargantuan $210 million despite the fact that shareholders had long complained about the sluggish performance of the company's stock. Some of these pay packages don't make any sense to me. Just like athletes and actor/actress movie and TV salaries don't make sense. It never ever makes sense to me why we have to pay a CEO 100s of millions of dollars to go away. It he screws up he should get the typical severance package that the company gives it workers. If thats 2 weeks or 6 months pay that's what he should get. I am still waiting for someone to ask me to go away for $210 million dollars. Sign me up baby!

Recently, President Bush – the first MBA president – took on executive pay. During a visit to Wall Street, Bush called upon business leaders to “pay attention to the executive compensation packages that you approve . . . and show the world that American businesses are a model of transparency and good corporate governance.” In the same speech, Bush invoked the phrase “income inequality.” He was making the case for reauthorizing the education reform law, No Child Left Behind. The president acknowledged that many Americans are worried that the economy is leaving behind working-class folks and suggested that the fear might be somewhat justified. Bush said the reason was “an economy that increasingly rewards education, and skills because of that education.” And that, Bush insisted, makes education reform all the more important. I guess I agree with this in some ways. But I would like to take another spin or direction on this topic. I have 2 college degrees and engineering degree and an MBA. However, in my neighborhood I have lot of families who's Dad's have different jobs or own business who most likely do not have a college degree. One guy is an auto mechanic, another guy owns two pizza places, and another guy owns a landscaping company. My point is the guy the installs and fixes my furnace make significantly more money than I do. He doesn't have a college degree but he owns the business, he and his wife run it and he might have 6 employees. Another friend of mine owns his own business and he has like 4 months of college and again he lives in a bigger house than me and makes more money. I am not saying I have envy of these people there are just different ways to slice the apple. You need the following to get ahead in life but you don't need all of them, 1. a good education, 2. a skill or trade, 3. own your own business. As the book The World Is Flat points out you can't offshore or outsource your plumber or mechanics job to India or China. The mechanics job keeps getting more complicated and most people now days can not fix their own cars. You need a skill, you need to be able to add value.

Bush is half-right. He is absolutely correct that, to the degree that there is an income disparity in this country, much of it is tied to those who obtain a quality education and develop marketable skills (See the author makes the same point here, marketable skills), and those who don't. As Bush pointed out, one recent study of what men earn showed that someone with a college degree earns about 72 percent more than someone who has only a high school diploma. This isn't new. There has long been a gap in earnings between those who are college-educated and those who aren't. And yet, according to Bush, the gap is greater than it was in 1980.
Americans shouldn't feel bad about that. Much of it is tied to the decisions that individuals make about how much education they're going to pursue, and how hard they're going to pursue it. Most of the obstacles that people face are self-imposed, and self-designed. We can't say that enough, especially at a time when too many people in this country look to blame others for their troubles, failings and shortcomings. Again some people are not natural born students. Even if you attempt to get a skill now days it takes some technical ability. You need to know math and how to read and right. I have a good friend from high school that is an electrician. He wasn't a good student, he was average, he continued to study for and retake the journeyman's test and then eventually the masters electricians test until he passed it.

So the president's focus on education is valuable. But there is less value in what he had to say about executive compensation packages. That's an issue best left to the executives and the company's shareholders – and the government has no business interfering. Whether we're talking about movie stars or professional athletes or television and radio personalities, there is a simple formula for deciding what someone is worth: It's what someone else is willing to pay them. OK I won't argue with this but really $210 million to get someone to go away after you have screwed up the company. It still doesn't make sense to me.

I bet that makes sense to most people. But for others, there is an emotion that always seems to get in the way. It's class envy – the sense that it's simply not fair that there are those who earn in an hour what it takes others to earn in a month. It doesn't help that there are plenty of politicians, commentators and pundits who shamelessly try to cultivate that resentment and use it for their own purposes. My Dad told me along time ago, there is always someone making more and there is always someone making less. You really have to get over the comparing yourself to others. The only race on your career and income is the race against yourself. You need to set your own goals. If you are stuck in dead end job are you going to night school? Can you get enrolled in an apprentice program? Does your dead end job require any skill or could anyone do it? If so it is time to make a plan and get yourself out of that dead end job. As Robert T. Kiyosaki says in Rich Dad Poor Dad there are 4 ways or quadrants to make money, 1. as an employee, 2. self employed, 3. as a business owner, and 4. as an investor. If you are stuck in the quadrant one as an employee you need to figure out ways how to improve this quadrant so you can think about how you might eventually move into other quadrants.

They won't succeed if you don't play along. Being envious of the rich is a waste of time and energy. Better to direct those passions toward building a life for yourself that others will envy.

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