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Fred WhittleseyPay and Performance: The Compensation Blog0 Comments

Every year I read Parade magazine’s article on what people earn. Actually, now that I think about it, I don’t think I’ve ever actually read the article but rather scan every picture and job title and salary. As a compensation specialist I can’t resist. Usually I just see surveys or spreadsheets of what people earn – job titles and salaries; here I get to see their faces. It’s a little voyeuristic as is the whole notion of the topic of pay.This year, however, the article appeared on the one Sunday that I didn’t make it to the corner to buy the newspaper and today a colleague advised me via email of the article online. So I didn’t get to peruse the facebook (well, there were 12 shown) – but when one shifts from print to web there are tradeoffs. I got to read the reader comments posted on the site. And I actually read the article.

As easy as it would be to launch into a political commentary, I’ll just say that the most striking comment by the writer was: “Workers need perseverance, stamina, flexibility, and patience to succeed in this difficult environment.” I always thought those are the requirements to succeed in any environment but maybe that’s because my father was born during the Depression and was thrilled to work later in life, after fighting in World War II, as a mailman (we call them “postal workers” now.) So I’m probably biased.

The comments posted, most of them ranging from irritated to outraged, blame the magazine, the President, the American economic system, our court system, the stock market, company politics, Howard Stern, Democrats, Republicans, the entertainment industry, sports teams, and others for the purportedly sorry state of American pay. It seems that Americans are getting a raw deal and it’s not their fault.

What’s interesting to me is the entitlement mentality that we Americans seem to have developed. We are entitled to real pay increases, darn it. What the heck is wrong here? Some of the quotes in the article include:

“Wages haven’t kept up with inflation.”
“Salaries just don’t seem to be keeping up with the average person’s cost to live.”
“My income will probably increase…but I doubt the increase will cover the higher cost of insurance and gas.”

I can’t think of a single source that would provide assurance that any of those expectations would or should have been met.

What really amazes me is the fourth sentence in the article: “’While the economy has been growing since 2001, all the benefits of that growth have gone into corporate profits’ says Mark Zandi, chief economist at Moody’s” I would point out to Mr. Zandi, without sounding like an apologist for corporations, that corporate profits turn into more jobs, higher stock prices, dividends, capital investments, and tax revenue. I think you and I get the benefit from at least one, if not all, of those. Granted, some of those jobs may not be in the US, but read on.

Yes, the US economy is booming, and many people are benefiting from the boom, but American employees – on average – are overpaid compared with the rest of the world. An outcome of globalization is to fix that. We are seeing capitalistic US values spread around the world, and some aren’t liking it when others are better than us at the game we invented. For every disgruntled employee in America there are two or five or twenty people in other countries that are ecstatic. But Americans still have choices. Depending on your particular skill set and area of expertise you can move almost anywhere else in the world; you can find a place where the ratio of your salary to cost of living is more favorable and you can be a beneficiary of the new equilibrium. I recently read about a mid-career software manager who moved from Seattle to Shanghai for just that reason. Go online and find out what your job pays in Shanghai or Rio de Janeiro or Amsterdam.

And, yes, on average, the real pay of Americans is declining. There is a bit of the 80/20 rule occurring: the top 20% see their pay soaring while the other 80% are experiencing erosion. Of course, the government numbers miss a lot of pay elements, but the crux of the statement is true: Americans are earning less. People in other countries are able and willing to do the same, or better, work for less pay. Step back, and it’s hard to be angry about that.

No one is going to insulate American workers from pay erosion because they complain about it. What Americans can do is what we’ve always done best – work hard, innovate, and take responsibility. We can get paid for that. But blame and resentment have never been high-paying skills. Good survey data shows that what increases pay of an individual is education, skills, experience, level of responsibility, and related factors. Accumulating those require – in the words of the writer – perseverance, stamina, flexibility, and patience.

I wonder when Parade will shift their annual story to show worker pay around the world and not just in the US. I can’t wait to see the reader comments then.

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