Are you paid what you are worth? Most of us think not. We also tend to look at other people who make more money than us and wonder if they are “worth” it. Who hasn’t seen the news of a sports celebrity signing a multi-million dollar contract and thought, even if only for a moment, “that’s not fair?”
The rock-bottom truth is that when other people pay voluntarily for our services, we are paid exactly what we are worth. Yes, the government does distort the market, subsidizing some who probably could not earn as much in the private sector. It also imposes additional costs on some people/businesses, causing them to earn less than they would in a truly free market. On the whole, though, our pay reflects our true worth.
This is a disturbing thought. Once we accept the premise that we mostly get what we deserve, getting less than we think we should is an indictment of our own will and ability. “Why doesn’t my boss pay me more?” becomes our mantra and a question without a good answer. Yeah, why doesn’t he/she?
Know why? Because you will work for that much. Why should you be paid more? Because you need it? That is charity–certainly a nice thing to benefit from when you need it, but not the basis for an employment contract. It is also not very convincing. Here is another approach.
Ask for more. I learned the power of this simple strategy years ago. One time, I was recruited by a university. They made an offer that I was ready to accept. As a professional courtesy, I showed the offer to my present employer, never dreaming in a million years that they would match it. Match it, they did, though, and I received a substantial raise. Never again was I bashful about asking for what I was worth. I knew I was worth it because someone else was willing to pay it.
Alas, though, even a substantial raise has its limits. There is an upper bound to what I can ask for in my job. Imagine me marching into the University President’s office and suggesting I should get what Eli Manning gets. If I ever try that, it will be on April Fool’s Day. That way, I can tell him it was all a big joke just before he has security remove me.
One’s own business has no such limits. You decide how much to grow. You decide how much is enough. You decide how much to pay yourself. Of course, you have to become worth whatever it is you want to earn. The big difference is that you don’t have to share it with anyone. If you work for someone else, you essentially pay for the privilege of earning a paycheck. Part of the value you create is skimmed off the top.
There is nothing wrong with this, morally or practically. It would be kind of hard for an automobile assembly line worker to do what he/she does solo. No one wants to pay for someone to screw on a lug nut–they want a car. But for all its advantages, working for someone else limits our income.
Another disadvantage of working for someone else is the amount of taxes one pays. Because it is easier for the government to collect from employees, those with jobs find a substantial portion of their income diverted to the government. In fact, you never see that money–it is taken out of your paycheck. The government knows that most people will not notice tax rates as much if they don’t have to write a check every month or every quarter.
Having one’s own business allows a significant proportion of expenses to be deducted. The result is simple–you get to keep more of what you earn. In a perverse way, government encourages us to have our own businesses, at least for now.
Growing a business can mean that you are no longer a prisoner of your “worth” as determined by your boss. Your worth is exactly what others are willing to pay for the value you provide. It is something created by you and for you. Enjoy making yourself worth your every dream.