How to Discover What Your Labor Is Really Worth

The news is full of talk about a fair wage, a living wage, an increase in the minimum wage, and income inequality.   Apparently, a lot of workers do not think they are being paid what their labor is worth; they want higher wages.  Are you one of them?  Do you feel you are worth more than you are being paid?  You might be worth more or you might not; you might not even be worth what you are being paid now.  How do you know what your labor is worth?

Shop your labor around

One way to determine if your labor is worth more than you are being paid is to shop around for a company that will pay you more for doing the same work.  If you can find one, then you have your answer.  If no company will pay you more for the same work, well, you also have your answer.

Work a job where your earnings are tied directly to your productivity

Take a job that pays you based directly on your productivity:  the more you produce, the more you make.  This could be straight commission sales, piecework in a factory or in the fields, billable hours for professionals (lawyers, counselors, physicians, and so forth), contingency fees for lawyers or bill collectors, percentage increase in specified business metrics for CEO’s, percentage reduction in expenses for CFO’s, and so on.  You get the picture.  In this type of job, you will find out quickly exactly what your labor is worth.  If you are highly productive, you will make a lot of money.  If you are not very productive, you will be searching for another job.

Work for yourself

Become a free agent and work for yourself.  Offer your services as an independent contractor to those who would pay you for them.  See what your labor is worth on the open market.  You may be surprised how difficult it is to make money without the support of an employer.  Suddenly, you bear all of the responsibility for securing customers, developing systems, negotiating prices, collecting payment, accounting for income and expenses, obtaining licenses and permits, and complying with various laws and regulations that pertain to your field of work.  You are in direct competition with other independent contractors, small businesses, and large corporations.  It’s tough to obtain consistent work that pays well five days each week for 52 weeks a year, year in and year out.  Take this route and you will find out exactly what your labor is worth.  Some discover their labor is worth a great deal; most discover they need the support of an employer to make their labor pay enough to finance the kind of living they desire.

Capital investment by employers increases the productivity of employees

Employers invest in machinery, technology, systems, personnel, real estate, product development, and marketing, all of which, when taken together, make each individual employee more productive.  I made more money selling printing for a large corporation than I did selling the same products on my own.  The corporation I worked for had a position in the marketplace that gave me a great advantage when selling to large accounts.  They also had the working capital to carry accounts receivable for large volumes of business.  I had neither of these in my own business.  My employer paid me whether they made money or not.  If my own business did not make money, I earned nothing for my labor.

If it came down strictly to money, I was better off working for the large corporation, but I enjoyed the freedom and independence of running my own little business.  These meant more to me than the extra money.  In either case, I knew exactly what my labor was worth because I derived my earnings directly from my production.  If I didn’t earn as much as I wanted, I only had to look in the mirror to know whom to blame.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages

The Dual Income Credit Trap

Dual-income couples, especially professionals because of their high combined earnings, face a credit trap that can keep them in debt forever. Using credit to leverage their combined incomes gives them tremendous purchasing power, while their monthly salaries provide the means to service a huge amount of debt. The combination of these factors makes it easy to overextend financial resources in pursuit of an elevated standard of living.

The temptation to spend now, earn later

With credit, a dual-income couple can spend their combined income before it is earned. They can enjoy the fruits of their labors now rather than wait until they have actually labored for the money. In our get-it-now, consumption-obsessed culture, this is a temptation that is difficult to resist: Borrowed money is easy to spend, because it hasn’t been earned yet; low interest rates and aggressive financing of big-ticket products by retailers encourage an overcommitment to debt.

Once they are caught in the credit trap, dual-income couples are under pressure to maintain their incomes at all costs and grow them if possible. That may mean staying in an undesirable job because it pays well or taking an undesirable job because it pays more. It may mean passing up an opportunity for interesting and rewarding work if  it doesn’t pay enough to service the debt.

If all goes well, they are able to service the debt and enjoy a higher standard of living sooner than they could have otherwise afforded. At worst, they may have to max-out lines of credit from time to time to cover expenses that exceed their available monthly discretionary income, and that may cause them to delay a purchase now and then. But, for the most part, while they may live close to the edge of financial ruin, they do not cross over it.

Lost opportunity: The hidden cost of the credit trap

These couples may escape severe financial consequences, but they still pay a price for being caught in the credit trap. I’ve already mentioned the loss of opportunity and freedom connected to employment, which are significant. They also forfeit the opportunity to take a break from work to pursue educational opportunities or other interests. The opportunity to achieve financial independence is sacrificed as the money required to service the debt and maintain elevated living standards takes all or nearly all of their monthly income, leaving little, if any, for saving, with the exception of money withheld from their paychecks to fund retirement accounts. Early retirement is out of the question and a delayed retirement is likely given the lack of savings and monumental debt. They will never know the peace of mind that comes from being free of debt.

The big fear: A reduction or loss of income

Dual-income couples caught in the credit trap desperately crave income security. The viability of their finances depends upon it. Unfortunately, income security does not exist.  The Great Recession of 2008 taught us that no job is absolutely secure, not a teaching job, not a federal government job, not a union job—no job, and that high paying  jobs can disappear overnight, leaving those who have lost them with little opportunity to restore their incomes to the levels to which they had become accustomed.

If things do not work out and there is a reduction in income due to a job loss, illness, or injury, the dual-income couple caught in the credit trap faces an immediate financial crisis. To deal with it, they accrue more debt on their credit cards, borrow or withdraw from their retirement accounts, juggle payments, and sell off possessions at a nickel on the dollar. A reduction in income that lasts long enough may result in bankruptcy.

The credit trap can be avoided

The same factors that make dual-income couples susceptible to the credit trap also provide the means of avoiding it. Combined earnings from two jobs allow a dual-income couple to save one income and still live well on the other. Increases in living standards can be paid for out of savings rather financed with debt.  A secure cushion of savings can be accumulated in a relatively short time that will provide tremendous employment flexibility. A standard of living based on one income allows the use of the relay method to take advantage of opportunities that require one or the other to temporarily exit the job market. Financial independence and early retirement are feasible if that is the goal. Dual-income couples never have to experience indebtedness if they don’t want to.

In our consumer culture, the default action is to leverage income with debt—buy now, pay later. To avoid the credit trap, the dual-income couple must make a conscious decision to live on one income and save the other. Such a decision comes from a vision of a financial future that extends beyond the present and encompasses more than the immediate satisfaction of material desires, a vision born from an understanding of the freedom,  independence, and relative financial security that accumulated wealth can produce.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages

Refurbished Computer Is Economical Solution to Windows XP Upgrade

I was satisfied with my nine-year-old Dell Dimension 8400 computer that came with a Pentium 4 processor, 1gb of DDR2 RAM, and Windows XP.  There was no need to upgrade until Microsoft announced the end of support for the Windows XP operating system.  Yes, I knew that day would eventually arrive, and I am grateful that I got nine years of service out of the Dell Dimension 8400.  In the past, I had upgraded my computer and operating system about every five years.  So I was overdue.  Still, I resisted the idea because I didn’t want to upgrade to Windows 8.1.  For one thing, I would have to upgrade all of my application software to accommodate the 64 bit environment.  Some peripherals such as my scanner and external disk drive were not compatible with Win 8.1 and would have to be replaced, as well.  I did not want to have to adapt to the Win 8.1 user interface, either.

The cost of a new computer

Initially, I came up with two options:  I could purchase a new computer from Dell with Windows 7 loaded on it for $450.00, or I could purchase the same computer with Windows 8.1 for $400.00.  Both computers featured Intel Core i3 4130 processors and 4 gb of DDR3 RAM.  Both were 64 bit machines which would require upgrades to my application software and the replacement of some peripherals that would add another $300 to the cost.  I planned to continue to use the flat-screen monitor that came with the Dimension 8400.  The total cost to upgrade from Windows XP would run between $700 and $750.  That wasn’t bad considering I had spent $1600 on the Dell Dimension 8400, but that price also included the monitor and a lot of application software such as MS Office Basic 2003.

Upgrade the old machine

A friend of mine suggested I do what he did.  He paid someone to install Windows 7 (32 bit) on his old computer.  I considered this option, but if I were to install Windows 7 on the Dell Dimension 8400, I’d want to add at least 2 gb of ram, as well.  The cost of labor, software, and the additional RAM would total about $250-$300.  I’d still have a nine-year-old machine and an outdated processor.  I would avoid having to upgrade my software and peripherals, however.  This option would save me $450 to $500 in the short run.

A middle way:  refurbished

As I was mulling over my three options out loud one day, Rosa asked if I had checked Walmart’s prices for the Dell computers.  I hadn’t and when I went to Walmart.com and searched, I came across refurbished Dell computers priced under $200 with Windows 7 Pro (32 bit) installed on them.  Now here was another option.

There were many configurations of refurbished computers listed on the Walmart.com site.  I checked each one, noting the system specifications.  I found one that had everything I wanted:  a better processor, more RAM, a DVD-RW drive, a 160 gb hard drive, and Windows 7 Pro (32 bit)—all for $161.00.  Shipping was free and it came with a one year warranty.  It also had great reviews.  So I added it to my cart.  When I went to check out, I was notified that it was out of stock.  I was asked if I wanted to leave it in the cart and be notified when it was back in stock.  I accepted but had no hope of it being stocked in the future.

I searched for a comparable refurbished computer in the same price range on the Walmart site, but found none.  Every one I checked lacked something I wanted.  Ebay offers a lot of refurbished computers at reasonable prices with Windows 7 operating systems, but none of those compared to the unit I found on Walmart.com.  For the most part, the eBay machines had slower processors, less RAM, and much smaller hard drives.  Almost all lacked a DVD-RW drive.

The refurbished option appeared to be a dead end.  I went back to my first two options and eventually decided on the Dell Windows 8.1 computer for $399.  If I was going to purchase a new computer, I might as well get the latest operating system and not have to upgrade for a good long time.  I was in no hurry to take the plunge and set the whole business aside for the time being.

About a week after that, I received a notification from Walmart.com that the computer I had tried to purchase earlier was back in stock.  I clicked on the link and double checked the specifications to make sure it was the same system.  It was and I bought it for $ 161.00.

Bare-bones system

It arrived a week later.  I set it up last weekend.  The machine is bare bones with only the operating system, including Internet Explorer, loaded on it.  There were no set up instructions, but I have set up many computers over the years and didn’t have a problem.  I used the Windows Easy Transfer program to pack and transfer my data files using a 32 gb USB drive.  Everything transferred just fine.  I installed all of the software I needed and had no problems with the exception of an old Western Digital external hard drive and a cheap accounting software program that were not compatible.  I tried another external hard drive I had on hand, and it installed and worked fine.  Even the software from my old Canon Lide 35 scanner installed and worked better than it had on the  XP machine.  I installed a free accounting software package (Express Accounts from NCH Software) that suited my little online business.  The best part was the MS Office Basic 2003 software that came with my XP machine installed and ran on the Windows 7 Pro without a hitch.  I didn’t have to invest in any application software or spend money on new peripherals.  The Windows 7 Pro user interface is essentially the same as XP.  This upgrade should last until Microsoft stops support of Windows 7.

Refurbished gave me the best value 

The refurbished computer gave me a hybrid solution that was less of an upgrade than the purchase of a new machine, which I didn’t really need, but more than a mere upgrade of my old Dell Dimension 8400 would have given me and at a lower price than either of those two options would have cost me.  I now have an Intel Dual Core processor running at 2.7 GHz, quadruple the RAM (4 gb DDR3), a hard drive equivalent to the old system (160 gb), and a DVD-RW drive like I had on the old system.  In addition, the new system (Dell Optiplex 380) has a desktop case instead of a mini-tower which takes up less space.  It also uses less electricity running at 235 watts versus 350 watts for the old system.

Time will tell if the refurbished computer is as good a value as it appears.  I have to confess that I had no interest in refurbished electronics until recently, but it is a viable option for me now.  This is the third refurbished electronic product I have purchased.  Previously, I had purchased a refurbished cell phone and cable modem on Ebay.   Both have  given me excellent service, so far.

Exercise due diligence when purchasing refurbished electronics

If you want to save some money on electronics, try the refurbished market.  You will need to do your homework:   Read the product specifications carefully to make certain you understand what you may be purchasing; use customer reviews to determine the reliability of the product and vendor and make sure there is a product warranty of some kind.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages