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 Lifestyle, Double-Dome Publications, 224 pages