T x R = E
This equation is true. The more time you spend working on something times the rate of pay will equal the money you will earn. Lets look at this equation.
Employee #1
Works 40 hours a week and gets paid $20/hour. At the end of the week he would have earned $800 (before taxes) Not bad.
Employee #2
Works 40 hours a week and gets paid $20/hour. This employee also worked 10 hours of overtime @1.5x the hourly rate for a total of 50 hours in the week. At the end of the week this employee would have earned $1100 (before taxes). Pretty good huh?
The right answer is both employees are doing it the wrong way. Most people work and trade their time for money. This is the slowest way to make money!! The only way that you can benefit from this type of exchange system is if you provide some service that is in such a high demand that you can demand an extremely high rate of pay. But the formula Time worked x R = earnings is still true.
No don’t get me wrong. This formula works for some people (Brain surgeons, lawyers, NFL quarterbacks) but most people don’t have enough leverage in their field to demand a high rate of pay from their employer. Your rate of pay can be determined by asking yourself the following questions. Do you have a have a strong ability or competency in your field? Is there a high demand for what you do? Will there be difficulty to replace you?
If you are a strong performer in your career and bring results to your company, it would be in their best interest to keep you happy. I’ve heard people sometimes say ‘they are going to slave’ which means they are going to work. It paints a picture of a master / slave relationship. When slavery was around it was in the best interest for the slave master to keep their slaves alive (so they can work for them). The slave masters would do as little as possible to keep them alive and able to work though. I believe that there are some companies who treat their employees the same way. They pay them just enough for them to support their lives and keep coming back to work more. HOWEVER!… If that person is a strong performer and is bringing that employer a large return ($$$) then if would be in the best interest of the employer to pay that person a higher rate of pay to keep them with their organization.
One of the highest paid positions in the NFL is the quarterback. The reason for this is simple… there aren’t many good ones out there. The position of quarterback is so crucial to the success to an NFL team that they are willing to pay a lot of money to get one. To add to that problem, there is not a large supply of good quarterbacks available. Therefore, economics tells us that if there is a low supply and a high demand, then the price will go up. So on top of my first point of having strong competency to do a job, if there is a high demand for your skill then you can expect or even in some cases demand a higher rate of payment for your services.
Coupled to the demand for a position, is the difficulty in replacing you. This will also determine how much your rate of pay can be. A sales person for a pharmaceutical company can make an average over six figures a year (before their annual bones). The reason their annual salary is so high is because there it is difficult to replace a good sales person and they can bring a lot of revenue into the company. This person can oftentimes go into negotiations when discussing their salary and come out on top because of their sales record. Hence, this person is difficult to replace so an employer would want to keep them on their payroll for the benefit of their business.
The take away of this post is to ask yourself these three questions.
1. Are you highly skilled in your field of work?
2. Is there a high demand for what you do?
3. Will there be a difficulty in replacing you?
Honestly ask yours self those questions. If you can’t answer them with a definite yes then the task you have to undertake is what changes do you need to make to answer them as a ‘yes’. This would take some effort on your part but it is worth it in the long run. Don’t make excuses, go and make it happen!
Do you agree or disagree? Share your comments below and let me know. I’m curious to hear your perspective. Be blessed!