USA Today reports that wages may be going up. The problem is that increases tend to be in certain professions and areas. Following an analysis by payroll processor ADP, the article claims that key trades are seeing pay increases between 3.8 and 7.2%. Interestingly the biggest pay increases have come in companies with 1,000 or more employees (5.9%). Smaller companies have offered lower raises: 500-999 employees (2.9%), 50-499 employees (2.5%), and 49 workers of less (2.9%). By region, the Midwest (4.4%) and West (4.4%) are earning more than those in the Northeast (3.0%) and South (2.6%). If these numbers are accurate, it's good news for workers in the right trade in the right area. Hopefully the good news will continue to grow and spread.
Daily Kos’s Mark E. Anderson examines increased productivity and stagnant wages between 1948 and 2014. His article includes a very informative graph that shows how these two economic measures were almost aligned. Now productivity doubles wages. Where has the money gone? Anderson argues that work has gone overseas where labor is cheaper and profits have gone to executives and investors. I agree, but would add one other big factor: automation. I was working with a client this weekend who works for a large technology manufacturer. His company will be able to shed hundreds of tech jobs once they move to cloud-based systems. Jobs can come back from China. Once they are automated, they are gone forever. Anderson makes a great point in concluding his article: What are the super rich and executives going to do when no one can afford to buy their products?
Most people look to the Bureau of Labor Statistics and its monthly employment report to understand the job market. While that is probably the best measure, there are other important signs, including how employers are treating employees and job candidates. A few months ago, I noted that almost every job posting now includes a list of benefits offered to new employees. Some are even listing a salary.
Employee retention is equally important. Bloomberg reports that some employers are now encouraging employees to use PTO and vacation time. A few employers are even paying bonus that employees can use during a vacation. Others offer “unlimited vacation.” These are the same companies who laid off so many workers that those who were spared worked extra hours and skipped vacation days. Now, as the job market tightens and employers still do not want to raise wages, vacation is a perk used to keep employees without increasing labor budgets.
If you’re asking for a raise or trying to negotiate salary with a new employer, think about vacation as a bargaining chip. If an employer cannot give you a higher wage, ask for an extra week of vacation or PTO. This is a good time to talk about time off.
Bloomberg reports today on careers that offer significant pay increases. Most workers are looking at minimal salary increases even though the unemployment rate has fallen. Workers in technology and finance have seen wages grow between 4-10%. What can you do to earn more? For most working people, especially those with college degrees, the best way to earn more is to find a new job. In many cases, new employers tend to offer more than current employers. Another way is to try to take the next step up the career ladder. Two clients who are clients in the grocery industry have told me that they have hired department managers with little experience. Why did they do this? Turnover. As the job economy heats up, there is more opportunity to move up because the experience employees are less available. If you’re unhappy with your current income, find a way to make a move.
Negotiating with a prospective employer is never easy. Most people don't even attempt to negotiate because they are afraid an offer will be pulled. However, when job seekers chose to negotiate, they often get more than the initial offer. This is especially true when they are willing to walk away from an offer.
A few months ago one of my clients received a job offer, but needed to have relocation costs paid. We worked together to come up with a goal of $6,000. At the last minute, my client changed her mind, and she told the employer that she would need $8,000 to relocate. The manager handling her recruiting said they could not meet that request. My client said she could not accept the offer. She thought it was time to move on. The next day, the company called back with a revised offer that included $6,000 in relocation fees and an ability to work remotely for one month, which let my client avoid paying two rents. If my client had not stuck to her guns, she got most of what she wanted. On the other hand, she did risk losing the job.
More recently, a client who is a manager with a small non-profit received a low ball offer from a large national corporation. She told the recruiter that the offer would have to be significantly increased. The next day the recruiter called with a $10,000 increase. My client compared her current position to what the new employer would ask of her. She also underscored the value she would bring to the employer. She did not ask for a specific amount, but told the recruiter that the offer would need to be improved. Two days went by. My client thought she had pushed things too far. She was wrong. The next day the manager called and increased the offer by another $10,000. She gambled and won.
I'm not recommending that every job seeker should take such drastic steps when negotiating. However, if you feel that an offer is not fair, you might want to consider taking a chance in your negotiation. There are no guarantees. Some companies will decide not to hire you. Others will recognize your value and give you what you're asking. Walking away is a big gamble that, in some cases, can have a bigger payoff.
Bloomberg is one of my favorite sources to learn about the economy and how it affects workers. Dan Moss, Bloomberg’s Executive Editor for Economy, has a short article on a good measure to understand how to gauge changes in hourly earnings. The Employment Cost Index (ECI) is a quarterly report from the Bureau of Labor Statistics. According to Moss, it “looks at how much employers are compensating the same position over a period of time. In other words, what is the pay of a builder, or plumber, or, God forbid, a journalist for a job over a period of time.” He says the number to watch is 2%, which is where the index has been stuck for a long time. Moss cites a forecast by Morgan Stanley that says the index will move to 2.6%, which he calls “encouraging.” I hope this is good news. In any case, it is good to have another tool to analyze what we are earning.
P.S. USA Today reported the latest ECI data, and the news was ugly. The second quarter increase was only 0.2%, "the slowest pace on record dating to the early 1980s." The article goes on to discuss how this lack of growth is odd given drops in unemployment. Employers should have to pay more to hire new employees and keep existing employees in a tight labor market. I will keep watching this topic and follow up with other news and views about how our very strange economy affects workers.
One of my clients is currently an Assistant Manager. He has been very successful in his field. Logically, his next move should be to pursue a position as a General Manager. Instead, he is going into a position in route sales and delivery. When I asked why he would do this, his reasons were all great and thoughtful. First, pay is similar for both positions. Second, he'll work fewer days and hours, which means his hourly pay will be higher. Most importantly, he'll be able to spend more time with his family, which is his priority at this time.
This story illustrates a major problem in career management: your money or your life. For many professionals, especially those pursuing careers that pay well, the sacrifice is personal time. One way to avoid this trap is to keep looking for companies that respect their employees as people. During second or third interviews, it's acceptable to ask what a typical day or week is like. You could also ask about the company's policies that promote work-life balance. Such jobs will be hard to find. Productivity has gone up and up over the last decade because too many companies are not concerned with anything except the bottom line.
Where is the money going? Corporate profits are up. Productivity keeps going higher and higher. Despite this “good news,” most Americans feel insecure in their jobs and income. So, where is the money?
Laura Clawson of Daily Kos shows one area where the money has gone: CEO pay. While I recommend that your read Clawson’s article, the whole story is told in a graph that accompanies the article. Before the mid-1990s, CEOs’ average pay was less than 100:1 the pay of average workers. By the end of the 1990s, the ratio had moved to 300:1. Since that time, the average has gone up and down. Still, it has ranged between 200:1 to 400:1.
This trend is only part of the story. If CEOs pay has moved this way, it’s logical to assume that other senior leaders have received healthy raises. I’m not arguing that these salary increases can’t be justified – because anything can be justified. The reality is that if pay disparity rewards the top of the pyramid, those at the bottom and middle will lose. The fight over the minimum wage is a good thing, but we also need to thing about who is being reward for economic growth and enhanced productivity. Do we want a society where a few have security and most people are running scared?
Jenny Che of The Huffington Post has written an article exploring how new college graduates can earn more on their first job. Che’s advice can be summed up in one word: Negotiate. According to an expert cited by Che, many companies are willing to increase salaries for new college graduates by as much as 5-10% over the initial offer. If the employer won’t offer more money, it’s possible to negotiate some other aspect of compensation: employer share of health care, education reimbursement, or related benefits. What’s the secret to getting more on your first job? Know you worth, and ask the employer to give a little more.
I've blogged in the past about how politicians in both parties say they want good teachers and then do everything possible to drive educators to change careers. The latest example of this trend is found in my sweet hometown of Chicago. Chicago Public Schools (CPS) have opted not to extend a contract with its teachers that would have given them a raise of 3%. Instead, CPS has said it will ask teachers to take a 7% cut in pay. Mayor Emanuel is quoted in today's Chicago Sun-Times that teachers are "working hard" and that schools are achieving "incredible results." At the same time, the mayor cites "serious fiscal challenges" as a reason for CPS' actions. Teacher's union president Karen Lewis call this action an "insult." There is good chance that the teachers could be forced to go on strike again.
For me, the real problem in this story is how it will affect teaching in the future. If we really want the best and brightest students to go into teaching, we need to think about how they react to stories like this. What intelligent, ambitious student would pursue a career that would cut the pay of people the mayor calls hard working and successful? Politicians and citizen need to ask themselves a difficult question: Do we care about saving a few dollars in taxes or educating children?
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