I hear a great deal about the challenges of running a business in the post-pandemic world. There is seemingly a strained relationship between management and labor. There are expectations on both sides of the equation and for whatever reason those are not always in sync. This leads some to despair for the future. It leads to complaints from both sides of the relationship.
Technology is changing the workplace. One might see major milestones in the industrial revolution (1760-1840), the digital revolution that began in the mid-1950s, the information revolution that began in the mid-1980s, the smartphone revolution earlier this century, the social media revolution that followed, or the artificial intelligence revolution of today. Change has been a challenge. Management and labor likely have different views of each successive innovation, and there has been recent strife in the relationship.
I have had students give me the "o.k. boomer" for which they hold such an affinity. They find my advice on the working world arcane and out-of-touch. They are genuinely and sincerely convinced that the world cannot work in the manner I describe in class. While I respect their perspective, I think the world does in fact work in that manner. To wit:
- The world of work is a value exchange. In simple economic terms, the employer/employee relationship turns on the perceptions each has of what "value" means.
- The world of work is persistently evolving.
- Skills are needed for success, and this is true for both sides of the equation.
- Employers and employees are likely to differ as to the value of contributions.
- Some degree of ymbiosis is necessary, that is both parties must perceive benefit.
I came across a story recently about a college graduate "upset" at the burdens of work. She posted a video on social media complaining about the 40-hour work week, her commute to/from work, and the dent that effort puts in one's life. She complains that she cannot afford to live closer to work, and thus must commute. In a word, the real point is that life is not fair. Or, that life is hard. Yes, both of those is true.
Commenters apparently were largely on her side of things. Some commented that it is time for a four-day workweek. Others explained that 40 hours is not necessary for productivity. The article cites some shorter workweek proponents who both concede that a 4-day week results in less productivity and nonetheless proclaim the benefits it yields in "work-life balance."
In another example, a recent college graduate laments the challenge of finding work. She "branded college as a scam," and complained about the debt she chose to incur to obtain a degree. Despite her college degree, she has been unable to locate entry-level work in her chosen field. That is, entry-level work that pays a significant six figures. She laments that her current occupation as a server pays better than those entry-level marketing jobs. She expected perhaps too much from college?
There is, fortunately, a World Wide Web out there with lots of data. Several provide expectations of potential earnings from degree-dependent work. Job search sites also provide data.
This poster has incurred $80,000 in debt and has "a bone to pick with America." The country, somehow, is responsible for her career choice, borrowing choice, and unrealistic (see data sites above) expectations, according to The Daily Mail. As a new college graduate, she laments "'the jobs that are $150,000-$200,000 a year, I'm not getting those." Who ever led her to believe that a bachelor's degree in marketing would yield such a six-figure income is to blame. Or, perhaps the graduate bears some responsibility for not checking the wealth of contrary data on the internet before investing that $80,000?
I hear it. "O.k. Boomer." Sure, what do I know? I get it. I am old and out of touch. Perhaps my lack of familiarity with the latest social media renders me clueless. Or, perhaps my worldview of hard work and sacrifice render my perspectives less than persuasive.
Well, where does the money come from to pay a salary? Somehow, the business doing the hiring has to generate income. It does that through selling some product or service. That has to bring value to its customers. If you are providing someone a good or service that does not enhance their existence in some way, does not bring them value, then they will not consume it. That is a simple fact.
In the same manner, if an individual does not bring value to the production of that good or service, then the employer is not benefitted. If the employer is not benefitted by that employee, in the production, maintenance, marketing, etc. of its good or service, then the business does not need that employee.
If it takes four full-time employees a full work week (40 hours) to produce the product or service that is being sold for $10,000 to a customer, using the $65,810 per year salary that Indeed says might be a reasonable marketing salary expectation (not necessarily "starting," but average), then those labor inputs cost ($65,810/4 52 weeks = $1,265.58, times 4 employees = $5,062.31). Without rent, taxes, and a slew of other expenses, the labor cost in this example is about 50%.
The input is four employees at 40 hours, that is 160 hours of labor to produce this income. Well, if the work week is fewer hours per employee (say 32 for a 4-day week), then that 160 hours now requires 5 employees. The labor cost (a "variable" in this instance) is now $6,327.90. It has escalated from 50% to 65%, plus additional facility space, oversight/management costs, and more. Will the customer pay more, $11,266, so that the employer's margins stay similar with these four-day workers, or will the customer buy from some competitor whose input costs are lower? If the business has no customers, how will it pay anyone anything? How will it stay in business?
The employee has to remember these simplicities. What value do you bring to the exchange? Do you somehow bring $200,000 of value to the employer such that a salary of that amount is worthwhile to that business? Do your efforts generate sales or consumption of the employer's product or service that draws that kind of revenue? Are you capable of bringing three times the effort, expertise, and contribution to the table compared to the employee earning the rational (or published at least) $65,810? If not, consider why the company would not hire three workers at $65,810 each instead of hiring you for $200,000.
The simple answer is this. If you draw that kind of revenue to the business, then you can logically demand that kind of salary. If you are bringing that kind of value, making that kind of production, the business should be happy to compensate you at those levels. This is a win-win for the business. Your success is their success. And if the business will not pay you, and you can draw that kind of revenue, then abandon them and open your own shop.
Know this also. Running a business is not as easy as it looks. It will require sacrifice, investment, time, labor, and (I hate to say it) likely blood, sweat, and tears. It is a persistent challenge of managing costs of inputs (materials, labor, rent, taxes, and more), and finding and convincing willing consumers of the value of outputs. See, if your competitors can provide the product or service with three employees, and you require four to accomodate that idealic 32-hour work week, then your customers may be driven to your competition. If so, your company loses customers, sales, and revenue. If your company loses enough, it may fold. It may be unable to compete in a dynamic market.
If it was easy, everyone would do it. Trust me, it is not easy. O.K. Boomer. What do you know? Well, I know I have worked for a multitude of businesses (over 20). I have managed several processes, departments, or facilities. I have started and run businesses. I have had to hold more than one job at a time to produce the income my lifestyle choices demanded. I have had a few years to study a multitude of inputs, outputs, expectations, and failures. I'm old, antiquated, and approaching obsolete. But, I have been there and done that.
That said, there is no reason to be treated badly. It is not a reason to allow anyone to undervalue you and your contributions. You should absolutely value yourself, respect your own boundaries, and expect others to as well. But that relationship with work will persist for a long time. Most people will labor around 40 years. It is not easy, rarely fun, and that is why they call it work. If it was easy, fun, and without stress, oh what a wonderful world that would be. But let's stick with reality.
That is not to say you cannot enjoy it. You can. That is not to say that you cannot benefit. You can. That said, expecting to earn $150,000 or $200,000 as a new college graduate is not realistic for the vast majority of workers. Expecting to be able to live in expensive neighborhoods as a new graduate is not realistic. Expecting to have lots of free time, leisure, and minimal stress is not realistic.
That is frustrating. True. It is challenging. True. It is exhausting. True. It is not new. You are not unique. And things will improve with time. When you grow and can bring that value to the employer, it will either pay you commensurately or lose you to its competition (which might be the company you start). There is some tendency to think the old folks had it easier. But I know lots of old folks who scrubbed dishes, waited tables, made deliveries, lifted packages, and worked multiple jobs simultaneously (I have done all that and more). You can call me names and discount my experiences, but you have never walked a single step in my shoes.
Success may come in time. You may grow into the world, gather and leverage experience, and derive increasing value with decreasing effort as you mature and evolve. But to expect that as a new graduate or when entering the workforce is not realistic. Those expectations will lead to disappointment, frustration, and even upset. Those emotions will not likely be positive for you. Do not invest in college degrees that are economically misaligned with your expectations. Study those probable salaries before picking a path. Pick a path after you have carefully examined your desires (what you like to do) and your expectations (the income, work life, etc).
Do not borrow money to obtain anything without careful research and introspection. Whether it is an education, a car, a house, or anything, you are making an investment. What do you expect of that investment? Can you reasonably expect a return? Will that car be dependable? Will that house be resaleable? Will that career bring fulfillment or income or both? Study that before you buy that thing. Figuring out the challenge of that consumption after you spent the $80,000 can be frustrating. If I emotionally invest $80,000 buying a combine and then find it is not ideal as a commuting vehicle, shall I complain that America is to blame for my decision, my uncomfortable and slow commute? No, I bought the combine. I selected the vehicle. I have to learn from that, drive the combine, and perhaps make a better choice next time.
So, set reasonable expectations and make plans. Study and weigh before you consume. Ask old folks about their perspectives and let them help you; they really want to help. Do not forego the work-life balance. Respect yourself, your value, and your needs. However, do not expect to earn a full-time salary for a part-time effort. Do not expect to earn three times the average salary in a career if you do not bring significantly more value than others who work there. Will your customer pay you three times the price for something they could as easily buy from a competitor? To earn above average, you will likely find you must produce above average.
Get over the "fair" and the "I want." In the end, no one is looking out for you to the degree that you are. Life will bring reward and sacrifice. There will be ups and downs. All of it will enhance you, and you will grow. There is great value in being productive, active, and achieving. Go at that with gusto. But do so realistically and with appreciation for the fact that work is a value exchange. What value do you bring, what value does your employer or customer(s) bring, what relationship between those is practical and acceptable to you?
