Employee Compensation

[hym 358]

This thread is being created in response to a side discussion that started in the American Politics thread.

The comment that started the discussion (which was said by myself):

While I'm not going to argue that there are people being screwed over, there is another side to this. With the opening of the global job market, Americans are no longer competing with just Americans. They are competing with much of the educated world, and there are plenty of people who are just as qualified to do white collar work as Americans, and they are overjoyed to do it for far less than an American will ever agree to work for. For example, a brand new electrical engineer in the US can expect to make at least $70,000 a year on average. You can go to Romania, find an electrical engineer with 20 years more experience who will be happy to do the work for a third of the cost of the American. If the American expects to get the job, he has to find a way to restore the balance back in his favor. His two easiest options are to work for significantly less money than he could have been earning, or to do the work of more than one person. This problem isn't so much the problem of people getting screwed over by their boss as it is the problem that Americans are grossly overpaid compared to much of the rest of the world, and Americans are going to have to sacrifice something to restore the competitive balance.

A Nonny Moose's response to that comment:

^ I certainly agree with the last sentiment. I don't care how much your young engineer spent to get his degree, he is still wet behind the ears, and his iron ring probably doesn't fit because he hasn't developed a ring calus yet. He isn't worth $70,000 per annum. Maybe he is worth around $30,000 per annum, and one has to wait and see. Compensation tending toward six figures have to be earned by merit, not by diploma.

Duke87's response to A Nonny Moose's post:

$70k is pretty high. The nationwide average for fresh out of school engineers is between $40k and $50k, depending on the discipline. Electrical and chemical engineers fetch a bit more because those fields aren't as popular and so lower supply pushes the price up.

It also of course varies by location. There may be some places where you may be able to get away with paying a fresh engineer only $30k a year (before taxes, mind you!), but certainly not in New York City. For some perspective, my rent alone is half that, and I got a great deal on my apartment.

[Easy Bakes 253]

I'm well compensated for what i do but there have been no raises forthcoming for 3 years.

So that good pay 3 years ago is being slowly eaten away by housing going up, and food, and fuel and medicine.

And that Romanian engineer that comes here to work for 30k for a 50k job will find that out too. 30k might get you very well off in Romania but here its almost poverty level if you have a family and thats your only income.

  Edited December 20, 2011 by Easy Bakes  

[hym 358]

A frequent complaint by employees is that they aren't paid enough for the work they do. Some people truly are underpaid for the work they do, while others are obviously paid above what seems reasonable. Some people have to work multiple jobs just to make ends meet. It raises the question, "What is a reasonable salary for the work being performed?"

Corporations frequently have formulas and charts to help standardize pay rates among facilities, employees, and departments. My former boss, who used to work for a company I won't mention, was privy to the pay chart that the company used to determine what minimum/maximum salaries would be for a given position in the company. It was done as a function of averaged value; the higher the average value they could expect you to put back in the company's bottom line, the higher your salary. Interestingly, even if were projected to over the company no positive value to its bottom line, the line charting your salary didn't hit $0.00. This is what was known inside the company as "the cost of a warm body." When budgets got tough in the company, those with the lowest "impact to the bottom line" versus "cost of compensation" ratio were the first to get purged.

To go back to A Nonny Moose's earlier comment that a new engineer isn't worth $70,000 a year, I would beg to differ. The question is how much the employee is worth to the employer, and in the right industry, even a young engineer can be worth several million dollars. (Even the engineering co-ops, who don't even have degrees yet, can be worth millions.) I have very little work experience and am by no stretch of the imagination an experienced engineer, and the work I was doing this fall, if ever called into service, will save the company from a fiasco that could easily cost anywhere from $5-20 million, or more. My salary was well in advance of an annualized $30,000 (above $60K, for that matter) and I think it could be easily argued that it was worth every penny if it prevents a catastrophe like I mentioned.

Back on the larger topic, compensation is more than just a paycheck. It includes things like medical benefits, retirement, bonuses, and the like. It is entirely possible for your boss to offer you a good deal in one of the aforementioned areas, and pretty much screw you over in another, and has been pointed out in times previous, some employers are fond of this approach.

So, thoughts on the subject?

EDIT:

I'm well compensated for what i do but there have been no raises forthcoming for 3 years.

So that good pay 3 years ago is being slowly eaten away by housing going up, and food, and fuel and medicine.

And that Romanian engineer that comes here to work for 30k for a 50k job will find that out too. 30k might get you very well off in Romania but here its almost poverty level if you have a family and thats your only income.

For the sake of clarity, that Romanian engineer is working in Romania, not moving to the US. The job is being outsourced.

[hamsterTK 93]

First off, I think to have this discussion we ought to just treat "engineers" and "Romania" as hypothetical examples. I'm sure you could split hairs over how much that profession pays or whether or not Romania is actually somewhere those kinds of jobs get outsourced.

The economics behind this are interesting. Labor is just someone selling their work and hoping to profit, so the rules of supply and demand apply. If all of a sudden the market is instantly flooded by lots of engineers looking for work,because Romania opened itself to trade with the stroke of a pen, then for a while engineers will be cheap. Of course things will balance out. People will find other higher paying jobs until there is only enough engineers as needed, engineered goods will become more affordable, and of course some will start their own firms and hire more engineers.

Sure, you could cite things like a culture where the initial generation of Romanian engineers have lower standards and are less likely to ask for raises or something. Or cost of living, though I am skeptical of this because its actually more expensive to live in cities in developing countries than people think. In a poor country, sure because of poverty you could cheaply hire a maid or a driver or buy street food, but if you want a new TV or a good apartment, it won't be super cheap. It might even cost more to get internet, electricity, water, and transportation there than here.

With globalization, this will take a long time and issues like Earth's finite quantities of natural resources will come into play. Real wealth comes from productivity and technology which is the real reason why such inequities exist in the first place. Right now if all 6 billion people had an equal amount of stuff, we'd all be pretty poor. What will change this is all those new engineers from Romania inventing things and coming up with brilliant ways of using less to get more.

But whatever. I am optimistic, so long as we avoid having some countries "cheat" by violating people's rights.

  Edited December 20, 2011 by hamsterTK  

[A Nonny Moose 8,261]

The benefit of the one cannot override the benefit of the body politic. An employee is usually worth more than he gets from a company. However, every company expects to make a profit, and this is impossible if employee compensation exceeds its income.

Some time in the relatively near past, a company I worked for had a trick of "stockpiling" fresh engineers. All bright and bushy tailed and hot off the latest stuff at school, the young engineer was first dipped in a primer project, where, unless he was very bright indeed, he would fail. Then, with the bloom off the rose, he would be sent on course to learn the companies methods. After that, he would be put in a project group that did things the company way.

After a few years of this, all that nice stuff the young man knew would be superseded and all he would know now was the company's way of doing things. Membership in professional associations were not discouraged, and in fact were paid for by the company, which can be a real side benefit. However, the young professional soon found himself thinking the company's way, and soon found that if he wanted to change jobs he was in a deficit position because no matter how hard he tried to keep up, he was too busy to do so, especially if he had a family with kids. At this point, the company could pay him whatever scale was current in the HR books.

I am not an engineer, by the way. I just happened to be in a position to observe what happened to some of them. I started life as a commercial banker and by accident moved into systems and then into programming. One day I got a raise that put my salary on the confidential list. I had been off sick because of overwork, and when I came back I discovered that the HR people had taken a look at what I had been doing and decided I wasn't Atlas. I suddenly had a staff of 14, and this nice raise. It was a heady time.

Sometime after that there was a big reshuffle in the management team, and seeing the writing on the wall, I shifted over to a computer manufacturer for a little more money and many more prospects. In the end, I wound up teaching computer science in a local college.

I don't think this kind of career is possible any more. The good old days of pulling yourself up by your own bootstraps are gone due in a large part to the cavalier attitude of many employers who treat their employees like cattle, and who seek skill sets that are beyond the possibile for anyone at an entry level age. Looking at some employment ads in the 1990s time frame when I got caught in a downsizing, it was impossible to fill some of the requirements for EDP professional in anyone under the age of about 35, and these ads were seeking new graduates. How these companies ever filled these jobs is a mystery to me.

  Edited December 20, 2011 by A Nonny Moose  

[Duke87 1,070]

The vast majority of jobs aren't filled through those want ads. In fact, as those assisting job seekers commonly point out, half of all new jobs are never even posted. If an employer is looking to hire someone, the first thing he is going to do is ask all his friends in the industry if they know anyone who is looking for a job. If any of them do and one of the people they produce is halfway decent, they will most likely get the job. Only if his contacts come up empty will he put the job out to the public and start looking at the resumes of people he has no prior connection with.

You remember the bit about how one of the big lies you were told in school was that only effort mattered, not actual skill? Well, even that isn't completely the truth. What gets you a job isn't what you're capable of, it's who you know. You can be the most skilled person in the world but if you don't know anyone in the industry you're looking to get into you're going to have a very difficult time finding a job. If you're a slouch but you've got friends in high places, finding a job will be easier for you (keeping one once you have it, on the other hand, is an entirely different matter).

One of the big problems I encountered when I was looking for a job was that basically every job posted on a job listing required some level of experience. Nobody was posting entry level jobs. Based on what I know from having talked to people about it and received sage advice about it, the issue is that in the field of engineering (or at least Civil Engineering), by far the most common way for someone to find their first job out of college is for the company they worked for as an intern during the summer to like them and make them a full-time offer. Which worked out well for many of my friends but didn't help me since in my intern days I worked for municipal government rather than a private company, and they had a budget crisis and weren't hiring.

As it worked out, when I eventually did find a job, it wasn't from any classified ad I responded to or any company I sent my resume to. It was from the husband of a coworker of my father's who was looking to start a new project up in a hurry and needed good leads on people to hire fast. And indeed, basically everyone who was hired early on had some prior connection to our boss. Mother was his real estate agent. Went to the same church as him. Friend of an existing employee. Etc., etc.

Which just goes to show you... skills don't get you a job. Knowing the right people gets you a job.

[Easy Bakes 253]

The old boy network.

Not that i like that it exists,but you cant deny that it does.

Only mention that fraternity you were in if your sure they were in the same one

[A Nonny Moose 8,261]

The old boy network.

Not that i like that it exists,but you cant deny that it does.

Only mention that fraternity you were in if your sure they were in the same one

This is completely correct.

I got my best job by simply walking in off the street and asking for it. The next best one was with a bidder on a job that they didn't get. I simply wrote them a letter and got hired by return mail.

You really do have to have some inside information of some kind, but I did get my first college teaching job with a private vocational college by answering an ad. I was either the only applicant or the most obvious one since I had been an industrial instructor. However, this job did not want a resume, it wanted an interview. One phone call, and a personal visit, and I had it. Oh, and at that time, private college teachers of any level of qualification got $20 per teaching hour, and no benefits. it was a contract job. It is like working in commercial banking, you sling around millions but very little of it clings to you.

[Shadow Assassin 336]

In my previous experiences hunting for jobs, I have found that networking has made things a lot easier, but it isn't 100% guaranteed that you will get a job, though your chances are immensely improved.

For instance, I'm with an employment agency who are helping me find work. If it wasn't for them, I wouldn't be on the books of a certain large company. My case officer actually knew someone high up in the HR department of said company, so was able to give me a chance to get my foot in the door. Because I've already gone through the first stage of the interview process, I can skip that stage for any entry-level position I apply for within that company. Unfortunately, I did this too close to the end of the year, where everyone's rushing around trying to fill positions and generally not following the procedures set out by management in the HR department. Perhaps early next year will be better, considering that in a lot of companies, not just this one, a lot of people tend to leave work just after Christmas for extended periods of time or to find more work.

What I'm saying, I guess, even with a network, it really boils down to three things: the people you know, the skills you have, and finally, what might be the important thing: luck.

I haven't had much of the third thing, but hopefully I can get myself something before long.

[A Nonny Moose 8,261]

In my previous experiences hunting for jobs, I have found that networking has made things a lot easier, but it isn't 100% guaranteed that you will get a job, though your chances are immensely improved.

For instance, I'm with an employment agency who are helping me find work. If it wasn't for them, I wouldn't be on the books of a certain large company. My case officer actually knew someone high up in the HR department of said company, so was able to give me a chance to get my foot in the door. Because I've already gone through the first stage of the interview process, I can skip that stage for any entry-level position I apply for within that company. Unfortunately, I did this too close to the end of the year, where everyone's rushing around trying to fill positions and generally not following the procedures set out by management in the HR department. Perhaps early next year will be better, considering that in a lot of companies, not just this one, a lot of people tend to leave work just after Christmas for extended periods of time or to find more work.

What I'm saying, I guess, even with a network, it really boils down to three things: the people you know, the skills you have, and finally, what might be the important thing: luck.

I haven't had much of the third thing, but hopefully I can get myself something before long.

And one more thing. You need the guts to sell yourself as hard as you can.

[Duke87 1,070]

And one more thing. You need the guts to sell yourself as hard as you can.

This was something I absolutely had trouble with. I mean, I did find a job, but I probably could be getting paid a bit more had I sold myself better.

I suppose it's a personality thing. I tend to be very modest and I find it annoying when people like to brag about themselves. Had I bragged more and snagged more money for it, I wouldn't have felt right about having done so. Those who ask for rewards the most deserve them the least.

[A Nonny Moose 8,261]

And one more thing. You need the guts to sell yourself as hard as you can.

This was something I absolutely had trouble with. I mean, I did find a job, but I probably could be getting paid a bit more had I sold myself better.

I suppose it's a personality thing. I tend to be very modest and I find it annoying when people like to brag about themselves. Had I bragged more and snagged more money for it, I wouldn't have felt right about having done so. Those who ask for rewards the most deserve them the least.

Self-abasement is not always good either. If you have talent and experience that is significant, you should not be shy about blowing your horn about it.

[FreewayofFlight 41]

I think a more adequate comparison is not an Engineer, but a simple factory worker. It is a common fear that one day you will be replaced by someone in China who will do the work you do for 85% (Hypothetically, I don't know the actual numbers) less than what you were paid.

If you go to any major retailer or department store and look at the tags, 99.99999999% of the time you will see Made in China, Malaysia, India, Pakistan, Vietnam, The Philippines, Indonesia, Argentina, Mexico, and well, you get the picture. The textile industry in North Carolina has been eliminated because there is no way a factory worker in the United States can live off $2 per hour, if that. While it is fine to compare the salaries of engineers in the US and Romania, there are going to be hundreds of thousands of Americans who have to live on far less than $70,000 per year. I, myself have had to make a living off $7.50/hour working at a grocery store. My first full year in the workforce I made a grand total of $17,671; an average of $1473 per month, which paid rent, gasoline, food, electricity, and insurance.

I am not complaining in the least, just giving an example. If a family of 4 had to rely on a similar sized paycheck (and I'm certain that there are many) it would be impossible to maintain a standard of living that our society has set. American corporations are not helpful either, when they decide it is not worth paying $8 per hour to have an American answer the phone at Customer Service and send our neighbors into the unemployment lines. It hurts everyone, because people who were laid off now have to depend on social services (Food Stamps, Subsidized Housing, etc.) in order to keep food on the table and a roof over your head.

  Edited January 8, 2012 by FreewayofFlight