Pay: the painful truth

20 Sep 13

Well-paid meaningful jobs are pretty rare. If you’re searching for purpose and validation through your work, then don’t expect to get paid well

I work for an organisation that is very transparent about what it pays its senior staff. We all know what each other earns down to the last penny every month.

We recently merged with another firm and this openness has come as a bit of a shock to the incoming partners. I think this is because, unlike the Americans, we Brits are pretty uptight and secretive about pay.

Salaries are like sex and watching reality TV. We all do it to a greater or lesser extent, but nobody talks about how much or how often. I know of organisations where it is actually a sackable offence to disclose your pay.

I don’t think it is here so, contrarily, I am going to break cover and disclose that in an occasional good year I earn slightly more than the Prime Minister, but seemingly far less than anybody at the BBC whose job title includes the golden words ‘Head of’.

This may still sound like a lot, but two things to bear in mind: I have lots of ex-wives and small children to clothe and feed and, within the overall context, pretty much anybody who is likely to read this article is rich relatively speaking.

Median pay in the UK is about £23,000, so if you earn more than £50k you are in the top 95% of the working population and in the top 1% of the global one. If you earn more than £100k, you are in the top 1% of the UK population and literally almost off the scale in the global context.

Out of a population of 60 million people in the UK, only 300,000 earn more than £100k per year, so for every rich banker there are thousands of people on £20,000 to £30,000. This is the nub of the issue, and I think the cause of misplaced middle-class anger.

We are all looking up at the few people on summit of the pay mountain from about 20 feet below and ignoring the millions who are thousands of feet below us on the plains.

I think the reason people get so exercised about issues of pay is that for the angsty educated middle class, pay equates to intelligence and more profoundly self worth. I must be bright because I earn more than a bus driver. This is why footballers’ salaries cause so much indignation.

He only kicks a ball once a week and can barely speak, whereas you’ve probably got a degree, shop in farmers’ markets and can name three French novelists. How can our society value him at ten times or even hundred times more than you?

The dangerous idea here is that actually how much you are paid has no correlation to your intelligence or value. It doesn’t mean anything because it doesn’t mean anything. There is no pattern here and however much you earn somebody somewhere who is clearly not as bright as you will always earn more. Much much more.

So, if we accept this, what can you do to increase your own pay? Firstly, sacrifice salary for meaning. Stop seeking self-actualisation in what you do and just focus on the monthly cash going into your account.

Well-paid meaningful jobs that create positive outcomes for society, like surgeons or head teachers, are pretty rare and require years of training and hard work. Well-paid meaningless jobs that create little or no value are much more commonplace particularly in the City.

The highest-paid person I know is a 32-year-old foreign currency trader who is paid single-figure millions to be very good at what is essentially a zero-sum game. Whenever he makes money for his bank, somebody somewhere else loses the same for theirs so, in aggregate, we as a society are no better off.

But as long as he is on the winning side of the transaction, the bank is happy and pays him a huge amount that he uses to fund a lifestyle of bacchanalian excess. This is his only point. There isn’t anything more fundamental or worthy going on here.

He makes, arguably, obscene amounts of money because he worries a lot about what the yen will do against the euro next month. You don’t because you don’t. Conversely, what he doesn’t do is worry much about purpose and meaning or write witty letters to the Guardian.

A second strategy is to work in a highly unionised industry with significant barriers to entry and one that makes a big difference to the lives of other people. This is why tube train drivers on £45,000 are paid more than vicars on £21,000. Although the latter have better shift patterns and the promise of eternal life, nobody but God cares if they go on strike.

A third approach is to try to distort the market by legislating general pay upwards and putting a cap on maximums. We see this with the minimum wage and the heavy hints from lefty politicians about bonus taxes, mansion taxes and maybe even an absolute cap on City-boy wages.

These things always play well to the conference crowd but is no more than beer and circus platitudes. Let’s be frank and honest here. Minimum wage means minimum wage for the relatively small number of people who live on this little rainy island. Nobody is pushing for a global minimum wage so as long as we are not told the tiny amounts other people are being paid to make stuff for us.

To give a simple example, we import about £300m of clothing from Pakistan each year and the average Pakistani textile worker is paid about 50p per day. But when was the last time you heard a UK politician or trade unionist mention it as any sort of problem?

Finally, you can advance your own cause by working in a place where other people make a lot of money. Over the course of my career, the single best predictor of how much I will earn in a given year has been how much my immediate peers earn.

If you work in a place where other people, make lots of money, you will make lots, irrespective of what you do. On the other hand, if you are the highest paid person in your office then your scope for advancement will be a tad limited.

This holds true for all types and levels of organisation so a PA at somewhere like Goldman Sachs earns probably two to three times as much as a PA in the local council even though their job is essentially the same.

So, in conclusion, pay remains one of the last big taboos in British society. This is probably because we wrongly imbue it with too much meaning about our wider selves. What you are paid actually bears scant resemblance to what you do or how clever you are and has got much more to do with how much money other people make as a result of your efforts.

Your search for purpose and validation through your work is probably coming at the expense of your absolute pay, so if you want to earn more you are going to have to make a choice between one over the other.

And, finally, if you go for the big meaningful stuff, remember that in a global context you will still be rich beyond the wildest dreams of the majority of the world’s population. Bear this in mind the next time you buy a £4.99 ‘Made in Pakistan’ T-shirt.

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