Personal essays
On evaluating how much to be paid
Ratio
Kim and I began and ended our honeymoon at the Ben & Jerry’s factory in Vermont.
We were on our way to Montreal and Quebec but it was much cheaper to fly into Burlington and drive the rest of the way.
I don’t know if we took the factory tour but somewhere we picked up the fun fact that when it was founded, the ice cream company had a rule that the highest paid employee would never make more than some multiple of the lowest paid employee. I don’t remember the number but it was somewhere in the five to ten range.
Now corporations regularly have a ratio in the hundreds - and that’s just for income - it doesn’t count the obscene bonuses that the men at the top (and it’s almost always men at the top) make.
I’d forgotten about this until my friend T J shared a quote from a Business Insider article on Warren Buffet’s reaction to the requirement that public companies have to compare the salary of the CEOs to that of the median worker.
They aren’t even comparing the paycheck of the CEO to that of the lowest paid employee. First, they figure out the median salary and then they compare.
Buffet argues that this comparison should have showed that the CEOs were making way more than their average employee and that should be enough.
It didn’t work. Instead, CEOs looked around and saw that there were other CEOs making more than they did and so they wanted more.
Of course there are loopholes. Elon Musk doesn’t take any salary from Tesla but the shareholders just awarded Musk shares that he estimates will be worth one trillion dollars.
I can’t imagine a trillion dollars. Honestly, I can’t picture a billion dollars and don’t really understand a million dollars.
In school they would have said something like “if you laid out a trillion one-dollar bills end to end it would reach from here to…”
In my head, at this point Lewis Black, who would be playing the role of the teacher, would explode with his patented reactions and then say, “you can’t f’ing lay out a trillion one-dollar bills.”
Getting Paid
I’ve been traveling a lot lately. Three weeks ago I flew out of Cleveland on my way to Italy.
The woman ahead of me in line asked the TSA agent who was checking our IDs before letting us fly if they wanted a piece of candy.
“Thank you,” said the agent, “but we’re not allowed to accept any gifts.”
The agent, and all of the other people working that shift, were as friendly as can be.
They didn’t hassle us unnecessarily and seemed to go out of their way to be nice.
This was during the government shut down.
These people weren’t being paid. They were “essential” so they had to go to work but they weren’t being paid.
I don’t think I would have gone to work if I wasn’t being paid. I certainly don’t think I could have been cheerful and up beat.
“But Daniel,” you say, “it’s not the travellers’ fault that they have to work without pay.”
I don’t care. If I’m not being paid but have to go in to work anyway, I’m not going to be my usual ray of sunshine.
I think about this sometimes with jobs that I take on. What should I charge? I’m at a point where I don’t need that much money to live on. And yet, I want to charge enough that the people who hire me value the work I do.
A recent podcast episode advised we start the pricing analysis with the money we need not the value of the product we produce. Decide how much money you need to live the way you want to live and then figure out what you will create, how many you need to sell, and what you have to charge for it.
That makes sense but, I want to charge enough that the people who hire me value the work I do - and no more.
Proper Amount
I chat regularly with a friend in the tech industry who always remarks on how overpaid we are.
We are.
I work hard and deliver quality but what makes me worth this amount of money?
And then recently I was chatting with another friend who does similar work to me and he told me what he was being paid by one of the companies we both work for.
It’s more.
I can’t tell you why it matters. I make the same amount today as I made before he told me. The amount I make more than covers my expenses and needs - but he’s getting paid more.
I’m not going to raise my rates, I really do make enough money, but it did give me some insight into how a CEO making more than any person can imagine, decides that they are worth more.
I charge enough that the people who hire me value the work I do. I don’t need to charge more.
Essay from Dim Sum Thinking Newsletter 295. Read the rest of the Newsletter or subscribe