Four Ways Your Employer is Paying You Less than You Think

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The tales of puny salary increases have become legend. In recent years, pay increases have been hovering around 2%. But that figure tells only part of the story. The other part is how your employer is paying you less than you think.

For 2018 and 2019, the average increase has supposedly been/will be in the 3% range. This is a bit of a distortion however, since it represents a blend of pay increases for high-, middle- and low-end workers. Apparently it looks as if middle- and low-end workers will continue to get something less than 3%.

Four Ways Your Employer is Paying You Less than You Think
Four Ways Your Employer is Paying You Less than You Think

The popular narrative on the economy is that ?everything’s great?. And yet pay increases are only barely keeping up with the rate of inflation (which is hovering around 2.2%, if that number can even be believed).

It begs the question, if things are so great, and the labor market is so ?tight?, why aren’t workers getting higher raises?

Before we get into that, let’s first discuss how your employer is paying you less than you think.

1. Playing with Bonuses

This article was inspired by a comment by reader IK. After working for her company since 2000, 2018 was the first year when they didn’t pay a year-end bonus. This despite the fact that the company claimed 2017 in 2018 were their best years ever. At this point, she’s not even certain she’ll get a pay raise that will keep her above the rate of inflation.

Now bonuses are just that, bonuses. They?re almost never guaranteed, and they can be increased or decreased at the employer?s discretion. But when an employer fails to pay bonuses – after doing so consistently for years – and despite having record earnings – it clearly represents a form of a pay cut.

I can relate to this issue. Years ago, I was working for an accounting firm that paid each staff member a ?bonus? at the end of tax season. I wrote bonus in quotes because it really wasn?t a bonus at all. It was our accumulated overtime from the tax season. I guess they figured calling it a bonus sounded more beneficent than simply accumulated overtime.

But as has been the case for decades, the firm’s health insurance premiums increased for that year. We were told in a meeting that they would keep the health insurance in place, but we would receive lower bonuses as a result.

Translation: the firm was taking the increased cost of health insurance premiums out of our tax season overtime pay.

In retrospect, I’m not even sure that kind of thing is legal. But unless you’re willing to hire a lawyer, and several employees are willing to sign on, you’ll be stuck with the arrangement as it is.

But playing with bonuses is only one way your employer is paying you less than you think.

2. Playing with Commission Arrangements

This isn’t a situation that applies to most employees, but it does affect millions of commissioned workers. THE most affected are those who are on 100% commission.

Now as matter of full disclosure, I spent eight years working on 100% commissions from a small, independent mortgage broker. They never changed the commission structure in all that time (consistency breeds employee confidence). Now the fact that it was a small firm had something to do with it. Small firms have to have commission structures that are both generous and consistent to retain talent.

But that’s not true with larger employers.

Commission structures can be quite complex with large employers. For example, they often have commission tiers. You may get up to 40% of the commission income on production of up to $1 million per month, then 50% of any production above.

But employers are not adverse to ?tweaking? the schedule. For example, they can lower the commission splits to 35% and 45% respectively. Or they can change the threshold for higher splits. Like raising the split to the $1.2 million level.

However it plays out, a change in the commission structure almost always runs against the employee. And when it does, it becomes painfully obvious the employer and employee are not in an equal partnership. The employer is looking to improve their margins by cutting back on compensation to the very people who are bringing in business.

It’s a self-destructive process to the core, but it’s how employers engineer paying less compensation to their commissioned staff.

3. Reduction in Hours Worked

According to the US Bureau of Labor Statistics (BLS) there are currently nearly 126 million full-time and more than 27 million part-time workers in the US.

By definition, part-time employees are nearly always hourly. But so are millions of full-time employees. This is especially true since so many jobs today are in the service economy, particularly retail and food service.

If you’re an hourly employee, your income is dependent upon the number of hours you work. If you’re considered a full-time worker, and scheduled to work 40 hours, you?ll earn ?full pay?. And if you exceed 40 hours, you’ll most likely get overtime pay. That’s the best of all worlds.

Unfortunately, many hourly workers work less than 40 hours per week. For some people, in some jobs, that’s more typical than not. I’ve known of many situations of full-time hourly employees working 38 hours one week, 35 the next week, then 42 the following week. But on average, they work less than 40 hours per week. That means they earn consistently less than their stated/expected full-time pay.

I know one woman who was in such a situation. She rarely worked more than 35 hours per week, and then her employer finally closed the doors. The reduction in hours was more than a financial inconvenience. It was a warning of worse to come.

That may be an extreme situation, but it’s become quite normal. I refer to these arrangements as rolling furloughs. The employer can adjust the employee’s schedule up or down, based on need or cash flow.

That may be good for the employer, but it can be a certified disaster for the employee, who is dependent on a minimum 40-hour pay week.

It’s yet another example of how your employer is paying you less than you think.

4. Demanding More Work Out of You

If an employer increases your responsibilities, and doesn’t provide a corresponding increase in pay, it’s effectively a pay decrease.

Many people may not think of it this way, perhaps because it’s disturbing on so many levels. But it?s a real strategy employers use to squeeze more production out of you, without the arrangement costing them anything additional.

A common example is when you?re the office/shop ?go to? person. If you are one, you likely know exactly what I’m describing. Any job that’s difficult, unpopular, or needs to be done right away, routinely ends up on your plate. Often this happens because you’re the boss?s right hand man or woman, and he or she has a habit of forcing his or her work off on you.

A more common example is the 80/20 rule. That?s where 20% of the staff is doing 80% of the work. It’s not often framed in these terms, but what it really means is that if you’re part of the 20% who are high performers, you’re carrying the load for a staff overweight in under-performers.

However it plays out, if you’re in this situation, your employer is paying you less than you think. You may be doing twice as much work as the person sitting next to you, who’s making roughly the same pay.

My Own (Short) Episode of More Work for Less Pay

I had a particularly extreme experience with this on a contract assignment when I was still in the mortgage business. As a contract underwriter, I was expected to underwrite five five loans per day. But when I was on the job, my time was 100% consumed with answering calls from borrowers and brokers, and dealing with a neurotic, malfunctioning computer (which seemed to be something of an industry standard with the larger mortgage lenders).

There was little if any time to complete underwriting the five-loan requirement. It was implied ? but never spoken ? that the ?solution? was for us to underwrite the loans on our own time. That meant bringing the loans home, spending several more hours doing ?homework?.

I was actually OK with that arrangement, but that’s because I expected the company would pay us overtime for the extra hours worked at home.

I was wrong. The contract company I was actually employed by agreed with me, and initially said overtime would be forthcoming. But the actual company I was working for nixed the idea. We were to underwrite the loans on our own time, and without any additional compensation.

Needless to say, that particular contract assignment didn’t last terribly long. After just 6 weeks, I called my contract company ? before even leaving the parking lot of the mortgage lender ? and told them I was done.

And lo and behold, the contract company was relieved that I requested leaving. The mortgage lender had called them only moments earlier, saying they didn’t think I was ?working out?.

The contract company’s response was an interesting one. They thanked me for lasting on the assignment for all of six weeks. Why? Because no one else they sent to that company lasted more than four.

I’m not surprised.

And here’s a less direct way your employer is paying you less than you think…

5. Cutting Benefits

I think this is a pay reduction scheme most employees are well aware of. It can take different forms, some of which include:

  • Canceling certain benefits.
  • Increasing employee contributions to certain benefits, typically health insurance (though more than anything else, this has become part of a standard coping strategy for dealing with the unfolding national health care crisis).
  • Reducing the amount of paid time off, or increasing the requirements to get it, which has the same net affect.

I’ve also experienced some certified nickel-and-diming behavior. One company I worked for took away the free coffee service. In order for it to continue, it had to become contributory. Each of us had to pitch in a few dollars each week to cover it. And this was at a very large company. Others I’ve seen have made the annual Christmas party contributory. There are all sorts of reduction schemes in this category, so it’s almost impossible to generalize.

But since benefits are a significant part of the average person?s compensation, cutting them ? whatever the methodology ? represents a reduction in total compensation.

Collectively, all these backdoor cuts in pay nullify pay increases, at a minimum. More likely, the net effect of a 2% or 3% salary increase is more than offset by a series of less visible cuts. This in large part explains why so many companies are so much more profitable in recent years.

After all, if payroll is an employer’s largest expense, the most effective way to lower costs is to cut payroll. That?s the cycle we currently find ourselves trapped in. And a major reason why so many employees feel they?re struggling more than ever even at a higher pay rate.

Why Pay is Being Constrained

In theory, none of the above should be happening in a job market with the unemployment rate at just 3.9%. That’s the lowest unemployment rate in decades, and more suggestive of dramatic increases in employee compensation and benefits.

But that’s not what’s happening, so it’s obvious we have a fundamental departure from previous employment models.

An excellent summary of what’s happening in the labor market was published last summer by Business Insider. In The ‘supply-and-demand model of labor markets is fundamentally broken,’ and that’s why you’re not getting a pay raise anytime soon, they listed the following contributing factors:

  • The gig economy, which allows employers to sub out jobs to low cost providers.
  • Part-time work replacing full-time jobs.
  • Under-employment, which masks the true extent of structural unemployment (the unemployed now deliver pizzas, rather than collect unemployment).

I’m also going to suggest a few more causes that I believe to be contributing in a major way:

  • A general preference among public companies to increase profits and share prices to impress their shareholders, at the expense of their employees.
  • The rise of contract workers (who are really no more than contingent workers with little bargaining power).
  • Offshoring of jobs to countries with lower wage costs and operating expenses.
  • Technology, enabling one person to do the work once provided by four or five people.
  • The general sense of fear among employees that ?I?m lucky to have a job?.
  • High levels of debt and low levels of savings that feed that fear.

All those factors have combined to create what is admittedly a grim picture. Unless you’re employed in one of the high demand occupations, like IT, health care, or education, it’s become very difficult to make steady progress and increasing your income.

Where Do We Go From Here?

I must confess, if I knew the answer to this question, I wouldn’t be writing this blog. Unfortunately, the answers are as complicated as the reasons that created the problem.

But let?s take a stab at it anyway:

  • The forces driving down pay are the result of a powerful series of dynamics. Don’t waste time thinking it’s temporary, that it will be different in the future, or that there’s a political solution. False hope is no hope.
  • If you can’t do much about your income situation at work, concentrate instead on personal finances. Lower your cost of living, and increase your savings. The combination of the two will give you a better chance of surviving and thriving come what may.
  • Develop new skills. It can be skills you can use on your job that may result in a pay increase. But it’s just as likely those new skills will enable you to either enter a new and more promising career, or help you start a side venture to supplement your income.
  • Seriously consider becoming self-employed, either now or at some time in the future. The worst outcome of all is living with the same constraints five or ten years from now. Becoming self-employed can present a serious opportunity to move in an entirely different direction, one unconnected to the forces that are limiting pay.
  • Become flexible in your thinking and in your lifestyle. That seems to be increasingly rare in employment situations. If you don’t have that ability on the job, it’ll be even more important to implement it in your personal life. Simply put, be ready for anything.

Has your pay been stuck for several years? Do you have any suggestions to break out of that?

( Photo by Damian Gadal )

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30 Responses to Four Ways Your Employer is Paying You Less than You Think

  1. Thanks Kevin for a great article highlighting all the ways an employer can screw paying employees. It took me until almost the end of my working life to figure this out when I had to give up an ?increase ? in pay to keep ?certain healthcare benefits ? plus agree to loss in paid time off as ?suggested ? by the ?ever helpful ?union to keep job. The trend by employers today is to minimize labor costs which is why I have been laughing at the public statements by Mayor DeBlasio guaranteeing low cost Metrocards, free healthcare and 2 weeks paid time off for everyone who works in NYC. I would really like to know where he?s getting this money. Someone is going to be getting the bill. I will be reading the comments to see the brainstorming on this article.

  2. Hi MariaRose – I’ve been hearing reports of these things from different people working in different occupations, but there’s always the common thread of some backdoor way to lower wages. I haven’t seen any studies on this, so what’s in this article is mostly anecdotal. I’d like to hear how some others have experienced this. It doesn’t seem to be unusual any more. Cost cutting has become so common it’s gotten very creative, and is probably happening in dozens of ways, some of which we don’t even see.

  3. All excellent points, and it’s easy to forget how inflation can distort our perceptions as to how much we’re actually making! One website I found that’s worth checking out: http://www.in2013dollars.com/. Plug in the amount you made for any given year and see how much it’s worth today. You might be surprised. Most employers should stop deceiving their employees by using the term “raise” and use the more appropriate “cost of living adjustment” instead!

  4. That’s true Steve and it’s one of the great deceptions of our time. Raises are really COLAs which is another incentive for the government (the nations largest employer and sponsor of Social Security) to present an optimistic inflation number. What magnifies the problem is that the published rate of inflation is almost certainly bogus. If the real rate of inflation is 5% and I get a 2% raise based on the official CPI, I’m actually getting a paycut. This is the #1 reason why people are falling behind despite making more money. And there’s nothing we can do about it because inflation is national policy, as well as the efforts to conceal the real rate.

    So all these other strategies are on top of the underlying inflation fiasco. It all explains so much. I so wish more people understood this.

  5. Anytime a company starts to tighten payroll costs, the first thing they do is find any way to minimize the actual cost to them. It now starts at the hiring point with the computer scanning for key issues in background check. They put it under equal opportunity questions but when they ask if you receive benefits or not, they are looking for employees that they ( the company) gets reimbursed to hire ( payroll savings from day one.) Ageism is the next trick?pressurized the long term employees (who are usually the highest paid) by upping the tasks required ( putting them in the 20% who do 80% more) to encourage early retirement. If that doesn?t work there?s always the excuse of downsizing the company to explain eliminating jobs. All of this is done to keep the profit line high. Labor costs are the highest cost for any employer and the first place that they cut, justifying it with plausible excuses from the fine print of the labor laws. Unless we get better labor laws protecting our rights, this will continue in the companies benefit as there?s no protection. Unfortunately the unions who used to work in creating these laws got sideswiped in politics and abandoned the workers. I was very vocal at those union meetings about how they were spending our money frivolously. It is even worse in jobs without unions especially with the right to work laws in place. The right to work mainly works against employees because they are employed at the whims of the employers and can be fired/laid off/ furloughed for any reason.

  6. I don’t think this can be fixed with legislation. The problem is economic, not legal or political. There are precious few jobs paying living wages and serious benefits. Employees live in fear of being fired, and increasing production has become the norm, at least among the 20% who are expected to carry the rest of the staff.

    If the problem is economic, the solution must be as well. That means employees have to vote with their feet. If enough people become self-employed – and that’s what I’m hoping and projecting, the problem solves itself. What a lot of people don’t realize is that self-employment removes workers from the employment pool. As it shrinks, the bargaining position of remaining employees increases. At that point, the employers lack leverage to constrict pay. A new economy builds outside the corporate employment world, and the game changes.

    What we need today is nothing short of an economic/employment revolution. I believe it will happen, but mostly because the next recession is going to so gut the job market that self-employment will be the only alternative. It’ll be painful while it’s transitioning, but we’ll end up in a better place.

  7. Hmmmmm. I worked for the same 2 women (owners)at a company from 1988 until last y
    ear. We had 15-20 employees. while I don’t disagree with anything you said, my experience with them was quite favorable. We rarely had any turnover.
    Healthcare was certainly the most tricky part for them. We were always ‘perked’ well two times a year, a percentage of the companies profits. Taking care of our kids was always understood. My daughter was homeschooled at our office every day for years. She used one of the empty offices. Issues of taking off for dental, vet, Dr appts was never an issue.
    I do understand that was not the norm. We WANTED the owners to make money because they were so good to ‘share’ with us a percentage. I find this to be more true in small businesses, like you said.

  8. Yeah, it’s the small business factor to the rescue here Ruth Ann. That was always my experience with small businesses. Much more flexible and accommodating, and you wanted to produce for them. But small employers don’t have a long line of candidates, so it forces them to treat the ones they have well. They also rely more on their employees and in a much more direct way. The longest tenures I had with any employers were small ones. I also always felt I had much more job security. At large ones, I never felt secure, even though I was doing my job and part of several other people’s jobs. Big employers just make you feel that way. In addition to the fact that I saw even good people fired on trumped up charges.

  9. Hi again Kevin,

    From my reading, it looks to me that the issue is pretty much entirely rooted in politics. Politicians make the laws so there is no difference between the two. The heydays of solid real wage growth and the subsequent stagnation tracks with the growth in power of trade unions and their loss of power due to government policies.

    The wage increases gained by unions drove bouts of real inflation but also influenced the labour (yes, I’m Canadian and we spell words in their original English) market to drive up wages for all workers. These labour cost pressures caused a greater portion of the proceeds from increased productivity to go to workers instead of investors.

    Weakening unions, both through government policy and propaganda, has achieved its goal of ensuring that most of the benefits of increasing productivity flow to investors.

    Further driving public acceptance of this outcome is the need for individuals to invest in the markets to obtain a rate of return greater than inflation. This also was not always the case. My suspicion is that the banks no longer have to offer a fair share of their earnings to depositors when the laws changed to allow the banks to lend more money out than they held in deposits. The banks no longer needed to attract as many deposits in order to lend money out.

    While this partially funded financing paradigm has driven enormous economic growth by making capital readily available, it has had a corrosive effect on working people whose retirement funding is dependent on keeping the labour costs low in the companies they are invested in.

    Undoubtedly this problem has other confounding causes as well. There are no simple solutions to what is happening to wages today. While I like your idea that people leaving employers to start their own businesses, the reality is that the number of workers that can viably do this will not significantly change the volume of the labour pool.

    Strengthening trade union would likely be more effective if accompanied with a return of a few more defined benefit pension plans, or at least risk shared plans. Removing the incentive to not care about other workers in favour of ones own pension needs would be a first step in changing public attitudes about how increased profits from productivity gains should be split.

    I suspect that not all the things that have caused the current state of affairs can be reversed. Reversing how banks fund mortgages would likely devastate the economy. But the real solutions can only be undertaken through the political process, if only there were fewer special interests and more political will.

  10. Hi Robert – I respectfully disagree on the union argument, mainly because I’ve worked in a couple, and saw how they were destructive in their own way (raising the cost of labor and protecting unproductive workers – I even saw packaging mechanics break the assembly lines routinely to increase overtime, or union leaders calling strikes the workers didn’t want). But I love that you’ve gone “big picture” with your observations, because that’s the real story. If you’ve been reading this blog for a while you know I believe the problems we have are mostly inter-connected, which is why solutions are so elusive.

    The economy has become so complex (mostly unnecessarily so), and the solutions are far from simple. But I don’t think there’s much that can be done at the macro level. At least nothing that can be accomplished in a few short years. That puts the burden on us as individuals to work out satisfactory micro-strategies. Your observation that labor has been devalued is right on the money. Capital policies and the spread of technology in combination with global wage arbitrage are conspiring against the humble worker. In a real way, we all have to strengthen our personal financial situations and figure out how we’re going to make a living in a world where labor’s share of the spoils seems destined to only get worse.

    I see the trend accelerating in the next downturn, so I’m really hoping to get others to start thinking about this in a serious way. The other issue is the rise of the contingent workforce (contractors, gig workers, part-time, etc) that may cause unemployment to rise quicker than we can react. On the other hand, we can dare to hope these alternative work-styles will keep unemployment lower than it might otherwise be, despite the view large employers now have of throw-away employees.

  11. What a great article and I have lots of experience here! First my job history: I worked at a major bank in the mid 80?s and received annual raises of 8%-10% every year. I then moved into a very small company owned by one woman and made great money with great flexibility and benefits. By now it is 1994 and I worked at a mid-sized company in Cleveland, owned by a family of 3 brothers. I didn?t get a raise for 5 years. When I finally got a raise, it was $1/hr. Benefits were good, but not great. I am now self employed and dictate my salary, although health benefits are killing me.

    Now my husband: he has worked for the same company for 25 years. It was family owned in the beginning and he had profit sharing, bonuses, annual raises of 5-10%, and great benefits. They were bought out by a European company and it has been downhill ever since. They went without pay during the 2008-2009 financial crisis. Since then, they get raises sporadicallly, and only 1-2% per year. Benefits continue to cost more while getting less. He did not get a raise this year again, but hey, they do give you a full sized candy bar for your birthday! I?m not kidding!

    My son works for the DOJ and is shocked at the large raises we used to get. While it?s not great right now because of the gov?t shutdown (they aren?t getting paid), benefits are good, but raises still suck.

    My take on all of this? Greed, plain and simple. Companies are keeping the profits for themselves. Don?t like it? Go ahead and quit and try to find a company that does better. It?s not easy and they know it because most all of them are doing the same thing, especially the larger companies. It?s pathetic. The large corporations bought the government and basically own the country. It?s a no win situation. I agree that self employment is the best way around this, but again, with the disasterous Obamacare, good luck getting health insurance for under $1k/mo. Oh, and my all-in tax bill is around 50% of my pay. Just pathetic.

  12. Hi Linda – You’re pointing to a phenomenon most aren’t aware of, and that’s mass conformity. As you wrote, all companies are behaving the same way, holding employees in a vice grip they can’t escape even jumping to another company. I think employees know this part of the game. And despite the record low unemployment rate, people are still afraid for their jobs. That attitude, which is grounded in reality, speaks volumes about what’s really going on in the economy and the job market.

    I know I beat the self-employment drum to death, but there really are fewer alternatives all the time.

  13. Kevin, I am retired now but every time I got a measly 2-3% raise from the state, it got eaten up by increased health insurance payments. The State of VA health insurance was better than most and less costly than some others, but it still ate up our raises. Before 2010, the State paid 100% into retirement for the employees; now the employees pay that share and the State pays nothing.
    A dirty little secret in the State of VA: about 1/2 of their employees are either P-14 (hourly, no benefits at all) or contract employees (especially in IT), many of whom are H1B Visa people from India.
    I was a P-14 for the Dept. of Social Services for 5 years, until I got classified in 2012. I had an illness that could have been cured had had I insurance but I didn’t and got very sick. People were astounded to hear that the department that dispenses Medicaid and SNAP and ADFC did not give its own employees as many benefits as a welfare recipient.
    The P-14s were expected to work all holidays except for Thanksgiving Day and Christmas Day with no overtime pay. Classifieds got paid time off for those days and more. If a Classified worked holidays, they received time and a half.
    I think it is okay to use part time labor when an employees is out for a time or to fill some other temporary, short term need. I believe it is disgusting to hire these people and tell them they are part time and then, in reality, forcing them to work full time hours without full time benefits and compensation or be fired with no recourse.
    When I was a P-14, I tried to publicize this travesty. I wrote the governor, much to the dismay of my supervisors. Even though I am retired, I think I will try to reach out to our current governor, who seems more amenable to solving such problems.
    People think government work is a gravy train and that the employees are lazy complainers, but I have found that not to be true. Sure, there are some lazy complainers but the majority are had workers. I think this misconception is one reason people don’t seem to care that 800,000 people are working with no pay or being furloughed with no pay right now. If that happened in the private sector. people would cry foul.

  14. Hi Mary – I think a lot of people have little sympathy for furloughed govt workers because they’re federal. The have more time off and benefits than the taxpayers, and it’s bred a certain level of resentment. But at the state level, there’s no money printing press like the feds have. So states have to live within their budgets. For that reason, they operate largely like private enterprise, in subbing out work to outside providers, and hiring people on a contract or part-time basis.

    I applaud your efforts to correct this, but I don’t see it getting better. Yes, even the states are now devaluing their workers. It’s the new normal. In some ways, state workers (those with full-time pay and benefits) are still better off than private sector workers. But the major disadvantage is that there are often no parallel occupations outside the state. If they lose their jobs or decide to leave, it can be tough to transition into the private sector.

    But in summary, it’s all part of these bigger picture issues, to which fewer and fewer employees are immune, no matter where they are. Sure, it may be the best of times for those in top 5%/10% occupations, but that’s just for now. We’re all replaceable, and employers are taking advantage of that. Even at the government level. If the choice is to cut popular spending programs or reduce state workers or their compensation, the employees will get thrown under the bus.

    Expect it to get worse. I have two brothers-in-law both of whom work for the same fire department. The younger one was hired about 10 years later than the older one, and both acknowledged that the later you were hired, the less generous your pay and benefits are. That’s the way things work in this very young millennium.

  15. I just wanted to touch on one notion that if you don’t think this way then maybe it’s time to consider.

    Employers do not care about you. They do not care what is fair or what you think is fair. They don’t care if you can live on your salary or not. That’s our problem.
    They do not care if your raises keep up with inflation. Again, it’s our problem.
    Most of us are numbers. The job continues long after we are gone. We’re not as important as some of us think we are, myself included.

    I’m not saying do not do a good job when you are there. They are paying you to do a job. If we don’t like the salary then leave. If you feel you can’t leave then develop some other kind of income outside the job and start to make plans to leave.

    We can write or complain to whomever we want. Nothing will come of it unless everybody in the company is doing it.
    Politicians do not care about us. They care about getting reelected and staying on the government gravy train.

    The quicker we can absorb that the better. It’s up to us to fix are problems. Not the government. They can’t when they created most the problems.
    Last time I checked we we’re still free enough to do as we will.

    This is what we keep talking about on here. Changing our mindset and thinking.

    If I don’t like something I’ll find a way around it no matter who is president or whom is in my state office. They do not matter.

  16. That’s all 100% true Tim. Sitting around waiting for justice is wasting your life. The politicians have made it clear they don’t care about the masses. Read this article France in a Nutshell: “The Government Stopped Listening to the People 20 Years Ago”. That’s true here in the US as well. If you doubt it think back to the Financial Meltdown – who did the government bail-out – the people? Nope. They bailed out the banks, who were busy foreclosing on the people. That was the best evidence ever that the government no longer fears the citizens, that they know we’ll quietly take whatever poison medicine is being doled out.

    And the employers? Right again Tim, they could care less. This is a consequence of remote ownership. Decades ago when a company occupied the same community as the people who worked there, there was a sense of taking care of each other. But with remote ownership, dominated by corporate chieftains who’s only concern is raising the stock price, and bean counters who only care about lowering payroll costs, there’s a pronounced coldness to the employer-employee relationship.

    Years ago you could appeal to management and even upper management. Now if you do, you’ll be put on a short-list for staff reductions. In my last years as an employee I began to notice that company meetings were becoming less about the exchange of ideas, and more about the issuance of marching orders. There’s a wall of separation between management and employees now, and the human concerns no longer matter.

    Of course that doesn’t stop the faux publicity campaigns that companies launch to create the image that they actually care. In today’s world of virtue signalling, it’s more important to advertise that you care than to actually care.

  17. Thanks Kevin,
    The advice that you and others have given here is totally rational and reasonable for most individuals to strive to achieve. But I think that we all know some people for whom starting a business is just beyond their skill set & with the cost of just living one’s life they don’t have the means to readily change their skills.

    And that brings me to a reason that isn’t based on rationality for these folks to push to unionize. Yes there are cases of waste and corruption by unions, but so to are there cases of waste and corruption in private industry & government & no one is saying that there is no place in society for those organizations. People just have to fight as hard to keep their union clean as they fought to create it in the first place.

    The reason is Mathew Chapter 37 Verse 39. If I will not look out for my coworkers as I will for myself, what kind of society am I promoting?

  18. I get what you’re saying about not everyone being suited to self-employment Robert. But I think nearly anyone could start a side business. The web makes it easier than ever. If you have a skill or a product line you like, you can build a side business around it. From what I’ve seen qualifications aren’t the issue, but motivation is. I see people out there with businesses on Etsy and eBay, or with blogs that are just side ventures. A few years ago my son and I went buying used stuff at garage sales and selling it on Craigslist. Neither of us have ever done that, but we made money and it was actually fun.

    The point is there are all kinds of opportunities out there, but you have to take a chance and try. My son watched Storage Wars and I read the Garage Sale Millionaire by Theodore LaPedis. That was our training, and we made it work. Anybody can do that.

    In a lot of cases a side business is all you need. It can provide additional income that 1) makes you less dependent on your job, 2) provides extra income to get out of debt and build up savings (very important in this economy) which create options, and 3) gives you the ability to be creative. The combination of all three can give you the confidence you need to go on to bigger and better things, even if your job makes you feel like crap.

    The main point however is we can’t just rollover and claim victimhood. And by expanding our own economic independence we are in a better chance to help others. And if we can become self-employed full-time, we’re leaving jobs open for others. I’m a believer as well, and I’ve learned to trust God and step into the unknown. We’ll never know until we try, and it is an act of faith to go forward and trust. Those have been my best moments. My worst have been when I thought of myself as stuck. Boy, that’s not a place you want to wallow in! It’s very depressing, and confidence draining.

    The world is what the world is. It’s how we react to it that counts. And as Jesus tells us “you are not of this world” (John 17:16-26). That’s the “horse” I’m hitching my wagon to.

  19. It does also give you a freedom of choice.
    I grew up with the get a good job mindset. I think a lot of Americans grew up with that mindset.
    My wife’s family who came over here from Lebanon never considered getting jobs. It was all about having your own business. I don’t think one person in the family has ever had a traditional job.
    Totally two different mindsets.

    Of course in this country and especially in this state. All the laws, taxes and so forth that have been created in the last 40 years have discouraged people from starting your own business.
    It forced everybody into overpriced college and a slave mentality making someone else money.

    Once I started my own business, which went against my upbringing it totally changed my outlook and thinking. I could not imagine ever working for someone else again.

    Like you said, even if it’s a side business, you never know what will come of it.
    Most people allow themselves to make a ton of excuses why they can’t do it. If this high school educated person can do it anybody can.

  20. That was my experience as well Tim, when I became self-employed, even part-time initially, both my mindset and my lifestyle changed – both for the better. I do think there’s a strong cultural connection too. I have a lot of people in my family background who were also self employed. In fact, both my grandfathers alternately – and often concurrently – had both businesses and jobs. I thought that was a good example, because what it teaches is that you do what ever you have to do. Meanwhile, neither was ever completely dependent on a job. And despite lacking education, both made a surprisingly good living.

    Of course there’s also a different mindset with self employment. Because income is more variable than with a salary, you save money, stay out of debt, and keep living expenses low. Yet none of that seemed to be miserable for them. Maybe it was the combination of a lack of stress and a feeling of being in control. They got their satisfaction in life from those qualities, rather than “living the life”.

    It’s an example I’m trying to follow. And thus far, it’s been a much better life than when I was job dependent. And maybe I’ve become a bit of a simpleton, but I do find great pleasure in simple things, like a good meal, reading a good book, being with my family, praying, and even working. As an example, this morning I dropped my daughter off at work at 7 am. On the way home I detoured by a local lake to watch the sunrise over the frozen water. It was a surrealistic, even spiritual moment, as I was able to admire and appreciate the artistic hand of God. We tend not to stop and take those “little things” in when we’re stressed and on a tight time schedule. But those things become more important when you’re not chasing the suburban lifestyle.

    Though most people may be repulsed at the idea, the lifestyle of a “starving artist” can be a pleasant one, in ways those on the treadmill can never appreciate. I’m not starving by any sense of the term. But the self-employed lifestyle does cause you to live a lot “closer to the ground”. It feels more natural to me. And like you Tim, I could never go back to a salaried job. Maybe on a part-time basis, but I’d rather take my chances being self-employed. It has its downsides, sure. But the benefits far outweigh them.

  21. I wanted to leave one more comment on here. This past two weeks and especially this past week, NPR has been reporting countless stories on the government shutdown.
    Some of the main theme has to do with interviewing people who are effected. This morning I heard a broadcast from a line at a food pantry. They had all these government employees who after missing one or two paychecks are already broke and can’t pay their bills or afford any food?
    These are not people who have been out of work six months or longer.

    Yes, the main theme of this post was to point out how most people get screwed out of any kind of real raises. We all know this occurs. We all know inflation eats up the rest. We all know that our money is worth less and less year over year.
    So in this day and age, when we all seem to know this, why do we insist on living hand to mouth?
    If you do not get a raise in a particular year and inflation is the bogus 3 percent then our lifestyles need to decrease by that amount every year just to stay even.
    If this is not a wake up call to anybody paying attention that having a cash cushion is not an option. It’s a must to survive.

    If you have a home that’s too expensive, sell it. If you have car payments, get rid of the car and buy one you can afford for cash. Eat macaroni and cheese for three months if you have to.
    This is not an option in life anymore.

    We can’t stop the nonsense in government but we can take control of our own lives.

  22. You and I are on the same page here Tim. My wife and I were discussing this just this morning. She said the web is abuzz with horror stories about furloughed federal employee. Neither of us feel sympathy, and that’s not because we’re cold-hearted and evil. Everyone of us in the private sector face the loss of a job, a client or an income source that’s part of the normal course of our existence. Fed employees are merely furloughed, which is to say they’ll be back on the job when this dog-and-pony show ends. My guess is they’ll be paid retroactively to boot. When we lose income, it’s gone.

    But that points to another issue, particular to government workers. They live in a world where employment, income and benefits are more certain. That often causes them to neglect/underestimate the possibility of facing financial stress. They have less need to save and be prepared. They’re often less concerned with debt. It’s a different world when you’re flying by the seat of your pants in the private sector. We prepare because we have no choice. That isn’t to say that all private sector workers prepare, or that all government workers fail to. But it is a trend.

    Apart from that, all these furloughed federal worker horror stories have a STRONG political angle. The media is very pro-government. They believe the world will stop without it. Anything that impairs it even a little (even like a slight reduction in the growth of spending on a particular spending plan) is considered to bring doom and gloom to human existence. As well, it’s a sideways attack on Trump, which has become their favorite preoccupation. “It’s all Trump’s fault these poor, desperate people are suffering so needlessly.”

    This country is awash with tens of millions of people for whom poverty is a way of life, and others who are dangling on the economic edge, with just enough to get by (and not even always), to make a house payment, to keep health insurance (see my latest post today), and to remain employed. Heck, THIS post is all about how people aren’t even getting paid as much as they think. Sorry, but I can’t feel sympathy for the furloughed workers. There are too many people in much worse shape, and their situations aren’t temporary.

    One of the major problems in this country, that keep us from dealing with our real problems, is that we focus too much on things that really don’t matter, and ignore the festering chronic problems that threaten to suck us into a sink hole. But I guess it’s easier to deal with “preference problems” than real ones.

    I’m sorry if this response sounds cold (but really I’m not), but my BS meter is working overtime these days. The media and government are keeping us fed with non-problems, false narratives, and distractions, to keep us from paying attention to the real issues, largely because either they have no plan to fix them, the fixes will be painful, or they live in ivory towers.

    Now you see what you’ve done Tim – you got me up on my soapbox and now I’m getting mean. I’m so ashamed. (That’s a bald-faced lie, of course.)

  23. Thank you Kevin for that last comment, it just emphasizes the big differences between a federal job and a job in the private enterprises, especially when the right to work clause is in play. These federal employees are so complacent about their job security, that this unexpected long term furlough is a wake up call. I look at it and see all these agencies still functioning and question why did they need so much staffing before. In a private business setup that?s a clear example of a place to trim the excess to achieve a profit level. This is why Congress doesn?t want to trim budgets as they aren?t using financial soundness, they work on just spending to their own agendas. Where did those politicians get the money to go to Puerto Rico and attend a show of the play Hamilton and made up an excuse that they needed to hold a caucus of rebuilding of Puerto Rico (which probably took all of barely an hour) all on taxpayers money. The longer the furlough goes, the more I see opportunities to cut government spending.. Any normal business enterprise will have been trimming these costs with the same disregard for those furloughed workers who also qualify for unemployment benefits. So like Kevin?no sympathy especially when they have fairly decent paychecks and get raises yearly. Bravo Kevin

  24. Hi MariaRose – I read a book about the IRS in the late 1980s – The IRS: A Law Unto Itself, I think was the title. But the author pointed out something that was a shock to my young mind. He said the true power of government isn’t the ability to tax, but the ability to spend. That was a true revelation for me. He said people judged government more by how much it spends than any other factor, even to the point of ignoring taxes. That made me realize government has no incentive to cut spending. They may cut taxes, but they’ll never cut spending because it’s the true source of their power. No politician is ever elected for cutting spending, but rather for promising more spending. It appeals to human greed.

    That’s why government won’t take advantage of the furlough to cut staff and payroll. Less spending means less power, and less popularity. They won’t do it, just as they never have in the past. Their careers, and the very existence of government rests on its ability to keep spending, and to increase spending each and every year.

    This is the point of government most citizens don’t get. Until we do, nothing will ever be fixed. Knowing how human greed works, the end result is that nothing will ever be fixed. A crash/crack-up is the far more likely outcome, which will eventually happen due to all the excess. In the meantime however, it’ll be business as usual. This has been the case for thousands of years, and not just here in the US.

  25. When you have the ability to print money along with taxpayer dollars it is totally irrelevant to them.
    It’s not their money.

    Government is a non for profit industry. They could care less about being fiscally responsible. If they run out of money they will just print more.
    5 billion for a wall? Where does that come from? Yet they keep saying social security will be out of money in the near future.

    I did finally hear Trump say something worth listening to. He said, with the amount of money we have spent on endless wars we could have rebuilt this country 3 times over.

    So as Kevin pointed out in the past, it isn’t just taxpayer money. They also have the printing press. It won’t last forever, eventually you will print your currency into oblivion. Which has already happened several times in history.

  26. That’s exactly right Tim, but the average citizen doesn’t understand that. All these so called budget battles are just theatrics and posturing. In the end, the dems want endless give-away programs, and the Right wants endless military, police/prisons, security state and war money. And each side will concede to the other’s spending goals as a bargaining chip to get their own. It’s a vicious cycle being funded by a combination of taxes, debt and printed money. (For those who don’t know this, printed money is the whole reason for inflation, which is also sometimes referred to as a “backdoor tax”, since it reduces buying power. But they massage the official inflation rate to keep the real rate hidden.)

    We should ask why in a “democracy” the citizens aren’t concerned that the federal debt has grown larger than the GDP, and why we have an $800 billion deficit nearly 10 years into an alleged economic expansion. But nobody does. It’s a game the whole country is playing. It all works just fine as long as “I get mine”. That’s why everything is going to Hell in a hand basket and no one really cares about anything other than their own pet spending projects.

  27. You don’t necessarily have to be in a self-employed setup to understand the need to control your own costs (in other words live within your budget). That budget should be evaluated on a periodic basis to ensure that both necessity costs are met and you are putting away money in some form of savings. That savings part is the hardest to achieve especially when necessity costs keep rising and your income doesn’t match up exactly (like in situations when your income is not rising, either because of no raises or predictability of income in self-employment). I happen to like stability when making a budget and don’t like the uncertainty of costs, especially when working with a budget increase that may not occur, in other words, fixed income. I just re-did my budget and tried to predict what I could eliminate in costs, by deciding where I would decrease spending on certain credit cards, I choose to work on the smallest bills so I could eventually have more free money in the budget to spend/or save. Okay, this was part of my end of the year planned budget revamp, but I noticed in comparison to last years’ revamp that an additional cost had occurred over 2018, unpredicted in that plan. Those interest rates that increase were not applied to any savings account but to the credit accounts. The only savings accounts that get any significant interest have to have a minimum of $25,000 in them. That’s about 75% of my total income for the year and not spare change, plus it falls under what with the new tax laws as considered taxable interest. Since I can’t utilize any deduction other than the standard deduction, I don’t intend to “loan” Uncle Sam–IRS– any more money.
    Predicting costs has become a juggling act. I just changed my Medicare drug coverage which was basically a drug coverage addition which worked with Medicare parts A & B to cover part D (drugs). It was a low-cost version of an Advantage plan (so confusing to understand). The reason I switched was that changes where made to allow the insurance coverage I had for long term care to include me into a Medicare Advantage plan at no cost to me (no monthly drug cost premium, no out of pocket costs for lab services by the primary doctor), basically eliminating between $300-500 of out of pocket costs, yearly if I stay within the covered program. Having medical procedure costs made transparently ahead of time will help.
    I only mention my situation as a reaction to the article states, we as workers are nothing but numbers that affect costs to companies. Like Kevin, I have no sympathy for the furloughed government, even those who were contracted, as they planned their lives paycheck to paycheck, which time after time we have discussed as the wrong approach to making money. (You can’t spend realistically money you don’t have, and you should not depend on job security in any employment.) Unemployment benefits aren’t an easy option to get, as many employers try to deny the benefits or the unemployment office finds an obscure way to deny benefits based on wording. Kevin always suggests self-employment as a means to achieve some control over your income but you have to realize that it comes with a sacrifice of never slacking off while earning your living. (Those furloughed workers never think about losing job security as part of their employment agreement as a government work is continued employment just based on seniority with no consideration for their job performances. While do you think there was a big announcement by the IRS about the mail backup which will delay ever and anything being processed by IRS staff. (Talk about lack of efficiency). I am glad I don’t need to get my refund immediately. As for running out of provisions, a well-stocked pantry should be a priority for everyone, plus learning to re-work leftovers into new meals. Takeout is a luxury, not an everyday occurrence. But I digress, what this discussion has made clear, is we need not be expecting handouts but making our own version of earning money (whatever works best with our skills) and keep developing better and newer adaptable skills.

  28. Hi MariaRose – That interest rate imbalance is what I wrote about in today’s new post. Rates are going up on loans, but not on most savings vehicles at most banks. This is a major reason for the dramatic run up on stocks in recent years. If you can only get 0.10% on safe investments, you may as well invest in stocks. But that also forces people, retirees especially, into high risk investments.

    You’ve also touched on another major issue, with unemployment. It’s now very difficult to get. All an employer needs to do is say you were fired for cause and you’e out of luck. The so-called safety net is increasingly being shredded, putting more responsibility on us all to prepare for the worst.

  29. Companies don’t value employees; they value profit. Managers don’t value employees; they are resources to be used, exploited, and discarded. The Federal government doesn’t value employment; it values corporate growth. Real wage growth is stagnant. The money you made 20 years ago buys (roughly) the same level of goods and services that your current income does. Housing costs are out of control. Most families cannot afford to save for a down payment, and all consumer lending is based upon a secret algorithm. College education costs have gone up 500% in the last 20 years. The national student loan debt has eclipsed $2 trillion dollars, and almost all of that debt has been collateralized to feed the Wall Street money machine. The ‘gig economy’ has emerged whereby everyone is a Contractor, in essence. Unions have been systematically dismantled in all but a few remaining trades or industries. The government has allowed companies to do away with all defined benefit pension plans (to further bolster corporate expansion and profits). Thank your politicians for all of this. It’s going to be proven (fairly soon) that a Capitalist government doesn’t work. Government has allowed companies to expand without any semblance of governance, and without protecting people. In short, people couldn’t be MORE exploited if they tried (and still remain a Democracy). It’s all a house of cards. When no one can afford to buy anything, and sales tank resulting in companies closing their doors (and layoff, which exaggerate the same problems), then people will look for change. Selling stuff on Etsy or eBay doesn’t make someone a business owner, and both forums are more about ‘garage sale’, ‘wholesaling’ or selling strategies based upon lowest price. It is genuinely difficult to create a business that is capable of being a full-time job capable of paying the mortgage, providing food, daycare, and education to dependents. Most people don’t have the skills to manage and develop a business. Those that do are probably employable in other ways that have less risk and more guarantees in terms of predictable compensation. As a single parent who is divorced and not remarried or living with a second earner, the prospect of ditching everything to start a business would be zero (unless me or my kids stop eating, needing a place to live etc.) It’s not about living within your means. I have what most people consider a ‘good’ salary, but after living expenses, kid needs, etc. i’m living paycheck to paycheck most weeks. And that’s been going on for close to 20 years – so it’s not a temporary condition. The simple truth of the matter is that being ‘bad’ prevails over ‘good’ normalcy trends every time. Bad employees are rewarded, bad managers are hired and promoted, bad companies with poor economic returns and personnel problems persist, and in general, everyone has their hand out asking for more funding, more sales, more donations, etc. There is only one way to make this work, and that’s to find a life partner who makes as much money as you do, and stay ‘married’. Only then will you have a shot at overcoming our national growth and employment problems. It takes twice as much money to just about everything (than you think it will), and no one can survive a job loss or other major life event on their own without a massive reset to their personal lives, economic prosperity and families. It’s not enough to work hard. You MUST avoid unnecessary financial trapping caused by ego and pride, and minimize all risks to your income streams to remain ‘healthy’. This is no different than how modern business looks at things. The sooner people start treating their own lives like a ‘business’ the better off they’ll be. If you can’t figure that out, you probably shouldn’t attempt to start a new business. Make the one you’ve got work, then expand if you are able to (not because you have to).

  30. Hi Christopher – I agree with all that you say, but I think we need to take a pro-active position. For example, I think we do need to consider self-employment, if only as a side business to a) provide extra income and b) to create a Plan B career. That plus cut expenses where ever possible, save and invest as much as possible, and get out of debt (and stay out). The key for the majority is to stop pretending everything’s normal – or soon will be “if only we can get Politician X into power” – and make any and all necessary adjustments. Not a comforting outcome, but there aren’t many alternatives, certainly none that won’t require sacrifices.

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