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March 22, 2023 - Freedomain Radio - Stefan Molyneux
17:17
How To Make More Money!
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Good morning, good morning. Hope you're doing well.
I guess I had a... Sorry, this has been posted a couple of times, but I wanted to get the advice out right away.
Somebody writes, Hey, community, need your advice on something.
Free domain. My one-year review at work is this week, and I've got a lot of anxiety about it, mainly because I've grown frustrated over the months because I've been feeling...
Like $25 an hour isn't enough for the type of work that I do, service technician for oil company.
That's because I got the job through an employment agency and a few dollars were deducted.
Also, I've been contemplating leaving because I'm no longer interested in doing this type of work and not getting the money I would like to make.
Unfortunately, my options elsewhere are limited because I do not have a post-secondary education.
I'm from Alberta.
Any thoughts will help.
So, appreciate the trust and I will do my best and I'm sorry it took me a couple of days.
Alright. So there are really two issues here.
The first is whether you want to do the job or not and the second is you want to make more money.
So my suggestion would be make the case to make more money and if you make more money then you can use that to get whatever education that you want on the side or maybe the company even has an employee training program which is not uncommon.
So, the question is, can you get more money for the type of work that you have?
Now, the employment agency, if you've been working there for a year, an employment agency, again, I don't know the laws in Alberta and so on, but I did some temp work and also hired some temp workers when I was in I'm a manager here in Ontario, but the employment agency is not supposed to be a tax for the rest of your career, right? So they place you and then at some point you're allowed to be hired separately.
So I would look into that. Maybe it's three months, six months, could be a year, but there should be the option to transfer your contract without having to pay the employment agency.
So I would check on that.
And see what the rules are behind that.
Now, when it comes to making a case for more money, so I'll just tell you sort of the high-level view of what your boss is.
I mean, if your boss is sensible, in my view, then this is what they're looking for.
So when I was a manager at a company, the employees, I had about 25, maybe 30 people working for me.
And they sort of came together to me in a group one day and they said, we feel underpaid.
We feel, I mean, he said, I'm talking to my friends.
People say, I'm talking to my friends in this industry and, you know, they are making more and so on.
So, and it's not like we asked a lot from them in terms of workers and so they wanted more money.
So, I had to build this case and bring it to the board.
And so what I did was I paid for a salary survey which says, you know, people with this amount of experience in this field are generally making this amount of money in this location, in this area or whatever.
And yes, I found out that they were in fact underpaid relative to industry standards.
So saying that people are underpaid is one part of it.
And then, of course, you have to talk about the costs of retraining.
Now, the costs of, let's say, somebody who's making $75,000 a year leaves.
And, you know, it's a complex code base.
It was millions of lines of code.
It's a complex code base.
Understanding the business, understanding the code base, understanding the customer needs, understanding the entire environment is a long time.
So generally, I would give people...
Three months, maybe a little bit more, to figure out if they were good at the job.
Because, you know, somebody walks in, they're just not going to know what the heck is going on.
So the costs of replacing someone who quits is quite expensive.
And of course, some of the people you hire might not work out at all.
They might make mistakes. They might mess things up for other people.
They might be lazy and so on.
In fact, I remember hearing a story from one hiring manager that he hired a guy who sent very inappropriate memes around the business and he was concerned about legal stuff, right?
So it's really dicey to hire new people.
So, a bird in the hand is worth two in the bush.
So, I did some, you know, back-of-the-napkin calculations, and I said that the cost of replacing someone is...
And, of course, it's the time to review, the time to interview, the time to whatever it is, right?
And, of course, you might interview someone and then want them, but they've taken another job, or they may want more money than you could possibly pay them, or whatever.
It could be any number of things. So, the cost of replacing someone...
I sort of worked out was 9 to 12 months of a person's salary, all told.
And that includes training them to get used to the codebase.
So I said, look, if somebody feels, somebody's making 75k a year, feels underpaid, and they are underpaid, by about 10k a year, then if you pay them more, It takes 8 years to be profitable from hiring someone else, even if someone else works out as well as this person.
right? Because if it's, if they want 10 grand more a year but it costs 75 grand to replace them,
then if they quit and you get someone just as good as they are and that those people stay even
while being underpaid, which is not too likely, computer programmers tend to be pretty good at
math, then it's going to take you at least eight years to make a profit and the grand total that
your make is five thousand dollar profit after eight years.
Like so it just makes sense to pay them more. And so I put an entire presentation, a
spreadsheet together and presented it to the And because I had done my research and I had the facts and I was advocating, see I wasn't advocating for my employees, I was advocating for what was best for the company as a whole.
And, you know, heaven forbid, you know, I said, and if a lot of people quit at once, you're doomed.
Like, your company will not survive.
Because if one person quits, and people do, they cycle in and out, right?
So if one person quits, then at least there is everyone else around to train them on the code base and how to test or whatever it is that they're doing.
But if a bunch of people quit all at once, you're hiring people to come into a codebase that has minimal documentation and it's no good.
I mean, I remember coming into a COBOL codebase when I was a programmer, which was hundreds of thousands of lines of code.
I was supposed to sort of alter and upgrade and it was like, that's a big deal.
That's a big, challenging deal.
So, if you can make a strong enough case, then people will accept reason.
Again, hopefully, I mean, if they're not the kind of people who will accept reason, then maybe you don't want to be working there at all, because they just, they don't, the company will fail, right?
Companies fail unless they're, you know, heavily plugged into the government.
Companies fail if they don't listen to reason, so...
So, if you say, 25 bucks an hour isn't enough for the type of work that I do.
Okay, so then what you want to do, and you don't have to pay for this.
I mean, you can if you want, but if it's going to give you additional viability.
But you're going to go sit down with your boss, and you're going to say to your boss, I'm not making enough, right?
So first of all, I'm getting dinged by the placement agency, right?
The employment agency. I'm getting dinged for that.
So I don't want to be dinged for that anymore.
I've been working for you for a year.
So you've got to find some way to get me out of that, right?
At least I'd like to find. And maybe you can find out what the facts are and say, oh, all you have to do is put a request in or transfer me to some other payment scheme and so on.
But it's been a year, so I'm not going to pay this sort of tax for the rest of my life.
So here's the way out of that, or you should find a way out of that.
So that would be one thing. The other thing is that you can do a search for all the people who make the kind of money doing what you do with the amount of experience you have and the location you are and so on and find out how much they're making.
Now let's say that they're making on average $35 an hour.
So then you say, look, it seems like we have a conflict, but we don't.
There's this traditional conflict.
The worker wants more money and the boss wants to pay them less.
And I said, look, I'm not here to win at your expense.
I'm not here to win at your expense.
I'm here for us both to win.
So you're going in as, you know, like when I went to the board to get pay raises for like 30 people.
And they were fairly significant pay raises, by the way.
So, when I went in to get pay raises for 30 people, I wasn't like, well, you guys have to give up money in order to pay these programmers more.
Because that's a win-lose.
My argument was, you're going to lose money when people leave.
I'm here to save you that money that you're going to lose.
I'm here to have you and the programmers win.
Right? It's a win-win. So, you going into your boss to help him.
So, let's say that you get really mad.
Let's say people make $35 an hour in your field.
You go in and you're really mad.
And you're just like, you guys are ripping me off.
I'm making barely anything.
And I quit. Right? Right?
And then your boss is really upset.
Because you didn't give him the choice.
You didn't give him the choice.
If you have some girlfriend and there's some person, maybe you crack your knuckles or something gross like that.
So you have some personal habit that's driving her crazy.
And then she says, she bites her tongue for...
Three months and then says, I'm leaving.
I'm breaking up with you. I can't stand this knuckle cracking, right?
Well, then do you say, gee, I wish you'd told me about the knuckle cracking.
I would have stopped. Like, I didn't know it bothered you.
Like, she didn't give you a chance to win.
If she'd have said, look, I love you, but I can't stand this knuckle.
It's driving me nuts. And is there any way, right?
Then you'd be like, hey, I'd rather give up knuckle cracking than you, so thank you for giving me the choice.
Thank you for giving me the option. But if you just sort of bottle it up and then you just get, yeah, you quit, you take this job and shove it stuff, then, you know, that's not very helpful to your boss at all.
I would much, I always preferred when employees came to me unhappy than when they just quit.
Because, you know, if they were really valuable, I'd try and talk them out of quitting and offer them this, that, or the other.
But usually when you've made your mind up to quit, you've already got some other job offer lined up or you're moving or some big thing.
So it's tougher to get you back.
And then even if you're back, you may not be particularly loyal because when you just say, I'm quitting to your boss without giving the option to make a counteroffer, you already have a negative interaction and it's hard to sort of recover from that.
So you go to your boss and you say, look, I want to help you because, look, You want to make more money.
I want to make more money. And I've figured out a way we can both do that.
So, like, I'm not... I've looked at the average salary.
It's $35 an hour. I'm making $25 an hour.
And also, you know, the cost...
You can look this up, too. Like, the cost of replacing somebody in my field is like six months' salary, right?
So, $25 an hour.
What are you making about... $50,000 gross a year and so six months is $25,000, right?
So $25,000 is going to cost $25,000 to replace me.
Now, maybe they'd say, well, we go to some agency and they're going to do all of that.
And it's like, well, yeah, but if you go to some agency, you're just stuck with somebody being underpaid again because the agency is taking their cut.
But let's say we take that down to $15,000, right?
Let's say we take that down to $15,000.
It costs $15,000 to replace me, right?
Okay, so if we divide $15,000 by $10 an hour, you're getting me for, you know, it's going to cost you 1,500 hours of increased salary for me to replace me, right?
It's sort of best case scenario, right?
So let's say divide that by a 40-hour workweek.
So it's going to cost you 37 and a half weeks to In other words, that's going to cost you 37 and a half weeks to replace me.
Now that's a lot of time, right?
That is a lot of time.
And you want to save him that time.
So basically what I'm saying is that if you replace me, it'll take you 37 and a half weeks just to break even, right?
And that's like, what, two-thirds or three-quarters of a year.
So it's going to take you like seven, eight months just to break even to replace me.
And then that person is going to be underpaid because you're replacing me at 25 bucks an hour.
Now, if I quit and you replace me at 35 bucks an hour, you've saved nothing, but it's going to cost you time and energy to hire and train.
So you get to lose that 10, 15K, whatever, right?
You lose the 15K no matter what.
So I'm here to help you with that.
So, you know, increase my salary and you won't have to spend money to replace me and maybe get someone who, I don't know, does mushrooms on the side or, you know, steals or, you know, it could be some negative thing.
So I've got half my foot out the door and I wouldn't want to be unfair to you and say, well, you know, I'm gone, right?
So you're losing your investment in me no matter what.
If nothing changes, you're going to lose your investment in me.
I want to help you save that money, so pay me the extra $10 an hour.
I'll stay. You don't have to spend time hiring and checking and training and improving and waiting for somebody to become good at the job because I know I'm really good at the job.
I'm here to save you the money that you're going to lose if I go.
You can understand that if I'm being paid $10 less an hour plus the The employment agency is taking their cut.
I mean, you'd be unhappy in my position, right?
And if I were in your position, I would be unhappy if somebody just happened to quit without giving me a chance to sort things out and make it work.
Give him that, you know, give him the respect of being helpful to him and helping save the company money.
So you're not there, you know, pounding the desk saying, you know, you cheap bastards, you owe me more, because that's a win-lose and that's antagonistic.
And the whole purpose of the free market is that it's win-win, right?
So, yeah, just saying to him, you know, you're going to lose 15K if I walk out the door.
I'm here to help you save that.
And, I mean, you're going to have to pay people more anyway, right?
And, you know, also you don't want someone in the job who's just going to be a drone and not think of his own interests because that's not going to be somebody who's going to be able to solve any problems.
Like, anybody who can't figure out they're being underpaid isn't going to be able to solve any problems on the job.
So, like, I know my own value.
Now, if you can get the extra money...
Then maybe that's okay for a while and you can get the training that you want.
Whether it's post-secondary or not, I don't know.
But I think going in with that approach, that's going to be fantastic.
Now, your boss might be a total dunderhead, right?
And say, you know, this is just an elegant shakedown.
You just want ten bucks more and you're greedy and so on.
In which case, okay, so you're never going to get any more money out of the guy.
Even if you make a perfectly good and rational and sound business case, you're never going to squeeze another dime out of the guy.
He's like some Ebenezer Scrooge pre-Ghost of...
Christmas is past, present, and future.
So then you know that you're never going to get another dime out of the guy and you can make your decisions accordingly.
If he's that kind of guy or she's that kind of woman, probably a guy, right?
Oil. So if he's that kind of guy, then you can go and apply for other people.
Like go and apply for other companies.
Now you might want to do that ahead of time because that's a pretty good way to get a salary option, right?
I'm not a huge fan of that because I don't like people wasting hiring managers' time and they have no intention of changing the position.
But let's say somebody's going to offer you $35 an hour, right?
If somebody's going to offer you $35 an hour, like, oh, what's the job offer?
Oh, $35 an hour. Okay, well, they haven't wasted people's time.
You're just asking for the salary, right?
So let's say somebody is going to offer you $35 an hour.
Well, then you can go to your boss and say, look, I got pinged by someone who wants to offer me $35 an hour.
Obviously, if somebody offered you a lot of extra money, you'd be interested in that too.
But I want to give you the respect.
I like working here. I like you as a boss.
So I wanted to give you the option to match it.
And, you know, I've looked up.
This is not an outlandish offer.
You guys may be a little bit, you know.
And, you know, have sympathy, right?
So, you know, inflation does its thing, right?
So, you know, when your boss was doing your job, probably $25 an hour was equivalent to $40 an hour now.
And he just has a tough time adjusting to that because then it feels like you're overpaying somebody because inflation kind of creeps up.
So just say, you know, I mean, I'm losing money.
On the employment agency's cut and so I'm just not particularly happy and you know you can't really do a good job when you're happy and you know I've checked to see if I'm unhappy for some crazy reason like I'm unhappy because I'm not getting geisha driven foot rubs under the lunch table every day like okay that'd be a little crazy but I'm unhappy because I'm being underpaid relative to the industry and so on and that's not ideal So, yeah, I would go into that and listen to the performance review and if they've got things to criticize, then, you know, take that and, you know, I'll work on that and that's great.
And say, you know, you review me and I would also like to give some feedback about whether I'm happy on the job or not.
And, you know, like let's say the employment agency is taking three bucks an hour, so I'm making, you know, 22 an hour for a pretty...
Pretty skilled and labor-intensive job and the industry standard is like 30 or 35.
So I'd like to discuss some ways that we can close that gap, right?
Because I want you to be happy as a boss.
You as a boss, of course, want me to be happy as an employee and let's see if we can figure out a way to make that happen.
So you come in sort of passive and friendly and all of that and really try and frame it as a win-win.
Because when you get win-lose, then people's primal fight-or-flight stuff gets activated and they kind of lose their reason in a way.
But if you work on win-win, people can do some amazing stuff to help accommodate.
So I hope that helps.
Listen, I wish you the very best of luck.
If you'd like to talk further, you can just email me, call in at freedomain.com as always.
And best of luck with it, man.
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