Sorry, but you are being exploited.
You walk into your boss’s office. She waits for you at her desk, typing something on her computer as you come in. You sit down. You wait. She looks you in the eye, and you work up the nerve to make a simple request: I’d like a raise. She says no.
You’ve worked so hard for this moment. You’ve consistently been a top performer in your organization, kicking ass and taking names. You always meet deadlines and never miss meetings. You stay late. You attend company gatherings after work to socialize and make the right connections. You take the lead on projects. You accept extra responsibility. You even clean dishes in the break room.
So, what the hell? Why aren’t you being rewarded for all your effort? Isn’t that supposed to be how this works?
Here’s the simple truth: your compensation and position at work has almost nothing to do with you. It is not about how hard you work, how much time you put in every day, or even how overqualified you may be for the job. That’s cultural mythology, straight up, and if you actually believe it, you probably haven’t been in the position described above yet. There are a lot of reasons for this pervasive narrative that affects most of us (at least subconsciously), but they all essentially boil down to two points: a misunderstanding about how employee value is calculated, and a new, related understanding about how if you’re not a shareholder, you are probably getting screwed.
We need to have a chat about the difference between how the average worker thinks of his or her value, and how his or her employer does. The average worker (say, you) thinks of their resume: what degree they hold, how many years of relevant experience they have, and whether or not they carry any extra-impressive credentials that indicate just how valuable they really are. This background is thought to be an apt summary of who you are as a worker and employee, and therefore qualify you for positions and pay grades that you have earned through the accumulation of these selling points in your favor. And it’s true that — within an HR hiring process — these things matter. They do determine factors like base compensation, whether or not you will be offered the opportunity to purchase stock options, or even what companies you’ll be able to work for in the first place.
It must be disappointing to learn, then, that at the end of the day you are seen as a commodity. You are an individual cost center, a line item in the budget. Sorry. Sucks.
From the side of your business, the equation is much more simple than what your resume may try to argue. You are paid a wage. In exchange for that wage, you are expected to produce whatever work they are paying you for. That’s the deal: you get money, they get whatever you’re creating for that money, and they get to keep it and do what they want with it. Seems simple enough, right?
There is one simple fact that makes this trade-off more sinister than it initially appears: businesses are intentionally designed to maximize profit. Think about that for a second. If it doesn’t strike you as meaningful, it should.
Profit is, put simply, the difference between what a company pays out and what it gets back. Costs and revenue. You’ve probably heard about this in a basic economics or finance class at some point in your life. It’s a pretty straightforward concept: in order to make profit (in essence, to create money from money), a corporation needs to take in more than it puts out. That extra money it makes on top of its costs is its profit. Got it? Good. If not, read that sentence again until it makes sense. Draw a chart if you want. I hear tables are pretty useful for this sort of thing. I’ll wait. It’s fine.
How does this have anything to do with your work? Glad you asked! When your employer pays out your salary (or your hourly wage), you are part of that equation. Just in case you’re still not clear (did you draw a chart like I told you to, slacker?), your salary is a cost to your employer. It goes in the “negative” column. It’s part of the going-out of capital, for them. This means that in return for having paid you, your employer now has to make more back than it pays you.
In other words, your value must be higher than what they are paying you at all times. If it isn’t, you become an unwise investment and likely no longer have a job at all. The whole goal is profit, remember? Most organizations that ignore the cost/return ratio don’t last very long.
This is why when you work for someone and ask for a raise, or a promotion, you almost certainly won’t receive it. If you will do the work at your position for the pay that you are doing it currently, your employer has every incentive not to give you a raise; this would reduce his profit margins and make the difference between your pay and the actual, greater value you provide smaller.
In short, you don’t have a chance in hell of getting what you want. If you do get it, it’s almost certainly for another reason (are you best friends with the CEO, perchance..?).
Quick question: does this strike you as an injustice, that your employer can pay you one, lower price for your work, and take a higher price on the market for that exact same work you did on their behalf?
Consider this from another perspective, for a moment. One day’s work may essentially be divided into two parts; in the first part, you are earning the wage your employer pays you. That should be a relatively equal exchange. In the second part, however, you are producing value that they are not paying you for, because they pocket the profits made from that value.
For the more mathematically inclined: if profit equals revenue minus costs, your employer could not make any profit if you weren’t producing what amounts to additional revenue past what they are paying you.
So, if you are being paid $50,000 salary, but your work brings in $60,000 annually, your employer is pocketing the extra $10,000 that you were responsible for creating.
Isn’t your paycheck supposed to be equal to the value you provide your company? Isn’t that the way this works?
If you don’t understand it already, you are a commodity. So too is everyone you work with (most likely). As an essential prerequisite to you having the job you have, you must provide more value than you are paid for. Your employer has an intense interest in keeping it this way, because if they don’t, they don’t make any profit. That is the way capitalism works. Sorry. It’s true.
There are, in general, two classes of people: people who work in exchange for a wage (traditionally called “labor”) and people who use money to make more money. Today, these are shareholders in our corporations; they buy shares of stock in a company with cash, which entitles them to any returns on the value of that share. As a company profits, the value of those shares goes up. The shareholder receives that value whether or not he or she directly contributed to producing it. Spoiler alert: they usually don’t.
If you work for a living, you are being exploited. That’s the way it is. That’s the world we live in.
If I were you, I wouldn’t ask for that raise.