You spend 8 hours a day working for a company. Maybe you like your job, maybe you don’t. Either way, you spend most of your time there and you work hard so that you can get noticed by your superiors. You want to lock down that promotion or get that raise. Sometimes you think, “I put so much effort into this job, I feel like I should be earning more money than what I currently make.” This is a perfectly normal thing to think. In fact, only 19% of Americans think they earn enough money. So are you getting paid what you’re worth?
You Don't Get Paid Based On How Much Effort You Put In
If you have to question how much you should really be making, it probably means you’re not getting paid what you’re worth. But first, there’s something that we need to clarify:
You don’t get paid based on how much effort you put in.
This is especially true for business owners. But whether you own a business or work a 9-5 job, you do NOT get paid based on how hard you work. It’s a common misconception that causes many people to spend hours and hours working on projects that make them minuscule gains.
It’s a matter of inputs and outputs. How so?
An author can spend 10 months on a nonfiction book, doing tons of research, interviews, and editing (the input). Upon release, he only sells 50 copies within the first several months (the output). Why? He didn’t do market research before he started: Nobody was looking for the information that he was writing about.
That’s 10 months of hard work for virtually no gains. Sure he was following his passion, but now he has no money.
He did not get paid based on the amount of work he put in.
If you’ve ever heard the term “work smarter, not harder,” this is what that phrase is referring to.
So what determines how much you get paid?
The amount of money you make is based on how much VALUE you provide to people.
This is very different from how much effort you put in. For example, if that author had worked smarter, he would’ve identified what problems people were having, then written his book around the solution to that problem.
The amount of time he put into it at that point would be a non-factor; If his book solved the audience’s problems, he would sell more copies.
A Small Lesson In Economics
To further our understanding of this, we need to understand something about economics.
The average consumer buys stuff that brings value into their lives.
When you buy a shirt for $20 from company XYZ, you don’t think about the suppliers extracting the cotton, the facilities dying the cotton, the workers ensuring quality and safety in the factories, the truckers shipping the shirts to retail stores across the country, the store clerk taking stock, etc.
Yeah, a hell of a lot of work went into that particular shirt, and just to be sold to you for a measly $20. If they priced that shirt based off of how much work went into it, it might be worth closer to $100 or $200.
This pricing would work if they were the only shirt producer in your market, but since there are 50 other shirt producers, company XYZ can’t price it at $100, because someone else would just sell for $90, and someone else would sell for $50, etc. Consumers often prefer the cheaper alternative.
Since there are so many companies making shirts, it makes the overall value of company XYZ’s shirt lower, and therefore cheaper.
This is supply and demand.
How does all of this relate to how much you should be making?
Well just like supply and demand, the amount you get paid is based on how much specialized value you provide.
If anyone can do your job, you won’t get paid very much.
McDonald’s pays cheap because it doesn’t take any specialized skills or experience to start working there. There is an endless supply of people that are qualified to work at McDonald’s. (High supply of workers). So if you demand to get paid $20/hour, they’d be happy to fire you and hire someone that will work for $10/hour.
Doctors make a ton of money because it’s a highly specialized practice and takes years of grueling training and experience to become one (high barrier to entry), and the amount of value they provide is extremely high. There are far fewer people qualified to get hired as a doctor due to how difficult it is to become one, so there’s less of a supply of doctors. A smaller supply of a highly valued service equals high pay.
Leveraging Economics To Increase Your Pay
So you get paid based on how much value you provide, and how many others out there can do what you do within your market.
Think about your current position.
If you work at a company, how much value does your company provide to people? How much value do you personally bring to your company?
If you quit today, would they be scrambling trying to keep things together and offer you a pay increase, or would they replace you in an instant?
If you feel like you’re easily expendable, chances are you’re not satisfied with your job.
True satisfaction comes from feeling needed by your company or your clients. If you feel expendable, there’s good news for you: You can make a change in your life and find true satisfaction in your work. There is hope.
So to get paid more, you’ll want to find a way to increase your value. Think bigger than your current position. How can you become more valuable in your company? Focus on your strengths here.
Maybe you’ve already exceeded the amount of growth you can do where you’re at. In this case, it may be time to take a risk. You’re not doing yourself any favors by staying in a dead-end job that undervalues your true worth. You need to realize that your unhappiness isn’t due to not getting paid enough, it’s because you’ve stopped growing. You don’t see a career path ahead of you and you’re in a dead-end job.
Escape Your Dead-End Job
You’ve got everything you can get out of your current position. You can’t grow anymore, and you can’t move up anymore. It’s time to make a lateral move to escape your dead-end job.
Here are a couple of options for you that could help:
Focus on learning new skills or leveraging your existing skills that can provide value to people. Think about the folks out there that have a problem that requires special knowledge or resources to solve.
Option 1: Start a service-based business:
You can start small. Here’s an example of starting a service-based business: If you’re really good at math, there’s a ton of students around the world that struggle with math and would love to tap into that knowledge of yours (high demand, existing market).
You can tutor students online or in-person a few days a week after work as a side hustle. Sure, you’re making a few extra bucks, but that’s not the end goal. Maybe you get enough client-interest to quit your dead-end job so you can tutor full time.
Then as you grow, you can scale into an online business that offers full courses and lessons to students all over the world. You start to hire other tutors which further expands your reach.
It started off as a hobby that brought you joy, but you took the risk to quit your job and turned it into your primary source of income.
Now you’re happy, you feel needed, you have your own brand, and you’re making more money than what you ever could’ve made at your dead-end job.
Obviously this kind of thing doesn’t happen overnight, but you shouldn’t put it off. Identify what brings you joy, and start solving people’s problems for money. That’s all a business is.
Option 2: Switch Jobs/Career Pivot
If you’re not the type to start your own business, that’s okay. You still shouldn’t settle for a dead-end job. You want to be at a company that values you because you have so much to offer, and you want your voice to come through.
Using a similar strategy as Option 1, you’re going to have to invest time into learning a skill or knowledge that helps people, then turn that into a side-hustle.
Using the above example, after you’ve been tutoring kids in math for a while, maybe you love it and decide that teaching kids is your calling.
Find out what certifications/education goes into becoming a math teacher. Complete the necessary requirements, and get hired full-time.
You can add to your resume that you offered math tutoring services on your free time for X number of years. You can even use your clients or their parents as references.
Again, what started as a small side hustle turned into a career pivot. Something that brought you happiness, money, and fulfillment.
Either one of these options will take time and commitment outside of work, but if it is something you care about and enjoy doing, it won’t feel like work.
Circling back to my author analogy, you need to be SMART about this, and ensure that there is a market for your side hustle. Otherwise, it will almost never turn into a business or a career pivot.
The Bottom Line
This post contains a lot of information, but the bottom line is this:
1. The amount of money you make is dependent on how much value you provide. (More demand)
2. Specialized skills/knowledge pays more due to higher barriers to entry. (Less supply)
3. If you’re at a dead-end job, pay-increases aren’t going to bring you the satisfaction you need. Something else needs to change, and that change starts with you.
Now, I’m not saying that if you’re feeling undervalued you need to quit. The point is, putting in more work won’t necessarily increase your pay. You need to strategically plan out how you can increase the value you provide to move up vertically in your company.
Putting in smart, intentional work to increase your value will earn you more money and promotions.
If you realize your job is one big dead-end, you’re expendable, and you don’t have a voice, then it’s time to explore your lateral career moves. But don’t hesitate to start. Time is your most valuable asset, so use it wisely.
Let me know in the comments which approach you’ll take to change your professional life.
Get intentional about your efforts, increase your value, and put your happiness first.