What Should I Be Paid? - 5 Factors that Influence Your Income
Have you ever heard anyone say, "Find the lowest paying job?" Well, neither has any of the search engines. No one is trying to earn less in this world. That is why the phrase "highest paying job" is one of the most frequently searched sets of words. The good news is that the second highest set of search words is "what is the average pay for my job?" This means that those people are looking for what the going rate is. They're looking to validate “fairness” in what they are being paid. These aren’t just common search phrases. Ask anyone who owns a business or makes decisions about people’s pay if these are frequent conversations. The answer will be yes.
Our livelihoods, our purchasing power, and the ability to do things we want to do are based on our income. Job seekers should become familiar with the factors that go into an employer's decision-making process on how much they get paid. We must separate the emotional connection to pay and understand that a wage is an amount that someone is willing to pay for your time and skills. Nothing more, nothing less. You have the ability to negotiate, of course, based on your years of experience and expertise.
These are some of the factors that go into determining the market rate for wages:
1. The Law: Minimum Wage and Living Wage
The Federal Minimum Wage set the minimum legal wage a business can pay an employee. At the time of this writing, The federal minimum wage is just $7.25 and has not increased since 2009. It was introduced in 1938 with The Fair Labor Standards Act. The act was a result of protests of the treatment of laborers due to exploitation and discrimination. The Inflation and Consumer Index helps determines that number. Cities, States, and to a lesser extent, the Federal Government enacts laws to enforce minimum wages.
We do not currently have a federal law that sets a living wage, although there are cities that have begun to raise that wage due to the Fight for $15 movement. A living wage will be different based on the cost of living in the local area. For example, the cost of living in California would necessitate a higher living wage than say, Indiana. California has one of the highest costs of living in the U.S. Indiana, one of the lowest.
2. The Average: Base Pay
Base pay is the value a company will assign to a certain job. It is the value of your time, skills, and experience from the employer's perspective. This number is generally based on historical information in payroll systems, such as ADP and the BLS.
3. The Results: Performance Pay
This is pay changes based on how well or if you accomplish goals or objectives.
4. The Market: Demand Wage
This approach says that you will be paid more when the skills you have are in demand and paid less when the skills are in less demand. Or when the skills you have are in small supply and there is a lot of demand. If there are over 100,000 open postings for a certain type of job, your skills are in demand and there isn’t enough supply. Your earning potential raises. If you are an executive and there are 10 job posts for executive-level positions, and 100,000 applicants, you're not likely to earn as high a value on your skills because there is a vast supply of people who meet the criteria for the position.
5. The Approach: Equal Pay
Equal pay is a social conversation, it's not the law. The social conversation is saying pay should be reflective of skills and ability to do the work. That doesn’t mean blindly distributing pay in equal amounts to everyone. That means apply better pay practices so that you aren’t consciously or unconsciously causing differences in pay based on anything other than work.
The above list is what most employers consider when determining how much you get paid. As you can see there are a lot of factors and it's not easy. What you can do as a Talent is know ahead of time what is reasonable for your skills and your time and prepare yourself to negotiate when the job offer comes. Knowing these factors will make you well equipped with a reasonable number that makes you feel valued and the employer move the work forward.
Still asking yourself "What should I be paid?"
If the question "What should I be paid?" is one that comes frequently to your mind, then we might have the answer for you. Pepelwerk is a job-matching app that will help you find the right-paying job for you, based on your skills, abilities and interests. Create your Talent Profile today and benefit from all the advantages our app has to offer. Need more reasons to download the pepelwerk app? Well, we're happy to inform that we offer Career-coaching services to our members, to help them make the most out of any job opportunity.