A Tactical Guide to Elevating Your Worth
In the corporate world, navigating compensation is like traversing a minefield.
Despite legal safeguards and purported commitments to equality (more on that later), pay disparity remains a pervasive issue, casting a shadow over the promise of meritocracy.
Keep in mind, we are not talking about some utopian equity where everyone gets compensated regardless of their contributions.
For instance, it’s widely known the top 1% saw their wages soar by a staggering 171.7% since 1979, while at the same time, the bottom 90% experienced a mere 32.9% growth.
That’s not wage disparity or unfair pay. That’s partly, differential market rates for different skills, and partly, the expression of power.
Let us explain…
Understanding the Underlying Realities of Pay Disparity
It’s crucial to start with a clear understanding of pay disparity and a legal definition.
According to the Office of Federal Contract Compliance Programs (OFCCP), pay disparity refers to an unequal distribution of earnings for the same work, based on factors such as sex, race, or ethnicity.
Here, what’s crucial to understand is that pay disparity is only considered valid when the work performed are comparable.
Example of Pay Disparity
Imagine two individuals, one male and one female, who hold identical positions within the same company, possess the same level of experience and qualifications, and perform equally well. However, despite these similarities, the male employee consistently receives a higher salary than his female counterpart solely based on gender.
This would be considered pay disparity, because the two individuals are unfairly compensated due to factors unrelated to their job performance or contributions.
What is Not Pay Disparity
On the other hand, let’s consider a scenario where two individuals, one with extensive experience and expertise and the other with limited qualifications, hold different positions within a company. And let’s say one of the individuals earns five times more than the other (a more common occurrence than you may think)…
In this case, while the two individuals receive unequal compensation, the disparity in pay is not attributed to discriminatory practices but rather reflects the variations in skill levels and job requirements.
Legal Protections
There are considerable legal safeguards against real pay disparity in the workplace.
Equal Pay for Equal Work
The cornerstone of legal protection against wage discrimination is the Equal Pay Act of 1963. This legislation, an amendment to the Fair Labor Standards Act, specifically prohibits wage discrimination based on sex.
In summary, it demands: “men and women in the same workplace be given equal pay for equal work.”
State-Specific Regulations
Keep in mind that pay disparity isn’t always rooted in gender discrimination. Other factors, such as race or ethnicity, can also contribute to unfair compensation. The laws for such discrimination, however, is more nuanced…
Some states have taken proactive measures to address these issues. For example, in California, the California Equal Pay Act goes beyond federal law to provide stronger safeguards against pay disparity. This law prohibits employers from paying different wage rates to employees of different sexes, races, or ethnicity for substantially similar work.
Inequality is Not Unfair Pay
As we mentioned above, it’s essential to distinguish between genuine unfair pay practices and general inequality in wages. While pay disparity often grabs headlines, and inequalities of all types get conflated into moral issues; not all inequality stems from discriminatory practices.
When you get to the bottom of it, many disparities can actually be attributed to differences in skill levels as well as the demand dynamics of the modern economy.
Why People Really Earn At Different Rates
According to a study titled “Explaining the Growing Inequality in Wages across Skill Levels”, technological progress and increased capital investment have been the primary reason why wage disparities between low-skill and high-skill workers have grown so much.
In other words, it’s not just that different skills are valued differently in the marketplace, such as digging ditches being worth $15/hour and writing code being worth $50/hour. It’s also that technology and investment have created many more opportunities for coders, while taking away opportunities from ditch diggers. (Gross simplification, but you get the point…)
In short: this study underscores the profound impact of technological advancements and direction of capital investment on compensation.
OK. So, inequality of pay may not be disparity, and it may be justified through macro-economic trends. But when you’re getting paid less than your peers, none of that really matters…
What then? What should a professional who is unhappy with their compensation do?
Actionable Steps for Individuals
To thrive in a competitive job market where the growing chasm between the low-paid and highly compensated is at an all time high, you need to be proactive…
You need to take action, period. That’s the harsh truth.
At a most basic level, since high-skills are a driver toward high pay, you must take proactive steps toward further skill development:
- Invest in Continuous Learning: Stay in the loop with what’s happening in your industry and the latest tech developments. Gone are the days when a college degree could sustain you throughout your career. You need to up-skill every few years.
- Focus on Skill Development: Take a good, hard look at your current skill set and where you want to go. Figure out which skills will get you there, whether it’s through online courses, certifications, or hands-on experience. Prioritize the skills that are not only in demand now but set you up for future job prospects.
- Seek Mentorship and Guidance: Don’t navigate the career jungle alone – surround yourself with mentors and advisors who’ve been there, done that. Their insights can be invaluable in helping you navigate the complexities of the job market and develop effective career strategies.
Of course, skill development is only the basic starting point..
Going Beyond Skills: Taking Control of Your Worth
In today’s job market, it’s easy to feel like just another commodity, valued solely for the skills listed on your resume. But here’s the truth: commodities are cheap, and you don’t want to be one.
Understanding the Value Hierarchy
In the world of marketing, there’s a four-tier system: commodity, product, service, and experience. At the bottom of the ladder, commodities are interchangeable goods with little differentiation. But as you climb higher, the value increases exponentially.
For example, when you start selling products, you could take a $0.50 worth of coffee beans, put it in a shiny package, and sell if for $5.99. When you sell services, you can deliver that coffee to someone’s doorstep for $25 per package. And when you sell experiences, you can create a trendy coffee shop with hipster staff, and charge $15 per cup – (a package of coffee usually yields 17-24 cups of coffee).
Experiences can open up exorbitant prices. For instance, when you start selling experiences, you can get away with charging $300,000 for a weekend helicopter ride (hint: you could rent the chopper and the pilot for the whole weekend for almost 1/10th the price).
The same psychological dynamics are also at play in the corporate game…
Remember: the job of a corporation is to maximize profits while minimizing expenses. In order to do this, corporations do everything they can to make individuals replaceable and commodified. And in response, top professionals, turn their work into “experiences”.
It’s a tug of war… The organization you work for aims to commodify you. In response, you need to elevate your value.
Elevating Your Value
The key to maximizing your worth lies in transcending the commodity trap.
Instead of allowing yourself to be reduced to a mere set of skills, you need to learn how to break out of the boxes they try to put you in.
Start by identifying ways to position yourself as more than just a set of skills. Focus on building personal brand, cultivating relationships, and showcasing your unique strengths and qualities. A little digging in our articles will give you all the basic strategies you need…
That being said, ultimately, you need to learn how to create a Career Narrative that not only differentiates you, but also permanently protects you from commodification.
Remember: Professionals are paid a lot more for who they are than what they do. If you are reduced to “what you do”, you have very little leverage. No real options.
Taking Action: What to Do Next
Suspect Pay Disparity? Empower Yourself
If you suspect pay disparity in your workplace, it’s crucial to take proactive steps to address the issue. Here are some key considerations:
Seek Legal Advice
Consult with legal professionals who specialize in employment law to understand your rights and options regarding pay disparity. They can provide valuable guidance on the legal avenues available to you. (This is not legal advice.)
Evaluate Your Options
Consider the potential consequences of taking action against your employer for pay disparity. Assess the costs, both financial and emotional, of pursuing legal action or seeking a new job.
(Pro Tip: We teach our students a probability weighted cost/benefits matrix to make these types of career decisions. You could learn more about it in our events.)
Maintain Professional Relationships
While addressing pay disparity, or any legal dispute for that matter, it’s essential to maintain professionalism and open communication with your employer.
You must be diplomatic, even when you don’t feel like it. Express your concerns after building leverage and protecting yourself. Then, seek resolution through constructive dialogue. Building and preserving positive relationships can be valuable for your career advancement in the long term.
No Pay Disparity, But You Want More?
Even if there is no pay disparity, if you aspire for higher pay, it’s crucial to be strategic about it. Don’t just barge in there…
Know Your Value: The Power of Knowledge
Don’t underestimate the importance of knowing your true value in the marketplace. Arm yourself with knowledge by conducting thorough research on the market rates for your position and expertise level.
Ask For More If You Are Underpaid
If you find yourself being underpaid for your contributions, it’s crucial that you ask for proper compensation.
Keep in mind, underpayment does not need to be caused by pay disparity, or any other malicious reason. It can be a side effect of your timing – if you got hired during a period where it was an “employer’s market”, you could be locked into lower wages.
Whatever the reason may be, even if you simply feel underpaid without any material justification, refer to our comprehensive guide on how to ask for a raise when you’re underpaid.
Explore More: How to Ask for a Raise When You Are Underpaid
Maximizing Your Earning Potential: Understanding the Salary Game
Of course, you don’t even need to feel underpaid to ask for more. There’s always room for more…
You could always be paid more…
And you probably should be paid more (See Capital in the Twenty-First Century by Harvard University Press for a full explanation of why).
However, to succeed in negotiating for more pay, you must first understand how the salary game is played.
Learn More: How to Increase Your Salary
Conclusion
Bottom line: take charge, know your value, and demand what you’re worth.
If you are unfairly disparaged, you have the law on your side.
If you are underpaid, you have options.
If you are paid well, you have even more options.
Remember: your company’s job is not to look after you. That’s your job.
That’s your primary job.
Understand this, and doors will open. Ignore it, and at the very least, you’ll leave a lot of money on the table.