The Biggest Misconception

About salary increases

The biggest misconception you will make as economically literate employee is that you will be compensated for the value you provide to the company.

This is completely false. Sure, it is very unlikely that you will be paid MORE than the value you bring.

But the reality is you will be paid according to your replacement cost.

Don’t believe me? Ask yourself, if your $30K car needs a new tire in order to operate, will you pay $30K for it?

You may if you had no alternatives. But because you do have alternatives, you will contract the most affordable service provider who can deliver reasonable quality.

This is exactly what your employer does with job listings. All large companies will use labor market surveys to determine what it should cost in a given market to pay someone with X years and Y qualifications to do a job.

The problem is that if and when you do a great job, it doesn’t meaningfully change what an employer thinks they should pay someone in your market to get someone with X years of experience and Y qualifications to do your job.

There are 2 ways to get paid more money as an employee: