Saturday, 29 June 2013

I want to be a garbage collector

The story that two garbage cleaners in New York were fined and forced to retire after being caught accepting a tip of $ 5 caught my eye.  Not for the reason you might think. This story would provoke hoots of laughter in my country where nothing happens in the public service without a gratuity.  Even in NY, this must be an incredulous story - every man and a dog demands tips shamelessly for just existing in the same space as you. But the real reason this story has prompted this post was buried somewhere in the middle.
The two garbage men apparently netted $100,000 each, including overtime. Granted that they had put in long years of service. Granted that they probably earned lots of overtime. But still a wage of $ 100,000 for a garbage collector shows everything that is wrong about the United States. No wonder they lose jobs by the droves to India and China. No wonder unemployment is a stubborn problem.
But this post is not to highlight the completely unrealistic pricing for labour in the US, as compared to the world. This post is instead about a global problem - automatic salary increases every year.
If you spend enough years on any job, even that of a garbage collector, you will reach levels of $ 100,000. If you start at $ 20,000 a year and get a 5% rise every year , you'll land up with a $100,000 salary in 33 years. That is presumably what happened to these two guys. Imagine the situation in India where anything less than a 10% raise a year leads to a strike. If you start at an annual salary of Rs 5 lakhs, an entry level salary for a qualified graduate,  and keep demanding 10% salary rises, by the time you retire after 35 years, your salary even staying in the same job, will be Rs 1.4 crores.
Now you see why there is age discrimination in employment and the older you are, the quicker you are fired. Now you see why there are large scale job losses.
Salary levels have to follow some form of a normal distribution over the years, if you stay on the same job.  You start low and as you gain more experience and you become more efficient, your salary should increase. It should probably reach a peak when you are say 40, and then begin a slow decline so that you can remain competitive with the younger folks who are trying to displace you. I know this sounds heretic, but I would rather take cuts in my salary than lose my job altogether. The trick is to price yourself, just a shade below the market rate (not go for the highest salary possible). If that involves annual salary decreases, then so be it.
Of course, you can, and should, upskill and move on to a higher value job. But if you stay in the same job, automatic salary increases every year is a one way ticket to losing the job.
So, how about negotiating a salary reduction, instead of a raise. At first read this might seem like an insane idea. But think about it .....
Its an altogether different matter as to why somebody who was earning $100,000 a year, asked and took a $5 gratuity !


RamMmm said...

Ha! You have a lively knack of picking nutty stories and then have a thought provoking view on that. The expectancy of ever increasing salary is more in the IT world, having seen it for quite some time. Once you get a higher salary, the expectation is to beat it with an even more higher one the succeeding years or when you jump ship. The companies also unjudiciously prop expectations and then cull when the going gets tough. Unfortunately in India, we have a view that the more "experienced" you are, the more salary you deserve.

Ramesh said...

@RamMmm - Yes, the IT world is a particularly vivid example, but such things have happened in the manufacturing industry as well. The death of textile mills, and virtually all manufacturing in Bombay, can be directly attributed to the same phenomenon - remember Datta Samant ?

Sriram Khé said...

Yep, I can never understand the idea of assuring a salary increase merely for staying put on the job. That, of course, is the norm in most public sector jobs all across the world. Given that education in countries like the US are dominated by public schools (not the British meaning of public school) we then find a system where teachers who are on the job for years on earn more than younger teachers, irrespective of how well one does the job.
It is a crazy system.

In the case of the garbage workers you refer to, well, again a public sector service it was. One can ask why the government needs to be involved in hauling trash ... surely, the private sector knows how to haul trash away ... but, of course, that is politics.

I tall ya: bankers blow away gazillion billions. the military sucks up gazillion billions. and, a million here and a million there, which soon adds up billions in various other government services that includes garbage collection. It is even a wonder then that the Johns and Janes working fifty hours a week are even able to feed themselves. It is one crazy world! :(

btw, I am surprised on reading that the IT world in India also has this years-of-service based compensation. Really? Even in the competitive IT world they can afford to have such schemes that are not meritorious work based rewards????

Ramesh said...

@sriram - Oh - this is not the preserve of the public sector only. The same annual increases happen in the private sector too. The only difference is that when you become a little too expensive, the private sector sacks you, while you simply cannot be sacked in the public sector.

The IT industry is still a young industry - nobody has as yet reached a geriatric age after starting there. And since its growing rapidly, there's enough room for everybody to be kicked upstairs and keep earning hefty raises. When the industry matures, all this will come home to roost.

Vishal said...

Very very interesting! the law of average holds good either ways. One is not going to get incremental salary over 30-35 years for sure. So a reduction or a pure lay-off, howsoever it has to come to parity over the lifespan.

Ramesh said...

@Vishal - Yes, its theoretical that somebody gets a raise every year for 35 years. But our mindset is like that. And I submit salary reductions are much more palatable than being fired and with no prospect of getting another job

Shachi said...

Hubs works for the govt and I work in private...I already see a phenomena on how he will retire with a very high base pay + pension/medical benefits and I'll ensure we stay married so I can tag along ;)....

In my experience so far, sooner or later, performance matters. I've seen regular cuts at Intel in the last 13+ yrs. Low performers struggle and don't get rewarded...these days, more shares are given than raises, and bonuses are tied to how you perform. Many years average raises have been 0%. I am not a manager and don't work in HR, but I've seen a fairly balanced system from my side of the world.

The Million Miler said...

Hmmm! interesting. Worked in the Public Sector in NZ. Role got 'disestablished' in a restructure. Opted to take a (fat)redundancy payout rather than relocate to Welly (remember Jafa??) Three months down the line the new business unit was such a mess that they called me back as a "contractor" for 9 months and my contracting hourly rate was twice the normal salary rate. Learned the fine art of being a contractor - no office politics, no backstabbing and ladders to nowhere to climb. Float in, get on with your work,be a daily wage (hourly wage!) office labourer and get out when the work is done. Seriously, it's pointless to work in the public sector in NZ as an employee (no annual increments, nothing). Ahh! the joys of contracting!

Deepa said...

And this is just salary we are talking about... people earned a pension for the years they were not going to do anything! Its a "cray cray" world. ("crazy crazy" in case you didn't follow, like me the first time I heard it, the intern in my office taught me) :D

Sriram Khé said...

Hey, Nancy, you did come back to make more comments ... you are "cray cray" ;)

But, Ramesh, aren't private companies also bound by laws against age-discrimination? Forget India--laws are there often only in the books. But, in W. Europe, N. America ....?

BTW, guess what? there is no mandatory retirement age for us faculty ... we can be on the job until we drop dead, or found to be slacking beyond tolerance limits, or misbehaving with students, ... I, with my straightjacket personality, could be "working" for a long, long time ... But, that also means that system saves money--I will delay collecting retirement and social security and whatever else remains after it is all plundered over the years in between ;)

Ramesh said...

@Shachi - Yes performance does matter and usually in private organisations you get the sack if your pay level becomes too high, even if you are a good performer. The worst example of public sector excess is in France where you can keep on getting pay increases and can never be sacked.

@Kiwi - Can I also come to Kiwiland :):):)

@Nancy, er Deepa - Oh the story of pensions is a huge issue by itself. Wherever pensions are contributory - that is both you and the employer contribute , then its OK - its just part of the wage in a different form - something like the PF in India. But where the pensions are based on the last salary - that's a complete ridiculous idiotic concept - especially as these are usually unfunded. This nonsense now usually exists only in the public sector. The US Social security sceheme is a variant of this monster.

@sriram - Nancy is going to bash you.

Oh there are laws against age discrimination everywhere, but try getting a job when you are 50 anywhere in the world. Fat chance.

There are two forms of dinosaurs in the US of A. One is the 9 Supreme Court justices who have jobs for life. Ditto College Professors who have tenure. Both deserve a cometary impact !!

Deepa said...

@Ramesh- I was in fact referring to the pension based on last pay. I audit a bunch of such plans at work. Some of the formulas remind me of the differential calculus and somehow they lead you to a figure close to a million if your last pay was abt $100k. To me these look like the biggest ponzi schemes in the history of ponzi schemes.

@sriram- Did you notice he never misses the upper case in my name, be it Nancy, be it Deepa? I decided to cut him some slack for that.

- 'W'hatsinthename

Sriram Khé said...

@Whatsinthename (with the upper case W):
"that which we call a rose
by any other name would smell as sweet"

Ramesh, you know I just returned from T-Rex country, right? just sayin' ... :D

Ramesh said...

@Deepa - Totally true. Defined benefit schemes are the biggest of Poinzi schemes. Governments still run such schemes, and shamefully give in to strikes by Unions whenever they try to stop it.

@Sriram (note the capital) - Touche !

Vincy said...

Ramesh, you sound so much like an HR head when speak about Salary levels averaging after it peaks at a point. While I dont completely agree with all the policies that IT organisations come up with, ( my expertise or rather my mere expereince is only in IT) I find it ridiculous that people im IT quote atrocious figures as salary hikes when they jump organisations. and similarly many feel they are entitled for some minimum percentage hike regardless of what value creation has been done to the account / project / organisation. and i not referring to fast trackers who upskill / value-add in an extraordinary manner and contribute not just to the project but even for social causes and are omnipresent in the value chain of an org - these people need to get the best share of the hikes year after year if that is the case or why even a double promotion.

I have realised, over the years, Greed takes over common sense especially for us, homo-sapiens.

Ramesh said...

@Vincy - Perfectly summed up. Its all greed overtaking rationality. Few people pause to think that its actually a dumb idea to get an astronomical salary.

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