Salary Inequality
I communicate with a young friend on topics of interest to both of us. The Society of Actuaries is trying to rebrand itself, and part of that effort was a revision of its trademark symbol. The group sent out a notice to members about this change.
The reason they feel the need to rebrand is that actuarial work is being shifted to non-actuaries in many situations. I could get into extensive detail, but that isn’t important.
My friend and I were messaging about this change and, like any conversation, the topic evolved over the discussion. Soon, it was how the actuarial pay rate was less than the salespeople's pay rate, as if that, in and of itself, was wrong.
That got me thinking, how does one determine a fair salary and, just as important, who determines what it is? Several mechanisms could be used to determine the salary. One is a pure equal salary approach, a utopian society, so to speak. Everyone gets paid the same regardless of whether you dig ditches or are the CEO of the largest corporation in the world. The problem with this approach is that some jobs require a lot from a person in preparation, talent and effort that not everyone can or wants to do. My friend was complaining about salespeople's pay, but good, successful salespeople work long hours to build a clientele to help them and the company succeed. As an introvert, spending long hours developing relationships with so many people is not a job I’d want to pursue.
Another way to determine people’s compensation is based on some established criteria. Teachers, for the most part, are compensated this way. Thirty years ago, and I don’t think it has changed, my salary was based on education and years of experience. It actually was presented to me in a chart that applied to all teachers. The downside, in my opinion, is that the excellent teacher and the horrible teacher are paid the same if they have the same education and years of experience.
Another way to determine pay is the market-based approach. This is the way most people have their salary determined. The market, meaning the collective decisions made by all companies and individuals in that job, determines what the market rate is for a particular job. So, the brain surgeon, due to the extensive education and experience required, demands a higher rate of pay than the cafeteria worker in the hospital. Since I was a trained professional with an advanced education, I appreciated this pay determination method.
But, what all these concepts really entail is envy. My young friend envied what someone else was paid and thought it wasn’t fair that he wasn’t paid more. We use that term “fair” as a smoke screen when we envy something or want punishment for someone else.
“We want you to know, brothers, about the grace of God that has been given among the churches of Macedonia, for in a severe test of affliction, their abundance of joy and their extreme poverty have overflowed in a wealth of generosity on their part. For they gave according to their means, as I can testify, and beyond their means, of their own accord, begging us earnestly for the favor of taking part in the relief of the saints—and this, not as we expected, but they gave themselves first to the Lord and then by the will of God to us. Accordingly, we urged Titus that as he had started, so he should complete among you this act of grace. But as you excel in everything—in faith, in speech, in knowledge, in all earnestness, and in our love for you—see that you excel in this act of grace also. I say this not as a command, but to prove by the earnestness of others that your love also is genuine. For you know the grace of our Lord Jesus Christ, that though he was rich, yet for your sake he became poor, so that you by his poverty might become rich. And in this matter I give my judgment: this benefits you, who a year ago started not only to do this work but also to desire to do it. So now finish doing it as well, so that your readiness in desiring it may be matched by your completing it out of what you have. For if the readiness is there, it is acceptable according to what a person has, not according to what he does not have. For I do not mean that others should be eased and you burdened, but that as a matter of fairness, your abundance at the present time should supply their need, so that their abundance may supply your need, that there may be fairness. As it is written, “Whoever gathered much had nothing left over, and whoever gathered little had no lack.”” - 2 Corinthians 8:1-15 ESV
The real problem (ok, my problem) is that I can focus on the unimportant things, such as pay, and not on the eternally important things. I’m still a work in progress.
