Are you underpaid or overpaid?

When things don't go as expected and failures keep piling on, most people will justify their poor state by being philosophical. It's an easy way out.

- Thyagarajan Delli

What are you worth? Are you receiving more salary than you should be receiving or do you feel that you are being underpaid?

Even if you are content with the job, sometimes you get that nagging feeling that you are not being paid what you deserve. Though money is not the primary satisfier (as proven by research), it is an important factor that motivates you to do your job. After all, it is for money you work in the first place. So, how do you find if you are being underpaid or overpaid? Let the market decide it for you.

Before, we dwell into the details, here’s a short economic lesson. Just as any commodity, the cost of labor is decided by the equilibrium between supply and demand. Go through this article, to get an understanding of the basics. While the wages are decided by market, it does not mean that you are getting the right pay you deserve. Almost always, the markets are never in a equilibrium due information asymmetry between employers, employees and the job market.

Start applying for jobs that matches your current profile in the market. Even though you are not bullish on a new job, try to go the distance where a company makes you an offer. While a single sample is not a good point of reference, you’ll get an idea of how much the market is ready to pay for you. Try to repeat this procedure once every two years to find out where you stand in the market. While it will make the HR managers cringe at the above idea, it will help you figure out your own worth.

If you find yourself to be underpaid, you are in an relatively favorable position as it is mostly uphill from here. You can either negotiate with your current employer on paying you more or look for a new job. Note that if a new company is ready to pay you higher, you should always make a correction by subtracting around 7-8% from the final offer since the new company would obviously try to get you on board by offering you more than what they think is your market rate.

If you are overpaid, it gets tricky, especially when you have a bad job. If you are working for great company with good values, amazing work culture and excellent brand value, then there is no sense in making a move unless you are not satisfied with the job or you want to switch to a different industry. The market will find you to be pricey and will not be ready to pay you as high as you currently get. So, a move to a new company or an industry will come with the inevitable cut in your pay. If you are not ready to accept this reality, you’ll end up being stuck in your old job with little or no progress.

To get things straight, the above points are purely from an economical point of view. Obviously, there are many more factors to a job than just money and they will play a bigger role in your decision making process. But, if you really don’t care about what you do and money is the primary focus, testing waters by throwing yourselves in the market is not a bad option. Even if love your current job, trying out a new one in the market may be fruitful because you may end up with a dream job.

P.S: If you are wondering, what’s that quote doing at the start of this post… well, I always wanted to start a post with a quote and what better way that to have one of my own :)