You can probably do a lot of personality-development, self assessment, and skills enhancement to save your job or get a promotion. However, that wouldn’t help a bit if the economy isn’t on your side.
Average Employee Overpaid
May be the experts talk about correction in economy or depreciation in the unemployment rate. But what happens when you take a closer look at the bottom of the hierarchy. You or the experts will realize that a correction is needed there. Excluding the bonus and perks, an average American employee is paid much higher than the people with same roles, responsibilities, and designation, than the rest of the world.
If the country wants to regain its momentum (logically, it definitely will), a cut down on employee compensation, perquisites, and benefits is inevitable.
For US and UK to balance its compensation level with other countries, it will have to cut down 20% of labor wages paid currently. It doesn’t really look necessary now. However, if it gets stuck at the current level, these countries are sure to witness a giant surge in the level of unemployment, higher than it was in 1930’s.
Raised Standard of Living?
The above mentioned situation is a dilemma that would definitely affect the economies in long run. However, it is, today, being misinterpreted as a steep raise in standard of living. People believe that they are earning more than last year (more than ever, to be precise) because they have developed their skills now and are really productive. This is an illusion.
The raised standard of living or more spending, more earning is due to a flaw in the compensation system. However, an equal contributor in creating this illusion is credit card as well. People buy a car and house by accumulating debts, but term their status are a raised standard of living. Also, a short term surge in returns seen due to temporary rise in stock price works similarly.
So, we, the US population, are living in an economy which is nothing but illusion. I can explain this situation in simple words: Since decades, no progress has taken place in certain segments of US population.
How did this happen?
The US has invested and is consistently investing through manpower and money into such things than is literally unproductive, into things that aren’t generating any returns. The government induced population to spend more than they have, eventually creating heaps of debt for every individual. Moreover, it kept funding projects that proved to be useless.
Ready for Pay Cuts?
I cant predict the exact month or year, but very soon, the swelled income that we enjoy today, will be slashed by the same government forcefully.
Ways to overcome this dilemma
Nothing can be changed overnight, especially something that’s been building since decades. A gradual way is to let the dollar’s value drop against various currencies.
Yes, there is a rapid way as well, but I am sure not many will support it. It is by slashing the excessive income and come down to the global level. Firstly, it’s a quite harsh method; people will start despising the government. Secondly, this step will lead to a major spiral deflation. Less income would not encourage spending and price would fall down considerably.
However, in long term, the gradual, former way seems to be practical. Depreciation in dollar’s value means a pay cut, if measured against global standards. But nothing has really changed for employees, as they continue to receive same number of dollars.
Nevertheless, it isn’t safe if handled inappropriately. While depreciating the dollar value, if some organization takes the second route, situation may get worse.
Meanwhile, the unemployment rate isn’t reducing much. Government is not doing much to generate jobs nor is it realizing the threats of overpaying employees. So, nobody can predict about the time when government awakens and takes major steps to improve the situations.
So, we can continue with some preparations that could possibly help us during tough times. Get back to personality development, self assessment, and skill enhancement and be ready for a pay cut.