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This is 100% the best way to keep your employees trapped. If you want to retain employees but your company sucks, paying them well above market will make it ver

This is 100% the best way to keep your employees trapped. If you want to retain employees but your company sucks, paying them well above market will make it very difficult for most of them to go elsewhere. It's easy to say "Well, they can just save the extra money and get MORE freedom!" but that's very rarely how things actually turn out in practice. It is important that potential employees realize this before accepting job offers with large salaries. That company is trying to trap you. You may choose to walk into that trap, but at least do so with your eyes open. The most despondent people I've met through the course of my career have told me that they're stuck at their company because no one else is willing to get near their salary.

madamelic 9y ago
Sounds like a bad case of lifestyle inflation.
- cookiecaper 9y ago
  Eh, sort of. How long are you supposed to only utilize half of your income, or half of your half? When is it no longer "lifestyle inflation" and instead "lifestyle baseline"? In theory, everyone would live at the average market salary (better yet, average individual income, on the bet that you'll always be of at least average commercial value) and save everything else to maximize their mobility, but almost no one actually does. The arbitrage between theory and practice is where most political tricks occur. Those resources have an expected value and a present value. At some point it is reasonable to decide to open it up a little bit more. Most people aren't going to max out their income overnight, but give them a couple years and they'll have moved to a nicer neighborhood, etc. Why? Because they could, and once you've filled some basic savings obligations, it can definitely be worth more to live somewhere better than to watch as a number you never intend to touch increments. That said, sure, most people lack the discipline to live at a market salary instead of the salary they get paid. That's why this is a great way to trap employees. You keep clean hands and all the blame can be shifted to the employee, even though it's understood that it's very unlikely that the employee will actually account for the fact that any other position will entail a 40% pay cut.

madamelic 9y ago

Sounds like a bad case of lifestyle inflation.

cookiecaper 9y ago
Eh, sort of. How long are you supposed to only utilize half of your income, or half of your half? When is it no longer "lifestyle inflation" and instead "lifestyle baseline"? In theory, everyone would live at the average market salary (better yet, average individual income, on the bet that you'll always be of at least average commercial value) and save everything else to maximize their mobility, but almost no one actually does. The arbitrage between theory and practice is where most political tricks occur. Those resources have an expected value and a present value. At some point it is reasonable to decide to open it up a little bit more. Most people aren't going to max out their income overnight, but give them a couple years and they'll have moved to a nicer neighborhood, etc. Why? Because they could, and once you've filled some basic savings obligations, it can definitely be worth more to live somewhere better than to watch as a number you never intend to touch increments. That said, sure, most people lack the discipline to live at a market salary instead of the salary they get paid. That's why this is a great way to trap employees. You keep clean hands and all the blame can be shifted to the employee, even though it's understood that it's very unlikely that the employee will actually account for the fact that any other position will entail a 40% pay cut.