Why do we get paid?
Well, we have to do something.
True. Some work must be done in order to get paid.
Yes, but someone could win a lottery too.
Or receive a gift, inherit a fortune perhaps. That’s not quite the same as getting paid though. It’s receiving money by chance, not compensation. So, let’s leave aside lotteries, gifts and inheritances.
Well then there it is. We do something, and for that we get paid.
Not quite. I could dig a hole in the middle of nowhere, and I wouldn’t be paid. A lot of effort goes uncompensated.
That’s because it’s useless work. The work has to be useful.
Good point. The work must have utility. While utility is necessary, as it turns out, even that isn’t sufficient for getting paid. Many volunteers and interns are unpaid. Sometimes, people devote their time for free to causes that they care about. Other times, people work for free hoping that they will gain work experience, build a good reputation etc. so that they can then find work that pays. And all the while, they are working and doing something useful, but not getting paid.
Then what is it? Work experience? A good resume? Trust of others? A brand people recognize?
It’s simple. In order to be paid, there must be someone on the other side who is paying.
So, you have to do work that helps someone else.
Yes. When we say, “useful work”, it is someone else, effectively a customer or employer of our service, who gets to decide whether the work is worth paying for. For work to be compensated, the payer should both have the means to pay, and the willingness to pay. Payers can be people, businesses, organizations with a budget, governments etc. but they cannot be abstract entities like humanity or society.
But shouldn’t we serve humanity?
Of course we should. A giving nature, a willingness to serve, these are qualities that enrich our lives and the lives of those around us. They also lead to long-term gains in our profession. But one should not expect direct compensation from abstract entities which don’t have a budget, or for serving those who lack either the means or the willingness to pay for our work. It is vital to understand this.
Okay, so we get paid for doing work that is useful to someone else who has money and is ready to pay.
Yes, I think that’s the answer to the question: Why do we get paid?
An understanding of why people are compensated should be developed in the Dependence stage (stage D) of the journey of wealth. It is a simple idea, but is prone to misunderstanding because compensation has a number of necessary conditions: work, useful in someone else’s eyes, who has money, and who is willing to pay for the work. As the conversation above illustrates, it is easy to miss one or more of the necessary conditions for compensation.
We humans learn from observing and generalizing the world around us. Based on what we observe, we develop expectations about how our life will unfold. When these assumptions are way off, life surprises us. If one wants a flavor of how life unfolds, I recommend a series of documentaries called the Up series. These movies follow the lives of fourteen individuals in England beginning in 1964, when they were just 7 years old. A new movie was made every 7 years when the individuals were 14, 21 etc. until age 63. The movies present an eye-opening, albeit anecdotal, tale of how lives unfold.
(Spoiler alert!) One of the protagonists in the Up series was Tony, who wanted to be a racehorse jockey since he was a child. He trained hard to be one but was unsuccessful. He had given up by age 21. Being a successful jockey is an example of a career where chance of success is small due to factors beyond one’s control. One has to have a very specific physique, and must train hard for years to be among the best. Subsequently, Tony became a London taxi driver and led a comfortable life. In a less developed country, the price of failure is higher.
I grew up in India, where I witnessed parents becoming anxious when their children chose unconventional careers. I can empathize with their concern that a child will suffer economically and emotionally if their chosen career does not pan out. On one hand, a person is unlikely to do well in a career they don’t enjoy even if it pays well. On the other hand, pursuing something that will not pay the bills can become frustrating even if it was enjoyable once. It makes more sense to pursue something that we enjoy with an accurate understanding of what it will pay. For this reason, some education on why people are compensated is desirable in the early years of life.
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