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Matthew Petroleum Notes

Why don’t job ads show the SALARY LEVEL they are offering?

A BIG FAT 90%+ of technical-level jobs advertised in the integrity industry don’t show any salary range in their ads. Job-seekers are expected to guess if it’s worth their while applying for a particular advertised position or whether they’re wasting their time. This annoys the merry hell out of most job-seekers so, we’ve been wondering, why does it happen?

WHY the change?

Ten years ago, more than 75% of professional-level job ads showed the salary offered, usually as a range. Now it’s nearer 10%, so what’s going on?

It seems unlikely that the supply: demand ratio of integrity jobs is the culprit. The supply of jobs available in the industry goes up and down all the time but, under the influence of a clever little thing called the Keynsian baseline model of labour markets, the demand for the jobs soon falls into line with the supply of them, and economic equilibrium is restored.

no salary

Next under suspicion: the increasing trend towards contract and freelance working in the industry. Freelance remote working, the gig-economy and millennial job-hoppers all looking for the biggest buck. It’s a real trend but the problem with it is that this hasn’t really changed much except the formal paperwork status of job-holders. Workers still do the same jobs, get paid, and have the choice of whether to work for one employer or a different one. The balance of power between worker and employer is still shared (as it always will be). In fact, there would be a more robust argument about how this had increased the power of the worker to see what salary was being offered before considering applying for a particular job, rather than the other way around.

So, what’s the reason? Let’s make a gentle approach to this; PERHAPS it might be something to do with the acceptance of a greater level of secrecy between workers in organisations about how much each is earning. In past years, people would discuss their salary more freely with each other; salary grades were known and the whole issue was not that much of a big deal. Now salary level is the skeleton resident in the closet; closets themselves not being a subject for discussion these days, never mind their residents. It’s not the existence of the salary-secrecy that’s the driver, but everyone’s acceptance of it as a no-go subject; a dialogue box that is never opened.

As to where this trend to acceptable secrecy has suddenly sprung from; that’s a different question, but one that’s not too difficult to answer. Try the reference sources at the end of this article if you are interested. We don’t keep or trade in secrets here.

Once you’ve got this salary-secrecy seen as acceptable in an organisation or industry (large or small; it doesn’t matter) then to understand how this links to jobs ads with mystery salary levels, we have to go back to 1817…

 A bit of economics

Back in 1817 a gentleman called David Ricardo published his various ideas on economics and how they were supported by observations he had made in the real world. A central theme of his ideas was that the price that someone will pay to buy something is ultimately controlled by how scarce that thing is (not a new idea) but also by the price of a similar purchase that is available on the ‘margin of acceptability’ to the buyer. He used the example of the prices for farm rents to illustrate this idea.

It’s not good to waste too much of your life worrying about economics but it affects the salary that you get so please bear with me for a short while on the subject of farms. Simplistically, the idea of ‘marginal acceptability’ works like this.

In the world of farming, the more money a tenant farmer can make from the crop yield available from a rented field, the more he will be willing to pay to rent that field. Hence the best fields command the best rents. Once a farmer comes along that can’t afford the (now inflated) rent, he looks for a cheaper, less fertile field to rent. He can rent this for less but accepts that he will make less yield from it. And so things continue, with poorer and poorer fields being cultivated, at lower rents and yields at the ‘margin of acceptability’ to the farmer (the purchaser, in economic terminology). The end result is a hierarchy of rental prices for fields, spanning from the lush green meadow to the barren mudflat. The factor that keeps this whole pyramid stable is not the rental price of the best fields but the price that some farmer is willing to pay to rent the cheapest, most infertile field. It’s all supported by the price at the bottom of the market. You can see this working when you look at the prices of houses or any scarcity-based commodity.

Now the link with salary rates

In the old world of salary-transparency, salary rates followed the principles of good old Mr Ricardo and his marginal acceptability model pretty closely. Salary levels were common knowledge (like the cost of renting a farm field being advertised to prospective tenants) leading to a hierarchy of salary rates. This ranged from the best rates (paid by employers in return for the services of the best people) to the lowest salaries commanded by the worst and lazy ones, who we now know, prop up the stability of the salary structure above them. Expressed in basic terms, this structure ensured that everyone got broadly the salary level they deserved.

From the employers’ viewpoint, they were hog-tied by the rules of this system so were never going to be able to escape paying the going rate for the quality of employee they wanted, which is equitable, sustainable and fair enough. Under this system there would have been no advantage to employers not to show salary rates in job adverts, which explains why most did.

What happens if you add salary-secrecy to the equation?

Secrecy between employees as to how much each earns breaks up the rules of the Ricardo-inspired salary structure which was based on price-transparency. This allows employers much more freedom to pay what they would like to, rather than what they would have been forced to, had the rigid structure still been in place. They have more freedom to get a better deal for themselves by attempting to pay the better people less than they would have before. There’s still the limited supply of employees influence there to catch them out if they go too far, but they can push the boundaries of this quite a bit before getting too badly burned.

Employer HOPES

In recruiting for a position under a salary-secrecy system, the objective of recruiters is to pay as little as possible, as long as the person can (hopefully) do the job. Recruiting anyone is risky so why buy an expensive risk if you can buy the same risk for cheaper price? To help achieve this, employers act in the hope that they will be able to get away with paying less to some people because of their personal circumstances. Their three main targets are candidates who we could classify as:

The unappreciated

If there is a prospective employee out there earning 30% or so below what they are worth then they might be happy with a 10% increase to move employers. This will make them slightly less unappreciated but they’ll see it as a good move

The unemployed

In the world of contract/freelance employees this doesn’t carry the stigma it used to, but it still means the same. People who are without work are willing to work for less, for sure

The comfort-seekers

People who seek comfort in apparent job-security, home-based positions, fancy job-titles or any similar such attributes will work for less. There’s a good spread of these around; younger, newly qualified people, experience-seeking people, older employees and the naturally insecure and indecisive ones that are happy to effectively pay for illusory job features that make them feel good

Back to the job ads

In order to gain the interest of the people comprising these targets, the only way that recruiters can do it is to not show actual salary rates in the job adverts, showing words like ‘competitive’, ‘negotiable’, or ‘large company benefits’ instead. If they did, it would reinstate the Ricardo structure that would only end up with the employer paying more for the same thing, as they see it.

So what?

Let’s reflect for a moment what we have just concluded. We have concluded that recruiters, employers, call them what you will, believe they WILL be able get an employee to work for them for a secret salary just on the margin of what is acceptable to that employee, and no more. This will make the employer feel good as they are paying less than they can afford. They also seem to believe that this will give them devoted employees and won’t encourage them to continually look for jobs elsewhere.

Presumably, if that’s how the system is working, these things must be true, but you should make up your own mind about that.

Message to job applicants

That’s roughly how the system works. Consider this when heading for your next job interview.

Message to recruiters

The point we’re trying to make here is that in the current incarnation of the plant integrity industry, or any other industry, it is clearly possible to reap the short-term cost savings that come from a system based on salary-secrecy. It’s all a matter of the time-horizon you are working to and the real quality and level of the organisation that you have and want. The higher the technical level of what you do the more difficult it will be to buck the fact that, over time, you will get precisely the quality of employee that you pay for.

Message to all bosses

No need to worry about your employees reading this article. You should feel good about it, because it all applies to you too.

Thank you

Thank you for reading this part of Matthews HEAD OFFICE: MoneyBIT. This article is the work of the INTERVIEWER

References and search terms:

What about the view from the other side of the employment fence? take a look at the The EMPLOYER’S view of the integrity industry freelance/gig economy.

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