Are you doing better even if you have been with the same employer for a decade or more?

Introduction
Probably not, if you have been with the same employer for a long time – 10, 15, 20 years or more – and have not gotten any promotion, or monetary reward, or bonus for your work performance, productivity, or contribution. The only increase in your salary is the union-negotiated, or employer granted periodic increases. Such increases usually fail to keep up with the rising rate of inflation.

Among employees belonging to a union, those in the public sector generally fare much better than their counterparts in the private sector. It’s well documented that a much higher proportion of public sector employees is unionized.

This question if one is better off while working too long with the same employer seeped into my mind while I was writing my second book entitled “A Writer’s Journey Through the Bureaucratic Maze: A True Account (to be out by late May or early June this year). There, in Appendix II, I used the actual salary amounts and number of years spent without any promotion, or rewards, and found out that I, in fact, was losing each year the purchasing power of the salary at hand. In this post, I want to share that example with you, along with some of its implications.

Illustrative example (based on factual data):

I started working at one of the Canadian federal departments in 1970. My starting salary was close to $11,000. By 1978, the salary moved to $32,000. And by the time I retired in March 2012, I was making close to $93,000. The corresponding ‘all items’ Consumer Price Index (CPI) with (2002=100) for 1970, 1978, and 2012 are 20.3, 36.6, and 121.7 respectively.

Let us now look at the components of change in salary between 1970 and 1978 and between 1978 and 2012 – the change due to rising inflation only, and the real change due to promotion/advancement.

The difference in 1978 and 1970 salary: $32,000 – $11,000 = $21,000
Increase in 1978 salary due to the change in CPIs (or inflation alone) = $11,000 x (36.6/20.3) = $19,833
Now the difference of $21,000 can be re-expressed in terms of two components: $21,000 = ($32,000 – $19,833) + ($19,833 – $11,000)
= $12,167 (real change due to promotions) + $8,833 (change due to inflation)
100% = 58% + 42%

So between 1970 and 1978, 58% of the change in my salary was due to promotions and the other 42% to strictly inflation.

Following the same steps, the change in salary between 1978 and 2012 was: ($93,000 – $32,000) = ($93,000 – $106,403) + ($106,403 – $32,000)
where $106,403 is simply the increase in 1978 salary due to inflation (= $32,000 x (121.7/36.6)).

This shows that by the time I retired in 2012, I was making even lesser than the inflation-adjusted 1978 salary – never mind making any real gain due to any promotion (which I didn’t get).

So between 1978 and March 2012 (399 months), I was short of $13,403 in order to simply keep up with the inflation.

Put it another way, I lost about $34 (=$13,403/399) a month, or $408 ($34 x 12) a year in the purchasing power of salary at hand. In the eyes of the world, I was working full-year full-time, but with each passing day/year, I was losing the purchasing power of money. Isn’t it ironic?

That’s why I mentioned at the outset that working too long with the same employer isn’t economically healthy for workers with stagnant, or periodic union-negotiated increases in salary.

Post’s message:
Employees working with the same employer over a long period, with no promotion or advancement, but simply periodic union-negotiated increases in wages and salaries are likely to be losers as they would be losing the purchasing power of their salary at hand. One can say one is fully employed and getting a salary, when in fact, the rising inflation over time would steadily keep chipping away one’s purchasing power. Employees have to make up this loss by looking at other sources of income including moonlighting, use of personal savings, and/or debt.

For paid workers, the only way they can beat the inflationary changes and protect their purchasing power is to keep on making career advances and make real gains in wages and salary. But there eventually comes a point when such workers either come to the end of their road as they lack any further opportunity, skills, connections, personal marketability, etc. From that point on, they are on the way to lose the purchasing power of their salary at hand.

Business people and those self-employed on own account, on the other hand, can always beat inflation by steadily rising prices of goods and services they sell. This group would lose its purchasing power only when their business isn’t doing well, or they have slowed down on account of their poor health, or other volatility in the market. Other than that, self-employed persons pave their own paths to prosperity. They are not limited like their paid counterparts – always vulnerable to the personal biases and whims of their employers.

What does the future hold?
First, on the rising rate of inflation.

In Canada, the rate of inflation (measured in terms of the change in ‘all items’, or’core items’ (as used by the Bank of Canada) CPI was rampant in the seventies and eighties. For example, all of the goods and services that cost me $1.00 in 1970 were costing me $2.17 in 1980, $3.86 in 1990, $4.70 in 2000, $5.74 in 2010, $6.00 in 2012, and $6.33 in 2016. So during my work life (1970 – 2012), I witnessed the cost of living move up six times, and 6.33 times by 2016. The percentage decomposition of the change in ‘all items’ CPIs showed that 42% of the total change occurred in the 1970-80 decade, followed by 31% in the 1980-90, 11% each in the next two decades (see charts).

Post_CPI_Chart 1

The Canadian rate of inflation has been hovering around 2% a year since 1992 (with the exception of the year 2002-03 with a rate of 2.8%, and 2010-11 with the highest rate of 2.9%). With the rate of inflation low and stabilized, employees with long job tenure and stagnant wages and salaries would be losing their purchasing power steadily, but at a much slower pace.

Second, on the rising number of employees with long tenure.

It’s well-known that Canada’s population is aging, living longer, and among those working, a good proportion is opting to work longer. Since the job or occupational mobility decreases with age, it’s likely that those working longer would be extending their employment with the same employer. According to Statistics Canada, 23.8% of all 9.7 million employees in 1976 had worked for the same employer for more than ten years; four decades later, in 2016, their proportion had risen to 31.4% of the total of 18.1 million. The proportion of those working more than twenty years with the same employer had risen from 10.2% to 12.6% (see chart).

Post_CPI_tenure

Of the additional 8.3 million employees between 1976 and 2016, 40.3% were working for ten years or more for the same employer. Evidently, more and more employees are staying put either because of the rapidly changing economy, technology squeezing some old and traditional jobs out and opening, in turn, some new and challenging ones, widening the gulf between those with and without proper marketable skills.

All these changes are likely creating, in turn, a phobia among employees to change employers. They must be living with the premise that a job at hand is better with the current employer than running a risk of losing it with a new employer. For them, the grass on the other side of the fence may not be all that greener after all.

Your suggestions/comments on this or any existing post are always welcome.

Tags:
Employee, job tenure, CPI, rate of inflation, income, salary, wages, savings, debt, purchasing power, decomposition of change.

My early inhibitions

What’s inhibition?
The Webster’s Dictionary defines inhibition as a “mental or psychological process that restrains or suppresses an action, emotion, or thought.” Under this broad definition, each and every person is likely to have one or more inhibitions, which could have originated at any stage of his/her life. Usually such inhibitions are fed into the brain during the early formative years – depending on a person’s cultural upbringing, folk tales heard from the first line care-givers like parents, grandparents, and/or babysitters – also considered as the first teachers or guides. These persons can implant in a child’s brain all sorts of whims, fantasies, fears, ideals, or teachings based on their personal experiences, or what they valued the most, religious beliefs, and superstitions. Besides these early tales and teachings, the company of friends, peers, bad personal experiences, and the environment may also germinate inhibitions which, in turn, may become a part of one’s personality or behavioural psyche. This psyche may impede or enhance one’s development, career-path, or economic gains over life-time. For example, if a person has been raised in a religious and God-fearing environment, and taught God’s gospels, that person would always show a strong inhibition to hurt anyone physically, emotionally, spiritually, or abuse, bully, or back-stab – irrespective of what others do to him/her.

Role of inhibition
Now that I am retired after almost fifty years of uninterrupted paid work and establishing myself as a writer, I am turning back the pages just to understand how some of my inhibitions played a positive and negative roles in my career as an employee. As my internal psyche worked in both cases – a driving motivation, ambition, and hard work that kept me going to achieve some goals on the one hand, and the disappointments, or failures that I suffered on the other – I am wondering what was it that kept me going through the sun shine or the rain, sleet, or snow. Although I do believe that the lady luck plays some role in life, but the fact of the matter is that a person’s own planning, efforts, persistence, and actions eventually account for his/her success. We all are architect of our own life. We all spend time, effort and energy to achieve our goals, but only a few really succeed and the rest moderately, or stagnate, or fail. Why? Could we attribute such successes and failures to some of our ingrained inhibitions – developed during formative or later years?

My early inhibitions
Like all children, I received my early teachings from the first line care-givers – primarily my maternal grandmother – who looked after me during my early years. She instilled in me innumerable teachings like ‘have trust in God, be respectful to parents, persons older to you, and the elderly, be compassionate and a giver, be courteous to women, work hard to progress, face adversity bravely and patiently, keep persisting until you get what you want, don’t berate others or brag about yourself, be humble, as a man be strong and don’t shriek even when run-over by a train, and on and on.’ Needless to say, some of these teachings became guiding-lights and some turned out to be inhibitions. In this post, I will dwell on two simply to demonstrate how they affected my career.

A. Respect a woman
As I was ingrained – always respect a woman – I grew up respecting a woman with utmost regard – from my mother to senior women relatives and acquaintances outside the home. As a mark of respect, I used to talk to them in a much softer and gentler tone. I would often obey their commands and follow their instructions. As the luck would have it, when I immigrated to Ottawa (Canada) from the United Kingdom with a job in the federal public service, I ended up with a woman supervisor, and another woman as a director. In other words, I had to work and deal with not one but two women. I found myself in a very odd situation as psychologically and mentally, I was simply prepared to talk to them in a soft and respectful tone, whereas the work required to talk to them back-and-forth in a stronger and convincing tone to show my effectiveness as a professional worker. Even when they shouted at the pitch of their voices, I kept my calm and listened to them rather than shouting back at them simply as a mark of respect. This inhibition of mine conveyed them the impression that I was too ineffective and poor in fighting back or communicating. They didn’t know how mentally trapped I was inside that even if I wanted to rebut to justify my actions, my tongue was tied. By the time I overcame this inhibition and started to communicate with them, it was too late. I had been labelled as an ineffective and poor communicator, which in turn, affected my career progression. This equally hindered my search for another job as these women would not recommend me. And no one wanted a ‘poor communicator’ on the staff.

In case you are wondering why didn’t I try for a different job right away to get away from these women. Well, put yourself in my position. As an immigrant, I was all alone in a new country, didn’t know anyone, had no financial source other than the salary from this job, which too was probationary for a year. I couldn’t risk my survival at least for a year. I didn’t want to quit my well-paying professional job, risk living on government’s social assistance for weeks or months, and further with no guarantee that I would get a similar or better job elsewhere. At that moment, I firmly believed that a bird in hand was better than two in the bush. As an immigrant, the financial security was way more important than the hurt caused by these women.

B. Be persistent and follow your goal
What was it that kept me going on the job? Despite my poor inter-personal relationship with these women, I was able to continue to pursue my analytic and writing interests. My grandmother’s teaching ‘be persistent and keep on track until you get what you want’ was always on my mind. I wanted to earn name and fame as a professional and the only way to get it was by having my work published in newspapers and well-received by other media. Over time, both of these women and other seniors realized that I was a skilled, creative, and prolific worker, who was also enhancing their profiles. I have seen my name published in almost every newspaper in Canada. One of the papers I wrote turned out to be one of the best among government publications in 1984-85 and was sent to Canadian High Commissions and Embassies around the globe. Even the last paper published a week before my retirement was quoted in the Wall Street’s ‘Dow Jones’ paper.

By the time I retired, I had published more than one hundred papers and reports; seventy plus tiles, available in the public domain, are listed on the site.

Concluding remarks
I wouldn’t infer that I had a happy and financially rewarding career. The least I can conclude is that I was able to do what I wanted to do. How I did it and overcame all the hurdles, bumps, and obstacles to simply pursue my writing interest is the subject of my next book “Pursuing writing in the public sector” to be released by summer of next year. In the meantime, I am really grateful to my grandmother for teaching me to face each and every adversity with courage, patience, and perseverance.

Tags

Inhibition, Type and source of inhibition, Writing, Writing career, Public sector, Woman supervisor, Persistence, Ambition, Hard work.