Strategically Change Jobs to Save More, Faster

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You Will Always Be Underpaid

I hate to say it, but you will always be underpaid. The majority of Americans are underpaid. Unless you are a CEO with millions of dollars in salary, tens of millions of dollars in stock bonuses, and a hundred million dollar severance package, you are underpaid. It is very easy to see how we are underpaid. Lets say that you are an Apple Sales Associate. You work in the Apple Stores and sell iPhones and MacBook Pros. Lets say that you are a bad employee, and only sell a single MacBook Pro for $2,000 every day. You are paid $120 in wages per day, but you generate $2,000 in revenue per day. Of course, the stores have to pay rent and a host of other overhead expenses. However, would Apple go bankrupt if they paid our hypothetical sales associate $16 an hour instead of $15? The answer is very obviously no, and our Sales Associate is therefore underpaid.

You will always be underpaid for a simple reason: you aren’t the boss. People who create companies take the majority of the risks: therefore, they will receive the majority of the reward. It’s really that simple. If you regularly invest and know some basic investment theory, this makes sense to you. The riskier an asset is, the greater the potential return. As a simple example, consider 2 deals. In the first deal, you give me $100 and there is a 50/50 chance that I give you back $200. In the second deal, you give me $100 and there is a 10% chance that I give you back $200. The payout of each deal is the same, but the first deal is obviously better because it carries less risk.

Change Jobs, Make More Money

The best way to make more money is to change jobs. I’ve been at my current company for 3.5 years. Since I work for a contractor, determining the financial impact of my work is a little more convoluted. Basically, anytime I work on a contract, my company bills our customer for $3, pays me $1, and takes the $2 for overhead and profit. Looking at it from a different perspective, I brought in $1 million in revenue last year, but was only paid about $100,000. There is obviously a lot of wiggle room. My company could easily pay me $105,000 and they wouldn’t go out of business. But when I asked them to increase my salary because of my performance, they said it would be impossible.

Since I started at my current company, I’ve received three yearly raises of 3.2%, 4%, and 4%. I was also promoted which came with a 10% pay increase. When I leave my employer to start my new job, I’m getting a 25% pay increase, significantly more than anything my company ever gave me. If you want to increase your income, you must change companies. Your current employer is going to pay you the minimum amount of money to stay. That way, they keep healthy profit margins and the people taking the risk, the owner of the company, gets their reward. I don’t know about you, but screw getting paid “the minimum amount of money to stay.”

Improve Your Skills and Assertiveness

Getting a new job with a significant pay bump is not trivial. In fact, it is difficult for the majority of Americans. This is because of two simple reasons. First, you do not have an in-demand skill. Second, you are not assertive enough.

If you do not have an in-demand skill, getting a higher-paying job is hard. Why? Because there are tens of thousands, potentially hundreds of thousands of people doing the same exact job as you, making exactly as much money as you are. Why should an employer pay you $1 more per hour ($2,080 per year) when they can find another person to replace you for cheaper the same day that you quit? If you want to increase your salary, you either need to get very good at what you do, or increase the breadth of your skills. Preferably both. If you aren’t significantly better than the competition, you will never ever see a real pay increase.

In general, people aren’t assertive. If you aren’t assertive, you’ll never ask for what you deserve. This could be asking for a raise you deserve after learning a new skill, or looking outside your company for new work, and requesting a salary commensurate with your skills and experience. You need to believe that not only are you good at your job, but that you deserve to be fairly compensated for it.

One of my coworkers is leaving her job with a 41% pay raise! However, upon giving her 2-weeks notice, her (our) boss said she was no longer eligible for her bonus, even though she would be working when it is distributed. She decided to “show her teeth” to HR and they informed her that her boss was indeed lying, and that it was company policy to pay out earned bonuses. Without being assertive, she would leave thousands of dollars on the table.

Save More, Retire Earlier

If you are able to increase your salary, saving more money is extremely easy. As long as you do not start buying new fancy toys, you will have more money to invest every month. If you actually invest this money, over the course of your career, you amass a much larger nest egg because of the wonders of compound interest.

Consider what would happen if you increased your post-tax salary by 10%. You could take that 10% and invest it in low-cost Mutual Funds or ETFs. Over the course of your career, that money would grow significantly. In addition, if you take the Zero Day Challenge and are able to reduce your unnecessary spending by 10%, you can now save 17% of your income (assuming you are in the 30% tax bracket) which is almost 3 times higher than the average American!

Do What You Gotta Do

In the end, we need to do what we are comfortable with. If you aren’t comfortable learning new skills and aren’t comfortable asking for compensation that you deserve, that’s fine. Just know that you are worth more, and you need to plan your life around the fact that it will be hard to improve your situation much. Remember, there is no reward without risk. If you are unable to take the risk of learning a new skill and asking for fair compensation, there will never be any reward.

Have you ever negotiated a significant pay increase? How did you do it? What risks did you take? Leave your feedback in the comments!

Good Hunting,

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9 Responses

  1. Zed says:


    Seriously, of all your posts this rings true the most for me. In fact I’ve been telling it to all of the interns I work with (even during interviews!). I recently changed companies, after 8 years, and got a decent pay raise. I should have done it sooo much earlier. (I did get decent raises and promotions for 8 years, but not enough to stay that long.)

    I believe it is common/trendy now to move companies frequently, and that can be dangerous, but people are doing it for a reason! I now see why, and I also see that even in my new role, with more pay, that I am/will continue to be underpaid.

    Go out there and assert yourself! (Thanks S-Bob!)

    • David says:

      Thank you!

      Its unfortunate that companies won’t pay employees enough to stay. One of my coworkers just got his PhD. At this point, he has a BS, 2 MS, and a PhD. Right now he’s only making $115k which is a lot, but nowhere near his earning potential. When he confronted HR about it, they said that “we pay new hires with your credentials much more because we need to get them to leave their jobs” which is so short-sighted. My company would rather pay somebody else who they don’t know $135k instead of paying him $125k.

      It sucks that we need to change companies to really increase our salary. I really like my coworkers. I’m not looking forward to talking to my group lead because he really is a role model whom I look up to. But at the end of the day, I need to take care of myself first.

  2. NZ Muse says:

    Yep absolutely. Maybe it’s because I haven’t worked for any huge corporates (yet) but I just don’t see how this is achievable by staying in one place. I’ve increased pay by 20-25% each time I changed jobs.

    • David says:

      I just submitted my 2-weeks notice on Friday. Kinda sad, I wish my company would pay me even remotely competitively. I was on a great, successful team that I got along with. But the opportunity cost is huge.

  3. This is so relevant for me right now, thank you! I just received a new job offer last week and I’m currently trying to figure out what the total financial gain of the increased salary is going to mean for me. Thanks for writing 🙂

    • David says:

      Congratulations on your new job offer!

      I was passed up on a promotion after I worked very hard and won our company a significant amount of business. I talked to HR and my boss about it, and there was nothing they can do. I wonder if they’ll think back to our conversations: my last day is this Friday. The pay increase at my new position is more than what I got in 4 years at my current company. Unless you’re a unicorn, finding a new job is really the only way to increase your salary.

      Good luck at your new job!

  4. David,

    Thank you for sharing your thoughts on the topic. Although I do know that it has become common practice these days to get a raise by changing companies, I’d throw caution to using some of the generalities above. As someone who runs a small business and who has friends that run small businesses, there’s much more that can go into the overhead in your examples above – on top of rent, making the product, R&D, legal fees, non income producing salaries, etc.

    I’ve always believed that good people make great companies, and that if you find a solid employee, you should do whatever possible to keep them. It sounds like your company doesn’t share the same philosophy. Fortunately for you and your coworkers, you’re high earners, where small adjustments can make large differences.

    Good for you for maximizing your earning potential, but maybe for many companies out there, there’s more than the employee knows about what goes into their employers expense column.

    Just my $.02. Best

    • David says:

      Hi Mike,

      I want to say thank you for your insights. It’s relatively uncommon to find people who actually own businesses, and I appreciate your thoughts. I should have prefaced the post with “I’m a disgruntled employee at a 70,000 person employer who doesn’t care about staff.” Since I started working for a startup, I have a lot more insight into different overhead components of businesses. For example, how much did that tweet cost, or that email newsletter? Should we pay somebody $1,000 to update our website, or do it in-house. How much business does each billable person need to generate to cover all of the overhead employees? There is really a lot that goes into the calculation, and it isn’t trivial.

      I’m very happy to have found a good company. I have no problem talking to the CEO, VP, CTO, etc. They give me advice and want to make me feel at home, something that I now value significantly more than money. At my last job, I could barely stand putting in my 40 hours. Now, I gladly work 60. I’m very lucky that I found a good fit and am compensated at the level of business that I generate.

      Again, thank you for your thoughts, I really appreciate them.


      • David,

        I’m happy for you that the new job is much more enjoyable. Sounds fulfilling too. One of my favorite things about blogging is learning new things and having an open mind to all of the ideas out there. I’ll keep checking out your site to see how life unfolds.

        Thanks for the civil discussion. Best regards,

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