Your Salary Is Leading to an “Uncompetitive Fixed Cost”.

I work for a major corporation and have been hearing lately that the management of our company and many other companies is “moving away from pay raises in preference to variable pay options.”

What this means is, it’s better for the bottom line of the company if you don’t get raises, but they give you better bonuses. See, raises are something that once you get, the company always has to pay you at least that much. But bonuses can be more directly tied to company performance.

Sounds good, no? Who can complain about a better bottom line? Who wants to “price themselves out of the market”? That’s bad. It’s bad because a poorly paid job is better than no job.

This is true I suppose.

But the language and the sentiment are somehow completely fucked up. I read today that one of the main reasons to get away from pay raises is because pay raises lead to “uncompetitive fixed costs”. This all started when the employees working for the company went from “personnel” to “human resources” to “human capital”. It’s so damn inconvenient to have to put up with this bioaccumulating capital. And for some reason it needs to make more money! First it was “the cost of living” then it wanted to “buy a house” or “have a family”….sheesh! Don’t the human capital units realize that the company is not a charity ???

Ah, the old days. I remember being under the impression that “pay raises” served two purposes: to help keep pace with the cost of living in an area and to provide a lifestyle for the employees. I’ve met people who actually, after graduating from college with a doctorate want to do the unthinkable and “get married”, “buy a home” and “have children”. Those things usually require more money than you were making back in graduate school (unless your kids like dog food from the can). And pay raises allowed these young professionals to “plan” life rather than live by the vicissitudes of the ever-fluctuating market forces.

But this is the 21st Century! A brave new world. Where employees…uh I mean “human capital” units vie for a toehold on the American dream by hoping that their work in “product delivery” or “accounts receivable” will vault the company into the stratosphere of profitability so they can get a nice bonus of maybe 10% in a really really really good year.

Meanwhile the CEO of the same company toils away for a nearly $1 million base pay but occasionally is able to scrape in a 500% bonus. It must be hard for him or her to plan their lives when they can only count on making $900,000 base pay and have to rely on the whims of the board of directors as to whether they will be able to clear an addition $5 million dollars in bonus.

So, see, it hits all of us. The lowest levels to the highest. In this tough economy we all have to give just a little so we don’t cause our company to have to get rid of us because of our exhorbitantly “uncompetitive fixed costs”.