A comment from ORC (old rugged cross) today in the Trump Presidency thread reignited my thoughts on posting this. Adding it to that thread would have drifted the thread too far, I thought, so here it is. For reference, the statement from ORC that got my attention was, "Blaming employers for that is in vogue."

In the context of that thread, my discussion here is not at all to be argumentative toward ORC, but to offer a different perspective.

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Friends and I were talking recently about what we ended up calling "the longevity penalty," with respect to long-term employment with a single employer, and the lack of "keeping up" in terms of salary. Boiled down, the gist of it is, "the longer you stay with an employer, the further behind the pay rate you become." More pessimistically stated, "employers hold down wages/salaries for those who stay a long time."

A couple of us had 20-year-plus terms with a previous employer. When we hired in, back in the day, the pay was "in line with the industry," and was pretty good. Raises came, pretty much annually, and usually at 2-4%. Twenty years pass, and the organization hires a "new kid," fresh graduate, and we learn what a nice offer the organization made him. I don't hold this against "Kid" at all, for he's sharp, intelligent, articulate, and he makes a solid contribution to the organization. But his incoming pay was within about 10% of ours, though we had far more seniority and experience. Why? Because the industry pay rates went up way faster than our own salaries. Why? Well, part of it is simple inflation -- everything gets more expensive to buy over time.

The other part of it is the longevity penalty. As we talked more, it became clear that our loyalty had not paid off. When do people like us usually get a significant raise? When we change jobs. For me, the change came when I took on more responsibility within the same organization (stepping up after our department leader left and taking on his role), though that came within the last three years of my time there, which helps prove our point.

But back to the point: staying with the same employer, in the same job function, for a long time didn't pay off. Those 3% increases didn't nearly keep up with inflation, and before we knew it we were way behind "the market" in terms of salary.

Our friend "Kid" has since moved on as well, taking a job out of state and getting a really nice salary increase to go with it. (I don't know about his new cost of living over there, so I can't make that comparison at the moment.) He's not building that longevity with a particular employer, and it's paying off.

So. Why did I write all this? Because as usual, I'm curious: How many of you have experienced the longevity penalty in your careers? Care to talk about it?

I had planned on staying with the same company for 40 years then retiring. When I started they had s traditional pension plan where you got more the longer your stayed with them. They froze the plan/stopped it when I hit 14 years.

I stayed until I had 22 years and I was behind being a salary employee. Pay raises used to be up to 7% for exceptional years (I got that a couple times) and was usually at least cost of living.

It got to where 1.5% was the highest on a good year and they would hire people in making more than me (and would also give new hires the same benefits that took me over 2 decades to get. Vacation being one of those benefits).

I have quit there and one two other places since but my pay is significantly higher than where I left after 22 years.

It used to be that having numerous employers showed you could not keep a job. That is no longer true and people move place to place to get better pay and benefits. There are no real benefits to staying at the same job your entire careeer and it seems to be a hindrance now.

I was in that situation with over 34 years with the same company, I looked at my boss and asked for a raise since it had been several years without getting any increase. He said sorry and it wasn’t going to happen so I said no problem, I’m putting in my retirement paperwork today. He wanted 6 months, I said I would be generous and give him 3 weeks, to which he balked and I asked how much notice he would give me if he were going to fire me. That was the last conversation he and I had.

That was a little over 3 years ago, and the early retirement was the best thing I ever did.

Loyalty in todays workplace is not appreciated and abused.

In addition to the original premise, it may be possible or likely that after extended periods (20 years), one may be actually making less in terms of real wages and real inflation. New hires tend to start with better alignment. I agree w/ the original premise and there are probably several aspects that make it unpalatable.

That being said, I had a wise manager once who taught me that there are three reasons to stay w/ a job: 1) the pay, 2) the work, 3) the people. You must enjoy at least 2 of the 3. If not, you would probably be better off in a different job.

I worked for myself for 40 years. At sixty I started to work for other people as an employee but mostly as a contractor.

I found when running the numbers the sweet spot was one to three years.

If you could find a job at the increased salary.

Today you are often competing against 100s of candidates for the same job.

I am currently retired but still have recruiters calling me. I may take some work to keep busy.

It doesn't help that HR departments are run by women who have an innate need to make things "fair" and "even", which means everyone makes the same salary for a given job or level. Part of this is to prevent lawsuits for "wage gaps". But they definitely avoid letting there be big salary differences based solely on merit.

The only way to really make more is to advance in level. A 20 year veteran that can run circles around a new hire will be paid similarly if they are in the same job/level.

I see the same thing - I came in with 16 years experience and it took me 8 years to get promoted to where I am now. They are giving away the promotions to kids with less than 10 years who have nowhere near the experience now. As always you are free to go whenever you have had enough...

I retired last year for personal reasons. I was heavily involved in the search for my replacement. We literally took six months interviewing replacements and the simple fact that became evident is that I worked most of my career at well below the standard for similar positions in our industry and location. Long story short, the replacement is a well-educated guy with great references but knows nothing about the industry or the company's equipment. He'll start his career making about 30% more yearly than I made as a veteran with 25 years' experience.

Every ladder has a top rung. And yes in many cases long term employees are taken for granted. You have to fight for yourself. Which is a foreign concept for most employee's.

quote:

Originally posted by konata88:
three reasons to stay w/ a job: 1) the pay, 2) the work, 3) the people. You must enjoy at least 2 of the 3. If not, you would probably be better off in a different job.

I liked the work, had great fun working with [most of] the people, and thought I was paid well... until The Kid taught me different.

I give thanks every morning for that phone call I got one afternoon, with the voice on the other end saying, "hey, man, let's meet for lunch."
That's been almost three years ago now. I feel like I'm in a heck of a good spot right now, and I truly enjoy it. I'm sure I won't do 23 years in this one, though.

quote:

Originally posted by old rugged cross:
Every ladder has a top rung. And yes in many cases long term employees are taken for granted. You have to fight for yourself. Which is a foreign concept for most employee's.

The structure at my previous employer was sooooooper flat. Opportunity for advancement was just about nil. I was upset when our department leader left, but in the big picture it was a good thing -- it opened up a better spot for me there, which led before long to the change I made in 2023.

quote:

How many of you have experienced the longevity penalty in your careers? Care to talk about it?

New hires are priced by the market for talent, while raises are completely controlled by company policies. There are downsides of frequent job changes, but if done at the right times, lagging inflation in pay rates is not one of them.

Corps don’t expect you to stay longer than say 5-6 years and they don’t much want you to. The suits go to seminars where the seminar sells a narrative and the suits buy into it. The current “shit” being sold is just that, absolute bs, and they don’t want people staying long term. They don’t want to pay the 401k match of higher paid employees. They don’t want to pay the higher salary and bonuses. Yet if they had a constant fresh supply of talent, many things get missed and/or removed and the business would be in a bad way.

Unfortunately, its how modern companies operate. There is NO loyalty, you are completely expendable, and you are penalized for staying. I got laid off after finishing the year 129% to goal because I capped out on salary. The genius new VP thought using customer service women and kids out of college were more cost effective. They ended up losing our biggest customer (that I won) among others.

After the layoff, I joined my current company and make in base salary what I did overgoal in the previous company.

I'm currently living that. I've been at my current job for almost 10 years. When I hired on the pay rate was competitive if not slightly better than surrounding agencies. Since then, those other agencies have received significant base rate increases, while we've seen a 2% annual cost of living increase. Especially since covid inflation has been outpacing that by at least double every year, so my paycheck is worth significantly less now than when I started. There's also zero opportunity for a merit-based pay increase here, so the only way to fill the gap is to work more overtime.

The only saving grace is that we're all tied to the same pay scale, so when it eventually gets so out of whack that they can't attract new hires they'll have to raise it for everybody.

This isn't anything new, unfortunately. In my first career as an engineer in the 80's, many companies had pensions. They preferred to have an employee leave before being vested, which was iirc typically 5 years. Thus the pay raises would stagnate quickly, encouraging one to move on.

When pensions generally were replaced with 401k plans, the company % match usually increased with longevity, so once again the company had a motivation to encourage leaving. Not to mention increasing vacation and sick leave typically awarded with longevity.

quote:

Originally posted by vthoky

But back to the point: staying with the same employer, in the same job function, for a long time didn't pay off.

I’ll offer two counterpoints from my perspective to put your issue in context.

1) Why should staying in the same job function for a long time pay off? Every job solves a problem that requires a person to solve until the problem is designed away or solved by technology. You’re solving basically the same problem for 20 years which, by now, you can do in your sleep. How does that deserve a raise?

If you want a merit raise, solve bigger or more problems for more people. That’s how people make money. To make the absurd example, I shouldn’t expect to be well off flipping burgers for McDonalds for 20 years.

2) Decades ago, you can stay with one company in the same job and expect a decent retirement because, while your raises still didn’t keep up with inflation, the gap between inflation and your raises were relatively smaller. A proxy in understanding inflation and how it has significantly increased is looking at the growth of the national debt over time. I don’t think it’s unfair to look at our national debt as an indicator of inflation because it simply represents fiat money created to suck value out of the economy.

3) I recently made this realization. In school, the answer to the question is: how is wealth created has always been “by creating value.” The idea was when a person creates something of value that another person buys, wealth “magically” is created by the transaction.

I finally realized this thinking is wrong. You go to any impoverished country and despite the extreme poverty, you can find extreme wealth in the few. How did the few become wealthy among a sea of poverty? It comes down to getting the better end of any deal and leveraging any advantage available to you.

When you have poor people who need subsistence, you offer them jobs and pay them less than the value they produce. That’s the formula for any job; no company is going to employ for long if you’re costing them more money than what you bring in to the company.

In an impoverished country, the leverage to underpay your workers is significant. This is the first step of wealth accumulation. The next step is selling the impoverished people “stuff” at a premium over the value they are getting in return. Again, that’s what every company does - sell product at a higher price than what it costs to produce or deliver.

And it’s this loop that creates wealth for the advantaged. This may seem pretty basic for some or even most of you but, as I said, I just made this realization for myself. I’m still as capitalistic as anyone but it is what it is.

I'm in a mid-market O&G service & supply company, in IT. 12 years this year, back in Sept.
I saw this, to an extent, over the years.

What really made it evident, was when my wife was looking for a new job, and was sending me listings for things in Houston similar to what I do, at a pretty significant increase in salary.

Had to take that knowledge to my boss, and it took 7 months. I got a new title with more breadth, and a decent bump, and surprisingly still got an average COLA at the usual time.

I enjoy my job and the majority of who I work for/with. In my case, I didn't even realize how behind the curve I was until my wife was looking. I wasn't unhappy, so I hadn't been keeping up with what the local job market was doing.
I think I'm still a little behind the average, but my current position doesn't really exist outside of my current employer. Just about anywhere else, it's the job of 2-3 people. We're small enough that our 5-man IT team has to wear multiple hats to cover our 500 employees in 14 offices.

quote:

Originally posted by Rey HRH:
Why should staying in the same job function for a long time pay off? Every job solves a problem that requires a person to solve until the problem is designed away or solved by technology. You’re solving basically the same problem for 20 years which, by now, you can do in your sleep. How does that deserve a raise?

A fair question, Rey, and a fair analysis behind it.
However... in the business we were in, solving a problem once didn't mean it was solved forever. Why? Because we didn't make the same product every single day for all of those years.

To be fair, the product I was involved with when I hired in was still being built when I left, so there's that. But the truth is, that product line ran pretty smoothly. We'd had lots of time to work out the bugs and problems.

But at any given time, we had a dozen or more product lines running, each with different product. Some products would EOL (end-of-life), and more would come in to take their place. All others were somewhere in between introduction and EOL. There was always something "in development." And even with mature product, there would be customer-instigated problems to solve. So to use your burger-flipping example, we weren't making Big Macs and only Big Macs day in and day out. Development, improvement, and new product introduction were constant. To brag just a little, we were innovators, not just builders. And, thankfully, that statement applies to my current employer as well. (I love this stuff!)

I can definitely relate to this! The job I retired from ended up being a 24 year position...by far my longest position. It was in the maritime field, but not really one that one would brag about. Still, it had many benefits given the schedule and the relatively okay pay. However, the raises we once got...say about the first 10 years I was there, barely matched inflation. From that point on, they completely eliminated raises and that's how it was for the remaining time I was there.

It would be easy to say, why didn't you leave? It's true, I could have moved on to a more lucrative job, but the perks of this one out-weighed the benefits of moving on...in my mind anyway. I continued to max out my 401k (with no employer match) and fully fund my Roth IRA. I ended up being really okay. The benefits of my position, schedule and relatively good pay, kept me in place.

quote:

Originally posted by vthoky:

quote:

Originally posted by Rey HRH:
Why should staying in the same job function for a long time pay off? Every job solves a problem that requires a person to solve until the problem is designed away or solved by technology. You’re solving basically the same problem for 20 years which, by now, you can do in your sleep. How does that deserve a raise?

A fair question, Rey, and a fair analysis behind it.
However... in the business we were in, solving a problem once didn't mean it was solved forever. Why? Because we didn't make the same product every single day for all of those years.

To be fair, the product I was involved with when I hired in was still being built when I left, so there's that. But the truth is, that product line ran pretty smoothly. We'd had lots of time to work out the bugs and problems.

But at any given time, we had a dozen or more product lines running, each with different product. Some products would EOL (end-of-life), and more would come in to take their place. All others were somewhere in between introduction and EOL. There was always something "in development." And even with mature product, there would be customer-instigated problems to solve. So to use your burger-flipping example, we weren't making Big Macs and only Big Macs day in and day out. Development, improvement, and new product introduction were constant. To brag just a little, we were innovators, not just builders. And, thankfully, that statement applies to my current employer as well. (I love this stuff!)

I’m quite familiar with the cycle of New Product Introduction and managing it through end of life, those were in addition to managing the on-market products. I’m not downplaying your skills or belittling your abilities. I’m boiling it down to the essentials - you and I may be flipping burgers today, cheeseburgers tomorrow. We’re still using the same skills from day to day. Problems may come in different configurations, we use the same set of tools inside our heads. What do you think of a salesperson demanding more money having the same territory and same unit volume sold? You’d laugh if you were the owner, right? It’s the same principle. Everyone in the organization is justified by how much money they bring into the company.

I would hazard you’re more technically adept at solving the problems you face than anyone above your level. And, yet, those above you get paid more than you do. So compensation is still not driven by the technical complexity required by your job.

But that’s a different though related issue to the point of being in the same job for so long.

I learned that fact in 1972 in auto dealer parts.