Gross Salary: An outdated metric of success

Read Time : 5 minutes

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In an era where click-bait is king and headline snippets dominate the media, it is no surprise that we buy into this shallow, capricious and often pretentious propaganda. We subconsciously allow this culture, fuelled by unadulterated capitalism and the need for eternal growth, to mould our goals, our mindset and ultimately our identity without questioning its rationality, validity or integrity.

It is not uncommon for an individual's aspirations and goals to read like a marketing campaign. Many want 'to earn 6 figures, drive expensive cars, wear a Rolex and buy designer clothing' with little to no appreciation of the trade-offs required for such a lifestyle or the current literature on the relationship between wealth and happiness.

 

Donnelly (2018) attests that 'money matters only for well-being', a theory bolstered by the work of Nobel laureates Daniel Kahneman and Angus Deaton who assert 'the happiness benefits of increased income diminish around $75000' (Cohan 2017).

This research, along with a well-timed marketing e-mail from a recruitment agency revealing the 'Top Earning Jobs in the IT, Finance and Accountancy Domains' acted as catalyst for me to reflect and ponder upon the oldest yet most revered metric of success, gross salary.

Gross Salary vs Relative Salary

Jessica works in the IT sector earning a salary of £100000 while Pauline works in the construction industry also earning £100000. Jessica works 10 hours per week, remotely, while Pauline works 80 hours per week on site.

Who is richer?

Jessica of course, but if we used those headline figures without delving deeper, we would have assumed both ladies were equally as well off. Gross salary, as a metric of success, is both antiquated and outdated as it is measured using only one variable, money, while relative salary uses two hugely important variables, time and money - usually pounds per hours.

Assuming both ladies take 4 weeks holiday per year and work 48 weeks, the breakdown is as follows:

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The difference in relative salary between Jessica and Pauline is breath taking, considering they both have the same gross salary. The implications upon lifestyle, stress levels, health, relationships and life experience cannot be emphasised enough here.

Although this theory is insightful, it is not until we take it into the realm of the real world that we understand its true gravity. Being a professional in the education sector, I decided to test this theory. Who would be a richer - a teacher at the top of the pay scale or the principal of a large secondary school? An online poll showed that 100% of the 143 respondents felt the principal would come out on top.

The Breakdown

A teacher at the top of pay scale will earn £39498 and have an official time budget of 1265 hours per year (NASUWT). Although I understand that teachers do go well above and beyond this time budget to ensure excellence in educational provision, I will use this official statistic for illustration purposes here.

A principal of a large secondary school on Leadership Spine Point 25 (L25) will earn £72644. Research conducted by the National Center for Education Statistics (2003) suggests that the average principal spends 59 hours per week on 'school related activities' while a survey on principal health and wellbeing (Riley 2011) asserts that the majority of principals spend at least 25 hours per week on schoolwork during the school holidays. Therefore, we can safely say that the average principal works around 60 hours per week 46 weeks per year.

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*It is also important to note that this simple calculation does not factor in the tax implications of being on a higher salary

These data are not to detract from becoming a principal or any other profession, who add incredible value to the community in which they serve and the society as a whole, but to allow for informed decision making and an appreciation for the implications of relative salary.

The Commute

With most on-site, high salary jobs being city based, the long hours are usually accompanied by a substantial commute. Instant Offices (2012) claim that the average commute in London is 74 minutes while the average commute elsewhere is 54 minutes. Consequently, the commute for many of us is an unintentional and unpaid part-time job.

 

Remote work, enforced by COVID-19, has shone a light on the cost of the commute; essentially it comes at the expense of our time, wealth, health and ultimately happiness. When applying for that high salary job, it is important to factor the price of fuel, car maintenance or travel tickets as well as the extra hours travel into your calculations for relative salary.

Lifestyle Expectations

Some professions carry with them expectations of their employees - law firms expect their employees to wear expensive clothing or suits, while high tech IT firms require their employees to have access to high performance computers and top end software and education and medical professionals are expected to continually add to their skillset through costly university level Continuous Professional Development.

These expectations have both financial and time implications which must be accounted for. Undoubtedly, the implicit company norms will have a huge impact on relative income and employees must not be blind to the true cost of company culture.

Responsibility

The proliferation of neo-liberalism has created a culture of contractual accountability 'concerned with standards and results based on a limited number of measurable outcomes’ (Glatter 2003, pg. 53) and with that, a culture based on outcomes rather than processes. As a result, high salary positions carry with them competition, high stakes decision making and quick turnarounds for those who do not hit targets or meet deadlines.

The cost of thriving in such environments is usually a sole focus on career; long hours, politics, decreased life experience, increased stress and anxiety and in many cases decreased health and longevity. The demands of these high-profile jobs ultimately decrease relative salary as individuals work longer hours and pay more money for remedial and recovery modalities.

The data are clear - gross salary as a metric of success is outdated, rudimentary and inchoate. We must look at relative salary to truly assess the quality, feasibility and attractiveness of an opportunity. We must create processes, systems and operations within our life that work for us, allowing us to earn the money required to have a fulfilling and meaningful life on our terms and to manage the demands of neo-liberialism and New Public Management.

This article is by no means an appeal to shirk or reject difficult or demanding jobs but a word of warning for those who are doing so for financial reasons alone. Being principal of a school, a partner of a law firm or The Head of Wealth at a financial institution can be hugely rewarding posts which allow for huge professional development and a massive impact on the community in which you serve and on society as a whole, but they are not bereft of the trade-offs outlined above.

Robert Frost emphasises our need to tread carefully in such affairs.

 

'By working faithfully eight hours a day,

you may eventually get to be a boss and work twelve hours a day'

 

Bibliography

Cohan, P., 2017, This Harvard Study of 4,000 Millionaires Revealed Something Surprising About Money and Happiness, Inc., New York

Collinson, A., 2019, The unforgiving hour: what our longer commutes are really costing us, Prospect, London

Donnelly GE, Zheng T, Haisley E, Norton MI. The Amount and Source of Millionaires’ Wealth (Moderately) Predict Their Happiness. Personality and Social Psychology Bulletin. 2018;44(5):684-699.

Glatter, R. 2003, "Governance, autonomy and accountability in education" in Strategic leadership and educational improvement, eds. R. Preedy, R. Glatter & C. Wise, Open University Press/ Paul Chapman, London, pp. 44-74.

Instant Offices, 2020, Transport and Commuting to London for Work, Instant Offices, London

Riley, P., 2011, The Australian Principal Health and Wellbeing Survey 2011 Data Final Report, Deakin University, Victoria

U.S. Department of Education, National Center for Education Statistics, Schools and Staffing Survey, 2003–04, Public School Principal, BIA School Principal, and Private School Principal Data Files.