Why You May Not Be Making As Much Money As You Think You Should

“Even Noah got no salary for the first six months partly on account of the weather and partly because he was learning navigation.” – Mark Twain

If you’re lucky, loving your job is its own reward. But when it comes to satisfying your sense of self-worth – and building wealth – the size of your paycheck can have a big impact. In fact, a 2006 study commissioned by the American Business Collaboration found that 49 percent of respondents listed salary as the factor that’s most important to their satisfaction at work.

So if you’re not making as much as you think you should be, is it time to start looking for a new job?

Before you start scanning the “Help Wanted” section of the newspaper, take a good hard look at what you do. Is your work really worth what you think it is?

I had a conversation yesterday with a writer – a friend I’d hired to work on a newsletter I consult on. It was contract time, and I had promised him “the best deal possible” – which is exactly what he got. He wasn’t satisfied. “Let’s face it,” he told me, “The success or failure of the newsletter’s renewals depends on me – and my writing is good.”

“I agree that your writing is good,” I told him, “but in the business of newsletter publishing, my opinion doesn’t count.”

What does? As JDG, a colleague of mine, likes to say, there are three sacred letters when you are in business – ROI (return on investment) – and they are the jury when it comes to determining the quality of what you’re selling.

Writers – screenwriters, novelists, magazine writers, and advertising writers – are valuable in business if and to the extent that they can generate positive ROI.

Writers who understand that can become very skilled very quickly and make a ton of money. Writers who refuse to believe that are doomed to spending the rest of their careers unhappy and underpaid.

But it’s hard to explain this to a writer who’s new to the business world. He feels, understandably, that since he’s smart and clever and works so hard, his writing is – or has to be – supernal.

Most writers I know (including yours truly) would like to think themselves equal to the greats: H.L. Mencken, Edna St. Vincent Millay, Ernest Hemingway, etc. And given the time, energy, sweat, and blood they put into their writing, why shouldn’t they get paid a ton of money?

That’s what Stephen Gaghan used to think. Gaghan – who directed and/or wrote screenplays for many films, including Traffic, Syriana, and Rules of Engagement – found that no one listened to him when he was a mere screenplay writer. But when he became a director, he had an important revelation:

“Decisions, actual decisions, upon which money would be spent and movies created, were happening in flurries. The studio and producers were no longer impenetrable, implacable forces aligned in the cause of movie prevention but well-tuned, experienced machines for the production of movies. Suddenly, everyone seemed to be pulling together and they were looking to me to help them do it. In fact, as far as I could tell, the moment you remove the screenwriter, things actually begin to happen,” Gaghan wrote in an article for The New York Times.

“I don’t completely agree with this system,” Gaghan continued, “but there is a reason nobody listens to the screenwriter: He isn’t accountable. The screenwriter is like an economist or political commentator who says, ‘If you don’t cut interest rates right now, there will be a 3 percent decline in housing starts next April.’ But nobody checks back next April. Nobody remembers or cares. Because you don’t have to act on the decision, you aren’t responsible for the fallout. You are an adviser, not a builder. And if ‘real housing starts’ decline by 20 percent and the construction industry lays off thousands – well, you still have your comfy chair and nice view out the window.

“For the director, it is the exact opposite. The time for theorizing is over. It is yes or no, and pretty soon you have an aesthetic. Period.”

The same holds true for other advisory professions: accountants, artists, architects, attorneys, IT specialists, customer-service managers – basically anyone on staff or hired to help. The number of exceptions are few:

  • CEOs
  • profit-center managers
  • salespeople
  • anyone else whose compensation is primarily (not incidentally) based on the success of the end product

If you want to make a good living, be good at what you do. Accountants and artists and screenwriters who are good will be recognized as good. If they promote themselves and shop around for the best compensation, they can make very good, very steady, and relatively low-stress incomes.

And if you want to take that route, you can still build wealth – slowly and carefully – by following the advice we’ve been giving you in ETR about investing and saving.

But if you are not satisfied with that and want to get cut in on the bigger money, you have to step up to the line and do what the big-money people do. You have to be willing to risk not only your time but also your financial safety.

This is a hard lesson for most people to learn. And if you see no sense in it, I can’t imagine you’ll be persuaded by the little story about Stephen Gaghan’s conversion. You may choose to spend the rest of your life feeling under-appreciated and under-compensated, just as so many do. That won’t get you what you want – but you will have the feeling that you’re getting screwed to warm you up at night.

My friend, the newsletter writer, is a smart guy. He’s going to argue his case as hard as he can and get as much as he can to do the job. But he’s doing something else too. He’s learning how to write marketing copy. He’s learning the principles of selling. And he’s studying the marketing business as closely as he can.

Some day in the future, he’ll step over to the other side and be fully accountable for the financial success or failure of his literary output. When that happens, he’ll be negotiating contracts with writers who may want more than he is willing to give them. Then he’ll come to his own conclusions about this age-old debate. I’ll be interested in seeing what he does.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]