Imagine that you’ve hired a guy whose job is to keep your house clean.
For the sake of this example, let’s assume that you make $100k a year and you pay the cleaner $30k a year.
(All inclusive employee costs/payroll is usually anywhere from 5% to 65% of revenue depending on the industry the company operates. In this example we’re going with 30% as a nice middle number.)
The cleaner has worked for you for the past 30 years.
When you originally hired him, he was fairly cheap but as the years have gone by the salary increments have added up.
If you were to hire a new cleaner in the market, you could find one for merely $15k a year who would do the exact same job for you.
Moreover, if you decided to hire a cleaner from overseas, you could find a highly qualified one for just $10k a year and they would be grateful to be cleaning your house.
It would be slightly more work to get this guy in the country (you have to sponsor his paperwork) but once he’s here, he’s on a tight leash. Yep, the overseas guy can’t quit because if he quits but cannot find another job in a short period, he will be deported.
(In the USA, if you get fired on a work visa, you have 60 days to find a new employer to sponsor your visa or else prepare to return to your country of origin.)
To top it off, this old cleaner of yours prefers old cleaning methods and hasn’t completely adopted new and efficient tools used in modern cleaning.
If you hired a new cleaner, they would be much younger and be familiar with new cleaning technologies. They would clean faster and miss fewer spots.
If this was you, what would you do? Would you retain your old cleaner or hire a fresh one?
Be honest.
Would you spend an extra $15-20k a year (assume $100k a year income) just to retain your existing house cleaner, or would you replace them in a heartbeat to save the cash?
Now assume the market is down and you’re having some financial trouble. You’ve been demoted and your new salary nets you merely $70k a year. Would you retain your old cleaner at $30k a year or would you hire a new one at $10-15k a year?
Remember that all your friends are firing their old cleaners and hiring new ones to save money. It’s completely socially acceptable and no one will judge you for it.
Maybe you could buy a new car or something with all the money you saved? Or take a few extra vacations a year? Money goes a long way.
Well – that’s exactly how much your employer cares about you.
Sure there are a few of you who will retain the old cleaner out of kindness (there are a few generous employers in the world as well) but for the most part – it just isn’t feasible.
You aren’t going to pay someone $30k to clean your house if the market rate is $10-15k. It just isn’t going to happen.
The same is true with businesses. They don’t hate you, but in the end it comes down to money.
You were hired to do a job, and if someone can do the same job for a much cheaper price – they’re going to make the switch just like you would replace the old cleaner.
This is just how the world works.
Of course, from the cleaner/employee’s perspective, this is “unfair”.
He says “I served you as best as I could for 30 years straight. You had no complaints about my work in the past 30 years of service. But now that I’m older and all these damn immigrants are working for so little money, I’m getting replaced. This is unfair and we need labor protection laws.”
The employee has been told that all that matters is how hard he works. From his perspective, you were his retirement plan.
He isn’t supposed to be out of a job as long as he does his job well. That’s what he was always told all his life. But even though he “did everything right” he got screwed anyway.
But that’s his mistake and his problem. You as an employer aren’t responsible for your employee’s life.
After all, you didn’t hire him to ensure his livelihood. You hired him to do a job for you and so far, you see no qualities in him that make him unfireable.
Your incentives and motivations are completely different from his.
You would rather pay $10k to get your house cleaned and then spend the remaining $20k to buy a new phone, computer, shoes, clothes, vacation, stocks, crypto, or whatever else.
Yeah you feel bad about firing the old cleaner but hey – it’s a tough economy, everyone’s firing and hiring cheaper workers, and you’re not a charity.
That’s how the world works and the cleaner has learned a valuable lesson in economics.
Hope that makes it clear how much your employer cares about you, especially when they tell you that you’re all a family.
But hey – thank you for your 30 years of service. Here’s an award for your loyalty.
It’s a special burger shaped paperweight! Hope you like it.
– Harsh Strongman
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