Pay  Raise
"Abolish percent pay raises" "Cost of Living Increase"

Abolish Percent Pay Raises. They change the relationships between jobs/positions. Percent pay raises continually increase the money differences between low incomes and high incomes. In the language of the Wage & Salary Analyst, such raises increase the distances between classes of positions. It makes meaningless the work of the Job and Pay Classification Technician.

The Wage & Salary Analyst determines that the tasks assigned to Job A are worth a $20,000 cost to the organization when compared to the tasks assigned to other jobs/positions in the organization, and the tasks assigned to Job B are worth a $30,000 cost to the organization when compared to the tasks assigned to other jobs/positions in the organization. A $10,000 difference. Assume there is a desire/need to increase the pay for all employees. A low IQ, poorly-educated, mathematically-challenged, low-integrity CEO gives a 5% raise. Now Job A costs the organization $21,000 and Job B costs the organization $31,500. A $10,500 difference. Irrationally, Job B now costs the organization $500 more than Job A than it did 2 seconds before the raise! Voodoo managerial economics. Solution: give everyone a $1,000 raise and the relationships between Jobs/Positions will be maintained. The organization also saves money. Taxpayers benefit when the organization is a government.

TABLE 1 - Giving 4% Pay Raises
In Year 0, Job/Position D costs the organization $30,000 a year more than Job/Position A.
By Year 20, Job/Position D costs the organization $65,734 a year more than Job/Position A.

There is not any reason to surreptitiously change the relationship between Job/Position A and Job/Position D.

TABLE 2 - (Cost-of-living increases) minus (Pay-raise increases).
Worker A
    1.  In Year 0, Worker A makes $10,000 per year.
    2.  Cost-of-living increases by $11,911 in 20 years.
    3.  Worker A receives pay increases of $11,911 in 20 years.
    4.  In Year 20, Worker A´s real income is still $10,000 [(pay increases) minus (cost of living increases), $11,911 -$11,911 = 0]

Worker D
    1.  In Year 0, Worker D makes $40,000 per year.
    2.  Cost of living increases by $11,911 in 20 years.
    3.  Worker D receives pay increases of $47,645 in 20 years.
    4.  Worker D´s real income is now $75,734. An increase of $35,734 [(pay increases) minus (cost-of-living increases) $47,645 -$11,911 = $35,734].

There is not any reason to surreptitiously change the relationship between Job/Position A and Job/Position D.

Dilbert comments on percent pay raises.