The Prof G Pod with Scott Galloway - The Future of Work Part 2: Talk About Money

Episode Date: March 1, 2023

In today’s episode, we continue our special 3-part series in answering your questions around the Future of Work. This episode focuses on the topic of money and negotiation. Scott gives his thoughts on using an outside job offer as leverage in salary negotiation and then discusses labor legislation and its effect on unions and gig workers. He ends with advice to a listener who is working in the U.S. on a work visa.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca Welcome to the PropGPod's Office Hours. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. In today's episode, we continue our special three-part series in answering your questions around the future of work. This is part two. Talk about money and other things

where we get into all things money and negotiation. First question. Hey, Scott. I'm a senior leader at a company that I joined about a year ago. The division I lead has seen quarter over quarter growth and has quickly become the profit center at the firm. About a month ago,

my previous employer approached me with an attractive offer worth almost double my current compensation package. I much prefer my current position. I don't want to go back to my old job, but I'm wondering if you think it's wise to use their offer as leverage in a salary negotiation, or should I rely solely on my quantitative and qualitative results of my job now, or should I maybe use a combination of both? And if so, how can I do this tactically? So this is what's called a good problem. Do I turn down the offer for double my compensation? Look, it sounds like you've already decided you're just not going to take the job, that you would be miserable. And I respect that. No one should be miserable at work. That's just going to be, you spend too much time at work to be miserable. I'm not saying you have to love it. I'm not saying you have to be passionate about it. I also think that's dangerous advice. But it has to be something that if you get good at it and you

start making a lot of money, it starts to give you some sort of reward because see above, you're good at it and you're making money. Anyways, this is a deeply personal question because a lot of it comes down to the economic security you already have or your cost of living. I mean, if you've got two kids at home and your partner isn't working and it's a struggle to make the mortgage, it might suck to be a grown-up and you might have to take that other job. The best way to get leverage if you want to make more compensation at your current role is to get another offer from an outside company. I would ask yourself, why is it my employer is willing to pay me double to do this other job? Is it just because it's an awful job or is it because they see something in me that I have a difficult time seeing?

And that is I am really good at X. So look, there's a lot of questions here that need to be answered and thoughtfully discussed before you make a decision that has fullness to it or a thoughtful decision. What I would suggest is, and what I'm comfortable telling you is a must, is assembling a kitchen cabinet of people and running them by much more in much greater color and detail of a situation. And it ideally includes someone at your work that knows your situation that you trust. Can you go to your boss and say, hey, an increase in compensation would be just enormously beneficial to me, but I don't want to take this other job because I'd be miserable. Is there anyone there who understands the situation and ideally is in a position of

authority to help you make this decision and can help you work through it? That is when we talk about senior level sponsorship. What we mean is not only someone who's irrationally or has a vested interest in your success at work, which I think is probably the number one kind of feature or benefit or requisite if you want to make it far within a company. Someone that is emotionally invested in your success, right? But hopefully you have that person. You can go to them and just be very honest and ask them for help. People, when you ask someone for help

and they give you advice, they become emotionally invested in your success and they want the advice and the decision they've helped you make to work out well for you. So one, assemble a kitchen cabinet. Two, if you really feel like you need leverage around currency, maybe check the job market every once in a while. And three, go to your boss or someone in a position of authority,

ideally, that has some influence here, and also that you trust, and just lay out what you just laid out to me, but in much greater color and detail. Because without knowing your economic situation, without knowing the nuance of, you know, you say you would hate this other job, would you really hate it? Would it really be that bad? Because boss, double the Benjamins is a big deal. I'm not one of these people that, oh, you need to be happy. Fuck, you want to be happy? Get economic security. But I don't know if maybe

you already have that. Anyway, I don't know. I don't know. There's a lot of questions here. But again, see above, this is a great problem to have. Thanks for the question. Question number two. I had a question about legislation federally called the PRO Act. It's the Organization of Unions and what that effect might have on gig workers or the 1099 income type of people, contract workers. It's also, I guess, voted in California, that AB5 legislation that's affecting 1099 workers adversely. Just curious what your point of view was on this and if it really is affecting the gig worker and 1099 income. Thanks for the question. So some context here. In 2021, the U.S. House of Representatives passed the Protecting the Rights to Organize, the PRO Act.

Its main purpose is to restore the rights of workers to organize efforts and unionize. The PRO Act is the strongest labor legislation in decades. As to how it relates to gig workers and freelancers, this labor law makes it harder for employers to misclassify workers as independent contractors and grants them employee status. This allows millions of 1099 workers to be government-backed so they can negotiate better pay and working conditions. On the other hand, not to be outdone, the empire strikes back, specifically corporations, specifically Uber. California's Assembly Bill 5, or AB5, is a more restrictive and controversial version of the PRO Act that was passed in 2019. AB5 has greatly disrupted the gig economy because it

prevents employers from classifying workers as independent contractors. Workers of companies including Uber, DoorDash, and Lyft fought back against the bill because this meant they'd lose their flexibility as contract workers, or they'd lose the flexibility to classify people as contract workers. Okay, so this kind of comes down to what is an independent contractor and labor law. First off, at a very basic level, I have a lot of thoughts about unions. I get a lot of pushback. I think people should have the right to organize. Let's go meta.

Let's talk about economy. Republicans would have you believe that the middle class is an organically forming entity. It's not. It's not. Throughout history, there's generally been 1% of people, either through inherited wealth or strength or just downright talent or luck, they garner the majority of the resources, the majority of the opportunities, right? That the bottom half of people starved, were screened out or starched out of the economy and propagation and just had shitty lives. And the middle class is probably the greatest innovation in America's history. That sort of post-World War II, we figured out a way with manufacturing technology, empathy, progressive tax rates to create this entity where the majority of americans were

prosperous where the majority of americans could have a house that they actually owned that grew in value that the majority of americans could send their kids to college that the majority of americans could have cars the majority of americans could eat beef i mean it was just just an amazing thing this thing called the middle class and it ended up the middle class was wonderful because they were productive when they were happy and they spent a lot of money, which fueled the economy, which created a multiplier effect. And it created a society that was more healthy and a society when people were drafted to go overseas and kill other people or be killed, that they did it because they thought this is worth fighting for. So the

middle class is not a natural occurring entity. If you just let the market reign over time, the rich get richer. They weaponize government and legislation. It's not self-sustaining. You have to invest in it. And what do we have in America? We have tax rates on the wealthiest. The top 1% have plummeted. We don't make investments in infrastructure.

We don't make the same level of investments in public education. Why? Because the rich have their own infrastructure. They can get around on their own planes. They can have their own schools. So what do we have? We have a middle class. It hasn't gone down. It's kind of gone flat. Anyways, a key component of that innovation and sustaining and investing in a middle class was giving workers the right to organize such that they could go back to capital and say, look, we don't have a lot of leverage over you. So we're going to create leverage by organizing and you're going to pay us a living wage. Unions were absolutely needed. They played a huge role. Also, they no longer work. And when's the last time someone super competent or super impressive said, hey, I got a job at the union, not with the union or for a

union, but at the actual union. In addition, they have a terrible reputation for being corrupt. So what do I think? What do I think? This is another example of corporations optimizing for shareholders. Uber, which has never made money, is optimizing for shareholders. And it said, okay, you can work 40 or 50 hours a week here. This can be your sole source of income.

We are your only employer. This is your main gig. And we still get to call you an independent contractor, which means we don't have to make payroll taxes, invest in healthcare, do all the wonderful things, investments in the middle class that employers make

as a means of your classification as an employer. And then California pushed back on this, and then they spent $200 million on legislation to fool California voters, in my view, into thinking, oh, we're actually giving them a raise. They did offer some consolation to gig workers. But in sum, the thing I hate about ride-hailing, the thing I hate about the gig economy is that I see it as software trying to circumvent employment labor laws to reduce costs, to reduce compensation, which then gets funneled to shareholders. And this is a larger theme in our economy. Our economy is optimized for shareholders. Having said that, they provide tremendous flexibility.

I know there's a lot of people who think, well, if I have a smartphone, I can make some money this weekend. And I got to be honest, when I ask Uber drivers, which I do, if they like Uber, the majority of them say yes. But that doesn't mean that's like saying, okay, I like living in America. Well, then stop complaining about it. No, we can do better. We need a better construct for how we invest in the middle class, even if it's at the cost of shareholder value. Thanks for the question. We have one quick break before our final question. Stay with us. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach,

what learnings have shifted their career trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Welcome back. Next question. Hi, Scott. My name is Paul, and I'm a long-term fan of the Prof G and PivotPod. Both are set instances in my week, so thank you and keep up the good work. I'm looking for advice for my upcoming review cycle, which I want to negotiate salary and title.

I want to get a promotion. I'm an account director at a renowned creative agency. I'm meeting or exceeding all my priority goals. My accounts are growing. My clients are happy. The team likes me. The work's good. I've been at the agency for about three and a half years and in this role for about two years. I've already taken on more responsibility proactively. I want to stay at the agency because I like the people. I like the atmosphere. I feel like there's still something to learn from me here. Last year, the agency moved me from Berlin to the US, which I'm very grateful for. However, that also means that I'm in the US on a work visa, which is tied to

the company. That to me basically means I have no leverage in negotiations. According to Glassdoor data and job posting from competitors, I'm paid somewhere between 15 to 30 percent on the market for my current role. I'm 30 years old, single, and I feel like that this is the period in my career that I really want to accelerate in terms of learning curve and take it on more responsibilities. Thank you in advance. I know it was a lot. Greetings, or as we would say in German, viele Grüße. Danke, und fahrt's in Nürgen. I am a huge fan of Germany. My partner for a long time, German, and spent a lot of time in Germany. Actually, I was discovered at the DLD event.

After working my ass off for 30 years, I became an overnight sensation when one of my videos at the DLD conference in Munich went viral. Anyways, and also I'm a huge Lewandowski fan who played for Bayern Munich for a long time. No longer there. A bit of a heartbreaker, but absolutely love Germany and the German people. Anyways, a bit of a digression. So a few different questions here. One, let me just lay it out for you. You are a little bit fucked here because America has been so anti-immigrant, because America is so fucking stupid when it comes to immigration policy. And we've restricted visas and decided that we're the team that doesn't want the number one draft choices from every college. We want to demonize immigrants for some reason. It is very difficult to get a visa. And they kind of have you by the short ones and they know it. Let's just break down the reality. You are getting what I'd call non-economic compensation too, as it relates to getting what you feel is market rate compensation. Generally speaking, it is difficult to negotiate your salary during the review. They will go through a process. Good companies do a very thoughtful process.

And once they decide that number, I can tell you what I do. Sometimes we get it wrong and we don't recognize or fully appreciate the value they've added and we undercompensate them. Sometimes we overpay people. No one ever complains about that.

If you start negotiating salary with people real time, word will get out and everyone will come in ready to negotiate. The best negotiation, the only real leverage you have in negotiating, quite frankly, is one of two things. One, you are so valuable to the company that a good company will try and surprise and delight you. I have fantastic people working at Prop G and many, actually all of the years, my objective around compensation has been, how do I surprise and delight my employees? You can only do that

for so long because every time you pay them a lot, that's their new expectation. And young people in a growth economy are under the impression they should make 20 or 30% more a year. And that just, that math just doesn't work. By the way, always go to work for rich people if you can. They're just going to be more generous. I know how gross that sounds, but at the end of the day, if property media doesn't work out, I'm fine. When I was starting companies on my own, I had to watch every goddamn nickel, which meant thinking, what do I have to pay someone, not what do I want to pay them? But now I can say, you know, I'm here to create economic security for other people. That is a goal of mine, and I can be more generous. Why?

Because C above, I'm already economically secure. Anyways, assuming that's not the case, they have leverage over you. So what do you do? Hopefully, and this was brought up in one of our previous questions, you have senior level sponsorship there, or you can go to someone and say,

hey, just before my review, I want to have a discussion. Also, if they're good, you do a self-review and you list out all of the things, right? And under objectives, you can just be very honest and say, based on market checks, think my compensation or my role is not market. And I'm hoping to see that come in line and lay out your reasons. You want to have that conversation. Let's be honest, that's negotiation. You are stating to them, I think I am underpaid. That's negotiation. You want to have that discussion and negotiation before the meeting. Because once you're in the meeting, it's probably pretty set. The cake is baked. The die have been rolled. But let's be honest, boss, you have a lack of leverage here.

Because in a supply and demand-based labor market, which we talked about before, your only real leverage is the threat of leaving or getting another offer. And the threat that you will leave is less of a threat because of our fucked up U.S. immigration policy. So let's circle back to what to do here. One, recognize that once you go into the room, it's likely baked. Two, if you have the opportunity and you get calls from headhunters, take the calls, get a feel for the compensation, and then relate that back to a person you trust at the company and say, this is the kind of offers I'm getting. And most importantly, sit down before the review, hopefully after you've done your self-review, and check in with your boss and say, I just wanted to check in around my expectations and the role I'm filling. And not only talk about why you're awesome and the compensation you deserve, but what you plan to do the next 12 months to really add value to the organization. What are your plans? What do you see the opportunity as? How are you going to drive a

shit ton of value? But one, it sounds like you're acting like an owner. It sounds like you're doing really well. It sounds like you have a great company that's sponsoring you. So your situation here needs to go from good to great. But at the end of the day, your situation even right now

is good. Good luck to you. And if you think about it or if you can, please send us an email and let us know what happened. That's all for this episode. Again, if you'd like

to submit a question, please email a voice recording to officehours at profgmedia.com. This episode was produced by Carolyn Shagrin. Jennifer Sanchez is our associate producer and Drew Burrows is our technical director. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Profiteer Pod from the Vox Media Podcast Network. We will catch you on Thursday for our conversation with Liz Ann

Saunders, one of my favorites, chief economist from Charles Schwab, and on Saturday with No Mercy, No Malice, as read by George Holland. What software do you use at work? The answer to that question is probably more complicated than you want it to be. The average U.S. company deploys more than 100 apps, and ideas about the work we do can be radically changed

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