Finding the best paying jobs: What makes them special?

Summary

In this video, Mike, with 25 years of experience in business, HR, and tech, delves into what drives high-paying jobs and how to navigate your career path. He discusses key factors like supply and demand, scalability, profitability, complexity, proximity to the product, and superstar wages. Mike explains how tech, finance, and certain sciences offer high salaries due to their scalability and industry growth. He emphasizes the importance of finding fulfillment in your career while recognizing that job security and salary can fluctuate based on industry trends. The video provides valuable insights for those planning their future careers.

Takeaways

• 😀 Supply and demand in the labor market is the first factor that influences salary. High demand and low supply lead to higher wages.
• 😀 Market demand can drive salaries up, as seen with industries like tech and service sectors during times of economic growth or shortage of labor.
• 😀 The scalability of a business impacts salary levels. Roles that directly contribute to a company’s massive scale, like tech and finance, tend to have higher salaries.
• 😀 Profitable industries, such as finance and tech, offer high salaries due to the revenue they generate compared to the number of employees.
• 😀 The ability to scale a role or business is crucial. For instance, a teacher’s impact is limited by the number of students, whereas tech roles can scale through software reaching millions.
• 😀 Complexity in roles, such as those requiring advanced skills and understanding of new technologies, is often compensated with higher salaries.
• 😀 As industries mature, salaries tend to stabilize. Big players in stable sectors, like automotive and airlines, may no longer offer premium salaries as they don’t need to pay a premium for skills.
• 😀 Hard skills, especially those in science and tech, are generally valued higher and compensated better than soft skills or human-centered roles.
• 😀 Proximity to the product plays a role in salary—employees working closer to the core product or revenue-generating activity tend to earn more.
• 😀 Superstar wages are paid to individuals who have the potential to significantly impact a company’s performance, like top athletes or CEOs, reflecting a belief in their value to the business.

Q & A

What is the primary factor that impacts salaries across different roles?

The primary factor impacting salaries is the law of supply and demand. When there is high demand for a certain skill or role but a low supply of qualified individuals, salaries tend to rise.

How does scalability influence salary levels in different industries?

Scalability drives higher salaries because industries or roles that can produce large revenue with relatively few people, like tech and finance, tend to pay more due to the potential for massive financial returns compared to the cost of individual labor.

Why do roles in tech sometimes earn less than before?

As tech has matured, the supply of trained individuals has increased, meaning that tech roles are less in demand than they were during the boom of the dotcom era. This leads to a stabilization or reduction in salaries for general tech roles.

How does profitability affect salaries in roles like sales and HR?

Profitability drives salaries in roles like sales because their contributions to revenue are measurable and direct. In contrast, HR roles, which are necessary but don't directly generate revenue, tend to have less impact on salary levels.

What is the relationship between industry maturity and salary growth?

As an industry matures, growth slows and companies focus on efficiency. This reduces the need to pay a premium for skills, as the value of individual employees becomes less critical to the overall business success.

Why do roles involving science and hard skills generally pay better than others?

Roles involving science and hard skills typically require specialized knowledge that is harder to acquire and in higher demand. This makes such roles more valuable, leading to higher salaries.

How does proximity to the product affect salaries?

Roles that are closer to the creation or delivery of the product tend to have higher salaries because their work directly impacts the business's core output, whereas roles farther from the product, like procurement or HR, tend to earn less.

What are superstar wages and how do they impact salaries in organizations?

Superstar wages are premium salaries paid to individuals who have the potential to dramatically impact a company's performance, like top executives or high-performing athletes. These wages are justified by the significant financial returns that these individuals can generate.

How does the hierarchical structure of an organization affect salary distribution?

In most organizations, the higher up you are in the hierarchy, the more you earn. This is because higher-level roles typically have more responsibilities, impact the company's overall direction, and manage larger teams or more significant projects.

What should you prioritize when choosing a career based on salary potential?

To maximize salary potential, it's important to focus on fields with high scalability, such as tech or finance, that involve complex, science-based skills and have proximity to high-growth products or services. However, balancing salary with personal interest is also crucial.