No one wants to pay me what I like- especially with the shifting labour market and the oilfield downturn, shifting it into an employer’s market nowadays- no longer an employee one. Many would just echo, under the influence of Desperate Worker Syndrome:
“Be grateful you have a job.”
A worker’s wage is the result of the market value of his/her body, given his/her characteristics- experience, credentials, and attitude/desperation. The employer’s desire, following basic economics, is to hire and make people work until marginal revenue is equal to marginal cost- as before this equilibrium is true, MR>MC. Its objective is to obtain maximum production for a given cost (e.g. wages)- and will make a worker(s) perform and/or keep acquiring worker(s) as long as there is additional per-dollar profit to be made.
The more grateful someone is just to have a job, the more fear and hence marginal production for the company this worker brings. This is a typical employer’s dream- to have a stationary employee just good enough to perform a given role at minimal cost. One who is not inadequate to perform and hence would have lower production, but not one too good and hence would demand a higher wage or leave. You see this in the oilfield a lot where employers love migrant workers who don’t know the market value of their positions and/or are scared to be out of work.
For my line of work, on average our wages have been reduced by $100/day. Factoring in the compounding effect and increased time required now to acquire intended investments with the new wages, the loss is much greater. Generally companies did not have trouble recruiting new workers from all over the country at these new wages, so this is roughly the new equilibrium- though many former oilfield workers in this work now exhibit higher turnover because of the new poorer wages.
I’ve received 10 job offers since the beginning of 2017 for trucking/operator positions- none which I applied to. They were strictly through word of mouth or being recruited from LinkedIn or Indeed. Nevertheless, none paid enough to warrant jumping ship- or if they did, consistency was questionable. My previous employer I did pipeline work for made frequent promises to return our wages to pre-recession ones to get the workers’ hopes up, but as more learned of the false promises, they left to greener pastures- including myself upon the seasonal slowdown of the oilfield.
No one would pay me what I wanted. My response was to start my own company and work as a contractor while gradually saving up further business capital and investment funds to grow. General consensus in a robust economy in Alberta was that if you were good at what you did, you made $100,000-150,000/year. Nowadays people are happy to make EI – $100,000. But to exceed that required some senior position with decades of experience and loyalty, self-employment, and/or aggressive investing and risk taking.
Now if I cannot get enough through doing business, then I will invest aggressively as well. My current strategy is to do both, plus employment and education part of the year- a 4-pronged approach to increase earning power. This new means of battle however faces one new enemy: the bank/lender- for which dealing with is playing devil’s advocate.
The bank- the public’s savings and hence the public’s fear- is the cheapest source of money, albeit the most difficult to get. It does not like risk takers and people looking to make money fast. Its favourite customer is a lifelong employee to enslave for decades- who makes just enough and for a desirable length of time to service their debt, but never enough to escape. It wants someone who is looking to buy maybe a new home or rental property once every few years, not a new one every year like I. It wants me to pay large amounts of cash for my assets to reduce risk, and to re-lend to people to enslave in higher interest debt. My intention is to let it hold as little as possible- make the maximum dollar for each dollar I hold. My response has been to keep up the fight against this enemy- playing the cards it likes to see, but diversity into stocks on the side, where less formalities exist.
I once attempted to order a new Porsche. The finance man said:
“Well the average customer displays around $400,000/year income and the average Porsche sale is around $100,000. When you made about $100,000 last year and you’re looking to put little cash down on a $8x,xxx Porsche, the lenders will raise an eyebrow. You and your company are young. They like people and businesses with many years of earnings and credit history before getting them into a Porsche.”
As soon as I heard “many years“, I immediately lost interest and walked out. I drove 3 hours south, and purchased a new F83 BMW M4 Cabriolet with around 3,000km on the odometer where I was approved with minimal cash down. Banks and the risk-taker-shunning public do not like large debts with low equity, but:
Interest rate: 3.9%
CRA write-off allowance of motor vehicle financing interest: <=$300/month
My top tax bracket at time of writing: 36.%
Resulting effective interest rate: 2.52%
After inflation, this is <=0.52%- and there is a long list of investments that beat this rate many times over.
Buying new also comes with a 4-year or 80,000km warranty. Less problems are likely to occur at these low milages, so I can save headaches and more time to earn more money or learn of new business and investment opportunities. I also found I was getting too comfortable with all the spare cash I had coming in every month and started to worry about work ethic and ambition corrosion. Referencing a old Chinese idiom:
“Money leaks through the gaps between the fingers.”
I told the sales guy and the finance lady:
“Part of the reason I came down to Calgary to see you was I was hoping, being a flawless (from a credit record perspective) BMW customer for years, I hope the financial arm will let me hold onto most of my cash and get a car I like. Then the first thing I’m going to do with that cash is to buy a third rental condo or more stocks- where my returns far eclipse and exceed that low 3.9% interest rate you’re quoting me.”
Even with this new large ticket item, based on my 2016 average monthly net income (for which is likely lower than that of 2017) and current expenses, I am still gaining $1,500-1,600/month excluding appreciation in my two condos and increasing work experience.
If no one wants to get the money I need to grow, then I will get it with my own hands.