Nobody Feels Overpaid

There are just over 130 million full-time workers in the United States and not a single one of them thinks they’re overpaid. This holds for people all over the income pool and paradoxically, is especially true for people towards the top of the ladder.*

It sounds absurd, but a person making $1 million can feel more stress over money than someone making $100,000 because the more you make, the easier it is to let your spending spiral out of control. Lifestyle creep is one of the most dangerous forms of inflation because you can feel like you’re falling behind when you should feel like you’re getting ahead.

An iron law of personal finance is that no income is high enough if you can’t live within your means. Just ask Antoine Walker, who blew through $108 million in career earnings.**

There was a recent article published by Institutional Investor that talked about high earners who feel like they’re underpaid.

For investment professionals that got a raise in 2019, three-quarters said the increase was up to 20 percent. Still, many believe they are underpaid…Even at the most senior level, one in three managing partners felt they were underpaid.

Gross right? Shouldn’t they be happy with what they have? Do they not realize how lucky they are?

Not so fast.

I’m sure on some level that many of these people who said they’re underpaid recognize their good fortune, but it’s hard to “be happy with what you have” just because so many people have less. We can’t help how we feel, that’s not how the universe made us. To be human is to compare ourselves to the humans around us.

Take a look at this chart*** of the distribution of NBA salaries. These salaries are public information, so people in the first bucket can compare their pay to people in the second bucket, and the second can compare themselves to the third, and so on.

I’m sure Draymond Green still has to pinch himself over the fact that his salary this season is $18+ million, but I wonder what he thinks about his former teammate Harrison Barnes making $24 million? I’m sure he doesn’t lose any sleep over it, but I also doubt Draymond feels overpaid, because nobody does.

Source:

Most Private Equity MDs Say They Deserve to Make More Money

*

**I know. Agents, taxes, etc, etc.

***Shout to Nick Maggiulli 

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.