Author Topic: Career progression - compounding of your earning capacity  (Read 3025 times)

vand

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Career progression - compounding of your earning capacity
« on: January 15, 2023, 03:27:46 AM »
Inspired by the recent post by ofdollarsanddata , I put some thought about how much my own career has progressed, and how I have managed to grow my earning capacity over time.

Turns out I have managed a 7.1% nominal rate of return on the value of my labour over a (so far) 24 working career, or a x5.3 total increase.

This is the progression from my first full time real job, not paper-round money. 

It came in 2 real bursts - in the first 5 years I compounded at a rate of 25%pa, then it quickly leveled off and grew at not much above inflation for the next 15 years as I got up to industry norms - and I will be the first to admit that I didn't push myself to progress my career as hard as I could have during this time.  In the last 2-3 years it started going up again through extra work I was taking on and then a good career move for me last year.

Of course, take inflation into account and the rate of progress is hovering more around ~5% in real terms, and it should be acknowledged that in some countries bigger salaries are more common, making it easier to compound your earnings than in others.

Nonetheless, it's interesting that we pay so much thought and attention to the process of the market compounding our portfolios over time (something we have no control over), but much less time about something we have much more control over which is our earnings potential over our careers.  Is this a form of FIRE laziness - expecting money we put away to do the work for us without working on ourselves as much as we could?

No judgement here - just interested in other peoples' stories about how their careers have progressed and, looking back how satisfied they are with it.
« Last Edit: January 15, 2023, 06:30:17 AM by vand »

vand

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Re: Career progression - compounding of your earning capacity
« Reply #1 on: January 15, 2023, 03:33:07 AM »
Nick also wrote kinda a precursor to this piece a couple of years ago too, at the time defending the traditional career path when the twittersphere was ablaze with financial gurus all espousing entrepreneurship and hustle culture as the best and only way to financial success:

https://ofdollarsanddata.com/there-is-nothing-wrong-with-a-traditional-career/

2Birds1Stone

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Re: Career progression - compounding of your earning capacity
« Reply #2 on: January 15, 2023, 06:20:20 AM »
Imagine you found this concept/community sooner!

Gross income is up 13X in nominal terms over a 13 year period, which included a year long sabbatical and several month long breaks.

Ron Scott

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Re: Career progression - compounding of your earning capacity
« Reply #3 on: January 15, 2023, 06:32:52 AM »
I grew up quite poor and always believed in the invest-in-yourself approach. I also had common sense.

I joined a company after college that paid full tuition and expenses for education and got a totally FREE PhD at NYU. Free tuition was available to every employee, but only a handful took that free money. Management was impressed by this and I was given a few choice assignments with the opportunity to highlight my capabilities. This was interesting work, not drudgery.

This place was 9-5, M-F, 40 hours a week. I decided, since I HAD to be there, I might as well work hard for the full 40. THIS COST ME NOTHINGóin fact, since I brown-bagged lunch I saved money on delis and such. It amazed me that most people simply didnít do this, choosing the path of least resistance instead, doing their jobs the take-it-easy way, and bitching about how bored and unappreciated they were. Management saw this too and I was fast-tracked for promotions, MAKING MORE MONEY.

By the time I retired I was managing a team of 1000 with $450M in revenue and was highly compensated; salary, bonus, stock.

I still believe a lot of success is due to luck and opportunity. It was for me. But a part is also due to working smart with a good attitude. And that costs you nothing.


Reader

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Re: Career progression - compounding of your earning capacity
« Reply #4 on: January 15, 2023, 08:04:15 AM »
Ron, great advice! a great attitude is really everything.
looking back, my salary compounded at 9% per annum.

a career is really an investment class and income stream, just like a business.

MaybeBabyMustache

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Re: Career progression - compounding of your earning capacity
« Reply #5 on: January 15, 2023, 09:12:49 AM »
I'm 25 years into my career, and make roughly 20x what I made when I started out. Biggest changes/pivots:
1) A big increase in tech salaries overall, on maybe year 4 of my career
2) I got my MBA (while working), and my employer funded some of it. I think about 20%. That allowed me to change roles within my same employer.
3) I went into my current field (same employer), which gave me a different skill set that was about to become very in demand
4) I switched to my current employer (#2) and ended up in an area with tremendous growth. The kind that's rare to find at all in you career. I've been on this team for close to 10 years & the growth is just now leveling off.

Ron Scott

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Re: Career progression - compounding of your earning capacity
« Reply #6 on: January 15, 2023, 09:28:14 AM »
a career is really an investment class and income stream, just like a business.

This is a great way of putting it. If youíre not treating your career as a business and an investment in yourself, why bother at all? If you just phone it in and bide your time youíre flushing money down the toilet.

mizzourah2006

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Re: Career progression - compounding of your earning capacity
« Reply #7 on: January 15, 2023, 11:09:57 AM »
My first full time job started in the fall of 2011. Since then my CAGR on my income has been around 15%. But I fully expect it to basically cap around here. I'm not really interested in becoming an executive.

lifeisshort123

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Re: Career progression - compounding of your earning capacity
« Reply #8 on: January 15, 2023, 06:43:55 PM »
My earnings have increased substantially.  It all depends on where you beginÖ. But less than a dozen years after graduating with my bachelors degree my annual income is up over 10x from those days.  I keep thinking I will have hit my ďpeakĒ and will just receive COLAs, but new opportunities continue to come across my way.  I keep learning, growing, acquiring new skills, and becoming more valuable to my employer.  The money follows, but honestly, despite being someone moving towards FIRE, etc. the growth has come primarily from the sense of wanting to push myself, grow more, and develop skills than solely getting a bigger paycheck (which is nice).

Tass

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Re: Career progression - compounding of your earning capacity
« Reply #9 on: January 15, 2023, 08:04:41 PM »
I'm currently in my first genuine, full-time, adult job (making 2.7x more than I made at the beginning of my PhD in 2015). I like the job so far and I'm working hard to be reliable, proactive, and overall useful to my boss, who is the only person I have to impress. So far, he's been extremely complimentary. I'm only 2 months in, but thinking ahead and wondering: when and how do I ask for a raise, and how much do I ask for? I'm thinking the one year mark?

Obviously there is a lot of documentation on these questions on the internet, but I'm curious of the take of forum members.

Metalcat

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Re: Career progression - compounding of your earning capacity
« Reply #10 on: January 15, 2023, 08:07:46 PM »
Lol, I don't think I'll ever again make what I made straight out of school.

iluvzbeach

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Re: Career progression - compounding of your earning capacity
« Reply #11 on: January 15, 2023, 11:06:55 PM »
Recently FIREd but ended my career earning 28x what I did when I first started. Like money saved/invested, the compounding really adds up. Whatís interesting is that as I began to be smarter with my money, my income grew exponentially.

Gremlin

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Re: Career progression - compounding of your earning capacity
« Reply #12 on: January 16, 2023, 02:19:53 AM »
My earnings capacity has compounded well in advance of my earnings.  Iíve consciously traded away the difference in favour of a better quality of life.

Greystache

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Re: Career progression - compounding of your earning capacity
« Reply #13 on: January 16, 2023, 08:15:10 AM »
I thought my earnings progression over my 33 year career was pretty good until I read this thread. I guess I was just an average slacker. My starting salary out of college was $22.5K in 1982. When I retired in 2015, it was $190K. That is only 8.4 times what I started with. It does not include the benefits package or the 401K matching or the pension or the free tuition for my masters degree. I guess I am a bit of a dinosaur, since I spent my entire career with the same company. Maybe I could have done better if I had job-hopped a few times but it never seemed worth it to me.

MaybeBabyMustache

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Re: Career progression - compounding of your earning capacity
« Reply #14 on: January 16, 2023, 08:54:02 AM »
I thought my earnings progression over my 33 year career was pretty good until I read this thread. I guess I was just an average slacker. My starting salary out of college was $22.5K in 1982. When I retired in 2015, it was $190K. That is only 8.4 times what I started with. It does not include the benefits package or the 401K matching or the pension or the free tuition for my masters degree. I guess I am a bit of a dinosaur, since I spent my entire career with the same company. Maybe I could have done better if I had job-hopped a few times but it never seemed worth it to me.

As context, we moved to a HCOL (bay area) for the job that really pushed me into the high returns I noted. So, it definitely came with financial tradeoffs that aren't otherwise clear in the thread.

vand

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Re: Career progression - compounding of your earning capacity
« Reply #15 on: January 16, 2023, 09:33:15 AM »
I thought my earnings progression over my 33 year career was pretty good until I read this thread. I guess I was just an average slacker. My starting salary out of college was $22.5K in 1982. When I retired in 2015, it was $190K. That is only 8.4 times what I started with. It does not include the benefits package or the 401K matching or the pension or the free tuition for my masters degree. I guess I am a bit of a dinosaur, since I spent my entire career with the same company. Maybe I could have done better if I had job-hopped a few times but it never seemed worth it to me.

Haha, I know what you mean.  It's important to realise that there is undoubtedly a huge amount of survivorship bias in the responses being posted.

Looking at my own situation, although I have "only" compounded at a relatively miserly 7.1%, I have done it over a longer period than others, and my absolute income now puts me around the 92-93rd percentile of full time employees in according to national statistics.  I mean, sure, I could have done better, but it's also important to recognise how far you have come, too.  Not everyone can be a CEO!

ChickenStash

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Re: Career progression - compounding of your earning capacity
« Reply #16 on: January 16, 2023, 10:24:09 AM »
My current salary is only up 3.65x from when I started my first "real job" 20 years ago. If my math is right, that's an average of ~6.7% growth, not accounting for inflation. At this point, some pretty drastic changes would be required to move the needle.

Slightly depressing, actually. As the old saying goes, comparison is the thief of joy.


ATtiny85

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Re: Career progression - compounding of your earning capacity
« Reply #17 on: January 16, 2023, 11:08:25 AM »
Definitely see this type of thread as a great draw for the upper end folks.

2000 out of grad school in engineering, started at $55k

2023 on the easy drift to retirement, $140k, not including bonus, which could be up to around 30%, and has been at least 20% each year since 2010.

Currently have some other decent benefits that will keep me in current company. 10% 401k match, a pension (non COLA, but still will be nice of course at likely $45k per year when I wait until 67 to draw). Iíd have to throw in the four weeks of vacation and Christmas shutdown in there as well.


vand

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Re: Career progression - compounding of your earning capacity
« Reply #18 on: January 16, 2023, 11:57:40 AM »
My current salary is only up 3.65x from when I started my first "real job" 20 years ago. If my math is right, that's an average of ~6.7% growth, not accounting for inflation. At this point, some pretty drastic changes would be required to move the needle.

Slightly depressing, actually. As the old saying goes, comparison is the thief of joy.

There is hope.

In his book Outliers, Malcolm Gladwell supposits that a positive response to training stimuli can be measured in how immediate it is, but also how long it can continually be maintained.  You have people who are quick to learn and adapt, but whose ceiling is reached fairly early on, and you have people who start off from a fairly unremarkable base, but are able to keep learning and improving for year after year after year.

Now, granted, he wrote of this more to explain athletic performance, but I think the concept can be applied to learning and career, too. What's more, I have seen it too in my own circle of friends - with many very bright young things who haven't been able to properly apply themselves to the world of work and never made much of their careers, and by contrast others who started out on min wage (if even there was such a a thing back then) who have been lifelong learners, applied themselves and learnt new skills year after year, and are very high earners today.

I do also like to quote Jim Rohn on this, though - for things to change, you have to change.
« Last Edit: January 16, 2023, 11:59:16 AM by vand »

wageslave23

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Re: Career progression - compounding of your earning capacity
« Reply #19 on: January 16, 2023, 02:31:04 PM »
It all depends on how many years you are planning to work for.  I worked hard to increase my salary for the first 5 years of full time work and more than doubled my salary.  Then I started coasting for the last 5 yrs and increased it 50% during that time. Mainly because I knew I wouldn't be working much longer so no need to try to bust my ass to earn a little more. If I was planning on working 20+ years, I would have invested more in my career.  I'm currently in a sweet spot where I'm saving a ton of money for very little effort.  I'd have to get double my compensation in order to switch to a higher stress/workload position due to the decreasing marginal utility of money. Especially with a progressive tax structure.

FIRE 20/20

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Re: Career progression - compounding of your earning capacity
« Reply #20 on: January 16, 2023, 03:29:20 PM »
One of the lessons I've learned is that there are lots of paths to FIRE.  Some people are natural entrepreneurs and will be happier maximizing lifetime earnings by creating something.  Others end up in a field with limited income growth but invest money and sweat equity into real estate (I think @arebelspy did this?).  Others start in a high earning career.  Some hop from job to job with big salary increases.  I did something like what the OP did.  I was fortunate to get into a program within megacorp that gave me connections and perceived value such that it made sense to work hard there and climb the ladder (7.5% / year and ~4x over 19 years).  I think knowing yourself and understanding your situation are often the starting point for developing a plan that will lead to increased earnings and FIRE.  But of course the spending part of the equation is usually the most important. 

bacchi

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Re: Career progression - compounding of your earning capacity
« Reply #21 on: January 16, 2023, 04:57:49 PM »
I'm not sure how some of you have such high multipliers. Are we talking high school jobs or first post-college, full-time, "real job?"

Anyway, my peak financial year was around 3x my starting salary compared to my first post-college job. At that point, I realized that I had enough invested to start working fewer hours.

bryan995

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Re: Career progression - compounding of your earning capacity
« Reply #22 on: January 16, 2023, 05:27:37 PM »
To me - moving to VHCOL (CA) was the biggest NET win for our household earnings/savings.
The only thing that is meaningfully more expensive is housing, and a fixed-rate mortgage locks that in.

(listing earnings of my spouse and I over the years)

~20 years old - part-time work during college - $20k/yr + $20k/yr (MCOL)
~25 years old - entry level corporate/academic jobs - $55k/yr + $45k/yr (MCOL)
~30 years old - PhD and MBA complete, initial roles after graduating - $190k/yr + $115k/yr (HCOL)
~35 years old - 5-7 years post graduate degrees - ~$300k/yr + ~$200k/yr (HCOL)

Up ~5x since our first full-time jobs.
« Last Edit: January 21, 2023, 01:12:18 PM by bryan995 »

joe189man

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Re: Career progression - compounding of your earning capacity
« Reply #23 on: January 16, 2023, 09:06:50 PM »
I'm not sure how some of you have such high multipliers. Are we talking high school jobs or first post-college, full-time, "real job?"

Anyway, my peak financial year was around 3x my starting salary compared to my first post-college job. At that point, I realized that I had enough invested to start working fewer hours.

This,

i am about 3.2x at a annual rate of around 7.5% over 16 years post college
DW is doing better

jac941

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Re: Career progression - compounding of your earning capacity
« Reply #24 on: January 16, 2023, 10:01:08 PM »
I'm not sure how some of you have such high multipliers. Are we talking high school jobs or first post-college, full-time, "real job?"

Anyway, my peak financial year was around 3x my starting salary compared to my first post-college job. At that point, I realized that I had enough invested to start working fewer hours.

This,

i am about 3.2x at a annual rate of around 7.5% over 16 years post college
DW is doing better

Iím with you. I canít recall exactly what I made after my Bachelors, but I know it was around 1/3 of what I make now - that was almost 20 yrs ago.  I finished my Masters 15 years ago and I currently make about 2/3 (67%) more than the job I got when I graduated. Basically getting the Masters improved my income, but itís been only slightly better than cost of living level increases since then.

My spouse currently makes substantially less than he made 5-10 years ago.

vand

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Re: Career progression - compounding of your earning capacity
« Reply #25 on: January 17, 2023, 02:52:42 AM »
I'm not sure how some of you have such high multipliers. Are we talking high school jobs or first post-college, full-time, "real job?"

Anyway, my peak financial year was around 3x my starting salary compared to my first post-college job. At that point, I realized that I had enough invested to start working fewer hours.

I personally measured mine from my first full time job.

I remember it v well, I was paid around ~70% of the national median wage at the time.  Frankly, the amount didn't really matter that much to me at the time, so much as the feeling of joining the workforce and making my own way in the world -- those were good times. Where I am today I've moved to about 260% of the national median wage.   The wage ladder is a bit more compressed in the UK (and I imagine most other countries) than in the US.  Even so, it's evident that there seem to an overrepresentation on MMM of high and very high earners (95th percentile or higher) here who have never been anything but high earners - commanding above national average pay straight out of college (which frankly blows my mind - I mean, great for them).

« Last Edit: January 17, 2023, 02:54:14 AM by vand »

Ron Scott

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Re: Career progression - compounding of your earning capacity
« Reply #26 on: January 17, 2023, 06:19:24 AM »
I'm currently in my first genuine, full-time, adult job (making 2.7x more than I made at the beginning of my PhD in 2015). I like the job so far and I'm working hard to be reliable, proactive, and overall useful to my boss, who is the only person I have to impress. So far, he's been extremely complimentary. I'm only 2 months in, but thinking ahead and wondering: when and how do I ask for a raise, and how much do I ask for? I'm thinking the one year mark?

Obviously there is a lot of documentation on these questions on the internet, but I'm curious of the take of forum members.

Can you tell a bit more about your situation? What industry? Size of company? Also, what is the norm for performance reviews and salary increases where you work?

iluvzbeach

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Re: Career progression - compounding of your earning capacity
« Reply #27 on: January 17, 2023, 08:04:14 AM »
I'm not sure how some of you have such high multipliers. Are we talking high school jobs or first post-college, full-time, "real job?"

Anyway, my peak financial year was around 3x my starting salary compared to my first post-college job. At that point, I realized that I had enough invested to start working fewer hours.

I personally measured mine from my first full time job.

I remember it v well, I was paid around ~70% of the national median wage at the time.  Frankly, the amount didn't really matter that much to me at the time, so much as the feeling of joining the workforce and making my own way in the world -- those were good times. Where I am today I've moved to about 260% of the national median wage.   The wage ladder is a bit more compressed in the UK (and I imagine most other countries) than in the US.  Even so, it's evident that there seem to an overrepresentation on MMM of high and very high earners (95th percentile or higher) here who have never been anything but high earners - commanding above national average pay straight out of college (which frankly blows my mind - I mean, great for them).

I did not go to college as my family couldnít afford it and I didnít know student loans or grants were a possibility. I started working full time 34 years ago, right out of high school, making $5/hour or just over $10K/year. I lived on my own beginning the day after high school graduation and supported myself on this $5/hr, with zero parental or other family financial support. Knowing I didnít want to be poor forever, I threw myself into my work and busted ass in an effort to advance my career and earn more. I recently retired and am one who mentioned my income increased by 28x (probably more when you factor in 401K contributions & match, along with other benefits) during my career from beginning to end. I was extremely fortunate but I worked very hard (as so many of us do) and earned every penny that I made.
« Last Edit: January 20, 2023, 06:53:05 PM by iluvzbeach »

Chris Pascale

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Re: Career progression - compounding of your earning capacity
« Reply #28 on: January 17, 2023, 08:25:34 AM »
got a totally FREE PhD at NYU. Free tuition was available to every employee, but only a handful took that free money.

Good on you, man. That's really awesome.

What did you study?

Metalcat

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Re: Career progression - compounding of your earning capacity
« Reply #29 on: January 17, 2023, 08:41:15 AM »
I'm not sure how some of you have such high multipliers. Are we talking high school jobs or first post-college, full-time, "real job?"

Anyway, my peak financial year was around 3x my starting salary compared to my first post-college job. At that point, I realized that I had enough invested to start working fewer hours.

I personally measured mine from my first full time job.

I remember it v well, I was paid around ~70% of the national median wage at the time.  Frankly, the amount didn't really matter that much to me at the time, so much as the feeling of joining the workforce and making my own way in the world -- those were good times. Where I am today I've moved to about 260% of the national median wage.   The wage ladder is a bit more compressed in the UK (and I imagine most other countries) than in the US.  Even so, it's evident that there seem to an overrepresentation on MMM of high and very high earners (95th percentile or higher) here who have never been anything but high earners - commanding above national average pay straight out of college (which frankly blows my mind - I mean, great for them).

Lol, yeah, I thought I made a lot of money until I came here.

Tass

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Re: Career progression - compounding of your earning capacity
« Reply #30 on: January 17, 2023, 08:45:42 AM »
I'm currently in my first genuine, full-time, adult job (making 2.7x more than I made at the beginning of my PhD in 2015). I like the job so far and I'm working hard to be reliable, proactive, and overall useful to my boss, who is the only person I have to impress. So far, he's been extremely complimentary. I'm only 2 months in, but thinking ahead and wondering: when and how do I ask for a raise, and how much do I ask for? I'm thinking the one year mark?

Obviously there is a lot of documentation on these questions on the internet, but I'm curious of the take of forum members.

Can you tell a bit more about your situation? What industry? Size of company? Also, what is the norm for performance reviews and salary increases where you work?

Ha, this is why I'm so lost. I work for a large and well-funded academic research lab doing PhD-level writing. I am the only person with my job and it's not a common position (because most labs are not as well-funded). Professors basically get to run their labs however they want, so there is not an outside standard for performance reviews, although when I was hired I requested one at 6 months and 1 year to ensure I meet their needs and continue improving.

use2betrix

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Re: Career progression - compounding of your earning capacity
« Reply #31 on: January 17, 2023, 11:23:40 AM »
Finished welding school in 2009

First full year welding in 2010: approx $50k working around 55 hrs/wk
Moved into inspections/supervision around 2012 and slowly rose to $240k by 2016
Career continued to excel, $379k in 2020
My career probably peaked as a contractor last year, $450k

I have transitioned from a contractor to a full time role this month which was a significant pay cut but a significantly improved quality of life increase. I worked around 850 hours of OT last year and had 2 weeks vacation and no holiday pay. Now I work 40  hrs, 5 weeks vacation, holidays, 2 days/wk remote, etc. My computed hourly rate in my new role compared to last years is very similar, but my total compensation will be around $200k less. Itís definitely a trial period but I am optimistic for the decreased stress and better work life balance.

I agree wholeheartedly with those here who have outlined the benefits of investing in yourself to better your career, in addition to just investing in the stock market. I take a very holistic approach to all aspects of my life which can improve my earning potential.

FIRE 20/20

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Re: Career progression - compounding of your earning capacity
« Reply #32 on: January 17, 2023, 11:51:00 AM »
I'm not sure how some of you have such high multipliers. Are we talking high school jobs or first post-college, full-time, "real job?"

I calculated from my first engineering job after getting my Bachelor's to my final salary before FIRE.  My multiplier is 7.6% annual raises in large part because of large raises during my first few years (10-12%), and then once I was on management's radar as a high performer I was "voluntold" for unpaid extra work.  While the extra assignments meant long hours without any overtime pay, I ended up getting much larger raises than my peers.  The extra work was usually 80-100 hours per week for 6 straight weeks, and came up once every year or two.  Aside from those long hour, high pressure periods I usually worked 40-45 hours a week. 

A lot of my peers thought I was crazy doing those extra assignments because that work had a reputation for burning people out, but I figured getting a "top performer" rating and a 6% raise instead of a "satisfactory performer" rating and a 2-3% raise was worth it.  Compounding meant that after a decade+ I was making $10s of thousands more than other people at my grade level, and I leveled up faster. 

While those crazy periods were really rough, I learned more about the company and the industry during those times than the entire rest of my career.  And it was also the time that I was surrounded by the most interesting people - it was all top performers working with total focus on one goal.  While there was a lot of suffering from the constant level of high intensity, I now look back on those times as some of the best of my career.  But in the moment I won't deny that it was really, really rough. 
« Last Edit: January 17, 2023, 11:52:49 AM by FIRE 20/20 »

Ron Scott

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Re: Career progression - compounding of your earning capacity
« Reply #33 on: January 19, 2023, 10:42:55 PM »
got a totally FREE PhD at NYU. Free tuition was available to every employee, but only a handful took that free money.

Good on you, man. That's really awesome.

What did you study?

Business psych and statistics. I like to torture myself.

LD_TAndK

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Re: Career progression - compounding of your earning capacity
« Reply #34 on: January 20, 2023, 04:28:18 AM »
Is this a form of FIRE laziness - expecting money we put away to do the work for us without working on ourselves as much as we could?

Sure, earning more can reduce your time to FI and is necessary if you're particularly undercompensated. I would argue working on your earning potential is not "working on ourselves" though. Earning more money won't make me a better person. Frugality on the other hand encourages stoicism and conscientiousness. In my experience focusing on income leads to a money money = more happiness mindset where my wants can increase faster than income.

Metalcat

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Re: Career progression - compounding of your earning capacity
« Reply #35 on: January 20, 2023, 06:25:28 AM »
Is this a form of FIRE laziness - expecting money we put away to do the work for us without working on ourselves as much as we could?

Sure, earning more can reduce your time to FI and is necessary if you're particularly undercompensated. I would argue working on your earning potential is not "working on ourselves" though. Earning more money won't make me a better person. Frugality on the other hand encourages stoicism and conscientiousness. In my experience focusing on income leads to a money money = more happiness mindset where my wants can increase faster than income.

I also think in a forum packed to the rafters with ultra high earners, there's no lack of folks here working on their careers.

GilesMM

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Re: Career progression - compounding of your earning capacity
« Reply #36 on: January 20, 2023, 06:44:28 AM »
My salary and bonus over 25 years grew at an 8% CAGR.  That doesn't include other benefits like the many years we were abroad with preposterous benefits like housing, vehicles, travel allowances, hardship premiums, etc.  Those turbocharged our savings (over 100% some years) while making life infinitely more interesting.

Laura33

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Re: Career progression - compounding of your earning capacity
« Reply #37 on: January 20, 2023, 08:33:50 AM »
I thought my earnings progression over my 33 year career was pretty good until I read this thread. I guess I was just an average slacker. My starting salary out of college was $22.5K in 1982. When I retired in 2015, it was $190K. That is only 8.4 times what I started with. It does not include the benefits package or the 401K matching or the pension or the free tuition for my masters degree. I guess I am a bit of a dinosaur, since I spent my entire career with the same company. Maybe I could have done better if I had job-hopped a few times but it never seemed worth it to me.

+1

I agree with the message of investing in yourself and recall a column Pete wrote about that a while back (making the similar point that before you have financial assets, you have skills and abilities, and so the best thing you can do is work your ass off to increase those skills and abilities and make yourself valuable and earn more, which gives you both better pay/job security at your current job and better options if you want to look elsewhere).  This is the advice I've given my DD, who's graduating college this spring -- she has a job offer from a company that provides incredible training and opportunities for free classes at a nearby university, and she's at a time in life with no other commitments (financial or personal), so I'm telling her to both throw herself into the job and throw her money into investments/savings, as that combo will put her in a powerful position in a couple of years.

The problem with the ROI approach, of course, is that it assumes that the career is the top priority.  At my highest pay, I made about 8x my starting salary.  But there are a bunch of things that played into that:

- I'm a lawyer, so my starting salary was higher than most, and something I "earned" by an unpaid 3-year "internship" (i.e., getting a JD).  A more accurate comparison is probably what I could have made right out of college, which would have been less than half that. 

- There have been several times over the past 30-ish years when Bad Things happened that hit my income to the tune of 30-50%.  Like DH losing jobs and me having to find what I could get in the new area, or me having to telecommute very part-time because the job I found sucked.

- Probably most importantly, I have never prioritized maximizing my income.  I have never, ever been the highest biller at any firm I've been with, and honestly I've probably never been in the top 50%, except maybe one year; even before I had kids, I vowed that I'd never work weekends unless it was truly necessary (vs. putting in weekend work to hit some hours target), and I have stuck to that rule.  I chose a lower-paid job in a MCOL city vs. a higher-paid job in a HCOL city because even though the overalll $$ was lower, the lifestyle was way better (commute/housing prices/etc.), and I think I did better overall with COL/savings.  But the biggest impact has been choosing to be part-time for a lot of years so I could have time with my DH and kids and still cook dinner and not pull my hair out with all the stress of trying to fit a 60-hr/week job in with everything else. 

And yet even with all that, I'm still at around 8x over 30 years.  Because when I was at work, I focused my entire brain power on it and put out good stuff -- and my clients and bosses could see that I was committed to their issues and to getting things right.  And when circumstances required, I did work my ass off, including 2-3AM nights and one 108-billable-hour week.  The funny thing is that I didn't even think of myself as having a work ethic, because my mom works even harder!  But in retrospect, it was that commitment to the work that allowed me to increase 8x while still having a pretty fucking awesome lifestyle along the way (at least compared to most lawyers!).

mizzourah2006

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Re: Career progression - compounding of your earning capacity
« Reply #38 on: January 20, 2023, 09:36:23 AM »
I thought my earnings progression over my 33 year career was pretty good until I read this thread. I guess I was just an average slacker. My starting salary out of college was $22.5K in 1982. When I retired in 2015, it was $190K. That is only 8.4 times what I started with. It does not include the benefits package or the 401K matching or the pension or the free tuition for my masters degree. I guess I am a bit of a dinosaur, since I spent my entire career with the same company. Maybe I could have done better if I had job-hopped a few times but it never seemed worth it to me.

I think your earnings progression is impressive. I'm only at about 5.5x.

My first full time job wasn't until I was 28. I worked part-time while going through HS and college and then the year after I finished college I worked about 24 hours a week at a grocery store and then I interned 24 hours a week for free at a consulting firm. I then went into a PhD program that came with a modest stipend. My first actual full time job was for a consulting firm, where I made $52k/yr in late 2011. If I counted my year at a grocery store after college my starting income would have been around $12k.

mistymoney

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Re: Career progression - compounding of your earning capacity
« Reply #39 on: January 20, 2023, 11:39:08 AM »
how are you all calculating this? Just current or final / start? or anyone flinging inflation in there? Just dayjob, or including any sidejob income? Seems extra job should not be included, imo.

One of the best things about a higher salary (aside from the higher salary of course!) is the increase in the match for 401k.

I was tracking my salary and expected (then actual raises) for a few years and was overjoyed when my match got to 10k/year. That felt like "real" money, not just a token/spit in the wind kind of money from the company towards retirement......

Another (very tiny!) kick I got was when I saw that my 401k depo varied slightly paycheck to paycheck. Turns out that the (tiny!) monthly payment for internet comp for WFH staff is also matched. This nets me $1/month extra into the 401k. I love it. Silly I know :).

BicycleB

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Re: Career progression - compounding of your earning capacity
« Reply #40 on: January 20, 2023, 12:58:29 PM »
In this thread of high earners, I congratulate you all. Apparently I will have to represent the "normal" people! :) 

My first full time job after college (whoops, already above average) was $350/week in late 1980s, similar to 45k today. My last full time job, a quarter century later, was 56k gross salary - triple in dollars, but only 50% increase after inflation. Increase rate maybe 5% year (2% after inflation), but I took breaks along the way.

This is slightly below median progression rate for USA; I started slightly above median and ended near median for age. According to US Dept of Labor's Bureau of Labor Statistics:

Median weekly earnings full time age 20 to 24 during first quarter 2021 were $633 per week (my starting pay was about $880 in 2021 terms)

Median weekly earnings full time age 45 to 54 during first quarter 2021 were $1279 (my final pay was about $1300 in 2021 terms)

https://www.bls.gov/opub/ted/2021/median-weekly-earnings-by-age-and-sex-second-quarter-2021.htm

So a median person roughly doubles in 25 years after inflation, an increase of 3%/year  - maybe 6%/year in nominal dollars. I was slow but close to normal. Thread participants mostly started normal-ish but rose quickly, proving that advancement is possible and pays well - and that this thread, as has been said, involves high performers comparing to each other. Again, congrats to all.
« Last Edit: January 20, 2023, 01:05:25 PM by BicycleB »

Laura33

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Re: Career progression - compounding of your earning capacity
« Reply #41 on: January 20, 2023, 01:41:03 PM »
One of the best things about a higher salary (aside from the higher salary of course!) is the increase in the match for 401k.

Reminds me:  I really, really wish companies were more open about what the various perqs turn into at different levels, so that people could fairly evaluate whether it's worth it to try to get that next rung up.  In my world, partnership is a pretty obvious step that leads to potentially huge gains over 5-15 years.  But one thing I didn't know until I got there was that we have a profit-sharing that allows something like $35K of our end-of-year profits to go into our 401(k)s.  I swear, every time I think about quitting/retiring, that and the fully-paid medical insurance are the two things that hold me back! 

DH, OTOH, has the more standard pension + 401(k) + "incentives" (i.e. stock options).  We know that each level generally means "more."  But we don't know what/when/how.  For example, he's heard through the grapevine that if you get to VP level, your pension improves not just because you have a larger final salary, but because they have a higher percentage payout (or something like that -- some better formula that gets you more $$).  DH prefers his tech role over the business-ey role he'd need to take to make VP, but boy it would be great to understand what the actual pros/cons are, instead of this smoke-and-mirrors-and-gossip stuff.

use2betrix

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Re: Career progression - compounding of your earning capacity
« Reply #42 on: January 24, 2023, 06:15:28 PM »
One of the best things about a higher salary (aside from the higher salary of course!) is the increase in the match for 401k.

Reminds me:  I really, really wish companies were more open about what the various perqs turn into at different levels, so that people could fairly evaluate whether it's worth it to try to get that next rung up.  In my world, partnership is a pretty obvious step that leads to potentially huge gains over 5-15 years.  But one thing I didn't know until I got there was that we have a profit-sharing that allows something like $35K of our end-of-year profits to go into our 401(k)s.  I swear, every time I think about quitting/retiring, that and the fully-paid medical insurance are the two things that hold me back! 

DH, OTOH, has the more standard pension + 401(k) + "incentives" (i.e. stock options).  We know that each level generally means "more."  But we don't know what/when/how.  For example, he's heard through the grapevine that if you get to VP level, your pension improves not just because you have a larger final salary, but because they have a higher percentage payout (or something like that -- some better formula that gets you more $$).  DH prefers his tech role over the business-ey role he'd need to take to make VP, but boy it would be great to understand what the actual pros/cons are, instead of this smoke-and-mirrors-and-gossip stuff.

That is how my current company is structured. There are annual bonuses that are based on your ďEĒ level. Most people are E3-E8, then for long term or director level, it goes to like M1-M3, then higher for VP, etc.

I am an E7 and get an annual 25% bonus of my salary. An E6 would be at 20% That can be more or less depending on personnel and company performance. Last year had a company performance multiplier of 1.4x, so with my 25%, it would have actually been a 35% bonus. Bonuses are paid out each March and based on the past calendar years performance. I was a contractor the last two years and just joined full time this month, so I wonít be eligible for the bonus until next year. I knew this going in and actually chose to transition my start date from last August to this January because the higher salary as a contractor was still far more than the adjusted bonus I would be receiving.

Archipelago

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Re: Career progression - compounding of your earning capacity
« Reply #43 on: January 24, 2023, 08:59:53 PM »
2016: $30k with FT job out of college and $9k in side hustle income = Total comp $39k
2017: $34k for FT job, $9k in side hustle income, started business A produced $3k, started business B produced $3k = Total comp $49k
2018: Quit FT job, $9k in side hustle income, business A produced $10k, business B produced $27k = Total comp $46k
2019: $56k with new FT job, $9k in side hustle income, business A produced $15k, business B produced $34k = Total comp $114k
2020: $61k with FT job, $9k in side hustle income, business A produced $20k, business B produced $67k = Total comp $157k
2021: $44k with FT job (left in September 2021), $9k in side hustle income, business A produced $36k, business B produced $79k = Total comp $168k
2022: Self employment, $4k in side hustle income, business A produced $36k, business B produced 97k = Total comp $137k
2023 projection: Business A generate $60k, business B generate $110k = Total comp $170k

Side hustle was a musician
Business A is real estate (rentals)
Business B is e-commerce company

2019-2021 were grinding years and 60-80 work weeks
2022 was 30 hours/week with much better work/life balance

I don't believe I could've done better with career laddering / promotions / raises / job hopping than by building businesses.

AccidentialMustache

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Re: Career progression - compounding of your earning capacity
« Reply #44 on: January 24, 2023, 10:16:29 PM »
Numbers are going to vary wildly. First full-time job in the midwest after college, but then moved out to tech in the bay? Yeah that's going to be a huge multiplier, but your cost of living is also going to skyrocket. And of course the worse starting job, the better moving into something like tech or good paying trades after it would be.

I'm between 9 to 10% annually, never having left college towns. Fuzzy because, well, RSUs. I'm also a tech type (sysadmin/devops/software) and have always worked in that area. My starting salary after college was under average for my school by quite a bit (public sector), so that's boosting my compounding number, but lowers my lifetime earnings.

BicycleB

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Re: Career progression - compounding of your earning capacity
« Reply #45 on: January 24, 2023, 10:35:49 PM »
2016: $30k with FT job out of college and $9k in side hustle income = Total comp $39k
2017: $34k for FT job, $9k in side hustle income, started business A produced $3k, started business B produced $3k = Total comp $49k
2018: Quit FT job, $9k in side hustle income, business A produced $10k, business B produced $27k = Total comp $46k
2019: $56k with new FT job, $9k in side hustle income, business A produced $15k, business B produced $34k = Total comp $114k
2020: $61k with FT job, $9k in side hustle income, business A produced $20k, business B produced $67k = Total comp $157k
2021: $44k with FT job (left in September 2021), $9k in side hustle income, business A produced $36k, business B produced $79k = Total comp $168k
2022: Self employment, $4k in side hustle income, business A produced $36k, business B produced 97k = Total comp $137k
2023 projection: Business A generate $60k, business B generate $110k = Total comp $170k

Side hustle was a musician
Business A is real estate (rentals)
Business B is e-commerce company

2019-2021 were grinding years and 60-80 work weeks
2022 was 30 hours/week with much better work/life balance

I don't believe I could've done better with career laddering / promotions / raises / job hopping than by building businesses.

Well done, @Archipelago! You have hopped into higher, ahem, income islands very smoothly. Screen name checks out. ;)
« Last Edit: January 25, 2023, 12:13:07 PM by BicycleB »

ChpBstrd

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Re: Career progression - compounding of your earning capacity
« Reply #46 on: January 25, 2023, 10:01:09 AM »
Nonetheless, it's interesting that we pay so much thought and attention to the process of the market compounding our portfolios over time (something we have no control over), but much less time about something we have much more control over which is our earnings potential over our careers.  Is this a form of FIRE laziness - expecting money we put away to do the work for us without working on ourselves as much as we could?

This is the paradox of FIRE, and why its more aggressive versions don't have mass appeal:

You have to work very hard for a long time in order to not have to work very hard for a long time.

Thus, if you are seeking an escape from working very hard, FIRE will appeal to you, but to achieve it you must do exactly the thing you're trying to avoid. The more I'm motivated to spend my best years having fun, the less motivated I am to behave like a workaholic. Yet, 10 years of workaholism in my 20's-30's might have freed up twice that amount of time for having fun later. The value of sacrificing time now to retire early depends a lot on your discount rate for time in the future. It also depends on the value you assign to spending time with your kids, traveling, keeping stress levels low, and doing non-productive things like hobbies, reading fiction, art/music, or having friends.

A lot of the folks here multiplied their salaries and got very rich, but they paid a price for it. Different people think about that price in different ways.

If any of you were able to 8x your salaries without putting in more than 40h/week, getting advanced degrees, doing continuing education on the weekends, letting entrepreneurship take over your life, or spending enormous amounts of time/energy relocating for jobs every couple of years, I'd like to know how you did it. Normally the pathway to career advancement is to out-work your competitors, and it sounds like many of the posters here made that choice.

Must_ache

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Re: Career progression - compounding of your earning capacity
« Reply #47 on: January 25, 2023, 10:14:08 AM »
I started at $32K in August 1996 and made $149K last year => 4.656x in 26.5 years => 6.0%/yr
These career growth numbers could be skewed if you started out underpaid or in some hole-in-the-wall position unrelated to the one you're in now. 
The actuary career was nice in that passing exams meant automatic raises and eventual promotions.  But there was sacrifice as well.

poxpower

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Re: Career progression - compounding of your earning capacity
« Reply #48 on: January 25, 2023, 11:09:04 AM »
If any of you were able to 8x your salaries without putting in more than 40h/week, getting advanced degrees, doing continuing education on the weekends, letting entrepreneurship take over your life, or spending enormous amounts of time/energy relocating for jobs every couple of years, I'd like to know how you did it.

Who cares about income multiplier? What matters is how fast you retire, if that's the point of FIRE.

Who's going to retire faster? Blue collar worker who starts part-time at Dairy Queen for 10k/year and moves up to 60k in his 20s by becoming a plumber?
Or Ivy League Diversity Consultant who starts at 100k/year, at 28, with 100k in debt.

Who's going to multiply their income faster or higher in their lifetimes and who's going to retire first? The blue collar worker. Without busting his ass very much either. Work earlier, for more money and spend less and compound interest will eclipse the late-blooming careerist who's destroying his entire life to gain that 5% salary increase yearly so he can retire 2 years faster ( but still 10 years later then the blue collar guy ).

2Birds1Stone

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Re: Career progression - compounding of your earning capacity
« Reply #49 on: January 25, 2023, 11:30:17 AM »
@ChpBstrd, that's why a 70-75%+ savings rate is the way to go :)

Especially for all of these wildly high earners.

 

Wow, a phone plan for fifteen bucks!