Why I had to think twice about what makes a reasonable starting salary in 2022 - Andrea Morrison
It was a trainee position so they felt they had the best of both worlds, being paid to continue training and learning.
It reminded me of when I first left college and got my first job, I thought I was earning a fortune!
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Hide AdI shared with my colleague that when I started out, I was earning around the same starting salary of £18,000 and how I thought this was a huge amount of money as I was living at home, had no other real expenses and so was able to save and buy things like my first car.
Not to my surprise, they responded by saying that their eldest felt the same about the new chapter in their life.
In some ways it was an inconsequential conversation that passed by in moments, but something about it just hung around for me.
As I reflected on it later on that day, it occurred to me what it was.
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Hide AdI was at some level surprised that an 18-year-old was earning the same as I did when I was that age, but that was over 30 years ago.
I love the way my mind nudges me and before I knew it I was tapping into the Bank of England inflation calculator.
Sure enough, £18,000 in 1990 is not worth £18,000 now in real terms but a staggering £35,945.65 – almost twice as much.
It fascinated me that my mind hadn’t moved on that much, and I still thought what I earnt a few decades ago was a reasonable amount to start on now.
It was like I had been stuck in a money time warp.
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Hide AdObviously, when I started my first real job that was the first time that I had been exposed to a ‘real wage’ and my mind had logged that as reasonable level ever since.
But what occurred to me then was a little more impactful.
In the UK, the equal pay gap in 2020 for female entrepreneurs is at 42%.
Whilst there are many factors feeding into this, one thing that I hear time and time again from entrepreneurs is ‘I can’t charge that - that’s too much and I don’t feel comfortable’ or ‘They won’t pay that so I can’t ask for that’.
I can empathise with this, because I used to feel like that too before I understood the tricks my mind can play.
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Hide AdIn the same way that what might initially seem like a reasonable starting salary actually proves to be worth considerably less than it once was, the amount entrepreneurs feel it is fair to charge their customers or clients should also be moving with the times.
What we think about money is important, because it colours our decisions, we will reduce our pricing if we think others won’t pay that level or we think that what we are charging too much.
But if you are stuck with a 1990s monetary mindset then you will be undercharging (or underpaying) by nearly 50% due to the impact of inflation over the past three decades.
I’m sure I don’t need to tell you the impact that that has on business growth!
Andrea Morrison is a Yorkshire-based transformational business coach and mentor