Law of Compensation: Supply and Demand

  As a refresher, the law of compensation states that the amount of money you earn is always in exact ratio to:

1. The need for what you do.
2. Your ability to do what you do.
3. The difficulty there is in replacing you.

So, the question comes down to, is there a great need for what I (or you) do? If there is, then that's a good step towards getting more money. If there isn't a great need, then it won't matter how good you are you won't earn lots of money.

If there is a need, especially a great need, for what you do, then you (or I) need to become really good at it.

The better we become at what we do, the more value we can command and will receive, if there's a great need for what we do. There may be a lot of others working in that field, usually because there's a high demand and need. But if you're among the best, or the best, you are more valuable.

This leads to the third part. The better you are at what you do, the more valuable you become, then the difficulty in replacing you increases. The higher the difficulty in replacing you means you are more valuable.

You can use affirmations, mantras, declarations, incantations, etc. all you want but how much you get compensated will be dependent on the three parts.

There may be a need for a burger flipper or grocery bagger, and you may be really good at doing it. But, it's also very easy to replace you. Maybe you're satisfied with doing the job, rich in a non-monetary way, but you will never earn big money doing it.

To get more money you need to offer something of value in an area where there is a great need/want. There has to be the demand.

In my current job, basically end user IT support, there is a need. It's not a great need, so there isn't a lot of money to be made. But there's more of need than finding an administrative assistant so my position pays more. And it's not as easy to replace me with my knowledge, skills, and abilities. Still, it's not a highly specialized position so the compensation isn't very high.

My mind started thinking, where is a there a strong need where I can provide value? Is there an area of great need that I'd be passionate about pursuing?

Two big areas of strong needs: entertainment and self improvement (and related areas).

Most people would rather be entertained than to think, which is why entertainment is a big need. There are tons of actors, so why are a few paid so much more? The same reason some athletes are paid more. They're not just good at what they do, but people like to watch them. The demand is there so those performers command a higher pay.

Marketing is a big contributor as this increases awareness of the person, but if the person isn't good at what they do then the marketing will ultimately fall flat. What good marketing can do is to not only increase awareness, but it can also increase demand.

I'm no athlete. I could've play a number of sports, but I'm the rare guy who isn't into team sports.

Acting would be fun but my point in life isn't conducive for that demanding life, especially for the first several years. I worked part-time in some TV and film productions, mostly as a stand-in or extra, and I thought it was a fascinating industry. I still think it'd be awesome to have a more substantial part in a big production.

God has given me the gift to write. And people like stories so writing good books is a viable option. I believe I'm a good writer so my challenge is create awareness, to market myself and what I write.

But high-paid actors/actresses and athletes (entertainment and sports) aren't the only areas where there's lots of money.

Think about the richest people and what they do, money isn't confined to existing industries.

Some people created new industries or markets, and thus created a demand. Think Bill Gates with Microsoft, Jeff Bezos with Amazon, Elon Musk and Tesla, etc.

I think coaching others, helping them to improve and better their lives would be very satisfying.

Maybe an easier comparison for the law of compensation is the economic law of supply and demand. 

If the supply is abundant (high) and demand is low, the price will be low. These are the low, minimum wage jobs where the supply of potential workers is high,  but the demand for skill level is low.

If supply is limited (low) and the demand is high, the price will be high. If there's a high demand for a profession or specialist, and the number of experts is limited, then the cost for employing that person increases.

But if the supply is high and the demand is high, or the supply is low and the demand is low, then prices aren't as extreme and other market/economic factors come into play for pricing. Some of these factors may pertain to local or regional variances.

For much of my life I've appreciated being a generalist, a jack-of-all-trades. But in my experience I have also learned that more specialized knowledge and expertise significantly increases my value to others. It's part of the reason I returned to formal education to earn a second bachelor's degree and then a master's degree. It's why I continue self-improvement.