The Competitive Advantages of Overpaying

Everybody loves entertainment. Music, movies, sports, comedy, theater, books or whatever, people get excited about it like almost nothing else. So everybody, even people who don’t consider themselves “cultural,” places value on artists like writers, actors, musicians, and the many, many other kinds of people that bring us the things that entertain us.

The conundrum we’re facing right now as a society is that it’s harder than in the past to get paid to do these things. Via Howard Sherman’s tweet, I read a thoughtful and passionate piece by Greg Redlawsk about the notion that artists (mainly actors in this instance) should “pay their dues” in the form of working for little to no pay early in their careers.

I’m not in a position to comment on most of the specifics of the issues here, but from an outside perspective, there are a couple of things that are somewhat obvious but may be helpful to people in the midst of the struggle on a day-to-day basis. At least, I hope so.

First, this notion that the low pay is because people should “pay their dues” is, as Redlawsk suspects, absurd. Yes, most professions require you to put in your time, and the rewards for success DO grow over time. Still, the idea that if you don’t suffer financially, you’re not legitimately committed is stupid. Yes, doctors “pay their dues” with grueling residencies, and no, they don’t get paid as much as their seasoned and skilled colleagues, but they’re not expected NOT to get paid.

That’s the good news.

The bad news is that the abundance of free, inexperienced (or relatively inexperienced) labor is what keeps the price low. So many people are interested in being a … you pick the potentially lucrative and glamorous (but probably not) artistic profession. You’ve got to be special not to be interchangeable, and most people, by definition, can’t do that.

Let’s talk about the polar opposite of this in our economy. In a time of high unemployment among young adults and massive college debt, there are jobs going unfilled that right out of high school pay $50k, rising to potentially double that within a few years. In the traditional trades (plumbing, electrical work, carpentry, etc.), a very young person can get work at nice pay, get trained on the job and have a recession-proof, fire-proof skill set for the rest of his or her life. And yet, in many instances, there are not enough of these people to fill the jobs available. As a result, you may have noticed the cost of things like plumber call-outs and carpentry work going up.

If, for some reason, hundreds of people wanted to be a carpenter for every one carpentry job, this would flip around, and those built-in shelves you wanted would be much cheaper.

Like I said, that’s the bad news.

There’s good news, though, and I hope that some people in a position to make these decisions hear it. Just because tons of free artistic labor is available doesn’t mean that’s what you have to pay. In fact, I believe strongly* that strategically overpaying for talent is one of the smartest things a business or organization can do.

Let’s say, for example, that young, relatively inexperienced actors are plentiful and, given their stage in life, many are willing to work for free. Among that pool of those willing to work for free, there’ll be a significant difference in skill and talent. Some of the people will be just at the edge of that pool, barely willing to keep doing it. They’re the ones who will feel most strongly that they are “forced” to keep paying their dues. To stop would mean giving up on a career in which they’ve made real progress, but to keep going is painful. Ugh.

So suppose that an organization decided to “overpay” the market. I don’t know what figures to use here, but in Redlawsk’s piece, he mentions nonunion actors making $125 a week. Suppose a comparable organization simply doubled that to $250 a week, and it involved paying 10 more actors that amount. You’d attract anybody willing to work for free, likely including the top of that pool. If you did it right, you’d probably get your pick of those people.

So for $1,250 per week in this example, if you know what you’re doing when it comes to talent, you’d have a significant upgrade on the quality of your show. I know $1,250 is real money in a small production. I’m a bootstrapped entrepreneur, so yeah, I know about every dollar counting, but it’s funny about costs like this. They seem huge until you step back and say, “What would it take to justify this?” For $1,250, if you’re selling tickets for $25, you’d need to sell 50 extra tickets a week.

Major upgrades on 10 actors … is it worth 50 tickets a week? I would think so. Longer term, how about a reputation as the organization that pays up? What might that be worth?

This is another area where slavishly following the crowd can mean big lost opportunities to the organization that knows how to capture them. Pay “market,” get “market.” Pay better than market in an area where people are hungry, and get … maybe something really special.

It’s simple economics. And that’s the good news.

* In our own organization (Goldstar), we have deliberately raised starting salaries above market in several key areas over the years, especially customer service and editorial. These are places where the difference between the bottom and the top of the talent pool is huge. As a result, we do really well in these areas, and frankly, better people can get more done, learn faster, stay longer and do everything more successfully than the people you’d get by saving a few bucks a month. I mean, just look at these folks. Worth every penny — and then some!

 

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