Stability Of Your Income Source

Our job, usually the first income source we have and the only income source for most. While there is a need for us to have multiple sources of income, many people are still largely reliant only on their job. But whatever it is, it is important to understand the stability of your income source, especially if you only have your job and nothing else.

In this world of rapid globalisation, many economies are interlinked to each other. Especially for small countries like Singapore where we are almost fully dependent on the global economy, any movements on the international stage has a great impact on us. Even a country as big as China still suffers from something such as the Fed’s interest rate policy. Hence it is important to know how solid is the foundation of your income source and how likely is your income source going to get cut off.

The Industry
The medical industry is one example of a very stable industry. No matter the era, people fall sick and they die. To prolong their lives, people go to the doctors, stay in the hospitals and eat medicines. Similarly, the education industry is also quite stable, as people sought to get educated to have a brighter future ahead. If you are in this line, chances are you will have a relatively stable job unaffected by the economic crisis or changes in spending habits. Unless of course the Government makes a very drastic change in policy such as that in China, where the Government clamped down on all after-school tuition activities, effectively crippling the education industry. There are of course reasons behind it, but that involves politics and I will not talk about it here today.

If you are in the insurance line for example, then you will need to be more concerned. In tough times, people put the basic needs for survival in the modern world above all else – food, shelter, education, medical etc. Only with extra money are people able to think of other things. Insurance which is marketed as a tool to protect your future, have to take second place. There is no future if the people cannot survive the present. Banking, tourism and automobile industry are also just a few examples belonging to the category of “good only when people have money”.

The Future
Somewhat related to the portion mentioned above, but in a slightly different way. What is the future? There are rising industries and there are sunset industries. For example, AI and big data are the rising industries which will expand more in the future. But perhaps oil and gas, while still hold importance in the world today, is designated as a sunset industry in view of the stance towards clean and sustainable energy. If you are in a sunset industry, then you will know that the segment that your industry holds will get smaller and smaller, requiring lesser workers over time. Are you able to keep your job till the day you retire?

Even if a particular industry is not a sunset industry in the global context, it may be so for your country’s context. In the 1990s, the semiconductor industry in Singapore reached its peak. Those who were in the industry earned a lot of money. But as Singapore phased out manufacturing in favour of the service industry, bio-chemical industry, finance industry etc, the competitiveness which Singapore had in manufacturing was gradually lost. The semiconductor industry is still important globally, but in the context of Singapore, it slowly died down. Till today we still have semiconductor companies in Singapore, but it is no longer holds much future in my country. These companies have now moved to cheaper developing countries.

The Skill
There are jobs in which you become more valuable as you get older, and jobs which get more worthless as you progress. Jobs like a doctor and a lecturer command higher pay as they gain experience over the years. Anyone would prefer an elderly doctor performing an operation compared to a fresh graduate. The reason is simple: The experience that one accumulated over the years is critical to the efficiency and effectiveness of the task that they are performing, where success or failure can have a huge impact. While teachers or lecturers do not hold life and death positions, their experience in guiding students towards effective learning also plays a part in producing good students, which in turn increases the reputation and standing of the school. This is why international schools always hire teachers with many years of experience.

On the other hand, jobs that focuses on raw energy or youth loses its value over time. Jobs like construction workers, soldiers, models etc have an early phase out age. Your experience can only lead you so far, and raw energy or just simple youthful looks is always the better choice. Unless you change the nature of the job, such as being promoted to the foreman or general, where your job actually involves planning and administrative work rather than running around doing the hard labour, you can expect to retire at an early age. It is the same everywhere, only the very few will make it to the top. For every 1 million soldiers, perhaps only 100 will be a Colonel and 1 will be a General. In the US, we see many homeless military veterans. They were probably paid a decent sum for their years of service, but due to poor financial management, ended up in a sorry state simply because they no longer have the capability to earn money anymore.

Is your job easily replaceable? For the white-collared workers, we have many people doing general administrative work despite their fanciful sounding job titles. For blue-collared workers, many jobs such as a truck driver is easily replaceable as the skill level involved is simply not high. Unless you are doing a specialised skill, such as a statistician or working in an oil rig for example, where not many has the kind of skill you have, if not any other worker fresh out from school is able to replace you.

Let us consider this scenario. As a white-collared general administrative worker in for example a big bank, as you work your way up through the years, you are now earning a salary of $10,000 a month. We now have this situation:

  1. You are a manager earning $10,000 per month
  2. You have an assistant manager earning $7000 a month
  3. In your team there are 4 other team members earning $5000 a month each
  4. There is also an intern earning a mere $1000 a month.
  5. The company pays $38,000 a month for your team.

The company now deems that at $10,000 a month, you are no longer value for money. As a middle age person, your drive is no longer for the company but for your family. As you age, you no longer have the energy to do over time. The company now makes the following decision:

  1. Sack you and save $10,000 a month.
  2. Promote the assistant manager and increase his salary by $1000, to $8000 a month.
  3. Promote 1 of the 4 team members to assistant manager, increasing his salary by $500, to $5500 a month.
  4. Give the other 3 team members who did not promote a salary raise of $250 a month, which is a 5% increase. Now their salary is $5250 a month.
  5. Officially confirm the intern as an employee of the company and give him a a salary of $3500 a month.

We have the following results: Manager salary $8000 + assistant manager salary $5500 + 3 members of the team $5250 x 3 + newly converted intern $3500 = $32,750
In this whole situation, you are the only one unhappy about it because you lost your job. The company saved $5250 per month in salary, the team members either got promoted or get a pay raise, the intern has a stable job now. Everyone is happy. Except you.

If you think that the rest of the team will be in fear that this will be their future, you can be sure they most likely will not. Firstly, that day is still far away. Secondly, you will be fired over a ‘valid’ reason. Be it poor performance or a serious mistake, your firing will be justified. The people who got their promotion or pay raise will be because they had good performances and exceeded the bosses’ expectations. The bosses had high hopes for them and hope they will continue to do well in the future. If nothing, these people will work even harder for the company than before to answer to the company’s expectations.

Now we imagine this scenario takes place in every department in every company in every industry. Those of you who worked long enough should know what I am talking about. Now if we do not want this to happen to us, we will need to ask ourselves how can we make ourselves relevant to the company or the organisation? How can we continue to hold on to our job as we grow older and get more expensive?

During the Covid pandemic, the economy got hit hard and trade volume dropped a lot. Many sectors were affected and people generally were no longer needed in the companies. To prevent companies from laying off workers, Singapore’s Ministry of Finance had taken out money to co-pay the salaries of workers from the private sector, so that the companies would not retrench them.

We can see that in quite a few sectors, the Government pays up to 60% of the workers’ salaries. We can then deduce that without the Government’s support, half of the existing workers may be easily laid off. During this Covid pandemic, rather than outright distributing out unemployment benefits like the US, the Singapore Government opted to co-pay the salaries of these people, ensuring that they still have a job to do. Socially speaking, it is not a bad judgement call. As long as people have a job, society still can function. But economically speaking, this is not sustainable. The hope is that Covid will die down soon and things go back to normal. However we now know that Covid is still around us. If you are one of those whose job is co-paid by the Government, then the day the Government subsidies are cut is the day your job is threatened. Your job is simply not sustainable.

Covid aside, there are also many jobs out there which people do that are simply not sustainable. Those who work in the nightlife where you need to drink a lot for example, live-streamers whose main point of attraction is beauty, pro-gamers whose competitive advantage is their reaction time and actions per minute (APM) etc. If you are in any of this line, you will need to think about how long you will be able to sustain.

Not all jobs are made equal. Not all jobs are built on solid foundations. People get new jobs all the time, and people lose their jobs all the time. Knowing how firm you stand in your career allows you to expect the future and make sound decisions to mitigate it, whether it is upgrading yourself or changing a career track. For those who are still in school, hopefully this will also help you in deciding where to go in the future. Now that we know that depending solely on one job for an income may be a dangerous thing, one should always work for multiple sources of income for financial stability.

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