I gave a talk to a group of relatively senior engineer on their career paths. Some of them found it interesting and encouraged me to blog about it. I was easy to convince.

Labor market essentially exchanges personal productivity with compensation. You contribute to the company's objectives; the company pays you back. Your pay is roughly commensurate with your relevant skill level. For salary workers, this market is inefficient: companies usually adjust your compensation once a year and you do not look for new jobs on a whim.

The black curve and the green stair-case lines show the relationship between the value of skills and actual compensation. Your earned pay reflects the improvements of your skills. Companies do this in a zig-zag way: sometime over-paying and sometime under. The gap between these two lines cannot be too wide for too long. Either you will find a new job that pays your market rate, or the company will fire you for not giving your money's worth.

Once in a while, opportunity knocks and you change job, usually for better pay. You will find yourself in the red square area. Three possibilities explain your newly elevated wealth status. You may have recently acquired some skills, or have found a market for those you already had, but not appreciated well enough. In this case, you would have jumped from the black curve to the blue one and started climbing the new light-blue ladder.

Or, sadly, you may have simply got the raise that would have come just few months later from the old job: same curve, same ladder. In this case, you are being "golden hand-cuff'ed." You cannot leave until your skills have caught up with your pay. While you are so hand-cuff'ed, you lose the option to jump to the blue curve.

Ask first, when you are thinking of a new job, if you will be learning new skills. Don't ask if it pays better. You compensation will keep up with your skills, sooner or later. If you are not learning new skills, then you are simply being harvested.