It's a clear signal, the company values you less than when it hired you. When leaving a company like that I find it best to frame it in a way that they were unhappy with you. "Hey look I know you are trying to spare my feelings, but that is 6 percent less than inflation, clearly you want me out of here but didn't have the courage to lay me off. Thanks for the heads up, I've found another role."
Whether you agree to buy or sell at a certain price is entirely dependent on whether such price is higher or lower than the value of the trade, in your own subjective assessment.
There are other meanings of the word "value" in business transactions, but that is probably the most common and fundamental one.
>Whether you agree to buy or sell at a certain price is entirely dependent on whether such price is higher or lower than the value of the trade, in your own subjective assessment.
The subjective assessment of the "value of the trade" is then a function of the subject's alternatives, which is usually how much someone else will pay or accept from them.
I find the term utility to be more beneficial than value, due to it being less likely to be confused. As a boss, I would say I value all the employees equally, in human terms. But the employees provide different amounts of utility/$. Although I can see how people use value and utility interchangeably.
> The subjective assessment of the "value of the trade" is then a function of the subject's alternatives, which is usually how much someone else will pay or accept from them.
I agree that it is a function of the alternatives, but the operative alternative here is not trading. The best way to assess value is that which you lose by taking something away, like taking a player out of a team or a customer out of your book of business
Every choice in life is a gamble. Many or most businesses are betting that their labor vendors (employees) will accept less and less. Based on the statistics of the past 5 decades, this seems to have been a good bet.
So in order for us to keep our value, we'd better switch as often as possible, I guess. As long as companies aren't giving reasonable raises, at least.
That is how price discovery in any market works. The more often buyers and sellers engage in transparent transactions, the more knowledge market participants have of supply and demand curve movements.
Note that for buying and selling labor, price is not only the amount of currency being exchanged, but will also include things like work schedules, work environments, break time, location, etc. I prefer to think of it as $x per a certain amount of quality of life at work.
