Derek Jeter is one of the most well-known and well-respected players in all of Major League Baseball. This year, at the age of 36, his contract is up for renewal. As the Captain of the Yankees, many fans expected the Front Office to give him whatever he wanted so that he could finish out his Hall of Fame career in pinstripes.

But there's a fly in the ointment: the Front Office does want to keep Jeter but Derek's Agent is suggesting that he be paid $23-25mm per year for the next 5 years. His agent has said that Jeter can't be valued the same way as other shortstops because of his leadership qualities. Why is that a problem?

1. A Player is "in their prime" between the ages of 29-32. They've got more maturity, they understand how to keep their bodies healthy through 162+ games and they have enough youth still in them to match up against the strength of a 25 year old.
2. There are only a handful of players making over $20mm per year - the list gets even smaller when you add the filter of being 36 years old or older. Oh, and the stats of Derek don't come close to matching those of the players who are at this altitude.
3. The 2nd highest paid shortstop in the Major Leagues is Hanley Ramirez who is 10 years younger, hit 30 points higher and hit 21 home runs to Jeter's 10.

How does this situation possibly impact you?

More and more I'm seeing Business Leaders who are making what I believe to be a major mistake: they're hiring people who are currently unemployed and offering them significantly less than what they were previously making. They Leaders are feeling quite proud of themselves because people are accepting the positions. Karl Scheible is a close friend of mine and a Sales Guru. For years he's pounded into my head that people make decisions for 2 reasons:

1. To run TOWARDS pleasure
2. To run AWAY from pain

The pain of unemployment is more prevalent than the pleasure of waiting for the perfect role for many people today. Here my words of caution to the people hiring the unemployed at drastically reduced rates from 12, 18 or 24 months ago: THEY WON'T STICK. Why? Because people place a perceived value on themselves that is based on both reality (their top pay throughout their career) and their distorted sense of what they think the market should pay them. As an employer, if you're not within 10% of what they have previously earned, I don't think they're going to hang around because we live in a hedonic society that encourages us to live beyond our means. If that new employee is accepting a 20% pay cut, it's unlikely they're going to be able to reduce their lifestyle costs by that same amount. They'll live in pain and will want to run away from it the second they believe the economy has turned around or someone calls them and offers them even $1,000 more per year to change jobs. Don't believe me? Check out this survey that was conducted 14 months ago (and the trend is going up). It suggests that 67% of people will look for a new position as soon as they think the market shows interest in their skills.

Bottom Line: While you may think that someone is only worth $X, if that person has earned $Y before and takes your job, expect them to be gone within 18 months or less.