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>software engineers tend to be underpaid compared to the value they produce I think comparing salary to the value produced is a slippery slope. Software engine

by vtlynch 11y ago

>software engineers tend to be underpaid compared to the value they produce I think comparing salary to the value produced is a slippery slope. Software engineers are certainly not paid below the average or median salary. Their "value" is just a function of the job, not a measure of its worth.

jstanley 11y ago
> comparing salary to the value produced is a slippery slope Can you elaborate? Surely the efficient-market ideal is that everybody gets paid an amount equal to exactly the amount of value they produce.
- InclinedPlane 11y ago
  I understand your point, but there's a glaring error in what you said. People need to get paid less than the value they produce, otherwise their employer would just be a passive participant gaining no advantage from their employment.
  - itsybitsycoder 11y ago
    If the employers produce no value, then we should get rid of them. If they are producing value, then the overall value produced should be greater than the sum of the value produced by their employees.
  - nosuchthing 11y ago
    Alternatively, get rid of the overhead of value leeching wigs by contributing to worker owned coop / collectives, or similar endeavors.
  - tsotha 11y ago
    That's only true if you believe the you can add up the value every employee produces to get the value the company produces. But the company produces more than the sum of its parts. Or should, anyway.
  - jstanley 11y ago
    If the employer provides any value (which he clearly does), he would receive payment equal to the value he provides too.
- analog31 11y ago
  That's why efficient markets are only considered to be an ideal. Note in edit: I suspect what I remember as the Econ 101 explanation is probably accurate enough for most purposes: Both the employer and the worker have temporary, local monopolies: The employer has plenty of money, but a shortage of time, and the worker has plenty of time but no money. So each is willing to trade with the other. The employer could make money in excess of the value added by the employees, by exploiting other kinds of effective monopolies such as patents, trade secrets, even things like brand recognition and goodwill.
  - jstanley 11y ago
    > The employer could make money in excess of the value added by the employees, by exploiting other kinds of effective monopolies such as patents, trade secrets, even things like brand recognition and goodwill. Exactly. That's why the ideal case is for the employee to be paid for the value he provides, and the employer also paid for the value he provides (i.e. he provides patents, trade secrets, brand recognition, ...).
AnimalMuppet 11y ago
> Their "value" is just a function of the job, not a measure of its worth. There are two kinds of value. The first is economic, and is measured in money. In a market economy, where scarce resources are allocated to the one who values them most (and therefore will pay the most for them), that is the definition of value. The second kind of value is social or moral. People have value or worth by virtue of being human, completely apart from their economic value. (For example, this is why it's illegal to murder poor people.) And jobs have value in this sense, too, that is different from their economic value. (Perhaps one sees the difference most starkly in the social value vs. economic value of elementary school teachers.) I think you are comparing salary to social or moral value, which is not just a slippery slope, but is a meaningless comparison - a category error. Comparing salary to economic value, on the other hand, is completely reasonable.
- vtlynch 11y ago
  >People have value or worth by virtue of being human, completely apart from their economic value. (For example, this is why it's illegal to murder poor people.) Ohhh... thats why we dont murder poor people? Never knew that.
bcassedy 11y ago
"Their "value" is just a function of the job, not a measure of its worth." I think we need to be careful with terminology here. I'm defining value as return on investment (and sometimes I'll be using the expected return on investment interchangeably). An employer hires an engineer because they want product x. If the employer thought they could receive $100k selling product x, they'd be silly to pay >= $100k to the engineer. So at the very least, we can agree that the upper bound for salary depends on the value the employee provides. Salespeople in particular are great at capturing the value they produce. It's extremely easy to measure the production of someone in sales. This is why it's common in many industries for the compensation of a salesperson to be an extremely high percentage of the margin on a sale. By virtue of their value being so easily measurable, salespeople are able to capture a much greater amount of their value than many other professions. All I'm saying is that comparatively, software engineers do a poor job of capturing their value.

by vtlynch 11y ago

jstanley 11y ago

> comparing salary to the value produced is a slippery slope Can you elaborate? Surely the efficient-market ideal is that everybody gets paid an amount equal to exactly the amount of value they produce.

InclinedPlane 11y ago
I understand your point, but there's a glaring error in what you said. People need to get paid less than the value they produce, otherwise their employer would just be a passive participant gaining no advantage from their employment.
- itsybitsycoder 11y ago
  If the employers produce no value, then we should get rid of them. If they are producing value, then the overall value produced should be greater than the sum of the value produced by their employees.
- nosuchthing 11y ago
  Alternatively, get rid of the overhead of value leeching wigs by contributing to worker owned coop / collectives, or similar endeavors.
- tsotha 11y ago
  That's only true if you believe the you can add up the value every employee produces to get the value the company produces. But the company produces more than the sum of its parts. Or should, anyway.
- jstanley 11y ago
  If the employer provides any value (which he clearly does), he would receive payment equal to the value he provides too.
analog31 11y ago
That's why efficient markets are only considered to be an ideal. Note in edit: I suspect what I remember as the Econ 101 explanation is probably accurate enough for most purposes: Both the employer and the worker have temporary, local monopolies: The employer has plenty of money, but a shortage of time, and the worker has plenty of time but no money. So each is willing to trade with the other. The employer could make money in excess of the value added by the employees, by exploiting other kinds of effective monopolies such as patents, trade secrets, even things like brand recognition and goodwill.
- jstanley 11y ago
  > The employer could make money in excess of the value added by the employees, by exploiting other kinds of effective monopolies such as patents, trade secrets, even things like brand recognition and goodwill. Exactly. That's why the ideal case is for the employee to be paid for the value he provides, and the employer also paid for the value he provides (i.e. he provides patents, trade secrets, brand recognition, ...).

AnimalMuppet 11y ago

> Their "value" is just a function of the job, not a measure of its worth. There are two kinds of value. The first is economic, and is measured in money. In a market economy, where scarce resources are allocated to the one who values them most (and therefore will pay the most for them), that is the definition of value. The second kind of value is social or moral. People have value or worth by virtue of being human, completely apart from their economic value. (For example, this is why it's illegal to murder poor people.) And jobs have value in this sense, too, that is different from their economic value. (Perhaps one sees the difference most starkly in the social value vs. economic value of elementary school teachers.) I think you are comparing salary to social or moral value, which is not just a slippery slope, but is a meaningless comparison - a category error. Comparing salary to economic value, on the other hand, is completely reasonable.

vtlynch 11y ago
>People have value or worth by virtue of being human, completely apart from their economic value. (For example, this is why it's illegal to murder poor people.) Ohhh... thats why we dont murder poor people? Never knew that.

bcassedy 11y ago

"Their "value" is just a function of the job, not a measure of its worth." I think we need to be careful with terminology here. I'm defining value as return on investment (and sometimes I'll be using the expected return on investment interchangeably). An employer hires an engineer because they want product x. If the employer thought they could receive $100k selling product x, they'd be silly to pay >= $100k to the engineer. So at the very least, we can agree that the upper bound for salary depends on the value the employee provides. Salespeople in particular are great at capturing the value they produce. It's extremely easy to measure the production of someone in sales. This is why it's common in many industries for the compensation of a salesperson to be an extremely high percentage of the margin on a sale. By virtue of their value being so easily measurable, salespeople are able to capture a much greater amount of their value than many other professions. All I'm saying is that comparatively, software engineers do a poor job of capturing their value.