3 ms·
All of these things are true. However, there is another input into supply side, and that's alternatives to employment like starting a company. Any employees th
by tacostakohashi 10y ago
All of these things are true. However, there is another input into supply side, and that's alternatives to employment like starting a company.
Any employees that really create much more value than their salary can and will just leave and start their own company, where they get to set their own salary. By doing so, they'll also be leaving the pool of employees, and potentially hiring others too (reducing supply, increasing supply, driving salaries up).
Of course, every employee creates more value than their salary, to cover overheads, some profit for shareholders, etc. Employees that claim to be creating far more value than their salary, but not leaving to start a company, are probably deluding themselves, and vastly underestimating the value of the capital employed in their company, goodwill with customers, the sales and management functions, etc.
- Kliment 10y agoThe latter is not necessarily true - you might be creating tremendous value, but have barriers to market entry that are enormous such that you can only really create that value from within one of the existing players on the market. See aerospace, telecommunications, medicine, government contracting for examples of such industries. If I'm making a huge amount of added value for a large telecom, it's unlikely I can start a startup to compete with it, and given the state of the market I'm unlikely to make much more at their direct competitors. Thus, as long as my value is industry-specific, and the industries have large barriers to entry, I might be creating much more value than my salary but unable to leave and compete against my employer.
- hnal943 10y agoYou're a component in a value creating engine which includes the ability to hurdle those barriers to entry, which means you don't get credit (on your own) for the total value that you are able to produce within that system.
- cheald 10y agoYou make the strong case that your value-creation in such a scenario is an amplification of value created by other people, and is not actually value created by you in a vacuum. What sense would it make for you to claim priority ownership of that value if you can't create it on your own?
- tacostakohashi 10y agoIf you can only really create value inside an existing player in an industry with large barriers to entry... then it's actually being an incumbent in that industry that's valuable, and not the employee. It's like a person making minimum wage working at a hotel in Times Square, charging $800 / night, saying they're getting a raw deal because they're creating so much value.
- idrios 10y agoRight? So many people are looking at company overhead as burdensome, but how are you going to cash in on the $1.5 million in value that you create if you don't have sales and marketing people to get your product out there? How do you even know it's worth $1.5 million if you haven't done market research? It's not just overhead, it's a highly efficient system.
- eru 10y agoHighly efficient or not depends on the actual system, ie company. Some companies aren't all that efficient, and have to painfully learn about that fact when real competition shows up. (See eg the effects of Aldi on the Australian retail sector.)