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If there exist jobs that produce $1MM in value but that have a going rate of 200k, then there should be more of those jobs This is true generally, but I think
by adrusi 10y ago
If there exist jobs that produce $1MM in value but that have a going rate of 200k, then there should be more of those jobs
This is true generally, but I think it doesn't apply in context. Tech has saturated the existing market, there is no demand to be satisfied for more tech. Of course, the industry will continue to grow, but only because the very nature of tech is to innovate. Growth in tech doesn't come from creating new supply to fill an ever-growing demand, it comes from innovating and creating new demand. That means that the growth of tech is bound to the rate of scientific progress, of investor's wallets and of cultural change. You can't keep hiring more and more 200k developers to make more millions, because there's no one left to pay more millions.
The parent, slg, was right in their analysis except for one point: employers have to compete on salary between each other, but they also have to compete against the engineer's opportunity to start their own company, which would let them earn directly in proportion to the value they produce. Engineers' salaries are therefore related to the level of risk and difficulty of entrepeneurship. The easier it becomes to start a startup (controlling for the expected returns of starting a startup), the more employers will pay their engineers.
- eru 10y agoAs long as not everyone has eg an iPhone, I see plenty of demand for tech left.
- IncRnd 10y agoYou are looking in the wrong places, then. Not everyone without an iPhone wants one - the demand you cite doesn't exist.
- adrusi 10y agoNo. People who don't have an iPhone either have a different smartphone (their demand is owned by Apple's competition), they can't afford a smartphone (they're not a source of demand — until someone innovates and makes a cheaper smartphone), or they've actively chosen not to own a smartphone (not a source of demand).
- eru 10y agoYou said: > Tech has saturated the existing market, there is no demand to be satisfied for more tech. Of course, if you mean at current prices, then sure: everybody who wants and can buy at current prices will do so. Still, demand is very elastic. Even with current tech, there's lots and lots more demand at slightly lower prices. Companies can just wait until their capital investments have deprecated a bit more, and then lower prices a bit. (You also want to keep prices high initially, even if costs would allow to go lower and still break even, to capture the higher willingness of some people to pay more to get your product sooner. Basic price discrimination.)