4 ms·
It's true, of course, that the price of labor just comes down to whatever the employer and employee agree on (barring things like minimum wage and other "market
by baddox 9y ago
It's true, of course, that the price of labor just comes down to whatever the employer and employee agree on (barring things like minimum wage and other "market distortions"). But it's also true that some people have ideas about fairness, and may be off-put by a pricing strategy they deem to be unfair. Thus, salary calculations like this, assuming they're known to potential employees, could definitely affect a potential employee's willingness to take a certain salary at a certain company.
- cameldrv 9y agoIt’s a two sided market. The clearing price is going to be dependent on the employer’s alternatives and the employees alternatives, and each sides judgements about the other sides alternatives. The employer generally will try to pay just enough to prevent an employee from jumping ship, subject to bad feelings about unfairness reducing productivity. Part of the set of alternatives that an employee has are local jobs, which vary in pay somewhat based on cost of living.