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> But I have no idea how society decides salaries. I think your confusion stems from the fact that society does not decide salaries. In the private sector, sa
by tathougies 7y ago
> But I have no idea how society decides salaries.
I think your confusion stems from the fact that society does not decide salaries. In the private sector, salaries are based on how much one's involvement in some endeavor causes that endeavor to generate more revenue (or how much you can convince someone your involvement generates more revenue), combined with how easy it would be to find someone willing to do the same job with the same impact at a lower rate. If the value add is high and there is no one able or willing to do what you do for cheaper, you will have a high salary. If you add little value, and no one is willing to do what you do, you will be fired and likely not replaced -- they'll do without. If you add lots of value, but someone else is willing to do your job for less, you will be kept around if you accept a lower salary. If you add little value and someone else is willing to do your work, they will be hired for a lower salary. This isn't rocket science.
- Someone1234 7y ago> In the private sector, salaries are based on how much one's involvement in some endeavor causes that endeavor to generate more revenue That's never been my experience. I've seen people add tons of quantifiable value to a business, including dock loaders, customer facing staff, and even cleaners but in spite of their value being quantifiable they weren't rewarded. Clients and customers would literally say that staff is why they came back, but nothing. Your post seems to be largely a THEORY of why salaries are set the way they are. In my experience social "value" seems to be a far bigger indicator of future salary rather than actual historical value. Meaning people are paying for perception, not measurements. You can see that just by looking at affluence typically white kids flowing from private schools, to named colleges, straight into the financial sector. When did they generate historical value for the business when they were hired at double the natural average salary?
- crumpets 7y agoNo, value to the business only sets the ceiling. The floor comes from the labor supply side of the market. (i.e. can the company find qualified people willing to do it at X rate)
- user5994461 7y agoValue to the business is the floor more often than not. Plenty of business activities simply don't generate much money in the first place, with salaries capped accordingly. Albeit not the typical tech company or F500.
- kd0amg 7y agoHiring and compensation decisions have enough of a principal-agent problem that value to the business doesn't even set a firm ceiling.
- wolco 7y agoWhen there last name brought associations to wealth to mind and brought in more business. The financial sector is more about trust and imagine than anything. Someone wearing a suit will sell more products than someone in shorts. Do you think having Obama's daughter on staff will bring in more clients?
- tathougies 7y ago> Meaning people are paying for perception, not measurements. I mentioned that explicitly in my theory by pointing out that it is the ability to convince others that you add value, not necessarily the value added itself.