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Ask HN: Why is labour priced differently from physical goods
How come labor i.e high skilled labor is priced differently from physical goods. eg an iPhone retail price is still ~700$ regardless of retail location. Yet the hourly rate of a skilled engineer varies wildly depending on region | locality. Assuming the skills & quality of an engineer are consistent across locales. yeah, market forces could've a play, but isn't it one of those cases where the market mis-prices a product | good ?
- dzonga 7y agoanother example would be cars: price of cars remains consistent across locales and software as well. with software even more funny, since the main cost of the software is due to software engineers.
- perilunar 7y agoPhysical goods are easy and cheap to move. Highly skilled labour much less so.
- conductr 7y agoIn terms of market efficiency, this is labor market having a high cost of arbitrage
- muzani 7y agoYou can price something based on cost, or price it closer to value. A stapler's price is much lower than its value, but because lots of people make staplers, the price is closer to its cost. Same with restaurants etc. But an iPhone and MacBook has less competitors so it's priced closer to value. Engineers are a middle ground. In SF, you can get a top notch engineer easily. The price becomes more cost-based - how much does it cost for someone to live there, or what is the competition offering. In something like Kuala Lumpur, the number of engineers who know Big O are rare. So it's more value based - how much money does the engineer bring to the company. But even so, the cost based pricing in places like SF is a lot higher than value based pricing elsewhere. After all, the reason prices are so inflated there is because all the money sloshing through tech giants and VCs.