4 ms·

In a simplistic free market model, both employer and employee aim to optimize their gain. The employer sets their wages only as high as necessary to attract, m

In a simplistic free market model, both employer and employee aim to optimize their gain. The employer sets their wages only as high as necessary to attract, motivate and retain, and hires whoever provides the most value over that cost. Wages are not set based on value provided to the company, but by maximizing the spread between cost and value. On the other side of the table, the employee wants to optimize the combination of their income (after-COL) and other aspects of the job they value which may include their location. I just made this model up. Assuming it is reasonable, if living back home near the grandparents, likely with a lower COL, has a higher value to them than commuting in a tech hub, it is possible for the company to pay lower wages, and still be equally attractive to labor that is equally valuable. And given it is possible, they will do that. Evidence : remote developers exist today and they are typically paid local market rate.

tom_mellior 6y ago
There is no proper market without all market participants having proper information, and salary information about your peers is typically very spotty. Evidence: I might be just as productive as a colleague working on the same project in the same company with comparable qualifications, and I would never know if they made 10% more (or less) than me.
- cheerlessbog 6y ago
  Job seekers have some competitive salary information though : if they can obtain multiple offers, or the salary is advertised.
  - tom_mellior 6y ago
    ... which is why most companies don't advertise salaries. Not even where I live (Austria), although it's required by law.
    - cheerlessbog 6y ago
      I said offers, not ads. It's pretty common to interview with several employers at a time.
      - tom_mellior 6y ago
        Fair enough, I misread this. Still, that only gives you a very linited amount of information, and nothing about what existing employees at those companies make.

tom_mellior 6y ago

There is no proper market without all market participants having proper information, and salary information about your peers is typically very spotty. Evidence: I might be just as productive as a colleague working on the same project in the same company with comparable qualifications, and I would never know if they made 10% more (or less) than me.

cheerlessbog 6y ago
Job seekers have some competitive salary information though : if they can obtain multiple offers, or the salary is advertised.
- tom_mellior 6y ago
  ... which is why most companies don't advertise salaries. Not even where I live (Austria), although it's required by law.
  - cheerlessbog 6y ago
    I said offers, not ads. It's pretty common to interview with several employers at a time.
    - tom_mellior 6y ago
      Fair enough, I misread this. Still, that only gives you a very linited amount of information, and nothing about what existing employees at those companies make.