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Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for

Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible.

Barrin92 6y ago
it wasn't obvious that the market doesn't run on labour theory of value? Of course a company is going to pay you as little as you're willing to sell your labour for. That's why the exact same dinner costs less in Brunswick Georgia than it does in Palo Alto
s1artibartfast 6y ago
I'm not sure what exactly you are critiquing here. >Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. You are payed your replacement cost. If you bring more value, you are harder to replace. It has nothing to do with total value, if this was the case, no company would ever make a profit. Is there anyone who thinks that a company pays employees $1 more than they have to? I haven't met anyone who thought otherwise. Afterall, they aren't a charity. >The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible I also haven't met anyone who goes above and beyond out of some sense charity. I know people who work hard because they enjoy their work, or think they will get more pay, but not simply for the sake of the company value.
jo032 6y ago
Maybe not at Stripe, but a lot of big tech employees (especially at Google and Facebook) would get substantial paycuts if they got paid for the value they brought to the company rather than the market price ("as little as they can get away with"). the average FAANG engineer does a shockingly small amount of work that has any impact on revenue
- mrkstu 6y ago
  The average FAANG engineer is partially being compensated for NOT working at a competitor- i.e. the best talent is also the biggest threat and if there isn't a salary cap then the NY Yankees are sometimes going to sign redundant players just to keep them from improving competitive teams.
  - robocat 6y ago
    This arguments fails on so many dimensions that it must just be a meme. I’ll use Google as the example. For it to work Google has to be able to monopolise the buying of talent. Most damning, the premise itself is self defeating. Somehow Google is picking the most talented people (delivering far in excess of say $1M marginal returns), yet somehow it is paying well below that to steal that talent and furthermore Google is then wasting that talent (employee delivering value below their pay+overhead). To assume Google chooses to waste talent merely to achieve some low value outcome (damaging a competitor by $1 doesn’t magically enhance Google’s returns by $1 so the factors are way out here) seems to assume the Google is somehow acting against their best financial interests. I don’t think Google is as poorly run as that. Also: 1. Occam’s razor: Could it be that a Google is actually getting good value by paying very high salaries? Yes. The average revenue per person for Google is about 160G$ / 115kiloemployees = 1M4 per employee. I do note that using an average is silly because the value distribution is not flat, but neither is the employee salary distribution flat. But the figure is so large, average does say something useful for back-of-envelope calcs. 2. Can Google monopolise by buying power alone? No. Other companies have similarly high returns per employee (Apple is 260G$/160kiloemployees, Netflix is 20G$/20kiloemployees) so for Google to outbid them, it needs to outbid above the marginal revenue per employee, which clearly is well above a 600k$ salary. 3. Can Google corner the market for talent by restricting supply? No. We know that there are plenty of talented developers because Google isn’t the only company making over $1M revenue per employee. Google employs about 115000 people. Let’s say 50000 of those were “overpaid“ to remove them from the competitors. If the total pool of equivalent talent were as small as 250000, then Google couldn’t monopolise talent. Yet other companies with high revenues per employee have a sum total of employees higher than 250000. Furthermore Google’s returns per effective employee become ~$2.8M/employee, so Google can obviously afford to pay $1M for talent it really wants! Your sports analogy fails because sports are designed to be zero-sum where there can be only one winner, so the best player can capture more of the winnings.
onion2k 6y ago
Tech companies aren't charitable foundations designed to help developers. They're businesses. They aim to maximise profit. If they can lower wage costs of course they'll do it. I suspect this is just the beginning of the move away from the Bay Area. Give it twenty years and small offices and remote workers distributed across the country will be very normal. Wages (and Bay Area house prices) will reflect that.
kgin 6y ago
Nobody gets paid for the value they bring. People get paid by how much it would cost to find and onboard a qualified replacement.
- lbotos 6y ago
  People paid on commission do. That said, I'm not going to advocate that we all get paid on commission.
austhrow743 6y ago
Too obvious? It can’t be more obvious enough. I’m sick of this weird phenomenon where people talk like it was maybe some other way. See: hn and every thread that touches on pay. Might as well say it’s a little too obvious that shoes go on feet.

Barrin92 6y ago

it wasn't obvious that the market doesn't run on labour theory of value? Of course a company is going to pay you as little as you're willing to sell your labour for. That's why the exact same dinner costs less in Brunswick Georgia than it does in Palo Alto

s1artibartfast 6y ago

I'm not sure what exactly you are critiquing here. >Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. You are payed your replacement cost. If you bring more value, you are harder to replace. It has nothing to do with total value, if this was the case, no company would ever make a profit. Is there anyone who thinks that a company pays employees $1 more than they have to? I haven't met anyone who thought otherwise. Afterall, they aren't a charity. >The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible I also haven't met anyone who goes above and beyond out of some sense charity. I know people who work hard because they enjoy their work, or think they will get more pay, but not simply for the sake of the company value.

jo032 6y ago

Maybe not at Stripe, but a lot of big tech employees (especially at Google and Facebook) would get substantial paycuts if they got paid for the value they brought to the company rather than the market price ("as little as they can get away with"). the average FAANG engineer does a shockingly small amount of work that has any impact on revenue

mrkstu 6y ago
The average FAANG engineer is partially being compensated for NOT working at a competitor- i.e. the best talent is also the biggest threat and if there isn't a salary cap then the NY Yankees are sometimes going to sign redundant players just to keep them from improving competitive teams.
- robocat 6y ago
  This arguments fails on so many dimensions that it must just be a meme. I’ll use Google as the example. For it to work Google has to be able to monopolise the buying of talent. Most damning, the premise itself is self defeating. Somehow Google is picking the most talented people (delivering far in excess of say $1M marginal returns), yet somehow it is paying well below that to steal that talent and furthermore Google is then wasting that talent (employee delivering value below their pay+overhead). To assume Google chooses to waste talent merely to achieve some low value outcome (damaging a competitor by $1 doesn’t magically enhance Google’s returns by $1 so the factors are way out here) seems to assume the Google is somehow acting against their best financial interests. I don’t think Google is as poorly run as that. Also: 1. Occam’s razor: Could it be that a Google is actually getting good value by paying very high salaries? Yes. The average revenue per person for Google is about 160G$ / 115kiloemployees = 1M4 per employee. I do note that using an average is silly because the value distribution is not flat, but neither is the employee salary distribution flat. But the figure is so large, average does say something useful for back-of-envelope calcs. 2. Can Google monopolise by buying power alone? No. Other companies have similarly high returns per employee (Apple is 260G$/160kiloemployees, Netflix is 20G$/20kiloemployees) so for Google to outbid them, it needs to outbid above the marginal revenue per employee, which clearly is well above a 600k$ salary. 3. Can Google corner the market for talent by restricting supply? No. We know that there are plenty of talented developers because Google isn’t the only company making over $1M revenue per employee. Google employs about 115000 people. Let’s say 50000 of those were “overpaid“ to remove them from the competitors. If the total pool of equivalent talent were as small as 250000, then Google couldn’t monopolise talent. Yet other companies with high revenues per employee have a sum total of employees higher than 250000. Furthermore Google’s returns per effective employee become ~$2.8M/employee, so Google can obviously afford to pay $1M for talent it really wants! Your sports analogy fails because sports are designed to be zero-sum where there can be only one winner, so the best player can capture more of the winnings.

onion2k 6y ago

Tech companies aren't charitable foundations designed to help developers. They're businesses. They aim to maximise profit. If they can lower wage costs of course they'll do it. I suspect this is just the beginning of the move away from the Bay Area. Give it twenty years and small offices and remote workers distributed across the country will be very normal. Wages (and Bay Area house prices) will reflect that.

kgin 6y ago

Nobody gets paid for the value they bring. People get paid by how much it would cost to find and onboard a qualified replacement.

lbotos 6y ago
People paid on commission do. That said, I'm not going to advocate that we all get paid on commission.

austhrow743 6y ago

Too obvious? It can’t be more obvious enough. I’m sick of this weird phenomenon where people talk like it was maybe some other way. See: hn and every thread that touches on pay. Might as well say it’s a little too obvious that shoes go on feet.