4 ms·

It doesn’t compound at all. If the going rate is $200k and I switch jobs my previous salary doesn’t matter, and therefore compounding doesn’t matter.

dzolvd 4y ago
in what industry does your previous salary not matter? (Not a snarky ask btw.) I have never entertained an offer blow my current salary, so personally find them highly correlated (sw eng).
- pc86 4y ago
  Nobody is talking about previous salary, the $3k/$5k thing was about yearly performance bonuses.
  - quickthrower2 4y ago
    My argument is general enough to cover that case too. Performance bonuses don't compound long term for the same reason.
- jasongi 4y ago
  Previous salary can’t affect future salary unless you let the previous salary be known.
  - artwr 4y ago
    There is a bit of a bias to this. Higher salaries will get disclosed more, because if I get an offer below my current salary, then I can disclose and at the very least get a match or refuse the offer. At a lower salary, there is a higher probability that the offer is higher, and my current salary does not matter. I believe that people more rarely accept a downgrade in salary, so the probably of acceptance is also conditioned on the current salary. What this means is that the effect is biased and probably non-linear, but I wouldn't qualify it as non effect.
vikingerik 4y ago
Raises that are a percentage will compound over multiple iterations, that's what he meant.
- quickthrower2 4y ago
  Only given the following conditions: * You stay at the same company * They are happy to pay above market rates and keep giving you raises even if you are paid over market rates. This would be the exception, and probably for some real specialist stuff. If I get a 10% raise today, it will have no impact on my 2030 salary. Getting more stock might be a different thing if you are very lucky and the ducks line up.

dzolvd 4y ago

in what industry does your previous salary not matter? (Not a snarky ask btw.) I have never entertained an offer blow my current salary, so personally find them highly correlated (sw eng).

pc86 4y ago
Nobody is talking about previous salary, the $3k/$5k thing was about yearly performance bonuses.
- quickthrower2 4y ago
  My argument is general enough to cover that case too. Performance bonuses don't compound long term for the same reason.
jasongi 4y ago
Previous salary can’t affect future salary unless you let the previous salary be known.
- artwr 4y ago
  There is a bit of a bias to this. Higher salaries will get disclosed more, because if I get an offer below my current salary, then I can disclose and at the very least get a match or refuse the offer. At a lower salary, there is a higher probability that the offer is higher, and my current salary does not matter. I believe that people more rarely accept a downgrade in salary, so the probably of acceptance is also conditioned on the current salary. What this means is that the effect is biased and probably non-linear, but I wouldn't qualify it as non effect.

vikingerik 4y ago

Raises that are a percentage will compound over multiple iterations, that's what he meant.

quickthrower2 4y ago
Only given the following conditions: * You stay at the same company * They are happy to pay above market rates and keep giving you raises even if you are paid over market rates. This would be the exception, and probably for some real specialist stuff. If I get a 10% raise today, it will have no impact on my 2030 salary. Getting more stock might be a different thing if you are very lucky and the ducks line up.