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>US tech salaries are good for only one reason, the largest tech companies went the path of public stock valuations and paid employees with stock. That's a rea
by savanaly 4y ago
>US tech salaries are good for only one reason, the largest tech companies went the path of public stock valuations and paid employees with stock.
That's a reason for first-generation employees to get paid highly, not a reason to continue to pay that highly to new employees joining today.
The real determinants of tech company salaries are the same old boring ones that govern salaries in most lightly regulated industries: productivity and competition. Each marginal employee earns a lot of revenue for a company, and competition ensures most of that is paid out in salary to them (I'm aware the company makes more from you than it pays you, but that's about average productivity not marginal productivity).
- partizanos 4y agoCan you please define the difference between average and marginal productivity?
- deleted 4y ago[deleted]
- savanaly 4y agoAverage productivity is exactly what it sounds like. If google is making one million dollars in a year and has 1000 employees their average productivity is $1000. Marginal productivity is harder to pin down empirically, it's the first derivative of productivity with respect to inputs of labor. Not all labor is productive to the same degree, it was hired at different times, and there's variance in negotiation so your comp definitely doesn't (===) your marginal productivity. It's also probably greatly distorted for startups that are banking on a unicorn valuation where the expected productivity is something like (0.99 * 0 + 0.009 * 1 million + 0.0001 * 1 billion). But for Google et. al where they're in a relative steady state, they have a good idea of how much revenue grows when they add an employee and they'll be willing to pay up to that.