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Because the people who decide exec salaries are execs in other businesses, so they generally have 1) An inflated view of the impact of execs compared to other

Because the people who decide exec salaries are execs in other businesses, so they generally have 1) An inflated view of the impact of execs compared to other employees. This is a well studied psychological phenomena. People tend to overestimate their "skill/contribution" even in poor luck or even rigged scenarios. (There was a study which gave some subjects a head start in monopoly, i.e. more money, the subjects tended to talk significantly more about the advantages of "their" strategy in the game, then the subjects that we not given the head start). 2) It's in the interest of execs to keep C-suite salaries high, because it increases their own salary. So it's not surprising that we have seen a dramatic increase in ratio of exec to average employee compensation, and why execs are typically isolated from economic downturns.

wildrhythms 4y ago
> People tend to overestimate their "skill/contribution" even in poor luck or even rigged scenarios. I don't personally understand this one, although I don't doubt its veracity. I am an engineer with years of experience in the industry, but I don't think my contribution is high or important; I could be fired at any moment and would anyone notice? Maybe in the short term yes, but mostly no. I am easily replaceable, my boss is easily replaceable... Society will continue on without me because like most of us I work a B.S. job. So I really struggle to empathize with the viewpoint of a self-perceived 'Hero IC', is it just narcissism?
- John23832 4y ago
  Because the threat of firing and the driving down of your self worth as a worker is core to (American style) capitalism. Your fear for your job or the prospect of having to find another one makes you take suboptimal economic positions, the arbitrage of which keeps the gears of capital spinning. We couldn’t have the workers collectively realizing their worth now, could we? The inmates would be running the asylum.
  - Aunche 4y ago
    This narrative is counterfactual to how capitalism actually works. Your worth is determined by supply and demand. Investors would never agree to paying American developers twice as much as European developers if they knew they would be on the hook for them until their cash reserves bled dry.
    - polygamous_bat 4y ago
      > Your worth is determined by supply and demand. Supply and demand works in a world with no information/power assymmetry in Econ 101, a.k.a. freshman's dream. Even in the most basic case, when a sack of flour is being bought and sold, the buyer wants to buy a sack of flour, the seller wants to sell a sack of flour + a variable number of bugs in it, and the seller's profit margin goes up with the number of bugs. That's why there is a third party necessary which fixes the maximum number of bugs to be included with a sack of flour: otherwise this whole "free market" falls apart or starts killing people.
      - Aunche 4y ago
        Yes. Regulations should exist. Econ 101 is a prerequisite to learning about exceptions to Econ 101, which evidently the general populous has not. This is why people get surprised when the solution of throwing more money at a limited supply of housing and college slots ends up increasing the price of housing and college. You can make a good argument that protections need to be made to protect income workers and that we wouldn't lose much economic efficiency from these changes. On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot.
        John23832 4y ago
        I'll reply down here. > This narrative is counterfactual to how capitalism actually works. Your worth is determined by supply and demand. Investors would never agree to paying American developers twice as much as European developers if they knew they would be on the hook for them until their cash reserves bled dry. Supply and demand works best when the data about the market is symmetric. In the job market it is not. Firms know that they are willing to pay, and what they have paid, for work. Workers do not. If a worker takes a penny less than what the firm can bare, that is slippage that is being arbitraged into profit by the firm. Workers are goaded into a cheaper price for their work by firms through the threat of "We will go with another candidate" even if there are no other candidates. Again, asymmetric data. > On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot. Comparatively (amongst workers) well paid workers does not mean that those same workers are compensated fairly by the firm. Workers do work, managers manage. The core question posed by the thread OP was around the value of the work (and the protections afforded to) workers do as opposed to that of management.
- MomoXenosaga 4y ago
  I also think people underestimate what a CEO does. On HN coding is more respected than social skills. A software engineer is likely to crumble in 30 seconds when they are interviewed on CNBC.
  - Jensson 4y ago
    > On HN coding is more respected than social skills No it isn't, you see people saying "social skills are more important than technical skills" everywhere people discuss such things, and they get upvoted a lot. People saying the opposite tend to get heavily downvoted. So to me it looks like even on HN social skills are more respected than technical skills, at least in threads where we discuss what skills are important.
    - projectazorian 4y ago
      Maybe on HN, but not in practice in the industry. The general rule at most SV companies is that poor leetcode performance in interviews is an automatic no hire. Poor social skills, on the other hand, are handwaved away unless the candidate did something really egregious.
paulcole 4y ago
> People tend to overestimate their "skill/contribution" This can’t possibly extend to computer engineers right?
- ghaff 4y ago
  Of course it does--at least in many cases.
- penguinvondoom 4y ago
  Definitely not. Computer engineers are famously humble and rational
nightski 4y ago
Your salary isn't determined by impact. It's more related to your market value. Part of your market value is set by yourself, through negotiation. The other part is the labor market and what the alternative candidates are asking. Of course impact is related, but only as a qualifier. If your impact doesn't justify the salary then that is a problem. But as long as you do enough to justify your salary than other factors tend to dominate.
- cryptonector 4y ago
  You don't get what you deserve, you get what you negotiate.
MintPaw 4y ago
This is a dishonest super one-dimensional analysis, borderline conspiracy theory, I'm disappointed to see it be the most upvoted.
- polygamous_bat 4y ago
  Do you have a concrete rebuttal that does not involve name calling? I'm interested in reading a counterpoint.
- p0pcult 4y ago
  Sure, so give us a better analysis instead of the presumptive downvote-and-grouse.
- wmeredith 4y ago
  Be the change you want to see in the world. Provide us with an alternative analysis.
- matheusmoreira 4y ago
  It's rational and makes sense. Elaborate on the flaws of the argument instead of just calling it a "conspiracy theory".

wildrhythms 4y ago

> People tend to overestimate their "skill/contribution" even in poor luck or even rigged scenarios. I don't personally understand this one, although I don't doubt its veracity. I am an engineer with years of experience in the industry, but I don't think my contribution is high or important; I could be fired at any moment and would anyone notice? Maybe in the short term yes, but mostly no. I am easily replaceable, my boss is easily replaceable... Society will continue on without me because like most of us I work a B.S. job. So I really struggle to empathize with the viewpoint of a self-perceived 'Hero IC', is it just narcissism?

John23832 4y ago
Because the threat of firing and the driving down of your self worth as a worker is core to (American style) capitalism. Your fear for your job or the prospect of having to find another one makes you take suboptimal economic positions, the arbitrage of which keeps the gears of capital spinning. We couldn’t have the workers collectively realizing their worth now, could we? The inmates would be running the asylum.
- Aunche 4y ago
  This narrative is counterfactual to how capitalism actually works. Your worth is determined by supply and demand. Investors would never agree to paying American developers twice as much as European developers if they knew they would be on the hook for them until their cash reserves bled dry.
  - polygamous_bat 4y ago
    > Your worth is determined by supply and demand. Supply and demand works in a world with no information/power assymmetry in Econ 101, a.k.a. freshman's dream. Even in the most basic case, when a sack of flour is being bought and sold, the buyer wants to buy a sack of flour, the seller wants to sell a sack of flour + a variable number of bugs in it, and the seller's profit margin goes up with the number of bugs. That's why there is a third party necessary which fixes the maximum number of bugs to be included with a sack of flour: otherwise this whole "free market" falls apart or starts killing people.
    - Aunche 4y ago
      Yes. Regulations should exist. Econ 101 is a prerequisite to learning about exceptions to Econ 101, which evidently the general populous has not. This is why people get surprised when the solution of throwing more money at a limited supply of housing and college slots ends up increasing the price of housing and college. You can make a good argument that protections need to be made to protect income workers and that we wouldn't lose much economic efficiency from these changes. On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot.
      - John23832 4y ago
        I'll reply down here. > This narrative is counterfactual to how capitalism actually works. Your worth is determined by supply and demand. Investors would never agree to paying American developers twice as much as European developers if they knew they would be on the hook for them until their cash reserves bled dry. Supply and demand works best when the data about the market is symmetric. In the job market it is not. Firms know that they are willing to pay, and what they have paid, for work. Workers do not. If a worker takes a penny less than what the firm can bare, that is slippage that is being arbitraged into profit by the firm. Workers are goaded into a cheaper price for their work by firms through the threat of "We will go with another candidate" even if there are no other candidates. Again, asymmetric data. > On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot. Comparatively (amongst workers) well paid workers does not mean that those same workers are compensated fairly by the firm. Workers do work, managers manage. The core question posed by the thread OP was around the value of the work (and the protections afforded to) workers do as opposed to that of management.
MomoXenosaga 4y ago
I also think people underestimate what a CEO does. On HN coding is more respected than social skills. A software engineer is likely to crumble in 30 seconds when they are interviewed on CNBC.
- Jensson 4y ago
  > On HN coding is more respected than social skills No it isn't, you see people saying "social skills are more important than technical skills" everywhere people discuss such things, and they get upvoted a lot. People saying the opposite tend to get heavily downvoted. So to me it looks like even on HN social skills are more respected than technical skills, at least in threads where we discuss what skills are important.
  - projectazorian 4y ago
    Maybe on HN, but not in practice in the industry. The general rule at most SV companies is that poor leetcode performance in interviews is an automatic no hire. Poor social skills, on the other hand, are handwaved away unless the candidate did something really egregious.

paulcole 4y ago

> People tend to overestimate their "skill/contribution" This can’t possibly extend to computer engineers right?

ghaff 4y ago
Of course it does--at least in many cases.
penguinvondoom 4y ago
Definitely not. Computer engineers are famously humble and rational

nightski 4y ago

Your salary isn't determined by impact. It's more related to your market value. Part of your market value is set by yourself, through negotiation. The other part is the labor market and what the alternative candidates are asking. Of course impact is related, but only as a qualifier. If your impact doesn't justify the salary then that is a problem. But as long as you do enough to justify your salary than other factors tend to dominate.

cryptonector 4y ago
You don't get what you deserve, you get what you negotiate.

MintPaw 4y ago

This is a dishonest super one-dimensional analysis, borderline conspiracy theory, I'm disappointed to see it be the most upvoted.

polygamous_bat 4y ago
Do you have a concrete rebuttal that does not involve name calling? I'm interested in reading a counterpoint.
p0pcult 4y ago
Sure, so give us a better analysis instead of the presumptive downvote-and-grouse.
wmeredith 4y ago
Be the change you want to see in the world. Provide us with an alternative analysis.
matheusmoreira 4y ago
It's rational and makes sense. Elaborate on the flaws of the argument instead of just calling it a "conspiracy theory".