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> It should be about the value I bring to the company, not where I live. That's like saying the price of goods and services should be about the cost of produci

by toyg 4y ago

> It should be about the value I bring to the company, not where I live. That's like saying the price of goods and services should be about the cost of producing them. No no no: the price is about what buyers will bear. In the same way, salaries are about what the worker will bear. If there is an arbitrage lever to maximize profit, any business will use it.

michaelscott 4y ago
Very much this. It makes the process of salary negotiation completely tied to perception rather than reality, which isn't necessarily bad for the employee. It just means that the justifications for a higher salary need to change from "your salary offer is too low because it shouldn't depend on where I live" to "your salary offer should be higher because I can improve your business in x, y and z"
- anon20230209 4y ago
  Also, the expectation by employer that by paying an average salary they get 100% performance has to change. Employees can optimise for pay or life depending on what the company is willing to offer.
- madeofpalk 4y ago
  > your salary offer should be higher because I can improve your business in x, y and z I just don't think this is true for the overwhelming majority of employees, including developers.
  - carlosjobim 4y ago
    It is true for almost all employees, otherwise the business wouldn't be hiring.
- Aeolun 4y ago
  I think the tried and true “Your salary offer is too low compared to your competitors, or what I can do for myself” is pretty much fine right?
  - autoexec 4y ago
    Until the moment companies once again collude to drive and hold prices down. Suddenly those competitors aren't too low after all and the "tried and true" isn't so useful. Corporations have enough staff that they can lay off hundreds or thousands of workers without a single worry. They can hold out not paying you the rate you want for much longer than you can afford not paying your bills and eating. Eventually, you will accept a lower salary and if you don't there are plenty of others who will. The vast majority of all employed people have next to no leverage compared to the companies that hire them and companies know it.
    - Aeolun 4y ago
      You need only one company to not go along to hoover up all the great talent. The large problem with the collusion before was that the 3-4 that already paid top of the market salaries colluded to keep them the same. It doesn’t mean they weren’t still top of the market for someone with a given level of experience.
      - HowTheStoryEnds 4y ago
        No because the pool of workers at that company vs the others combined is small. This in turn will make entry in that pool excessively competitive which again will serve to drive down the wages in that pool. Once the tiny pool is saturated they might as well benefit from entering with the others in agreement as well.
mcv 4y ago
Employers are the buyers of labour. If food prices depend on what the consumer can bear, then labour prices should depend on what the employer can bear. And most of them can bear a lot more than they're currently paying.
- sokoloff 4y ago
  It is a market. Employers and consumers will pay what they have to be satiated. If they can’t afford that, they’ll have to make do with less. If something is priced too high and there are viable alternatives, they’ll consider those alternatives.
  - mcv 4y ago
    And so should employees, of course. We have options too.
    - sokoloff 4y ago
      Absolutely! Everyone is free to select among their options the one that they most prefer.
      - interactivecode 4y ago
        though you have to admit in basically all situations the employer has more leverage than a single employee.
        mcv 4y ago
        That is the big fundamental problem of employer-employee relations. They hold more power and it's easier for them to organise with other employers without anyone being aware of it. The only way to balance that is for employees to also get organised. Or ban corporations, I suppose.
        kroltan 4y ago
dontlaugh 4y ago
Why shouldn’t the price of goods be the cost of producing them?
- komali2 4y ago
  Because that's labor theory of value which is Marxism and marx is just some guy. Arguments against will be that value "is" what people are willing to pay for them, which is some combination of supply and demand, but I find this just too simple. Technically it's true that the "value" of something is the price someone last paid for it, but then we get situations where we say a Bitcoin is worth 40k usd or whatever tf the price is right now. And then suddenly its value is 20k, and if you ask why you'll get thirty answers, all wrong. Maybe the price was 40k to someone and 20k to someone else, but the value? Nah. And the price alone tells us basically nothing. The interesting thing for me is the third person. Me, in this case, to whom Bitcoin is worth 0, or less than 0 because I would consider it a labor cost to own a Bitcoin (figuring out a wallet or whatever). How does someone to whom a Bitcoin is worth 40k then then around and say "Bitcoin is worth 40k" to someone like me? To capitalists trying to nod their heads and say ah the price is high, supply must be down or demand must be up, I say, good luck predicting human behavior, that usually goes great. For me though I agree with you, the value of goods is some combination of their production costs, in any meaning of the word "value" that matters. "But what if someone spends an entire lifetime of labor producing a single widget nobody wants? Clearly demand plays a part in value!" I don't know, go away. Why would that happen? Sure, ok, also include in value calculus that hopefully people only make things that people actually want. (the capitalist argument here is, the profit is to be found in the margin between cost to create and the price set by desirability - to which I say exactly, profit should be eliminated) Edit: someone else had a comment they deleted talking about how profit is necessary so as to have surplus to save in case of equipment failure, I'll paste my response here cause my thumbs put in the labor so by golly I'll get the Payout Traditionally, are profits sequestered to be used as savings like that? In my experience the equipment breaks and both companies go bankrupt because the executives in the c corp spent the profit on themselves already and are happy to just go find a new investment. Actually in my experience the other company, the co-op, doesn't go bankrupt, because the workers are smart enough to safeguard their well being with rainy day funds. This might be one of the reasons coops are repeatedly shown to be far more resilient than traditional companies.
komali2 4y ago
What's at the other end of "bear" when the thing being bought is food or housing? Seems like a dangerous analytical framework.
- regularfry 4y ago
  People go hungry and homeless. This is visible today. This is literally why one function of the state is to act as a non-market-participant so it can provide a safety net. There are some things markets can't and shouldn't try to do.
  - MrPatan 4y ago
    Yes! I can't wait for food production and distribution to be put in the hands of government officials. Access to food is going to be equalized so hard! The market has been taking care of it for too long, we're getting too fat, we need a few decades of food controlled by the police to get back into shape.
    - jen20 4y ago
      > we're getting too fat I don’t know if you’ve seen the average American waistline, but yes, this part is absolutely true. Unhealthily so.
    - regularfry 4y ago
      Take it up with Adam Smith.
    - komali2 4y ago
      Being fat can be a sign of malnutrition. Americans aren't just fat because they eat too much, many are fat because they live in food deserts or have no time to cook and no access to affordable healthy food. You're not helping your argument with this example imo.
lunarhustler 4y ago
Except the market ain't going to bear it, not for a long time anyway. If I am a CEO of a remote-first company and it truly doesn't matter for me where the employees are located it makes no sense to overpay for labor in high cost of living area. So if there's a company A that pays $X in high COL area, and $X/3 in a low COL area. And then there's a company B that pays $X/2 everywhere. Then people from the low COL area would go to the company B, and people from the high COL area would go to the company A. As a result, company B gets the same results 2 times cheaper. Repeat this process enough times and the salaries will be equalized. Of course it's not immediate, there are companies rigidly set in their ways; there are people who won't move no matter what; there is limited supply of both companies and workers; etc, etc. But eventually the market forces will do their thing.
- dorwi 4y ago
  "As a result, company B gets the same results 2 times cheaper" - that's just an assumption. If I turn it around, it sounds - "people on average in high COL area do the same work two times faster than in low COL area".
  - Kbelicius 4y ago
    What assumption is being made? What are you turning around?
    - danaris 4y ago
      The assumption they're claiming lunarhustler made is that engineers in Silicon Valley and engineers in (say) Utica, NY work at approximately the same speed and quality. The assumption dorwi's asking you to make is that moving to Silicon Valley somehow makes you work twice as fast, or that only engineers who work twice as fast live there. Basically, lunarhustler is making the assumption that humans who can program end up at roughly the same quality no matter where they live or how much you pay them, while dorwi is making the assumption that how much you are paid is directly related to your productive output.
taneq 4y ago
Of course, this is very much what a business is. It's an engine, running on the difference in energy between two or more goods or services. In fact, if you think about it, the upper limit to profit margin is profit_margin = (price_sell - price_buy) / price_sell Look familiar?
- selestify 4y ago
  Wow, how have I not heard of this framing before? So then, are there equivalent analogies to the laws of thermodynamics? An equivalent entropy as an arrow of time?
  - eru 4y ago
    Not really. In vaguely thermodynamic terms, businesses are very open systems. Thermodynamics doesn't have to say very much about systems far from the equilibrium.
  - anticensor 4y ago
    Decrease of profit margins over time?

by toyg 4y ago

michaelscott 4y ago

Very much this. It makes the process of salary negotiation completely tied to perception rather than reality, which isn't necessarily bad for the employee. It just means that the justifications for a higher salary need to change from "your salary offer is too low because it shouldn't depend on where I live" to "your salary offer should be higher because I can improve your business in x, y and z"

anon20230209 4y ago
Also, the expectation by employer that by paying an average salary they get 100% performance has to change. Employees can optimise for pay or life depending on what the company is willing to offer.
madeofpalk 4y ago
> your salary offer should be higher because I can improve your business in x, y and z I just don't think this is true for the overwhelming majority of employees, including developers.
- carlosjobim 4y ago
  It is true for almost all employees, otherwise the business wouldn't be hiring.
Aeolun 4y ago
I think the tried and true “Your salary offer is too low compared to your competitors, or what I can do for myself” is pretty much fine right?
- autoexec 4y ago
  Until the moment companies once again collude to drive and hold prices down. Suddenly those competitors aren't too low after all and the "tried and true" isn't so useful. Corporations have enough staff that they can lay off hundreds or thousands of workers without a single worry. They can hold out not paying you the rate you want for much longer than you can afford not paying your bills and eating. Eventually, you will accept a lower salary and if you don't there are plenty of others who will. The vast majority of all employed people have next to no leverage compared to the companies that hire them and companies know it.
  - Aeolun 4y ago
    You need only one company to not go along to hoover up all the great talent. The large problem with the collusion before was that the 3-4 that already paid top of the market salaries colluded to keep them the same. It doesn’t mean they weren’t still top of the market for someone with a given level of experience.
    - HowTheStoryEnds 4y ago
      No because the pool of workers at that company vs the others combined is small. This in turn will make entry in that pool excessively competitive which again will serve to drive down the wages in that pool. Once the tiny pool is saturated they might as well benefit from entering with the others in agreement as well.

mcv 4y ago

Employers are the buyers of labour. If food prices depend on what the consumer can bear, then labour prices should depend on what the employer can bear. And most of them can bear a lot more than they're currently paying.

sokoloff 4y ago
It is a market. Employers and consumers will pay what they have to be satiated. If they can’t afford that, they’ll have to make do with less. If something is priced too high and there are viable alternatives, they’ll consider those alternatives.
- mcv 4y ago
  And so should employees, of course. We have options too.
  - sokoloff 4y ago
    Absolutely! Everyone is free to select among their options the one that they most prefer.
    - interactivecode 4y ago
      though you have to admit in basically all situations the employer has more leverage than a single employee.
      - mcv 4y ago
        That is the big fundamental problem of employer-employee relations. They hold more power and it's easier for them to organise with other employers without anyone being aware of it. The only way to balance that is for employees to also get organised. Or ban corporations, I suppose.
        kroltan 4y ago

dontlaugh 4y ago

Why shouldn’t the price of goods be the cost of producing them?

komali2 4y ago
Because that's labor theory of value which is Marxism and marx is just some guy. Arguments against will be that value "is" what people are willing to pay for them, which is some combination of supply and demand, but I find this just too simple. Technically it's true that the "value" of something is the price someone last paid for it, but then we get situations where we say a Bitcoin is worth 40k usd or whatever tf the price is right now. And then suddenly its value is 20k, and if you ask why you'll get thirty answers, all wrong. Maybe the price was 40k to someone and 20k to someone else, but the value? Nah. And the price alone tells us basically nothing. The interesting thing for me is the third person. Me, in this case, to whom Bitcoin is worth 0, or less than 0 because I would consider it a labor cost to own a Bitcoin (figuring out a wallet or whatever). How does someone to whom a Bitcoin is worth 40k then then around and say "Bitcoin is worth 40k" to someone like me? To capitalists trying to nod their heads and say ah the price is high, supply must be down or demand must be up, I say, good luck predicting human behavior, that usually goes great. For me though I agree with you, the value of goods is some combination of their production costs, in any meaning of the word "value" that matters. "But what if someone spends an entire lifetime of labor producing a single widget nobody wants? Clearly demand plays a part in value!" I don't know, go away. Why would that happen? Sure, ok, also include in value calculus that hopefully people only make things that people actually want. (the capitalist argument here is, the profit is to be found in the margin between cost to create and the price set by desirability - to which I say exactly, profit should be eliminated) Edit: someone else had a comment they deleted talking about how profit is necessary so as to have surplus to save in case of equipment failure, I'll paste my response here cause my thumbs put in the labor so by golly I'll get the Payout Traditionally, are profits sequestered to be used as savings like that? In my experience the equipment breaks and both companies go bankrupt because the executives in the c corp spent the profit on themselves already and are happy to just go find a new investment. Actually in my experience the other company, the co-op, doesn't go bankrupt, because the workers are smart enough to safeguard their well being with rainy day funds. This might be one of the reasons coops are repeatedly shown to be far more resilient than traditional companies.

komali2 4y ago

What's at the other end of "bear" when the thing being bought is food or housing? Seems like a dangerous analytical framework.

regularfry 4y ago
People go hungry and homeless. This is visible today. This is literally why one function of the state is to act as a non-market-participant so it can provide a safety net. There are some things markets can't and shouldn't try to do.
- MrPatan 4y ago
  Yes! I can't wait for food production and distribution to be put in the hands of government officials. Access to food is going to be equalized so hard! The market has been taking care of it for too long, we're getting too fat, we need a few decades of food controlled by the police to get back into shape.
  - jen20 4y ago
    > we're getting too fat I don’t know if you’ve seen the average American waistline, but yes, this part is absolutely true. Unhealthily so.
  - regularfry 4y ago
    Take it up with Adam Smith.
  - komali2 4y ago
    Being fat can be a sign of malnutrition. Americans aren't just fat because they eat too much, many are fat because they live in food deserts or have no time to cook and no access to affordable healthy food. You're not helping your argument with this example imo.

lunarhustler 4y ago

Except the market ain't going to bear it, not for a long time anyway. If I am a CEO of a remote-first company and it truly doesn't matter for me where the employees are located it makes no sense to overpay for labor in high cost of living area. So if there's a company A that pays $X in high COL area, and $X/3 in a low COL area. And then there's a company B that pays $X/2 everywhere. Then people from the low COL area would go to the company B, and people from the high COL area would go to the company A. As a result, company B gets the same results 2 times cheaper. Repeat this process enough times and the salaries will be equalized. Of course it's not immediate, there are companies rigidly set in their ways; there are people who won't move no matter what; there is limited supply of both companies and workers; etc, etc. But eventually the market forces will do their thing.

dorwi 4y ago
"As a result, company B gets the same results 2 times cheaper" - that's just an assumption. If I turn it around, it sounds - "people on average in high COL area do the same work two times faster than in low COL area".
- Kbelicius 4y ago
  What assumption is being made? What are you turning around?
  - danaris 4y ago
    The assumption they're claiming lunarhustler made is that engineers in Silicon Valley and engineers in (say) Utica, NY work at approximately the same speed and quality. The assumption dorwi's asking you to make is that moving to Silicon Valley somehow makes you work twice as fast, or that only engineers who work twice as fast live there. Basically, lunarhustler is making the assumption that humans who can program end up at roughly the same quality no matter where they live or how much you pay them, while dorwi is making the assumption that how much you are paid is directly related to your productive output.

taneq 4y ago

Of course, this is very much what a business is. It's an engine, running on the difference in energy between two or more goods or services. In fact, if you think about it, the upper limit to profit margin is profit_margin = (price_sell - price_buy) / price_sell Look familiar?

selestify 4y ago
Wow, how have I not heard of this framing before? So then, are there equivalent analogies to the laws of thermodynamics? An equivalent entropy as an arrow of time?
- eru 4y ago
  Not really. In vaguely thermodynamic terms, businesses are very open systems. Thermodynamics doesn't have to say very much about systems far from the equilibrium.
- anticensor 4y ago
  Decrease of profit margins over time?