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Basic pricing logic. Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't? There's a reason subscriptio

Basic pricing logic. Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't? There's a reason subscriptions cost a lot less in the developing world than in rich countries - and everyone seems to think this is somehow fundamentally fair. People are happy for software engineers to earn more than burger flippers, but not happy for 3x software engineers to earn more than 2x software engineers. Emotional reasoning abounds.

nordsieck 4y ago
> People are happy for software engineers to earn more than burger flippers, but not happy for 3x software engineers to earn more than 2x software engineers. I think that it's probably partially due to the historical difficulty of measuring developer productivity. Sales compensation has always been heavily commission based. And for the most part people are fine with that.
- Wolfenstein98k 4y ago
  Commissions are a good example. They are deeply "unfair", using the logic of objections to the original article.
  - deleted 4y ago
    [deleted]
  - klabb3 4y ago
    The issue isn’t that the employer measures and rewards work output, which is not controversial itself (although some _methods_ of measuring are). The issue is that they use everything they know about you to determine the lowest possible price you’re willing to accept, on an individual basis with droves of data that exist because of as-tech.
    - vba616 4y ago
      I never took a college-level economics course, but a book I read purporting to be an intro to economic thinking put it something like this (no warranty I'm remembering correctly): If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value. However, there is generally more than one price where both parties would benefit and should want to trade. Which price is agreed on in that range determines who gets what portion of the surplus value. Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%. A purely rational actor with no secrets is easily manipulated.
      - nordsieck 4y ago
        > If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value. What you're describing is basically the "Subjective theory of value"[1]. > Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%. Interestingly people don't really act like that[2]. > A purely rational actor with no secrets is easily manipulated. Probably. Good thing that, in this case, the most important information like competing offers tends to be secret. Or at least strategically revealed. --- 1. https://en.wikipedia.org/wiki/Subjective_theory_of_value https://en.wikipedia.org/wiki/Subjective_theory_of_value 2. https://en.wikipedia.org/wiki/Ultimatum_game https://en.wikipedia.org/wiki/Ultimatum_game
  - GolfPopper 4y ago
    You don't have to look any further than the deceit, sabotage, and selfishness that show up whenever commissions impact the financial status of the salespeople to see their downside.
  - imtringued 4y ago
    I am not sure you read the article. For commissions to be relevant, the AI software would have to determine your commission and since it is intransparent it could decide to give some well performing employees less money because that motivates them to work harder as the AI has determined that this particular employee really needs the money for whatever reason.
neilv 4y ago
> Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't? If it turns out that any companies are trying to do the things the article alleged --- exploitative (e.g., using intimate data to determine the minimum they can offer each individual gig worker, while they have them over a barrel) and bad-faith (e.g., blocking an individual worker from gigs when they're about to hit a bonus threshold) -- the corpus of HN comments tells us that there will always be a tech worker with logic and values aligned with making it happen. > Emotional reasoning abounds. Many of us would do well to be more logical in our thinking, and many of us would do well to discover more "emotional" values based wanting to lift up everyone rather than dominate them.
- lotsofpulp 4y ago
  > do well to discover more "emotional" values based wanting to lift up everyone rather than dominate them. The right way to do this is via wealth redistribution via taxes. Not letting markets determine appropriate prices simply leads to society wide misallocation of resources.
  - carlitossway 4y ago
    One thing is to prevent the market to decide prices, and a very different thing is to let bad-faith actors to continue going around unchecked. The first scenario allows us to collectively make a bigger cake and then figure out how to share it. The second scenario allows the two biggest bullies to stomp over half of the cake while fighting who is to claim a bigger slice! It is ok to let people with bigger appetites to eat more; but if you cannot be civil and keep wasting food, why wouldn't the others kick you out of the table?
  - ipaddr 4y ago
    That leads to waste, corruption and the rich paying even less.
  - pdonis 4y ago
    > Not letting markets determine appropriate prices simply leads to society wide misallocation of resources. So does wealth redistribution via taxes (and printing money, which is a significant component of wealth redistribution in all developed countries, and not to the advantage of the poorer people). The right way to prevent exploitation is to equalize bargaining power. But doing that requires less government interference, not more; free markets aren't perfect, but they do better at equalizing bargaining power than the alternatives. For example, the reason Uber can exploit its gig workers is that its competition, taxis, is already regulated up one side and down the other by the government, and hence is horribly inefficient (and exploitative of its drivers), so Uber can compete simply by being a little bit less inefficient. Nobody has ever even tried to see what an actual free market in transit would come up with.
carlitossway 4y ago
You've just conflated having low performance with low bargaining power, which is weakly correlated at best. So... 1) Why pay less productive employees the same as more productive employees (for the same position)? Because it can be hard to measure performance, and harder to demonstrate to what degree the poor performance is direct responsibility of the employee. To some degree, it is laziness and/or sentimentalism from the employer; but if pursued to the ultimate consequences you may end up expending way more in your super perfect performance measuring infrastructure than what you will end up saving in payroll. It's way easier to turn a blind eye to small inefficiencies and firing actual slackers. 2) Why pay employees with low bargaining power as much as employees with high bargaining power for the same (or better) amount/quality of work? To some degree, every employer does this unless their workforce is unionized. The problem is, greed is an actual invariant in human nature and you do not want to live in a society that lets it run unchecked. It may be nice to save on payroll by low-balling your employees, but then it will be equally nice for Microsoft to send a horde of salesmen to hardcall your client database and offer them juicy cash incentives to drop your business and sign up for their free service... ... or for the matter, for Beaves and Butthead to try and invade your home and take as much of your property as they see fit.
jacquesm 4y ago
> Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't? Because we're not living in an Ayn Rand novel.
flandish 4y ago
If you hire two people for the same non piecework role they should be paid the same regardless of a whole host of things. If you pay someone widget wise - that’s entirely different. Reminder: Capitalism will exploit any time it can.
- hackerlight 4y ago
  > If you hire two people for the same non piecework role they should be paid the same regardless of a whole host of things. So by this logic it's fine for a manager to be paid 2x more than a subordinate, presumably because they're 2x more important/valuable/scarce/productive/whatever, but it's not fine for a software engineer who is 2x more productive to be paid 2x more than the less productive software engineer, all because it's "the same role", and such categorisations are arbitrarily chosen. Assuming I'm not strawmanning you, I don't see why this makes sense.
  - flandish 4y ago
    How do you measure sw productivity? And is that an appropriate metric by which to assign salary? If I resolve 3x the salesforce issues you do and implement with less post production fixes, but you are a VERY good “fixer” of that kind of “oh shit sky is falling” issue - and I am not available after hours like you are… All we do here is normalize employee comparisons at the employee-employee level, and not at the employee-corp level thus *keeping our working class fighting itself* while the owners ensure we help them pay as little as possible for their labor.
    - hackerlight 4y ago
      > How do you measure sw productivity? You measure it the same way that you measure the relative difference in compensation that a manager should make versus a SWE. You make a subjective assessment. Why is such a subjective assesment OK in the case of manager vs SWE, but not OK in the case of SWE vs SWE? Both assessments are equally prone to mistakes and difficulties of the type you are talking about. > All we do here Convince me of this, because to me, this is necessary to being fair and just. As an employee, I would feel ripped off if I am clearly doing more quality work than a colleague, but I am being paid the same. It's unfair, I am de facto doing work that's uncompensated if I am doing 2*X but am being paid as if I was doing 1*X, which is de facto someone stealing money I rightfully deserve. In effect and outcome, it's no different to wage theft being done to me, due to the fact that half of my output is de facto uncompensated. And let's be real, sometimes it's super obvious when one person is more productive than someone else, even if in other cases it can be hard to measure and separate the contributions of two individuals, and even if in other cases those perceptions are distorted due to narcissism and information asymmetry.

nordsieck 4y ago

> People are happy for software engineers to earn more than burger flippers, but not happy for 3x software engineers to earn more than 2x software engineers. I think that it's probably partially due to the historical difficulty of measuring developer productivity. Sales compensation has always been heavily commission based. And for the most part people are fine with that.

Wolfenstein98k 4y ago
Commissions are a good example. They are deeply "unfair", using the logic of objections to the original article.
- deleted 4y ago
  [deleted]
- klabb3 4y ago
  The issue isn’t that the employer measures and rewards work output, which is not controversial itself (although some _methods_ of measuring are). The issue is that they use everything they know about you to determine the lowest possible price you’re willing to accept, on an individual basis with droves of data that exist because of as-tech.
  - vba616 4y ago
    I never took a college-level economics course, but a book I read purporting to be an intro to economic thinking put it something like this (no warranty I'm remembering correctly): If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value. However, there is generally more than one price where both parties would benefit and should want to trade. Which price is agreed on in that range determines who gets what portion of the surplus value. Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%. A purely rational actor with no secrets is easily manipulated.
    - nordsieck 4y ago
      > If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value. What you're describing is basically the "Subjective theory of value"[1]. > Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%. Interestingly people don't really act like that[2]. > A purely rational actor with no secrets is easily manipulated. Probably. Good thing that, in this case, the most important information like competing offers tends to be secret. Or at least strategically revealed. --- 1. https://en.wikipedia.org/wiki/Subjective_theory_of_value https://en.wikipedia.org/wiki/Subjective_theory_of_value 2. https://en.wikipedia.org/wiki/Ultimatum_game https://en.wikipedia.org/wiki/Ultimatum_game
- GolfPopper 4y ago
  You don't have to look any further than the deceit, sabotage, and selfishness that show up whenever commissions impact the financial status of the salespeople to see their downside.
- imtringued 4y ago
  I am not sure you read the article. For commissions to be relevant, the AI software would have to determine your commission and since it is intransparent it could decide to give some well performing employees less money because that motivates them to work harder as the AI has determined that this particular employee really needs the money for whatever reason.

neilv 4y ago

> Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't? If it turns out that any companies are trying to do the things the article alleged --- exploitative (e.g., using intimate data to determine the minimum they can offer each individual gig worker, while they have them over a barrel) and bad-faith (e.g., blocking an individual worker from gigs when they're about to hit a bonus threshold) -- the corpus of HN comments tells us that there will always be a tech worker with logic and values aligned with making it happen. > Emotional reasoning abounds. Many of us would do well to be more logical in our thinking, and many of us would do well to discover more "emotional" values based wanting to lift up everyone rather than dominate them.

lotsofpulp 4y ago
> do well to discover more "emotional" values based wanting to lift up everyone rather than dominate them. The right way to do this is via wealth redistribution via taxes. Not letting markets determine appropriate prices simply leads to society wide misallocation of resources.
- carlitossway 4y ago
  One thing is to prevent the market to decide prices, and a very different thing is to let bad-faith actors to continue going around unchecked. The first scenario allows us to collectively make a bigger cake and then figure out how to share it. The second scenario allows the two biggest bullies to stomp over half of the cake while fighting who is to claim a bigger slice! It is ok to let people with bigger appetites to eat more; but if you cannot be civil and keep wasting food, why wouldn't the others kick you out of the table?
- ipaddr 4y ago
  That leads to waste, corruption and the rich paying even less.
- pdonis 4y ago
  > Not letting markets determine appropriate prices simply leads to society wide misallocation of resources. So does wealth redistribution via taxes (and printing money, which is a significant component of wealth redistribution in all developed countries, and not to the advantage of the poorer people). The right way to prevent exploitation is to equalize bargaining power. But doing that requires less government interference, not more; free markets aren't perfect, but they do better at equalizing bargaining power than the alternatives. For example, the reason Uber can exploit its gig workers is that its competition, taxis, is already regulated up one side and down the other by the government, and hence is horribly inefficient (and exploitative of its drivers), so Uber can compete simply by being a little bit less inefficient. Nobody has ever even tried to see what an actual free market in transit would come up with.

carlitossway 4y ago

You've just conflated having low performance with low bargaining power, which is weakly correlated at best. So... 1) Why pay less productive employees the same as more productive employees (for the same position)? Because it can be hard to measure performance, and harder to demonstrate to what degree the poor performance is direct responsibility of the employee. To some degree, it is laziness and/or sentimentalism from the employer; but if pursued to the ultimate consequences you may end up expending way more in your super perfect performance measuring infrastructure than what you will end up saving in payroll. It's way easier to turn a blind eye to small inefficiencies and firing actual slackers. 2) Why pay employees with low bargaining power as much as employees with high bargaining power for the same (or better) amount/quality of work? To some degree, every employer does this unless their workforce is unionized. The problem is, greed is an actual invariant in human nature and you do not want to live in a society that lets it run unchecked. It may be nice to save on payroll by low-balling your employees, but then it will be equally nice for Microsoft to send a horde of salesmen to hardcall your client database and offer them juicy cash incentives to drop your business and sign up for their free service... ... or for the matter, for Beaves and Butthead to try and invade your home and take as much of your property as they see fit.

jacquesm 4y ago

> Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't? Because we're not living in an Ayn Rand novel.

flandish 4y ago

If you hire two people for the same non piecework role they should be paid the same regardless of a whole host of things. If you pay someone widget wise - that’s entirely different. Reminder: Capitalism will exploit any time it can.

hackerlight 4y ago
> If you hire two people for the same non piecework role they should be paid the same regardless of a whole host of things. So by this logic it's fine for a manager to be paid 2x more than a subordinate, presumably because they're 2x more important/valuable/scarce/productive/whatever, but it's not fine for a software engineer who is 2x more productive to be paid 2x more than the less productive software engineer, all because it's "the same role", and such categorisations are arbitrarily chosen. Assuming I'm not strawmanning you, I don't see why this makes sense.
- flandish 4y ago
  How do you measure sw productivity? And is that an appropriate metric by which to assign salary? If I resolve 3x the salesforce issues you do and implement with less post production fixes, but you are a VERY good “fixer” of that kind of “oh shit sky is falling” issue - and I am not available after hours like you are… All we do here is normalize employee comparisons at the employee-employee level, and not at the employee-corp level thus *keeping our working class fighting itself* while the owners ensure we help them pay as little as possible for their labor.
  - hackerlight 4y ago
    > How do you measure sw productivity? You measure it the same way that you measure the relative difference in compensation that a manager should make versus a SWE. You make a subjective assessment. Why is such a subjective assesment OK in the case of manager vs SWE, but not OK in the case of SWE vs SWE? Both assessments are equally prone to mistakes and difficulties of the type you are talking about. > All we do here Convince me of this, because to me, this is necessary to being fair and just. As an employee, I would feel ripped off if I am clearly doing more quality work than a colleague, but I am being paid the same. It's unfair, I am de facto doing work that's uncompensated if I am doing 2*X but am being paid as if I was doing 1*X, which is de facto someone stealing money I rightfully deserve. In effect and outcome, it's no different to wage theft being done to me, due to the fact that half of my output is de facto uncompensated. And let's be real, sometimes it's super obvious when one person is more productive than someone else, even if in other cases it can be hard to measure and separate the contributions of two individuals, and even if in other cases those perceptions are distorted due to narcissism and information asymmetry.