6 ms·

I really doubt that could override the fundamental supply and demand forces. If hiring a finance "worker" will make my company $500k/year I will offer him $450

I really doubt that could override the fundamental supply and demand forces. If hiring a finance "worker" will make my company $500k/year I will offer him $450k regardless of what Google engineers make.

mitthrowaway2 2y ago
Will you offer him $450k regardless of whether he would accept $250k because his next best alternative is offering $200k?
- BurningFrog 2y ago
  In that case I would offer $250k, of course, but that assumes there is no other firm that can put that person to work on something equally profitable. Either way, engineer wages at Google would not be a factor.
  - wewtyflakes 2y ago
    > Either way, engineer wages at Google would not be a factor. ...for you. It would be a factor for who you are trying to hire. If who you are trying to hire sees Google engineers making $$$, but you are offering $ for job X, and they do not see it as an unbridgeable gap in their own aptitude, they could well say "I am going to instead try to be an engineer at Google so I can make $$$, instead of being offered $ doing X". This happens all the time.
  - sokoloff 2y ago
    In this example, if their alternative was a $300K/yr job at Google, that would certainly affect their willingness to accept your $250K/yr offer. If it did not at least affect that willingness, they might not be worth $250K/yr as a financial analyst.
roughly 2y ago
This is absolutely not how wages are set anywhere and certainly not in tech. Workers are paid according to the prevailing wages and what they’ll accept, not according to the value they generate for the firm.
- yieldcrv 2y ago
  and yet, they could, no matter what happens in other industries
  - hmmokidk 2y ago
    if they were paid for exactly the value they produced the firm would not profit as all the profit would be paid out to those generating it
    - yieldcrv 2y ago
      oh okay, if anyone anywhere suggested otherwise in this thread I'll let them know
    - pests 2y ago
      > the firm would not profit as all the profit would be paid out to those generating it Then what is the firm doing at this point?
      - deathanatos 2y ago
        In theory, it could re-invest those profits into the company, in hopes of further gains down the road. (But like all things, there's a healthy balance.) In practice, I think the answer is "executive bonuses" and [short-term] "stock buybacks". (But morally I agree; there is no reason every company has to be Scrooge, and I think it's to their long-term unprofitability to be so, by effectively ensuring a lack of experience & growth within the employees generating the value in the first place.)
- BurningFrog 2y ago
  How much value a worker generates is of course much harder to quantify in tech, vs a finance trader, but the market forces will produce a rough equivalent result over time. But to get back to the topic, tech wages are definitely not set by comparing with finance wages!
kelseyfrog 2y ago
Curious, have you always been a market determinist, or did that develop in a unique way for you?
- BurningFrog 2y ago
  I've never heard that term before, so it's hard to answer :) After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms.
  - kelseyfrog 2y ago
    There's not exactly a good descriptive term, but the vibe I got was beyond, "Markets are the best tool to solve exchange problems," and ventured more into "Markets are an inevitable fact of nature, provide the most utility, and efforts to intervene produce worse outcomes." Let me know if I got that wrong.
  - ceejayoz 2y ago
    > After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms. AP Physics is learning that a perfectly spherical cow does X. Common sense is realizing perfectly spherical cows don't exist, and that certain things are overly simplified or more chaotic than theorists would sometimes like to admit. See also: https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus
    - TeMPOraL 2y ago
      But then wisdom is recognizing it's AP Physics, not common sense, that put a cow on the Moon. There may not be perfectly spherical cows in the real world, but then real cows will also do X, to the extent their non-perfect-spheriness doesn't interfere with it. Theorists don't simplify for the sake of simplifying, they're trying to study specific components of the whole in isolation. Yes, it's important to not confuse a component for the whole thing, but then it's also important to know the most impactful components and how they behave.

mitthrowaway2 2y ago

Will you offer him $450k regardless of whether he would accept $250k because his next best alternative is offering $200k?

BurningFrog 2y ago
In that case I would offer $250k, of course, but that assumes there is no other firm that can put that person to work on something equally profitable. Either way, engineer wages at Google would not be a factor.
- wewtyflakes 2y ago
  > Either way, engineer wages at Google would not be a factor. ...for you. It would be a factor for who you are trying to hire. If who you are trying to hire sees Google engineers making $$$, but you are offering $ for job X, and they do not see it as an unbridgeable gap in their own aptitude, they could well say "I am going to instead try to be an engineer at Google so I can make $$$, instead of being offered $ doing X". This happens all the time.
- sokoloff 2y ago
  In this example, if their alternative was a $300K/yr job at Google, that would certainly affect their willingness to accept your $250K/yr offer. If it did not at least affect that willingness, they might not be worth $250K/yr as a financial analyst.

roughly 2y ago

This is absolutely not how wages are set anywhere and certainly not in tech. Workers are paid according to the prevailing wages and what they’ll accept, not according to the value they generate for the firm.

yieldcrv 2y ago
and yet, they could, no matter what happens in other industries
- hmmokidk 2y ago
  if they were paid for exactly the value they produced the firm would not profit as all the profit would be paid out to those generating it
  - yieldcrv 2y ago
    oh okay, if anyone anywhere suggested otherwise in this thread I'll let them know
  - pests 2y ago
    > the firm would not profit as all the profit would be paid out to those generating it Then what is the firm doing at this point?
    - deathanatos 2y ago
      In theory, it could re-invest those profits into the company, in hopes of further gains down the road. (But like all things, there's a healthy balance.) In practice, I think the answer is "executive bonuses" and [short-term] "stock buybacks". (But morally I agree; there is no reason every company has to be Scrooge, and I think it's to their long-term unprofitability to be so, by effectively ensuring a lack of experience & growth within the employees generating the value in the first place.)
BurningFrog 2y ago
How much value a worker generates is of course much harder to quantify in tech, vs a finance trader, but the market forces will produce a rough equivalent result over time. But to get back to the topic, tech wages are definitely not set by comparing with finance wages!

kelseyfrog 2y ago

Curious, have you always been a market determinist, or did that develop in a unique way for you?

BurningFrog 2y ago
I've never heard that term before, so it's hard to answer :) After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms.
- kelseyfrog 2y ago
  There's not exactly a good descriptive term, but the vibe I got was beyond, "Markets are the best tool to solve exchange problems," and ventured more into "Markets are an inevitable fact of nature, provide the most utility, and efforts to intervene produce worse outcomes." Let me know if I got that wrong.
- ceejayoz 2y ago
  > After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms. AP Physics is learning that a perfectly spherical cow does X. Common sense is realizing perfectly spherical cows don't exist, and that certain things are overly simplified or more chaotic than theorists would sometimes like to admit. See also: https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus
  - TeMPOraL 2y ago
    But then wisdom is recognizing it's AP Physics, not common sense, that put a cow on the Moon. There may not be perfectly spherical cows in the real world, but then real cows will also do X, to the extent their non-perfect-spheriness doesn't interfere with it. Theorists don't simplify for the sake of simplifying, they're trying to study specific components of the whole in isolation. Yes, it's important to not confuse a component for the whole thing, but then it's also important to know the most impactful components and how they behave.