4 ms·
I'm not sure exactly what principle you're trying to cite here, but as I understand the words that's wrong. "Value creation" is the only point to paying anyone
by ajross 2y ago
I'm not sure exactly what principle you're trying to cite here, but as I understand the words that's wrong. "Value creation" is the only point to paying anyone to do something in the first place. You pay people to do work from which you hope to get value.
There are other reasons that might inspire, elicit or compel one person's labor at someone else's direction; but if you accept the idea of "salary" as a concept, then it exists to create value, by definition.
- s1artibartfast 2y agoyes, you pay someone because you derive value from their work. How much you pay them is a question of marginal cost/benefit, not total value. If I make a fixed $100 from some labor, that number is an upper bound for how much I would ever pay, but doesnt determine how much I actually do pay. That is set by supply and demand for someone that can do the job. Maybe it is $1, maybe it is $99. For jobs with variable productivity, pay is set by marginal benefit. If paying $1 more nets $10 more profit, you pay more. Repeat until you dont get more profit from raising wages. Wages are set by the derivative of profit, not profit itself.
- ajross 2y ago> a question of marginal cost/benefit, not total value. Uh... yes it is? Are "benefit" and "value" not synonyms here? I think you're confusing "value" with "profit" maybe? They may not be equal, but the denominator in "cost/benefit" is exactly what I'm talking about.
- s1artibartfast 2y agoYes, value and benefit are synonymous, but in reference to different objects/choices. There is the financial benefit that doing the work provides, and the financial benefit of paying more. The pre-cost benefit of having any worker might be $100. If you can get a worker for $10, the marginal benefit or paying $20 is negative $10.