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Comically high salaries are an aberration due to zero interest rates. SWEs should earn well, but not 3-4x as much as the median (and conversely, median salary s

Comically high salaries are an aberration due to zero interest rates. SWEs should earn well, but not 3-4x as much as the median (and conversely, median salary should pay the rent, the housing market also being distorted by ZIRP).

lotsofpulp 2y ago
High prices are due to supply and demand. While ZIRP can cause high demand (and high supply of currency to fulfill that demand), the underlying demand still comes from the fact that software has near zero marginal cost, near zero liability, the ability to easily collect rent, AND high barriers to entry. The ideal business. This means a business that sells software solutions can earn high profit margins, which is a necessary component to be able to then pay high prices to labor sellers. A buyer has to be both able and willing to pay a high price for the seller to be able to sell at a high price. If the labor buyer is only earning 5% profit margin, then the labor seller is going to have a harder time extracting more money. But if a buyer is earning 20%+ margins, and their business is growing to boot, the buyer will be able and willing to part with more, hence higher prices for labor sellers.
abirch 2y ago
Software is very scalable and can provide a lot of value. If you look at the revenue per SWE for Microsoft, Alphabet, Netflix, etc, then it's hard to compare them to the person whose job isn't scalable, to say a truck driver, nurse, or bartender.
- bix6 2y ago
  So I agree with this but I think it distorts the true value. A nurse is worth way more to society than another SWE but the SWE gets paid way more. Bankers get paid a lot because they control money supply but I don’t think most people believe bankers are helping them or wish we had more bankers. Software is going down a similar path (see artist outrage over AI) because the pull of money is too great.
  - abirch 2y ago
    I agree that the value to society and the economic value are two completely different things. I shining example of this principle is the 1980s corporate raiders that would buy a company, gut its pension program, and ride off with the profits.

lotsofpulp 2y ago

High prices are due to supply and demand. While ZIRP can cause high demand (and high supply of currency to fulfill that demand), the underlying demand still comes from the fact that software has near zero marginal cost, near zero liability, the ability to easily collect rent, AND high barriers to entry. The ideal business. This means a business that sells software solutions can earn high profit margins, which is a necessary component to be able to then pay high prices to labor sellers. A buyer has to be both able and willing to pay a high price for the seller to be able to sell at a high price. If the labor buyer is only earning 5% profit margin, then the labor seller is going to have a harder time extracting more money. But if a buyer is earning 20%+ margins, and their business is growing to boot, the buyer will be able and willing to part with more, hence higher prices for labor sellers.

abirch 2y ago

Software is very scalable and can provide a lot of value. If you look at the revenue per SWE for Microsoft, Alphabet, Netflix, etc, then it's hard to compare them to the person whose job isn't scalable, to say a truck driver, nurse, or bartender.

bix6 2y ago
So I agree with this but I think it distorts the true value. A nurse is worth way more to society than another SWE but the SWE gets paid way more. Bankers get paid a lot because they control money supply but I don’t think most people believe bankers are helping them or wish we had more bankers. Software is going down a similar path (see artist outrage over AI) because the pull of money is too great.
- abirch 2y ago
  I agree that the value to society and the economic value are two completely different things. I shining example of this principle is the 1980s corporate raiders that would buy a company, gut its pension program, and ride off with the profits.