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A Google engineer might generate $50k/month in value, but she is unlikely to generate as much value as a non-Google engineer. Competitive labor markets generall

by natrius 13y ago

A Google engineer might generate $50k/month in value, but she is unlikely to generate as much value as a non-Google engineer. Competitive labor markets generally don't see such ~75% profit margins across the board. Either anti-competitive practices are pervasive, or Google is uniquely profitable. Most of the evidence points to the latter explanation. If engineers are underpaid, start a company, pay engineers more to lure them away from Google, and enjoy your "paltry" ~50% profit margins.

Aloisius 13y ago
Google's profit margin is actually around 21-24% (depending on who calculates it)
- natrius 13y ago
  I merely calculated the margin on $50k/month at $150k/year for the sake of argument. If Google engineers are underpaid, someone should be able to pay them more in exchange for a slightly lower profit margin. I don't think this is the case.
CleanedStar 13y ago
Engineers are underpaid. It is obvious to all of us in this respect. I'm not going to get paid $120k a year, unless my being there is generating $130k, or $140k, or more for the company. They're not hiring me to lose money. This is obvious. As to your theoretical example of starting a company, here is where that falls apart logically. Several hundred families own trillions in capital. They make 20% a year profit on each engineer they employ. Say I own $50 million. I am a nice guy, so I only make 15% a year profit off each engineer, and give the engineers the other 5%. Several things arise from this. For one, the dozens of people I employ are only a drop in the bucket to everyone else. So the dent in the whole economy is negligible. More importantly, my already relatively small pile of money is growing slower than everyone else's. Compound returns and all that. Now they get even more economies of scale. I can't even maintain my small niche, my small piece of the economy becomes ever smaller over time. I don't want to go into every detail of your messages...anti-competitive? Look into the documents on the anti-poaching case which has hit Apple, Google, Intel etc. Also, there's a well known way for companies to make excessive profits - monopoly. Something the government is currently investigating in the case of Google.

by natrius 13y ago

Aloisius 13y ago

Google's profit margin is actually around 21-24% (depending on who calculates it)

natrius 13y ago
I merely calculated the margin on $50k/month at $150k/year for the sake of argument. If Google engineers are underpaid, someone should be able to pay them more in exchange for a slightly lower profit margin. I don't think this is the case.

CleanedStar 13y ago

Engineers are underpaid. It is obvious to all of us in this respect. I'm not going to get paid $120k a year, unless my being there is generating $130k, or $140k, or more for the company. They're not hiring me to lose money. This is obvious. As to your theoretical example of starting a company, here is where that falls apart logically. Several hundred families own trillions in capital. They make 20% a year profit on each engineer they employ. Say I own $50 million. I am a nice guy, so I only make 15% a year profit off each engineer, and give the engineers the other 5%. Several things arise from this. For one, the dozens of people I employ are only a drop in the bucket to everyone else. So the dent in the whole economy is negligible. More importantly, my already relatively small pile of money is growing slower than everyone else's. Compound returns and all that. Now they get even more economies of scale. I can't even maintain my small niche, my small piece of the economy becomes ever smaller over time. I don't want to go into every detail of your messages...anti-competitive? Look into the documents on the anti-poaching case which has hit Apple, Google, Intel etc. Also, there's a well known way for companies to make excessive profits - monopoly. Something the government is currently investigating in the case of Google.