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Because they have to employ somebody at your position and it might as well be you. That they are indifferent between you and a market-rate replacement does not

Because they have to employ somebody at your position and it might as well be you. That they are indifferent between you and a market-rate replacement does not mean they don't benefit from having you in your position. Say I'm in the market for a babysitter. If the market rate is, say, $18/hour, and I hire someone for $18/hour, I'm not abnormally benefiting from a low salary, yet I'm perfectly okay with that because I need a babysitter. The rate at which I no longer want to have a babysitter because the benefit they bring is cancelled out by their salary may be much higher than the market rate, because the market rate takes into account other potential babysitters. In short, market rate is not the rate at which employers can no longer profitably hire, but simply an equilibrium price point that balances supply and demand. Assuming a reasonably well-run company, the price point at which they are better off not having you or anyone else in your position is much higher than your market price or worth.

chongli 13y ago
You're confusing market rate with employee value. If an employee produces $100 worth of goods per hour (after non-labour expenses), that employee is worth $100 an hour. It doesn't matter if the market rate for that job is only $12 an hour.
- candybar 13y ago
  The worth people are talking about here is, for the most part, the market rate. If you don't own the business, your labor is fungible and the revenue you bring is not separable from the rest of the company, your worth based on revenue criteria like the one you mention is irrelevant and impossible to calculate, because part of the input is the system you're placed into and its cost is the profit deliverable to the owners. In general, the market does a better job of attributing how much of the profit is due to the capital, the system, the management, etc and how much is your contribution than any sort of ad-hoc, I produced X type of analysis. If that's not the case and your production is separable from the rest of the system, that does set a floor for your market rate because you can just do that on your own and keep the money instead.

chongli 13y ago

You're confusing market rate with employee value. If an employee produces $100 worth of goods per hour (after non-labour expenses), that employee is worth $100 an hour. It doesn't matter if the market rate for that job is only $12 an hour.

candybar 13y ago
The worth people are talking about here is, for the most part, the market rate. If you don't own the business, your labor is fungible and the revenue you bring is not separable from the rest of the company, your worth based on revenue criteria like the one you mention is irrelevant and impossible to calculate, because part of the input is the system you're placed into and its cost is the profit deliverable to the owners. In general, the market does a better job of attributing how much of the profit is due to the capital, the system, the management, etc and how much is your contribution than any sort of ad-hoc, I produced X type of analysis. If that's not the case and your production is separable from the rest of the system, that does set a floor for your market rate because you can just do that on your own and keep the money instead.