I think comparing salary to the value produced is a slippery slope. Software engineers are certainly not paid below the average or median salary. Their "value" is just a function of the job, not a measure of its worth.
I think we need to be careful with terminology here. I'm defining value as return on investment (and sometimes I'll be using the expected return on investment interchangeably).
An employer hires an engineer because they want product x. If the employer thought they could receive $100k selling product x, they'd be silly to pay >= $100k to the engineer. So at the very least, we can agree that the upper bound for salary depends on the value the employee provides.
Salespeople in particular are great at capturing the value they produce. It's extremely easy to measure the production of someone in sales. This is why it's common in many industries for the compensation of a salesperson to be an extremely high percentage of the margin on a sale. By virtue of their value being so easily measurable, salespeople are able to capture a much greater amount of their value than many other professions.
All I'm saying is that comparatively, software engineers do a poor job of capturing their value.
There are two kinds of value. The first is economic, and is measured in money. In a market economy, where scarce resources are allocated to the one who values them most (and therefore will pay the most for them), that is the definition of value.
The second kind of value is social or moral. People have value or worth by virtue of being human, completely apart from their economic value. (For example, this is why it's illegal to murder poor people.) And jobs have value in this sense, too, that is different from their economic value. (Perhaps one sees the difference most starkly in the social value vs. economic value of elementary school teachers.)
I think you are comparing salary to social or moral value, which is not just a slippery slope, but is a meaningless comparison - a category error. Comparing salary to economic value, on the other hand, is completely reasonable.
Ohhh... thats why we dont murder poor people? Never knew that.
Can you elaborate? Surely the efficient-market ideal is that everybody gets paid an amount equal to exactly the amount of value they produce.
Note in edit: I suspect what I remember as the Econ 101 explanation is probably accurate enough for most purposes: Both the employer and the worker have temporary, local monopolies: The employer has plenty of money, but a shortage of time, and the worker has plenty of time but no money. So each is willing to trade with the other. The employer could make money in excess of the value added by the employees, by exploiting other kinds of effective monopolies such as patents, trade secrets, even things like brand recognition and goodwill.
Exactly. That's why the ideal case is for the employee to be paid for the value he provides, and the employer also paid for the value he provides (i.e. he provides patents, trade secrets, brand recognition, ...).