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Comment by caiob | Hacker News Reader

> On Wall Street, new computer engineers get hired at $120,000, but senior managers can make $400,000 plus the bonuses Wall Street hands out every winter

This always bums me out. Why do managers make so much more money than engineers?

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A group of 5 engineers, left to their own devices, would probably produce about $100k worth of value. An effective manager can extract two million dollars worth of value out of those same 5 engineers.

If you don't believe this, you may have never had a great manager.

And an effective manager given engineers who can't write a for loop will produce $0 worth of value (or worse). I don't find this line of thought convincing.

A better answer is "that's the market clearing price for good managers".

>And an effective manager given engineers who can't write a for loop will produce $0 worth of value (or worse)

No, an effective manager given engineers who can't write a for loop will replace those engineers with more talented ones.

I keep reading that there's a big shortage of those, though.

Could say the same thing about athletes and coaches but who makes more in pro sports?

Athletes collectively bargain. Either way, coaching still matters in sports.

Of course coaching matters! The point, I believe, is that the relationship between management and creative can be mutually beneficial, with both parties earning considerably more through a partnership than they would on their own.

The fact that developers become much more valuable with a good manager doesn't, in itself, explain why managers are paid more.

For example, let's say a manager without a good developer would be worth 100k of value a year, and a developer without a good manager would produce 100k, but working together, they produce 500k. There is now a surplus.

Now, if it's easy to be a developer and very difficult to be a manager, then it would make sense that the manager would capture most of the surplus, because he or she could always just go and find a new talented developer to work with. The Rolling Stones can find a new manager more easily than a manager can find a new Rolling Stones.

However, ahem, it seems to be the managers constantly bemoaning the difficulty of hiring good developers. Share a bit more of that surplus, and you may find those hiring woes aren't quite so woeful?

Difference is accountability. Managers are taking on responsibility for their teams delivery and usually owning some budget and timeline that's critical to the business. In finance, that could be worth millions or even hundreds of millions. Managing Directors at top tier investment banks absorb a ludicrous amount of pressure to earn their bonuses.

Engineers aren't the money makers.

Engineers aren't in the room when they decide who is doing the most critical work.

That's not the case everywhere. Some companies pay managers less than engineers. From the company's perspective, a manager deals with a larger chunk of the business, while an engineer solves just one small part. Not saying it's right, but that's my simple guess.

This is changing. Maybe less so in banks, but at my hedge fund, its more about individual contribution rather than how many people you manage. We are also a bit different in that we are actively modeling ourselves like a tech company.

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