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Comment by blowski | Hacker News Reader

I remember going through performnace-related bonuses. If somebody tried super-hard and got a "level 5", they got a £5K bonus. Somebody ticking along without being outstanding got £3K. Most people realised the extra £2K wasn't worth the extra effort required to get it.

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A raise of even a small amount makes a big difference over time because raises continue and even compound a little. Consequently, a cheap company will try to make the near certain portion of a bonus feel like part of your negotiated salary and extract effort with bonuses as ephemeral raises.

It doesn’t compound at all. If the going rate is $200k and I switch jobs my previous salary doesn’t matter, and therefore compounding doesn’t matter.

Raises that are a percentage will compound over multiple iterations, that's what he meant.

Only given the following conditions:

* You stay at the same company

* They are happy to pay above market rates and keep giving you raises even if you are paid over market rates.

This would be the exception, and probably for some real specialist stuff.

If I get a 10% raise today, it will have no impact on my 2030 salary. Getting more stock might be a different thing if you are very lucky and the ducks line up.

in what industry does your previous salary not matter? (Not a snarky ask btw.) I have never entertained an offer blow my current salary, so personally find them highly correlated (sw eng).

Previous salary can’t affect future salary unless you let the previous salary be known.

There is a bit of a bias to this.

Higher salaries will get disclosed more, because if I get an offer below my current salary, then I can disclose and at the very least get a match or refuse the offer. At a lower salary, there is a higher probability that the offer is higher, and my current salary does not matter.

I believe that people more rarely accept a downgrade in salary, so the probably of acceptance is also conditioned on the current salary. What this means is that the effect is biased and probably non-linear, but I wouldn't qualify it as non effect.

Nobody is talking about previous salary, the $3k/$5k thing was about yearly performance bonuses.

My argument is general enough to cover that case too. Performance bonuses don't compound long term for the same reason.

We're not talking about raises, we're talking about one-time performance bonuses.

We are talking about performance bonuses, a trick to avoid permanent raises.

The bonuses where I am now are a % of the employee's base salary. A mid-level "meets" engineer can expect something like $20-25k during an average year for the company. Up to twice that for a strong year.

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