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Comment by Workaccount2 | Hacker News Reader

Reducing wages by definition increases profits and the title doesn't match what the linked abstract says.

I get what the study is saying, but the crucial piece of info is whether the non-business degree managers create an increase in profits greater than the increase in profits from wage cuts/suppression.

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The time horizon is crucial here. Will it increase profit in the current fiscal year? Likely. Will it drive away the employees that have other options, which are often the ones who help building valuable products? Also likely.

This is the part I don't understand. Are shareholders really that short-term minded? I agree with everything you've said btw.

I've come to the realization that most companies have a very small percentage of people doing the heavy lifting and important work. Somehow they're never compensated in a way to reflect that. Brain drain will eventually catch up to you.

It does only in a vacuum. Real world is not so simple. Productivity can be impacted by wages, morale too, retention.

I feel like your statement is kinda like random business drone would argue.

1. Lowers wadges.

2. Adjusts spreadsheet.

3. Declares increased profit!

But that's too simple / not how things play out and then you ask for a great deal more analysis. Kinda a weird angle to approach it from.

The key part is the assumption that in between step 1 and step 2 that productivity and everything related to it remains stable. This is almost certainly never true.

I'm not arguing any point except that the study data is incomplete.

It also a strong signal that you have no idea, no longterm plan and strategy and just want to micromanage and premature optimize the status quo to death.

Its a warning light going off, signaling to any competent person with a longterm career in mind to abandon ship.

Do you know how much it costs to hire a single developer? You need a team of recruiters and waste countless employee-hours on interviews. Retention is a big deal. You can probably provide a real monetary value to retention.

You have quite a few things backwards here, if reducing wages reduces REVENUE by more than the reduction in wages then you have a net loss. Your second sentence only continues this confusion when you compare two different definitions of profits when surely you mean comparisons of expenditures to revenue.

Not necessarily. Are workers going to work as hard while earning less or will they just coast along doing just the minimum equilibrium to stay employed? Likewise are workers earning more going to feel more pressure to do more less they lose their position to someone who will be more motivated.

Only if you assume that reducing wages has no secondary effects. But that's never the case. You might get a momentary bump in your balance sheet, but then you have to deal with employee morale issue, deadline slippages, &c., which eat away at that bump and then some.

I took the study to imply sales / revenue went down as much as salaries.

if you reduce your wages to 0, you’ll probably lose some profit.

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