I really doubt that could override the fundamental supply and demand forces.
If hiring a finance "worker" will make my company $500k/year I will offer him $450k regardless of what Google engineers make.
If hiring a finance "worker" will make my company $500k/year I will offer him $450k regardless of what Google engineers make.
Either way, engineer wages at Google would not be a factor.
...for you. It would be a factor for who you are trying to hire. If who you are trying to hire sees Google engineers making $$$, but you are offering $ for job X, and they do not see it as an unbridgeable gap in their own aptitude, they could well say "I am going to instead try to be an engineer at Google so I can make $$$, instead of being offered $ doing X". This happens all the time.
If it did not at least affect that willingness, they might not be worth $250K/yr as a financial analyst.
Then what is the firm doing at this point?
(But morally I agree; there is no reason every company has to be Scrooge, and I think it's to their long-term unprofitability to be so, by effectively ensuring a lack of experience & growth within the employees generating the value in the first place.)
But to get back to the topic, tech wages are definitely not set by comparing with finance wages!
“The market can stay irrational for longer than you can stay solvent”
There are price makers and price takers. Guess which side labor is on?
No, they absolutely will not. Absolutely not. The entire history of the labor movement and of labor law is testament to this. We’ve tried this, repeatedly, in the real world, and labor gets fucked every single time. Employers do not pay according to the value generated by the employee, they pay the minimum they need to get an employee. Get this model out of your head, it is wrong.
But certainly not since then.
And even he probably paid the minimum overage he could. It's the nature of business.
1. For paying a team of N people the going wage.
2. For paying a team of N/2 people, double the going wage. Aiming for the best workers it could find.
3. Paying a team of 2*N workers, whatever the bottom of the market is.
This would be for teams where high functioning workers resulted in high value results, i.e. creative/design/technically challenging work.
I have no idea how a study like this would work, but the more challenging the work, the higher likelihood that you save money going high salary, high talent.
Some AI researcher seem to be falling into this category, with really high salaries. Researchers certainly have 10x talent. But I bet there are a lot of 2x, 4x engineers, designers, whatever, that are being overlooked and/or under motivated. That would be cheaper to pay, and produce more value, in small numbers, than others in larger numbers.
I think you're saying that employers pay employees as little as they can, not according to some formula based on the value each employee generates. Aside from some very specific exceptions, I think that's very true.
But then we need to explain why all companies don't just pay minimum wage!
I claim that prices (wages) on a labor market, like on most markets, is determined by supply and demand. Obviously, companies that pay employees more than the value they generate will run out of money and die. This sets an upper limit on wages.
The lower limit comes from companies outbidding (demand) each other for workers (supply) as long as it's profitable. In aggregate this means wages will converge on on some large percentage of the value generated by the typical employee.
A former colleague built a program that would have saved $30M p.a. in OpEx but as a policy they can’t deploy something unless more than two people understand it and they wouldn’t pay enough to hire someone capable enough. Probably would have taken $600K.
It’s about power and in general management does not want to yield power to ICs no matter how much money they could make with it. The more productive the IC the more power management loses.
We are giving away this expertise for fractions of a penny, but companies react to market pressures. Let them spend the extra $36 million for not keeping up with it. When they offer incentives, then do the work.
Heck, maybe you can make an underhanded pitch to whatever cloud provider it was that you earned them millions by not fixing the issues.
I've been in the board room when discussing salaries and told that we need to offer the lowest that the candidate will accept - "it's just good business".
I was arguing against that mentality as responsibilities and retention are a more important metric to my mind when thinking about compensation. But even there, I'm part of the problem as I would set my "retention" target to some measure above industry standard: where-by I am still thinking in industry standard terms. (as per this thread)
After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms.
AP Physics is learning that a perfectly spherical cow does X.
Common sense is realizing perfectly spherical cows don't exist, and that certain things are overly simplified or more chaotic than theorists would sometimes like to admit.
There may not be perfectly spherical cows in the real world, but then real cows will also do X, to the extent their non-perfect-spheriness doesn't interfere with it. Theorists don't simplify for the sake of simplifying, they're trying to study specific components of the whole in isolation. Yes, it's important to not confuse a component for the whole thing, but then it's also important to know the most impactful components and how they behave.
- Yogi Berra
I think these concerns are pretty similar to the religious idea that "evolution is just a theory". Our human minds really don't want to admit any facts that would force us to change our world view.