from Hacker News

The Anatomy of Your Salary

by louwhopley on 3/30/23, 7:34 PM with 43 comments

• by ecshafer on 3/30/23, 8:44 PM

  Baseball statistics have this concept WAR (Wins Above Replacement), basically if by putting in this player, how much more wins did they bring in than some other player. This is what's really big in salary, but is tied together with another variable, how much money is that win worth?

  If I am hiring sandwhich makers and pay them $10 an hour, which brings in $15 an hour of revenue, then some other sandwhich maker is twice as good at making sandwhiches, how much do I pay them? Probably not $20 an hour, since them being faster might still only net $15 of revenue an hour. That increase in revenue is what drives salary. The downside to a bad sandwhich maker is very small, its at most a few messed up sandwhiches.

  Tom Cruise makes 1000x another actor for the same movie because the fact that Tom Cruise is in the movie brings in some large multiple of revenue, and Tom Cruise takes a cut of that increase. Sports work in the same way. Software, Finance, and to a point Sales are the "normal" jobs out there that work in a similar way because its largely non-fungible. An amazing trader or dev might make the firm 100x revenue than an average trader. A bad dev or trader brings in Negative value as they make things worse.

  This is why teachers don't make more money, a better teacher does not bring in 10x revenue to a district, a worse teacher doesn't create 10x losses. Even though teachers have a large societal effect, there is no direct revenue analysis you can do to show what the replacement value is.

• by aftbit on 3/30/23, 7:50 PM

  >Consider the price of water compared to the price of diamonds. Diamonds are far more expensive than water, even though water is essential for life and diamonds are basically useless.

  >Water is cheap because it’s relatively easy to acquire, whereas diamonds are much harder to get. Salaries work precisely this way.

  Diamonds are expensive not because they're hard to get, but because their sales and distribution channels are controlled by a cartel. Oddly similar to SWE salaries, now that I think about it. :P

• by dangerwill on 3/30/23, 8:21 PM

  This is the level of analysis you'd expect from a first year economics student. And that isn't even considering that his points about teachers are entirely wrong.

  Teachers generally need a post grad degree to teach, assholes in tech only devalue this work because it isn't coding. I would pay money to see this guy try to run a classroom.

  Finally, teachers don't "get a lot of time off". They get a lot of time off in the summer but are pretty swamped throughout the rest of the year and it seems to end up hitting the average working hours per year in total. This is one of those job stereotypes from before the 2000s, when jobs at the bottom of the pay scale were not squeezed as hard as they are now

• by gdthvxs on 3/30/23, 8:05 PM

  Low effort post that can be replaced entirely with “supply and demand.”

  Why not actually do some research and back up the claims? Give some insight?

• by sixo on 3/30/23, 8:09 PM

  It is also affected by the value of the work-if the work is not valuable enough for the salaries required to hire people who can do it, the job won't exist. If the business can't substitute for that role the business won't exist.

• by alexfromapex on 3/30/23, 8:12 PM

  These proclamations about things without citing any data whatsoever drive me kind of crazy

• by matheusmoreira on 3/30/23, 8:03 PM

  In simple words: leverage. How much they need you divided by how much you need them.

• by lysecret on 3/30/23, 8:06 PM

  I mean this is the beauty of our market economy, in 9/10 cases when someone asks "why is this the price?" The answer is supply and demand. The other answer is incentives. Here you got a free econ degree.