> Anyone else see an issue with this comment? We don’t know how to value the work of a corporate employee but we’re simultaneously all being paid less than we’re worth.
Think of it as a general rule of thumb, a statistical average. You will for example find that often managers and executives make a crazy amount of money, but are all but useless, but are only a small part of the bigger company.
> The money we make pales in comparison with the size of our contributions to the company. Especially so if you are in a value-adding position and not something like internal tooling. Management and executives are DEFINITELY underpaying us relative to what we bring to the table for them
I mean, I’ve seen people working in retail make this same point. And I’m not saying either of you are invalid in your claim, thats just how work is, it seems
> trillion dollar company with some/many employees delivering quite a bit more value than they are paid
Companies structurally and intentionally pay the average employee less than that employee generates in value. (If they paid more on average, they'd obviously either decide to never start or would go bankrupt. If they paid people working equal to their contributions on average, they'd show no profit and would have no reserves to cover for employees who are out on paid leaves that society or the employees want companies to cover the costs of.)
The underpayment relative to value delivered is a necessary condition (at least in my opinion, by simple math above). If you want to capture all the net value you create, you should work for yourself. For many (including me), I'd rather trade away some of the upside in exchange for a much lower stress existence.
> the implication is always they should get paid proportionally to the company's additional revenue due to their work
Being proportionally paid with the value you bring isn't even remotely comparable to being paid everything you make. In fact, proportionality of pay is quite common in plenty of industries, e.g., real estate, law, etc.
> I capture only a fraction of the value I generate for my employer.
I think this is a misunderstanding of how companies perceive value. You could be making your company a billion dollars a year, but if any schmuck off the street could do the same you're not actually providing much value at all. Your value is the difference between what you provide and what a similar replacement worker would provide.
> Why such a sweet deal? Obviously it’s no easy task running a major corporation, so a commensurately meaty paycheck is to be expected.
Statements like this really grate on me. Corporations large enough to afford seven-figure annual salaries already have dozens, if not hundreds of great, capable employees that could do at least as good a job as these guys for 100th of the cost.
The obscene salaries are purely the result of collusion.
> Why is it okay for a company to extract a so much more money from an employee than they pay them, but not okay for employees to band together to get paid what they're worth?
Salaries are based on supply and demand, not value generated. More developers at your skill level = lower salaries for everyone. More successful companies competing for talent = higher salaries for everyone.
If you want compensation based on value to the company, that's stock options or partial ownership.
Tons of companies fail because they pay their employees more than the value they create.
The salary a FAANG or any company offers is designed to be a win/win. The employee gets a fixed income they can plan their life around and the employer gets the potential upside of generating more revenue. As long as the marketplace is competitive and unbiased this works really well.
Please also remember that revenue != profit. If I run a business and I generate $1.6M in revenue off of a $300k employee, it doesn't mean I'm walking home with $1.3M in my pocket.
And running a business isn't exactly easy. If it was so easy to generate $1.6M off of a $300k employee, you'd be flooded with other companies willing to pay higher and higher salaries. It's really, difficult and rare.
The point is, executive pay is entirely out of whack with the value (most) provide. Orders of magnitude out of whack. Sure I might not fill a good CEO's shoes but you or I can likely do the same job as a lot of lackluster CEOs that get paid insane multiples of our salaries.
> Every place I have worked needs me more than I need them.
If this is actually true, in any situation where this happens, you are being underpaid, because it implies the employer is getting more out of your employment arrangement than you are.
I know what you meant, it is just the semantics of economics are precarious and a lot of people would fight tooth and nail to be in a position to bargain for more because of a situation where an employer values the worker much more than the worker values the employer. You want equilibrium where the worker gets as much from the employer as they can, which is when employer and work both get as much out as one another.
>if they have any whiff of the kind of status- or compensation-driven thinking displayed in this comment section.
Whenever I hear about an employer that doesn't want employees who want to get paid a fair market value, I just assume the bosses and owners are the greedy ones which exploit their employees emotions in order to under pay them.
> The problem I see sharing salaries is that people tend to overestimate how good they are.
Absolutely. Gather 10 people from a company in a single room and I really doubt they will be able to agree on it. Especially when it's not even about how good they are, but how much value they provide. I have seen this issue in a team of 3 people I managed, it's hard to imagine what it will look like with 100+ people.
> But your value should not be measured by how much somebody else is getting paid, but by how much another company is willing to pay you.
Who are you to say that? Is the invisible hand prescriptive now? What if I value fair treatment over marginal nominal compensation? What if I don't know how much to ask for when I'm looking for work because I'm so underpaid that my perception of the market is fucked?
> How does this work? Rather than a company asking an employee what their salary range is, the employee asks the company what is the most they can afford to pay you, and they pay you that.
I still don't see how that works. Your comment seems like it boils down to saying the company should pay the employee more than they're worth (i.e. worth to the business compared to others who could add the same value), but the company has all sorts of obligations to investors, other employees, etc. and spending money just because they can afford to do so today seems like an irresponsible way to run a business.
> I think the amount one gets paid is equal to the amount of value one creates for others.
I get what you mean, but thats not quite true, it is also supply and demand, intelligence, salesmanship, the ability to exploit others, and greed.
Of course a software dev can create more value than a picker at Amazon, but if what you said were true or if it were the only rule, there would be a correlation of performance and executive pay, which provably isn't the case.
I just have to comment on that line in the conclusion of the article... When Forbes, Forbes!, states unequivocally that employees are underpaid, it's probably time to sit up and take notice.
> It objectively the case that salaries vary with profits.
Salaries are a function of the perceived value of the particular employee to the company. If the salary is too low, he'll be poached by another company. If it's too high, he's likely to be laid off or otherwise pushed out.
For example, if an employee contributes $100 in value to the company, his ideal compensation would be $100 minus the opportunity cost of the money, which is about $15.
This has nothing to do with the profit of the company as a whole.
It is true that companies often have a lot of difficulty computing what the actual dollar value of a particular employee is, but there is no doubt that the company will do badly if it gets it too far wrong too many times.
Companies falling on hard times that try to cut salaries across the board (or limit raises, same thing) do so at great peril - the underpaid (relative to their contribution) employees leave and the overpaid stay. I.e. this can result in a vicious death spiral. A much harder, but far more effective strategy is to identify the overpaid ones and get rid of them.
> Shouldn’t a company pay what a job is worth to them
No, they pay just enough for you to accept working there. If your alternatives are worse than your colleagues because you don't have high-paying local options, you'll be paid less.
Outside of things like sales, no one knows what your job is worth. Not you, and not your employer. It's incredibly hard to figure out how much your contributions affected the bottom line. Your accomplishments are dependent on many other employee's efforts. There's no good way to disentangle that.
That's why everyone just looks at the market value.
Think of it as a general rule of thumb, a statistical average. You will for example find that often managers and executives make a crazy amount of money, but are all but useless, but are only a small part of the bigger company.
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