Anorak News | Whinging about salaries at tech companies is plain stupid

Whinging about salaries at tech companies is plain stupid

by | 19th, February 2013

THIS does get depressing, vaunted media experts pronouncing on matters economic without actually understanding anything about economics. The Observer’s John Naughton wants us to get all upset about the way that these vast fortunes being made in hte tech comapniues only go to the entrepreneurs and the engineers. The average staff doing the average jobs just get the usual crap.

Well, yes, that’s how the system is supposed to work:

These vast revenues, however, are not being widely shared. Instead, they are mostly enriching the founders and shareholders of Apple, Amazon, Google, Facebook et al. Of course, those who work at the heart of these organisations – the engineers, developers and the executives who manage them, for example – are richly rewarded in salaries, stock options and lavish perks. But these gilded employees constitute only a minority of the workforces of the big tech companies and most of their colleagues have decidedly more mundane terms of employment – and remuneration.

Pay isn’t determined by how much the company itself is making. Nor is it determined by the marginal productivity (ie, how much money you make for the company). It’s determined by how much you can make in another job: what are other people willing to offer for your skills?

In the tech world the entrepreneurs get fortunes: but only if they get it right. And there’s an awful lot of people who don’t get it right. Similarly, there’s currently a shortage of good tech engineers. That’s why they get fat salaries and share options. Because there are many companies that want to hire them so they keep offering more money to get people to work in any one particular place.

For the people shifting stuff around in an Amazon warehouse? Flogging phones in an Apple stoore? What’s their alternative employment? Workjing in someone else’s warehouse, flogging someone lese’s electronics? Then their pay will be determined by what other people are willing to pay warehouse hands or retail clerks. Absolutely nothing at all to do with whatever it is that Apple or Amazon are making nor what they pay their engineers.

Do note that this isn’t about capitalism either. Under the various forms of socialism that have been tried those with the rare skills in high demand still got paid more than the average chelovek in the street. Admittedly, the rare skill was the ability and desire to beat up on the politically troublesome but the point still stands.

Posted: 19th, February 2013 | In: Money, Technology Comment | TrackBack | Permalink