> Pay is a reflection of market demand, not the monetary value you bring to a company
Market demand is itself based on the perception of the hiring parties of the value you would supply. Companies hire people [0] only when they expect that that the cost of doing so will be justified by the return.
But, yes, I agree that supply and demand set price, but I just disagree with the idea that those are somehow unrelated to value.
> Walmart wouldn't function without someone at the register, but how much "value" that person at the register brings doesn't dictate their salary.
The value sets an upper limit to what WalMart will pay, just as the perceived opportunity cost to the worker of taking the job sets the lower limit of pay they’ll accept. The former is demand, the latter supply.
[0] outside of hires where a decision maker is funnelling business resources to the hired party as a kind of personal gift, which do happen, sure.
That sounds very much like what said about setting an upper limit, yes.
> It's meaningless when you are talking about giving paycuts to people you know are in cheaper locations.
Sure, each side is actually seeking the other sides limit price: as an employee, you demand what you think you are worth to the employer; as an employer, you offer what you think the employee is willing to work for (both sides, of course, present this as reflecting their own side rather than their guess of what the other side will accept.)
This gets weird when an employer continues to try to do this but tries to have salary transparency, because then they either have to abandon elements that go into their estimate of what employees will accept or make it clear that that' they are targeting an estimate of the employees lower limit.
What lets you pay them less is not their lower costs, it's the unavailability of higher pay in their area. So if you're going to do it, size it that way and, ideally, call it what it is.
Market demand is itself based on the perception of the hiring parties of the value you would supply. Companies hire people [0] only when they expect that that the cost of doing so will be justified by the return.
But, yes, I agree that supply and demand set price, but I just disagree with the idea that those are somehow unrelated to value.
> Walmart wouldn't function without someone at the register, but how much "value" that person at the register brings doesn't dictate their salary.
The value sets an upper limit to what WalMart will pay, just as the perceived opportunity cost to the worker of taking the job sets the lower limit of pay they’ll accept. The former is demand, the latter supply.
[0] outside of hires where a decision maker is funnelling business resources to the hired party as a kind of personal gift, which do happen, sure.