Re:What harm do minimum wages do?
by themacguffinman on Wednesday August 19, 2020 @07:31PM
(#24218088)
Every worker gets to do this, and it happens a lot in startups and big companies alike. Stocks and stock options are (varyingly) anchored to whole-company valuation, and early / senior employees that produce more value will often get more stock because they comprise a greater share of the company's health.
If your friend insists on paying you a low flat fee for doing highly lucrative work, your rational choice is to turn down the offer and find another employer, or even go at it on your own. Your friend's rational choice is to negotiate because the lost profits from you (and others) declining the offer is worth more than the profits he loses by paying you more.
Regardless of that, a single transaction like this is often not sufficient to accurately determine the market value of your contribution. Market valuation happens in aggregate for this reason. A single irrational transaction like the one you described just represents a market inefficiency.
I think we need to define "value of their contribution".
If a friend of mine has an idea for an app, but he has zero programming knowledge and so he pays me $1,000 to develop it, and he ends up making $1,000,000 from selling it, what is the value of my contribution?
Is it only $1,000 because that was the agreed price for my labor? Or is it $1,000,000 because that's how much money he made from it? Or something in between?
Obviously, in this hypothetical, I should be negotiating a share of the revenue instead of just a flat fee, but generally most workers don't get to do this.
So...what was the value of my contribution?