That's definitely not true. Indeed, I think that's a pretty bad way to think about comp, leading to an adversarial employer/employee relationship.
As examples, consider Netflix, which is widely known for paying above market, or Gravity Payments, which changed their minimum pay to $70k/year: https://en.wikipedia.org/wiki/Gravity_Payments
I'm just about to post 3 new positions, and I have no interest in squeezing people on cash comp. I want people who are happy, relaxed, and feel like they're being treated well. And I also want a fair salary structure. Could I pressure bad negotiators and naive people and pay less? Absolutely. Will I? Fuck no. Maximizing shareholder value has been called "the world's dumbest idea". I wouldn't go that far, but it's certainly up there.
That's not a counterexample of what the post you're replying to is talking about. Netflix feels they need to "overpay" to get the caliber of talent they want, and also to make it harder for it to be tempted to leave. At the end of the day it's what they feel to be the "bare minimum to keep you to stay" for the kind of people they want.
>> I want people who are happy, relaxed, and feel like they're being treated well.
Right, same thing. You want that because that's what strong employees demand and is your strategy for getting sustainable quality output out of them. If you were just a good guy, you'd pay MORE than that :)
You can call maximizing profits maximizing shareholder value, and often they’re aligned. But it’s how businesses were always designed to work, long before stock markets. Is it fair? Most likely not, but it’s business 101, same as me writing reliable production code is engineering 101.
[citation needed]
As far as I can tell, that's a modern, MBA-ish fantasy about the nature of business. I have small business owners in my family going back generations. Maximizing profit was not the goal. It was making a living and being part of a community. This is definitely not uncommon. See, for example, the writings of the late economist Alison Snow Jones: https://www.interfluidity.com/v2/1095.html
If that involves maximizing profits, then great, but if the owner enjoys doing work with happy, un-stressed people more than he does a few humdred extra dollars in his pocket, it’s clearly not (only) about optimizing profits.
Who taught you this? If there's a specific historian pushing this narrative I'd love to know who it is, because on the surface this claim sounds absolutely outlandish.
Feels like this reasoning changes for those starting in San Francisco or London, looking to relocate?
Hopefully they've learned enough about how much the company values them and how much it cares about them, that they don't just accept a relocation and whatever salary their company gives them. I'm not too hopeful though, given what working conditions they already accept while living in SF (or wherever).
Comp is a retention mechanism that’s determined by supply and demand. Not a single reasonable company will be willing to pay you more that’s bare minimum to keep you to stay. Hiring isn’t about rewarding workers based on the value they provide, it’s about optimizing costs so you can maximize profits.
While location based term is a BS term, it is very real market mechanism. In your local market there’s less non remote companies than in high cost of living areas, that are willing to compete for you, so your price point is lower.