While you’re right that how hard someone works doesn’t determine their pay, how much money someone brings in at best loosely correlates to their pay as well. I think a lot of people have dissonance there as well, thinking “well surely if it’s not how hard the work is, it’s how much value they bring in!” But no, all that matters from a business perspective is that the sum of all paychecks is less than is needed to make a profit. It’s all about the cost of replacement, or how much money it would take to hire the next best chef you can find. It’s the supply demand curve of “how many chefs are looking for work” vs “how many people want to hire them”. If there are many more people who want to be chefs than there are slots for chefs, they can easily end up working for many times less than they bring in to the business.

How much you bring in makes an upper bound on comp. How much you can be replaced for makes a lower bound.

In theory sure, but in practice the internal complexity of organizations leave plenty of room for obfuscating that ideal. Throw in nepotism, favoritism, corruption, and an inflated valuation of upper management roles and you've got plenty of jobs that pay well past what they "bring in", which is itself nebulously defined at best, especially in white collar industries. Hell I know some companies that would've been better off just axing some of their c-level suite.

I totally agree but do think it's true in terms of averages and probably true more often than not that a given individual falls within the range. After all, you can't have an industry-wide average for most roles that's higher than the value they bring in. There's also a myriad of roles that don't produce directly and are either supportive, compliance, or simply unnecessary.

There's no reason to want to make it better (or understand it at all) unless you're also thinking about something besides the raw numbers.

There's no way to make it better if you don't start with the root cause.

You start with a problem statement, not a root cause.

And root causes, especially for problems as complex this, is a fallacy.

this is true, but it doesn't make it right.

this is not even true. i've witnessed plenty of very highly paid people who actively undermine the organizations paying them

you're right, though it's a prevailing truth in economics, and thus whatever bullshit they come up with influences how markets work, it's true.

> It's economics and it starts and ends with raw numbers.

No, it starts and ends with peoples' lives and how much of it they must expend to keep it going. There are no such thing as "raw numbers".

also, economics isn't a hard science.

We as a society can define how our economy looks like, it is not some hard defined concept like the speed of light or the very basic principles of mathematics.

Economics is a soft science, and we should treat it is suchs.

The raw numbers don't say much, expect the result of how we have shaped our economy. There is very little preventing us from changing the way the housing market is structured in a real, hard fact kind of sense.

They’re talking about how it is ridiculous that nothing but pure luck and circumstance of a screwed up housing market/system means they ended up with a sweet deal with affordable quality housing while their friend is forced to deal with living in a closet for much higher prices despite working hard.

I get that but

> despite working hard

that's a non-sequitur. Migrant laborers on farms work absurdly hard. "Work hard and get more" is practically a boomerism at this point. There are many reasons to work hard, but none of them have to do with guaranteed home ownership

Generous of you to explain.

You ignored the information about the restaurant's popularity, which indicates that the gp took demand for teh chef's services into account.

it starts and ends with raw numbers

No it doesn't. If that were true markets would be reliably self-correcting and market failures would never occur, rent seeking wouldn't be profitable and so on. In reality there are variations in elasticity of demand and supply, regulatory issues, and economic network phenomena like preferential attachment, all of which substantially complicate the picture.

> People aren't paid by how hard they work, they're paid by how much money they generate and how hard they are to replace.

On average, this may be true, although "how hard they are to replace" is difficult to quantify and most of the scarcity is artificial. But there is enormous variability in the relationship between pay and revenue/profits provided and opportunities for replacement. I am certainly paid much more than I should be, since I work in a cost center and in that group I am definitely not the one bringing in work or revenue, and I suspect I would be very easy to replace. But at the time the contract was signed, I had the right certifications (e.g., PhD) and the right resume. Like many others, though.

Firstly, cognitive dissonance is not really being used well here and I don't like it being so trivialized. What OP feels is more guilt and confusion that his friend is worse paid than him and yet has to work harder. Cognitive dissonance is holding two conflicting beliefs at the same time in a way that creates a mental toll. What happens in abusive relationships or example when a person is told "i love you" while being hurt. Or when your gut feeling tells you something wrong is happening, but you're told everything is right. Cognitive dissonance feels almost like physical pain.

And about your comment:

SW aren't well paid because of how much money they generate or how hard they are to replace.

1- I'm not sure why you say this but SW are not that difficult to replace. There's plenty of SW around for everyone.

2- What actually determines the fact that SW are so well paid is just luck and time. What do I mean by this?

2.1 The profit margins in software services are the biggest. An easy example is Amazon. Initially a simple bookstore. Then a e-commerce shop. This is what Amazon is. And yet their margins for this is about 1% and for their cloud services is about 40%. Amazon CAN afford to pay SW well not because it generates more money, but because it has huge profit margins. And why is that?

2.2 Because it just so happens tech is VERY NEW and has changed everything far too fast for the market to adapt. Consumer physical products have been manufactured and sold for decades. Agriculture is a much more essential service than SW and it's some of the worst paid industry. Their profit margins are close to zero. All the money that could be extract has been, capitalism has done a good job of making it cheap for consumers. But tech? The world of mega corporations, monopolies and duopolies, there is often no such thing.

It's not about value to the world SW provide, money SW generate or hard to replace. If you really want to talk about value to the world there are many other careers that do. SW isn't one of them. SW are just well paid, due to luck, timing of being born right now, and the fact market is very new and hasn't adapted yet, that's it. Enjoy.