A company has a fixed amount of money it can spend on wages. Reducing wage inequality means paying less to the best employees and more to the others, which is great if you just want to slack off but terrible if you're already one of the highest paid employees.

Indeed the only reason I could do this was because the new salary ranges were shown thanks to pay transparency.

Not if high performers underrate their skill, and under-performers overestimate their skill, both of which studies suggest is true.

What can happen, which is why you may have seen budget constraints prevent profit-maximising hiring, is that the finance dept is operating off older information than the managers in business units (or just is crosswise with them for any reason at all). You can definitely get a situation in which managers can't get approval to do profit maximising hires, but this isn't inevitable.

Absolutely not. It has a maximum, sure, and a minimum it can get away with, but there's always a range in between them.

> Reducing wage inequality means paying less to the best employees

Bold assumption that the best are paid the most.

I'll argue that money goes to those who are best at internal politics, with perhaps a moderate correlation with work performance.

The only time I have seen a correlation greater than 0 is where bonuses where directly linked to earnings or sales ... even then the correlation was not 1

Maybe I've been lucky to work for moderately reasonable companies, but I've never seen that.

For example in my current company, yearly raises are directly tied to performance rating. And while there is subjectivity in the rating, it is basically impossible to squeeze in a high performer rating for someone who doesn't do anything even if I wanted to (which I don't). It is also impossible to give a very low rating to someone that all peers see doing great work.

The correlation will never be a perfect 1.0, but it is closer to 1 than to 0. Low performers end up getting low to nothing in raises, and the high performers get a multiplier that increases their raises.

I work at a smaller company now, with a lot of very good people, so I've been happy enough with my rating and bumps.

When I was at "bigcorp", I was still as good at my job, but I didn't play the game very well. I presume I was not visible enough to be rated highly by my peers (peers aren't those in your team, but outside your team) and so I didn't see the rate of progression I think I merited, and eventually left.

That was a very good decision.

Well yes, that's common. But I was responding to the idea that there is literally 0 correlation between performance and raises.

- Some employee salary discrepancies are inefficiencies due to humans sucking at rationally evaluating other people

- Some employee salary discrepancies are legitimate outcomes of value produced relative to other employees

The problem is the more we create policy assuming the first one is true, we eliminate everyone in the second category (however small or large that category), making the economy less efficient. I would argue pay transparency isn't one of those policies however, and in fact would lead to more efficiencies.

All interventions have consequences, and less growth and higher inefficiency from cutting tall poppies is indeed a risk. As someone in Europe, our total lack of productivity growth is leading to collapsing governments and social welfare systems. These are serious issues that should be discussed and not dismissed outright with downvotes.

My actual response "But then we will have to deal with biases, discretion and management collecting their 10mil bonus by giving the juniors a pittance"

The flip side of course is people who actually work in bonus heavy revenue generating roles tend to leave if they are not valued appropriately - and take their clients with them.

The thing is, if you're rewarding performance through _process_ it ends up being more public and you have to have a written justification for it. Not just favouritism.

When they hire and amazing 100x employee they have higher sales, revenues and profits with which to pay employees.

It's very hard for people to accept that this might even be the case, many people just assume that transparency is better for workers.

See also: hiking the minimum wage (possibly the most egregious example of academic corruption), rent controls, taxing the rich, etc.

There are a number of reasons for this, but the primary ones are 1) economists also respond to incentives and those think tank jobs pay better and 2) prestige in the industry is also a commodity - a commodity which can be bought and sold. The level to which money talks in this industry is reflected by the wages - always higher than all other humanities.

As an example the freakonomics guys popularity are to popular economics what k pop is to music: a slick, highly refined, marketed product from a superbly well oiled marketing machine.

There is of course still a black market

A minimum wage is a ban on certain baskets of compensation for work.

It doesn't prevent 'exploitation', whatever that means. Companies fiercely competing for labour is what you want here.

No, it's not.

Most restaurants you go to to eat would have to close if they needed to employ their workers legally. Same thing applies to bars and similar venues.

Source: worked in that industry 10+ years

And then there would be much more demand for restaurants, then there is supply, causing the prices to rise until they could afford to pay the workers legally.

stage 1 is it hammers profit margins <-- for 95% of businesses we are here.

Stage 2 is then it increases prices <-- only affects very low margin businesses which are a small minority.

Stage 3 is it triggers job losses <-- to my knowledge it's never been raised high enough to make this happen. maybe $50 / hour would be the threshold.

Businesses adapt, raise prices and do more automation to keep their margins, which have been remarkable stable if you look back. The losers are consumers and workers, because everything costs more and salaries don't rise as fast.

> Stage 2 is then it increases prices <-- only affects very low margin businesses which are a small minority.

Every mom and pop shop is a low margin business. Most business are low margin, only a few have a really high margins, the ones we all know and talk about.

>Stage 3 is it triggers job losses <-- to my knowledge it's never been raised high enough to make this happen. maybe $50 / hour would be the threshold.

I can only recommend you expanding your knowledge. It's like saying why do we need car seats for babies, because when we were younger we didn't have them and did just fine. Of course those that didn't make it aren't here to tell their story.

Why are people so focussed on employment? Employment is only one area that minimum wage affects, and as you say, with moderate minimum wages and an otherwise functioning economy, employment effects are relatively minor.

Not everyone has the time, energy or patience to do that though.

Point being if you were to make an assumption, "pop economist says that thing that is bad for profits is bad for you too is probably bullshit" is a fairly safe one.

I think the most common "mistake" is that most economists are used to thinking about money in absolute terms, but in real life it's a lot more useful to treat prices as a percentage of your income. That means the utility of money is not linear, so redistribution is good by itself unless it hurts growth so much that average incomes start going down in real terms.

The other one is way deeper and harder to fix but I don't think a lot of people actually believe it, they just use it implicitly in their research. It's that the goal of economics is to maximize efficiency (measured by ROI = profits), not to deliver the best outcomes for the greatest amount of people.

From this point of view a platform like Doordash is efficient because they underpay workers and overcharge customers, and so are surveillance data brokers. That's clearly not a perspective that gets us into a better society. But measuring quality of life is much harder than taking two numbers every company is legally required to count.

I always found the question “what is a good life?” to be one of the most interesting and consequential philosophical questions. People have found very different answers for this over the millennia.

But rent control? Really?

Really, can you at least provide some napkin calculations to see the cons and pros? Some countries have tried it, notably France. It backfired as expected and they had to revert.

What actually happens is that profit margins get hammered (notice how you forgot about those? they can go down too) and those businesses that rely upon minimum waged labor complain bitterly.

Very low margin businesses do raise prices but in the studies I saw the only two examples from a wide survey were, like, nail salons and catering.

The whinging manifests as money piled into lobbying and public outreach to prevent this type of thing from happening again and the result of that public outreach is where you formulated your opinion about what happens.

So I live in a country with no rent controls with very high rents and housing costs. The capital is disincentivized from creating more supply by the fact that creating more supply devalues existing supply.

Rent controls would 1. lower the rent (obviously), 2. lower the price of existing apartments since the profit you make on them is lower, 3. like a sibling comment points out, hammer the profits of capital.

> Taxing the rich lowers the velocity of money, disincentivizes capital to search for more profit seeking enterprises.

Wow... Taxing the rich means less taxes for the poor means more people with money/time to start their own companies.

That said, your 3 examples are very well studied, and rent controls are completely different from taxing the rich and hiking the minimum wage.

That said I think Jury is still out on pay transparency mostly because there isn't that much practical data. The EU has been navigating it for a few years but research is still ongoing.

One paper (which is more focused on pay gap reporting, which is longer implemented and seems to have limited impact) suggests salary disclosure in job ads actually increases wages.

https://www.oecd.org/en/publications/pay-transparency-in-pro...

It's definitely obvious that internal salary transparency will a) act to normalise salaries over the long term and b) generally depress salaries. But disclosure at the job as stage is less clear.

There's a difference between coworkers talking to each other and the system being set up in a transparent way where everyone can see everyone else's salaries, these two aren't the same thing.

We will invent narratives to protect our ego and will happily keep other people down (including ourselves) instead of confronting this.

"He just got promoted because he's charming and outgoing, he's not more talented than me!"

Ok let's assume thats true. But if your job involves spending 40 hours a week with someone (more than your family), it turns out humans value being around charming, outgoing people. Is this wrong or is it the market accurately assessing relative value in the context of the actual work (collaborating with other humans)?

It goes other way round too. It might just be that the your higher salary is not rational, you got lucky or got unfair advantage.

Like, in the bottom of your comment, you made up situation that might just not apply. Or might just not counteract anything

Or, might be directly damaging - agreeing with everyone makes you popular, but causes a lot of damage in the long term. Lying about important stuff makes you popular, but causes damage to company and everyone else.

People go out of their way to rationalize and defend unfair or damaging systems.

So it's far more likely these comments are over-indexing on the "its all luck/unfairness" explanation than the "it's all rational" explanation given there's 100X more people who will have their egos protected by the former positioning.

The percentage of executives at an organization to worker bees is like 100:1

It’s more that the “i work hard and hustle everyday” narrative from successful people is to protect their little egos from the realisation that 90% of their success is pure luck / chance / chaos.

Yes, both parties use motivated reasoning to protect their ego.

But there's 100X more of the worker bees than there is of the uber-successful.

Therefore any discussion like this one will over-index on the luck explanation.

We're obviously not at risk of assigning too much competence to successful people here on HN, a leftist internet forum.

Mediocre and average employees like the idea of reducing inequality, because the mediocre employees stand to financially benefit and the average employees can expect little to no change in compensation while reaping emotional rewards.

For highly paid employees (high impact, high competence, whatever the reason), reducing inequality goes against their direct financial interests. Inequality gets reduced by dragging their compensation down, not increasing everyone else's.

The reality is that in most industries competence and impact has very little to do with compensation. Compensation is the result of political status games, not demonstrable ability.

Speaking as someone who's been a super high performer in some roles, and a terrible performer in others, I definitely want to reduce inequality.

Like, it's entirely unfair that I (because I negotiate well) get better options than others. If you want to pay someone outside of band, give them a different title.

If someone performs unexpectedly well, give them a bonus/promotion etc.

It's deeply sad (but unsurprising) that so many people can only focus on their particular benefit (especially when the vast majority of that benefit is context dependent).

Like, if you hired John Carmack or Fabrice Bellard and just told them to take tickets, they'd probably be an average performer at best. If you told them never to take initiative, they'd perform badly. So lots of performance is dependent on context, there are very few "good" employees in a vacuum.

Then give your money to people who don't negotiate as well. In practice, you don't: your revealed preference speaks louder than your stated preference does.

And the transaction costs on such an approach would be too large, as I'm sure that you know.

M I note that you don't address the notion of context dependent high performance.

No its not. This is a skill that is useful when exchanging value with other entities (the basis of the economy). You're being compensated for having that skill.

Would you hire a salesperson or head of procurement or media buyer with bad negotiation skills? How about a developer who can't properly negotiate with teams demanding their time to properly allocate themselves where needed?

> Speaking as someone who's been a super high performer

This might be true, or it could be your subjective view tainted by the need to protect your ego.

As an EM, a person's current salary is an anchor. If someone is paid at the bottom of the band, but then later the company learns about their high impact, they aren't given a raise, they are told to push harder and get promoted.

And then when they are promoted, they are probably at the bottom of the next band.

if a person threatens to leave, the EM (rarely) can magically wave a wand to increase the salary, but they can promise to put them up for promotion next cycle.

I'd like the boss to do his work and write down the rationalization. Then, when we have an objective measure of the rationalization of the wage, I can work towards getting a higher wage myself.

The biggest opponents of wage transparency (and many other things) are incompetent managers refusing to do their work.

Signed, a high earner.

At least the young women in UK are outearning (and outeducating) young men.

More critically; historical data shows pay gap for women increases through their 20s and jumps significantly in their 30s

My first question to any recruiter is now always "what's the salary range for this role?" precisely because I've run into your first point earlier in my career. I'm not even particularly salary-driven (doing interesting, valuable work is far more important!) but it's the best indicator that the role is pitched at the right level for me.

From an employer's point of view, there's also the avoidance of future unpleasantness if (or, rather, when) it comes to light that some staff are paid significantly less than their peers.

Responsible employers don't need mandatory salary disclosures to do the right thing here but, sadly, not all employers are responsible so this sets a common baseline and ensures everyone plays by the same rules.

The concept of range isn't useful to ask though. If you say my range is $x to $y, all the company hears is that you'll work for $x. The $y part is irrelevant. Learned this early in my career, where every "$x to $y" invariably became an offer for $x.

So now in my initial intro call with any recruiter I just tell them my minimum, fully knowing that becomes the maximum offer. If they're ok with that we can keep talking, if not, that's cool, we both avoided wasting time.

That way you can respond to their range with something along the lines of "that sounds roughly what I was expecting", "okay, I'd probably be looking for the top end of that", "that's perhaps a little lower than I was expecting - is there enough room for flexibility for us to be able to continue talking?" or whatever. It's too early in the conversation to be doing a full salary negotiation, you're just making sure the role's at the right level.

There's a big problem with employers writing a senior-sounding job ad for a junior role - the salary range is a much more accurate indicator than a job description.

Disagree, I've had "my range is X-Y", and the recruiter told me "for this role the range starts at Y+20%, are you ok with that".

I suspect we're pretty lucky in tech, though. Anecdotally, I've heard that in fields such as sales and marketing it's much more the norm to treat potential new hires in a much more adversarial manner.

I've tried the opposite, paid everyone the same. But there were clear differences in ability and more importantly outside options. It became a problem when it came to retention and the business didn't have the ability to overpay everyone to keep the top performers.

It does make me wonder what would happen if you put out 100 different job adverts split apart by £1,000 increments. I'm sorry you aren't suitable for the 100k job you applied for but would you consider our 97k role instead?

A title like "Senior Software Developer" can range from 5 years of general-purpose web development experience to 20 years of highly specialized experience. Those "Principal" and "Staff" titles don't necessarily make sense outside of larger corporations.

Most recently I've seen salary ranges up to 30% of the upper bound. Completely reasonable.

I'm not answering a pitch that says "$100K-$350K salary, final decision based on vibes" but I will if it says "$250K-$270K salary, needs 10 years of experience leading X kinds of projects and proficiency in Y, Z".

If you want juniors to fill out your team, why are you getting a bunch of seniors?

If you think every junior/senior/staff has the same ability, you're delusional. Two people can broadly fall into the same bucket but be very different in terms of output.

Or, I find value in areas that get overlooked in the market. Career transition people for example might not have many other options and I can take a gamble on how fast they ramp up.

If I'm building a team, I don't need everyone at the exact same level. I want a mix. I want some juniors, some seniors and a tech lead. The job description is the same, I'm not writing 3 or 4.

But a team of SWEs at different experience levels for the same role won't be different job descriptions.

I'm in this situation right now, I have a minimum requirement, it could be MET with someone with 1-2 years of experience or 20 years.

But that is the MINIMUM, if I find someone that meets that minimum but I get a lot more, I will pay more. But I'm still not making multiple job descriptions with different ranges.

Why would you put people with different experience levels in the same role? You'll have three classes of people, only one of them "happy", for the others it'll be too much or too little. You cannot put a junior in the same position as a person who wants to be tech lead?

I think maybe I'm misunderstanding what you're saying, because having one job description for those three roles don't make much sense as I understand it currently.

We need a team of X people, we have minimum requirements. We are open to anyone as long as they are close to the requirements (100% match is never possible).

We evaluate the comp based on interview feedback... then as the team gets filled what we look for starts to narrow to "fill out the bench" so to speak.

But we won't ever go back and update the description or pay-band, no need.

There's valid conversation around the nuances of "what if this need isn't specific to a level?" but those don't excuse keeping people in the dark about what the job offers or requires.

As an occasional hiring manager, having this sort of flexibility sounds really nice!

Unfortunately I have to define my requirements and justify a fairly narrow range when I want to add to my team, so it's not something I get to enjoy. There have definitely been candidates who stand out from the crowd and have higher expectations, that I have not been able to offer to.

It's also easiest for candidates. If you are faced with 2 job postings about the same org at a company you may not have any experience with, how will you decide whether to apply for the lower or higher level role? It's not always clear.

An example that became a problem with one previous employer was that they kept saying "performance" was their only determining factor for pay, after it had come out that exactly one person on our team had been offered bonuses as a performance incentive.

It's not actually performance-based if you have different and better reward structures, and can't or won't explain why they exist.

Say someone didn't have those particulars, and were just, by regular standards, qualified for the job. Do you have a cutoff for what you would pay those people? Then you should probably post that, and then just act like companies that comply with this stuff already and include a disclaimer that extraordinary candidates may still fall somewhere outside that range.

You want to set laws that hurt 99% of employees for a theoretical benefit to a 1% case for the employer?

it's just multiple grades at that point masquerading behind a broken HR system

* The company decides to open a specific position, which it will fill no matter what.

* The position will pay the same amount no matter who fills it.

* There exists a binary condition called "qualified" which people metaphysically are or aren't.

* The job must not go to an unqualified person, but could go to any qualified applicant.

* Society may instruct you to use certain non-merit-based criteria to prefer some qualified applicants over others, but hiring managers and teams must not use their own subjective feelings or relationships to do so.

I can understand how a civil service or other massive bureaucracy full of principal-agent problems arrives at these rules, but they are obviously not the only valid way to assemble a high-performing team or the best one in all circumstances.

It's why we require public companies to disclose their finances. How could a person, even in theory, know whether to invest otherwise? It's why we require sellers of houses to deliver an independent inspection report. Etc etc.

The converse is also why HFT companies make more money than croesus.

Employers are willing to pay more for someone who can hit the ground running and contribute meaningfully to the team's output in week 2 vs someone who has the basic skills and a couple years experience but will need months to come up to speed on industry-specific knowledge.

But "week 2" people are hard to find, so they often settle for "months" people just to keep work moving along.

I usually reply to the brush-off with "I only ask because the seniority level is reflected in the salary, not the role or the advertisement."

I say that because it is, in fact, true: the seniority/skill required for the role and duties/responsibilities dictates the pay, the bullet points in the advertisement and the role description is often completely divorced from the level of seniority or skill required in the actual role.

IOW "We're hiring a Senior dev" might have me respond "That's a Junior pay-bracket".

I need someone to do a specific set of tasks, but there’s also a wider group of tasks which I’d like someone to do, but it isn’t urgent.

The posting goes out for the task we NEED. If someone more senior applies, and they can do more than the role needs, we pay them more.

There is no (and I feel comfortable with this absolute) scenario where you need to keep the salary range hidden, or where a published salary range prevents you from hiring a candidate for an expanded role. None.

The only thing transparent pricing does is result in an informed participant in the market, which is pricing signals and thus something Capitalism.

Once you go down the route of asking for special exemption to make your business work in an open market, you're not doing Capitalism anymore.

To be honest, the places I’ve worked for that could do this were not the best jobs I’ve had. That flexibility can sometimes point to other organizational issues.

At the very end you can see what states they’re talking about and it’s basically just New York and California (no other state enacted a law 3 years before 2019).

California’s median income increased 17% from 2016 to 2019 (the 3 years following the law).

New york income increased 17% too.

Federally it increased 5%.

I think using some random spreadsheet as your data source just isn’t a great idea. NBER should be aware the IRS will let people have access to income data for research purposes.

I hold no opinion on whether this is fair is not. Another applicant who is single, low mortgage may end up with more disposable income for less pay and subjectively be "better off" and effectively undercut me and my dependents that I support.

No system is fair. My only personal opinion is that any employee should be able to have representation in employment negotiations. That does not mean just unions, although they work for some, rather they could be a family member or a paid agent.

This always enabled the company to shift around who is the top 10% (whereas salary is locked in).