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The myth of big salaries (it's all marketing)

seths.blog

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Re: The myth of big salaries (it's all marketing)

#141

Post by TrackerFF »

krupan wrote: post #99
TrackerFF wrote: post #73

I've said this before, but the managing director of the Norwegian Pension Fund - which currently sits at a cool $1.56 trillion, has a $657k salary. Nothing more, nothing less. The return for last year was around 25% Some of the fund managers there make more than the managing director, but still, we're talking about a "modest" figure in the $1mm-$2mm range. That's paltry pay compared to the big bucks made in hedge fun…

Is the manager of that fund really "top talent?" How hard is it really to make 25% off of $1.6 trillion? I'll bet you could do it. Also, that's a very different job than working at a hedge fund. Hedge funds have to attract investors. How do they do that? By saying, "look at the expensive managers we have!" A government pension fund doesn't have to do that.

Well, prior to joining the fund he had (still has) a hedge fund and is worth close to a billion, and is otherwise on par with the other hedge fund managers you'll find out there (elite education, good "pedigree" and all that).

Of course, government pension funds have much stricter investment guidelines. And there are ethical investment guidelines on top.

Their goal is never go chase the absolute largest returns, as the risk / investment guidelines would prohibit that.

Re: The myth of big salaries (it's all marketing)

#142

Post by codpiece »

jjcm wrote: post #122
lumost wrote: post #85

Earlier quoted context omitted.

I think this over-estimates the amount required to live a luxurious life in perpetuity. Consider the case of someone wishing to live a luxury lifestyle in the trendy lower east side neighborhood of manhattan. We'll use a 1300 sqft 3 bedroom condo as a baseline. https://www.redfin.com/NY/New-York/455-FDR-Dr-10002/unit-B30... This condo will cost 8k/month with a 20% downpayment at todays interest rates, leaving our hyp…

If anyone wants an extremely simplified "when can I retire given x expenses and y income" calculator, I threw together one here: https://html.non.io/simple-retirement-calculator/ Screenshot with op's scenario: https://image.non.io/7865a80e-d1e7-4437-b983-9101ed023024.we... (assumes a 4% safe withdrawal rate, I suspect op is using 3%).

Thanks for this, it's simple and extremely helpful.

Re: The myth of big salaries (it's all marketing)

#143

Post by sequoia »

lowercased wrote: post #131
sequoia wrote: post #109

It's pretty absurd of him to talk about how it's ridiculous that people are paid $50mil (I agree) then pivot and say that $120,000 per annum for a new grad is another example of "ridiculous comp." These things are not in the same ballpark, they are qualitatively different. I don't know the author but this is so bizarre it makes me question their analysis overall.

"Law firms went through this cycle twenty years ago." The reference was to new law grads 20 years ago getting $120k jobs. That indeed was a high starting point for most recent grads from most fields 20 years ago.

agreed, but this is IMO qualitatively different from a 50mil salary. The $120k job might be classified as normal competition for talent and therefor be outside the scope of what this article is talking about (astronomical salaries).

Re: The myth of big salaries (it's all marketing)

#144

Post by Gormo »

danbruc wrote: post #77
ifyoubuildit wrote: post #60

Earlier quoted context omitted.

The idea here is that they did the work up front and then saved to accumulate wealth which they could spend later. Is that immoral to you?

Yes. If you work for 10 years and then just consume stuff for the rest of your life without lifting a finger, stuff for which other people work all day long to produce it while at the same time probably not enjoying a quality of life anywhere near yours, that is deeply unjust and I consider it immoral to desire such a life.

How bizarre it is to have strongly prescriptive opinions about other people's time-value preference, and then to mistake those opinions for moral principles.

Re: The myth of big salaries (it's all marketing)

#145

Post by qwerpy »

crazygringo wrote: post #57
toast0 wrote: post #18

> After a million dollars or so in salary, the absolute amount that a person is paid has no real impact on their life. They can't eat more meals in a day or wear more shoes. What matters to the manager is the relative amount. Sure, nobody needs more than a million dollars in annual compensation (in 2024 dollars), but relative amount gets you to your never need to work again number faster or slower. You might still wo…

Yeah, a million dollars a year is not anywhere close to where having more money doesn't impact you. If that's $600K after taxes, and a year of college for a single child costs $80K at an excellent school, and you've got two or three kids, and housing in a major metropolitan area... I mean you're definitely living very comfortably, but there are still lots of ways to spend money that have a big impact on your life, be…

From my personal experience in my circle of friends in my expensive west coast city, there are very impactful differences between the lower end of annual household income (400K) to the upper end (1.5M). While everyone lives fairly comfortably and doesn't have much financial stress, there are things the upper end can do that the lower end can't:

- Send the kids to private schools (more and more important as public schools start to cancel gifted programs, focus on non-core subjects, tolerate misbehavior and disruption from students that wouldn't be accepted to private school, etc.)

- Live closer to work, shortening commutes from 2 hrs round trip to 45 minutes, saving more than an hour of stressful commute per day.

- Every major purchase other than a house requires no budgeting or planning

- Optional early retirement at 45 vs 60 or later

- Have a vacation house, which enables building social capital through hosting friends, and never having to compete with others to book lodging during peak season

- Freedom to leave a job that is too stressful/time-consuming

Re: The myth of big salaries (it's all marketing)

#146

Post by lanstin »

Traubenfuchs wrote: post #3

Name the other axes, Seth. What are they? What else is there but money? With sufficient money you can fill your positions instantly with top talent. Anyone pretending there are other answers is probably guilty of lowballing, wanting to lowball or the English translation of my name: a grape fox.

autonomy is a big one for some people. respect. influence/power. As a software engineer I have left jobs because the total traffic was too low, and I was addicted to 10^9 and the like numbers in my counters. Additional salary is ok, but it functionally just means I waste more or less money before having to rein it in. If I saw really rich people doing more awesome stuff with their moneys, I might think otherwise, but having a Lambo or a house so large my kids would be less able to relate to people in general doesn't seem that useful. Get used to luxry clothes instead of my somewhat scruffy true style

Re: The myth of big salaries (it's all marketing)

#147

Post by danbruc »

cscurmudgeon wrote: post #104
danbruc wrote: post #77

Earlier quoted context omitted.

Yes. If you work for 10 years and then just consume stuff for the rest of your life without lifting a finger, stuff for which other people work all day long to produce it while at the same time probably not enjoying a quality of life anywhere near yours, that is deeply unjust and I consider it immoral to desire such a life.

Let me guess your take on folks who never work, are able bodied/minded but live off the state.

You should not be able to do that, the system should discourage it. But I think one likely has to tolerate this to some extent because trying to completely eliminate it will probably negatively affect people that rightfully claim such benefits, for example having to constantly prove that they are eligible.

Re: The myth of big salaries (it's all marketing)

#148

Post by nostrademons »

krupan wrote: post #136
nostrademons wrote: post #129

As with everything, TANSTAAFL. The danger with offering "marketing" instead of salaries is that it locks your company into valuing (and continuing to offer) the boon that got people to join it in the first place. Google (and HP before it) used to distinguish itself with "We take care of our employees, give you decent work-life balance and flexible working arrangements, and let you work on self-directed projects. We w…

FWIW, Google and HP back in their days did still pay among the highest if not the highest salaries. But you are right the ideals mattered a lot to the employees and it's really really hard for a company to maintain those high ideals for too long, but I think HP did it for around 40 or 50 years. Google for maybe 15? Different time periods though.

The competition for Google back in the days wasn't a random enterprise software shop, it was usually the financial industry or starting your own company, both of which could have payoffs in the tens of millions. When I got my first offer letter (2009), they explicitly said "Googlers do not generally work for Google for the prospect of outsize financial gains." They paid very well compared to your average software company, but there was no way they could match say Jane Street or D.E. Shaw.

Re: The myth of big salaries (it's all marketing)

#149

Post by asadotzler »

srackey wrote: post #56
Aqueous wrote: post #19

I guess I'm not sure that there's a practical difference between "It's marketing" and "This is what the market rate is for a CEO." In other words, firms need to pay this much because that's what other firms are paying (at least.) That's not marketing - that's just the unfettered market at work. Which is why it needs to be fettered. I agree with the salary cap idea, because the market will naturally keep raising the p…

A salary cap doesn’t change the market rate! It just obfuscates it. Salaries for public companies locked at 10M/yr? Ok, now firms have to compete on amenities. (Your current firm gives you a free car? Ours gives a jet, a personal Michelin star cook, and complimentary beverages)

Caps work. If they didn't, they wouldn't be in massively expensive fields like sports.

Re: The myth of big salaries (it's all marketing)

#150

Post by asadotzler »

krupan wrote: post #130
mfuzzey wrote: post #98

Earlier quoted context omitted.

How about no salary cap but a maximum difference factor between the highest paid and the lowest paid in any company? Not sure what the figure should be (x10?, x20?, x50?, x100?). That way companies that want to pay higher saleries to their CEO would have to increase everyone's salary. But there would need to be a way of stopping companies just using shells and subcontracting all the real work to low pay subsidiaries.

You're right, companies would stop hiring employees and just work with contractors. These kinds of regulations never work like you want them to. Just let the market do it's thing.

then make the same ratio apply to contractors. you're working awful hard here to defend corporations. why?
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