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I would argue that cannot be true. If it were true, new companies would emerge that paid good employees more -- closer to their fair value.

(Also, most companies pay employees more than fair value, to discourage them from shirking.)



"new companies would emerge that paid good employees more"

This has been happening for a decade or more... Every time I look at salaries they've gone up significantly more that other fields.


It's likely that pay has gone up because tech workers are providing more value.

Consider an employee working at an investment bank 15 years ago versus today. 15 years ago, most value was generated by hoards of sales people and traders who cultured deep personal relationships with deep-pocketed customers. Today, tech people command a greater share of the wallet, and banks are making deep cuts to the ranks of sales people and traders.


If it were true, new companies would emerge that paid good employees more -- closer to their fair value.

These companies are emerging, though, right? 37Signals? I'm sure there are other small well-paid companies, if only from the evidence of a job ad I once saw. Now, "Compensation: Competitive" and "Compensation: Market" have been batted around for years, even around here, but this ad was for a programmer at a financial technology company and in the space for "Compensation" they put "Extremely high." Then again, those places are probably actually using the Big-O concepts they ask about in interviews.

You never see anything like that in Internet companies.


you forgot an asterisk in your argument: "assuming perfect competition"



Fair to whom? Depends on your point of view. Do you think employers make a fraction back on their investment of developers, or a multiple?




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