In general the supervisor or manager provides more value than an employee under his command. Exceptions to that are at least as common as employees having higher wages than managers and supervisors.
I don't understand why do you think this is the case. (I am one of those people who thinks people should have the same salaries, btw.)
What exactly do you mean by "value"? Can you give some examples?
To add: I don't think there is a meaningful comparison of importance of two professions that depend on each other. It's like asking, which part of the car provides more value for the user? Is it the engine or the wheels?
There is an entire field of study about this, with maybe millions of students.
Why a wage is what it is might be one of the most described, modeled and studied things out there. A simple explanation is that the supply of people that can do the managing is lower than the demand for it.
Clearly, the cases where managers earn less than the people they manage follow the same rule (i.e. sports coaches, movie directors, etc).
About the comparison: It depends, if you have a car without engine and a car without wheels, which one is easier for you to fix.
A simple explanation is that the supply of people that can do the managing is lower than the demand for it.
But I don't want an explanation of that fact, I have my own. I want an explanation, why some people (who are actually not in the management) think it is right. It is a moral question, not factual one.
As this conversation goes, its nature, it lacks any concept of morality. Why is a rock a rock is not a moral question, and it doesn't merit one in my opinion.
I think you have to reveal what is the moral question you have about preventing that natural result, and I can try to answer why such a thing doesn't bother me at all.
The OP asked: "Many people think that a supervisor or a manager should make more money than the person reporting to them. I ask why"
You responded: "In general the supervisor or manager provides more value than an employee under his command."
I asked: "why do you think this is the case"
And I got the pretty much textbook economics reply. But I am not asking about what economists think, I wonder about what you think. Why do you, personally, think the work of the manager is more valuable? So I was wondering how you understand the value.
Based on your response, you seem to value scarcity of either positions or suitable candidates. So do you think the president should have the highest salary? There is only one. I am also not convinced that scarcity itself is "providing value".
I think the one that pays the manager believes its more valuable, and that if the value wasn't there, the ones that doesn't pay managers will make a killing and soon infect the rest with that idea.
In general I see people getting what people are willing to give them, even when its an 'unfair' situation (i.e. the son of the business man getting preferred treament).
The opposite, people getting what they have by taking it from people unwillingly, which I find aberrant, is seldom what happens in this scenario, and more what happens with proposed solutions around income inequality.
I think the one that pays the manager believes its more valuable, and that if the value wasn't there, the ones that doesn't pay managers will make a killing and soon infect the rest with that idea.
In general I see people getting what people are willing to give them, even when its an 'unfair' situation (i.e. the son of the business man getting preferred treament).
The opposite, people getting what they have by taking it from people unwillingly, which I find aberrant, is seldom what happens in this scenario, and more what happens with proposed solutions around income inequality.
Are you talking about taxes or ransom? I am all for progressive tax rates and as a poor person I do not support tax cuts for the wealthy (just wanted to clarify that). That being said, we need to fight income inequality just like we need to fight against "nature" in every other scenario. Someone talked about "information asymmetry" a while back. I think all companies should be required to make compensation (salary, bonus etc) information public for all employees and contractors. I don't see how we can get rid of income inequality as long as there is something "they" know that "we" don't.
Some people would ask what is the difference. Im not quite there, but sympathetic to the idea.
I am all for progressive tax rates and as a poor person I do not support tax cuts for the wealthy (just wanted to clarify that)
This is a technically problematic issue that i think the public does not quite understand.
There is a concept called the statuatory incidence of taxes and the economic incidence of taxes. The first one is who signs the check to the government, the second one is who ends up paying for it. So if for example someone said that "now employers will pay 100% of the social security tax)", it might look to the untrained eye, that taxes are lowered on employees. But actually, it will reduce wages just as much, and in the end, the employee is still paying for it.
Progressive taxation has this debate in economics: the excess wealth of the rich always get invested, which increase competition for labor, which rises wages. (very classical economics). At the same time, when the government seizes that money, a huge chunk is eaten out by the machinery. For example, some goes to the military, some goes to the government machination, some goes to the collector.
Add to that, that now the wealthy will spend money to avoid the tax, which reduces the amount you will tax in comparison to what would have been spent or invested.
I'm not sure if it technically holds true, and this is a debate amongst economists, but the thinking that taxing the rich will help the poor is not as simple at its stated, and I strongly opposed the mentality of "that guy has to much, lets shoot him".
I think all companies should be required to make compensation (salary, bonus etc) information public for all employees and contractors
I think its even easier for the IRS to do it, since they already collect that data, and it will also inform on the effective tax rates people are paying, leading to a more informed society. I am all up for public salaries, after all ,mine was already forcefully disclosed in the US as an immigrant, lets get the rest in.
For better or worse, production workers are seen as fungible and managers (ideally) have deep domain expertise and knowledge of the company's operations that allow them to multiply the efficiency of the people working under them. I am aware that in reality this is not always the case.
Edit: In your car analogy, the management aren't the engine; they're the driver.
And yet when you need the car to move people or cargo from one place to another, then suddenly the driver becomes as fungible (sometimes even more) as the car itself.
I don't think there's really any moral justification for managers earning more than their subordinates. It's all power and scarcity at play. Managers get more because there is less of them and they are in position to ask for more.
In this (stretched to breaking) analogy, drivers aren't necessarily fungible since most of them will drive the car off a cliff, and the great ones will turn a Ford into a Ferrari.
For better or worse, production workers are seen as fungible
Everybody in this thread agrees that it is indeed the case. However, the mystery is why some people see it that way.
managers (ideally) have deep domain expertise and knowledge of the company's operations
The point of the car analogy was that without workers, managers are nothing, just like car without wheels or engine is useless. In that situation, why would you say one is more important?
Value is a too ill defined concept. I would say that the manager has more leverage on the destiny of the company, thus you want a great manager more than you want great employees, and thus you have to pay them more.
Except that this is not exactly true either. Some times it is, other times it isn't. Yet the salary relations never change.
Except that this is not exactly true either. Some times it is, other times it isn't. Yet the salary relations never change.
I think the meta is for "intellectual"/"mental" workers you have to pay someone enough that they focus on the task they need to work on rather than spending mental cycles on how to afford to pay for rent or food or vaccines/formula for baby.
It isn't ill defined. Ideally, and I would argue in most circumstances, wages are a strong approximation of the marginal revenue product, just as neoclassic theory states they should be.
Comments
In general the supervisor or manager provides more value than an employee under his command. Exceptions to that are at least as common as employees having higher wages than managers and supervisors.
I don't understand why do you think this is the case. (I am one of those people who thinks people should have the same salaries, btw.)
What exactly do you mean by "value"? Can you give some examples?
To add: I don't think there is a meaningful comparison of importance of two professions that depend on each other. It's like asking, which part of the car provides more value for the user? Is it the engine or the wheels?
There is an entire field of study about this, with maybe millions of students.
Why a wage is what it is might be one of the most described, modeled and studied things out there. A simple explanation is that the supply of people that can do the managing is lower than the demand for it.
Clearly, the cases where managers earn less than the people they manage follow the same rule (i.e. sports coaches, movie directors, etc).
About the comparison: It depends, if you have a car without engine and a car without wheels, which one is easier for you to fix.
But I don't want an explanation of that fact, I have my own. I want an explanation, why some people (who are actually not in the management) think it is right. It is a moral question, not factual one.
As this conversation goes, its nature, it lacks any concept of morality. Why is a rock a rock is not a moral question, and it doesn't merit one in my opinion.
I think you have to reveal what is the moral question you have about preventing that natural result, and I can try to answer why such a thing doesn't bother me at all.
The OP asked: "Many people think that a supervisor or a manager should make more money than the person reporting to them. I ask why"
You responded: "In general the supervisor or manager provides more value than an employee under his command."
I asked: "why do you think this is the case"
And I got the pretty much textbook economics reply. But I am not asking about what economists think, I wonder about what you think. Why do you, personally, think the work of the manager is more valuable? So I was wondering how you understand the value.
Based on your response, you seem to value scarcity of either positions or suitable candidates. So do you think the president should have the highest salary? There is only one. I am also not convinced that scarcity itself is "providing value".
I think the one that pays the manager believes its more valuable, and that if the value wasn't there, the ones that doesn't pay managers will make a killing and soon infect the rest with that idea.
In general I see people getting what people are willing to give them, even when its an 'unfair' situation (i.e. the son of the business man getting preferred treament).
The opposite, people getting what they have by taking it from people unwillingly, which I find aberrant, is seldom what happens in this scenario, and more what happens with proposed solutions around income inequality.
Are you talking about taxes or ransom? I am all for progressive tax rates and as a poor person I do not support tax cuts for the wealthy (just wanted to clarify that). That being said, we need to fight income inequality just like we need to fight against "nature" in every other scenario. Someone talked about "information asymmetry" a while back. I think all companies should be required to make compensation (salary, bonus etc) information public for all employees and contractors. I don't see how we can get rid of income inequality as long as there is something "they" know that "we" don't.
Some people would ask what is the difference. Im not quite there, but sympathetic to the idea.
This is a technically problematic issue that i think the public does not quite understand.
There is a concept called the statuatory incidence of taxes and the economic incidence of taxes. The first one is who signs the check to the government, the second one is who ends up paying for it. So if for example someone said that "now employers will pay 100% of the social security tax)", it might look to the untrained eye, that taxes are lowered on employees. But actually, it will reduce wages just as much, and in the end, the employee is still paying for it.
Progressive taxation has this debate in economics: the excess wealth of the rich always get invested, which increase competition for labor, which rises wages. (very classical economics). At the same time, when the government seizes that money, a huge chunk is eaten out by the machinery. For example, some goes to the military, some goes to the government machination, some goes to the collector.
Add to that, that now the wealthy will spend money to avoid the tax, which reduces the amount you will tax in comparison to what would have been spent or invested.
I'm not sure if it technically holds true, and this is a debate amongst economists, but the thinking that taxing the rich will help the poor is not as simple at its stated, and I strongly opposed the mentality of "that guy has to much, lets shoot him".
I think its even easier for the IRS to do it, since they already collect that data, and it will also inform on the effective tax rates people are paying, leading to a more informed society. I am all up for public salaries, after all ,mine was already forcefully disclosed in the US as an immigrant, lets get the rest in.
For better or worse, production workers are seen as fungible and managers (ideally) have deep domain expertise and knowledge of the company's operations that allow them to multiply the efficiency of the people working under them. I am aware that in reality this is not always the case.
Edit: In your car analogy, the management aren't the engine; they're the driver.
And yet when you need the car to move people or cargo from one place to another, then suddenly the driver becomes as fungible (sometimes even more) as the car itself.
I don't think there's really any moral justification for managers earning more than their subordinates. It's all power and scarcity at play. Managers get more because there is less of them and they are in position to ask for more.
In this (stretched to breaking) analogy, drivers aren't necessarily fungible since most of them will drive the car off a cliff, and the great ones will turn a Ford into a Ferrari.
Everybody in this thread agrees that it is indeed the case. However, the mystery is why some people see it that way.
The point of the car analogy was that without workers, managers are nothing, just like car without wheels or engine is useless. In that situation, why would you say one is more important?
Value is a too ill defined concept. I would say that the manager has more leverage on the destiny of the company, thus you want a great manager more than you want great employees, and thus you have to pay them more.
Except that this is not exactly true either. Some times it is, other times it isn't. Yet the salary relations never change.
I think the meta is for "intellectual"/"mental" workers you have to pay someone enough that they focus on the task they need to work on rather than spending mental cycles on how to afford to pay for rent or food or vaccines/formula for baby.
It isn't ill defined. Ideally, and I would argue in most circumstances, wages are a strong approximation of the marginal revenue product, just as neoclassic theory states they should be.