That doesn't mean that they weren't providing $70k of market value, unless you assume that (at a minimum):
(1) they were maximimizing their pay in choice of job, and
(2) they had perfect knowledge of all the alternatives jobs that they could otherwise have obtained.
These are the kind of assumptions that are typical in Econ 101, but to which real humans do not actually conform, particularly the second.
Ignoring a lot of caveats, that means that the labor they were providing was worth less than $40k to them. It says nothing about how much the labor was worth to the company. That the company was willing to pay them $40k says their labor was, with similar caveats, worth at least $40k but there is no implied upper bound.
Comments
Because they were willing to work for $40k.
That doesn't mean that they weren't providing $70k of market value, unless you assume that (at a minimum):
(1) they were maximimizing their pay in choice of job, and (2) they had perfect knowledge of all the alternatives jobs that they could otherwise have obtained.
These are the kind of assumptions that are typical in Econ 101, but to which real humans do not actually conform, particularly the second.
Ignoring a lot of caveats, that means that the labor they were providing was worth less than $40k to them. It says nothing about how much the labor was worth to the company. That the company was willing to pay them $40k says their labor was, with similar caveats, worth at least $40k but there is no implied upper bound.
If someone volunteers for a non-profit for no pay, does that mean they're providing $0 in value?
After all, they were willing to work for $0.
How long would they be willing to stay at that rate? Raises aren't entirely altruistic.