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Notes -
This is true of a lot of people though. Anyone working with large amounts of data and money have this large effect on profits through their labour.
Does an IRS worker that prevents ten million in tax fraud every year deserve 200k a year? I feel like should have a lot to do with how replaceable the labour is and some people in SWE (especially at FAANGS) have gotten fairly overconfident in exactly how irreplaceable or necessary they are on an individual level.
One can of course turn this around and say that some people in other sectors are very underpaid for the very valuable and hard to replace labour they do.
Having an effect on profits is not the same as solely generating that profit. Let's say you have a small business that generates widgets generating revenue of $300,000 per year, and it has two employees who operate a machine to make the widgets. If either employee or the machine stops working, no widgets get made and the profits go to zero. So each employee and the machine can claim that 100% of the profits depends on its role. But that can't mean that each employee is worth $300,000 a year. If each employee were paid $300,000 a year and the machine were rented at $300,000, the company would be losing $600,000 a year. If the machine costs say $100,000 a year to rent, then each employee can only be paid $100,000 a year. So an employee who can correctly say that $300,000 of revenue depends on their work is only worth $100,000. More complicated processes with more employees would result in starker differences between these two figures.
I'm sure there's some capacitor somewhere in some multi-million dollar machine that would stop it from working if it failed, but that doesn't mean the capacitor could possibly be worth more than a few dollars, because there are many other components like it and if it did cost more than that, the machine could never have been built in the first place.
That is what I'm saying, it depends on the value of the process and the replaceability of a particular part/person (and to a lesser extent the value add of the person). The tech worker depends on their position in a process/system just as much as the IRS analyst to generate value but one is harder to replace than the other.
Only... Sometimes it other things disrupt this. Collective bargaining (and control over labour supply) and employers with employees in vulnerable positions are common examples, or people that are just too complacent/risk averse to effectively negotiate. People collectively overvaluing something is common as well.
I believe that people in tech (both employees and their employers) have been overestimating their value and replaceability/redundancy. There are still plenty of people in tech that actually are valuable and hard to replace and many of the people that are replaced are needed in other parts of the economy, but they might not command as high wages.
In the specific case of software engineer layoffs, replaceability isn't the issue. They weren't replaced. Their employers got rid of their positions and expected profits went up, which meant that whatever they were doing wasn't producing enough to pay their salaries. So, their mistake was not just to think they were irreplaceable, nor was it to neglect that other employees and capital were needed for them to their jobs.
They must not have understood that what they were doing was not nearly as valuable as they thought.
I agree.
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Yup, anyone with a basic knowledge of economics would understand why the average salaries are the average salary for a particular profession.
I wonder how much of it is a complete lack of knowledge or misunderstanding of the labor market versus fully well understanding how they work but then choosing to argue against the premises/reality that created those systems in the first place and wanting to replace it with something else.
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