It’s unclear to me what you mean with privilege. I’m trying to imagine a situation where making 75k is not enough for a low-privilege person, but I can’t think of any. AFAIK 75k is an extremely high wage. I know a CEO of a bank that makes that.
Toonalfrink, I’m hesitant to provide a concrete definition of privilege because it’s definitely an amorphous thing. That being said, since I know it does mean very different things in different countries, so I should have provided some context in my examples:
Employer Location: US major metropolitan city
Entry level salary/benefits: $35k; competitive health insurance; no 401k/403b (retirement fund) match; no maternity leave
Looking briefly as US dept of Education data, the median American student loan debt burden for those with a bachelor’s degree is around $12k at graduation. The high-performing applicants from selective schools undoubtedly had better-compensated employment options. Assume private and selective schools generally costing more, and higher-earning/more-educated families are generally more capable at navigating the US scholarship and financial aid system (these are both true generalizations, forgive me for not dredging up hard figures to support the claims). It starts becoming clearer why employees in such an org disproportionately came from comfortable backgrounds.
Further, many employees at the organization in my example had previously worked at the org as unpaid interns there for at least a semester (14-16 wks), and generally for >8 hrs/wk for several months. Some were interns after graduating. While that meant we (as the employer) could understand those applicants better than any interview would have allowed us to, many individuals simply can’t afford to commute to a center city office and effectively volunteer for that long—they need to work to support themselves.
Hope this provides clarity, at least with my use of the term.
It does provide clarity, and I can imagine that there are unfortunate cases where those entry level salaries aren’t enough.
As I said elsewhere in this thread, I think this problem would be best resolved simply by asking how much an applicant needs, instead of raising wages accross the board. The latter would cause all kinds of problems. It would worsen the already latent center/periphery divide in EA by increasing inequality, it would make it harder for new organisations to compete, it would reduce the net amount of people that we can employ, etc etc.
But I could be wrong, and I sense that some of my thoughts might be ideologically tainted. If you feel the urge to point me at some econ 101, please do.
The latter seems substantially better than the former by my lights (well, substituting ‘across the board’ for ‘let the market set prices’.)
The standard econ-101 story for this is (in caricature) that markets tend to efficiently allocate scarce resources, and you generally make things worse overall if you try to meddle in them (although you can anoint particular beneficiaries).
The mix of strategies to soft-suppress (i.e. short of frank collusion/oligospony) salaries below market rate will probably be worse than not doing so—the usual predictions are a labour supply shortfall, with the most able applicants preferentially selecting themselves out (if I know I’ll only realistically get $X at an EA org but I can get $1.5X in the private sector, that’s a disincentive, and one that costs the EA org if they value my marginal labour more than X), and probably misallocation issues (bidding up wages gives a mechanism for the highest performers to match into the highest performing orgs).
It’s also worth stressing the “Have a maximum, but ask the applicant to make a first suggestion; don’t disclose wages; discourage employees sharing their salary with other employees” isn’t an EA innovation—they are pretty standard practice in salary negotiation on the employer side, and they conspire to undermine employee bargaining position. Canny employees being confronted with ‘how much do you need?’ may play along with the charade (“I need $10k more for leisure and holidays which are—promise! - strictly necessary to ensure my peak productivity!”) or roll their eyes at the conceit (“So I need $X in the sense you need to offer $X or I won’t take the job”).
Moreover:
‘Paying by necessity’ probably gets into legal trouble in various jurisdictions. Paying Alice more than (similarly situated) Bob because (e.g.) she has kids is unlikely to fly. (More generally, the perverse incentives on taking ‘pay by necessity’ at face value are left as an exercise to the reader).
Heavily obfuscating compensation disadvantages poorer/less experienced/less willing negotiators. I think I remember some data suggesting there are demographic trends in these factors—insofar as it does, it seems likely to lead to unjust bias in compensation.
Typical sentiment is that employees rather than employers are the weaker party, at greater risk of exploitative or coercive practice. I don’t understand why in EA contexts we are eager to endorse approaches that systematically benefit the latter at the expense of the former.
Not trying to push down the ceiling doesn’t mean you have to elevate the floor. People can still offer their services ‘at a discount’ if they want to. Although this still a bad idea, one could always pay at market and hope employees give their ‘unnecessary’ money back to you.
I’m a big fan of having some separation between personal and professional life (and I think a lot of EA errs in eliding the two too much). Insofar as these aren’t identical—insofar as “Greg the human” isn’t “Greg the agent of his EA employers will”, interests of (EA) employer and (EA) employee won’t perfectly converge: my holiday to Rome or whatever isn’t a ‘business expense’; the most marginal activity of my org isn’t likely to be the thing that I consider the best use of my funds. Better to accept this (and strike mutually beneficial deals) rather than pretending otherwise.
I’d add that I think there’s something to be said in favor of a needs-based model in the early stages of a startup. For as long as you’re heavily funding-constrained, it allows you to hire a greater number of people at a given cost. (This is essentially first-degree price discrimination; maximizing producer’s surplus (≈ altruistic utility) can IMO be a good idea under some circumstances.) One could argue that even then, promising EA startups should (and will) be paid better, but I’m not sure this always works out in practice.
[Raising wages across the board] would cause all kinds of problems. It would worsen the already latent center/periphery divide in EA by increasing inequality, it would make it harder for new organisations to compete, it would reduce the net amount of people that we can employ, etc etc.
But I could be wrong, and I sense that some of my thoughts might be ideologically tainted. If you feel the urge to point me at some econ 101, please do.
I think you’re right that these problems in would occur if a handful of orgs with the most money started raising salaries across the board in the current environment. But a commenter on FB summed up my econ 101 read on this perfectly (to reiterate I’m not an economist): “If the community can’t afford market rates maybe it’s time to start admitting that the community is funding constrained.”
Question: if all you knew about a bank was that the CEO made $75k a year, would that knowledge make you more or less likely to invest in that bank (from a purely financial perspective)? That would make me way less likely to invest.
Here’s a simple example: imagine that you, or someone you were responsible for taking care of, had medical expenses of $100k/year. In that case, $75k wouldn’t even let you break even, you’d still be taking on lots of debt.
Other examples: you have debt, you have kids (and/or other relatives you’re financially responsible for), you live in a high cost of living location, or various other factors that have no relation to someone’s suitability for a job.
Given the numbers that we have in mind, these examples are all very specific to the US.
Medical expenses don’t get much past $2k per year in most European countries. The only place where cost of living is prohibitively high past a ~$30k income, is San Francisco.
I’m not arguing against the idea that some people exist that should be given the $150k that is needed to unlock their talents. I’m arguing that this group of people might be very small, and concentrated in your bubble.
I think that’s the crux of the argument. If a majority of senior people needed $150k to get by, I’d agree that that should be the wage you offer. If these people make up just 1% of the population (which seems true to me), offering $150k to everyone else is just going to cause a lot of subtle cultural damage.
I’m not arguing against the idea that some people exist that should be given the $150k that is needed to unlock their talents. I’m arguing that this group of people might be very small, and concentrated in your bubble.
I think that’s the crux of the argument. If a majority of senior people needed $150k to get by, I’d agree that that should be the wage you offer. If these people make up just 1% of the population (which seems true to me), offering $150k to everyone else is just going to cause a lot of subtle cultural damage.
Very well put. Agree this is the crux of our disagreement; my intuition is that there’s a much larger pool of people who would be enticed by the higher pay.
I think it would be very difficult to raise a family in London on $30k (or even £30k). Rent for a family home in good repair in Zone 2 is like £2000 a month. So a £30k salary would only cover the rent of a place like that.
To make £30k work, you’d have to live quite far away and have a long commute, which has a major impact on quality of life. I think that’s true in many other major cities.
30 was just an arbitrary number. Is London still hard to live in for 60? Mind that the suggestion is to raise salaries from 75k to 100k. I can’t imagine many cases where 75k is prohibitive, except for those that feel a need to be competitive with their peers from industry (which, fwiw, is not something I outright disapprove of)
We should probably operationalize this argument with actual data instead of reasoning from availability.
Using NYC as an (admittedly US-centric and high cost of living) example, the average cost of private school is ~$18k/year, and many of the good ones are around $50k. So if you think of a couple that wants to have a couple of kids, doesn’t want to send them to a bad (possibly dangerous) public school, and would like to put those kids through college, it’s unlikely those people would even consider non-profit work unless they had unusual circumstances that would allow them to do so (e.g. one partner with particularly high earning power, a trust-fund, etc.)
It’s unclear to me what you mean with privilege. I’m trying to imagine a situation where making 75k is not enough for a low-privilege person, but I can’t think of any. AFAIK 75k is an extremely high wage. I know a CEO of a bank that makes that.
Toonalfrink, I’m hesitant to provide a concrete definition of privilege because it’s definitely an amorphous thing. That being said, since I know it does mean very different things in different countries, so I should have provided some context in my examples:
Employer Location: US major metropolitan city
Entry level salary/benefits: $35k; competitive health insurance; no 401k/403b (retirement fund) match; no maternity leave
Looking briefly as US dept of Education data, the median American student loan debt burden for those with a bachelor’s degree is around $12k at graduation. The high-performing applicants from selective schools undoubtedly had better-compensated employment options. Assume private and selective schools generally costing more, and higher-earning/more-educated families are generally more capable at navigating the US scholarship and financial aid system (these are both true generalizations, forgive me for not dredging up hard figures to support the claims). It starts becoming clearer why employees in such an org disproportionately came from comfortable backgrounds.
Further, many employees at the organization in my example had previously worked at the org as unpaid interns there for at least a semester (14-16 wks), and generally for >8 hrs/wk for several months. Some were interns after graduating. While that meant we (as the employer) could understand those applicants better than any interview would have allowed us to, many individuals simply can’t afford to commute to a center city office and effectively volunteer for that long—they need to work to support themselves.
Hope this provides clarity, at least with my use of the term.
It does provide clarity, and I can imagine that there are unfortunate cases where those entry level salaries aren’t enough.
As I said elsewhere in this thread, I think this problem would be best resolved simply by asking how much an applicant needs, instead of raising wages accross the board. The latter would cause all kinds of problems. It would worsen the already latent center/periphery divide in EA by increasing inequality, it would make it harder for new organisations to compete, it would reduce the net amount of people that we can employ, etc etc.
But I could be wrong, and I sense that some of my thoughts might be ideologically tainted. If you feel the urge to point me at some econ 101, please do.
The latter seems substantially better than the former by my lights (well, substituting ‘across the board’ for ‘let the market set prices’.)
The standard econ-101 story for this is (in caricature) that markets tend to efficiently allocate scarce resources, and you generally make things worse overall if you try to meddle in them (although you can anoint particular beneficiaries).
The mix of strategies to soft-suppress (i.e. short of frank collusion/oligospony) salaries below market rate will probably be worse than not doing so—the usual predictions are a labour supply shortfall, with the most able applicants preferentially selecting themselves out (if I know I’ll only realistically get $X at an EA org but I can get $1.5X in the private sector, that’s a disincentive, and one that costs the EA org if they value my marginal labour more than X), and probably misallocation issues (bidding up wages gives a mechanism for the highest performers to match into the highest performing orgs).
It’s also worth stressing the “Have a maximum, but ask the applicant to make a first suggestion; don’t disclose wages; discourage employees sharing their salary with other employees” isn’t an EA innovation—they are pretty standard practice in salary negotiation on the employer side, and they conspire to undermine employee bargaining position. Canny employees being confronted with ‘how much do you need?’ may play along with the charade (“I need $10k more for leisure and holidays which are—promise! - strictly necessary to ensure my peak productivity!”) or roll their eyes at the conceit (“So I need $X in the sense you need to offer $X or I won’t take the job”).
Moreover:
‘Paying by necessity’ probably gets into legal trouble in various jurisdictions. Paying Alice more than (similarly situated) Bob because (e.g.) she has kids is unlikely to fly. (More generally, the perverse incentives on taking ‘pay by necessity’ at face value are left as an exercise to the reader).
Heavily obfuscating compensation disadvantages poorer/less experienced/less willing negotiators. I think I remember some data suggesting there are demographic trends in these factors—insofar as it does, it seems likely to lead to unjust bias in compensation.
Typical sentiment is that employees rather than employers are the weaker party, at greater risk of exploitative or coercive practice. I don’t understand why in EA contexts we are eager to endorse approaches that systematically benefit the latter at the expense of the former.
Not trying to push down the ceiling doesn’t mean you have to elevate the floor. People can still offer their services ‘at a discount’ if they want to. Although this still a bad idea, one could always pay at market and hope employees give their ‘unnecessary’ money back to you.
I’m a big fan of having some separation between personal and professional life (and I think a lot of EA errs in eliding the two too much). Insofar as these aren’t identical—insofar as “Greg the human” isn’t “Greg the agent of his EA employers will”, interests of (EA) employer and (EA) employee won’t perfectly converge: my holiday to Rome or whatever isn’t a ‘business expense’; the most marginal activity of my org isn’t likely to be the thing that I consider the best use of my funds. Better to accept this (and strike mutually beneficial deals) rather than pretending otherwise.
I’d add that I think there’s something to be said in favor of a needs-based model in the early stages of a startup. For as long as you’re heavily funding-constrained, it allows you to hire a greater number of people at a given cost. (This is essentially first-degree price discrimination; maximizing producer’s surplus (≈ altruistic utility) can IMO be a good idea under some circumstances.) One could argue that even then, promising EA startups should (and will) be paid better, but I’m not sure this always works out in practice.
Other than that, I agree.
Well put Gregory, you nicely captured a lot of concerns I have about the “pay by (reported) necessity” model.
I think you’re right that these problems in would occur if a handful of orgs with the most money started raising salaries across the board in the current environment. But a commenter on FB summed up my econ 101 read on this perfectly (to reiterate I’m not an economist): “If the community can’t afford market rates maybe it’s time to start admitting that the community is funding constrained.”
Great post, strong upvote.
Question: if all you knew about a bank was that the CEO made $75k a year, would that knowledge make you more or less likely to invest in that bank (from a purely financial perspective)? That would make me way less likely to invest.
Here’s a simple example: imagine that you, or someone you were responsible for taking care of, had medical expenses of $100k/year. In that case, $75k wouldn’t even let you break even, you’d still be taking on lots of debt.
Other examples: you have debt, you have kids (and/or other relatives you’re financially responsible for), you live in a high cost of living location, or various other factors that have no relation to someone’s suitability for a job.
Given the numbers that we have in mind, these examples are all very specific to the US.
Medical expenses don’t get much past $2k per year in most European countries. The only place where cost of living is prohibitively high past a ~$30k income, is San Francisco.
I’m not arguing against the idea that some people exist that should be given the $150k that is needed to unlock their talents. I’m arguing that this group of people might be very small, and concentrated in your bubble.
I think that’s the crux of the argument. If a majority of senior people needed $150k to get by, I’d agree that that should be the wage you offer. If these people make up just 1% of the population (which seems true to me), offering $150k to everyone else is just going to cause a lot of subtle cultural damage.
Very well put. Agree this is the crux of our disagreement; my intuition is that there’s a much larger pool of people who would be enticed by the higher pay.
I think it would be very difficult to raise a family in London on $30k (or even £30k). Rent for a family home in good repair in Zone 2 is like £2000 a month. So a £30k salary would only cover the rent of a place like that.
To make £30k work, you’d have to live quite far away and have a long commute, which has a major impact on quality of life. I think that’s true in many other major cities.
30 was just an arbitrary number. Is London still hard to live in for 60? Mind that the suggestion is to raise salaries from 75k to 100k. I can’t imagine many cases where 75k is prohibitive, except for those that feel a need to be competitive with their peers from industry (which, fwiw, is not something I outright disapprove of)
We should probably operationalize this argument with actual data instead of reasoning from availability.
Using NYC as an (admittedly US-centric and high cost of living) example, the average cost of private school is ~$18k/year, and many of the good ones are around $50k. So if you think of a couple that wants to have a couple of kids, doesn’t want to send them to a bad (possibly dangerous) public school, and would like to put those kids through college, it’s unlikely those people would even consider non-profit work unless they had unusual circumstances that would allow them to do so (e.g. one partner with particularly high earning power, a trust-fund, etc.)
Okay, you’ve convinced me that a US based EA organisation should consider raising their wages to attract top talent.
This data does make me doubt the wisdom of basing non-local activities in the US, but that is another matter.