(Obvious CoI/âown views, but in my defence Iâve been arguing along these lines long before I hadâor expected to haveâan EA job.)
I agree âEA jobsâ provide substantial non monetary goods, and that âsupplyâ of willing applicants will likely outstrip available positions in âEA jobsâ. Yet that doesnât mean âsupplyâ of potential EA employees is (mostly) inelastic to compensation.
In principle, money is handy to all manner of interests one may have, including altruistic ones. Insofar as folks are not purely motivated by altruistic ends (and in such a way theyâre indifferent to having more money to give away themselves) youâd expect them to be salary-sensitive. I aver basically everyone in EA is therefore (substantially) salary-sensitive.
In practice, I know of cases (including myself) where compensation played a role in deciding to change job, quit, not apply etc. I also recall on the forum remarks from people running orgs which cannot compensate as generously as others that this hurts recruitment.
So Iâm pretty sure if you dropped salaries you would reduce the number of eager applicants (albeit perhaps with greater inelasticity than many other industries). As (I think) you imply, this would be a bad idea: from point of view of an org, controlling overall âsupplyâ of applicants shouldnât be their priority (rather they set salaries as necessary to attract the most cost effective employees). For the wider community point of view, youâd want to avoid âEA underemploymentâ in other ways than pushing to distort the labour market.
Totally agree. I think weâre aligned on all your points.
So Iâm pretty sure if you dropped salaries you would reduce the number of eager applicants
Iâd expect a reduction but not a drastic one. Like Iâd predict Open Philâs applicant pool to drop to 500-600 from 800 if they cut starting salary by $10k-$15k.
Right, I (mis?)took the OP to be arguing âreducing salaries wouldnât have an effect on labour supply, because it is price inelasticâ, instead of âreducing salaries wouldnât have enough of an effect to qualitatively change oversupply.
Aside:
Iâd expect a reduction but not a drastic one. Like Iâd predict Open Philâs applicant pool to drop to 500-600 from 800 if they cut starting salary by $10k-$15k.
This roughly cashes out to an income elasticity of labour (/âapplicant) supply of 1-2 (i.e. you reduce applicant supply by ~20% by reducing income ~~10%). Although a crisp comparison is hard to find, in the labour market you see figures generally <1, so this expectation slightly goes against the OP, given it suggests EA applicants are more compensation sensitive than typical.
âreducing salaries wouldnât have enough of an effect to qualitatively change oversupply.â
Right, this^ is what I mean.
This roughly cashes out to an income elasticity of labour (/âapplicant) supply of 1-2 (i.e. you reduce applicant supply by ~20% by reducing income ~~10%).
Oh, interesting.
It was a rough, off-the-top-of-my-head prediction, so I wouldnât give the specific numbers too much weight.
That said, thereâs probably a gradient of applicant income elasticity here (and in most places? I donât know very much about labor economics).
Iâd expect dropping salaries by $10k to reduce the applicant pool substantially, and by $20k to reduce it somewhat more. But thereâs probably a hard core of applicants whose demand is quite inelastic (i.e. who would be excited to apply to EA jobs regardless of whether they paid $35,000 or $70,000).
And probably also thereâs some lower bound where anything under it is too little to live on, such that setting salaries under that threshold would cause a sharp drop-off in applications.
(Obvious CoI/âown views, but in my defence Iâve been arguing along these lines long before I hadâor expected to haveâan EA job.)
I agree âEA jobsâ provide substantial non monetary goods, and that âsupplyâ of willing applicants will likely outstrip available positions in âEA jobsâ. Yet that doesnât mean âsupplyâ of potential EA employees is (mostly) inelastic to compensation.
In principle, money is handy to all manner of interests one may have, including altruistic ones. Insofar as folks are not purely motivated by altruistic ends (and in such a way theyâre indifferent to having more money to give away themselves) youâd expect them to be salary-sensitive. I aver basically everyone in EA is therefore (substantially) salary-sensitive.
In practice, I know of cases (including myself) where compensation played a role in deciding to change job, quit, not apply etc. I also recall on the forum remarks from people running orgs which cannot compensate as generously as others that this hurts recruitment.
So Iâm pretty sure if you dropped salaries you would reduce the number of eager applicants (albeit perhaps with greater inelasticity than many other industries). As (I think) you imply, this would be a bad idea: from point of view of an org, controlling overall âsupplyâ of applicants shouldnât be their priority (rather they set salaries as necessary to attract the most cost effective employees). For the wider community point of view, youâd want to avoid âEA underemploymentâ in other ways than pushing to distort the labour market.
Totally agree. I think weâre aligned on all your points.
Iâd expect a reduction but not a drastic one. Like Iâd predict Open Philâs applicant pool to drop to 500-600 from 800 if they cut starting salary by $10k-$15k.
Right, I (mis?)took the OP to be arguing âreducing salaries wouldnât have an effect on labour supply, because it is price inelasticâ, instead of âreducing salaries wouldnât have enough of an effect to qualitatively change oversupply.
Aside:
This roughly cashes out to an income elasticity of labour (/âapplicant) supply of 1-2 (i.e. you reduce applicant supply by ~20% by reducing income ~~10%). Although a crisp comparison is hard to find, in the labour market you see figures generally <1, so this expectation slightly goes against the OP, given it suggests EA applicants are more compensation sensitive than typical.
Right, this^ is what I mean.
Oh, interesting.
It was a rough, off-the-top-of-my-head prediction, so I wouldnât give the specific numbers too much weight.
That said, thereâs probably a gradient of applicant income elasticity here (and in most places? I donât know very much about labor economics).
Iâd expect dropping salaries by $10k to reduce the applicant pool substantially, and by $20k to reduce it somewhat more. But thereâs probably a hard core of applicants whose demand is quite inelastic (i.e. who would be excited to apply to EA jobs regardless of whether they paid $35,000 or $70,000).
And probably also thereâs some lower bound where anything under it is too little to live on, such that setting salaries under that threshold would cause a sharp drop-off in applications.