This is a big topic, and there are lots of factors.
One is that paying very high salaries would be a huge PR risk.
That aside, the salaries are many orgs are already good, while the most aligned people are not especially motivated by money. My sense is that e.g. doubling the salaries from here would only lead to a small increase in the talent pool (like maybe +10%).
Doubling costs to get +10% labour doesn’t seem like a great deal—that marginal spending would be about a tenth as cost-effective as our current average. (And that’s ignoring the PR and cultural costs.)
Some orgs are probably underpaying, though, and I’d encourage them to raise salaries.
This kind of ambivalent view of salary-increases is quite mainstream within EA, but as far as I can tell, a more optimistic view is warranted.
If 90% of engaged EAs were wholly unmotivated by money in the range of $50k-200k/yr, you’d expect >90% of EA software engineers, industry researchers, and consultants to be giving >50%, but much fewer do. You’d expect EAs to be nearly indifferent toward pay in job choice, but they’re not. You’d expect that when you increase EAs’ salaries, they’d just donate a large portion on to great tax-deductible charities, so >75% of the salary increase would be refunded on to other effective orgs. But when you say that the spending would be only a tenth as effective (rather than ~four-tenths), clearly you don’t.
Although some EAs are insensitive to money in this way, 90% seems too high. Rather, with doubled pay, I think you’d see some quality improvements from an increased applicant pool, and some improved workforce size (>10%) and retention. Some would buy themselves some productivity and happiness. And yes, some would donate. I don’t think you’d draw too many hard-to-detect “fake EAs”—we haven’t seen many so far. Rather, it seems more likely to help quality than hurt on the margin.
I don’t think the PR risk is so huge at <$250k/yr levels. Closest thing I can think of is commentary regarding folks at OpenAI, but it’s a bigger target, with higher pay. If the message gets out that EA employees are not bound to a vow of poverty, and are actually compensated for >10% of the good they’re doing, I’d argue that’s would enlarge and improve the recruitment pool on the margin.
(NB. As an EA worker, I’d stand to gain from increased salaries, as would many in this conversation. Although not for the next few years at least given the policies of my current (university) employer.)
[Predictable disclaimers, although in my defence, I’ve been banging this drum long before I had (or anticipated to have) a conflict of interest.]
I also find the reluctance to wholeheartedly endorse the ‘econ-101’ story (i.e. if you want more labour, try offering more money for people to sell labour to you) perplexing:
EA-land tends sympathetic using ‘econ-101’ accounts reflexively on basically everything else in creation. I thought the received wisdom these approaches are reasonable at least for first-pass analysis, and we’d need persuading to depart greatly from them.
Considerations why ‘econ-101’ won’t (significantly) apply here don’t seem to extend to closely analogous cases: we don’t fret (and typically argue against others fretting) about other charity’s paying their staff too much, we don’t think (cf. reversal test) that google could improve its human capital by cutting pay—keeping the ‘truly committed googlers’, generally sympathetic to public servants getting paid more if they add much more social value (and don’t presume these people are insensitive to compensation beyond some limit), prefer simple market mechs over more elaborate tacit transfer system (e.g. just give people money) etc. etc.
The precise situation makes the ‘econ-101’ intervention particularly appetising: if you value labour much more than the current price, and you are sitting atop a ungodly pile of lucre so vast you earnestly worry about how you can spend big enough chunks of it at once, ‘try throwing money at your long-standing labour shortages’ seems all the more promising.
Insofar as it goes, the observed track record looks pretty supportive of the econ-101 story—besides all the points Ryan mentions, compare “price suppression results in shortages” to the years-long (and still going strong) record of orgs lamenting they can’t get the staff.
Perhaps the underlying story is as EA-land is generally on the same team, one might hope you can do better than taking one’s cue from ‘econ-101’, given the typically adversarial/competitive dynamics it presumes between firms, and employee/employer. I think this hope is forlorn: EA-land might be full aspiring moral saints, but aspiring moral saints remain approximate to homo economicus. So the usual stories about the general benefits econ efficiency prove hard to better- and (play-pumps style) attempts to try feel apt to backfire (1, 2, 3, 4 - ad nauseum).
However, although I don’t think ‘PR concerns’ should guide behaviour (if X really is better than ¬X, the costs of people reasonably—if mistakenly—thinking less of you for doing X is typically better than strategising to hide this disagreement), many things look bad because they are bad.
In the good old days, I realised I was behind on my GWWC pledge so used some of my holiday to volunteer for a week of night-shifts as a junior doctor on a cancer ward. If in the future my ‘EA praxis’ is tantamount to splashing billionaire largess on a lifestyle for myself of comfort and affluence scarcely conceivable to my erstwhile beneficiaries, spending my days on intangible labour in well-appointed offices located among the richest places heretofore observed in human history, an outside observer may wonder what went wrong.
I doubt they would be persuaded by my defence is any better than obscene: “Not all heroes wear capes; some nobly spend thousands on yuppie accoutrements they deem strictly necessary for them to do the most good!”. Nor would they be moved by my remorse: self-effacing acknowledgement is not expiation, nor complaisance to my own vices atonement. I still think jacking up pay may be good policy, but personally, perhaps I should doubt myself too.
I’m just saying that when we think offering more salary will help us secure someone, we generally do it. This means that further salary raises seem to offer low benefit:cost. This seems consistent with econ 101.
Likewise, it’s possible to have a lot of capital, but for the cost-benefit of raising salaries to be below the community bar (which is something like invest the money for 20yr and spend on OP’s last dollar—which is a pretty high bar). Having more capital increases the willingness to pay for labour now to some extent, but tops out after a point.
To be clear, I’m sympathetic to the idea that salaries should be even higher (or we should have impact certificates or something). My position is more that (i) it’s not an obvious win (ii) it’s possible for the value of a key person to be a lot higher than their salary, without something going obviously wrong.
I definitely agree EAs are motivated somewhat by money in this range.
My thought is more about how it compares to other factors.
My impression of hiring at 80k is that salary rarely seems like a key factor in choosing us vs. other orgs (probably under 20% of cases). If we doubled salaries, I expect existing staff would save more, donate more, and consume a bit more; but I don’t think we’d see large increases in productivity or happiness.
My impression is that this is similar at other orgs who pay similarly to us. Some EA orgs still pay a lot less, and I think there’s a decent chance this is a mistake – though you’d need to weigh it against the current cost-effectiveness of the project.
I think the PR risks for charities paying high salaries are pretty big—normal people hate the idea of charities paying a lot. Paying regular employees $200k in London would make them higher paid than the CEOs of most regular charities, including pretty big ones where the staff are typically middle aged. EA has also had a lot of kudos from the ‘living on not very much to donate’ meme. Most people aiming to do good are assumed to be full of shit, and living on not very much is a hard-to-fake symbol that shows you’re morally serious. I agree that meme has some serious downsides relative to ‘you can earn a bunch of money doing good’ meme, but giving up that kudos is a major cost – which makes the trade off ambiguous to me. Maybe it’s possible to have some of both by paying a lot but having some people donate most of it, or maybe you get the worst of both worlds.
Agree that we shouldn’t expect large productivity/wellbeing changes. Perhaps a ~0.1SD improvement in wellbeing, and a single-digit improvement in productivity—small relative to effects on recruitment and retention.
I agree that it’s been good overall for EA to appear extremely charitable. It’s also had costs though: it sometimes encouraged self-neglect, portrayed EA as ‘holier than thou’, EA orgs as less productive, and EA roles as worse career moves than the private sector. Over time, as the movement has aged, professionalised, and solidified its funding base, it’s been beneficial to de-emphasise sacrifice, in order to place more emphasis on effectiveness. It better reflects what we’re currently doing, who we want to recruit, too. So long as we take care to project an image that is coherent, and not hypocritical, I don’t see a problem with accelerating the pivot. My hunch is that even apart from salaries, it would be good, and I’d be surprised if it was bad enough to be decisive for salaries.
I think there are a few other considerations that may point in the direction of slightly higher salaries (or at least, avoiding very low salaries). EA skews young in age as a movement, but this is changing as people grow up ‘with it’ or older people join. I think this is good. It’s important to avoid making it more difficult for people to join/remain involved who have other financial obligations that come in a little later in life, e.g. - child-rearing - supporting elderly parents Relatedly, lower salaries can be easier to accept for longer for people who come from wealthier backgrounds and have better-off social support networks or expectations of inheritance etc (it can feel very risky if one is only in a position to save minimally, and not be able to build up rainy day funds for unexpected financial needs otherwise).
Doubling costs to get +10% labour doesn’t seem like a great deal
I agree in principal, but in this case the alternative is eliminating$400k-4M of funding, which is much more expensive than doubling the salary of e.g. a research assistant.
To be clear, I am more so skeptical of this valuation than I am actually suggesting doubling salaries. But conditional on the fact that one engaged donor entering the non-profit labor force is worth >$400k, seems like the right call.
If there are now 10 staff, each paid $100k, and each generating $1m of value p.a., then the net gain is $10m - $1m = $9m. The CBR is 1:9.
If we double salaries and get one extra staff member, we’re now paying $2.2m to generate $11m of value. The excess is $8.8m. The average CBR has dropped to 5:1, and the CBR of the marginal $1.2m was actually below 1.
Agreed, just a function of how many salaries you assume will have to be doubled alongside to fill that one position
(a) Hopefully, doubling ten salaries to fill one is not a realistic model. Each incremental wage increase should expand the pool of available labor. If the EA movement is labor-constrained, I expect a more modest raise would cause supply to meet demand.
(b) Otherwise, we should consider that the organization was paying only half of market salary, which perhaps inflated their ‘effectiveness’ in the first place. Taking half of your market pay is itself an altruistic act, which is not counted towards the org’s costs. Presumably if these folks chose that pay cut, they would also choose to donate much of their excess salary (whether pay raise from this org, or taking a for-profit gig).
On b), for exactly that reason, our donors at least usually focus more on the opportunity costs of the labour input to 80k rather than our financial costs—looking mainly at ‘labour out’ (in terms of plan changes) vs. ‘labour in’. I think our financial costs are a minority of our total costs.
On a), yes, you’d need to hope for a better return than a doubling leads to +10% labour estimate I made.
If we suppose a 20% increase is sufficient for +10% labour, then the new situation would be:
Total costs: $1.32m
Impact: $11m
So, the excess value has increased from $9m to $9.7m, and the CBR of the marginal $320k is about 1:3. So, this would be worth doing, though the cost-effectiveness is about a third of before. (In our case at least, I don’t think a +20% increase to salaries would lead to +10% more hires though.)
It looks like the breakeven point is roughly an 80% increase in salaries to gain 10% of labour with this simplified model. (I.e. the CBR of the marginal $1m is around 1:1). In reality I don’t think we’d want to go that close to the breakeven point—because there may be better uses of money, due to the reputation costs of unusually high salaries, and because salaries are harder to lower than to raise (and so if uncertain, it’s better to undershoot).
In reality I don’t think we’d want to go that close to the breakeven point—because there may be better uses of money, due to the reputation costs of unusually high salaries, and because salaries are harder to lower than to raise (and so if uncertain, it’s better to undershoot).
Good points, I agree it would be better to undershoot.
Still, even with the pessimistic assumptions, the high end of that $0.4-4M range seems quite unlikely.
Does 80k actually advise people making >$1M to quit their jobs in favor of entry-level EA work? If so, that would be a major update to my thinking.
Does 80k actually advise people making >$1M to quit their jobs in favor of entry-level EA work?
It depends on what you mean by ‘entry level’ & relative fit in each path, but the short answer is yes.
If someone was earning $1m per year and didn’t think that might grow a lot further from there, I’d encourage them to seriously consider switching to direct work.
I.e. I think it would be worth doing a round of speaking to people at the key orgs, making applications and exploring options for several months (esp insofar as that can be done without jeopardising your current job). Then they could compare what comes up with their current role. I know some people going through this process right now.
If someone was already doing direct work and doing well, I definitely wouldn’t encourage them to leave if they were offered a $1m/year earning to give position.
The issue for someone already in earning to give is that probability that they can find a role like that which is a good fit for them, which is a long way from guaranteed.
Shouldn’t the displacement value be a factor though? This might be wrong, but my thinking is (a) the replacement person in the $1M job will on average give little or nothing to effective charity (b) the switcher has no prior experience or expertise in non-profit, so presumably the next-best hire there is only marginally worse?
The estimates are aiming to take account of the counterfactual i.e. when I say “that person generates value equivalent to extra donations of $1m per year to the movement”, the $1m is accounting for the fact that the movement has the option to hire someone else.
In practice, most orgs are practicing threshold hiring, where if someone is clearly above the bar, they’ll create a new role for them (which is what we should expect if there’s a funding overhang).
This is a big topic, and there are lots of factors.
One is that paying very high salaries would be a huge PR risk.
That aside, the salaries are many orgs are already good, while the most aligned people are not especially motivated by money. My sense is that e.g. doubling the salaries from here would only lead to a small increase in the talent pool (like maybe +10%).
Doubling costs to get +10% labour doesn’t seem like a great deal—that marginal spending would be about a tenth as cost-effective as our current average. (And that’s ignoring the PR and cultural costs.)
Some orgs are probably underpaying, though, and I’d encourage them to raise salaries.
This kind of ambivalent view of salary-increases is quite mainstream within EA, but as far as I can tell, a more optimistic view is warranted.
If 90% of engaged EAs were wholly unmotivated by money in the range of $50k-200k/yr, you’d expect >90% of EA software engineers, industry researchers, and consultants to be giving >50%, but much fewer do. You’d expect EAs to be nearly indifferent toward pay in job choice, but they’re not. You’d expect that when you increase EAs’ salaries, they’d just donate a large portion on to great tax-deductible charities, so >75% of the salary increase would be refunded on to other effective orgs. But when you say that the spending would be only a tenth as effective (rather than ~four-tenths), clearly you don’t.
Although some EAs are insensitive to money in this way, 90% seems too high. Rather, with doubled pay, I think you’d see some quality improvements from an increased applicant pool, and some improved workforce size (>10%) and retention. Some would buy themselves some productivity and happiness. And yes, some would donate. I don’t think you’d draw too many hard-to-detect “fake EAs”—we haven’t seen many so far. Rather, it seems more likely to help quality than hurt on the margin.
I don’t think the PR risk is so huge at <$250k/yr levels. Closest thing I can think of is commentary regarding folks at OpenAI, but it’s a bigger target, with higher pay. If the message gets out that EA employees are not bound to a vow of poverty, and are actually compensated for >10% of the good they’re doing, I’d argue that’s would enlarge and improve the recruitment pool on the margin.
(NB. As an EA worker, I’d stand to gain from increased salaries, as would many in this conversation. Although not for the next few years at least given the policies of my current (university) employer.)
[Predictable disclaimers, although in my defence, I’ve been banging this drum long before I had (or anticipated to have) a conflict of interest.]
I also find the reluctance to wholeheartedly endorse the ‘econ-101’ story (i.e. if you want more labour, try offering more money for people to sell labour to you) perplexing:
EA-land tends sympathetic using ‘econ-101’ accounts reflexively on basically everything else in creation. I thought the received wisdom these approaches are reasonable at least for first-pass analysis, and we’d need persuading to depart greatly from them.
Considerations why ‘econ-101’ won’t (significantly) apply here don’t seem to extend to closely analogous cases: we don’t fret (and typically argue against others fretting) about other charity’s paying their staff too much, we don’t think (cf. reversal test) that google could improve its human capital by cutting pay—keeping the ‘truly committed googlers’, generally sympathetic to public servants getting paid more if they add much more social value (and don’t presume these people are insensitive to compensation beyond some limit), prefer simple market mechs over more elaborate tacit transfer system (e.g. just give people money) etc. etc.
The precise situation makes the ‘econ-101’ intervention particularly appetising: if you value labour much more than the current price, and you are sitting atop a ungodly pile of lucre so vast you earnestly worry about how you can spend big enough chunks of it at once, ‘try throwing money at your long-standing labour shortages’ seems all the more promising.
Insofar as it goes, the observed track record looks pretty supportive of the econ-101 story—besides all the points Ryan mentions, compare “price suppression results in shortages” to the years-long (and still going strong) record of orgs lamenting they can’t get the staff.
Perhaps the underlying story is as EA-land is generally on the same team, one might hope you can do better than taking one’s cue from ‘econ-101’, given the typically adversarial/competitive dynamics it presumes between firms, and employee/employer. I think this hope is forlorn: EA-land might be full aspiring moral saints, but aspiring moral saints remain approximate to homo economicus. So the usual stories about the general benefits econ efficiency prove hard to better- and (play-pumps style) attempts to try feel apt to backfire (1, 2, 3, 4 - ad nauseum).
However, although I don’t think ‘PR concerns’ should guide behaviour (if X really is better than ¬X, the costs of people reasonably—if mistakenly—thinking less of you for doing X is typically better than strategising to hide this disagreement), many things look bad because they are bad.
In the good old days, I realised I was behind on my GWWC pledge so used some of my holiday to volunteer for a week of night-shifts as a junior doctor on a cancer ward. If in the future my ‘EA praxis’ is tantamount to splashing billionaire largess on a lifestyle for myself of comfort and affluence scarcely conceivable to my erstwhile beneficiaries, spending my days on intangible labour in well-appointed offices located among the richest places heretofore observed in human history, an outside observer may wonder what went wrong.
I doubt they would be persuaded by my defence is any better than obscene: “Not all heroes wear capes; some nobly spend thousands on yuppie accoutrements they deem strictly necessary for them to do the most good!”. Nor would they be moved by my remorse: self-effacing acknowledgement is not expiation, nor complaisance to my own vices atonement. I still think jacking up pay may be good policy, but personally, perhaps I should doubt myself too.
I’m just saying that when we think offering more salary will help us secure someone, we generally do it. This means that further salary raises seem to offer low benefit:cost. This seems consistent with econ 101.
Likewise, it’s possible to have a lot of capital, but for the cost-benefit of raising salaries to be below the community bar (which is something like invest the money for 20yr and spend on OP’s last dollar—which is a pretty high bar). Having more capital increases the willingness to pay for labour now to some extent, but tops out after a point.
To be clear, I’m sympathetic to the idea that salaries should be even higher (or we should have impact certificates or something). My position is more that (i) it’s not an obvious win (ii) it’s possible for the value of a key person to be a lot higher than their salary, without something going obviously wrong.
I definitely agree EAs are motivated somewhat by money in this range.
My thought is more about how it compares to other factors.
My impression of hiring at 80k is that salary rarely seems like a key factor in choosing us vs. other orgs (probably under 20% of cases). If we doubled salaries, I expect existing staff would save more, donate more, and consume a bit more; but I don’t think we’d see large increases in productivity or happiness.
My impression is that this is similar at other orgs who pay similarly to us. Some EA orgs still pay a lot less, and I think there’s a decent chance this is a mistake – though you’d need to weigh it against the current cost-effectiveness of the project.
I think the PR risks for charities paying high salaries are pretty big—normal people hate the idea of charities paying a lot. Paying regular employees $200k in London would make them higher paid than the CEOs of most regular charities, including pretty big ones where the staff are typically middle aged. EA has also had a lot of kudos from the ‘living on not very much to donate’ meme. Most people aiming to do good are assumed to be full of shit, and living on not very much is a hard-to-fake symbol that shows you’re morally serious. I agree that meme has some serious downsides relative to ‘you can earn a bunch of money doing good’ meme, but giving up that kudos is a major cost – which makes the trade off ambiguous to me. Maybe it’s possible to have some of both by paying a lot but having some people donate most of it, or maybe you get the worst of both worlds.
Agree that we shouldn’t expect large productivity/wellbeing changes. Perhaps a ~0.1SD improvement in wellbeing, and a single-digit improvement in productivity—small relative to effects on recruitment and retention.
I agree that it’s been good overall for EA to appear extremely charitable. It’s also had costs though: it sometimes encouraged self-neglect, portrayed EA as ‘holier than thou’, EA orgs as less productive, and EA roles as worse career moves than the private sector. Over time, as the movement has aged, professionalised, and solidified its funding base, it’s been beneficial to de-emphasise sacrifice, in order to place more emphasis on effectiveness. It better reflects what we’re currently doing, who we want to recruit, too. So long as we take care to project an image that is coherent, and not hypocritical, I don’t see a problem with accelerating the pivot. My hunch is that even apart from salaries, it would be good, and I’d be surprised if it was bad enough to be decisive for salaries.
I think there are a few other considerations that may point in the direction of slightly higher salaries (or at least, avoiding very low salaries). EA skews young in age as a movement, but this is changing as people grow up ‘with it’ or older people join. I think this is good. It’s important to avoid making it more difficult for people to join/remain involved who have other financial obligations that come in a little later in life, e.g.
- child-rearing
- supporting elderly parents
Relatedly, lower salaries can be easier to accept for longer for people who come from wealthier backgrounds and have better-off social support networks or expectations of inheritance etc (it can feel very risky if one is only in a position to save minimally, and not be able to build up rainy day funds for unexpected financial needs otherwise).
I agree in principal, but in this case the alternative is eliminating$400k-4M of funding, which is much more expensive than doubling the salary of e.g. a research assistant.
To be clear, I am more so skeptical of this valuation than I am actually suggesting doubling salaries. But conditional on the fact that one engaged donor entering the non-profit labor force is worth >$400k, seems like the right call.
Not sure I follow the maths.
If there are now 10 staff, each paid $100k, and each generating $1m of value p.a., then the net gain is $10m - $1m = $9m. The CBR is 1:9.
If we double salaries and get one extra staff member, we’re now paying $2.2m to generate $11m of value. The excess is $8.8m. The average CBR has dropped to 5:1, and the CBR of the marginal $1.2m was actually below 1.
Agreed, just a function of how many salaries you assume will have to be doubled alongside to fill that one position
(a) Hopefully, doubling ten salaries to fill one is not a realistic model. Each incremental wage increase should expand the pool of available labor. If the EA movement is labor-constrained, I expect a more modest raise would cause supply to meet demand.
(b) Otherwise, we should consider that the organization was paying only half of market salary, which perhaps inflated their ‘effectiveness’ in the first place. Taking half of your market pay is itself an altruistic act, which is not counted towards the org’s costs. Presumably if these folks chose that pay cut, they would also choose to donate much of their excess salary (whether pay raise from this org, or taking a for-profit gig).
On b), for exactly that reason, our donors at least usually focus more on the opportunity costs of the labour input to 80k rather than our financial costs—looking mainly at ‘labour out’ (in terms of plan changes) vs. ‘labour in’. I think our financial costs are a minority of our total costs.
On a), yes, you’d need to hope for a better return than a doubling leads to +10% labour estimate I made.
If we suppose a 20% increase is sufficient for +10% labour, then the new situation would be:
Total costs: $1.32m
Impact: $11m
So, the excess value has increased from $9m to $9.7m, and the CBR of the marginal $320k is about 1:3. So, this would be worth doing, though the cost-effectiveness is about a third of before. (In our case at least, I don’t think a +20% increase to salaries would lead to +10% more hires though.)
It looks like the breakeven point is roughly an 80% increase in salaries to gain 10% of labour with this simplified model. (I.e. the CBR of the marginal $1m is around 1:1). In reality I don’t think we’d want to go that close to the breakeven point—because there may be better uses of money, due to the reputation costs of unusually high salaries, and because salaries are harder to lower than to raise (and so if uncertain, it’s better to undershoot).
Good points, I agree it would be better to undershoot.
Still, even with the pessimistic assumptions, the high end of that $0.4-4M range seems quite unlikely.
Does 80k actually advise people making >$1M to quit their jobs in favor of entry-level EA work? If so, that would be a major update to my thinking.
It depends on what you mean by ‘entry level’ & relative fit in each path, but the short answer is yes.
If someone was earning $1m per year and didn’t think that might grow a lot further from there, I’d encourage them to seriously consider switching to direct work.
I.e. I think it would be worth doing a round of speaking to people at the key orgs, making applications and exploring options for several months (esp insofar as that can be done without jeopardising your current job). Then they could compare what comes up with their current role. I know some people going through this process right now.
If someone was already doing direct work and doing well, I definitely wouldn’t encourage them to leave if they were offered a $1m/year earning to give position.
The issue for someone already in earning to give is that probability that they can find a role like that which is a good fit for them, which is a long way from guaranteed.
That all seems reasonable.
Shouldn’t the displacement value be a factor though? This might be wrong, but my thinking is (a) the replacement person in the $1M job will on average give little or nothing to effective charity (b) the switcher has no prior experience or expertise in non-profit, so presumably the next-best hire there is only marginally worse?
The estimates are aiming to take account of the counterfactual i.e. when I say “that person generates value equivalent to extra donations of $1m per year to the movement”, the $1m is accounting for the fact that the movement has the option to hire someone else.
In practice, most orgs are practicing threshold hiring, where if someone is clearly above the bar, they’ll create a new role for them (which is what we should expect if there’s a funding overhang).