concerns me that entry level positions in EA are now being advertised at what would be CEO-level salaries at other nonprofits
A further and related worry I have resulting from this is that is it is anti-competitive - it makes critiquing the EA movement that much harder. If you’re an ‘insider’ or ‘market leader’ EA organisation you (by definition) have the ability to pay these very high salaries. This means you can, to some degree, ‘price out’ challenger organisations who have new ideas.
These are very standard economic worries but, for some reason, I don’t hear the EA landscape being described in these terms.
I think the ‘econ analysis of the EA labour market’ has been explored fairly well—I highly recommend this treatment by Jon Behar. I also find myself (and others) commonly in the comment threads banging the drum for it being beneficial to pay more, or why particular ideas to not do so (or pay EA employees less) are not good ones.
Notably, ‘standard economic worries’ point in the opposite direction here. On the standard econ-101 view, “Org X struggles as competitor Org Y can pay higher salaries”, or “Cause ~neutral people migrate to ‘hot’ cause area C, attracted by higher pay” are desirable features, rather than bugs, of competition. Donors/‘consumers’ demand more of Y’s product than X’s (or more of C generally), and the price signal of higher salaries acts to attract labour to better satisfy this demand (both from reallocation within the ‘field’, and by incentivizing outsiders to join in). In aggregate, both workers and donors expect to benefit from the new status quo.
In contrast, trying to intervene in the market to make life easier for those losing out in this competition is archetypally (and undesirably) anti-competitive. The usual suggestion (implied here, but expressly stated elsewhere) is unilateral or mutual agreement between orgs to pay their employees less—or refrain from paying them more. The usual econ-101 story is this is a bad idea as although this can anoint a beneficiary (i.e. Those who run and donate to Org X, who feel less heat from Org Y potentially poaching their staff), it makes the market more inefficient overall, and harms/exploits employees (said activity often draws the ire of antitrust regulators). To cash out explicitly who can expect to lose out:
Employees at Org X, who lose the option of migrating to more lucrative employment.
Employees at Org Y, who lose out in getting paid less than they otherwise would.
(probably) Org Y, who by artificially suppressing salary can expect a supply shortfall versus a preferable market equilibrium (as they value marginal labour more than the artificially suppressed price).
Donors to Org Y, who (typically) prefer their donations lead to more Org Y activity, rather than being partially siphoned off in an opaque transfer subsidy to Org X. Even donors who would want to ‘buy’ more Org Y and Org X could do so more efficiently with donation splitting.
Also, on the econ-101 story, Orgs can’t unfairly screw each other by over-cutting each other on costs. If a challenger can’t compete with an incumbent on salary, their problem really is they can’t convince donors to give it more money (despite its relatively discounted labour), which implies donors agreeing with the incumbent, not the challenger, that it is the better use of marginal scarce resources.
Naturally, there are corner cases where this breaks down—e.g. if labour supply was basically inelastic, upping pay just wastes money: none of these seem likely. Likewise how efficient the ‘EA labour market’ is unclear—but if inefficient and distorted, the standard econ reflex would be hesitant this could be improved by adding in more distortions and inefficiencies. Also, as being rich does not mean being right, economic competition could distort competition in the marketplace of ideas. But even if the market results are not synonymous with the balance of reason, they are probably not orthogonal either. If Animal-welfare-leaning Alice goes to Redwood over ACE, it also implies she’s not persuaded the intrinsic merit of ACE is that much greater to warrant a large altruistic donation from her in terms of salary sacrifice; if Mike the mega donor splashes the cash on AI policy but is miserly about mental health, this suggests he thinks the former is more promising than the latter. Even if the economic weighting (wealth) was completely random, this noisily approximates equal weight voting on the merits—I’d guess it weakly correlates with epistemic accuracy.
So I think Org (or cause) X, if it is on the wrong side of these dynamics, should basically either get better or accept the consequences of remaining worse, e.g.:
Try and persuade donors it is underappreciated on the direct merits.
Or try and persuade them they should have a hypothecated exploratory budget for areas which do not currently, but might in future, have attractive direct merits (and Org X would satisfy these criteria)
Alternatively, accept their budget constraints mean they hire fewer staff at market rates.
Or accept they can’t compete on salary, try to get more staff on lower salaries, but accept this strategy will result in a more constrained recruitment pool (e.g. only staff highly committed to the cause, those without the skill sets to be hired by Org Y and company).
Appealing for subsidies of various types seems unlikely to work (as although they are in Org X’s interest, they aren’t really in anyone else’s) and probably is -EV from most idealized ‘ecosystem wide’ perspectives.
I suspect we’re speaking at cross-purposes and doing different ‘econ 101’ analyses. If the EA world were one of perfect competition (lots of buyers and sellers, competition of products, ease of entry and exit, buyers have full information, equal market share) I’d be inclined to agree with you. In that case, I would effectively be arguing for less competitive organisations to get subsidies.
That is not, however, the world I observe. Suppose I describe a market along the following lines. One or two firms consume over 90% of the goods whilst also being sellers of goods. There are only a handful of other sellers. The existing firms coordinate their activities with each other, including the sellers mostly agreeing not to directly compete over products. Access to the market and to information about the available goods is controlled by the existing players. Some participants fear (rightly or wrongly) that criticising the existing players or the structure of the market will result in them being blacklisted.
Does such a market seem problematically uncompetitive? Would we expect there to be non-trivial barriers to entry for new firms seeking to compete on particular goods? Does this description bear any similarity to the EA world? Unfortunately, I fear the answer to all three of the questions is yes.
So, to draw it back to the original point, for the market incumbents to offer very high salaries to staff is one way in which such firms might use their market power to ‘price out’ the competition. Of course, if one happened to think that it would bad, all things considered, for that competition to succeed, then of course one might not mind this state of affairs.
I also share these worries.
A further and related worry I have resulting from this is that is it is anti-competitive - it makes critiquing the EA movement that much harder. If you’re an ‘insider’ or ‘market leader’ EA organisation you (by definition) have the ability to pay these very high salaries. This means you can, to some degree, ‘price out’ challenger organisations who have new ideas.
These are very standard economic worries but, for some reason, I don’t hear the EA landscape being described in these terms.
[own views etc]
I think the ‘econ analysis of the EA labour market’ has been explored fairly well—I highly recommend this treatment by Jon Behar. I also find myself (and others) commonly in the comment threads banging the drum for it being beneficial to pay more, or why particular ideas to not do so (or pay EA employees less) are not good ones.
Notably, ‘standard economic worries’ point in the opposite direction here. On the standard econ-101 view, “Org X struggles as competitor Org Y can pay higher salaries”, or “Cause ~neutral people migrate to ‘hot’ cause area C, attracted by higher pay” are desirable features, rather than bugs, of competition. Donors/‘consumers’ demand more of Y’s product than X’s (or more of C generally), and the price signal of higher salaries acts to attract labour to better satisfy this demand (both from reallocation within the ‘field’, and by incentivizing outsiders to join in). In aggregate, both workers and donors expect to benefit from the new status quo.
In contrast, trying to intervene in the market to make life easier for those losing out in this competition is archetypally (and undesirably) anti-competitive. The usual suggestion (implied here, but expressly stated elsewhere) is unilateral or mutual agreement between orgs to pay their employees less—or refrain from paying them more. The usual econ-101 story is this is a bad idea as although this can anoint a beneficiary (i.e. Those who run and donate to Org X, who feel less heat from Org Y potentially poaching their staff), it makes the market more inefficient overall, and harms/exploits employees (said activity often draws the ire of antitrust regulators). To cash out explicitly who can expect to lose out:
Employees at Org X, who lose the option of migrating to more lucrative employment.
Employees at Org Y, who lose out in getting paid less than they otherwise would.
(probably) Org Y, who by artificially suppressing salary can expect a supply shortfall versus a preferable market equilibrium (as they value marginal labour more than the artificially suppressed price).
Donors to Org Y, who (typically) prefer their donations lead to more Org Y activity, rather than being partially siphoned off in an opaque transfer subsidy to Org X. Even donors who would want to ‘buy’ more Org Y and Org X could do so more efficiently with donation splitting.
Also, on the econ-101 story, Orgs can’t unfairly screw each other by over-cutting each other on costs. If a challenger can’t compete with an incumbent on salary, their problem really is they can’t convince donors to give it more money (despite its relatively discounted labour), which implies donors agreeing with the incumbent, not the challenger, that it is the better use of marginal scarce resources.
Naturally, there are corner cases where this breaks down—e.g. if labour supply was basically inelastic, upping pay just wastes money: none of these seem likely. Likewise how efficient the ‘EA labour market’ is unclear—but if inefficient and distorted, the standard econ reflex would be hesitant this could be improved by adding in more distortions and inefficiencies. Also, as being rich does not mean being right, economic competition could distort competition in the marketplace of ideas. But even if the market results are not synonymous with the balance of reason, they are probably not orthogonal either. If Animal-welfare-leaning Alice goes to Redwood over ACE, it also implies she’s not persuaded the intrinsic merit of ACE is that much greater to warrant a large altruistic donation from her in terms of salary sacrifice; if Mike the mega donor splashes the cash on AI policy but is miserly about mental health, this suggests he thinks the former is more promising than the latter. Even if the economic weighting (wealth) was completely random, this noisily approximates equal weight voting on the merits—I’d guess it weakly correlates with epistemic accuracy.
So I think Org (or cause) X, if it is on the wrong side of these dynamics, should basically either get better or accept the consequences of remaining worse, e.g.:
Try and persuade donors it is underappreciated on the direct merits.
Or try and persuade them they should have a hypothecated exploratory budget for areas which do not currently, but might in future, have attractive direct merits (and Org X would satisfy these criteria)
Alternatively, accept their budget constraints mean they hire fewer staff at market rates.
Or accept they can’t compete on salary, try to get more staff on lower salaries, but accept this strategy will result in a more constrained recruitment pool (e.g. only staff highly committed to the cause, those without the skill sets to be hired by Org Y and company).
Appealing for subsidies of various types seems unlikely to work (as although they are in Org X’s interest, they aren’t really in anyone else’s) and probably is -EV from most idealized ‘ecosystem wide’ perspectives.
[also speaking in a personal capacity, etc.]
Hello Greg.
I suspect we’re speaking at cross-purposes and doing different ‘econ 101’ analyses. If the EA world were one of perfect competition (lots of buyers and sellers, competition of products, ease of entry and exit, buyers have full information, equal market share) I’d be inclined to agree with you. In that case, I would effectively be arguing for less competitive organisations to get subsidies.
That is not, however, the world I observe. Suppose I describe a market along the following lines. One or two firms consume over 90% of the goods whilst also being sellers of goods. There are only a handful of other sellers. The existing firms coordinate their activities with each other, including the sellers mostly agreeing not to directly compete over products. Access to the market and to information about the available goods is controlled by the existing players. Some participants fear (rightly or wrongly) that criticising the existing players or the structure of the market will result in them being blacklisted.
Does such a market seem problematically uncompetitive? Would we expect there to be non-trivial barriers to entry for new firms seeking to compete on particular goods? Does this description bear any similarity to the EA world? Unfortunately, I fear the answer to all three of the questions is yes.
So, to draw it back to the original point, for the market incumbents to offer very high salaries to staff is one way in which such firms might use their market power to ‘price out’ the competition. Of course, if one happened to think that it would bad, all things considered, for that competition to succeed, then of course one might not mind this state of affairs.