I think bankers are an early example of a knowledge-worker occupation where the amount of economic value produced by one's labor scales in relation to deployed capital, rather than in relation to hours worked, and therefore they command stupidly high salaries because (when performing properly) they should.
Bad news for anyone who enjoys income equality: I think they're not the last occupation that will see this decoupling of returns from hours worked (which, since everyone has a roughly similar cap at some fraction of 24 in the day, is the ultimate thing keeping wages in the relatively narrow band people associate with "normal" folks).
Many people take it as an article of faith that there is a 10x difference in productivity between the best programmers and (take your pick) either average programmers or the worst programmer in their organization. Almost no programmers, however, are compensated at 10x the compensation of the average or lowest performing member of their organization.
This is a sign of economic inefficiency. The market abhors economic inefficiency. And the market generally gets what it wants.
I mentally consider myself in the middle of two engineers at the day job. One of them is literally incapable of programming Java, and earns to the yen what I do because our seniorities are equivalent. The other is the 10x engineer -- 10x in relation to me, easily. He is older but his premium on my wage is, hmm, 15%? 25%? Something like that.
One thing I have learned recently is that my skillset generates more value than my salary quite literally while I am sleeping. That number is going to keep increasing at a rate faster than my salary, and at some point the essential conflict is going to deprive my company of my services. Honestly, that won't be the world's biggest loss to them. What should worry them is when math becomes inescapable to the 10x engineer, too.
Many people take it as an article of faith that there is a 10x difference in productivity between the best programmers and (take your pick) either average programmers or the worst programmer in their organization. Almost no programmers, however, are compensated at 10x the compensation of the average or lowest performing member of their organization.
That's not an article of faith. It is a repeatedly measured fact. Pick up a copy of Peopleware for an explanation of how that was measured.
That said, in comparisons of programmers from different organizations the single biggest factor in determining performance was the productivity of other programmers at your organization. Part of that is that productivity is highly environment driven. Part is that good programmers like to congregate together. Either way you are very unlikely to see 10 to 1 ratios within an organization. A ratio of 3 or 4 to 1 is much more realistic. (See Software Estimation: Demystifying the Black Art by Steve McConnell for a cite.)
Going back to the theme of the article, there is another reason for high salaries, which is to provide a disincentive for bribery. You see this in an obvious way with traders. Imagine that you're bargaining over the exact price of a $10 million bond. Wouldn't you be tempted to offer $10,000 under the table to the other guy if he'll agree that the bond is worth $100,000 more? If the other guy was receiving a normal salary, wouldn't this offer be hard to resist?
However are you going to risk the outrageous salaries that traders get offered for a small bribe like that? And if you began taking bribes, you can be sure that news would get around. (If for no other reason than that traders trade that kind of valuable information around.) Which would make it hard to ever get another job at that outrageous salary.
Bad news for anyone who enjoys income equality: I think they're not the last occupation that will see this decoupling of returns from hours worked (which, since everyone has a roughly similar cap at some fraction of 24 in the day, is the ultimate thing keeping wages in the relatively narrow band people associate with "normal" folks).
Many people take it as an article of faith that there is a 10x difference in productivity between the best programmers and (take your pick) either average programmers or the worst programmer in their organization. Almost no programmers, however, are compensated at 10x the compensation of the average or lowest performing member of their organization.
This is a sign of economic inefficiency. The market abhors economic inefficiency. And the market generally gets what it wants.
I mentally consider myself in the middle of two engineers at the day job. One of them is literally incapable of programming Java, and earns to the yen what I do because our seniorities are equivalent. The other is the 10x engineer -- 10x in relation to me, easily. He is older but his premium on my wage is, hmm, 15%? 25%? Something like that.
One thing I have learned recently is that my skillset generates more value than my salary quite literally while I am sleeping. That number is going to keep increasing at a rate faster than my salary, and at some point the essential conflict is going to deprive my company of my services. Honestly, that won't be the world's biggest loss to them. What should worry them is when math becomes inescapable to the 10x engineer, too.