Basic economics teaches us that prices are determined by supply and demand. Scarce skills like being able to throw a baseball 100 miles an hour are highly compensated. But talent isn’t the only source of scarcity. Sometimes, scarcity is a matter of popularity. Jobs in glamorous industries like Hollywood or videogame design often pay like crap. That’s not because they don’t add value. Rather, there are so many people who want those jobs that employers don’t have to pay well. Conversely, employers have to pay very well to get people to do the jobs that are unpopular.
Everyone wants to be a developer at Google. The company is basically the World’s greatest resort for programmers. But do you know whom Google pays the most? QA.
You see, Google wants its QA function staffed with the same kind of top talent as the rest of its operation. But few top developers want to do QA. Google solves this problem through the simple expedient of bribing them with way above market salaries. Think of them as Google’s garbagemen.
The real insight here is that these jobs are necessary, unpopular, and unharmful. We’re not talking about coal mining (a profession that provided many a high school dropout in West Virginia with a six-figure income and an early death from lung disease). Walking through sewage is unpleasant (and malodorous) but safe.
Nor is this principle limited to jobs and individuals. The same holds true for companies. If you find a way to deliver the necessary and unpopular, people will pay you for it.
(Cross-posted @ Adventures in Capitalism)