My dumb theory applied to how much you should get paid

Let’s face it—aside from HR, no one really knows how salaries work. But I’m going to try to break it down using the basics of economics that I know.

Imagine you work for a company that sells a Good (product) called X. What you bring to the table is called Labor. Your labor is essential for creating X.

When the company sells X, it keeps a portion, pays off the intermediaries (because intermediaries are everywhere and always get a cut 😫), and whatever’s left is your salary.

Oh, by the way, this is a incomplete super-simplified version of what’s known in Economis as the circular flow of income model.

Now, don’t get too excited, you’re never going to see the full value of your labor in your paycheck. The company and those pesky intermediaries are going to take their share for all their hard work. So in other words:

Since absolute value is tied to the final product, it’s ruled by the same boring economic principles, primarily the law of supply and demand. This explains a lot of what we see happening every day:

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