> > a person’s pay is determined by how rare their skills are and how much demand there is for those skills. The value of their work doesn’t factor in as much
> What's the value of a person's work that isn't just determined by the first part? What does the author think drives demand, if not the prospective value you provide to the various companies in the labor market?
The value of your work is "how much money would the company lose if no one did the exact job I am doing". This generally has 0 correlation to your wage, because in general a company will think in terms of "how much money would the company lose if anyone else did the job this employee is doing", which is a very different question. This is how it happens that many absolutely essential jobs, without which society would simply stop functioning, are also among the lowest payed. Probably one of the best examples is nurses, but also warehouse workers, transport people, construction workers, farm hands.
I assume that when he talks about 'rarity' of skills he's talking about supply. Almost anyone can be a farm hand; supply is huge and individual workers are fungible. So wages are low.
"how much money would the company lose if no one did the exact job I am doing" seems a bit of a moot point when it's not even close to being the case that no-one would do the job in question. _Expected_ value then approaches price paid as you weight in the probability involved.
Well, this is exactly what he explains as the reality, and I agree that this is how the job market works.
However, that's not to say that it is a good state of affairs, or that it is the only way things could work. In fact, the purpose of workers' unions is exactly to stop this kind of thinking, and it seems like this may once again start spreading a bit, given the recent movements in Amazon and other places.
The problem with this is that the company is using its leverage over workers to treat them as a commodity. If workers had more leverage, they could refuse the job unless they were paid a fair wage (the value of their work as I defined it above), but as it is, they are forced to compete with other workers since not working would see them and their families homeless and maybe even dying of hunger.
With the current state of affairs, the company owners end up extracting much more value from their workers as profit, often by deliberately fixing the wage market (as we saw with the illegal SV "no poaching" deal for tech workers), or at least by seeking to attain geographical monopoly status in it.
I'm not sure it's ever going to be the case at the very bottom of the skill continuum that workers won't be seen as a commodity given just how replaceable they are to the company. For some jobs you could have your whole workforce strike, fire them, and replace them the next day with a minor blip in productivity. The only thing that stops that is regulation or wider organization than just that particular worker segment, neither of which seem forthcoming in the US, at least.
Well, showing up to work for someplace that did this used to be called "scabbing" and carried quite a bit of social stigma. But yes, this requires wider organization and some regulation. This type of organization and regulation do exist in many places in the world, and can work decently well.
> What's the value of a person's work that isn't just determined by the first part? What does the author think drives demand, if not the prospective value you provide to the various companies in the labor market?
The value of your work is "how much money would the company lose if no one did the exact job I am doing". This generally has 0 correlation to your wage, because in general a company will think in terms of "how much money would the company lose if anyone else did the job this employee is doing", which is a very different question. This is how it happens that many absolutely essential jobs, without which society would simply stop functioning, are also among the lowest payed. Probably one of the best examples is nurses, but also warehouse workers, transport people, construction workers, farm hands.