Unfortunately, there is an incentive for EA organizations to compete for candidates based on their impact value rather than market value. Each organization can increase its impact by offering better incentives or salaries to attract the most talented EAs.
Paying in proportion to impact is not unfortunate at all. More impactful jobs should be paid higher, so that workers who follow that incentive gradient end up at the most impactful roles.
+1; higher salary is a hard-to-fake market signal of funders thinking that the job is valuable.
True. But not useful. Salary is a very very very weak signal of impact and a high salary could mean many many other things.
For example here are some things a high salary could also be a signal of, many of which might suggest that following a high salary is NOT a good idea. A high salary might be a sign that:
Salary is an extremely messy signal, with many factors affecting it. I would recommend folk in EA do not overly update for or against a job based on its salary.
At least from a personal perspective, if I see an EA job with a super high salary, I sometimes catch myself thinking: the salary is so high, they will definitely find someone for that job, so I would rather work at a less established org that can only offer a lower salary. So my brain sees lower salaries as a signal of higher counterfactual impact. Not sure this is a great way to think (I don’t think folk should judge impact based on salary, and I might just be confabulating to justify my past decision making). But if a fair amount of other folk do think like that then orgs that compete for altruism with high salaries might be shooting themselves in the foot.
the salary is so high, they will definitely find someone for that job
Alternatively, the salary is so high because it is difficult to find someone for that job.
very very very weak signal of impact
This is not at all clear to me. Like, I can process the considerations that you've written, but it's not clear to me that they overweigh the market signal, and I would still lean towards no.
There are other considerations that complicate the analysis. For example, it creates an incentive for grant seekers to request much more money than they need. Someone who is motivated by the expectation of impact and only needs money to cover basic expenses should, other things equal, not be put in a situation where they feel they need to ask for way more money or else create the perception that their work is low value.
That's true, it's more I think it can lead to poor incentives for organization competition and we could achieve the same gradient at a much lower level, closer to candidates 'normal' job counterfactuals.
I'm also proberly more skeptical than the average EA about how good a signal funding is for org impact. Even in EA I would bet a charismatic well networked fundraiser does more for an organizations funding than improving the organization (with this being more true short term and for an equivalent cost)
That's true, it's more I think it can lead to poor incentives for organization competition
How? If organisations try to convince funders of their impact so that they can pay bigger salaries, this is good prima facie.
we could achieve the same gradient at a much lower level, closer to candidates 'normal' job counterfactuals.
But most EAs could earn more outside of EA than they do at EA organisations. Note that earn-to-give EAs tend to have more funds available for personal consumption than those doing direct work, even after their donations. I think it is not unreasonable for there to be some difference, because direct work is often fulfilling and has other perks, but we shouldn't delude ourselves that direct work pays more.
Good point and I agree for some roles such for technical AI safety researchers. Being a recent graduate I can see what my EA and non-EA friends can get in the job market and my some of my EA friends are better compensated. It's possible my EA friends are more competent and could command a higher wage but I don't get that impression. For a more solid case study of what i'm taking about: Office Manager - New York EA Hub : $85,000 - $100,000
Office Manager Salaries in New York from Glassdoor: ~$55,000
I agree that some EA jobs in ops pay above market. But there has been a community-wide shortage of ops staff for over five years, so the salaries help retain people who would otherwise go for jobs outside EA. Often people's alternative jobs are pretty good too. Note that an office manager at Google makes $85k. And some ops staff in EA have even stronger alternatives - working as a consultant, a programmer, a product manager. Plus this particular job is probably a pretty difficulty office manager job (working without a big local team, to set up a new office) And there has been recent inflation.
Also, the quoted passage seems to assume that EA orgs optimize for their org’s impact rather than for the impact of the movement/good of the world. I’m not convinced that’s true. I would be surprised if EA orgs were attempting to poach workers they explicitly believed were having more impact at other organizations.
It does seem possible that orgs overestimate their own impact/the impact of roles they hire for. However, this would still lead to a much smaller effect than if they completely ignore the impact of candidates at their current roles, as the post seems to assume.
I think EA orgs are probably most sensitive to this issue of any in the world, but there still is probably some amount of ‘wanting your own org to be the ones having the impact and the power’; hard to completely eliminate this part of human nature.
EA organizations cooperate to offer salaries based on the same formula using the same idea above.
This would almost certainly violate antitrust law.
This is the third time I've seen a suggestion like this, and antitrust law is always brought up. I feel like maybe it's worth a post that just says "no, you can't coordinate salaries/hiring practices/etc., here's why" since that would be helpful for the general EA population to know.
This would almost certainly violate antitrust law.
Probably most of these brief statements about "coordinating salaries equals violating antitrust", are simplistic and may substantively be untrue or misleading.
I'm LARPING wildly but the below gives a sense why:
There might be several legal theories or law involved. A not entirely crazy guess is that one legal theory is that anti-trust is set to prevent for profit businesses from creating a cartel at their benefit. So these are completely separate entities, making agreements to maintain advantage in a marketplace at the expense of workers.
It's totally possible this can be undermined or end-runned, and "anti-trust" doesn't apply if:
Law isn't this black and white thing where police drop out of helicopters.
At least half of this thing, is someone actually needing to sue and show harm. That's a long and difficult process. I can see how that might not happen even if there was malign anti-trust actually going on.
By the way, as suggested by preceding thought that reality sort of sucks, I probably oppose and think it's bad to set up hard salary norms from a central source.
This is just because of sort of "Soviet style" sort of central planning problems and I generally distrust the implementation, because for example:
The lists of practical problems are probably 10x longer in reality and the thoughts in this comment could change a lot if I spent more time thinking about this.
I also may have the dumbs, please stomp all over this comment if I'm wrong.
(For context, I'm a lawyer who's worked a lot on issues related to antitrust and AI safety.)
These entities are funded by very close and coordinated sources of funds
There is such a thing as the "single entity defense," but it almost certainly would not apply in this context. The orgs are legally and functionally separate entities.
The "cartel" actually has to create economic harm, and this might require a natural marketplace for employees that is being undermined. If the funders and all the execs created the entire marketplace (e.g. think of many EA cause areas), that's harder to say they are unfairly benefitting. . . . The EA community or funders gathered together and demanded lower/higher salaries or other norms.
The best theory would be that employees are being harmed by anticompetitive fixing of the prices of their employment. That the funders or "community" want the salaries to be lower does not negate the impact on the workers, and so is not relevant to the claim.
However, it may be less legally risky (in the US) for funders to impose (common) salary caps on the downstream orgs that they fund as a condition of funding. Major cases on-point: State Oil Co. v. Khan, 522 U.S. 3 (1997); Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977); Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).
I might be a bit naive here, but I don't really see how this would violate competition/antitrust law (other than potentially for very specialist roles that basically only exist at EA organisations): Surely the 'market share' of EA orgs for most type of role is so small that there shouldn't be any way this actually interferes with the market?
(Just clarifying: I don't think it would be a good or practicable idea for EA organisations EA organizations "to offer salaries based on the same formula", but I'm confused why that wouldn't be possible if they wanted to.)
Does antitrust law apply to non-profits in that way?
I upvoted this even though I strongly disagree with it.
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(However, for other readers, just in case it needs saying: please make your own independent assessment of whether this post is overall worthwhile*).
*One thing I dislike is overcorrection for "oh no I might be biased for liking/not liking this post, so I can't downvote it"
So I think this conversation might be more productive if we clarified some terminology/dove into the specifics. There are a lot of different ways to set salaries in general.
These varying ways cause a pretty dramatically wide spectrum of possible salaries. There is a case for using basically any of them. Ballpark numbers might range from 40k-400k depending on which system you use.
I think a lot of people are conflating the conversation a bit, there seem to be two central questions; 1) which of the systems (or index of systems) that’s best to use, and 2) pragmatically, what do these systems look like when cashed out?
For example, Josh’s comment is getting at number 1; maybe we should be using “pure market rate earnings” or “value in impact to the organization” instead of “amount that creates best incentives”.
Ryan’s comment on the other hand is basically “the ideal incentives” might in fact correlate quite a lot to the resources the organization has.
I think splitting these out can make it easier to discuss each possibility.
Many EA organizations offer entry-level salaries significantly higher than what candidates could earn elsewhere
That is definitely not my experience. Yes, offers are higher than they were, but they are generally going to highly talented people who have some very lucrative options if they choose to optimize for that. Do you mean significantly higher than what they could earn doing the same work elsewhere?
Keeping the set of EA org employees fixed, and paying them more, I think higher salaries have three effects:
My intuition is that EA org salaries are low enough, and talent is scarce enough, that (2) probably dominates.
There’s also the consideration of how the set of people working at EA orgs will change.
Keeping the set of EA org jobs fixed, the pool of people willing to take those jobs will expand. I would guess with higher salaries the people hired would tend to be more talented, and less “totalising” in their commitment to EA. The former seems good, whereas the latter seems bad for some roles, but perhaps good for others. I think it’s important to recognize that people’s willingness to work for a low salary depends on many factors. In particular, families (parents, spouses, children) can be significant financial resources or burdens. So low salaries are an imperfect way to filter for level of commitment.
And, given the relative scarcity of EA talent vs. funding, making EA org work more attractive (relative to earning to give) seems valuable to me. With higher salaries the number of EA org jobs will tend to expand due to an increased supply of workers, which seems good on the margin.
However, this almost inevitably leads to all organizations in a sector competing on this metric leading them to pay far higher wages for each staff member than they would have had had they corporated and not paid above market rate.
This reads like "It would be more efficient to have a cartel."
Also there is a messy distinction made between "impact" and "market" value with regard to competing for talent.
If all the incentive value of the additional salary was just to allocate employees among EA orgs, yet there were small differences in employees’ relative productivity between orgs… then it plausibly could be more efficient to have a cartel from the POV of the EA “output”. It’s sort of a solution to a collective action problem.
But some of the salary might draw in more skilled labor from outside EA orgs, and some may serve a price signal function to allocate the most skilled workers to the EA orgs that generate the most marginal impact from these skills, so are willing to pay the most.
But to me it’s not clear which effect dominates. I don’t think the standard perfectly competitive market arguments necessarily hold the day, if EA employees are intrinsically motivated.
My sense is that the difference in impact between jobs that have higher and lower impact is often very substantial, and that if a higher salary can make people more likely to take the higher-impact jobs, then that extra expenditure is typically worth it. (Though there is the issue whether you think there is a correlation between impact and salary in effective altruism - my guess would be that there is). In any event, I think that jobs at EA-organisations aren't overpaid.
A concrete follow-up question (anyone, feel free to answer it):
What do you think is the correct salary for some common roles, and why that number?
Non-profit work is systematically underpaid (and often unpaid) in relation to its value (e.g. for humanity) since market mechanisms are laughably unfit to price it properly. I think the EA community is in a great position to counteract this through a culture of high salaries, good benefits etc. and should use that opportunity. I'm happy you bring it up though, as I think there should be far more research on things like salary, incentives etc. instead of just relying on "business/market common sense" which is only fully appropriate in businesses proper, which most EA organisations are not.
The market for EA jobs is weird. The EA movement attracts some of the most talented, well-educated people from top universities. Yet the niche skills required for many roles mean even these incredibly talented people are often unable to get roles at EA organizations. It’s also strange in that people with skills that are highly or lowly valued in the free market may have completely different values to EA organizations. These are typically good people to hire as an EA org as their skills are massively undervalued by the market. Such as young university students working as group organizers, academics with a research background in a niche area, or philosophers.
A way to visualize this is each EA as having both an earning potential on the general market and impact earning potential in different roles. The typical EA org staff member typically has a high impact potential in the role they are offered and a higher variance in the market earning potential. With some EAs having huge general market earning potential and others closer to the average graduate.
On the EA job market, you are hired for your impact potential, not your market value. The value that provides to the world is the impact of that role minus the salary and organizational overhead involved. Thus at market rates, these roles can create huge social value.
Unfortunately, there is an incentive for EA organizations to compete for candidates based on their impact value rather than market value. Each organization can increase its impact by offering better incentives or salaries to attract the most talented EAs. So it is a good strategy to offer higher salaries and benefits to attract and retain staff that other similar organizations might hire. However, this almost inevitably leads to all organizations in a sector competing on this metric leading them to pay far higher wages for each staff member than they would have had had they corporated and not paid above market rate.
This situation is made even worse when we account for the non-monetary benefits that already exist at EA organizations. Such as a job that is inherently meaningful, working with like-minded colleagues, or status in the community. Many people are willing to take salaries well below market rates to acquire these and thus even paying the market rate at EA organizations would be overpaying for staff.
Beyond the obvious waste of the movement's financial resources, this dynamic also distorts the job market towards large better-funded organizations. So new organizations are put at a disadvantage, at a time when talented staff can make a huge difference to their long-term trajectory. Or even across cause areas where better-funded causes thus attract more talent and encourage motivated reasoning about which career paths are likely to be more impactful.
The original solution to this problem was first low levels of funding so that this sort of competition was not possible. Although this obviously comes at other severe costs to the movement! Secondly a social norm of high demandingness with roles at non-profits.
With increasing levels of funding for some causes or organizations in EA, the first constraint is mostly gone leaving us to rely on strong social norms to maintain value alignment. From my general observations, this seems to have failed in the EA job market at the moment. Many EA organizations offer entry-level salaries significantly higher than what candidates could earn elsewhere while also providing many non-monetary benefits (and what some have reported they would be willing to accept). This also occurs in more experienced positions where competition for some candidates with scarce in-demand skills leads organizations to inflate benefits. Although I should obviously note that this is only my own observation and may not be emblematic of the rest of the movement. I'd like to see actual research to test this concern. For example, conduct an anonymous survey about the job offers people accept at EA organizations, what they would have accepted and why they chose to work there over other organizations.
For those individuals that are most altruistic aligned, these higher salaries serve as a useful signal on which roles may be most impactful (given they trust the funder's evaluations and will donate most of their income anyway). However, most people are not so altruistic as to donate all their income above a certain threshold. So instead most of these higher salaries will be spent on personal goals or wasted entirely.
Clearly, this will not be universal, it will occur to different degrees for organizations, skill sets, and causes areas. Still, it is a worrying dynamic that I have seen emerging in the EA community particularly as more funding becomes available.
Finally, a few possible solutions to this problem based on how promising I think they are intuitively (I've done no formal evaluation of these):
I think EA orgs generally pay higher salaries than other non-profits, but below-market for the EA labor market (many of whom have software, consulting, etc as alternatives). I don't think they're anywhere close to "impact value" based on anecdotal reports of how much EA orgs value labor. I believe 80k did a survey on this (Edit: it's here).
Adding on, paying higher wages than most nonprofits is a good thing. Most nonprofit employees are underpaid even though they arguably deserve to be paid more than their private-sector counterparts.
I agree having these roles filled is still very valuable for the world and would continue to be so at higher wages. My worry is from seeing what candidates next best alternative option is for other jobs. I worry that EA jobs are too good a deal e.g better benefits, better salary and more impact. When one or a couple of those would be enough to motivate someone into that job. As you mention this won't be as true for some types of roles such as operations of computer sciences roles where transfering the higher paid 'normal' jobs is easier.
I don't know wether nonprofit employees deserve more is a relevant question. As that's more subjective and comes at the cost of the organisations beneficiaries (if deservingness is the goal)
Imagine if Google [edit: in its early high-growth phase] said something like this - our company is so impactful that we ought to pay a salary far below the industry standard, to avoid making our job offers "too good". Clearly this is wrong. Yes, there is an effect in this direction. But if you stoop down to nonprofit salaries, you will lose more from being unable to recruit selfish talent, than you would lose from overpaying the altruistic talent.
Note also that if the talent is truly as fully altruistic as they would have to be for your logic to work out, they could negotiate their salary down, or donate it on, so the cost of overpaying them should be quite small indeed.
Agree with your conclusion but I don’t see the Google analogy. Google doesn’t expect its employees to be prosociallly or impact motivated. And what is a good decision logic for maximising Google profits might correspond to a terrible logic for an EA org to follow. E.g., unpredictable product rollouts to confuse the competition, trying to lock in markets and systems.
Sorry, I was picturing an early-stage Google that could expect their staff to be at least a bit altruistic. They had a giant ratio of users to staff, such that each staff member genuinely would have an enormous positive impact, and growth and impact were aligned at least somewhat.