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Comment by JohnFen | Hacker News Reader

> If people are more effective at doing their jobs with a tool, their productivity would increase meaning their wages would also increase.

Why do you assume this would be the case? Why would companies increase pay?

> And if productivity increases that means it's worth to hire more people.

No, it means the opposite. Companies can reduce payroll expenses without incurring a decrease in productivity.

it's not clear to me that your bank branch example shows that automation increased employment. It seems more likely that as populations have grown, there was a corresponding increase in demand for bank branches.

But that's just speculation either way. Do we have a good way of determining causality here?

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> Why do you assume this would be the case? Why would companies increase pay?

It's pretty basic economics that says wages are based on productivity. If you were hiring would you pay more for a 10x engineer?

If the current employer wouldn't pay you more you could leave as someone else would pay you since you're more productive

Its self evident pretty basic economics. Disputing that you'd have to reinvent a lot of basic economics

Dev tools made programmers many times more productive. Do employees just stop hiring as many programmers?

> It's pretty basic economics that says wages are based on productivity.

This is a nice idea that plays to the human sense of fairness, but wages have been completely decoupled from productivity for about the last four decades[1].

The only thing that really raises wages is the market power of laborers. Wages have stagnated or fallen as the market power of labor has eroded.

[1] https://hbr.org/2015/06/the-great-decoupling

You're looking at aggregate values. And there's a lot going on including benefits. It's hard to tease out. But use common sense. It's not about fairness.

If you had a goose that lays golden eggs that you can sell for $100 net of costs. You'd pay up to $100 for the goose. If suddenly it started producing double the eggs you'd pay up to $200 or someone else would outbid you. The only way the goose wouldn't be able to get a higher salary is if competitors were not greedy as it's basically free money and just let the current owner profit from the goose's productivity gain

> If suddenly it started producing double the eggs you'd pay up to $200 or someone else would outbid you.

This makes a lot of assumptions about the market being perfectly competitive, which is a bit of a stretch. The past four decades have been marked by consolidation and reduction of competition, and the largest firms have profit margins that aren't at all indicative of healthy competition.

Wages are based on supply and demand. If you increase the supply of engineers essentially infinitely, with the same demand, the pay approaches zero.

Companies gladly outsource to countries where developer wages are lower -- and that's with issues like time zones and language barriers. What if you could outsource to an AI that works whatever hours you want, even around the clock, and speaks perfectly in your native language?

> Dev tools made programmers many times more productive. Do employees just stop hiring as many programmers?

If programmers were less efficient, companies would probably have to hire more of them, and more of other sorts of people too. Or they would hire the same amount, but just be forced to accept slower progress.

> If you were hiring would you pay more for a 10x engineer?

Certainly not if there was some tool that made every engineer a 10x engineer. In effect, it would mean that they're all 1x engineers, but that the "x" is ten times greater.

> Its self evident pretty basic economics.

Basic economics says that businesses try to eliminate as much expense as possible. So no business is going to pay their employees more just because they're more productive. All it does is reset the baseline for what is considered the minimum acceptable level of productivity. Salaries won't increase because of that.

> Dev tools made programmers many times more productive. Do employees just stop hiring as many programmers?

Yes, that's exactly what has happened historically. If a tool makes programmers twice as productive, then the business needs half as many programmers. Some businesses may be able to increase profit by doubling the number of products, thus needing to maintain the same amount of programmers -- but that's not the norm.

Wages are not based on absolute productivity but rather on relative productivity. If engineers will become 10x more productive, all companies with engineers will have this boost, hence the relative productivity stays the same.

Think about an operator of a machine in a factory. If the machine is 10x more productive than the operator on its own, will the operator get paid 10x more? I don't think so, because the competing companies also have 10x the productivity. Prices of produced goods will drop but that will not lead to 10x more consumption.

There are a lot of businesses that would love to hire engs but it's not profitable for them to do so. If devs were 10x more productive a lot of those businesses would hire devs. Which is exactly why we have things like WordPress developers for small businesses when before it didn't make sense to hire a developer.

If a business wants to hire a dev but can't afford it, the dev being 10x more productive doesn't make them more affordable unless

1) They're hiring a contractor for 1/10th the hours, and 2) The contractor hasn't increased the per-hour fee to match the increased productivity

I mean, sure, it can work out. But it's hard to see how it would do so in enough numbers to actually matter much.

> Which is exactly why we have things like WordPress developers for small businesses

Right, this is a solved problem. Businesses who don't need a full-time dev hires a contractor. That's how it's always worked. But contractors are expensive.

So, either the contractors would reduce their fees (thus falsifying the assertion that AI would increase their pay rate) or those businesses will be paying the same as they've always paid but perhaps getting the finished work sooner than they otherwise would have (thus falsifying the assertion that AI would make this more affordable).

Productivity gains can absolutely reduce costs and increase profits, but they do so by getting more work out of people while paying them the same as always.

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