Considerations on Compensation

by T3t7 min read6th Oct 202115 comments

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This post was prompted by the recent announcement of Lightcone Infrastructure, and particularly Elizabeth's response in a comment thread on compensation.  I'd like to thank Max Wallace, Ruby, and Miranda Dixon-Luinenburg for their comments and copyediting.

Context (& disclaimer): I'm a software engineer and donate ~exclusively to longterm-focused orgs (currently MIRI).  While most of the arguments are intended to be broadly applicable, this post was written with that specific framing in mind, and one argument does explicitly depend on the question of AGI timelines.

You're an EA-aligned organization that isn't funding constrained.  Why should you (or shouldn't you) pay market rate?

Talent Pool

The econ 101 view says that if you want more of something, one easy way to get it is to pay more money.  But where exactly would we be getting "more" from?

The already-convinced

There is a group of people who already know about your mission and agree with it, but aren't doing direct work.  This group consists of:

  • Those earning to give
  • Those who are earning enough to give but don't (for a variety of reasons)
  • Those who don't have the capacity do either direct work or earning to give

On the margin, who in this group could be convinced to do direct work?

Those earning to give

There are many reasons why someone might be earning to give instead of doing direct work, assuming they have the skillset necessary to do the second (or can acquire it).  Here is a list of plausible reasons that could be overcome with more money.

  • Information -  they may simply not know that their favorite EA org pays (close to) market rates!  This is an area where there may be some "free wins" obtainable with just better PR - in that sense I think Lightcone's announcement and public salary listing is a great start.
  • Maintaining their present lifestyle - this one is pretty sensitive to the actual numbers involved, but it needs to be said that in the Bay Area there are things that are difficult to afford on typical non-profit salaries, like "owning a house within reasonable commuting distance of the office" and "having kids".  These can be concerns even for e.g. highly-paid software engineers, if they've already done one or the other (or both!) and thus locked themselves in to those costs.
  • Maintaining optionality - if you take a pay cut to do direct work and circumstances change in the future such that it no longer makes sense for you to keep doing whatever you're doing, you have less money and thus fewer options to deal with whatever problems may arise.  This doesn't matter if you're operating on short timelines and are extremely confident in them.  Kinda sucks if you're only mostly sure, though.
  • Hedging against the loss of career capital - technically this belongs under "Maintaining optionality" but it's a fairly specific point that I don't think I've seen raised elsewhere so I wanted to emphasize it.  At least in software, most work that you'd do at an EA org will not grow your career capital, compared to the counterfactual work you'd be doing at a better-paying tech company.  (The major exceptions to this are roles at research orgs which are doing large-scale ML R&D, which seem extremely similar to such roles at tech companies and look just as good if not better on your resume.  Think OpenAI, Anthropic, etc.)  If you jump in the pool, you'll likely have a harder time getting out, later, and this gets worse the longer you stay in.  For a motivated and skilled software engineer, this could easily dwarf the explicit pay cut when it comes to calculating foregone future earnings.
  • Social expectations - this is mostly just here for completeness' sake.  I don't expect there are a huge number of people who would go do direct work except that their family/friends/social circle would look down on them for taking a pay cut.  It's a big world out there, but I'd expect subtler status concerns to dominate and those are harder to move just by throwing money at them (though see the point about PR under "Information").
  • Preference for industry work - some people might expect that they'd enjoy direct work less.  Maybe they'd be happy to either take a pay cut, or sacrifice some of the intrinsic pleasure of the job, but not both?

Those who are earning enough to give but don't

If we want to be precise, there's obviously a spectrum - many people who are earning to give could probably give more without sacrificing anything, except optionality.  This group is all the way on one side of the spectrum.  When I was in this group the loss of optionality seemed to be the dominant factor informing that decision.  I don't have great insight into what else could be driving that for other people, though, beyond those factors also listed in the previous category.

Those who don't have the capacity do either direct work or earning to give

If the lack of capacity is a permanent condition, more money obviously won't do anything, so we can ignore that.  If it's a temporary condition, like "still a university student", then there are probably some cases where "more money" could be motivating in the right direction (focusing on things more applicable to direct work, graduating faster, dropping out, etc.).  I think the effect here is pretty marginal, though.

The skeptical

I don't think more money moves the needle for anyone who's familiar with a cause area but isn't convinced it's worth working on or directing resources to.

The not-yet-aware

Most (extremely online) software engineers have never heard of EA, but they have heard of FAANG[1]!  I think it's extremely likely that the number of software engineers who would be mission-aligned if they but knew about the mission is substantial and each additional engineer that first hears about [insert EA org here] on an online tech forum because "[insert EA org here] is competitive with FAANG, isn't that crazy??" is another opportunity to introduce someone to the community.  PR concerns deserve their own section but are not entirely negative.  If we are substantially bottlenecked on talent (particularly experienced talent), then increasing the top of the funnel is an urgent priority and could be much more effective than trying to pull from the relatively small set of people who are already aligned on mission, have the necessary skillset & talent, and aren't otherwise constrained by exogenous factors.

One potential downside here is that the pipeline could fill up with technically qualified but unaligned (or worse, pretending-to-be-aligned) candidates.  There are ways to manage this but it does deserve some thought.

PR

One obvious concern with paying top-of-market salaries is the PR risk.  "Local non-profit pays its engineers half a million dollars a year!" certainly looks like a bad news headline, but I think this is not actually a huge concern.

First, "Local non-profit pays its engineers 300k per year!" does not have a meaningfully different effect on the impression the median headline-reader comes away with.

Second, my subjective impression (which could stand to be validated empirically) is that most sources of funding for orgs focused on long term causes and meta work won't be offended by paying market-rate compensation for talent.  Quite possibly they would have the opposite reaction!  There is a real risk here that it could turn away some potential future donors (or even employees) on the margin, particularly those who aren't yet familiar with EA and the associated goals and principles behind it.  If you strongly think we live in a universe with a short timeline (<30 years) to AGI, this is not a significant factor.  If not, this deserves consideration.

Other Considerations

Let's imagine you're spinning up a new EA organization and you have more money than you know what to do with.  You have so much money that you've started paying people $500 to write book reviews!  (I kid, I kid.  $500 book reviews are cheap, as far as a hits-based approach goes.  But they also aren't something that MIRI/LW/Lightcone had money for 5 years ago.)

How do you decide what you're going to pay people?  I'm not totally sure what strategy I would try first, but I don't think it's "try to capture as much surplus 'value' as I can from the relationship".  I wouldn't want to optimize for being just barely the best option my desired candidates have available to them - I'm in a rush!  I'm under a time crunch!  I need as many qualified candidates as possible beating down the doors to work with me.  I want to be solving the problems of "how do I filter for the best of the best" and "how do I grow an organization as fast as possible while remaining strongly mission-aligned", not "where on earth am I going to find motivated, competent, and aligned engineers to work early-stage-startup-style overtime on what is effectively line-of-business software"!

That's just a guess as to what I'd come up with if I was trying to write a comp policy from first-principles, anyways.  I'm not an HR professional and there are certainly considerations I could be missing, but even accounting for things you can't put in writing I don't think the case for paying below-market rates is terribly motivating.


  1. FAANG stands for "Facebook, Amazon, Apple, Netflix, and Google".  Originally the acronym was FANG, and was used to refer to a group of high-performing tech stocks, but was picked up by software engineers online to talk about tech companies that were known to pay notoriously well at the time. ↩︎

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I have to admit, I don't really understand this idea that it makes sense for J. Random Company to pay "market rate", that is, the same amount of dollars that Google et al would pay the same person for a different job. That's not how markets work. I think that Lightcone should pay people whatever it can pay while being positive-sum for both parties. Whether the candidate's BATNA is an offer at Google affects that, but not in a formulaic "we match pay" way.

My perspective here is as someone who has had offers from Google and Facebook and repeatedly took alternative offers from different companies for ~50% as much TCO, because I had many reasons to prefer to work for those other companies. It wasn't even close, actually. I don't think that there is anything strange about this, and I don't understand how I could consider those companies to have been underpaying me or insulting my dignity, given that I freely determined that they were in fact making me a better offer than Google was.

One crux here is that it seems to me like all the parties involved have lots of alternatives -- engineers have many jobs to choose from, and companies have many candidates to choose from, so I think the market will really work out to give people what they want the most. If it were a situation without so much genuine competition, I might feel differently.

By the way, in this particular case, I expect Lightcone to have an extremely easy time hiring all the engineers it wants at the rates quoted (because 70% of FAANG is much more than most similar very small startups), and it wouldn't get much easier if they paid more, so I think they are if anything overpaying.

I feel like this sort of entirely misses the point of the post. Obviously there are people who will go work somewhere for less pay than some of their alternative options. The question is not whether those people exist, it's whether there are enough of them with the qualities that Lightcone (and other EA orgs - this is not a Lightcone-specific post) is looking for such that Lightcone can "have its pick" of extremely qualified candidates without spending an excessive amount of time and effort looking for them.

First, Lightcone (and other EA orgs) are not hiring from the general pool of software engineers. They are hiring from the pool of software engineers who are already mission-aligned, which constrains them to maybe, if we're lucky, a low five-digit number engineers in the US, a substantial fraction of whom don't live in the Bay Area and probably don't want to relocate. If I'm wrong about how strongly EA orgs filter on whether their desired candidates are mission-aware and mission-aligned, that does render a substantial chunk of my concerns moot, yes.

Second, Lightcone (and certain other x-risk focused orgs) are not in the business of trying to optimize on labor costs; they're racing against the clock and want to be wasting as little time as possible on things that don't directly advance their research agenda like "looking for & hiring people". If this isn't true, my argument is that it should be true. Spending an extra month looking for a similarly qualified candidate (or, worse, settling for a less qualified candidate) is a cost that has a dollar figure attached to it. If you think we live in a world with short timelines, it has something worse than a dollar figure attached to it.

I'm sure Lightcone would probably not have much trouble hiring from within the pool of engineers that comprise their personal network and who are amenable to doing direct work (and capable of it), if they wanted to do that instead of posting public job announcements. That pool, to the extent that it's not already mostly doing direct work, is not going to be all that big.

Finally, our observation in reality is that EA orgs have been talking about how they're talent-constrained for years. Maybe I'm wrong and this announcement will clear the market really fast! I'd love to see it. But, you know, just on priors, "not taking an obvious avenue to improve conversion rates" is a not a great sign.

There seems to be a huge blind spot here, dismissed in just one sentence:

I don't think more money moves the needle for anyone who's familiar with a cause area but isn't convinced it's worth working on or directing resources to.

Of course it moves the needle! That's how pretty much everything in the world outside direct family and friend relationships gets done.

There isn't even a category in this article for people who would never donate, but will still do good work for pay. That covers the vast majority of the people who could be working for the organization! It's a huge blind spot to completely ignore these people who almost certainly make up 99% or more of the talent pool!

The only way it makes sense to just ignore all those people is if the talent pool is so broad and deep that you can afford to just exclude almost all of them, or if the organization is based on some ideology that absolutely requires converts instead of just people who will do good work.

Even among people who think "this organization's work is worthwhile", there's a huge gulf to "I'll donate much of my disposable income to this specific organization" in the form of being paid below the market rate. An organization that requires the latter is definitely going to get a lot fewer candidates, even among those who think that the organization is doing worthwhile things and would donate to it.

Yeah, that section could probably have benefited from being fleshed out a little bit. Given the numbers you're proposing I think you're suggesting that EA orgs could be hiring people that fit the profile "technically qualified candidate who's either never heard of EA org's mission or who has and doesn't find it particularly convincing". I think I'm operating on a model where EA orgs mostly don't want to hire people who are explicitly skeptical or unconvinced of the value of their mission, and the question of "is it worth hiring such people rather than spending additional time looking for more aligned employees" is a worthy one but not what I wanted to cover in this post. If we assume the answer is mostly "no" then we can ignore them; if the answer is "yes" then that folds in to widening the top of the funnel under "The not-yet-aware".

For what its worth I think most EA orgs, at the current stage in their lifecycles, should still be trying to hire people who are strongly mission-aligned, if not necessarily strongly motivated to do direct work otherwise.

It seems like you're assuming there's no space between "people who don't find EA convincing" and "people who find it so convincing they're willing to donate 30% of their salary". What about the people who think EA is a good idea but don't want to donate such a large amount (right now)?

I think I address that group of people under the subheading "Those who are earning enough to give but don't" - they definitely seem like group that could find more money motivating, on the margin.

There may be a miscommunication here. I interpreted your whole "earning to give" section as meaning people who already turn over a significant fraction of their salary to that specific organization that is considering employing people:

There are many reasons why someone might be earning to give instead of doing direct work, assuming they have the skillset necessary to do the second (or can acquire it).

So now I'm not sure whether you meant people "earning to give in general", or "earning to give to EA more specifically" or "earning to give to the specific organization that is looking for workers".

Most likely! To clarify: when I say "earning to give" in this post I generally mean "earning to give to EA organizations", unless I explicitly specify an organization or domain in context. Of course, I think most people would choose to work for an organization they were donating to if they could meaningfully do direct work for it, rather than some other org (assuming that their choice of donation targets reflects some belief about the relative value of the work that org does), but lots of people would probably still take their second, third, or even tenth choices of orgs to donate to as employers if they were paid market rate.

I don't think more than a tiny fraction of people would choose to work for an organization they donate to, even if you limit it to those who donate a lot more than most. Perhaps they might with everything else being equal, but everything else is never equal.

Yes, and one of the most salient things that usually isn't equal is compensation :)

I do cover some other factors that might dissuade someone from doing direct work at an organization that they donate to (or would donate to, if earning to give), but beyond compensation, career capital, inherent interest in that kind of work, and culture fit, what other major factors do you foresee being a downside?

In my case if I wanted to work for the organization to which I have donated most, I would have to move a very significant distance and either waste 100+ minutes per day commuting or pay more than double house prices or rent. Others might also have family commitments, schools, etc to deal with.

I think this is covered under "Maintaining their present lifestyle". The framing of your top-level post led me to think we were discussing those who who didn't have hard physical constraints (such as not living in the same state) preventing them from working for a given org.

The context of this sub-thread has drifted greatly from the top-level comment, to the point where here we're talking about the directly opposite class of people. I was originally talking about people who would work for an organization but not donate, but we've drifted into talking about people who would donate but are unlikely to work for.

It's still relevant, since one of the things that could compensate for a less desireable change in life circumstances would be a sufficient amount of monetary incentive.

Organsations can generally only scale at a certain rate. I'd be rather surprised if they fail to find candidates at the skill level that they're looking for the rates that they're offering.

But beyond this, there's no shortage of things they could money on:

  • Lightcone has vague references to some kind of campus project - that sounds expensive?
  • EA funds community builders in major cities, but LW doesn't. This might be something worth considering, although I know that they're wary of making LW a movement.
  • They could take on paid interns to edit the Wiki
  • Funding community members or outside experts to produce research on topics deemed to be of particular importance

This is just off the top of my head. I'm sure there's lots of other ideas of how many could be spent out there and we should be careful not to fixate on this one just because it's most prominent in our minds.

In any case, if Lightcone decides to offer higher salaries it can't exactly lower them very easily if it decides that the higher priority is spending money elsewhere. On the other hand, if it becomes clear that high-quality staff is the real bottleneck, then they can always raise salaries later.

While my post was prompted by the Lightcone announcement and subsequent comment thread, it's really meant to be more general commentary in an environment where we seem to be in a funding overhang (https://forum.effectivealtruism.org/posts/zA6AnNnYBwuokF8kB/is-effective-altruism-growing-an-update-on-the-stock-of).