Paying superstar programmers tens of millions of dollars is called the “Kobe Bryant effect.”
Venture capitalist Marc Andreessen says that engineers are being paid their “true value” in the technology industry, where some engineers are drawing multi-million dollar paychecks.
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Andreessen explains it this way: A change in Google’s algorithms can sometimes be worth as much as $100 million in new revenue, so that easily justifies paying the best engineers “tens of millions of dollars.” Other companies are following Google’s example, with the result that highly-paid “superstar programmers” are not uncommon at California’s biggest tech firms. Andreessen calls it the “Kobe Bryant effect,” after the extravagantly paid American basketball player.
The observation lends further credence to the idea that gains from the knowledge economy are accruing only to a small group of extremely talented people. As MIT labor economist David Autor told American Public Media’s Marketplace last year, “Certainly, the labor market has never been better for very highly educated workers in the United States, and when I say never, I mean never.” Quartz’s Christopher Mims explored this in his March piece, “How the internet is making us poor“:
One thing all our machines have accomplished, and especially the internet, is the ability to reproduce and distribute good work in record time. Barring market distortions like monopolies, the best software, media, business processes and, increasingly, hardware, can be copied and sold seemingly everywhere at once. This benefits “superstars”—the most skilled engineers or content creators.
Of course, the trend also benefits consumers, who get better, cheaper products. But the consumers are also workers; in that role, they, too, get squeezed by such concentration of wealth.