, Columnist
You Want a Bigger Paycheck? Convince Me.
There's a misconception that productivity and pay are linked and that great worker output should lead to bigger paychecks.
He's worth every penny.
Photographer: James G. Welgos/Welgos/Getty ImagesThis article is for subscribers only.
There’s a common myth that standard economics predicts that people are paid an amount of money equal to the value of the things they produce. Actually, this isn’t true – in fact, the idea doesn’t even make sense.
In standard economics, your wage is equal to the marginal productivity of the company that hires you. That means that you get paid an amount equal to the amount that the company’s production increases when it hires you. Now, that may sound kind of like “you get paid what you produce,” but it’s not the same thing.