Thirty years ago, one was supposed to work one's way up the corporate
ladder. That's less the rule now. Our generation wants to get
paid up front. Instead of developing a product for some big company
in the expectation of getting job security in return, we develop
the product ourselves, in a startup, and sell it to the big company.
At the very least we want options.
Among other things, this shift has created the appearance of a rapid
increase in economic inequality. But really the two cases are not
as different as they look in economic statistics.
Economic statistics are misleading because they ignore the value
of safe jobs. An easy job from which one can't be fired is worth
money; exchanging the two is one of the commonest forms of
corruption. A sinecure is, in effect, an annuity. Except sinecures
don't appear in economic statistics. If they did, it would be clear
that in practice socialist countries have nontrivial disparities
of wealth, because they usually have a class of powerful bureaucrats
who are paid mostly by seniority and can never be fired.
While not a sinecure, a position on the corporate ladder was genuinely
valuable, because big companies tried not to fire people, and
promoted from within based largely on seniority. A position on the
corporate ladder had a value analogous to the "goodwill" that is a
very real element in the valuation of companies. It meant one could
expect future high paying jobs.
One of main causes of the decay of the corporate ladder is the trend
for takeovers that began in the 1980s. Why waste your time climbing
a ladder that might disappear before you reach the top?
And, by no coincidence, the corporate ladder was one of the reasons
the early corporate raiders were so successful. It's not only
economic statistics that ignore the value of safe jobs. Corporate
balance sheets do too. One reason it was profitable to carve up 1980s
companies and sell them for parts was that they hadn't formally
acknowledged their implicit debt to employees who had done good
work and expected to be rewarded with high-paying executive jobs
when their time came.
In the movie Wall Street, Gordon Gekko
ridicules a company overloaded with vice presidents. But the company
may not be as corrupt as it seems; those VPs' cushy jobs were
probably payment for work done earlier.
I like the new model better. For one thing, it seems a bad plan
to treat jobs as rewards. Plenty of good engineers got made into
bad managers that way. And the old system meant people had to deal
with a lot more corporate politics, in order to protect the work
they'd invested in a position on the ladder.
The big disadvantage of the new system is that it involves more risk. If you develop ideas in a startup instead
of within a big company, any number of random factors could sink
you before you can finish. But maybe the older generation would
laugh at me for saying that the way we do things is riskier. After
all, projects within big companies were always getting cancelled
as a result of arbitrary decisions from higher up. My father's
entire industry (breeder reactors) disappeared that way.
For better or worse, the idea of the corporate ladder is probably
gone for good. The new model seems more liquid, and more efficient.
But it is less of a change, financially, than one might think. Our
fathers weren't that stupid.