Top actors, writers, and athletes have agents, who help them find good jobs, in exchange for a small part of their income. But having an agent is pretty rare – why don’t the rest of us have agents? You might think its only worth paying an agent 5% of your income for jobs where wages vary by large factors, and that most people’s wages are pretty much set by their occupation, education, etc. Not true, however. Consider: workers in the same occupation, with the same observable experience, school, etc. can easily earn 30% more, or 30% less, just based on the industry they work in. For example, in the auto industry both janitors and truck drivers make twice the salary of janitors and truck drivers in the “eating and drinking place” industry. (More on industry wage differences below.)
My initial thought is that it wouldn't be worth while unless 5% of your income is enough to hire an agent. Then I realized that since most jobs last a lot longer than something like the length of time it takes to film a movie, an agent would have a lot less work, so they could get more clients and 5% of your income will be more than enough.
1. If wage differentials are positively associated industry concentration, it confirms a bias that I have that anti-trust tends to increase earning differentials in a country?2. Some employment agencies charge the employee a percent of his wages. This could be considered a cheap from of agent?
I suppose this depends on the level un unionization in the industry and, for industires that are concentrated in specific geographical locations, on local factors.
I suppose that agents put significant effort per client, so that they can only manage a few of them. Therefore, unless the client has a very high pay, they are not profitable, at least compared to other recruitment operations that have larger scales.
Contractors are typically companies, not indivduals, so they probably perform the agent functions internally.
5% of your income has to be worth the agent's efforts. Unions and Headhunters fill the role on the low end here, basically commoditizing employees to make it efficient enough to be profitable.
Having an agent signals high mobility, not a desired quality in many fields.
Additionally, the fields you mention are all highly public figures. Isn't bartering a low status activity? Having someone to do the bartering is likely a status increaser, as well as likely to keep tales of your greed out of the press.
I work in software, and there are a lot of headhunters. I've had experience with numerous flavors of engineering where the contractors essentially rely on the same headhunter to work out their jobs in advance.
Finally, don't high end business executives have agents too?
There are recruiters/headhunters in many fields. They can help you to find a job, but of course they usually don't care about maximizing your wage. However if you do have a minimum wage that you will work for, they certainly take that into account. Overall I've had pretty bad experiences with having them manage my job. I suspect the potential payoff of a typical worker is just too small for them to spend a lot of time on it.
Actors engage in lots of small jobs -- a movie here, a commercial there, a guest visit on a TV series, maybe theater, plus promotional appearances and maybe speeches and fundraisers, etc. -- and I think it makes sense that managing all of the various contracts implied by this can be a job itself. Compare to a "typical" worker, who works for years for just one employer; i.e. one "contract" per several years, as opposed to dozens of "contracts" per year for a successful actor, not to mention the hundreds of possible contracts that must be weighted to select those dozens. Add to this that the entertainment business is heavily specialized: a movie producer might want a particular type of actor, etc, and so there is also room for professional specialization involved with connecting the producers with the particular kind of talent they are seeking.
So actors having agents makes perfect sense to me, even as most occupations don't have agents.
However, in light of this, I don't know why athletes have agents. It seems to me their business isn't like this. I'd guess it's because athletes receive very high pay relative to their education (preparation for negotiating contracts of such value as they have), and so they're just buying a service that is worthwhile for them but wouldn't be worthwhile for most people. Although athletes jobs are perhaps not so simple, given promotions and sponsorships etc.
There are some professions, though, where it does seem there is room for agents. Like contractors (for home maintenance / improvement). These are people who also do dozens of different jobs a year. They are also specialized, and with special aesthetics. It would seem very worthwhile to have a few agents, who a given person would explain the work they want done to, and then the agent connects them with just the right contractor. Except that's sorta how contractors themselves work: the contractor listens to the work you want done, and selects the various specialized professionals (plumbers, painters, decorators, etc) to get the job done. The analogy isn't perfect and I think it's interesting look more carefully into why.
This was one of the original purposes of unions -- to act as a group agent for the workforce. Unfortunately, just as some authors and actors have discovered, the agent's interests aren't always in line with the client's.
Is there evidence that this is the case? In my experience, cleaning, security etc is often contracted through an agent (G4S etc) and wages are the same for workers cleaning at For or Goldmans
When employees are disgruntled about pay, management's most effective reply has been that the firm lacks funds for higher wages. If some workers do better than the industrywide standard, others will be able to complain, "If them, why not us?"
The question being asked is why janitors working for Ford aren't paid the same as janitors working for Goldman Sachs, even though they're both doing basically the same thing.
This is the case for most employers. I could (for example) make cars all by myself, but division of labour, economies of scale etc make it more efficient for several of us to work for Ford instead. In return, Ford take a cut of my productivity. As long as my marginal productivity is greater than my marginal cost, Ford will employ me. And as long as Ford's cut is not prohibitively high, I will work there. Your post simply describes labour exchange under capitalism.
My initial thought is that it wouldn't be worth while unless 5% of your income is enough to hire an agent. Then I realized that since most jobs last a lot longer than something like the length of time it takes to film a movie, an agent would have a lot less work, so they could get more clients and 5% of your income will be more than enough.
1. If wage differentials are positively associated industry concentration, it confirms a bias that I have that anti-trust tends to increase earning differentials in a country?2. Some employment agencies charge the employee a percent of his wages. This could be considered a cheap from of agent?
I suppose this depends on the level un unionization in the industry and, for industires that are concentrated in specific geographical locations, on local factors.
I suppose that agents put significant effort per client, so that they can only manage a few of them. Therefore, unless the client has a very high pay, they are not profitable, at least compared to other recruitment operations that have larger scales.
Contractors are typically companies, not indivduals, so they probably perform the agent functions internally.
5% of your income has to be worth the agent's efforts. Unions and Headhunters fill the role on the low end here, basically commoditizing employees to make it efficient enough to be profitable.
Having an agent signals high mobility, not a desired quality in many fields.
Additionally, the fields you mention are all highly public figures. Isn't bartering a low status activity? Having someone to do the bartering is likely a status increaser, as well as likely to keep tales of your greed out of the press.
I work in software, and there are a lot of headhunters. I've had experience with numerous flavors of engineering where the contractors essentially rely on the same headhunter to work out their jobs in advance.
Finally, don't high end business executives have agents too?
There are recruiters/headhunters in many fields. They can help you to find a job, but of course they usually don't care about maximizing your wage. However if you do have a minimum wage that you will work for, they certainly take that into account. Overall I've had pretty bad experiences with having them manage my job. I suspect the potential payoff of a typical worker is just too small for them to spend a lot of time on it.
Actors engage in lots of small jobs -- a movie here, a commercial there, a guest visit on a TV series, maybe theater, plus promotional appearances and maybe speeches and fundraisers, etc. -- and I think it makes sense that managing all of the various contracts implied by this can be a job itself. Compare to a "typical" worker, who works for years for just one employer; i.e. one "contract" per several years, as opposed to dozens of "contracts" per year for a successful actor, not to mention the hundreds of possible contracts that must be weighted to select those dozens. Add to this that the entertainment business is heavily specialized: a movie producer might want a particular type of actor, etc, and so there is also room for professional specialization involved with connecting the producers with the particular kind of talent they are seeking.
So actors having agents makes perfect sense to me, even as most occupations don't have agents.
However, in light of this, I don't know why athletes have agents. It seems to me their business isn't like this. I'd guess it's because athletes receive very high pay relative to their education (preparation for negotiating contracts of such value as they have), and so they're just buying a service that is worthwhile for them but wouldn't be worthwhile for most people. Although athletes jobs are perhaps not so simple, given promotions and sponsorships etc.
There are some professions, though, where it does seem there is room for agents. Like contractors (for home maintenance / improvement). These are people who also do dozens of different jobs a year. They are also specialized, and with special aesthetics. It would seem very worthwhile to have a few agents, who a given person would explain the work they want done to, and then the agent connects them with just the right contractor. Except that's sorta how contractors themselves work: the contractor listens to the work you want done, and selects the various specialized professionals (plumbers, painters, decorators, etc) to get the job done. The analogy isn't perfect and I think it's interesting look more carefully into why.
Table 1 in the linked paper is a very cool dataset. Here is a scatterplot-matrix: http://people.mokk.bme.hu/~...
The variation by industry is one main reason Peter Dorman doesn't believe that occupations are characterized by compensating differentials for risk.
This was one of the original purposes of unions -- to act as a group agent for the workforce. Unfortunately, just as some authors and actors have discovered, the agent's interests aren't always in line with the client's.
Is there evidence that this is the case? In my experience, cleaning, security etc is often contracted through an agent (G4S etc) and wages are the same for workers cleaning at For or Goldmans
When employees are disgruntled about pay, management's most effective reply has been that the firm lacks funds for higher wages. If some workers do better than the industrywide standard, others will be able to complain, "If them, why not us?"
The question being asked is why janitors working for Ford aren't paid the same as janitors working for Goldman Sachs, even though they're both doing basically the same thing.
The agent has an incentive to maximize income, not total utility for a job including reasonable work hours, vacation time, and enjoyable atmosphere.
Pro atheletes have to lead very focused lives, earn a lot of money fast, and retire young.
This is the case for most employers. I could (for example) make cars all by myself, but division of labour, economies of scale etc make it more efficient for several of us to work for Ford instead. In return, Ford take a cut of my productivity. As long as my marginal productivity is greater than my marginal cost, Ford will employ me. And as long as Ford's cut is not prohibitively high, I will work there. Your post simply describes labour exchange under capitalism.
This is exactly correct and scalable to employers more generally