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August 2005  
  
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.  
  
  
  
  
  
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