I love the US and California, the tech scene is amazing and I was lucky to met such talented and friendly people in about every place I worked... from very large tech cos to "garage" startups.
Which is why it pains me to see that so many engineers get stuck with such ridiculous salaries (relative to the value and wealth they provide and create). Problem is that some salaries are seemingly high compared to what the average worker does in the country but ridiculously to what they would look like if engineers were allowed to capture a greater (that is a >0.01%) percentage of the added value they CREATE.
Most, from the freshly out-of-school to the senior engineer with glowing reviews are getting scammed because they get paid just enough to live a comfortable life but not nearly enough to what they are worth and what they would need to consolidate their place in the upper middle class.
I had one company acquired by a large tech co. Probably going to start another one soon, I won't commit the same mistake twice... engineers need their fair share. They are the one creating things, they are the one on the front line and we should not get satiated by the crumbles we are left with.
What about the linesmen who provide the power for your computers?
What about the road workers who make it possible for you to get to work?
What about the African miners who dig up the rare earths for your components to run your computer?
What about the guys soldering all this crap together?
I bet you'd say the road worker creates hardly any value, but in reality the economy just ceases to function without roads. Or sewage. Or power lines. Or gas stations powered by truck drivers. Or a million other things.
Developers create a portion of a valuable system, they're not water-walking god-kings. I know, I'm one of them--and my code is probably faster and more reliable than a very large proportion of that created in the rest of the industry, but I don't kid myself thinking I'm doing it all by myself or creating something that has a stand-alone value and operates outside of a larger system; we're all cogs and together we make an amazing machine.
I'm glad I can watch Silicon Valley on TV instead of having to live around those characters. Delusions are detrimental.
Supply/demand. There's a much larger supply of people capable of building roads vs. those capable of developing a system. And the monetary difference between an average road and a really great road is not nearly as much as the difference between an average system and a really great system.
You're right about the value of teams being greater than an individual contributor, but the ability to work within a team is a valuable skill just like any other.
> the monetary difference between an average road and a really great road is not nearly as much as the difference between an average system and a really great system.
Pick another profession then. How about customer support? The difference between an average support person and a really great one can be millions of dollars of revenue. But they are paid peanuts because it's women's work, not like the manly engineering which obviously creates more value... nevermind that novice engineers often create negative value by creating liabilities that can cost the company millions, while still getting paid more than the highest paid customer support people.
The truth is, you are just assuming the people making the roads have nothing to offer in terms of outstanding value, because that's your preconceived notion. You already decided they were worth less than you, even though you never bothered to check. Never bothered to measure. Never bothered to ask.
If you really believed in your value, you wouldn't be afraid of a system where people are paid what they are worth to the company. Instead you hide behind "market rates" because market rates are good to you. But markets are flawed, we've seen it over and over. There's a lot of money in rigging markets, and the salary market is no exception.
> But they are paid peanuts because it's women's work, not like the manly engineering which obviously creates more value
Cherry-picking one profession to claim low salaries are because of gender is absurd. The world is an unfair place if you can't cope with the fact that a large majority of jobs will pay "peanuts". If tomorrow there is an infinite supply of highly qualified programmers, surely programmers would be paid low wages too but the truth is that there never will be - there is a lot of valuable software left to be created, to be maintained and we won't hit saturation any time soon.
> Cherry-picking one profession to claim low salaries are because of gender is absurd.
Community/support roles are still widely considered "soft skills", and thanks to a century or two of patriarchy, are indeed considered womens' work. (This is, needless to say, bullshit.)
You seem to be implying that there is an "infinite supply of highly qualified" community/support folks; hence the low wages. There is not.
The difference between an average and a great customer support is not millions of dollars in revenue. You are thinking about the difference between a terrible and a great customer, and with 1 in a million scenario.
There are some situations where great customer support brings the company tremendous value and opportunity. But these situations are so rare and few that investing in great customer support (for high price) is not worthwhile. An average person should do.
If good customer support is really bringing in value, then they should be able to negotiate for more pay. If they leave, the company should see losses.
Reinforcing this, B2B customer support is vastly different than consumer-facing customer support.
Screwing up B2B support genuinely can cost millions in a single incident, which is why service level agreements and reliability standards exist. Compare that to the service level of your average help line (somewhere between "maybe if you're lucky" and "go die"). And of course, entities like ISPs don't count in the first place when they're immune to competition.
There are customer support reps making six figures. They tend to go by names like "service engineer", and actively solve problems the customer can't, rather than just guiding someone through a reboot process. In extreme cases, customer support is the development team - if your business is worth enough you'll end up talking to someone who actually made the broken product.
As you pointed out, it's not an accident that the companies with useless, call-center customer support are the ones not worried about losing a consumer or two.
Of course it is. Everyone remembers getting shitty offshore technical support from company X then a few years later you're the engineer making recommendations or the CTO signing off POs and you think "I will never deal with X again".
I've got my list, I bet everyone reading this can think of their own X's too...
What do you mean by it? That the difference between great and average technical support is worth millions of dollars in revenue?
Everyone remembers getting shitty offshore technical support
This seems hardly generalizable, but beyond that, I agree with you. Shitty tech support is never excusable.
Pay for average or above-average tech support. Those you can train in less than a month.
Don't break your back paying for "great" tech support. This is a silly directive, because it's so obvious once you are in the shoes of an executive, having to recognize tradeoffs in every decision. Unless your company is large enough where the tradeoffs make sense, paying for stellar tech support is an inane investment.
You can say a lot to the leader as a follower, but once you start leading, you must dance around the intricacies of decisionmaking.
EDIT: Not quite sure, but your assertion based on the so-called "list" of shitty tech support seems to be a case of selection bias.
There were probably many cases of reasonable tech support, but you haven't made a list of them :P
"Average" tech support is pretty bad is why. Companies either care a lot about support (i.e. their reputation), or they don't care at all, there is no middle ground in my experience... Companies with good tech support are good all round.
"The difference between an average support person and a really great one can be millions of dollars of revenue. But they are paid peanuts because it's women's work, not like the manly engineering which obviously creates more value... nevermind that novice engineers often create negative value by creating liabilities that can cost the company millions, while still getting paid more than the highest paid customer support people."
Spent a few years doing community management / customer support. This is _100% correct_. Oh, the stories I could tell. The role is critically important, and terribly, horribly underpaid. I went back to web development because, even with a 3-year gap in my resume and taking a non-senior role, I was still able to make 50% more.
I can train someone in less than a month to be a world class customer support agent. Assuming they have the temperament, the job requires no scarce skills. I can train a person to work on a crew pouring concrete in a day. Comparing road crews to software engineering is a false equivalence. Mining in Africa is certainly hard work, but I could staff a mine with eager workers in an hour.
If one feels that income inequality among the professions is a problem, one should change professions. There's nothing stopping anyone right? However if we do acknowledge that there are barriers to entry, then we have just proven the point as to why a guy pouring asphalt is paid less than a person writing APIs. Marxist theory has every profession being equal. Yet, why, in the Soviet Union were nuclear scientists rewarded differently than the shop clerk at Moscow's GUM department store? Why were Soviet ballerinas treated like relative royalty while the people running electricity to the Bolshoi treated far worse?
Because of scarcity. Gold is worth more than sand. Though without sand, you wouldn't have concrete. I can't believe we're still having economic discussions where scarcity seems to be a novel (and controversial) concept. Marxism fails every time it has been tried because it fails to recognize scarcity.
Supply vs. demand explains so much of this world. Some people either don't grok the concept, or refuse to believe it applies everywhere.
It hurts our emotions when we think about a miner in Africa (working 120 hour workweeks, wiping the sweat off his brow, with five mouths to feed) getting paid hundred times less than a software engineer fresh out of college working four hours a day, sitting in ergonomic chairs and getting in massage pods as a "break."
But pain is not value. Sorry. This is not a utopia. Don't make decisions thinking the world is a utopia. Have a correct mapping of the world, and then do something about it.
The article starts with "In a groundbreaking effort to close the wage gap between men and women..." I do see what you were getting at but my guess (based on karma and skimming previous comments) is that the gender comment was sarcastic. I could be wrong though.
Serious? There's more to customer support than picking up a phone. I've worked with some very intelligent customer support people who know the product as well as the engineers.
B2B seems like the obvious standard of comparison here. Customer support really can be worth millions there, and that's reflected by how the system works.
Keeping customers happy as a general principle isn't gendered, or undervalued, or much of anything else. It just varies from "you're an essential customer, you can call our engineers night and day" to "abandon us forever, see if we care". Any kind of generalization like "treated as women's work" or "don't put technical people in front" is going to find counterexamples in big, high-stakes contracts.
I saw one contract with a clause that a Sev1 incident had a 15 minute SLA to the highest tier support engineer and 30 minute SLA for initial contact from an SVP level exec to the customer CIO.
There's more to customer support than picking up a phone.
I agree. There is more to customer support than picking up a phone, and some people make it sound like supporting a customer is just reading from the manual.
There's also more to cleaning than mopping. You can employ your philosophy of cleanliness and make things perfectly ordered and spiffy-shiny.
Maybe one day the CEO might walk in and be impressed by your attention to detail, hire you as an intern, and so goes the rest of your success story.
But how much value is the janitor bringing to the company by doing a stellar job? How about customer support? Either hire a stellar engineer and mediocre customer support, or hire a mediocre engineer and stellar customer support. Which would you choose?
When we start talking about jobs, we tend to imagine, in our minds, the people working. Then when people throw out words like "software engineer brings more value to the world than customer support", we translate those words to "you are saying this customer support Jan I am imagining is more valuable than the software engineer Dan I am imagining?"
(Names Jan and Dan were chosen as such because I have seen more female customer support and male software engineers than their counterparts. If you think that is sexism, then you are inherently valuing the human worth of software engineers over that of customer support personnel.)
People's worth is not determined by how much value they bring to the world.
Digression aside, we tend to construct mental models emotionally and attempt to justify with logic.
That is why people include gender in this argument, even though gender has nothing to do with whether people bring value. Again, the software engineer Dan is not a more valuable person than customer support Jan. If you don't get this difference, read No More Mr. Nice Guy or The Way of the Superior Man. The titles are somewhat of a misnomer; I suppose women will gain just as much value from those books.
This is a total shot in the dark, but female engineers are probably paid less than male engineers because they bring less value to the company (read: people hiring) than their male counterparts. The reason why male trait is valued more in STEM is because there are more men in STEM already.
We tend to want to work with people who are similar to us. Thus to a male CEO, he probably prefers a male over female engineer, if they are equal in aptitude. This, of course, is not a right judgment call, but this is humans' default mode of thinking.
There are also job-specific preferred traits. If I were running a hospital, I would pay a male nurse less than a female nurse; female nurses, by their gender trait and societal preference of female nurses (both men and women prefer female nurses), female nurses inherently have more value.
A complex topic that is easily subject to emotional manipulation. But worth talking about.
I disagree with a lot of what you said (starting with the importance of janitorial services -- have you ever worked in a place with truly bad janitorial services?) but to stick to the factual side right now, male nurses earn more than female nurses. The article I'll link from the Journal of the American Medical Association includes analysis of approximately 290,000 RNs.
That is my mistake, I would have assumed otherwise. Thus it must make my example invalid. I would have to think otherwise, then.
The point about janitorial services — I am sure having horrible janitors (and horrible customer support) is a true disaster. But being an average janitor is not too hard; if a place has bad janitors, then of course that should be a priority investment.
> (Names Jan and Dan were chosen as such because I have seen more female customer support and male software engineers than their counterparts. If you think that is sexism, then you are inherently valuing the human worth of software engineers over that of customer support personnel.)
That's not really needed, my Name is Jan and I'm male. My cousin is called Dan and she is female (people call her Dan but it's Danielle).
Assuming people should pay what things are worth to them is complete and utter bullshit and isn't how economics work.
Do you realize how much water is worth to you? You cannot live without it, but you aren't going to send your water company $100/gallon for it because there is a massive supply of it.
The same applies to paying people to do things. Nobody is going to pay more than what the price is for the skills they are looking for. To expect otherwise or lament the fact that's it's not happening shows a very basic misunderstanding of economics.
> And the monetary difference between an average road and a really great road is not nearly as much as the difference between an average system and a really great system.
I used to drive over the I-35W bridge, twice per day, on my way to work and back.
Feel free to keep talking about how there's not much difference between roads, but I'm not going to be listening.
Our economy pays differently for different jobs for exactly one reason; scarcity.
The best road workers in the world, they do what? The best miner? Now, the best coder? Some coders should be paid like the best road worker. Few road workers should be paid like the best coders, because there's just too many ready replacements who would do the work for less.
Coding is becoming that way, but far from it currently. Our best invention is the one that puts us totally out of work.
More supply than demand only exists for 'free' or 'public' goods. If there are costs of production, nobody (except government) will want to supply more than is demanded, as they will be giving the product away (or paying people) to get rid of it. Garbage is an instance of supply > demand.
Try building a road system with just road workers, and no civil engineers or systems and operations analysts, and all this entails.
Or pay the house painter what you pay a software engineer, and see how many people paint their house themselves, or with less frequency. House painters would be priced out of the market, and more homeowners would fall, and/or have crappier paint jobs.
That is supply and demand in a nutshell, and how markets value a skill or talent you have to offer with obvious exceptions.
All of those guys already got paid by the time you sit down at your desk.
The wealth that the GP is talking about is the incremental wealth created by the engineers under consideration. They're taking publicly available things and putting them together in a new way to create something more valuable than the cost of parts and labour.
Yeah, I suppose it would be interesting to look at the value multipliers throughout the supply chain to see if they are even or uneven. There is a difference between value of input goods and a value of output products, and workers capture some percentage of that difference as pay.. For instance, if someone who takes raw metals at $1/unit and processes them into component-ready materials at $2 per unit and are paid $0.50/unit, they're capturing 50% of the value they have created. A programmer takes software and hardware components that have some intrinsic value (perhaps not, difficult to reason about here) and processes them into software and hardware or services that have a greater intrinsic value. At large tech companies, the programmer might get a salary of $1XX,XXX, but the company might making a profit on the services that programmer created of $5XX,XXX, which only capturing 20% of the value added. I guess what I wonder is: should everyone in the pipeline for goods creation capture the same percentage of what the inherent value they've created? Or is it the nature of markets to differentiate based on scarcity of labor at each stage?
You could be charitable and read OP as making the case that labor in general should capture a greater portion of corporate profits than it does now. I'm sympathetic to your comment, but I think you're barking up the wrong tree.
Coding is definitely higher value for sure, just as driver who operates a berry picking machine can deliver more value than a migrant individually picking berries.
Why a migrate rather than say someone who picks berries by hand? Vice did a story comparison on this and actually migrate workers worked harder and picked more fruit than Americans pulled from temp agency.
But in your comparison, the machine would be of higher value, the operator would be of little value since it does not take extensive skill to operate - much less skill than someone working on power lines for example. It's all based upon geographic demand.
You have a prejudice against Silicon Valley / California.
Aside from that, I think one key point you failed to observe is that the engineers are often the biggest producer of innovation and invention in the production process. Software engineering is not manual labor, instead a heightened level of mental focus and ingenuity is required to perform the job.
I think I might have a prejudice against manual labor.
Major difference is trainable skills versus innate talent. The number of people who can be trained/educated to perform the tasks you described above are pretty large. The number of people who can write elegant, concise code is a pretty small pool.
It's also important to distinguish between day-day coders who write CRUD apps (trainable skill), and developers who develop platforms that others build on.
Another way of looking at this - by providing significant rewards to top-end developers (and top end developers should be starting around $500K, and be making north of $1mm with 5-6 years of experience in their chosen vertical), you encourage outstanding individuals who might chose another field where they might be more richly rewarded (Law, Finance, ...) to put their skills to good use in programming.
And that's the crux of the matter - I don't believe we should provide outsized rewards to developers with exceptional talent because they deserve the extra money - I think everyone who works a 40-hour week deserves a comfortable, stress free life. I believe we should provide outsized rewards to developers with exceptional talent so as to ensure efficient allocation of capital and labor, resulting in economies with increased productivity, and greater rewards for everyone interlinked in that economy.
From that perspective - I guess I agree with you, we are all cogs working together to make this amazing machine -I just want to make sure the right cogs are allocated to the right machine.
There is nothing unique or special about being a programmer.
Programmers think they are undervalued and should get more. But guess what, nurses think they should get more as well because they are saving lives. Soldiers think they should get more for making us all safe. Police think they should get more for reducing the level of crime in society which benefits us all. Teachers think they should get more because they are educating the next generation of wealth creators. Everyone thinks they should get a little more of the pie.
How do you resolve this? (Hint: supply and demand)
Couple points - I didn't say there is anything unique or special about being a programmer from a skill perspective. Almost everyone who can graduate from high school can be taught to program, and put together useful applications. I tried to call that out when describing the difference between a day-day CRUD developer and platform developer.
But there is a distinct hierarchy of developers who can, for example, instinctively comprehend pointer-to-pointer data structures, or have walked through and mostly understand AoCP, or heck, can (quickly) write concise elegant code like this: http://www.cs.princeton.edu/courses/archive/spr09/cos333/bea....
One key difference between programming and teaching/soldiering/policing, is leverage. A single 100x teacher/soldier/police officer is limited in the impact they can have on the world, whereas a single 100x developer can write a platform/system that is used by 100s of millions of people.
Now we're talking about heroic icons. There are thousands, or maybe 10s of thousands of 100x developers. There is only one Florence Nightingale, Steve Jobs, Donald Knuth, Michelangelo, Einstein, etc...
You don't need to be a heroic icon to be more valuable than a 100x developer.
The 100x teacher who molds the mind of the kid/teenager/adult who eventually cures cancer is worth more than just about any single 100x developer out there right now, and you'll never know that person's name.
(Yeah, I'm aware there will be multiple different cures for different cancers, the point remains)
It would be interesting to see if any great researcher could tie back their success to a teacher. My suspicion (based on nothing more than gut feeling) is that while a good/great teacher has some impact, that beyond a certain level it's 99.9% the individual and their environment/peers/parents/contacts, rather than any particular teacher.
Another way of saying this from a mercenary monetary point of view is that I don't think investing more than $250K/year on a K-12 teacher makes sense, though you might be able to make an argument that people who teach teachers might have greater leverage.
I certainly agree that the spread in productivity between the best and mediocre seems to be huge in software development compared to most other industries. In fact, I cannot think of another one quite like it off the top of my head.
We do have certain other advantages though. We can create a start-up and potentially make a huge amount of money. This is a realistic possibility for a substantial percentage of good developers. Much fewer people from other industries have that kind of chance.
> There is nothing unique or special about being a programmer.
Really? Take 1000 programmers and try to teach them skills nurses have. How many will be able to do the job well enought to be able to work at the hospitals?
Now take 1000 nurses and try to teach them skills programmers have. Is the number suitable for profession work at sowftware companies be the same, as in the first case?
You can claim, that there is nothing unique or special in being theoretical physicist. But is that really true?
I’m in no way mentally prepared to be a nurse. That is something I suspect I would never ever be able to do. That has to do with skills (especially hard to learn skills, like interacting with people properly), it also has to do with being emotionally ready to do such a job. Especially a job like being a nurse is in my estimation not something you can just teach. You need people who are prepared, ready and willing to do the job.
I think very, very few of those 1,000 programmers would be ready to work in hospitals. I would not at all be surprised if you could find more great programmers among 1,000 nurses than you can find great nurses among 1,000 programmers. To me being a nurse is an extremely demanding job.
I am a developer and have a very close friend who is a nurse. I am pretty sure I could teach her enough to do an entry level web dev job within 2-3 months, whereas there is no way I would be mentally or emotionally prepared to deal with working life as a 'real' nurse within that short amount of time, if ever.
I couldn't agree with you more that nursing is a tough job that deserves excellent pay (though out here in SF, registered nurses do earn more, at the median, than software application developers, though this is a bit unusual and not the case in most areas). It would take a tremendous amount of time, training, and effort to turn a software developer into a registered nurse, no doubt.
I am pretty bummed to hear a developer speak so dismissively of what it takes to be developer. I'm not sure what you mean about an "entry level" web job, of course - if "entry level" entails no background or skills, then I suppose I could prepare someone in no time at all.
However - and I fully acknowledge this is just anecdote - after 15+ years in the field, I have yet to see the mythical simple CRUD app. I came into this field after a major in math with a CS emphasis and a MS in Industrial Engineering, during which I wrote a lot of code for various numerical analysis problems. I've written apps that need to build and solve linear programs with a few million variables and communicate results to analysis within one minute, which we felt was the maximum amount of time anyone would wait for an interactive tool designed to explore multiple supply chain scenarios. It is hardly a work of genius, but these were real CS and math problems, with a dose of programming optimization.
In many ways, those projects were considerably easier than the "CRUD" projects I've been on. Seriously. You have to gather business requirements from people who do understand their business, but aren't accustomed to explaining it in a way that works within the strict confines of computer code. You often have to work with existing code bases, deciding how much customization you can get away with before forking yourself into a maintenance hell (and you have to deal with that maintenance hell). You have to integrate with many different data sources, back and forth, over networks, many of which are obscure, poorly documented, and poorly maintained. You are pressured to provide estimates and deadlines for systems that you have no idea about (how long will it take me to alter a code base for an existing application to integrate with a data source that I haven't studied yet? Uh, a week?). You have to weave through existing data structures, code bases that involve intricate logic, uncover magic documents that nobody told you about, interview and talk to business analysts, test, design UIs or work with UI people... and often encounter an (at best) irritated look when you didn't meet your "estimates" that turned into deadlines.
I maintain that even the "simple CRUD" projects are difficult, stressful, and require a very high level of logic, coding ability, and the ability to communicate will with people at many levels of an organization.
If you truly believe that web dev is simple, of course you have every right to make that point. You shouldn't back of from saying what you think is the truth just because the truth is harmful to the reputation of developers.
What pains me is that I absolutely don't agree with you, I think it's a really hard job, and I think we developers really hurt ourselves when we trivialize our jobs this way.
This is all very interesting, but has absolutely nothing whatsoever to do with my point. I am saying that both web dev and nursing can be very challenging, yet while everybody of college ability could learn enough web dev to function well in a junior position (and your description definitely wasn't a junior position at any of the companies I have seen), very few have the emotional and psychological strength to work as a nurse - especially given the difference in pay.
The world knows how difficult software development is - we don't need to put down other professions (which equally difficult yet in a different way)
We're both looking at exactly the same words, sometimes people just reach different conclusions. You've said that we don't need to put down other professions, but consider your words about software development and nursing...
"I am pretty sure I could teach her enough to do an entry level web dev job within 2-3 months, whereas there is no way I would be mentally or emotionally prepared to deal with working life as a 'real' nurse within that short amount of time, if ever."
I do see that as putting down software development in order to build up nursing. Like I said, we're looking at the same words, so this is just a matter of perspective.
Perspectives sometimes vary because of experience. I actually don't agree, as a general condition, that the world knows how difficult software development is. Some of the world does, and some software development positions are clearly respected. But as a general statement? No, I really don't agree - I see too many developers working loud, distracting open offices, back visibility, methodologies that reduce autonomy and long term thinking the to micromanaged 24 hour "sprints", and a career path where "successful" people should term out before age 35.
I certainly wouldn't argue that this describes all dev jobs, but it sure does describe a lot of them. I do think that the kind of denigration of the field I'm hearing here does contribute to this.
That's why labor policy is so important. The guy digging proverbial ditches does indeed deserve more, but the market has been distorted by large corporations who lobby for lax enforcement of immigration law. On the other end of the spectrum engineers and programmers probably deserve more but the market has been distorted by large corporations who have lobbied for massive numbers of H1Bs or colluded with each other to keep poaching/salaries down in the valley.
Because I have a basic understanding of supply and demand. I even explained how supply of labor was being distorted in my post at both the higher and lower ends of the job market. I think the more appropriate question is how do you not know?
Labor economists have concluded that undocumented workers have lowered the wages of U.S. adults without a high-school diploma — 25 million of them — by anywhere between 0.4 to 7.4 percent.
This is the paragraph immediately following the sentence you quoted:
> The impact on everyone else, though, is surprisingly positive. Giovanni Peri, an economist at the University of California, Davis, has written a series of influential papers comparing the labor markets in states with high immigration levels to those with low ones. He concluded that undocumented workers do not compete with skilled laborers — instead, they complement them. Economies, as Adam Smith argued in “Wealth of Nations,” work best when workers become specialized and divide up tasks among themselves. Pedro Chan’s ability to take care of routine tasks on a work site allows carpenters and electricians to focus on what they do best. In states with more undocumented immigrants, Peri said, skilled workers made more money and worked more hours; the economy’s productivity grew. From 1990 to 2007, undocumented workers increased legal workers’ pay in complementary jobs by up to 10 percent.
Don't make it look one-sided.
Besides, you didn't tell me what you think a ditch digger should earn, which is what I asked. But that's fine, because you can't tell me, because you don't know. In fact, nobody knows. It is an unanswerable question. Much like determining what someone's "fair share" of taxes or benefits is, or their fair standard of living, it is impossible to determine the income they "deserve." There is no absolute standard for any of these things. The only way to know if someone is being fairly compensated is to compare their income to some kind of absolute standard -- but such a standard does not exist.
In the case of unskilled American workers, maybe their incomes are 0.4-7.4% lower than they would have been in the absence of immigrants. But that by itself does not tell us anything about fairness. Perhaps they were overpaid before the immigrants showed up -- after all, there were other people willing to do the job for less money, so what did the American workers have to offer that justified a higher salary for doing the same work? Again, in the absence of an absolute standard of what their income ought to be, it is impossible to know if they are fairly paid, underpaid, or overpaid.
So your argument is that it's okay that we've made it worse for the people who already had it the hardest because the rest of the more wealthy people in the country benefitted from it? Sorry, but that doesn't make it better.
As for the rest of your post, my comment implied a context of the moral an legal framework currently in place in the US and most countries people would actually want to live in. But you're willing to dismiss major components of domestic and international law as well as the basic moral principles most of us live by with a vague existentialist argument about whether fairness even exists. We're not even debating the same thing, and what you want to debate isn't something I'm interested in debating.
> So your argument is that it's okay that we've made it worse for the people who already had it the hardest because the rest of the more wealthy people in the country benefitted from it?
Where did I write that? I included the excerpt from the article to demonstrate your intellectual dishonesty in selectively quoting a single sentence from an article that is positive about the effects of immigration. I did not make any moral judgments anywhere in my comment. Quite the contrary -- I argued that a moral judgment in this situation was not possible to make.
What legal framework have I dismissed which determines what someone deserves to earn, aside from the minimum wage?
We are debating the same thing. I'm arguing that your assertions have no basis. If you don't know what is fair, you cannot know if someone is treated fairly or not.
You have no basis for your claim that some people are paid less than they deserve to be paid, unless you know what they deserve to be paid, and can demonstrate that what they are actually paid is a lower number than what they deserve to be paid. That's not a vague argument. It is very clear. It's also not existentialist, and if you think it is, you don't know what existentialism is.
I wasn't referring to philosophical existentialism. This is the definition of existential I was using, straight from google.com:
ex·is·ten·tial
ˌeɡzəˈsten(t)SH(ə)l/
LOGIC
(of a proposition) affirming or implying the existence of a thing.
Sure, okay, there's no absolute standard for fairness. So there's no point in discussing the article, because by what basis would you even discuss whether or not employers should be allowed to ask applicants for their previous income? By what basis should we determine whether we should have any labor laws? What is the absolute standard by which you determined that there should be a minimum wage, or what that minimum wage should be?
If we ignore the entire framework of the conversation and my original comment, then we're veering off into a place I don't find particularly interesting.
I didn't say that fairness does not exist, or that there are not standards for fairness for some things. I said there is no standard for determining the fairness of what someone is paid. There are plenty of areas of life where fairness can be determined.
...and increased the wages of otherwise poor Guatemalans, Mexicans, and their families by thousands of percent. Why exactly should I be opposed to this?
Let me see if I understand this: In your worldview, allowing the brown-skinned person next door to bid on the same work that you are bidding on is equivalent to taking money from you?
>The guy digging proverbial ditches does indeed deserve more, but the market has been distorted by large corporations who lobby for lax enforcement of immigration law.
Do gravediggers get paid relatively more than other kinds of jobs in countries where there is essentially no immigration for economic reasons? I doubt it.
(1) Stop shaming each other for being "greedy" when they actually ask for what they merit. I can't tell you how many times on HN and elsewhere I've run into extremely defeatist attitude about this implying that we should be happy just to have jobs in the field. As long as these folks are around shaming fellow engineers for asking for more money they will drag everyone else down and other folks will laugh their way to the bank at engineers' expense. It needs to end.
Edit: See other replies to this post for great examples of this. Just because you get paid more than a lot of other folks, does that mean you're getting paid commensurate to the value you actually create?
(2) To justify these asks programmers must shift from doing things like chasing the latest JavaScript trend to focusing on delivering business value first and foremost. Every programmer hire is a gamble that might pay off big time or might end your business with crushing technical debt and poor decisions. Until programmers as a whole demand that each other focus on delivering business value first and foremost the shiny new tech chasers will, just like the shamers above, drag the salaries available for everyone down due to their own poor decision making.
The chasers will only drag your salary down, if the business can't distinguish you from them when hiring. Luckily, it's pretty easy for you to signal that you are not a chaser.
Getting paid more than other folks mostly means you are better at interviewing and negotiations. (Or, if you are a lifer, that you are good at your company's promotion process. If your company is sane, that might even imply something about how well you work.)
I don't think shaming or not makes a difference. It's just irrelevant. (Or are people really going to ask for less in their next negotiations because someone on the Internet 'shamed' them? Really?)
It's not just the Internet, it's real life too. If salaries are low across the board at $COMPANY it's an easy wedge for the management to use. "We couldn't give you more because then you would be making more than your coworkers. Do you feel like you really deserve more? You should be happy to have what you do already." If your coworkers are also too meek to ask for raises it's bad news for all the engineers. Pressure matters.
"We couldn't give you more because then you would be making more than your coworkers. Do you feel like you really deserve more? You should be happy to have what you do already."
The answer is to call their bluff and tell them that yes, you do feel like you deserve more. You may or may not add that you feel like your coworkers also deserve more. You can't negotiate your coworkers' salary for them. You're only in a position to negotiate your own.
In my case I have been fighting for my colleagues salary too, since they're "linked" by company policy.
It works because even though he's not asking for more money I can tell them what the cost of replacing us is, and I can tell them if one of us leaves the other is more than likely to follow.
Yes. And that's why every employee should spend some low amount of background effort constantly interviewing elsewhere. First, to get a feeler for what the rest of the market is doing. Second, to take a better offer if available. Third, even a committed lifer needs to keep the interviewing skills sharp, in case of layoffs or bankruptcy.
You do realize that it costs companies more to continually hire. If you add real value to a company, from my experience most non-global companies see and understand that. However, in many cases the engineer is mediocre in their job (regardless of actual skill) and still expects a company to increase their pay. In a generation of people that feel something is owed to them, unfortunately the mediocre engineer covers 80% of the talent pool.
There are also places that hamstring their above average developers with processes and/or interruptions that tend to bring down a lot of potential productivity (and morale).
Yes, I do realize. If you keep interviewing, you'll get a sense of how much your talents are worth in the market. (And the mediocre engineer you talk about will see their real worth too.)
These things aren't mutually exclusive. If it takes 10 devs 3 months to ship a Java EE app that requires 2 full time SREs to keep running, vs. 2 devs, 3 months and a part time SRE to ship something built with ShinyNewTech, then you better believe that's delivering business value.
ShinyNewTech bites people when they aren't intentional about introducing it and haven't done an accurate cost/benefit analysis. If you've done that analysis, and it really is a big difference in cost to market & cost of operation, then you're leaving money on the table by not taking that route. This happens all the time.
The cost of rejecting new stuff because the status quo seems to be working well enough is massive, especially because the status quo at most software shops is room-on-fire-this-is-fine.jpg
A good engineer certainly should know when to bite on new technology if it will deliver legitimate value but a FAR more common story in this industry is that whole stacks get rewritten for the new hotness with very little actual tangible gain to show for it. Opportunity cost of jumping at new tech when you shouldn't is much higher than the opportunity cost of the opposite.
It helps to try to price yourself out of 2/3-3/4 of the cold approaches you get from recruiters. If you want to make more, ask for it. If you're in a position, even if you don't like it, there's no harm to keeping your options open, or asking for 5-10% more than you are currently making. You might be surprised. Also, if you outright ask what the pay range is, more often than not, they'll tell you. That gives you some indicator of what to ask for.
Also bearing in mind where you stand on the skills ladder as part of that factoring.
Wait a minute, it is straight up crazy to suggest that most engineers get paid less than 0.01% of the value they create. If you make $100,000/year, in order for that to be 0.01% of the value you create, you'd need to create $1 billion in value.
You're off by like dead minimum two orders of magnitude, and probably more than three.
It's an interesting question to look at job and calculate how much value it would need to create per day or per hour to "outperform" the salary. Certainly it's a good benchmark in cases like this, where lone engineers are obviously not producing large-multiples of the value of their entire company.
At a guess most engineers are getting paid >10% of their value created, and some jobs (a crappy CEO, perhaps?) are getting paid >100% of that value. In fact, I'm not even sure that >100% of value means anything is wrong if someone is undertaking a high-risk job.
Developers are just another means—we're not wizards. We are a commodity, and if you don't recognize that you're in for a hard midlife crisis. Do you really expect to make any money without taking the risk of deciding what to build? How it's constructed is a (admittedly time-consuming and distracting) detail—only a small aspect of the company's value.
Risk and comfort are tradeoffs. If you want to live without risk, you'll have to be satisfied with whatever salary you can negotiate as a commodity.
A startup might make lots of money, but most never succeed. As a regular dev in an established company, I expect to make a lot, my goal is $400k a year in total comp, but I might only break 300k this year. I'm not the VP, I'm not a director. I'm an experienced dev in Seattle, I hope for $200k in stock, 200k in salary + bonus. I have 20 years of experience.
As many people have said, you don't have to do your own startup to make a lot of money at the big companies. In Seattle, your average 10 year experience google employee is making $200k salary + bonus, and then at least $100k in stock. Amazon, Msft, Facebook pay comparably.
But a good engineer will have a say in what to build, not only how to build it. Otherwise all dev work could just be outsourced. IMO, the role of a good engineer is to deeply understand the business/domain to provide good insight in regards to what to build.
I think that everyone believes part of their job should include deciding both what they do and how they do it. I think it's pretty rare for non-managers in any field to have the latter, and extremely rare for any non-managers to have the former.
I'm not sure why you believe engineers would be uniquely entitled to make decisions about what they're building. Even in a classical engineering job (building a bridge) they don't get to go "nope, this is a bad idea let's not build it." At best they can say "this is what it'll take to do what you want, is it worth it to you?"
Really, deciding what to do is literally the only job top management even has. It's not often shared with the people doing the work.
I think the distinction between "what" and "how" is a matter of perspective. The "what" is definitely the domain of management (even if decisions are made with engineering input), but where the "what" ends and becomes "how" is fluid.
To use your bridge example, the "what" is "build a bridge" and the "how" is type of bridge, where beams go, etc.
That could just as easily be reframed as a more general "what" of "increase traffic capacity from A to B". The "how" might be a bridge, or it might be a new road that routes around the lake, a tunnel, or some other solution.
You could also frame it as more specific "what" of "build a suspension bridge" where the "how" no longer includes as many decisions.
You'd see the same distinction form between a micromanager and a hands-off manager. The former leaving almost all of the decision making in the "what" and the latter leaving almost all of it in the "how".
This is actually why so many organizations that are good at shipping other kinds of products suck at software: the distinction between "what to build" and "how to build it" is very squishy, and on a complex enough project the distinction is nonexistent.
A complete specification could just be executed. It is the program.
> Otherwise all dev work could just be outsourced.
The value of American engineers is their ability to a) speak english well, b) show up at the office, and c) swallow large amounts of debt for college to ease hiring. So I'm not sure how outsourcing plays into this at all.
I have never before heard of someone expressing a desire to hire a product manager/marketer/sales/brand strategist/designer because they're a good engineer. It actually shocked me you would consider skills involved related at all. I would not expect this from an engineer, and it would make hiring one immensely difficult. That's more the type of skill that leads to starting your own company.
> I have never before heard of someone expressing a desire to hire a product manager/marketer/sales/brand strategist/designer because they're a good engineer.
Hmm, I'd heard that hiring product managers that were excellent engineers is very common in the Valley. Not as an exception, but as a "preferred" qualification.
Hopefully they have some ability to manage a product, too. :) That's a skill that engineering helps inform, but a good engineer does not imply anything like time management, market knowledge, people skills, translating between designers and engineers, etc etc.
"I have never before heard of someone expressing a desire to hire a product manager/marketer/sales/brand strategist/designer because they're a good engineer."
I have. They don't have to be amazing engineers, but a background with some engineer knowledge is always a big plus.
Well, sure. But it's not their engineering talent alone that got them the job—hopefully that is not sufficient. The main reason it helps is to understand obstacles, time management, and communication, not because their job is engineering. Regardless, coding is certainly not a directly useful skill.
There's a common saying "Nobody ever gets rich working for someone else". I am not sure how much that is backed up by any statistics but the Bay Area and employees of unicorns or Google/Apple/Amazon/Microsoft/... may be outliers to this adage.
Anyway the point I am trying to make is that as an engineer you either have the choice of working for an employer and living an albeit comfortable life (without any risk) or going it alone or starting your own venture with all its associated risk/reward profile.
You have already indicated that you believe in this adage and took the necessary steps to increasing your worth and would continue to take the same approach in future.
What somebody is worth is what the market is willing to pay for them either in salary or by investing in their venture.
This adage is used mostly by snake oil salesmen slinging get-rich-quick schemes. Working for somebody else is probably the best way to get rich. Putting a qualification here, rich is not filthy rich, but affluent to comfortably rich.
Uh, no. This adage is very very true. Sure, you can get a comfortable six figure salary, but that is by no stretch of the imagination "affluent".
I'm defining rich as making 7 figures a year. I think that's a pretty fair assessment. You'll never get that working for someone else (especially as an engineer), barring extenuating circumstances. High equity employee #1 or co-founder is the way to go.
A 7 figure annual income is setting the affluent definition very high.
You can work at Google for a decade and end up a multi-millionaire, with enough money to retire to most places in the US.
From your other comment, it seems like you haven't done the analysis on this. Top companies are routinely paying $200k-300k these days. That's enough to save a million dollars over a decade even if you have a family.
You're very likely talking about the top 0.1% employees at the top 0.1% of companies.
Every time salary is discussed on HN, inevitably someone brings up this "fact" that engineers are "routinely" making $200K or $300K or $400K or whatever other ridiculous figure. Given average Bay Area software engineer compensation being between $100K and $140K depending on your source, even at $200K we're probably talking at least 1 or 2 standard deviations from the mean. But there's no fighting HN anecdotes. There's always someone here who knows That Guy At Google Who Makes $300K or That Buddy's Roommate That Gets $400K Straight Out Of School At Facebook, and suddenly this turns into "everyone must be earning that much." Come on.
Yes. It is surely possible to work at Google for a decade and end up a multi-millionaire. It's possible to bowl 300, too, and hit 3 hole-in-ones in a row. It's astronomically more likely most people who work at Google or any other software engineering role for a decade will not end up multi-millionaires. Pretending otherwise grossly overstates the (admittedly okay) lifestyles and salaries most tech folks enjoy.
This is all in the greater thread's context of whether you are more likely to get rich working for someone else or yourself. Sure, only the top engineers get paid $300k+/year, but an even smaller number of founders are able to pull that sort of effective salary. I'd wager that these days a smart engineer is financially better off at a big co than even starting a startup.
For more specifics, large, prestigious companies such as Google have salary and equity bands based on levels. The majority of engineers at Google are going to be above $200k total comp (salary + bonus + equity). Here's a glassdoor link for context: https://www.glassdoor.com/Salary/Google-Senior-Software-Engi...
> This is is all in the greater thread's context of whether you are more likely to get rich working for someone else or yourself.
The point I'm trying to make is that both likelihoods are very small. Maybe you have a 1 in 1000 shot at becoming a multi-millionaire by working at BigCo vs. a 1 in 2000 shot at a startup. Some people are claiming that Google, Facebook, etc. are simply pumping out millionaire after millionaire and this is obviously not true. And when you call them on this, they trot out the usual "Bbbbut I know That One Guy At Google Who..." anecdote to somehow prove that everyone in the valley is printing money.
I generally don't trust equity figures when looking at Glassdoor, because there are no details. My guess is most of what's self-reported as yearly equity is really just signing bonus equity that vests after 4 years and then you're back to making base salary.
Fair point, though I do believe it is reasonably common for a new grad that starts at FB, Google, etc. to have saved a million within 13 years. (An individual making $200k/year can readily save $80k/year)
> My guess is most of what's self-reported as yearly equity is really just signing bonus equity that vests after 4 years and then you're back to making base salary.
Generally, I think people would be reporting what they are going to make this year. (e.g. #shares vesting this year * value).
Companies continually issue refresher equity as time goes on. At year 2, you'd be expected to be vesting significantly more equity than you did at your start date (especially if you have been promoted)
In support of your argument, I would be surprised if the key engineers in large companies (ex: Jeff Dean, Peter Norvig, Yann LeCun, Andrew Ng, ...) aren't earning 7 figure annual incomes, especially after stock incentives are taken into consideration. They all work for someone else.
Instead of downvoting, please check the median salary for a PRINCIPAL software engineer on Glassdoor (it is self-reported, I believe) - it is 140K, nationally.
Glassdoor skews heavily downwards. Even for companies I've worked at, where I knew what everyone made, its data was roughly 25-40% below reality.
Also, why look at median salary? We're arguing over whether it's "possible" to become affluent as a mere employee—even if only the top 20% of engineers are capable of it, it's certainly possible.
Maybe I am a total loser, but I am not aware of any companies which "routinely" pay $300K for technical positions, not even at the Director level, in the Boston area.
I find in these conversations that some people are talking about salary and others are talking about salary + bonus + stock options. In particular, the stock option portion to me (but YMMV) seems disingenuous.
As an example, I'm in the Boston area and ~2 rungs away from a "director" type title, working at a company known to not pay top dollar and without things like stock. It wouldn't take much stock for me to enter into the range that's being discussed here, albeit likely the lower side of it. OTOH none of the people I talk about this stuff with are remotely near the top end of that range when you take stock options out of the picture.
Google and Facebook etc often give 'restricted stock units', ie stock that vests over time. That's almost as good as cash, since you can sell them anytime after they are vesting.
Stock in startups and options in general are a gamble, of course.
They're way better than startup-y options, definitely. However if for some reason I don't stay there long enough, it's not at all the same as cash.
They're still plenty valuable, as opposed to startup options which I consider worthless, but my point was that IMO this is one of the sources of all of these debates as to how much people make. Some people will count them and others won't
At Google you wait for a year, and then get stock vesting every month. I just treat it like monthly salary (and don't even pay too much attention to how much unvested stock I theoretically have: if I stay, they'll top it up anyway; if I leave it's gone.)
Yes, totally agree, if you want to compare numbers, you have to agree on what you compare.
In theory, we could just always talk about total compensation, and just plug in standard financial valuation models. (Those models would typically value startup equity at close to zero value---especially the kind of equity that tends to get horribly diluted.)
Because these companies don't exist. Top companies pay SDE3s and tech leads like 300-400k. Medium-sized companies in high cost of living areas pay directors around that much. No one pays engineers that much. Literally no one.
No, they just don't consider the millions they receive in stock. Given that an intern at Facebook earns $8000 a month plus free luxury rent, do you honestly think a director makes only 70% more in a tech company?
At most companies tech lead means someone who is planning the technical work of a team, but is not the manager. The tech lead is an engineer. So that company has separated manager and tech leadership. Google works this way. There are some groups at google where someone does both tech lead and manager, they call that person the TLM.
I have a friend that works there as an engineer and as far as he has told me they pay about average to a bit below average and the engineers sit in an open plan office.
Just checked glassdoor, and a senior software engineer makes ~114k so that gives you a pretty good idea of their compensation structure...average.
Not to call you a liar or anything, but I get emails from wayfair recruiters all the time and my understanding of their compensation has led me not to respond but I'd love to be wrong.
There a lot of jobs that pay that much in other comapnies in and outside of tech, although you will be expected to do more than just excel at a profession (read go to management).
There are also many more tech companies which will give such salaries to distinguished engineers.
edit: Reading your other comment, median is not the right parameter to compare in this situation.
There's a few more companies paying well than that.
But, yes, the limitations of popular knowledge are part of the reason why we wade through lots and lots of applications from people who have absolutely no clue at Google. (The most clueless just haven't heard of the less well-known companies that also pay well.)
$200k-$300k in places like San Francisco and Menlo Park. Clearly, you don't understand how cost of living works. Also, to make that much, you need to be at around a level of SDE3/tech lead, which is by no means easy (a decade of making low six-figures & some political panache). See this top answer on Quora, for a pretty detailed analysis: https://www.quora.com/Will-I-be-able-to-become-a-millionaire...
You might be able to become a millionaire in 25 years assuming a frugal lifestyle and no big life event costs, but that's optimistic.
You can argue all you want, but I understand how cost of living works plenty well. SV is expensive but not so expensive that it wipes out $200k in income. If you're careful about expenses you can easily put away tens of thousands annually.
This is backed up by own personal experience as a developer in NYC (hardly a low cost area). I expect to have a million dollars saved up within a decade and I certainly haven't relied on political panache to get there.
Sorry for seeming incredulous, but if you're saying that you're saving 100k a year in NYC, then you must be making like 400k or living in a cardboard box.
Even with a 300k salary, you could only save 10k a month if you only had 5k worth of monthly expenses (3-4k is easily rent in NYC).
And keep in mind that making 300k-400k is not typical.
Only if you insist on living by yourself, or renting a luxury apartment with your friends/family in Manhattan. Going under $2k a month is easily possible if you have a large, multiple earner family or roommates, especially if you live outside Manhattan/Brooklyn. Plenty of New Yorkers manage with incomes less than $60k, and if you can live like them, saving 10k a month on a $300,000 salary is easy.
There is nothing requiring you to spend a certain amount of money just because you are earning a certain amount of money. We don't have sumptuary laws, after all.
I make substantially less than 400k and I assure you that I do not live in a cardboard box.
$5k is high for monthly expenses. I rented a single bedroom in Manhattan for $1850 and you can save even more if you're willing to live with roommates.
I'm not sure what I can do to convince you I'm not lying, but consider that median household income is less than $100k in both SV and NY. If the average person can get by on <$100k, why wouldn't you be able to save tons of money if you're making $200k? I have friends getting by on $40k in NYC. Can you imagine how easy it is to save if you match your lifestyle to theirs?
Of course, it's not going to buy you a luxury lifestyle. But personally I'd rather maintain a high savings rate than live in a glitzy apartment and spend thousands on bottle service.
Ok, so maybe I'm just bad at math. I know that if you make 200k as an engineer in NYC (which is STILL high[1]), you make around 10k a month after taxes.
10k - 2k for rent - 1k for expenses = 7k saved if you don't go on vacation, and literally do nothing that costs money for ten years. Even saving 7k a month, you won't save 100k a year.
You are exaggerating NYC income taxes. At $200k, your effective income tax rate if you file single, including FICA, is 33%, not 40% [0].
Heck, your marginal tax rate isn't even 40%, and all those numbers are without taking a 401k tax deduction.
People get this crazy idea that $200k isn't rich in NYC or SF. It is very, very rich, even for the area. COL adjustment for rent and groceries shaves off $15-30k, but it doesn't keep scaling up from there.
There's actually no contradiction. Marginal tax rates go down 6.2% at 118,500 when social security cuts out, and they only go up about 3% from there to 200k.
It's kind of outrageous, marginal tax rates going down for high earners, but there we are.
But thanks for pointing out that I had the wrong zip code, so I missed NYC income tax, which is 3.65% marginal, bringing average tax rates at 200k to 36%, not 33% (albeit with zero deductions and exemptions, which obviously isn't reasonable, you'll deduct state income tax at the very least and shave off 1.4% immediately).
Your link is in error, it treats Social Security tax as continuing past $118k.
> you'll deduct state income tax at the very least
The tool also factors in state income tax deductions. You'll see it deducted in the link above
The tool reports the marginal tax rate for a $200,000 earner as ~36%.
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But yea, you're right, it sucks that $50k earners are taxed even more % than $200k earners. The employer pays payroll taxes of 7.65% (6.2% + 1.45%), so actual marginal taxes are ~50% from an employer cost perspective. It's truly insane.
7k is about right. My average savings rate over the past 3 years has been $6k and it's increased as my salary has.
You're forgetting to include investment gains. With them, I can go on regular vacations and still reach $1m within 10 years.
Also, since someone else mentioned it, my model conservatively assumes a 4% inflation rate. Over the 3 years I've been tracking, my model has consistently underestimated the growth in my savings.
It's not huge. That's bills together with all of your everyday spending. It's certainly possible to get that down to less than $1000 a month but you can easily spend $1000 a month without doing anything extravagant.
A lot of people make TL within 5-7 years, its not that uncommon (although we are talking about top 1-5% of programmers). Saving $1MM on west coast salary in 10 years is really doable. I am on track to do it in effectively 7 years or so.
Have you seen the thing about how there are no rich Americans?[1] No matter how big my house and expensive my car, I'm not rich, heavens no, that guy over there has a bigger house and a shinier car, he's rich. And of course he'll tell you the same thing.
$200k/year is most definitely rich by the standards of most of America. If you think that's silly, hang out with someone who makes $30,000 a year and think about how much $200,000 would change their lives.
You will probably not become a millionaire unless you have no family, you never get laid off/let go, and your salary scales with inflation.
There are other considerations as well, including cost of living (most high salary jobs are in high-cost areas), liabilities (debt), and so forth. If you want to get rich (again, 7-figure range), this just doesn't seem like a good bet to make.
My personal slant on things is that even if you do become a millionaire, let's say in your 60s, who cares? The point is to get rich while you can still enjoy your money. There's no virtue in being buried with your treasure.
I don't feel like I do. I cannot afford to battle patent trolls when something I produce somehow infringes on their "intellectual properties." There has been some progress, given the Alice vs CLS Bank decision, but there's still lots of patents flying around out there like this one (https://www.google.com/patents/EP2973038A1) where Google attempts to patent "Classifying resources using a deep network." Given that there's a very real threat of bankruptcy for even trying to start my own venture, I plod along at my position which is automating thousands out of their jobs while I make a minuscule fraction of what those people were once paid.
There is a tremendous amount of risk to go it alone, especially when the alternative is so comfortable and risk free. By all definition you would be crazy to go it alone. The statistics seem to point in that direction.
But then again the reward profile if you are in that 10% to 5% that succeed and have the stomach to continue for the long haul is huge.
I personally am a victim of the 'Analysis Paralysis' that your are alluding to and understand the hesitancy in taking the first step. There is plenty of risk out there and its good to be wary, but if you never take that first step you will never know what your future could be.
Maybe its better to try and fail than never to have tried at all.
Time is not on your side and none of us are getting any younger. (Sorry for all the cliches).
I've seen people with a decade of experience on the job "disappeared" and there's little more than an email to the staff telling us they are gone, effective immediately. I don't consider that comfortable or risk free. Especially true if one is in charge of systems, because of stories about loose cannons like
>Maybe its better to try and fail than never to have tried at all.
I hear this sentiment mostly from upper middle class people who can fall back on family if they fail. I don't meet a lot of people who have experienced true financial ruin, recovered, and are willing to risk going back. A lot of us are as hungry as any entrepreneur. We simply don't have the safety nets. I don't know your case. Maybe you're as "financially independent" as I am, but advice like that sounds condescending in such a context. Of course they'll walk the tightrope. They've got a net.
This is really difficult to quantify, I imagine. Sure, engineers can create very valuable things. They can also create totally useless things (I am one, and I've made my own share of 'useless' features).
I don't really see why singling out engineers is really terribly helpful in saying how much they're worth. An engineer can create great value, but if no one is selling it, is it worth much? A company without a direction can have great engineers but crater without good leaders. Without accountants, the money would be in shambles. Without IT, nothing would get done in a larger company. Without designers, user experience would likely suck so bad as to get in the way of the product.
It's hard to say that engineers necessarily deserve a larger slice of the pie. As it stands, we/they're paid quite handsomely. But I think to try to make it out to be something almost mythical seems unfair to everyone else.
Look at Apple, for instance. Without Steve Jobs, it almost certainly wouldn't be what it is today. Steve Wozniak is by all accounts an excellent engineer, but without Jobs' vision and drive, Apple wouldn't ever have taken off. Of the two of them, Jobs was the much more "valuable" by that measure.
Though I'm not sufficiently familiar w/ Jobs / Woz careers -- I like what you're getting at. I would say that just like there are 10x engineers, there's 10x Product managers / CEOs (really, just 10x people in general). They are few and far between (or, I've never met one) -- but if you got one, I can't imagine its possible to overpay them.
If it was true that the output of engineering alone was creating that value, then it stands to reason that dissatisfied engineers could simply leave and capture something closer to 100% of that value.
The reality, though, is that businesses themselves enable substantially all of the value they create through engineering. Google can't drive billions in revenue without engineers, that's true. But the Mets can't play in Shea Stadium without the janitors cleaning up after games, too.
Sorry, but this is straight up proletariat bull. You get hired, you get paid. If it doesn't pan out, you go somewhere else. You have 0 risk and a guaranteed career. And sorry, but 100k for a javascript "engineer" is more than the "fair share" in my opinion, but it's a market, so it is what it is.
Of all the social goals that we have (curing cancer, hunger, war, etc.), it amazes me that we haven't added 'work' to that list. Maybe like 5% of people that I know enjoy work more than 50% of the time (and it's probably not 'work' at that point).
Work sucks - we should eradicate it and let people spend their short time on Earth doing what they enjoy. Many of our ancestors worked hard so that we could have better. I hope that I can work so that my descendents (and your descendents) won't have to.
And, for the people down-voting, I'd love to know why. Send me a message if you don't want to say publicly. The anthropologist in me genuinely wants to know.
I can't understand how anyone would be for work ('they call it work for a reason, right?'). The only reasons I can imagine are 1) inflexible ideology, 2) sadism, or 3) love of power hierarchies.
I enjoy my work. If I go more than a week or two without doing some paid programming, I start to feel listless.
I'm lucky enough to get paid well as a freelancer, so I can work as much as I want from wherever I want. Even if I could retire tomorrow, I would still continue to do similar work to what I'm doing now.
Ok, got it - it's probably semantics then. When I say 'work', I mean doing something other than what you enjoy. If you love it, it's not work, in common vernacular.
Working as an employee is not without risk. There is the risk that you'll invest 10% or 50% of your productive lifespan in an employer who squanders it all and leaves you jobless without notice instead of an employer who puts your abilities to good use and recognizes the value that you create. The risk is partially mitigated by receiving a paycheck during those wasted years regardless of the employer's competence.
> invest 10% or 50% of your productive lifespan ... and leaves you jobless
If you are not an equity holder, that sentence makes no sense. In a standard employment arrangement, you are selling your time for your salary. The job is not your property; it was created by your employer.
Also, you got paid for that 10-50% of your productive lifespan. What else are you expecting?
As an employee, your time and skills are your personal capital (your means of production). The way you invest that capital has risk like any other investment.
Again, this is partially mitigated by salary. But as an employee, you probably don't expect to earn your negotiated starting salary for the next 40 years. You enter the relationship expecting some form of advancement, bonus, or other rewards in relation to your performance over time. Those expected returns don't manifest when the employer turns out to be a bad employer. Employers are not the only ones taking risks.
Returns to your productive capital being less than expected is quite different than being jobless. Though that is the worst-case outcome.
Asking about those advancement opportunities up front is very important during the interview stage. Getting it in your contract is even more important.
I agree that the employee takes risks when choosing an employer. I was confused about the scope of upside expectations.
At a company, devs and come and go and they are just people working in a job. The difference is that at this time in history, there's a huge shortage of us. A company can hire as many secretaries as they need, and its a lot easier to hire directors and vps. But if you can't hire enough devs, a company that builds software isn't going to be able to do anything. The acute shortage is the difference.
If there was a big shortage of say people with business skills, then they'd be worth more, or sales. Good sales and biz dev is always valuable. But there's not really a shortage of them, in the same way that there is in software.
To give an example, I worked at a startup. We had millions to pay salaries. We were paying 150-200k in salary. We couldn't ever grow over 5. We wanted to hire about 20 more. We had plents of designers, office managers, and leaders. Devs were far more valuable than a new hire in those other areas, because we were short. I left after a while, we couldn't ever hire anyone to work on a group I was supposed to lead.
Yes, I find it quite ironic that one of the most privileged groups on the planet is suddenly supporting an essentially communist argument of wage theft, as soon as there's even a slight possibility of them being underpaid. Apparently they are also entitled to unprecedented upward mobility.
I sincerely doubt many software developers here spend any sleepless nights wondering what it would have been like had they been in another field or profession, which are just as much victims of wage theft as supposedly these engineers are.
Why shouldn't everyone care about getting paid as much as absolutely possible (i.e. the only meaningful definition of "not underpaid")?
It's a somewhat free market, shouldn't we all be striving to maximize our take? Or are you suggesting that the central planning committee should be handing out salary guides?
Can you tell me the reason behind you thinking that "100k for a JavaScript engeneer is more than the "fair share"? And why you highlight the word "engeneer"?
Having a PE license is by no means the definition of being an engineer. And if it was it would be a very narrow one. I work at an aerospace company, most of my peers with advanced degrees in mechanical, aerospace and electrical don't hold a PE and don't need it. Are those not engineers? I have a degree in aerospace by currently write software exclusively, am I not an engineer either?
No, we're not "professional engineers," which means we cannot testify in court as an expert in our field, and have limitations for what we can consult on based on the licensing requirements of your state.
However, the title of "engineer" can be conferred upon an individual by an employer, during the term of their employment.
PE of course is a special term for that single accreditation agency. We can call ourselves whatever we want. The PE types have sued people in some places for calling themselves software "engineers" but they've pretty much given up on that. The work I do is engineering, I'm a professional.
Because you can achieve high proficiency rather quickly. Contrast this with engineers who optimize compliers who need much deeper and broader knowledge to make decisions in their day to day work, yet have the same comp. How is this fair? Again, it's a market and it is what it is.
I think there is a flaw in your logic here. You are saying "you can achieve high proficiency rather quickly", but at the same time you are saying that "it's market and it's what it is". Since it's a market - it means there is a high demand in those "JavaScript engineers", and if it's so easy to become proficient then what prevents those "engineers who optimize compilers" to become proficient in JavaScript and compete in that market? Maybe it's not that easy to become somebody who can manage to bring enough value by "just" being a "JavaScript engeneer" for whom employees can pay 100k+ wages?
>and if it's so easy to become proficient then what prevents those "engineers who optimize compilers" to become proficient in JavaScript and compete in that market?
Because money is not the only motivator for someone to work. And besides that, from a macro perspective the "free market" is simplistic propaganda. I don't know why people keep bringing it up. Nothing in the real world works that way. Real world is messy, arbitrary, impractical and irrational decisions are made every single day by all human beings. Normal human beings don't sit down and try to "optimize" some cost function in their life/work.
True, but it doesn't work like that in many parts of the world. I personally know Javascript engineers working for 20k just for geographical reasons and, like GP said, they should all smarten up imo.
Underpaid relative to what? Oklahoma pays teachers crap, yet for every open position there are fully credentialed applicants willing to accept that salary.
I wish everyone could make a million dollars a year, but as of yet the only fair way to set value for labor is a free market.
You're trained in something because you love it. You really want to do it, and you went to school for it, have experience in it. Someone gives you a choice -- you can do this for $XX/year or you can starve. The labor market is not as "free" as free-marketers make it out to be. I made a mid-career switch from social work to coding in part because of compensation, but it wasn't a friction-free switch. Also, my point was in response to the above poster who claimed that engineers were getting a fraction of what they deserved. By your metric, programmers are also getting what the market values them at. But by OPs metrics, I maintain that teachers create a lot more value than someone building another ad-tracker.
If you're doing it because you love it, then you should consider that joy/satisfaction as part of the comp package. A lot (most?) high-paying jobs are high-paying because people don't love doing them and they involve a lot of sacrifice. That's why they call it 'compensation'.
Then maybe we should have a reverse auction for jobs? I can pretty much guarantee you'll need to pay more for someone to work in a mine than to push pencils in an office, for example.
But within the same skillset, the higher paying jobs are usually the crappier jobs (longer hours, more stress, more physical discomfort, less job security, seasonal, etc.)
I think you're unfairly discounting the essential work done by other people in any business. While we engineer-types are tempted to look down upon sales, marketing, legal, HR, and leadership as do-nothing fluff, those roles can be just as crucial to a business's success as an engineer's. Pay is determined by the supply and demand of labor in the market.
Most professions you are referring to are unionized and defend their interests as a group, if you wait for C-execs to increase salaries of its information workers you might wait a long... long time. They have a board of shareholders to respond to and that is just not in their interest.
I am actually quite surprised at the devotion of some people here for their masters. It does provide a beautiful illustration of La Boetie's speech on "Voluntary servitude".
I mean, c'mon, this isn't the McCarthy era anymore... people should not get thrown off because you pronounce the word unions. Ordoliberalism like applied in Germany where I worked a couple years provides a quite elegant framework to allow a local form of union so the workers' right can be defended while not impending innovation and regular market dynamics.
>if you wait for C-execs to increase salaries of its information workers you might wait a long... long time.
Actually, you wouldn't wait very long at all, since pay for software engineers is at all-time highs. If you're good (and even if you're not), you can come out of college into a six-figure job in the valley.
I know people who work at Boeing and have to follow union rules. I want no part of that racket. Keeping track of every single minute worked is mandatory and working extra time beyond the allowed maximum can get you fired. It becomes a way for the mediocre and complacent to pull the excellent and ambitious down to their level. The union has repeatedly shot themselves in the foot by forcing outrageous demands on Boeing. Guess what the company is doing in response? Moving more and more operations to South Carolina and China.
There's no place for unions in software, a field of highly-paid knowledge workers that have recruiters emailing them weekly.
>Ordoliberalism like applied in Germany where I worked a couple years provides a quite elegant framework to allow a local form of union so the workers' right can be defended while not impending innovation and regular market dynamics.
The United States is wealthier, more dynamic, and has a lower cost of living than Germany. Why exactly should we copy their model?
Economic theory mumbo jumbo is a red herring. It's all about risk. You "pay" a premium for an FTE position where you get paid every two weeks, get someone to deal with your benefits and pay your taxes.
If you create $1M of value, that's fine, but the check for that value may not arrive for a year -- or ever. But you still get paid. Engineers always talk about the money they save or value they create, but most of the savings are fixing mistakes and the value usually cannot be attributed to specific people.
If you want to get paid what you're "worth", you need to be at risk. Either work for yourself or work a gig where you get paid directly for outcomes like a salesman.
I think you are creating false equivalencies. There is a huge difference between the risk and commitment that an entrepreneur brings to a venture when compared to any other employee.
Now, if an employee (engineer or not) participates with similar exposure they definitely deserve more than a salary.
Maybe you haven't had a solid failure yet. I have. I lost everything once. And by that I mean everything: home, cars, furniture, even the last penny in my bank account. Everything.
My employees got laid off and found new jobs. Their lives continued (something I was happy to see, BTW). For me it was a nightmare that lasted a few years until I was able to get back on my feet (through entrepreneurship, again).
Everything in business in business isn't rosy. Businesses like Facebook that go from dorm to rocketship with hardly any struggle are pink unicorns. Most ventures have to slog it out and struggle, sometimes for years, before they succeed (and most fail). In this context, paying market rates --which means "only as much as you have to"-- is the fiduciary responsibility of the entrepreneur/CEO. Over-paying because of some unconventional criteria of fairness (that happens to be false) is simply irresponsible.
Because of this and other experiences I am very sensitive to this idea that everyone is equal (in terms of salaries, responsibility, exposure, risk, etc.). That's not the case at all.
> engineers need their fair share. They are the one creating things, they are the one on the front line and we should not get satiated by the crumbles we are left with.
This, 10x and especially for programmers coming for 2nd/3rd world countries, whom are even more unaware of the value they're creating and settle with way less. Obviously, it's easy to say this and it often doesn't help you get your foot in the door when you ask for 3x the average dev salary around you at an interview. Key is to keep re-negotiating after you've proven your value, then iterate until you get the slice you deserve. For a company it's really painful to lose an employee who is already performing well, they'll likely give up on the margin to keep you on.
We used to joke that people with naïve pictures of Africa in their heads, expected to see wild life immediately after stepping off the plane. I believe the image you have is somewhat more nuanced, but still could do with some work. We are very aware we are generating value which we are not capturing. I've heard AWS CT devs complaining about receiving less than half the total comp as their US peers. We just don't have much leverage.
I am a developer, so I am all for higher developer salaries, but your posts shows a common misunderstanding about economics. The value someone creates has nothing to do with their salary. Their salary is dictated by how many people need to hire developers and how many developers exist to fill those jobs or in simple terms, supply and demand. I might create millions of dollars in value with my code, but there might be another developer that will accept $5k less that can still create millions of dollars with their code. Similarly, the job that 95% of us do really isn't that unique. Sure, each development job has its own challenges and there certainly are a handful of 10Xers out there, but the truth is that once you get to the point of "competent developer" and the meaty part of the bell curve, we are all pretty much interchangeable. It then becomes a question of who will do the same work for less.
Your answer also shows a common misunderstanding about economics, because it takes too narrow a focus.
If there exist jobs that produce $1MM in value but that have a going rate of 200k, then there should be more of those jobs: either the company doing the work should expand, or it should have competitors. This will lead to increased competition to hire, which means higher wages. The increased number of jobs might generate downward pressure on the value produced by those jobs (since the output is now less scarce), and the increase in salary should increase the number of people who want to work in the field (which would dampen the salary increase), but we should ultimately reach some sort of equilibrium. The fact that tech companies bemoan how hard it is to find employees suggests that we aren't at this equilibrium.
To give an analogy, your explanation is akin to when people observe that the price of a good is based on the competitive market, and that the cost to produce merely provides (in most cases) a floor to that price. However, that's only part of the story: in a well functioning market large spreads between cost to produce and price encourages competitors to enter the space, which leads to lower prices. There may be delays, and there may be exceptions, but generally the function of competition is to reduce these spreads. Likewise, we should expect competition to reduce the spreads between job value and job salary, generally by increasing salaries and lowering values.
>If there exist jobs that produce $1MM in value but that have a going rate of 200k, then there should be more of those jobs: either the company doing the work should expand, or it should have competitors.
How could you possibly determine how much value your efforts are producing? How much value are you assigning to the risk the founder and investors are taking? Maybe your $200k job is producing $200k in value. Or even less.
>The fact that tech companies bemoan how hard it is to find employees suggests that we aren't at this equilibrium.
Tech companies always pretend it's impossible to find employees. That's not reality, though. That's a political strategy.
> How could you possibly determine how much value your efforts are producing? How much value are you assigning to the risk the founder and investors are taking? Maybe your $200k job is producing $200k in value. Or even less.
I'm not disputing that there's difficulty, and that it might not always be possible (although we can often estimate and assign a confidence level). But the parent comment claimed that even if we did know, value shouldn't pull salaries up: that's what I'm responding to (side note: the parent also implied that we can know what values are, since he acknowledged their use as a floor for salaries).
In college I spent a couple summers doing repair work in the shop of a family friend. I got stuck with a boondoggle repair and when it got into day 2 that I was still working on it, and the manager got pissed off and tried to take over for half an hour before he figured out why it was taking me so long. Then we had a shocking conversation about the fact that while he was paying me $x/hr, I needed to be booking at least $10x/hr in repairs, so I needed to work faster. It seemed so unfair to me until I spent a lot more time working in small companies.
The repairs were a profit center, and the labor I was billing was keeping the utilities turned on, buying replacement tools, consumables, paying for my lunch break, covering rework, a hedge against me injuring myself, paying for the shop van I used to run inventory between stores, paying taxes, business licenses, my manager's salary, the owner's salary, paying for Bob to wander over and consult on a repair I wasn't sure about, paying the interest payments on the loans, and covering the loss leaders that got us repeat customers who needed repairs in the first place. Things like trade-ins and entry level equipment.
At your programming job, every manager above you in the chain, every support team that you use to get your work done are all being paid out of the money billed for you. Yes you may be writing $1M in software a year, but the company wouldn't exist and you wouldn't have any sales without those other people, so all of that overhead gets subtracted from your value. Ironically and possibly painfully, a company can exist for months without a single programmer, but it can't exist long without a management chain.
I don't disagree with any of this. I'm not saying that if an engineer writes software that increases profits by $1MM then they have realized $1MM in value: it's a team sport. But I don't think that prevents us talking at all about the value of the work that is done in a job.
Do you have quarterly goal setting reviews? People generally find that a formal process such as this will answer the questions you pose.
For example, you may discover that someone else got that promotion that you were eyeing, because they provided 15x value compared to you - 7 patents, 3 products architected that opened up new areas for growth, etc.
If you can convince the general public the tech industry will wither on the vine for lack of skilled labor, you can get Congress to raise the H-1B cap, allowing you to drive down your labor costs.
I do not believe that you shouldn't get any compensation, but the idea that simply having money entitles you to the lion's share of the compensation, above and beyond those that actually do the damn work, is idiotic.
"And what makes showing up at the office and typing on a keyboard such a holy use of time that it alone deserves compensation?"
I know what you mean. It's the current system that's messed up, that just by holding money you can create money. It generates all kinds of fucked up inequalities.
Yes there is risk...but so much investment is made by those that can afford to risk it..that is the risk of losing the investment is not losing your home and car or being thrown to the street. If risk is defined by surplus money alone then yes, investors take risks, but if you define risk as the chance of losing your livelihood and basic needs? Typing on a keyboard entails more risk.
When the poor takes an investment risk of $1000 they risk more than some elite putting up $1000.
No, it's the money itself which is risked. Everything else is adjacent. How much the specific individual holding the money actually values it is irrelevant. It's how much that you value the money that's relevant.
What is $1,000 worth to you? Now, that question has a wide range of answers. In some places, that's literally worth multiple lives. Or it could be beyond insignificant.
Obviously very few can or should take a personal investment risk of 100% or more of their net worth.
You are arbitrarily limiting the scope of risk to a unit of account without regard to what those units of account do or do not afford one in the world. That is too limited a definition to be useful IRL.
What I was trying to get at is that the value of money is both absolutely consistent (unit of account) but also completely situational ($10 can save a life). At the same time, the IRR of investing on public markets, like an index fund tracking the S&P 500, is exactly the same for everyone, and anyone can invest 10% of their net worth, whether that is $1,000 or $10,000,000.
The original comment was that holding money generates nothing, you have to risk it, and I completely agree. You can risk 20% of your net worth and you're not risking your livelihood, and odds are in ~8 years your investment will have doubled, and your net worth increased by 20%. For some people that's a thousand dollars, others it's ten million. If you want to double your net worth in less than 30 years, you're going to have to risk a lot more. Everyone has access to the same returns on the public market (and we restrict access to private markets for very good reasons).
So it's a literal definition of risk, and as a percentage of net worth it works well. The problem of massive wealth inequality to me is completely adjacent to risking capital in return for investment returns.
In truth my original comment was to point out that the holding money comment was misunderstood to mean keeping money under a pillow when I took it as it takes money to make money, and those that have money risk little in terms of their physical welfare.
If there exist jobs that produce $1MM in value but that have a going rate of 200k, then there should be more of those jobs
This is true generally, but I think it doesn't apply in context. Tech has saturated the existing market, there is no demand to be satisfied for more tech. Of course, the industry will continue to grow, but only because the very nature of tech is to innovate. Growth in tech doesn't come from creating new supply to fill an ever-growing demand, it comes from innovating and creating new demand. That means that the growth of tech is bound to the rate of scientific progress, of investor's wallets and of cultural change. You can't keep hiring more and more 200k developers to make more millions, because there's no one left to pay more millions.
The parent, slg, was right in their analysis except for one point: employers have to compete on salary between each other, but they also have to compete against the engineer's opportunity to start their own company, which would let them earn directly in proportion to the value they produce. Engineers' salaries are therefore related to the level of risk and difficulty of entrepeneurship. The easier it becomes to start a startup (controlling for the expected returns of starting a startup), the more employers will pay their engineers.
No. People who don't have an iPhone either have a different smartphone (their demand is owned by Apple's competition), they can't afford a smartphone (they're not a source of demand — until someone innovates and makes a cheaper smartphone), or they've actively chosen not to own a smartphone (not a source of demand).
> Tech has saturated the existing market, there is no demand to be satisfied for more tech.
Of course, if you mean at current prices, then sure: everybody who wants and can buy at current prices will do so.
Still, demand is very elastic. Even with current tech, there's lots and lots more demand at slightly lower prices. Companies can just wait until their capital investments have deprecated a bit more, and then lower prices a bit.
(You also want to keep prices high initially, even if costs would allow to go lower and still break even, to capture the higher willingness of some people to pay more to get your product sooner. Basic price discrimination.)
> If there exist jobs that produce $1MM in value but that have a going rate of 200k, then there should be more of those jobs: either the company doing the work should expand, or it should have competitors.
> in a well functioning market
All these big California technology firms argue to shareholders that their network effects create a "moat" (they prefer you not to call it a "natural monopoly"), and that this is exactly why their revenues are disproportionate to their spending/hiring.
I think your argument should be played backwards: the large-cap CA technology industry is not a "well functioning market" because everyone's just seeking natural monopolies--and sometimes capturing them.
> either the company doing the work should expand, or it should have competitors.
That's not how technology works. The most evident example is where data feeds data, creating a market without compare. You can't compete with google for map data or AWS for hosting.
> we should ultimately reach some sort of equilibrium
The equilibrium is not based on the metrics you have proposed except in the slightest degree.
Doesn't the fact that people are trying to compete with those services suggest that you can? Bing maps, Apple maps, Azure, Google Cloud Platform, Digital Ocean, Joyent.
I don't think technology is that different. Incumbents have always had advantages. That doesn't totally preclude the possibility of competition. It might be that they compete by providing less value for less cost (eg the maps might not be as good, but they might be good enough for some users), or by servicing users that the incumbent doesn't care about (side note: isn't this what The Innovator's Dilemma is about?). But it's rare that a competitor is so dominant as to totally preclude any possibility of competition. You certainly haven't provided an example of one yet.
Spend 25k a month on Azure vs AWS. It's not comparable any more than Sonii branded product are comparable to Sony products. One derives revenue comes from ignorance while the other is the product being copied, badly. GCE is akin to Oracle's "cloud offering" which is simply a different product, but hey they all say "cloud" so they are competing! Market influence isn't as powerful when you can't actually deliver. What's to the left of you at 33.802799, -117.885665 using apple maps? Oh Apple Maps a different market, meaning it's not in the same market. Being apologetic about features is being disingenuous about choices. There aren't that many for people who have specific technical needs and marketing doesn't solve "address those issues" (a scripted phrase from highwinds CDN, which is another terrible service). The leaders will stay that way and there's not a lot that venture capital can do to avoid that, since outliers are absorbed in these winner-take-all markets.
No. Why would that be a remotely rational thing for them to do?
When I use "should" in my earlier post, I don't intend it as an ethical "should". I mean it as a "if everyone acts in a rational way, this should, eventually, be the outcome".
If everyone acts in a rational way, and there is no occurrence of monopolies or price fixing, and if information is widely distributed, and a few other "ifs" that are not obviously missing from the scene, this should, eventually, be the outcome
To put it in simpler terms, if an employee creates $100 in value but only costs $10, competitors will line up to outbid that $10 to poach that employee.
There are 10s of thousands of businesses in the US. It's hard to believe there'd be any remotely successful collusion in keeping wages down.
Non-compete agreements are invalid in many states. Also, would you sign a non-compete agreement in order to get paid 10% of your value to the business?
> There are 10s of thousands of businesses in the US. It's hard to believe there'd be any remotely successful collusion in keeping wages down.
This takes many assumptions: People know of all these businesses. People are able and willing to move at a whim (not so easy with family/friends), people are willing to change their jobs every other month (for a business a job is just a transaction of money vs time, human beings, failed constructions that we are don't see it that simple) and so on. Neither the world nor people are completely rational, so things which work in theory often donThere are 10s of thousands of businesses in the US. It's hard to believe there'd be any remotely successful collusion in keeping wages don't work in reality.
"Our policy only impacted cold calling, and we continued to recruit from these companies through LinkedIn, job fairs, employee referrals, or when candidates approached Google directly. In fact, we hired hundreds of employees from the companies involved during this time period."
It doesn't sound like it was very effective. Cartels in general tend to be unstable, as members have powerful incentives to cheat on the agreement.
It's hard to say if this agreement actually reduced salaries in any significant way, as there were plenty of other companies in the area who were not part of the cartel.
You appear to be ignoring everything else that goes into making a company besides labor. There isn't perfect competition in the real world. Companies don't all have the same resources, customer base, or opportunities.
For example, a person doing the exact same job at Facebook is going to provide more value than a person doing the exact same job at Twitter which is going to provide more value than a person doing the exact same job at a brand new startup. The Facebook employee might be producing $1m and the Twitter employee might be producing $200k. In that instance Twitter can't pay more than $200k and Facebook has no incentive to offer more than $200k.
Or maybe a more concrete example, if I am the head of design for Ford, the value I produce for Ford is always going to be more than I can provide by myself because I have no way to put my skill set to use in a new company. I don't have access to the supply chains Ford does. I don't have access to the factories that Ford does. I don't have access to the labor market that Ford does. If I wanted to actually compete with them, it would require billions in funding behind me like Tesla.
I feel like my earlier comment has been misconstrued as "if your work generates $1MM in profit than it should be rewarded with $0.999MM in salary". That's not what I'm attempting to say at all. Assessing value is definitely more complex than that.
Additionally, yeah, it's true, competitors might not be able to realize the same value in the same space. Competitive advantages exist. Spreads between value and salaries will exist, and some companies might have bigger spreads than others because they're more able to realize value. I agree with all of this.
All I am attempting to do is refute the claim that there's no relationship between value of work and renumeration for that work ("[t]he value someone creates has nothing to do with their salary"). I don't dispute that we can create toy examples where that doesn't happen, but they aren't effective refutations of the general point.
In the short term, yes. In the longer term competition and companies/people entering/leaving the market moves demand and supply closer to something that justified by costs of production and 'value' of product.
(Economists say demand and supply are elastic, I think.)
I agree. Labor is just another input that a company requires in order to create its product. I would expect labor prices to be driven by similar if not the same market forces as goods. Excluding government interventions of course.
Labor theory of value claims that the value of X depends only on the amount of labor required to produce X. This theory doesn't explain how gold is more valuable than iron, or how $UNICORN is more valuable then this other startup. So it's a bad theory.
matthewowen's argument is not assuming the labor theory of value is true. It's just pointing out that, other things being equal, if the demand for X increases then the demand for X-makers' labor increases too; hence X-makers' wages increase.
Nail on the head right here. The price of an employee isn't their MPL, it's no greater than their MPL and is set by how little the next guy is willing to take to do the job. Competitive pressures work to drive down labor prices, too!
Nobody is stopping engineers from saying "I'm going to contribute $1.5m to your bottom line this next year, I want you to pay me $1.4m", but they'll be shown the door because there's a guy that's willing to contribute the same $1.5m in exchange for $100k in compensation.
> Nobody is stopping engineers from saying "I'm going to contribute $1.5m to your bottom line this next year, I want you to pay me $1.4m", but they'll be shown the door because there's a guy that's willing to contribute the same $1.5m in exchange for $100k in compensation.
Which is why you should be an owner/competitor versus an employee if you know the business well enough.
Assuming that you can tolerate the commensurate risk, absolutely. Many people forget that the rank-and-file employee isn't exposed to the financial and legal risk that their employers were/are.
In case of financial trouble (very common at startups), who gets to be laid off first, the CEO or the developer?
Also, rank-and-file employees are typically scape-goated in legal proceedings, example: finance people going to jail for rogue/insider trading, even though upper management at least encouraged such behavior.
who gets to be laid off first, the CEO or the developer?
Wrong comparison. The CEO and developer are both employees. I've outlasted laid-off CEOs at several places of employment.
The comparison is between an employee and an owner. (Of course an owner may ALSO be an employee, maybe even CEO, and an employee may also be an owner, but comparison should consider these roles separately.)
The employee is risking having his assets stop growing temporarily as he is forced to go find another source of income. The owner might have no income from the business for a long time even if it is succeeding (or ever if it fails) and has to hand over already-earned assets to the business in hopes of getting it back plus more, but if things go south, he might not get anything back and may even be forced to hand over additional assets to cover damages. The employee's risk is temporarily not gaining assets, while the owner's risk is potentially losing his.
Reality is a little murkier than this separation, because an employee might lose assets moving to a new city only to get laid off. In a certain sense, an employee is the "owner" of a small service business providing services to a customer (his employer) and owners can trade off equity for risk by bringing in partners, but the big picture is still that people who decide on ownership vs. employment are choosing between two very different risk/reward profiles.
Every employment position comes with some degree of risk exposure. But, the risk of "I might lose my job" is quite a lot less scary than "I might lose all my invested capital and/or be stuck with crippling debts after the company crumbles". Early-stage startup employees are given greater compensation packages than later-stage employees specifically because of the greater risk of going to work for an early-stage startup.
This isn't a very difficult thought exercise - if you believe the risk profile is greater for employees than CEOs, then why not quit your job and become a CEO of your own company?
Part of the disagreement that seems to be emerging is that not all management positions are the same. Being a CEO of a large company per se doesn't carry the same risk as starting your own business.
A CEO or manager at many large corporations often has very little risk relative to the employees, and their contributions are often small relative to that of the employees, and in the least often not greater than the employees. I'm not saying there aren't good managers, or that they do nothing, but management has become too top heavy in the US as a whole, and the salaries of management pathologically disproportionate to their relative contributions.
You don't have to look very far to find examples of CEOs driving businesses into the ground and then leaving with severance packages that dwarf average employees' salaries, sometimes even average employee lifetime salaries, or of CEOs sheltered from financial or legal consequences by corporate personhood. There's also plenty of CEOs who take over businesses that are already turning around from a downside, after reforms that were put in place, and then are credited with causing the improvements, even though they did nothing.
Starting a company is different from managing or acting as an executive of an existing one, and my guess is that this is what people are reacting to. Even founders are sheltered to some extent when you consider venture capital and the protections of incorporation relative to, say, acting as an independent contractor.
I am of the mindset that risk profile is entirely a subjective concept when it comes to what actual living people do in the real world. What a person knows about their situation or for that matter, someone else's, is the only real factor in how they perceive their risk and their ability to confront said risk. This is to say, there is no real variation between the risk an employee takes and the risk his/her employer takes.
In cases where employee ends up dependent on their employer, knowledge and experience of their job market would have prevented them from falling into this "trap", and also help them to escape it.
Likewise, employers (the shrewd ones at least, which our contemporary world tends to worship for good or bad) often don't actually take on real risk. We have witnessed many cases where companies have capitalized on profits, but chosen to socialize losses, bankruptcy or even worse, internal misconduct. This is in addition to the veil which usually shelters real corporate decision makers from risk.
This is not to say that risk analysis does not matter, but to emphasize its inherent subjectivity, and that the perception of risk can be varied through greater knowledge of one's situation.
"Every employment position comes with some degree of risk exposure. But, the risk of "I might lose my job" is quite a lot less scary than "I might lose all my invested capital and/or be stuck with crippling debts after the company crumbles". "
That doesn't happen. The company has those debts. Not the individual.
"Early-stage startup employees are given greater compensation packages than later-stage employees specifically because of the greater risk of going to work for an early-stage startup."
Usually not, actually. We've seen plenty of stories about early stage employees being underpaid compared to what the new guys get, and their stock compensation gets dilluted to all hell.
"This isn't a very difficult thought exercise - if you believe the risk profile is greater for employees than CEOs, then why not quit your job and become a CEO of your own company?"
Because I like engineering, and becoming CEO is the fastest way I know of to stop doing engineering.
That doesn't happen. The company has those debts. Not the individual.
In certain industries, in certain places, this is possible. For tech businesses in the US, it might even be the norm. But it is far from universal. My food business failed 3 years ago, and despite being an LLC, I'm still personally liable for brick and mortar leases, business loans, credit card debt, unpaid taxes, and outstanding invoices from suppliers. On good days I think I might get past this and be a member of society again, but this seems far from certain. You are welcome to argue that with better risk management this would not be the case, but your blanket statement "That doesn't happen" is false and offensive.
Financially they don't generally risk anything. Yes, your compensation could end at any time due to termination of your employment, but the risk of not getting paid at some point in the future is unavoidable regardless of whether or not you're an employee. The major difference is that as an employee you're very unlikely to have to put any of your own capital at risk.
I hate to say this, but if you think getting laid off is a huge financial risk then you probably have not done much business. There are exceptions of course, but most founders I know carry huge financial risks (like years and years of salary on the down side, and tens of times that on the upside...).
If you haven't tried you probably can't imagine how stressful it can be at times...
Most founders (at least in the software area) provide a lot of sweat equity, but almost never any cash.
Also, early startup employees are persuaded to accept below-market salaries and work a lot of overtime, exactly like the founders, without the upside ( rarely more than 1% of the company).
The downside was a lower pay now and substantially larger risk of losing my job compared to other places. And developer work here isn't exactly hard to find.
The potential upside was... maybe two years down the line they'd start paying me what other people were willing to pay me now. The guy I negotiated with even tried to make it sound like we were all there on the same terms cos our monthly pay was the same, leaving out that I'd be the only without a share, the other four sharing the company equally... have to say I walked away from that one.
I know a lot of founders who've put in significant cash in their businesses. And besides, sweat equity is also, well, equity.
I'm not saying there aren't early employees that deserve better deals, I'm quite sure there are. But a lot of the perception of unfairness I think stems from a lack of understanding of the differences between being a founder and being an early employee. They are just very different bargains, each with their ups and downs.
For example, let's say three founders own 20% each and there's an external investor that owns 20% and a 20% options pool. The founders payed for their shares with a year's sweat equity. The first employee gets 1% from the options pool. From then on everybody makes the same, and works just as hard. Is that unfair?
I'd say it depends, and the math is not entirely straightforward... Stuff you would have to take into account (and which I rarely see mentioned when people talk about this) include the probability of the company failing before raising money / hiring the first employee, each person's alternative costs and the company's expected future value when the first employee was hired. There are also more subtle issues, like the employee having every right and incentive to leave the minute the company starts going downhill, whereas the founders... Well, it's just very different.
Come to think of it, I've been playing a bit with Bayesian probabilistic programming with PyMC lately, and it might be pretty interesting to put together a model for this. I think it could give a pretty interesting picture of how expected future outcomes vary for the different people, depending on the different parameters. Anybody want to join in the fun? :)
Does the CEO pay? The founders don't get to pay the compamy, they usually don't invest cash (in angel/VC-funded startups). With some luck/skill the company gets sold/aqui-hired and the investors can get their money back. Not always, but quite often.
Or you can just get your non-competes redlined. I did it at literally every job I worked at after my first out of college (and that non-compete was "travel companies", BFD).
There are literally thousands of reasons to live anywhere, and it turns out that Massachusetts measures real well on a lot of them. If you base your living decisions on "there might in the nebulous future be an onerous non-compete I can't get an employer, who is trying to be appealing to me and in an industry as stupid-hot as tech is almost never the only game in town, to redline", I envy your few and trivial problems in life.
Hell, I've treated it as a filter in the past: the mindset that leads a company to be unyielding on noncompetes is a signal not to work for them in the first place. That a noncompete is unenforceable in some jurisdictions functionally only means, for the overwhelming majority of tech employees, you aren't finding out how much they think of you before you sign on the dotted line and quit your other job.
Having thought about this a bit, I actually come to the opposite conclusion.
I think a lot of companies who might have previously hired devs would be better off trying not to anymore, with what devs cost today. This is going to mean all sorts of things, including more off-the-shelf stuff vs. home-rolled for companies, smaller software companies that don't get started because people would rather take the BigCo job that pays $200k base plus stock, etc.
Pretty much any business is about taking stuff and making something out of it that can be sold for more than its inputs. With dev salaries being what they are, a lot of opportunities get ruled out quickly because they just aren't big enough.
Sure. And this seems an OK thing. Many tiny companies hire a programmer to write them excel macros. If they can be replaced by some SAAS app, then do so.
No reason for 100s of companies to write the same app.
I wish I could, but I don't have the cash. Maybe I can save some, by working a few years as an aforementioned employee monkey, but I'll be 30+ by then.
The reason is simple but absolutely wasn't that: they both subsidized their customers' rides to the tune of a billion dollars in a bid to undercut one another.
As it turns out taxi riders care a lot more about price than they do about the company's cultural sensitivities.
This isn't unusual in the transportation sector. In the 80s UK bus companies would undercut each other in a bid to achieve a monopoly. Some even offered completely free buses in a bid to drive their competitors out of business.
> Nobody is stopping engineers from saying "I'm going to contribute $1.5m to your bottom line this next year, I want you to pay me $1.4m", but they'll be shown the door because there's a guy that's willing to contribute the same $1.5m in exchange for $100k in compensation.
No, the reason you don't get that salary is because you need to discount for the risk that you don't deliver $1.5m.
Realistically, you just could be full of shit, you could get bogged down in politics, your wife could get cancer, and any number of other things could happen. So the price trends down sharply.
Even assuming that you had an identical prior on the two candidates, the information that one person was willing to do a job for half price would make me doubt his intelligence.
If in some artificial scenario, I had to blind hire one of two candidates with functionally identical resumes, where one asks for market value, and the other asks for half market value, yeah, I take the higher salary..
This assumes the opportunity's to generate 1.5m in value are finite and all developers are equivalent. Both are rather sketchy assumptions. I might have a 1% chance of preforming an amputation successfully. But, the people with an 90% chancing of doing the same are worth vastly more.
Out of 100 developers 10 might save you 1.5million and getting the correct 2 might save you 3 million.
Not sure your point. A heart surgeon has much better odds of doing an appendectomy than I do. Further, while doctor and programmer can do a range of things a specialist is a much smaller pool.
You seem to assume that no one is being paid to do nothing. Sometimes an employee, for a multitude of reasons, may be paid top dollar and merely benched. Whether to keep the employee out of competitors hands or because their deployment is done and as a reward for prior service does not matter. There are no upper or lower bounds* in what employers will pay.
* I say there is no lower bound because slavery still exists. There are employers who do not pay people at all.
We keep hearing from large tech companies that there's a crisis -- a massive shortage of qualified software engineers, to such a degree that they won't be able to operate at all if they can't raise the H1-B quotas and import more people to fill all the jobs currently going unfilled.
If that truly is the case, then supply and demand would tell us that currently engineers are underpaid; if there are companies so desperate to hire engineers that they're turning to immigration law to try to increase the supply, why aren't they simply offering large enough compensation packages to attract the existing pool?
A similar issue exists with respect to illegal immigration and low-pay, low-status jobs such as crop picking, meat-packing, and janitorial services: if there aren't enough Americans willing to do the job at prevailing wages, then aren't prevailing wages too low? Sure, my tomatoes would cost more and cleaning services might be 200% more expensive, but that's just the cost of doing business.
Or for another "white-collar" example: the alleged "pilot shortage" in the US. There's no shortage of trained, qualified pilots; there is a shortage of trained, qualified pilots willing to accept the wages and working conditions that are typical when starting out with a US-based airline. That one ends up draining in the opposite direction: instead of working for airlines in the US, those pilots go overseas where the offered pay and working conditions are better, and end up flying for Asian or Middle Eastern airlines.
> why aren't they simply offering large enough compensation packages to attract the existing pool?
Well, they are. Compensation packages at the big tech companies are ridiculous. I know someone that got $100k signing bonus (cash, not stock) without a degree at 21 years old. He's not a genius either.
At a certain point, don't you think it's better to share some of that opportunity with smart foreigners? How many Teslas does an American twenty-something need?
Clearly they aren't. Say an engineer can make a company $1 million per year. They are only willing to pay $200k per year in total compensation, but they complain that they can't hire enough engineers. Obviously they aren't paying enough per engineer.
>At a certain point, don't you think it's better to share some of that opportunity with smart foreigners? How many Teslas does an American twenty-something need?
So it's not the multi-billion dollar companies that are being greedy, but the engineers making $150k a year?
Companies want to import foreign workers to depress wages so that they can save money, and your instinct is to blame the workers who don't want lower wages?
> They are only willing to pay $200k per year in total compensation, but they complain that they can't hire enough engineers. Obviously they aren't paying enough per engineer.
Engineers are not created from money. You might be able to fill your positions by paying more, but not all of the positions in the entire country. Not without immigration or higher graduation rates.
> Companies want to import foreign workers to depress wages so that they can save money, and your instinct is to blame the workers who don't want lower wages?
How do you justify that the location of birth should be the main determinant in whether an engineer earns $150k a year or $30k a year? That line of reasoning is a lot more disgusting to me than corporate profit-maximizing.
If there was really a shortage of engineers, then engineer salary would be very close to the value the engineer adds to the company, because the competition to hire would drive the price as high as it could possibly go. Salary is nowhere near close to the value an engineer adds to the company, so most likely there is no shortage.
The shortage is a manufactured problem to justify an attempt to depress wages.
>How do you justify that the location of birth should be the main determinant in whether an engineer earns $150k a year or $30k a year?
If we take that to it's logical extreme. No one makes $150k a year. We allow an unlimited number of software engineers in until the average salary drops down to a level where it's not worth it to immigrate here. Maybe that's worth it to you, but if global income equality and globally open borders are your goal, argue for that.
Stop with this false argument about an engineering shortage that doesn't exist.
> Salary is nowhere near close to the value an engineer adds to the company, so most likely there is no shortage.
I think it is more likely that the marginal value added by an engineer to a company is much less than you think it is.
If Google currently earns an average of ~$2m per engineer that does not imply that they will earn an additional $2m upon hiring another engineer. In fact I'm confident they could fire at least 500 engineers tomorrow without negatively impacting their profit at all.
>In fact I'm confident they could fire at least 500 engineers tomorrow without negatively impacting their profit at all
That makes no sense. If they can lose a significant chunk of their engineering team "without negatively impacting their profit at all" then why did they hire them in the first place.
If your assertion is true, they must have significantly overestimated their staffing needs. If they did, it's likely everyone did, so the engineering shortage crisis doesn't really exist after all.
That was the least important part of my comment. If you're arguing there's no shortage because wages are much lower than the marginal value of hiring an engineer, it's on you to come up with evidence supporting this supposed (much) higher marginal value.
Everything I've seen points to a real shortage and desperation on the part of the employers: interns making six figures with free Manhattan penthouses, nonstop recruiter spam, 22-year-olds negotiating stock packages on their 8 fulltime offers before they finish school, fresh grads buying Teslas with signing bonuses before their first day of work, countless job listings that never ever go away, $10k+ referral bonuses, websites where employers apply to you...
> it's on you to come up with evidence supporting this supposed (much) higher marginal value.
There's no more onus on me to prove a higher marginal value than there is on you to prove a lower one. You've attempted to shift the burden of proof by arbitrarily deciding that your assumption is the correct one.
I will say that most of the people I've read trying to determine the marginal value of software engineers, think that it's a good deal higher than what you seem to think it is. When you consider that there are outliers who will make or save companies tens of millions and not very many who are going to have very large negative impacts, the average is going to trend pretty high.
>Everything I've seen points to a real shortage and desperation on the part of the employers: interns making six figures with free Manhattan penthouses, nonstop recruiter spam, 22-year-olds negotiating stock packages on their 8 fulltime offers before they finish school, fresh grads buying Teslas with signing bonuses before their first day of work, countless job listings that never ever go away, $10k+ referral bonuses, websites where employers apply to you...
None of that is at all even remotely normal. The vast majority of software engineers don't experience anything like that.
None of the people you're talking about are close to average. Average programmers don't pass Google style interviews. I went to a fairly average state school, and I've done a lot of tutoring and interview prep. I'd be shocked if 1% of the students I graduated with could pass a Google interview.
It's hardly shocking that the top 1% of engineers are making large salaries. Top law firms start associates out at $200k a year, do you think there's a shortage of lawyers?
If there really was a shortage, Google and other companies would relax their interview processes, and invest more in training.
If anything, the real problem is that everyone thinks they need to hire the top 1%, but they don't want to pay for it.
$150k in silicon valley is equivalent to about $90k a year where I live, so I'm not interested in moving. If someone there offered me $300k, I'd go in a heartbeat.
So we've been disagreeing the whole time on what it means to be a 'qualified engineer'.
The employers don't consider someone who can't pass an AmaGoogTwitBook interview (with some practice, of course) to be a 'qualified engineer', and there is indeed a shortage of such people.
Companies have arbitrarily set a very high standard that can only be passed by x% of engineers, and then argued they can't find enough. You could do the same for any industry.
Here's an example (also keep in mind this next example would work the same even if the bar isn't set arbitrarily):
Let's say I run a cleaning business, and I decide that I only want to hire janitors who can run a 4 minute mile. I think that they are the best people for the job, and no-one else will do.
Let's also say that I only want to pay them $50k a year. Some time goes buy and I'm having a really hard time finding people. Now I could raise what I'm offering to $100k a year, and find plenty of candidates who would move here from other states, change careers, move from management back to working as a janitor, come out of early retirement etc...
Or I could relax my requirements--take people who show the potential to run a 4 minute mile and train them.
Or I could lobby the government to increase the visa cap so I can import qualified people who are willing to work for $50k.
This doesn't sound so bad when you think about it. I wasn't willing to offer more than $50k a year, so wages weren't increasing anyway.
However, if I didn't have the option of raising the visa cap, and I really believed that only janitors who meet my qualifications would work, I would have no choice but to offer a higher salary.
Therefore, importing more workings depresses wages for qualified janitors.
Now you might be thinking $50k is plenty for qualified janitors. They can live with less. But here's the important part. You didn't increase the visa cap for only qualified janitors.
You increased the visa cap for all janitors, who are making at least the prevailing wage. And it's based on a lottery. The number of extra visa spots aren't proportional to how much a company is paying. Every company who is willing to pay the candidate at least the prevailing wage gets the same shot at these visa slots. Since, most companies don't have sub 4 minute mile requirements for janitors, the prevailing wage is much lower than $50k a year.
Now the market is flooded with janitors willing to work at average companies for $20k a year, and you've driven down wages for all janitors not just the top 1% of qualified janitors. Even though the shortage is only for the top 1%.
Average software developers aren't making $150k a year and buying Teslas, and they are the ones you're going to hurt with visa cap increases.
I'll agree that there is a shortage of top 1% programmers. There is a shortage of the top 1% in nearly every industry almost by definition. However, until you develop a system for only importing enough top 1% programmers to meet demand, you're going to hurt everyone who's not in the top 1%.
There are several systems for doing this. The easiest to implement probably to use an auction instead of a lottery (this comes with a set of its own problems though).
..because the engineers have created things that the company can continue to profit off. They're not factory workers, they don't need to be there on the day-to-day to add that value, so it's a little disingenuous to suggest the impact would be seen "tomorrow". Still not having those engineers 6, 12, 24 months down the line might not look so happy, though.
You wouldn't attribute much of the value created by a Boeing 747 to the mechanic the maintains it, so why would you do so with the mechanics that maintain the AdWords money machine built ten years ago?
I'm not really sure what to make of this analogy. Are you suggesting that the mechanic maintaining a 747 is on the same level as the design and fabrication team who built it?
The design and fabrication team who built AdWords years ago are rich. The engineers they're hiring today at 150-200k are akin to the mechanics hired to keep it running.
Just to be clear on your last point, I don't object to immigrants pursuing engineering, at all, provided it was a choice they made freely, that the immigrants were also free to choose not to become engineers as a condition of entering the US. I do object to empowering employers to coerce would-be immigrants into studying engineering (or any field for that matter) or working as engineers as a condition of gaining access to the US labor market, as I believe that this produces harmful market distortions and is an affront to personal freedom.
Generally speaking, immigrants (about 1.2 million annually to the US) are free and full participants in the labor market, free to pursue the degrees and skills they wish, in response to salary, working conditions, career longevity, personal interests, and so forth. They may wish to open a sandwich shop, sell real estate, or write software. Just like people who were born in the US.
It turns out that, like those born in the US, these immigrants don't go into engineering in numbers that high tech employers feel they should. Personally, I think this is a sign that perhaps high tech employers need to sweeten the pot a bit - if people (immigrants or otherwise) who are free to choose aren't choosing you, that's the market's answer. It's not them, it's you.
Employers have responded by lobbying for what I consider to be a wildly self-serving and coercive visa that gives them the power to bestow and revoke US residency and work rights under the notion that there is a "shortage" of engineers. This enables them to say - we'll let you in if you study computer science and agree to write code for us for the "market rate" salary that fails to attract those with the freedom to choose their careers in sufficient numbers. We won't let you in if you don't take our tech test, and if you try to quit your job and open up a sandwich shop, we'll have you deported. You know, free labor markets.
I'm opposed to a system that allows employers to bestow (and revoke!) US residency and work rights on non-citizens under the condition that they study what the employer says they should study, work on what the employer says they should work on, live where the employer says they should live, and so forth. I think this position is very consistent with pro-immigration attitudes and personal freedom.
> You might be able to fill your positions by paying more, but not all of the positions in the entire country. Not without immigration or higher graduation rates.
There is not set number of "positions", the number depends on the number of developer willing to work for the wage offered. If you would consider an employer who is willing to pay $50 per month for a developer to have an open "position", then the number of positions would be an order of magnitude higher.
> if there are companies so desperate to hire engineers that they're turning to immigration law to try to increase the supply, why aren't they simply offering large enough compensation packages to attract the existing pool?
I don't get this argument. If there are 100 open positions and 80 eligible candidates, 20 (at least) positions will remain vacant, regardless of compensation. Not saying that this example reflects the real world, just that the argument is not sound from a logical/mathematical standpoint.
Your math is wrong, or rather irrelevant. The pool of eligible candidates is not fixed. It constantly changes based on the offered compensation and other factors. For example there are plenty of people qualified to do engineering work who aren't working in that field right now for whatever reason, but could be enticed to take an engineering job for enough money.
I disagree, the pool of candidates basically only changes via immigration and as people retrain or teenagers choose different college majors (very slow).
> For example there are plenty of people qualified to do engineering work who aren't working in that field right now for whatever reason, but could be enticed to take an engineering job for enough money.
Like whom? How can you be qualified to do software engineering if a) you've invested so much in a different career that you already make more than SV salaries and b) you presumably haven't done software engineering in years?
That's just flat out wrong. I know people who were formerly software developers and who stopped their careers to become stay-at-home parents. If you offered a salary of, let's say, $300K they would be happy to reenter the workforce. It's not that hard to catch back up.
As for past investments in different careers, those are sunk costs and irrelevant to decisions made now.
> I know people who were formerly software developers and who stopped their careers to become stay-at-home parents.
The population of people who consider $150k a year not to be sufficient incentive to get a job is vanishingly small.
> As for past investments in different careers, those are sunk costs and irrelevant to decisions made now.
It's not irrelevant if they did those things instead of learning/doing software engineering. You can't study medicine or law or banking for 8 years and just become an engineer at Google overnight because the Google starting salary had (hypothetically) risen to $300k and it's now a better deal.
The argument is that there are thousands of eligible candidates who simply haven't chosen to apply for your company because they are happy at their current position, and Apple/etc are choosing to focus on increasing the pool of candidates rather than increasing their attractiveness to the existing group of candidates.
All of these things are true. However, there is another input into supply side, and that's alternatives to employment like starting a company.
Any employees that really create much more value than their salary can and will just leave and start their own company, where they get to set their own salary. By doing so, they'll also be leaving the pool of employees, and potentially hiring others too (reducing supply, increasing supply, driving salaries up).
Of course, every employee creates more value than their salary, to cover overheads, some profit for shareholders, etc. Employees that claim to be creating far more value than their salary, but not leaving to start a company, are probably deluding themselves, and vastly underestimating the value of the capital employed in their company, goodwill with customers, the sales and management functions, etc.
The latter is not necessarily true - you might be creating tremendous value, but have barriers to market entry that are enormous such that you can only really create that value from within one of the existing players on the market. See aerospace, telecommunications, medicine, government contracting for examples of such industries. If I'm making a huge amount of added value for a large telecom, it's unlikely I can start a startup to compete with it, and given the state of the market I'm unlikely to make much more at their direct competitors. Thus, as long as my value is industry-specific, and the industries have large barriers to entry, I might be creating much more value than my salary but unable to leave and compete against my employer.
You make the strong case that your value-creation in such a scenario is an amplification of value created by other people, and is not actually value created by you in a vacuum. What sense would it make for you to claim priority ownership of that value if you can't create it on your own?
You're a component in a value creating engine which includes the ability to hurdle those barriers to entry, which means you don't get credit (on your own) for the total value that you are able to produce within that system.
Eh, some barriers to entry are artificial, some are not. Even artificial barriers are difficult for a single moustache-twirling monopolist to bring about on his own.
If you can only really create value inside an existing player in an industry with large barriers to entry... then it's actually being an incumbent in that industry that's valuable, and not the employee.
It's like a person making minimum wage working at a hotel in Times Square, charging $800 / night, saying they're getting a raw deal because they're creating so much value.
Right? So many people are looking at company overhead as burdensome, but how are you going to cash in on the $1.5 million in value that you create if you don't have sales and marketing people to get your product out there? How do you even know it's worth $1.5 million if you haven't done market research?
It's not just overhead, it's a highly efficient system.
Highly efficient or not depends on the actual system, ie company. Some companies aren't all that efficient, and have to painfully learn about that fact when real competition shows up.
(See eg the effects of Aldi on the Australian retail sector.)
I agree with your explanation but I'd suggest a slightly different way of explaining it.
Labor's price is set in a competitive factor market, just like land or capital. It gets bid up and down by supply and demand. Let's call this "the labor market force".
How much value a person can provide in a given setting depends on a whole range of things including what the employer does (scaled product company vs. body shop), overall management effectiveness, how motivated they are (both themselves and by their employer), their skill level, etc. Let's call this "the company force"
The reason people aren't paid as much as California devs elsewhere has a lot more to do with the "company force" than the "market force". The fact is, most companies who employ developer just don't need great devs. They need people who can develop websites of moderate complexity, keep things going, write line-of-business software, etc., not people who can do original, innovate algorithmic work.
Related, there is no "Developer shortage". There is only a technical talent shortage insofar as dev salaries are getting bid up and the buyers who are getting outbid (mostly smaller startups) are complaining. The good companies are getting exactly who they want.
>The fact is, most companies who employ developer just don't need great devs. They need people who can develop websites of moderate complexity
They actually do they're just unable to recognize great devs, unable to recognize that they don't recognize them and refuse to pay for them.
But they certainly need them.
>Related, there is no "Developer shortage".
There's always a shortage of labor in every industry.
That's one of the iron rules of business lobbying - if you whinge about it enough the government will go and do something (training, bring in immigrants, teach code in school) that will let you pay employees less. => higher profit.
An illustation of that is found in high-end hotels. Beyond the building, it's the value that the cleaning and groundskeeping staff provide which makes the stay great. And yet their pay is not that much higher than their counterparts working for a budget hotel.
(As a side-note, that's why I always smile and engage with the staff whenever I can: it's a thankless job, despite being one of the most important.)
That's great! I dig how you treat them with respect and human dignity, that they're not beneath you but working hard, too. I hope you also support their right to unionize wherever that is possible.
"Whoa, whoa, whoa. I like to be nice enough to the Help so that I can pat myself on the back. But let's not get ahead of ourselves and let these people fight for higher wages, which might impact my costs!"
I don't think the poster of your parent comment would disagree with your explanation of the how things are; they're only saying that's not how it should be.
If we lived in a just meritocracy, people who created millions of dollars in value with their code would be compensated with millions of dollars, but this is rarely, if ever, the case. It's this fact which makes libertarian arguments about the unfairness of tax and social welfare programs offensive.
The are great advantages to individuals and society to paying less than the value of goods and services. If my daughter is ill, and a simple shot of antibiotics will cure her, should I pay $20 for that, or should I pay what saving her life is actually worth to me? I've enjoyed ever faster internet connection speed at my home (coming in two weeks -- gigabit!) I assure you I'm not paying the full value of what that speed is worth to me. The same for food, clothes, transportation, everything. If I really did have to pay the full value to me for each of those I would, by definition, be indifferent to buying any of them.
Market economics has some serious downsides, but it has vastly increased the welfare of humanity. More people have been coming out of poverty in China in the past few decades that ever before in human history.
If you feel it is unfair that as a developer you can create millions of dollars in value that you aren't being compensated for, then I recommend you consider ways that you could be compensated for this value. Perhaps instead of being an employee, maybe get involved in a start-up with equity (or found a company.) Having done so, I can assure you it's more nerve wracking than ever I would have expected, and harder to unleash the millions in value than one might expect, but it's still fun, challenging, rewarding, and worth giving a go! :-)
> The are great advantages to individuals and society to paying less than the value of goods and services. If my daughter is ill, and a simple shot of antibiotics will cure her, should I pay $20 for that, or should I pay what saving her life is actually worth to me? I've enjoyed ever faster internet connection speed at my home (coming in two weeks -- gigabit!) I assure you I'm not paying the full value of what that speed is worth to me. The same for food, clothes, transportation, everything. If I really did have to pay the full value to me for each of those I would, by definition, be indifferent to buying any of them.
Okay, so what's the society of my boss getting paid twice as much as me while actively impeding my ability to create value?
Also, antibiotics and internet are poor examples of market economics; both are heavily subsidized and regulated. So it's disingenuous to hold these up and then in your following paragraph claim that market economics is helping humanity.
> Market economics has some serious downsides, but it has vastly increased the welfare of humanity. More people have been coming out of poverty in China in the past few decades that ever before in human history.
How do you justify attributing this to free market economics?
> If you feel it is unfair that as a developer you can create millions of dollars in value that you aren't being compensated for, then I recommend you consider ways that you could be compensated for this value. Perhaps instead of being an employee, maybe get involved in a start-up with equity (or found a company.) Having done so, I can assure you it's more nerve wracking than ever I would have expected, and harder to unleash the millions in value than one might expect, but it's still fun, challenging, rewarding, and worth giving a go! :-)
I do think it's unfair, but I actually don't care, because I'm self-aware enough to realize that the way in which our economy hurts me is nothing compared to how it hurts most people. I'm incredibly lucky to have landed in a career where things are only as unfair as they are, and I'd much rather work toward helping people in worse situations than me than in fixing the minor injustice of getting paid less than management.
Have you ever worked on a project where management considered developers as pretty much interchangeable and added folks to the team that did more damage than good? If so, do you want to repeat that experience?
I'll say this: if you aren't writing code in a way that someone else can pick up the project when you leave, then you are being an irresponsible coder.
This only makes sense if the compensation isn't tied to your replacement value. If it's tied to replacement value... well, too bad - the company shouldn't create an incentive to ramp up technical debt.
Code that belongs to the company is ultimately the responsibility of the stockholders and their board. As an at will employee with no equity, I will give them exactly what they ask for in their code.
At each job, I will go above and beyond the call of duty once, to gauge the reaction. At some jobs, I get a cash bonus. At others, I just get a pat on the back. The last two jobs in a row, I was told to not do that again. So I didn't.
Don't be an apologist for bad management. I'm not going to do the right thing if I could get fired for it.
My post had the condition of "competent developer". There are certainly some developers that aren't competent. In my experience those developers get weeded out of the industry relatively quickly. This cuts off the bottom of the bell curve leaving most most developers with something close to an average skill set or above.
I also won't discount the frictional costs of changing teams. If you take two identical developers and switch their jobs, each of their teams would see a temporary hit in performance as each one gets acclimated. But they will eventually get to the point were their team is exactly as efficient as it was with the other employee.
They don't get weeded out. They might even sit in one place for years at a time before management catches on and does something, if they even catch on at all. Or, they will bounce from job to job infecting various roles with their poor work until the immune system of each company slowly wakes up and does something about them. Sadly, this gives them more "experience" and industry credibility, making it even easier to trick future victims.
Agreed. In my field, physics, salaries are low precisely because supply is high.
The work is hard, and demands a lot of training/skill, but there are a lot of people who will do almost anything to stay in the field. One of the things they can do is accept a lower-than-tech-market salary.
> the truth is that once you get to the point of "competent developer" and the meaty part of the bell curve, we are all pretty much interchangeable
That is not my experience at all. I see big skill differences in my coworkers.
But as an employer, it's real hard to know which candidate is 200% of the average and who is 50% (or -10%), so you end up having to offer everyone an average salary with small variations.
CEOs and top executives are highly replaceable too (they sure change companies a lot), and yet they command massive salaries. What happened to the laws of supply and demand there? Why do CEOs have to die or retire before the board decides to replace them with someone more competent? How was Steve Ballmer able to stay in charge at Microsoft for so long?? I remember the day Ballmer announced his resignation, MSFT stock went up by like 10%! So the market definitely wanted him out!
The main difference is that executives have leverage (and they have friends in high places) while average employees have almost no leverage.
It's the government's job to make sure that employees have some sort of leverage over their employers.
There's supply and demand, and then there's also principal agent problems. In practice, shareholder capitalism is a lie: companies are run for the benefits of upper management.
It's not only rank-and-file employees that have little leverage, average shareholders aren't much better off.
The government can try and make sure to keep barriers to entry low for competitors, and barriers to switching to competitors for employees. Competition keeps companies in line, even when it's executives running the show.
This isn't exactly correct either. It's a combination of barriers to entry (e.g. startup costs) and how much value the developer can make vs what they're paid. If a developer makes $100k/year and can create $1 million in value, then certainly I can poach them by offering them $200k/year and still make a profit on top of that.
In many fields what prevents this is startup capital. It's expensive to get a supply chain for physical goods up and running. But if you have the business acumen and connections there is not nearly as much of a barrier to entry in the software world.
You don't even need much startup capital if you're starting up not in an expensive location like SV. The reason so many of us 100kers don't up and leave when we realize we're generating millions in value is because we're only generating that value as part of a larger organism telling us what to focus on. Given individual autonomy most of us couldn't produce the same value, maybe not even our salary value. Ability to autonomously produce value seems independent from coding ability, business acumen, and connections and I would argue is far more important in building a lasting business.
In Silicon Valley it seems popular to just start your own company and capture the value that way, but other fields have solved this issue by unionizing.
> other fields have solved this issue by unionizing
careful with the "U word" around here. We don't need no stinkin unions, or any sort of professional association.
I mean sure we don't get OT and too frequently get asked to be in a hellish oncall rotation or some 80 hour a week death march. We like it that way and we don't want to do anything to change it!
High level executives at large corporations are a small enough group with enough common interests that they might as well constitute a union, and they have an exemplary record of preserving value for themselves.
You'd have to poll their members, but I would suspect they are pretty happy. They are well paid, are not allowed to be worked around the clock like Silicon Valley programmers and have a known career path. For blue collar work it's about as good as it gets.
> Is it possible that there are factors outside of unionization that affect how these workers are paid?
Of course, there are tons of variables. But it's a fact that unionized workers make more than non-unionized workers in the same jobs, that unionized workers are much more likely to have health insurance, that unionized workers are much more likely to have paid vacation and sick time, etc etc.
It's silly to point to a cohort of high-skilled non-union workers that are highly paid and claim that is an argument for the unionization of high-skilled workers.
I'm not arguing for unionization here, although it does have its advantages; I'm arguing that:
1) Unionization is easier and more effective when defection is difficult (or impossible, as in some German unions) and heavily punished. As soon as defection pays off, it loses its value.
2) The set of high level executives at large corporations is small and cliquish enough that it is a de facto union, since they can convince boards to bid up each other's prices and punish/shun those who offer their services at lower prices.
I can't agree with that. For most people, the salary is dictated by how good they are at negotiating, and how strong their ability is to walk away. Two things that are completely unrelated to their ability to do the job, and as such, should have nothing to do with the employment process.
Those factors are hugely important. But you'd be hard pressed to get more out of a company than you provide in value to them, even with the best negotiation.
I don't think the poster of your parent comment would disagree with your explanation of the how things are; they're only saying that's not how it should be.
If we lived in a just meritocracy, people who created millions of dollars in value with their code would be compensated with millions of dollars, but this is rarely, if ever, the case.
As a counterpoint: people don't create millions of dollars in value in a vacuum.
Somebody (usually several somebodies) took the chance to create a support structure to enable said person to create the millions of dollars in value.
How much of the value should go to the value creator and how much to the enabler with the capital (and the vision to use it in that way instead of spending it on something else) is a very interesting question that has been tackled for a long time, particularly from Marx onwards.
> Somebody (usually several somebodies) took the chance to create a support structure to enable said person to create the millions of dollars in value.
A tech company contains a lot of structure, and very little of that is actually geared toward enabling anyone to create millions of dollars of value. A large portion of that structure exists to enable the management of a company to justify taking in large profits. It's should surprise no one that those creating the structure would create it in a way that benefits them.
I know a few people who work at a tech cooperative, which has mostly developers with 1 secretary who manages benefits/taxes/etc. and 1 "business liaison" who manages customer communication. They've created millions of dollars of value without most of the structure, and it's no coincidence that they're all set to retire in their late 30s.
But is it ok for competition to kill the value of developers work (in the benefit of managers/founders and whomever else)? The actual point I think is to get developers to understand they need to lift the bar higher because it's now set too far from the value they actually create.
Competition means no profits for anybody, no meaningful differentiation, and a struggle for survival.
So why do people believe that competition is healthy? The answer is that competition is not just an
economic concept or a simple inconvenience that individuals and companies must deal with in the
marketplace. More than anything else, competition is an ideology—the ideology—that pervades our
society and distorts our thinking. We preach competition, internalize its necessity, and enact its
commandments; and as a result, we trap ourselves within it—even though the more we compete, the
less we gain. - Zero To One, The ideology of competition
Supply and demand absolutely determine programmer salaries.
And what you neglected to mention is that there is currently a massive developer shortage of supply, and lots of developers are being suckered into low salaries when they could be making much more somewhere else.
Once I stop reading article after article here and elsewhere about how there just aren't enough developers in the world to fill all the jobs he have now and coming, then I'll buy that we're on a pure supply & demand curve.
> the truth is that once you get to the point of "competent developer" and the meaty part of the bell curve, we are all pretty much interchangeable. It then becomes a question of who will do the same work for less.
This under-values domain knowledge and especially company-specific knowledge. Yes, someone can ramp up on a code base over time, but I don't know if you've seen how ugly the limiting case is where they utterly replace all the devs with a new set who know nothing about the codebase and drop all the organizational knowledge. The rate at which things get done suddenly becomes a fraction of what it was before and the defects multiply quickly.
I disagree, there was a time when the finance community similarly valued themselves with the broader market until some people realized the numeric dollar value they could create. And the rest is history. Its time for software engineers to collectively realize their expanding relevance to value creation in actual numeric value.
It's routine to get bonuses larger than your annual salary in finance, specially in investment banking roles, this is not routine in software engineering
Only the total compensation is important for me. If anything, I'd rather get a stable one than a variable one. (Variable is only better, if the expected value is higher.)
Assuming perfect information, yes, "supply and demand". Since you are so eager to offhand dismiss people, you can now research that one condition you conveniently left out.
I tend to ignore any comment that starts with "you misunderstand basic economics". That's not so much the arrogant tone but rather the crass dogmatism that pervade those comments.
Change the set of axioms and the initial parameters and you end-up with invalid definition and properties of market dynamics. I guess OP probably believes that markets reach equilibrium by themselves.
>Assuming perfect information, yes, "supply and demand". Since you are so eager to offhand dismiss people, you can now research that one condition you conveniently left out.
There's plenty of information about salaries at software companies floating around. Everyone knows (or could know with a quick search) what the salary for each level at the big tech firms are, as well as what the typical pay at startups is.
It's a bit harder to do for a fresh grad in the middle of nowhere that's not already in Silicon Valley or even the same continent.
However the information problem for employees isn't actually all that bad, as you say. The problem for employers trying to figure out whether people can actually perform is much, much harder. (But luckily they can usually diversify their bets amongst more than one employee.)
This reality provides one of the best arguments for a switch from a capitalist economy, in which it is shareholders who have little to do with the creation of value in the economy who ultimately benefit the most from it, to a free market socialist economy (one based on democratically owned worker cooperatives). In an economy based on worker cooperatives, the distinction between "employee" and "owner" is eliminated. Instead of there being competition in the labor market which drives salaries well below the value created by individual laborers, labor simply receives the value it creates.
Consider that practically every company begins as a democratic worker-owned cooperative, and those worker-owners generally can't wait to diversify themselves out of that position. Risk exposure is a lot higher when you're a worker-owner, and most people are horribly risk-adverse.
Ignoring the risk factor in the equation leads to some rather wrong conclusions.
exactly. The point of shareholders is so that you can spread risk and reward. Instead of contributing all the capital yourself, you sell shares in your business to others, giving up some reward, but also a lot of the risk. Without this, the economy would collapse
What do stock holders actually risk when they buy stock? Only the money they put into the stock. What does an employee risk when he joins a company? Potentially his livelihood if the company goes under with out warning.
I would argue that the employee's current risk is greater than the stockholder's risk, since the stockholder generally has much more information about exactly what he is risking than the employee does -- and a greater legal right to that information. The average employee has no legal right to information about the health of the company where he's employed. He has to take the risk that the company isn't simply going to collapse out from under him leaving him with no income and a, best case, several week or month job search.
So what about the case of a worker cooperative economy? Where would the risk come from in a worker cooperative (beyond the normal risk an employee assumes)? Capital financing, which could still be done by debt or by crowd sourcing. In the case of debt, the risk depends on how we structure the companies. If they are structured as limited liability corporations, where only the property of the company can stand as collateral for debt, then the employee owner doesn't risk anymore than he does joining any other corporation. The difference is he has a legal right to complete information about the company's health and a voice in picking its direction.
He actually take substantially less risk in a worker cooperative (where employment means ownership is granted as a part of salary as opposed to being required to buy shares) than with a normal corporation. And he stands to reap the full benefits.
Free market socialism (i.e. a large UBI + single payer healthcare + low regulation) would largely mitigate that risk aversion, especially when combined with low levels of personal debt, since if you fail you can always count on decent healthcare and the UBI check.
That can work fairly well. If you finance the government largesse with a land value tax, you can even untax capital and labour and remove almost all distortions to the economy.
Err no not in my experience - I used to be member of a well lnow tech coop in the UK. They way you structure it is your a member of the coop that owns the company who employes you .
Of course Mondragon in spain is different you have to Ante up
This is interesting. Can you suggest any resources that lay out concrete proposals for how this could work in practice? Are there examples of where it has already worked in the world?
Some questions:
1. Wouldn't there still be a need for capital to finance risky ventures that take a long time to create value? How would a forward-looking startup with high capital costs, such as a biomedical device company with unproven technology, work in this economy?
2. How do you measure the value labor creates?
3. Is the allocation of resources among labor proportional to the value it creates? How does that work among a team of specialists that are more than the sum of their parts?
I'd genuinely like to understand whether this could work or has worked.
Richard Wolff and Gar Alperovitz have both written about alternative economies based in part or in whole on worker cooperatives. If you're just curious about how worker cooperatives work in the existing economy, read up about Mondragon or the South Mountain Company. A good book about the latter, written by its founder, is Companies We Keep by John Abrams.
> Which is why it pains me to see that so many engineers get stuck with such ridiculous salaries (relative to the value and wealth they provide and create). Problem is that some salaries are seemingly high compared to what the average worker does in the country but ridiculously to what they would look like if engineers were allowed to capture a greater (that is a >0.01%) percentage of the added value they CREATE.*
As an engineer, I'd certainly like to make more, and I plan to negotiate more aggressively at my next position; but I'm honestly more concerned about how little most of the rest of the nation gets paid compared to the value they create. I don't like seeing my friends who work harder than I do--and contribute at least as much to society--getting paid 1/3 of what I make, just because they don't happen to have natural aptitudes for a currently fashionable skillset.
If I could fix just one of those two problems, it would be the second one. I make enough to live comfortably. Too many people don't.
+10000
I've always maintained that Wall Street is way fairer to its employees than the Valley. Most investment banks and hedge funds offer great bonuses to their traders/analysts as they should -- they are the ones bringing in money. Relative to the value engineers create for firms like Apple/FB/Google, its easy to see they see peanuts of that value.
Sports is another industry where the employees are paid quite fairly relative to the owners. This is often missed when people complain about someone getting paid millions to throw a ball. The alternative is that the owners of the teams make even more.
The other thing to note is that most athletes in America's sports industry are unionised.
If I have learnt one thing, it's that creation of wealth, no, rephrase that, the creation of a business that can extract profit from the creation of wealth, is the 80% of the total effort.
I happily produce code that does a job. But doubling my skills with nested loops, debuggers etc will not produce double profits. This is because in most cases competent coding produces good enough code.
Increasing my skills with architectural design, improving my processes mgmt (releases, testing) will likely increase profits because those are often left unfixed in many companies.
Then improving my ability to understand what the ultimate paying user needs will have much much more impact because I will build the right thing
And finally improving my ability to co-ordinate with others (a market?) will magnify my efforts again.
I suspect that the creation of a business that allows and encourages all the above (call it marketing ?) is the key to extracting wealth.
Not sure where that goes but it meant something as I types
If in 10 years, every high school graduate is trained to be what we now think of as a 10x programmer, do you think they would still make six figure salaries?
Of course not! Value-creation may drive demand but it does not (itself) set prices - supply is in there too. There are enough programmers willing to work at current salaries, or they would rise.
Salaries seem lower today than the value add because some companies are being valued very highly. $20B for Whatsapp. $26B for LinkedIn. If you were risk taking and joined a no name startup early enough for a less than market salary- and it turns out successful, you do get that share of the pie.
If you want a cushy secure job writing hr applications for a Fortune 100 company, or some code for facebook when it reached 1B users, then its crazy to expect a large share of 'the profits' as the company's profits are spoken for by the owners who bought its shares and they are happy to get rid of expensive engineers as the engineering prowess you are bringing is not required as much now.
If the supply/demand curve pushes the salary above the value created, then the job will disappear and that value will never be created. That is how resources get allocated to the most valuable projects.
(Value of course is subjective, but here it refers to things that can be measured in dollar amounts).
This world rewards people for the value they bring (supply vs. demand). The world you propose seems to reward people for the value they think they are bringing.
Let me clarify.
The world does not reward those who work the hardest. More pain /= more value. The people working might feel like they are bringing more value; a construction worker probably does more "work" than a white-collar executive. The worker may even be more stressed, physically and mentally.
But does that mean he is bringing more value? Unlikely. This is because how effective you are has no correlation with how hard you work.
I could dig holes all day, and I would be "working hard," but at the end of the day, I haven't done shit.
Saying "I am getting underpaid" is admitting "I made a wrong strategic choice." Don't complain about the state of the world, but instead compose the right strategy moving forward according to the state of the world.
The Dough of Idealism must go through the Sieve of Reality to create a product that realizes the idealism for as many individuals as possible. Have just the former, you are a lone idealist. Have just the latter, you are a lame realist. Idealism and Reality are both necessary to bring the most value to the world.
Your problem is you are labouring (if you pardon the pun) under the assumption that wages are set by a function of the value created. This is not how pricing works.
Western economies largely operate by attempting to establish monopolies and by not passing on value created by employees. This is essentially the foundation of profits, otherwise they would be cooperatives.
If you want to get into the true middle class (who should not have to work as they do not need the money, not the faux middle class we have now who have a reasonable car and a holiday for 2 weeks), you need to stop creating wealth and capture wealth creation by:
1. land monopoly to capture wages (like money moustache man who as 3 properties and write blogs about grain being cheap)
2. run a business that does not pass on as much as possible of the value your employees create, ideally by choosing an industry without organised labour
This is not to dismiss all companies as terrible capitalists, of course!
We buy the line that value drives price from sales people selling their wares to us. Yet we do not hold that line when it comes to the price we sell ourselves for.
@markonthewall, in the companies you start do _you_ pay your engineers based on their value or based on market rates?
Basically you're saying that a developer's worth is tied to the worth of the company; that the same developer who works at a multimillion dollar company is worth millions, but if they then move to a startup that is struggling and then fails, they are only worth tens of thousands (or even zero).
If developers were paid relative to what the company was earning, there wouldn't even be a 'startup scene'.
As a businessman, I'm going to find the cheapest way to do something at the necessary quality that I can, regardless of how much value it adds. If a faster database is worth $50M to the company, and one person can do it for $500k and the other for $200k, I'm going to choose the guy who will do it for $200k (assuming he's up to the task). It's all about supply and demand.
It can be pretty demoralizing when you look at it from that perspective. We really need to have a conversation that even though passion is important and great for quality of life, it can hide real systemic problems and inequities
I probably shouldn't post because reading this kind of stuff always annoys me. Let's back up from the "OMG I'm getting scammed" position and see what a "fair" share for a programmer is.
Let's say there are 10 programmers on the team and the company makes $10m in sales that year. How much money should each programmer receive? You might naively think $1m a piece is fair. But there are other people in the company and other costs involved. It is quite common to run companies with a 5% profit. R&D expenditures are usually around 10% of total expenditures. So $10m sales is $500k profit and $9.5 million expenses. $950k of that is spent on R&D, or about $95k per developer. The rest goes to paying other employees, real estate, cost of sales, etc, etc. If you find a way to reduce these other costs in your company, you will almost certainly be able to negotiate a wonderful bonus, but otherwise you really can't complain. It's just hubris to think that your contribution should account for more than everybody else's. Go ahead and fire those sales people. What could possibly go wrong.
But you may not be thinking about sales. Because, hey, we're in "dotcom version 2" these days. Who cares about sales? It's company valuation that really defines "the added value they CREATE", right? Well, please forgive the sarcasm from an old programmer. Moving money from your investor's pockets to your own is an age old and proven business plan. If you feel you deserve a slice of the action, then by all means go for it. My moral outrage does not quite extend to your plight, unfortunately.
You might be thinking, "I'm not talking about those scammy startups that are just pumping their valuation to score a big exit. I'm talking about the true unicorns that are wildly successful. Where's our cut?" Well, if you look at a wide cross section of startups and look at return on investment over a 10-20 year period, it is true that there is some growth. Let me be really clear, though -- you don't deserve that money.
Let's face it. Are you going to take responsibility for the failed projects? Are you going to refund the investors when it turns out that your awesome architecture suddenly implodes and causes the company to miss its window of opportunity? Are you going to pay for those days when you were arguing with your coworker about whether to indent 2 space or 4 spaces instead of getting the damn product out the door? Am I going to pay my employer for wasting their time writing this ridiculous reply instead of fixing their sales system? OF COURSE NOT!
The attitude that "All the success is due to me and all the failure is due to someone else" really bothers me. If you really think you're worth millions, then go ahead and stick that giant price tag on your head. I wouldn't hold my breath about landing that "no downsides, all upsides and BTW make me rich" job, though.
I hate this question. I frequently dodge or outright deny answering it. I won't lie about it, I just say, no you don't get that information.
To dodge this question I say the following:
"I'm looking for compensation in the range of xxxx to XXXX. This obviously depends on the benefits packages, for an awesome benefits package you may be closer to xxxx, if your benefits are bad then you'll need to be closer to XXXX."
If they persist I follow up with, "I gave you my range if that isn't enough for you then I'm sorry but I'll have to pass, I don't disclose my current salary to any recruiters."
I've followed this advice in the past with mixed results. Some companies do a great job of either respecting this or not asking in the first place. When I interviewed at Uber (a little more than a year back), the recruiter was super persistent. I told them "I understand why you're interested, but it's my personal preference at the advice of personal mentors, not to disclose that information. If we both like each other I'm confident we can find an arrangement that is mutually beneficial." To which the recruiter replied, in person face-to-face, after the 5th time asking: "OK, we can do that. But we have a policy of always making the lowest possible offer to candidates who won't share their compensation information. I just want the best for you." In the end, they very clearly made the lowest possible offer they could and weren't willing to negotiate. It was a cool team, and regardless of if you think they're over-valued a cool company, but it was a very easy "no thank you" for me. That's probably the hardest part of the advice -- you need to be comfortable saying "no" if the negotiation doesn't work out.
> "OK, we can do that. But we have a policy of always making the lowest possible offer to candidates who won't share their compensation information. I just want the best for you."
This makes absolutely no sense to me. "Oh, we can't use previous compensation to effectively lowball this candidate we like, so we'll ineffectively lowball them instead."
It makes perfect sense. If an applicant doesn't want to disclose their previous salary and disclosing it is the cultural norm, that indicates a) they're troublemakers (very privacy conscious or what have you), or b) their previous salary was very low.
You probably don't want troublemakers so there's no point in making them a generous offer. And if the previous salary was very low the lowest possible offer is probably not too far off.
It actually incentivises disclosing your previous salary because unless it was lower or as low as the lowest offer, you'll have a better bargaining position.
I'm not saying the reasoning is particularly ethical or nice, just that it is entirely rational.
That's interesting, I hadn't considered it that way. I was looking at it as, "We want this person to work here because they passed our tests, now we wreck the deal for no reason." You're saying the salary disclosure is just one of the tests. Makes sense.
If it's penalised, I'd say it's likely a "test" (or more of a checkmark). But I wouldn't go so far as to say every employer that asks for your previous salary is testing you.
That said, even if you disclose your previous salary that could affect how you are perceived:
* disclosing it at all without hesitation might mark you as either very open (positive) or untrustworthy (negative)
* if the salary is much lower than expected it might indicate you're not as good as you claim (negative) or that you're bad at negotiating (positive?) or that you left because you wanted a bigger salary (negative)
* if the salary is much higher than expected it might indicate you'll make unreasonable demands (negative) or that you're a strong negotiator (negative?) or that you are underselling yourself (positive?)
Again, it entirely depends on the employer and sometimes a cigar is just a cigar.
I'm not sure you're aware I'm speaking from the hypothetical position of the kind of company that would penalise candidates for not disclosing their previous salary.
From that perspective it should be obvious: if you're a privacy-minded individual, you'll be a bigger hassle to deal with than someone who's blissfully oblivious to privacy concerns. You might call out technically illegal practices others might be willing to put up with, for example.
I have blind-spots of dense thinking. I appreciate your response. In particular...
> You might call out technically illegal practices others might be willing to put up with, for example.
It routinely still amazes me that companies want armies of Yes Men to willingly go forth into that good night at the drop of a paper-clip without so much as a "yes but".
You know what that is? An army of dumb-AI robots, which we already have but not to grand-high scale.
Because that person values you jumping through hoops to train you to accept future hoop jumping you will inevitably do, and test your hoop jumping ability.
If you dont play ball with bureaucracy, you are punished in the only way they have available.
Quick story. Before I took this advice, I made the mistake of telling a recruiter my salary, and then the recruiter said, yeah I'm not going to give you a 20K raise. The guys on that team were great and the compensation was actually viable, but it was not a good fit overall.
I think any negotiation where you want to walk away with the best deal you have to be willing to let a job go. It's when you want something so bad that you start to loose perspective and take a really bad deal. I say this from personal experience. When I have wanted something really bad I negotiate poorly, but when I come at it from a take it or leave it position I am almost always more happy with the result. It's really hard advice to follow when you really need/want a job especially if it's a big name like Uber.
This advice is also VERY dependent on you being able to negotiate. If the market is down and you can't find a job, you may end up in the 5th interview you don't get because you refused to disclose and guess what? This tactic isn't working. Adapt to the market, but use any leverage you have to secure the best position you can for yourself at a place you will be happy.
I've gone through 4 employers in 4.5 years and I have loved 2 of the last 4. Those were the ones I took because I had time to decide and really vetted them out. I had the power in the negotiations and I stacked the deck in my favor. They were also the biggest pay bumps I'd received.
The tech jobs I've worked have ended roughly thus:
Company went under
Short-term contract for specific task
Department downsized
Short-term contract for specific task
Department downsized
Short-term contract for specific task
Short-term contract for specific task
I have never quit a job since finishing school. I'd have loved to stay on at several of those places for the rest of my career, but that's not how most of the industry works these days. If you've been able to stay at a job you love for 19 years, you're very lucky.
Even with quick promotions, you are much more likely to end up with a higher salary by moving jobs every 1.5-3 years. I'm 30 and the longest I've been at a job is 21 months. It's never been brought up as a negative and I've got plenty of experience across multiple business domains and companies.
I used to be super intimidated by negotiation. I recently took a Coursera course that I highly recommend https://www.coursera.org/learn/negotiation. It's not specific to negotiating job offers, but it helped me become a lot more comfortable with the process just to have a framework to think about the whole thing in. It's a really well put together course too.
Yeah fair. It was definitely a very negative sign. Having participated in hiring elsewhere, my assumption was maybe it was just a bad recruiter. Generally, engineering managers have a big input into the offer process and I thought I'd give the process the benefit of the doubt over the bad salesmanship. Plus, at that point, it costs me nothing to hear their offer and make a fully informed decision. Even if I knew I wasn't going to take it, waiting a day for a number is a valuable data point.
I agree. It's not easy to gracefully walk out of that kind of situation. At that point it was better to just go through the motions and maybe end the interview prematurely.
> "OK, we can do that. But we have a policy of always making the lowest possible offer to candidates who won't share their compensation information. I just want the best for you."
"OK, you can do that. But I have a policy of always turning down offers that are too low for the role and benefits involved. I just want the best for me."
> we have a policy of always making the lowest possible offer to candidates who won't share their compensation information
What does "lowest possible offer" even mean? Lowest wage that you can live off? Lowest wage that anybody else in the company makes? Lowest wage that you'll accept?
I've been recruiting for a few years now, and I've always hated asking how much someone is making currently. Have always found it better to ask "what are your compensation expectations?" Puts the ball in the candidate's court and I prefer asking this early in conversations as to make sure we're aligned and no one wastes each others time.
Most negotiation experts disagree with this advice. The first person who gives a number anchors the conversation to that number. When you name a number you certainly do set a max on negotiation, but you also get to set the starting number. And many negotiation experts think the latter is more valuable than the former.
So they can start off trying to negotiate you down from your max, or up you can spend your time trying to negotiate them up from their min.
If you're doing something like selling your startup, you want to set the anchor price, yes. There is such a huge range of outcomes, it's best for you to shoot high (as long as you're comfortable with the risk of scaring the buyer off) as the seller. (Or to start and shoot low as the buyer; with the walkaway risk reversed.)
For something like salary negotiation where results are more well-bounded and there is a lot more commoditization (ie replacements are relatively easy to find, or are perceived to be relatively easy to find), you generally don't want to anchor. An anchor that's way out of whack is easy to shoot down (show comp data). Anchoring slightly high/low doesn't buy you much as there is no real anchor... you're just in the established/known range... and so it's more valuable to see where the counterparty starts off an dplay from there.
There are unique situations / exceptions of course. For example, you might have uniquely valuable skills for a given company (or be able to convince them you do) and therefore move into a less-bounded zone of negotiation, in which making the ask/establishing the anchor would again be a good idea. But for a normal, well-established position, there is literally no benefit in "anchoring" as the bounded range is already fairly well established and that is the anchor.
Still, coming up with that first number is very tricky. A application of mine once reached the salary negotiation phase, and the company asked me what I was expecting. I didn't want to go so high they were insulted, so I took what I thought was a reasonable number and bumped it by 40%.
They said "okay". No negotiation, no fireworks, nothing. I've always wondered what I could have gotten out of them.
I guess the fear is that you'll anchor it "lower" than they would have. Example if they are intending to pay 120, and you say "I'm hoping to make 110" they might just come down to 110. But I suppose if you start at your high range that might be in your favor. Some of us (myself included) just don't know what we're worth so it's hard to know how to start the deal...
Also if your problem is every time you look for a job people keep on wanting to throw more money at you than you could ask for with a straight face. Well then dang I wish I had that problem :)
This problem is usually because people just set their starting price too low, or aren't firm enough on it. One tactic(I haven't used yet, but I'll try the next time I apply to a job) is ask the hiring manager how selective they are. Many time they'll brag about how hard it is to join their company. They'll say things like "We only accept 1 in 10 developers". Boom now they just admitted that if they were paying fair market value their offer should be about $153k :). [0] This is a great place to start a salary negotiation. Also glassdoor is a good place to find information for where to start a salary negotiation as well.
[0] 80% of devs get paid between $57k(10th %) and $153k(90th %).
That sounds similar to the idea the Overton window[0]. I've thought for a while that I hope I get to say what I want before they say what they're offering. The hope is that if I say a high number then we will be negotiating based on that high number rather than some unknown, possibly lower one.
The other school of thought on this is that the first person to talk numbers has the upper hand due to anchoring power
> Just like the word suggests, you want to set a reference point around which the negotiation will revolve. Making the first offer can be to your advantage, as this offer might set the height of the negotiation bar. This anchor is the arena where the two parties will wrangle in a tug and pull negotiation scenario. Interestingly enough, many studies have shown that the first offer has a strong psychological pull, almost a magnetic lure. The resulting agreement is often strongly attracted towards the person who proposes the first offer.
This works iff you shoot very high/low and if it's a very fungible range of possible outcomes. In something that is fairly well-bounded like job compensation (or most residential real estate transactions, as another example) it's usually better to let the counterparty turn the first card.
That's a sensible rationale as well, but if you are already familiar with the bounds of compensation, may it not be preferable to throw out a number that's slightly higher than the upper bounds of that yourself?
Since employers know the bounds as well, letting them name the first price would seem likely to result in a number that's near the mid range and not take into consideration you as an individual (skills & personality), it would be irresponsible for them not to try to mid-ball you even if they really like you, no?
Yours is a good thought too. Here is my perspective/experience:
Scenario 1: You start at the high end of the range or just a bit above it, I think you risk the employer coming in low as a counterplay, expecting to meet in the middle. Now, it's up to you whether you do actually meet in the middle, or hold firm and move them way up, or just end the negotiation entirely. But I think this opens up their strong counterplay and establishes their ability to take the reasonable-seeming ground that it's fair to meet in the middle (even if it isn't).
Scenario 2: They throw out the first price.
Scenario 2a: They throw out the first price, and it's low for the range. Now you can counterplay by going high. You also can take the strong moral high ground here by showing comp data and basically saying that it seems like they're not being fair or don't value your experience and skills correctly, which is a concern to you. Often, this will be enough to get them to offer a higher price, and you can then spring from there to continue negotiations from this higher spot. Whether they offer a higher price or not, you can start high and employ meet-in-the-middle even from the low starting point. So, Scenario 2a is no worse than Scenario 1, and has some chance of being better.
Scenario 2b: They throw out the first price, and it's mid- or high for the range. Hey! Free money! Now you can safely shoot higher and hopefully end up somewhere between where they started (already on the good side of the range) and where you countered. :-D So, again, Scenario 2b is at least as good as Scenario 1. Very rarely will a company demand no negotiation whatsoever (and maybe you want to tell them kiss off if they do, unless they have a very good philosophical / values-based reason for doing this, and they do it consistently with all candidates), so you're only bettering your position by opening the possibility for them to start somewhere above the low-end of the established market range.
By combining all the above logic, you don't want to go first.
In practice, I think this works a lot better for prospective employees too. :-) I personally think companies should offer first, for this reason (even though it's bad "negotiation" on the company's part... I actually don't think employing people is a zero-sum game, let alone a one-turn game... so I think you're better off trying to position them well. But of course not all employers think this way, and it seems in fact most do not.)
I don't mind giving a range, but that results in a tricky situation that isn't always easy to handle. If you give a range of let's say $130k-$150k for a role, candidates' expectations are now set that if they get anything below $140k, that they're not as valued as a potential new hire.
This can be easier to say than to do, depending on the person.
I am now at a stage in my career/life where if anyone tried to force me to give me a number, I'd say no. If they pushed the issue, yes I'd walk away.
That wasn't always the case, there were times where I needed to be the one to fall into line. In those cases I universally got screwed as the company would always quite obviously base my offer on my current salary, even when they claimed otherwise.
This. Negotiating a compensation package, in general, is asymmetric information warfare. Having to reveal your salary history you may as well not even negotiate.
I know so many women who are constantly bit by this and negotiating in general. Here's an idea: compensation agents who negotiate the compensation package on your behalf. Athletes and actors have them, why not everyone else?
I actually went on an interview once in which they asked for my last pay stub as proof of income. I declined and they said they would have to pass on me. A good portion of my previous income was equity. Granted the equity did not pan out but I was making double that in straight income in the job before it. Anyways I doubled down on their attempt at making the information asymmetrical and told them that they have my asking price and that there would be no negotiations on salary, if I had to hand over that information. I submitted my last check, they came back 20% higher than my previous compensation, at which I doubled my salary requirements from my originally stated requirements to take the position and took a position with their competitor before they even responded. After notifying them I was no longer considering the position, they eventually came back and said they would match my original requirement as they where getting desperate, but honestly at that point the well was poisoned.
Point being you are right it is asymmetric information warfare and they will use it against you, even if you offer them a poison pill like I did.
If a potential employer demands to know how much I made at my last/current job, then in order to maintain a fair, symmetrical conversation, I would need to know how much every one of their current engineers make. Anything less would be unfairly favoring the employer. Because they will likely never reveal such information, I think a ban on demanding pay history is completely justified.
You should be paid what the company believes you are worth, not as little as they can trick you into accepting.
I wrote a post a few years ago about agents (https://jobtipsforgeeks.com/2012/09/17/disrupt/) and actually had some people from HN approach me to see if I'd started that service. At the time I hadn't but I'm reconsidering this right now.
I wrote the article in response to the incentives for recruiters being typically seen as driven by the client (hiring firm). The main issue is that recruiters are paid by hiring firms, and agents would be paid by the employee/new hire.
Job seekers seem less likely to pay for a service like this (negotiation). I've provided coaching to many, which usually includes mostly job search and resume advice, and may end with negotiation advice, but I'm typically not approached just for the sake of negotiation help.
Maybe I should advertise that as a separate service.
In my experience, the problem is that those most in need of such a service are those who are least likely to use it.
In my peer group, there are some developers who treat their employment like a business and negotiate aggressively. They read up on tactics and practice them. I'm not sure agents would actually be that helpful to such people.
Another whole group basically acts like they're paid "enough" and don't negotiate at all. They're unlikely to see the utility in professional negotiators since they're not even willing to read up on tactics themselves.
I see these things too. Most developers believe they are much smarter than the average recruiter (which is certainly true) and probably think they can negotiate at least as well with even minimal training or reading. It's a matter of convincing a smart developer that the negotiation will likely provide a better result than would have happened without the assistance, and for a price that seems both fair and reasonable when compared to the amount negotiated.
I tell you what I think I can get out of an employer. If you think you can get more, you take me on as a client and receive x% of the additional amount.
I like that idea, and I definitely would like to see an element of incentive like your model includes, but I imagine I'd also spend a fair amount of time either (a) saying no to people with unrealistic expectations or (b) trying to manage expectations down for those I'd consider overly optimistic, which could be perceived as opportunistic. It's tricky.
If you think most people's expectations aren't reasonable, then maybe your service isn't needed. Isn't your whole thesis that lots of engineers are getting less than their worth due to their inferior negotiation skills?
By "fair amount" of time, I wasn't trying to imply "most". I think at least a slight majority of the population have fairly reasonable expectations based on my years of experience. For them to be a client though (based on your pricing model), their expectations have to be reasonable and a bit lower than market or unreasonably low. Reasonable and a bit high doesn't work.
A small percentage tend to have expectations far below market.
There are thousands of engineers getting less than they could be getting if they had better negotiating skills, better marketing skills, and better information.
The number of underpaid engineers doesn't need to be anywhere near a majority for the service to be a good business opportunity, or needed. There are plenty of engineers that could use the help - the question is whether or not they'd seek it out.
A pure hourly rate would seem easy to figure, but I dislike that there is no financial incentive for the negotiator to actually get results. The ideal situation would be for the negotiator to also benefit financially from the result, as he/she would likely be more inclined to push a bit harder.
Perhaps a combination of an hourly rate and either (a) % of salary - which would be very small I assume or (b) % of difference between initial offer and final offer - which would be larger than the percentage in a.
I'd have to think about it, but in the short-term I'd charge my standard hourly coach/consult rate to job seekers which is currently $60/hr.
I agree with this: employees are at a huge information disadvantage. However, I think a better (& admittedly more radical) solution to this problem would be to force employers to publicly post anonymized salaries by job title. That way prospective and current employees know exactly how much they ought to be paid. It makes salary negotiation almost trivial.
Preventing employers from asking about previous salary does not prevent them from discriminating against women, which is the intention of the MA law. I can definitely see how this law might hasten a transition away from an era where salary was unfairly pegged to gender - but only to the degree that employers aren't still just blatantly discriminating by gender.
I'm not sure why you'd want to do that. It seems unnecessary to achieve pricing transparency - anonymized salaries would be sufficient. It would require a dramatic cultural shift to be accepted. Discussing of one's salary is taboo (at least in the U.S.).
> I know so many women who are constantly bit by this and negotiating in general. Here's an idea: compensation agents who negotiate the compensation package on your behalf. Athletes and actors have them, why not everyone else?
Because most other workers aren't, even with an agent, going to get paid enough more to make it worthwhile to pay a competent agent to negotiate on their behalf.
I agree, but smaller payscales means both sides are less willing to negotiate - i.e. an employer would be less willing to negotiate a programmer position as fiercely as an NBA team would for a starting slot.
Salary and benefits negotiation usually comes at a point where the decision to hire has already been made, meaning it's costly for the employer to not negotiate.
That is why there is negotiation in the first place.
Be careful about that. The recruiter's incentive is stronger to get more people into jobs that to get one person a little bit more money. It's much like the situation with real estate agents that freakonomics covered in https://www.youtube.com/watch?v=17jO_w6f8Ck
A high quality third party recruiter has different incentives than a real estate agent, because they expect repeat business: Few people buy more than two houses in their life, but having a good relationship with a stable of good developers that change jobs every couple of years leads to a far easier and lucrative job in the long run.
There are plenty of awful recruiters who will undervalue you, send you to gigs that don't fit you and such. But it's precisely how bad the field is that makes being a good recruiter such a strategically smart play. Being the rare recruiter that does their job well lands you top talent, that top talent means you can start asking for higher wages for people than the salary bands posted, which leads to more people coming to see you, because you can actually get higher rates than what someone could if they asked up front.
I often ask recruiters what the salary is for the positions they offer. The right recruiter in my town, who I have a work relationship with, will often talk about a 20/hr premium. When compared to the worst (consulting firms that tell you a rate that has nothing to do with what they'll ask the employer, and will hide this) the difference can be huge. I have worked on the same team with another very comparable coworker, and I was getting paid almost triple! and he is an American, not an H1-B.
I'm assuming you're talking about third party recruiters, not recruiters that are employees of the company you're negotiating with. Yes, they do commonly do that, but they're only going to be involved if they've been involved since the beginning of the application process.
I agree, except what I generally tell a recruiter what I want for a job before an offer has even been made, and I usually work with multiple at once. It gives me some haggling power without being the one who has to haggle directly.
Third party recruiters dealing exclusively in contracts are more likely to side with the employee. Those dealing exclusively in long-term employment will be more likely to side with the employer.
This is because of how their compensation is structured. The contract guy is going to start getting paid immediately. The employer guy is going to get paid when the employee has vested a certain amount of time with the company.
Yes, but their contract and fiduciary duty rests with the employer, not the candidate. They are paid by the company to find an employee, not the other way around.
Many third-party recruiters are simply matchmakers, not retained agents of a company. Sure, they still get paid by the companies for matching employees, but their motivation is still to make matches, not get either the employer or the employee the best deal.
> fiduciary duty
I think you are misusing that word. A third-party recruiter does not have a fiduciary duty to the company with the role unless they have been empowered to make the hiring decision themselves. I don't know of any agencies with such power.
> Here's an idea: compensation agents who negotiate the compensation package on your behalf. Athletes and actors have them, why not everyone else?
I'd definitely be willing to pay for something like this. Make it commission based (pay as a percentage of additional salary negotiated) and the incentives between the negotiator and client will be perfectly aligned.
the incentives between the negotiator and client will be perfectly aligned.
I'm not sure that this is the case when talking about such low amounts.
Taking hints from a similar "agent with percentage", think real estate agents. Unless an agent is working with pretty high level homes, the 3% they are getting is not significantly effected by a something like 20k up or down on a $300k house. It's an extra $600, but often their time is better spent getting the deal closed as quickly as possible for as many people as possible. If that $20k for the client takes an extra few days the haggle, the agent could have been working with another client on another $300k house deal.
In both cases, the thing that throws the agent and client out of alignment is the fact that the deals come through very infrequently, thus from the agent's perspective, they need to keep clients hustled through the door in order to be able to keep their own cash flow going, and working extra hard for a minimal gain isn't going to generally effect future gains. Most engineers would just use the same agent regardless unless the agent was spectacularly bad.
(and there are way more rules for real estate agents than there would be for a hypothetical engineer's agent)
A better compensation structure would take into account that the majority of the price is a given, and compensate say 30% of the price over $270k.
But that would require realtors to give accurate and competitive assessments of property values, distracting from their primary hustle which is getting their client to sign an exclusive contract.
Could still be room for a win for people who are just exceptionally bad negotiators. Non-confrontationalists who can't bring themselves to ask for more and the like. Basically, a half-assed job by a professional, minus a significant cut, could still be significantly better than just taking a first offer or meekly saying 'Is that the best you can do?' and getting a token 1/2% bump.
Not sure if that would pan out, or that's a large enough target audience. Just a thought.
> pay as a percentage of additional salary negotiated
So many things wrong with this. Agents typically negotiate fixed-term contracts for athletes and entertainers. Agents take 10% of the entire pot, not "additional salary negotiated" whatever that means. You don't know what you would have been able to negotiate so there is no "additional" amount, only what they got you. Are you willing to give 10% of every paycheck to your agent?
Not sure why you're assuming I wanted something analogous to agents for athletes and entertainers. Those work full time and have a lot more responsibilities and provide many more services than simply doing a one time negotiation for a higher salary, none of which I'm actually looking for.
I'm looking to pay someone to negotiate a salary raise on my behalf in exchange for a cut of the additional salary negotiated. It's a one time deal, that should take a couple of emails and a couple of phone calls at most, not a full-time job. It has the potential to pay very well considering the minimum amount of effort required on the part of the "agent" as far as I can see.
Of course, I'm not denying that there could be something I'm missing that could make this arrangement infeasible (in fact, other replies have already mentioned many such factors), but I'm not sure how your post about agents for athletes and entertainers was in any way relevant to the discussion.
Everyone talking about how great an agent would be are forgetting that under the current way every agent works, they'd be writing off 10% of their paychecks in perpetuity to that agent (or at least along a defined timeline).
> Athletes and actors have them, why not everyone else?
Largely because the compensation changes are both rare enough and small enough that hiring someone to negotiate on your behalf isn't really worth the money for either side. Paying enough that the negotiator would be able to pocket a decent amount of money would probably not be viable.
>Having to reveal your salary history you may as well not even negotiate.
Having to? It's not a requirement. I used to get asked this all the time. They want to know how much I made last gig? I tell them the rate I want, not the rate I got.
That's right, if they ask me a question they have no business asking and can never confirm, I reserve the right to tell them what I want them to believe.
I also think it's sexist to frame this as equal pay for women. That implies that women are predisposed to be bad negotiators.
not predisposed to be bad negotiators, but more likely to have a history of lower pay due to institutional sexism, which gets used as justification to offer lower pay down the line
I've heard similar advice, but instead of just making it up say "my current salary is confidential" (then, if press, "I hope to make XX at my next gig" or what not).
> Here's an idea: compensation agents who negotiate the compensation package on your behalf. Athletes and actors have them, why not everyone else?
Because in your typical job you're trying to negotiate over a few thousand dollars in your annual salary. If you actually paid an agent enough for it to be worth it to them, you may as well have not negotiated at all because the money they won for you is just going in their pocket.
Athletes and actors are haggling over several millions of dollars. They've got plenty of fuck you money in there to pay an agent.
They could make up for it in volume. There's only so many athletes and actors around. And their contracts will be a hell of a lot more complicated than an engineer, so it should be quicker to negotiate.
Then again, in a different form, those compensation agents were simply known as unions.
"Companies will not be allowed to prohibit their workers from telling others how much they are paid."
Companies are not allowed to do that now. That's Federal labor law, and it's been prohibited since 1935.[1] This only applies to employees, not contractors.
I applied and soon after worked as an engineer for a large company that not only asked for my previous compensation but part of the application process involved my employer validating that I actually made what I told them. They worked with a third party to match my figures with W2 statements and/or pay stubs.
It was really intrusive. Pay should equate to value, not some silly ladder climb
I'm sorry that you had to go through this. I agree that it's intrusive and really shouldn't be tolerated.
A while ago, I was in the middle of the job interview process for a company. Having read some rudimentary background on salary negotiation, I was somewhat prepared for how to deflect the "how much are you making?" question.
The next interview was a technical interview, so I wasn't too focused on this aspect of the interview process since I hadn't received a verbal offer. The technical interview went well, but suddenly the interviewer asked "what are you making right now?". Completely clueless, I started talking about the projects I was working on and various technical aspects. The interviewer nodded, and then replied "No, what I meant was what is your current salary?"
I was completely unprepared, fumbled and after some resistance gave up my salary after being told, "this process cannot continue until you tell us your salary". (They also subsequently asked for W2s as proof) I handled this extremely poorly and basically backed myself into that corner. Basically, they negotiated much better than I did, even if it meant resorting to heavy-handed tactics like that. Later on, HR explained this line of questioning to me by saying, "we ask for this information... not to draw a box around you, or anything like that, but so that we can give you an offer that matches everyone's needs".
Long story short, the offer came in at almost exactly $PREVIOUS_SALARY * 1.05. I politely declined.
While this process was painful, I learned a lot from it - always be ready to handle the salary question, even if the interview is supposedly a technical one. If you willingly give up your previous salary, in most cases, you're looking at an offer 5-10% higher at most. (Unless you're an outlier making several standard deviations above the mean) Don't let people box you in.
It looks like they learned something as well, since you declined after they invested time into your interview and offer process. Thanks for doing that, you made things better for everyone else here in aggregate.
>"we ask for this information... not to draw a box around you, or anything like that, but so that we can give you an offer that matches everyone's needs".
Yuck. I'm always amazed at how willing they are to waste your time by playing "gotcha" over things they should have worked out before you ever came in. Very unprofessional to spring all that on you.
It's really interesting this discussion, I don't go past the first initial discussion with a potential employer without understanding the salary range.
If they refuse to comment on that I assume it's low and head on elsewhere.
yahoo did this to me. Verifying employment is one thing (I guess...), but their background check thing wanted exact salaries too, and permission to ask HR at all my previous employers.
Is this common? I've worked for small companies so haven't run into anything like this elsewhere. Except for one asshole that wanted to do a reference check two weeks after I started work (!!!) (he offered me a job at the end of the interview with a 24 hour time limit and had me start 3 days later; I had already left the previous employer so it suited me well enough at the time), and was unhappy when I told him what he could do with himself.
1 - if I can pass the interview having lied about where I worked, why did I have to do the interview? It just seems silly.
2 - they all insist on contacting the current employer, which I refuse to allow until I have a non-contingent job offer in hand from the new place. If X can't make me a firm offer, I'm not allowing X to contact (ie notify) the company currently paying me.
In California, I was asked by the recruiter what my previous salary was. I gave them a number. Later, the background check requested my W2s. I bristled and stalled, but they were being difficult. I ended up scanning them, whiting-out any numbers relative to salary, and giving them that.
They were satisfied. (That's just a datapoint, N=1)
Sounds really really weird. My previous employer flat out refused to tell my new employer my salary claiming it was confidential. In fact the job agreement always mentions that salary is confidential.
Ugh. This type of behavior should be banned everywhere. It's incredibly invasive and it serves no function in evaluating candidate fit. It serves merely to increase already high information asymmetry against you and reduce your prospective offer from where it might have otherwise landed.
> Pay should equate to value, not some silly ladder climb
I agree with this statement, but that's a tough thing to get large companies to agree with
I think it's in the interest of the industry-at-large to not ask this question, because it incentivizes hopping jobs every 1-2 years.
But, that's all fine and good and everybody might agree with what I said, but individual companies still profit by 'defecting' (asking how much you made before and offering you that * 1.05).
Imagine how painful it is to be an entrepreneur with a very weak signal about how much you can pay people to remain happy to work with you without going broke and still retaining good enough talent.
So the way to counteract information asymmetry (if we assume it exists) is to artificially enforce less information on the employers? That can't possibly be the right answer unless there's some systematic bias that leads to worse economic outcomes when employers happen to know a candidate's past income.
Candidates "may" offer this information upfront? I feel like I'm watching Office Space
"Am I supposed to tell you my salary before even hearing your initial offer?"
"Some employees choose to offer salary information, and we encourage that"
That's why the measure comes across as empty pandering. (Hint: you can tell it's pandering because all the rationale is gender gap bullshit instead of the job application process being shitty for everyone.) If Massachusetts really wanted to improve the strength of employees with respect to employers, the legislature would do things like ban non-competes, ban non-solicits, clarify IP assignment rules, and ban mandatory binding arbitration clauses.
But what do we get instead? Identity politics pandering.
Well, it is Massachusetts, after all. Effectiveness is less important than ideology. They could also cut some of their ridiculous taxations, if they want to be more competitive. Switching from working and living in MA to working and living in NH is worth almost a 10% pay bump.
Sometimes telling an employer your current salary is a hammer. If they are way off you can do this to get more money, but I don't tend to disclose either way.
"Yeah, and of course you'll share equity and strategic decision-making with me." Employers, executives, managers all love to move their problems onto the employees.
Feel free to tell them what you make just add 15-40% to that number. This has worked well for me. Employers seem happy as well.
Example:
Assuming your current salary is X.
"So I currently make (X * 1.20), but in order to make the jump I need at least (X * 1.40)."
That way they get to feel out immediately whether they can afford you, you get the salary that would motivate you, and no one is wasting time in the hiring process.
Keep in mind many employers wont want to pay you more than 8-10% more than what you "currently make" unless they are incredibly motivated to hire you and you alone.
> Assuming your current salary is X. "So I currently make (X * 1.20), but in order to make the jump I need at least (X * 1.40)."
Regardless of whether or not the employer actually does due diligence, why put yourself at risk by lying? The second half of that statement is the only part that matters. If you simply say "I need (X * 1.40) to make the jump", you'll accomplish your goal without putting yourself at risk by being dishonest.
Due diligence or not, dishonesty during a job interview can only come back to hurt you.
They can sometimes find out that you've lied. I've known people who had this happen, and the offers were rescinded. In all of those cases the person had already quit their job, were in the transition period and were told they were no longer going to work at the new place.
I've never had a company ask for proof of income and I wouldn't work at one that did. That's an insane requirement that should have nothing to do with whether or not I'm fit for the job and they're willing to pay what I ask for someone to do the job.
I am at a higher end of market salary range and when I tell potential recruiters my expectations and my previous salary they take my desires into account but ask for documentation.
There was a discussion here on HN a couple months ago that this approach is common in such cases.
sometimes they find out via other means. They're not supposed to be able to, but it happens. Other times they don't tell you until after it is too late.
I would never work for a company that went to that level. In 10 years, I havent seen a company pull that. If you suspect that might be part of their hiring process. Just say "I need to make X" and evade all talk of current salary.
As I mentioned in previous comment - companies would do this in case they really want a candidate but feel that previous compensation is somewhat above the market. They OK to pay market rate (if you can prove that) but are weary that a candidate employs the strategy suggested by the parent comment. I this case showing proof of previous compensation usually helps with negotiations.
In countries where the employer does the tax for the employee, then the employer will see how much tax has been paid earlier in the year. They can deduce salary from that.
I started off with a really low salary because I was working as a developer outside the SF bay area and in an industry that paid really low. Then moved to the bay area. Every company or recruiter tries to place you at maybe 5% to 10% more than your current job.
There was a time when I was just hopping from job to job to increase my salary. If there wasn't this convention of paying someone the same I wouldn't have switched so many jobs. There are plenty of places I wanted to stick around but got a much higher offer somewhere else so I pretty much had to switch.
My salary is more than 400% what it was 10 years ago. I feel that I have finally reached market value and have a salary I am happy with. It would have been nice if it was based on supply / demand and how well I interviewed.
That being said, I'm not sure I agree with this law. I like the outcome but not the implementation.
Having a law that says you can't ask someone something seems to violate Freedom of Speech and it sets a dangerous precedent.
I'm fine with the not discriminating part, it's the asking part I'm concerned with. It seems like censorship and going against Freedom of Speech to me.
A better law would be that employers may not discriminate or refuse to hire someone if they refuse to tell them their previous salary.
Specificity is key, just saying you can't ask feels too overreaching. The intent is to prevent discrimination, not speech.
>A better law would be that employers may not discriminate or refuse to hire someone if they refuse to tell them their previous salary.
To be honest, this does not seem like a better law at all. "You can ask about this information, but you can't use it" just means they'll come up with some other excuse for doing whatever they wanted to do all along. The problem isn't the "speech" itself, it's the demanding of information. Is it any different than saying a company can't ask about an applicant's religion?
Asking is different than demanding. They can't use it if they didn't receive an answer.
They can ask, and then the candidate can choose whether they want to answer or not. It may be beneficial to the candidate to answer, or they may not really care if the company knows.
It accomplishes the same thing but doesn't limit speech.
Sometimes a job candidate might even want them to ask so they can set the minimum bar of what they are looking for without appearing to bring up compensation first.
I would take the same stance with any of the other "can't ask" questions (they can ask, but can't demand).
BTW, there's no law that says an employer can't ask about religion, children, etc. The law says they can't discriminate. It's just recommended practice to not ask those questions to not give any evidence for a discrimination lawsuit.
The law says, "an unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex, or national origin was a motivating factor for any employment practice"
In California, there actually are prohibitions on asking certain kinds of questions of prospective employees:
The California Fair Employment and Housing Act (FEHA) prohibits any non-job-related inquiries of applicants or employees, either verbally or through the use of an application form, that express, directly or indirectly a limitation, specification or discrimination as to race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation, or any intent to make such a limitation, specification, or discrimination.
We can't effectively legislate thought yet, although that hasn't stopped legislatures from trying and lawyers from making loads of money arguing over intent. It's incredibly difficult, inefficient and expensive to determine whether an asked question led to a discriminatory decision, so asking is prohibited instead.
This is why I dislike anti-discrimination laws too. The way they were enforced probably worked well with manual labor jobs and the like where labor is a commodity for example. Of course, this is why I am willing to compromise and limit the laws to these kinds of jobs.
Massachusetts is doing some good steps to better the work environment and entrepreneurship. This is a nice to have in negotiations and MA challenging non-competes are great things to change[1].
Non-competes are extremely anti-innovation, anti-worker, anti-business and really anti-American. Workers that are skilled cannot be owned. Good knowledgable workers should be compensated to keep them around, not fear of legal threat of using skills they developed.
California's Chamber of Commerce should buy billboard space outside of MIT and Harvard highlighting this, it's a huge incentive for new grads to move to California instead of taking jobs in Massachusetts.
> California's Chamber of Commerce should buy billboard space outside of MIT and Harvard highlighting this
Since employers (who make up the CoC) in California often try to get people to sign non-competes that are unenforceable in California, and to restrain their behavior after having signed them based on the misperception that the agreement is enforceable, its unlikely that the CoC would trumpet publicly the fact that such agremeents are not enforceable in CA as a positive thing.
I think non competes could be done if they were required to be paid at say 150% of comp in the past year, and the employee would continue to be considered an employee for the duration for the purposes of bonuses and equity vesting.
This way, if there was an employee for whom it was worth it for you business to bench, you could do it, but it would be expensive enough to only apply to truly key employees.
Keeping an employee out of the market for even a year is extremely detrimental to that employee's career. Skills atrophy and domain-specific knowledge fades. And past income is not an indicator of actual value or future income.
The idea of simply limiting it to "competitors" is difficult to determine, since it's easy for any company to call anyone a competitor. It would simply allow contracts to exist that would be cost prohibitive for employees to challenge.
If a business wants to prevent high turnover and on-going poaching, then it should be the one bumping up pay to 150% of the previous year, otherwise they're paying below market wages for their industry.
I mean I think that people will survive. I would think with 150% pay one should be able to stay up to date, and I think that the non-compete would be a reasonable explanation for the gap. If you offered for friends 150% of their pay to not work for a year, how many would say yes? Go get a master's degree, travel the world, write OSS, etc. I bet 90%+.
I don't even think that you'd have to limit it to competitors in this case either - it could be a blanket "we have the option to bench you for up to a year" clause. I think that if non-competes were paid at a multiple like this, companies would think very hard before enforcing them, and it would work out to the employee's advantage.
This is so needed in California. My past personal experience and my friends' experience in the Bay Area shows how hard the recruiters can push for the current salary. What they are saying is that we will give you a 10% raise from your current salary, but not what you and we can agree on is your market price. This is so against letting the markets figure it out.
This is precisely letting the markets figuring it out.
Those who offer at most 10% increase when a person's value is 50% higher will find themselves missing the good employees and ultimately, failing.
---
An example:
How much do I offer for this house? I have have no friggin' clue. But I can look at previous sale prices to get an rough idea. Naturally, I if trust my decision to that 100%, I'll risk making a poor decision. But the previous sales are a piece of information about the market that I ought not ignore.
I like the example, but wouldn't it be more parallel to ask "How much have you offered for other houses?" or "How much did your previous house sell for?". The seller would love to know that you are capable of offering more, but you are (properly?) reluctant to give this information.
> But the previous sales are a piece of information about the market that I ought not ignore.
I don't think there is any dispute that this is valuable information to the person doing the hiring. The question is whether it is fair to the person being hired to be asked this question.
Despite the theoretical disadvantage to the business, the current result seems to be that those who are historically disadvantaged will remain disadvantaged, while those who started out with an advantage will be disproportionally rewarded.
Your proposed parallel is backwards. The house is for sale to the buyer; the employee's time and skills are for sale to the employer.
So those question would be more like "How much do you pay other employees?" or "How much have you offered other candidates?"
You can ask those questions. Some employers are upfront, even posting salary ranges in the job ad itself. Other employers will decline to share that information.
Either side can reveal as much or as little information about their employment history as they choose. Curtailing freedoms is a heavy-handed act, despite the theoretical advantage to candidates.
Exactly. Good companies understand the value of great employees and I've found these tactics are for companies that penny-pinch and can't/won't budge. No better way to lose out on great talent that to only offer 10% more when other companies realize the value they're getting and offer significantly more.
The part of this that looks more important than forbidding recruiters from asking about previous pay is this:
>"And the law will require equal pay not just for workers whose jobs are alike, but also for those whose work is of “comparable character” or who work in “comparable operations.” Workers with more seniority will still be permitted to earn higher pay, but the law effectively broadens the definition of what is equal work."
I suspect the result will be to flatten wages everywhere except the most easily quantifiable, thus legally defensible, cases. Sales people will still make a commission on what they sell and have a huge gap in their earnings, but it will become much harder to reward rare engineering talents or even people who work on their craft recreationally.
It also means that pay will be determined by judges, not markets, as it is an impossible to define concept. More of the economy will get sucked up into litigation.
Comparable Worth is another incarnation of the Labor Theory of Value, which has long been discredited.
This is a big problem that I hope doesn't swamp the benefits of making salary private. Employers might have to prove in a court of law that I'm worth more than another employee? This could really really suck.
I never tell people anyway. I slightly evade the question and say, (in a somewhat annoyed tone), "I'm looking for something in the $X range," where $X is higher than what I actually want. So far, that's worked out fine, since that is the information they actually want to know.
I suspect this law may backfire. It's hard enough determining what a prospective employee may be worth to a company, and the salary history is used as a proxy. Take that out of play, and the risk is higher in hiring the candidate. Higher risk means lower pay offers, not higher.
In a similar vein, there is evidence that laws which forbid employers from asking about applicants' criminal records on job applications significantly increase hiring discrimination toward blacks:
This happens because many employers assume blacks have a criminal record, and asking the question tends to exonerate those who do not, rather than penalize those who do. The default assumption means that things can't get worse if the question is asked, but they can get better.
This law only banned asking the question, not running a background check. But employers don't even get that far, because they presumably do not want to pay for a background check on an applicant they assume has a criminal record.
Of course, this law was intended to have the opposite of its actual effect.
I've never understood why this question is such a big deal for people. When asked what you made at your last job, you should just give the number you would like to make at this new job.
Some people place an intrinsic value on honesty, and dislike being forced into situations where the advantage is given to brazen liars. I upvoted you since I think this is a topic worth discussing, and probably many others share your view, but I personally find your lack of compunction reprehensible.
I say that's what you "should" do, because I think it's the most logical way to respond to that question. That doesn't mean I wouldn't feel guilty about lying, and I've never actually had to do it, so I'm not sure how I would realistically respond in the situation.
In my case, my total compensation at my last job is far more than I could expect to earn at a new job anyway, ha!
Excellent measure. I remember interviewing at a very large corpo (think one of the main phone carriers), their application process online required applicants to reveal their salaries for the past 10 years. And before making an offer, they were asking for a W2 to make sure you were currently making what you claimed. Needless to say, I laughed at their face and walked.
I assume this law won't apply to questions like "how much are you expecting to make?".
Well duh, this law isn't trying to keep companies from knowing what the salary range for an industry is, they're trying to keep companies from taking advantage of (usually young) professionals who don't have the power to negotiate fair compensation.
There isn't a service offered by a credit bureau that I know, which allows an employer or a lender to find out about a prospect's salary. Salary info is used for credit risk strategies, and only where applicable or allowed.
I don't know how credible this is, but "The Work Number" (owned by Equifax) put this on an FAQ about this nefarious service:
Can just anyone get my income information from The Work Number?
No. You have to give someone authorization to get your income information from the service. There are numerous ways in which you can give someone authorization to access your income information. A few examples - by signing a borrower's authorization form when applying for a loan or by creating a salary key on our service, a one-time electronic signature.
> There is a lot of salary data available for people through services offered by the credit bureaus.
This is based on self-reported data to creditors. I've never had a creditor verify my stated income in any way, they always waive in because my score is good enough.
I posted a link in one of the siblings to your comments, but this data results from employers giving/selling the data to Equifax for their The Work Number service.
I have to say I'm surprised at the number of HN readers who are unaware about the availability of this data.
Excellent measure only if the world worked by laws passed. Clearly the job market in Mass is very competitive and current salary is something that is helping employers make a better decision. Outlawing it only means top employers will have to rely on proxies where as low-end employers will violate the law nevertheless.
On the ground it only makes things worse for both employees and employers.
I think is a great step. I work for a big company and has been around for 4 years. when I joined this company, my salary was on par (also justified as per my previous salary). We saw a tremendous amount of growth in the technology and the team has grown by 20X. The people joining now are getting far better salary because either their current salary is high and they negotiate on that OR the company is ready to pay more for filling up the positions. But I feel very bad when I think of it, the employees who laid the foundations got very small hike over the years and I feel underpaid now. Also, I was the member who laid the foundation of the team and created the initial reputation which was required.
Salary negotiations based on previous salaries are just plain idiocracy. I have co-workers who are excellent in terms of the skillset and the value they create but they come from either smaller cities where the pay was not great or from startups which didn't pay very well in the early days. These people suffer a lot even though they know that their counterparts who come from large companies and had good salaries get paid almost 1.5-2X.
this wont really help much because they will still ask how much do you expect to make and people who have low salaries currently will say a low number that is just slightly higher than their current salary. They need to make it illegal to ask any salary questions prior to the company making an initial offer. I cant even understand why they would not just make it mandatory to reveal the salary range of the position at the beginning of the interview process. No company can make a valid argument for why they cant reveal a salary range to prospective employees other than we can pay them less if they dont know the range.
> I cant even understand why they would not just make it mandatory to reveal the salary range of the position at the beginning of the interview process.
Something of this nature would lead to the 'bait and switch' by companies with shady interview practices. Interview a candidate for a position with a $150k posted salary, then make an offer for a different position that is $100k and the company has deemed a better fit for the skill set.
> this wont really help much because they will still ask how much do you expect to make and people who have low salaries currently will say a low number
Yes the person still needs to do their research to figure out what the job should actually pay.
I have seen that some employers ask for documentation of past salary. I don't think you will have any legal ramifications. Only they might rescind their offer or later fire you if they find out you lied
Where are you based? I'm in London and it's gotten so bad for me I only apply direct now so I can ask for a specific number that I would like. I no longer take calls or reply to external recruiters because so far they all tell me they won't proceed unless I tell them my precious salary despite myselr having told them what I want to make in the new role. Even if the company is willing to pay what I want they insist on knowing. I just say thanks but no thanks.
And include every benefit/perk you get. 401K matching, however much the company pays for benefits, any stock/equity, yearly comp for events/conferences, etc. I think that's all reasonable to include when someone asks you to produce some compensation number.
One of my coworkers just got hired by one of the big Silicon Valley companies and he said that the company knew his salary down to the cent without him disclosing it. Does anybody know how they could have found out? Could this be part of the background check?
This is good legislation. Hopefully this is legislation that we will no longer need in the future. Good government doesn't always mean smaller government. It gets smaller when it needs to and sometimes larger when it needs to.
No one mentions that this isn't officially implemented until 2018. Don't go into interviews expecting this to be law, and definitely use the strategies that other users have pointed out.
What are the chances that in this particular case, enforcing noise in the data actually leads to better economic results?
Technically less information can lead imperfect human reasoners to more rational allocation of resources, but you'd have to do a lot more work to prove that to me than some policymaker's "feeling".
> a group of female cafeteria workers who filed a lawsuit in 1991 seeking parity with male janitors, who did comparable work, the cafeteria workers said, but were paid significantly more.
You'd have to pay me more to do janitorial work than cafeteria work. Cleaning bathrooms is dangerous, dirty work.
By the way, if a new employer asks this, you don't have to answer them. You can politely say "I'd prefer not to share my previous salary with you." If you're at this point in the discussion this isn't likely to hurt your chances of being hired.
I'm from MA and I think this is a great piece of legislation.
I'd like to take it a step further and some day see a service where people can submit verified wage data to and access this wage data when they are negotiating employment terms.
My employer uses wage data from a survey they buy for several thousands of dollars when it comes negotiation time. The wage data is reported by other employers and includes wage data from companies across the country. I think it would help level the playing field when it comes to negotiations for anyone that is in that position because as it is now, even with this piece of legislation, employers have the upper hand.
I don't like bans but whenever people asked me about my current pay I told them it is confidential and I should be judged based on what you are willing to pay rather than what I am making.
I've read a few anecdotes here about fumbling the question. Let me tell you the magic words, "Sorry, that's confidential (it really is), I'm looking for $X."
I'm a big advocate for salary transparency, but I share that author's struggle - what's the best way to ethically disclose my salary to my coworkers, or publicly?
First thought
Finally! Jobs are worth what the market bears right then, not what they were previously worth, so why do employers want to ask such demeaning questions
Second thought
Boy, all of those recruiting/hr programs are going to need to be re-written to comply. A lot require you to say what you've been paid at every previous job. Since they are sold nationally, all of those HR departments will need that one field stripped out to now comply to MA law.
If an employer asks for your previous salary decline and threaten to walk. It's not that hard. Learning how to handle these situations is an acquired skill. Learn it.
I got bit by this at my current job.
I didn't remember telling them my salary at my previous company (usually I decline to answer), but my manager brought it up when I was trying to negotiate an extra 5k.
It's unfortunate that I must've told them my base salary when applying online and that I didn't do a proper negotiation afterwards. My new company doesn't give out stocks of any kind, so overall I'm making less.
I've run into quite a few applications that won't let you continue past the salary history without entering something. Its definitely a dark pattern for job applications
It pains me to see that people can't apply common sense without law anymore.
If a potential employer asks about my previous salary, I refuse to answer. Similarly, it never even occured to me to hide my salary from my coworkers regardless of what my employer asked me to do.
Needless to say, if any employer has a problem with that, I definitely don't want to spend 8+ hours of my day with them.
Ideally, everyone should be working for something they actually believe in and everyone should work with people whose skillset is valuable to achieve their common goal.
If there is no mutual respect and at least a minimum level of decency and each party of the employment contract is just chasing their own gains then we end up in this sad situation where laws are needed to lay out and enforce the rules of even basic human interaction.
I think at most it's an exaggerated premise, not false. There's tons of evidence that it does exist, though there is much debate over what exactly the percentage of the gap is. It's hard to find "the gap doesn't exist at all" evidence outside of certain think tanks or opinion pieces.
Would love to hear the opinions of founders who hated this practice as employees now they're on the other side of the table.
Personally I've always had a strict salary/comp band in place for each position, but having never had a company with > 25 people, I wonder at what point that breaks down.
At will employment. The company may change the salary at any time. They can just employ them, then immediately seek their salary history, then _alter_ their salary based on it. If a whole lot of companies coordinate to do it together, then the system is bypassed rather easily.
I am not sure of the utility of asking the salary question anyway. A credit check which is usually part of the pre-offer paper chase will provide an employer with plenty of info for determining your current burn rate.
Over here in Russia asking how much you make is often considered a taboo, or a bad tone. I've never been or heard about this being asked at the interviews.
This may have the opposite effect as intended, as men are more likely to apply to a job that has a lower upfront compensation and try to negotiate the price upward.
If Hillary wins, you'll also be able to ask about your peers' salary, legally - not sure to what extent of course, probably won't apply if you're asking for a level higher than yours - so that the "glass ceiling" might be broken, meaning women in the same job w/the same quals/experience should make the same as men. My wife found out through a colleague who's a friend of hers as well that he made 10k over her, same experience/qualifications/title....
Does this sort of information get revealed in background checks for previous places of employment or is that a privacy thing?
Also is it really necessary for a state to dictate such things? Is it too much pressure for someone to respectfully decline to answer such a question and practice some negotiation skills? What exactly is the state's interest in this sort of thing precisely?
No it doesn't come back in a background check. The only thing that comes back is your title and employment dates.
That is actually how I've avoided all those annoying salary negotiations. Lie about how much I make, let them offer me slightly above that and gladly accept.
Having it stipulated by the state means that people who have less leverage to decline to answer such questions have the power of the state behind them.
Good. To be honest asking about previous salary is offensive, and only helps employers take advantage of employees who aren't tactful enough to refuse to answer.
There's probably something to the fact that it's biotech first, government contractor tech second and software startups third, though. Those employer-friendly and IP-friendly laws work a lot better for biotech's long product cycles and government contractors.. whatever it is about them.
The way that article, from a study conducted by a real estate company, defines brain drain is interesting though. Basically, Boston has a huge number of STEM students and a disproportionate number of them leave after they graduate for a variety of reasons.
However, in the context of the Bay area, consider the following paragraph:
"CBRE’s report notes that over the past five years, the cost of living in Boston has climbed by 118 percent. Even a software developer earning the average salary of $108,270 per year could grow tired of a rent well over $2,000 per month."
The article also cites people returning home and better city experience (bigger city/better climate ?)
Certainly not unimportant issues as is overall tech job growth. But brain drain usually means a net outflow of mature workers.
> The article also cites people returning home and better city experience (bigger city/better climate ?)
Boston is small, the public transportation system kind of sucks, and everything closes early. And trying to change those things raises a lot of neighborhood groups' hackles. The rents are high and a lot of the housing stock is old. All stuff that drives young people away, I'm guessing.
Not sure why these comment is being down-voted. It is not even rude. The law does seem stupid and an empty gesture. (Like NY state banning Sex offenders from playing Pokemon Go) but such laws benefit no one, add an extra layer of complexity in hiring process. Are not there any other proxies for determining a person salary ? For example you can always ask a person his/her house rent or ask for tax returns.
Who the hell asks for those things in an interview?
Considering how much salary negotiation advice talks about how revealing your current salary puts you at a disadvantage this doesn't seem like an awful thing to try.
Why do you think only employees deserve the protection from the law and not employers ? All they are asking for some information to make an informed decision.
Employers enjoy far more power in this relationship and thus need less protection. The idea that employers receive no protection from the law is bogus.
Are you a star? If not, then you have very little leverage in negotiating compensation. That is true across professions: Rock Star, Sports Star, Sales Star, Surgical Star, you name it. Next ask if stars are made or born. If born, then you're out of luck again - until you are reincarnate. If made, then learn from how others made themselves stars. Like many things in life, it helps to start young, and it often comes down to luck.
If your plan is not to achieve fame and fortune via stardom, then pursue it through more accessible means like being a doctor or lawyer or banker or businessperson. Being an engineer or scientist can be a stepping-stone, but if you stay on that stone then there is a slim chance of achieving star power.
First, I beg to differ your "like for janitors" statement. In almost every profession there is a large difference between the top performers and the average. But your statement "Not all markets are superstar markets" is exactly the point of my post - engineering is not a superstar market, and hence engineers will never have much compensation leverage.
Which is why it pains me to see that so many engineers get stuck with such ridiculous salaries (relative to the value and wealth they provide and create). Problem is that some salaries are seemingly high compared to what the average worker does in the country but ridiculously to what they would look like if engineers were allowed to capture a greater (that is a >0.01%) percentage of the added value they CREATE.
Most, from the freshly out-of-school to the senior engineer with glowing reviews are getting scammed because they get paid just enough to live a comfortable life but not nearly enough to what they are worth and what they would need to consolidate their place in the upper middle class.
I had one company acquired by a large tech co. Probably going to start another one soon, I won't commit the same mistake twice... engineers need their fair share. They are the one creating things, they are the one on the front line and we should not get satiated by the crumbles we are left with.