Massachusetts Bans Employers from Asking Applicants About Previous Pay
nytimes.com
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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.
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.
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.
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.
I have. They don't have to be amazing engineers, but a background with some engineer knowledge is always a big plus.
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.
A complete specification could just be executed. It is the program.
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".
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.
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.
>but affluent to comfortably rich.
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.
High risk, high reward.
And wealth is not defined by how much money you make, but by how much money you have.
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.
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 might be able to become a millionaire in 25 years assuming a frugal lifestyle and no big life event costs, but that's optimistic.
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.
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.
$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.
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.
[1] https://www.glassdoor.com/Salaries/new-york-city-software-en...
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.
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.
That's wrong. The marginal tax for even a $50,000/year earner in NYC is over 42%.
Source: http://arjun-menon.github.io/taxes-in-nyc/?income=50,000
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.
Actually, the tool does stop adding Social Security after the income limit: http://arjun-menon.github.io/taxes-in-nyc/?income=200,000
> 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%.
--
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.
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.
Yup, all four of them - Apple, Facebook, Google, Netflix.
</sarcasm>
https://www.glassdoor.com/Salaries/principal-software-engine...
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.
Unless you're Norvig or Dijkstra.
https://www.quora.com/What-would-a-CTO-compensation-equity-b...
Per CIO magazine (2015), CTOs make up to $220K, directors up to $174K:
http://www.cio.com/article/2878056/salary/tech-salary-guide-...
Pretty much all surveys show similar ranges. Do they all "skew heavily downwards"?
New grads at Google get paid around $170k a year. https://www.quora.com/What-is-the-salary-for-graduates-start...
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.
Stock in startups and options in general are a gamble, of course.
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
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.)
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 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.
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.)
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.
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...
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.
> 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)
$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.
[1]http://www.slate.com/blogs/moneybox/2015/03/03/how_americans...
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.
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
https://news.ycombinator.com/item?id=12179637
>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.
If you were paid the salary of all those you automated out of a job, there'd be zero incentive for anyone to buy your product.
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.
https://en.wikipedia.org/wiki/Participatory_economics#Balanc...
That must be why call-center workers are all on six figures?
Seriously, the people who least like their jobs are not the high-wagers, but the minimum-wagers.
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.)
(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.
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
JavaEE programmers might be a legitimate concern though ;-)
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?)
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.
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.
Also bearing in mind where you stand on the skills ladder as part of that factoring.
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.
https://www.nspe.org/resources/licensure/what-pe
Although there does appear to be a PE exam for software: http://ncees.org/wp-content/uploads/2015/07/SWE-Apr-2013.pdf
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.
We on the other hand, have to take an "exam" everytime we show up for an in person interview.
I mean, they say so as much:
> "What makes a PE different from an engineer?"
They're talking about a specific type of certification, not what an engineer is or isn't.
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.
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'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.
(I figured I'd toss that one out there for the engineers in the room ;-) )
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?
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.
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.
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.
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.
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?
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.
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.
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.
That gave me a chuckle.
(Though, of course, some social intelligence goes a long way. No need to actually know how to code.)
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.
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.
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?
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.
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.
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.
Small company and startup loans are often secured by personal guarantees of the owners / founders.
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.
However, there are many staff that are let go prior to cutting engineers out right.
If you haven't tried you probably can't imagine how stressful it can be at times...
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.
Take a job for below market pay, sure. You better have decent equity though or you are being taken advantage of.
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.
I've been both by the way. :P
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.
For their exposure, employees are compensated with salaries. Are you willing to pay your company money if the product you work on misses expectations?
Which makes it the perfect position to be in to launch and iterate and test and lean startup a good side hustle.
Agree though, risk vs reward.
http://www.wbur.org/morningedition/2016/08/02/non-compete-ag...
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.
Uber just lost a war of attrition with Didi Chuxing after throwing a billion dollars at China's taxi market
How much attrition can you afford?
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.
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.
No reason for 100s of companies to write the same app.
Out of 100 developers 10 might save you 1.5million and getting the correct 2 might save you 3 million.
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.
* I say there is no lower bound because slavery still exists. There are employers who do not pay people at all.
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.
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.)
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.
(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.)
I appreciate that grocers are selling me cheap goods, and that it took hard work to create and supply them. Yet, I don't want them to form a cartel.
Cartelization is not good for the economy, no matter who tries to pull it off.
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.
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
In any case, in https://news.ycombinator.com/item?id=12212180 you said something like
- finance people used to get normal amounts of money, now they get more - hence, software people need to do something as a collective.
I don't see how the first implies the second. Especially since the finance people didn't do anything as a collective, did they?
Ignoring the risk factor in the equation leads to some rather wrong conclusions.
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.
Of course Mondragon in spain is different you have to Ante up
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.
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.
http://www.chelseagreen.com/business-economy/companies-we-ke...
> 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.
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.
The American Medical Association is a great example.
With tech it's the other way around.
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!
No need to accept these conditions. Eg Google and Facebook are always hiring and treat their employees better than that.
(And I don't really see why I would want to join an organization and throw in my lot with people who are not smart enough to take above remedy.)
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.
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.
It's not just overhead, it's a highly efficient system.
(See eg the effects of Aldi on the Australian retail sector.)
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.
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.
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.
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.
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.
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.
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.
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! :-)
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.
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?
Pondering the answer to that may enlighten you.
With immigration Americans get cheaper tomatoes and unAmericans get comparatively better jobs. It's a win-win.
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?
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.
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.
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.
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.
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.
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...
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.
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.
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).
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.
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.
> 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?
As for past investments in different careers, those are sunk costs and irrelevant to decisions made now.
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.
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.
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.
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.
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.
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.
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.
In 20 years, we will see who is competing and who is was just funded with unicorn dreams. I don't consider a single one of those comparable.
Azure and Google Compute Engine? I'd say those are pretty comparable to AWS.
Could you explain your example? I tried this, thinking it might give me something interesting, but I couldn't figure out what you were referring to.
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.
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).
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.
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.
Absolutely 0, because they're not the ones doing the work.
And what makes showing up at the office and typing on a keyboard such a holy use of time that it alone deserves compensation?
) In Icelandic, "win" means "work".
When the poor takes an investment risk of $1000 they risk more than some elite putting up $1000.
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.
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.
"And what makes showing up at the office and typing on a keyboard such a holy use of time that it alone deserves compensation?"
The fact that it actually makes the damn product.
Genuinely interested to hear an expansion of this. How would pretending that technical employees are hard to recruit, benefit a company politically?
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".
Price fixing is an actual thing, that's why we have labor laws. Also see: non-compete agreements.
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
Totally agree that the price fixing wasn't kosher.
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.
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?
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.
> 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.
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.
> 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.)
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.
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.
(Economists say demand and supply are elastic, I think.)
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.
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.
(You see some more examples of stories like the Ballmer resignation, when you look at the "Effects of untimely CEO death", eg http://www.cnbc.com/2016/04/28/the-effects-of-a-ceos-death-o...)
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.
(Unless you are going to work for fools..)
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.
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.
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?
Where on earth did you get that assumption?
Most marketers, lawyers, HR people, or managers are not unionized.
Unions work well for commodity labor, not professionals with a huge variation in pay and value.
If you're creating $1M in value, but there are only 100 jobs and 1000 people applying for them, you'll never capture the $1M.
(Value of course is subjective, but here it refers to things that can be measured in dollar amounts).
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.
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.
The other thing to note is that most athletes in America's sports industry are unionised.
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
@markonthewall, in the companies you start do _you_ pay your engineers based on their value or based on market rates?
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.
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!
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'.
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.
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.
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
You're off by like dead minimum two orders of magnitude, and probably more than three.
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.
It is my greatest goal and wish in life to have as much money as you and to be able to give myself more money whenever I want it.
Do you have any advice for someone who hopes to have the same kind of success as you?
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.
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.
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.
You can't say highly technical fields are comparable to customer support.
Do you think the receptionists in hospitals should earn the same as doctors?
And in that vein, I've worked with some very skilled receptionists. But they're not doctors.
Anyway erikpukinskis didn't say public-facing.
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.
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.
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).
I chose those names and gender differentiation intentionally to make a point about emotional reactions not necessarily being logical.
Perhaps it was little over the top!
http://jama.jamanetwork.com/article.aspx?articleid=2208795
It's touching that you think that "gender traits" will give women higher pay in some profession like nursing, but it's only true in porn.
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.
Gender was already in this.
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.
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.
Don't skip the first step.
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.
But that never happens.
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
Yes!
"Those you can train in less than a month."
Can you train a senior developer in a month? Can you train a true full-stack developer in a month? Can you train a "10X" developer in a month?
"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.
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.
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.
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.
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.
In this age of metrics and micromanagement it is rare, but in olden times key vendor salespeople were really an asset to past employers.
Unlike support people, they are a revenue center, so when they say "This needs to be fixed or it puts $X in quarterly revenue at risk", it gets fixed.
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.
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.
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.
Poop popsicles are extremely rare (I have yet to see one). But their price would be essentially $0, if/when they exist.
https://en.wikipedia.org/wiki/Artist%27s_Shit
... truth is stranger than fiction!
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.
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)
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.
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.
I'd call Florence Nightingale a 100x nurse, or maybe a 10,000x nurse, for the impact she had on the world:
https://en.wikipedia.org/wiki/Florence_Nightingale#Statistic...
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)
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.
How do you know? Do you have some kind of special formula to determine what people deserve to be paid? Otherwise, it's just subjective.
The answer is a number.
https://www.hks.harvard.edu/fs/gborjas/publications/popular/... (page 2)
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.
We haven't eliminated poverty in this country because we keep moving the goalposts.
> 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.
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.
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.
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.
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.
> There is nothing unique or special about being a programmer.
You can claim, that there is nothing unique or special in being theoretical physicist. But is that really true?
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.
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.
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.
None of them, because programmers hate working with people so they'd all quit.
Ah yes, those people are making the world a better place by constructing elegant hierarchies for maximum code reuse and extensibility.
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.
Or rather: less people are qualified to fill engineer positions.
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.
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.
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.
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.
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.
- So you are talking about how much value we create and that we should receive more of it.
- Then someone else mentions a lot of other professions that do that too: create a lot of value.
- Now the discussion does a 180, forgetting completely the first topic: value. Now it's about supply and demand.
Pick your measuring stick people.
You either trust that markets work best and then you are paid exactly what you deserve, because you are free to change jobs and ask for more.
Or you don't and think that a better system should be in place, but then it should apply to everybody, not just software developers, right?
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."
This has worked really well for me in the past.
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.
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.
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 %).
They said "okay". No negotiation, no fireworks, nothing. I've always wondered what I could have gotten out of them.
> 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.
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?
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.)
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."
If you dont play ball with bureaucracy, you are punished in the only way they have available.
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 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.
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.
> 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.
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.
I love my current employer, which is why I have stayed there 19 years.
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
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?
They're saying that whatever your offered position is, you are at the bottom of the salary band as a matter of principle.
"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."
"Sorry, I do not negotiate with terrorists."
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.
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'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.
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)
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.
Not sure if that would pan out, or that's a large enough target audience. Just a thought.
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).
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?
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.
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.
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.
That is why there is negotiation in the first place.
EDIT: I should point out that that's what they do in regards to full-time W2 work, not contract.
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.
Recruiters are much more likely to cut bait and leave an extra 5% on the table to:
1. Keep a good relationship with the employer
2. Keep their turnover high, making money on negotiating many "OK" salaries instead of maximizing each individual salary (including yours).
They get paid by the company though. So if I had to pick between the company and the candidate I'd say they're more aligned with the company.
You're definitely right though that they aren't really aligned with the company either.
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.
> 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.
It's a simple matter of supply and demand: https://medium.freecodecamp.com/why-talent-agents-for-engine...
because you haven't built a startup to do it yet, and Gayle McDowell hasn't figured out how do it yet.
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.
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.
Then again, in a different form, those compensation agents were simply known as unions.
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.
Having a trusted third party between myself and the prospective employer would help shift the power dynamic significantly.
Also having a trained negotiator would take a lot of stress off of me.
Any thoughts on a rough price range you would look for to provide this sort of service?
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.
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 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.
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.
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.
You should be paid what the company believes you are worth, not as little as they can trick you into accepting.
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.
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.
It was really intrusive. Pay should equate to value, not some silly ladder climb
I almost managed to write that with a straight face.
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.
Why are you reluctant about a company being able to verify that you worked where and when you said you did?
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.
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.
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.
If they refuse to comment on that I assume it's low and head on elsewhere.
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.
Large and medium size businesses have much more information available to them than their applicants do.
They were satisfied. (That's just a datapoint, N=1)
"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"
But what do we get instead? Identity politics pandering.
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.
There was a discussion here on HN a couple months ago that this approach is common in such cases.
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.
Internal conversation: "I have 100K salary with nice benefits that are worth about 20K."
What you say: "My compensation is about 120K."
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.
Like your age, religion, sexual orientation, or if you're planning on getting pregnant?
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.
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?
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"
https://www.eeoc.gov/laws/statutes/titlevii.cfm
But exceptions are allowed when it is relevant to the job. A casting director can certainly discriminate based on age, sex, etc.
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.
See http://www.dfeh.ca.gov/res/docs/publications/dfeh-161.pdf
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.
Non-competes need to go away everywhere.
[1] http://fortune.com/2016/06/30/massachusetts-non-compete-pass...
https://www.bostonglobe.com/business/2016/07/31/noncompete-c...
These reform attempts have been going on for years in MA and never make it into law.
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.
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.
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 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.
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.
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.
>"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.
Comparable Worth is another incarnation of the Labor Theory of Value, which has long been discredited.
If it's really a deal-breaker (maybe standard red tape or other BS), I say "My previous/current salary is $W, but I'm looking for $X."
After all, there is a reason you're leaving your current employer, right?
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2795795
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 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!
I assume this law won't apply to questions like "how much are you expecting to make?".
http://www.nbcnews.com/technology/exclusive-your-employer-ma...
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.
More at: http://www.theworknumber.com/Employees/Help/faq.asp?category...
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 have to say I'm surprised at the number of HN readers who are unaware about the availability of this data.
On the ground it only makes things worse for both employees and employers.
Employer: We are willing to make an offer to you. We will offer a base pay of $125k.
Employee: what? I am already making $150k with my current employer.
Employer: Oh..we can't ask your current salary..so we just threw a number at the lower end to see if you would accept.
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.
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.
Yes the person still needs to do their research to figure out what the job should actually pay.
Is there any legal risk in lying about your current/past salary? I'm not talking ethically. That's a different discussion.
Generally you don't want to work for the companies that demand it either.
Currently working for a medium-sized company in the NW but open to moving.
Because it would be a great way to shut down anyone asking about your salary.
If it's not then they're going know you're just trying to avoid answering the question.
But if feminism can be abused to improve workers' rights in the US, that's good enough, isn't it?
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".
You'd have to pay me more to do janitorial work than cafeteria work. Cleaning bathrooms is dangerous, dirty work.
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.
My first job change gave me 2X the salary.
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?
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.
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.
What happens if that is no longer the situation?
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.
That's why it pains me to see this.
http://www.forbes.com/sites/karinagness/2016/04/12/dont-buy-...
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.
And AFAIK a lot of people don't have any credit history, so this does not sound useful anyway.
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.
Salary is very taboo w friends and family. But when interviewing it nearly always comes up.
I see a loophole forming before my eyes.
Oh, wait, presidential candidates' promises aren't worth anything.
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?
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.
What if the company has an office just over the MA border where they hire then later relocate the employee to MA?
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.