Ask HN: Why are IT salaries falling? | Hacker News Reader

Ask HN: Why are IT salaries falling?

9 points01-_-8 comments

In my view, IT salaries may be falling due to factors such as increased automation, offshoring (transferring jobs to lower-cost countries), a greater number of skilled workers and economic pressures that reduce demand. In addition, some technological functions are becoming more standardized, lowering the salary of certain positions.

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Supply and demand.

Wages are not proportional to skills or output. Wages are only proportional to power.

So a low agency explanation is that supply exceeds demand and companies are either tacitly colluding (by flooding the workforce with layoffs to increase negotiating position) or actively colluding (like google and apple did).

A high agency explanation is that collective bargaining via unionization is in decline and people either need to unionize or guild to improve their power, but aren't because that involves putting oneself at risk for the benefit of others.

I figured a high agency explanation would be "what do I need to do in order to stand out above the rest?"

I am generally pro-union, but I figure a high agency individual would not want to be lumped into a group whose mean agency is below theirs.

In my personal experience, early in my career, I struggled to have my position un-unionized so I could receive fair compensation. Ironically, the union I was trying to leave helped me, because my market rates would have disrupted their pay scales and they figured it was best to negotiate my exit.

I would appreciate sensible counterpoints to this.

Others have already given good answers. But it’s not just offshoring. It’s also people working remotely in the United States. You’re competing with people living in the MiddleOfNowhere Wyoming with a much lower cost of living who are willing to work for much less than someone living in San Francisco.

Also, the public markets have gotten wise to VCs Ponzi scheme of capturing all of the value of a company before it goes public, the company still not being profitable when it IPOs and then the public seeing the value of its investments stagnate or decline.

Without a viable exit strategy, investors are a lot more skittish about throwing money at startups.

Yes, I know most exits are via acquisitions. But in the current regulatory environment globally, major acquisitions are also being blocked.

A lot of comp increases over the last ten years have been due to the stock market.

Salaries haven't gone up much or down from the last eight years in big tech, it's stock comp that has gone through the roof, and that is an artifact of companies having to entice employees to leave their appreciated, unvested shares.

In addition, huge scaled up deca-corns were offering huge comp packages (higher than FAANG) to make up for their loss of liquidity, so the profitable big tech companies had to pay up to at least retain some of their employees.

There are a lot less giant scale ups these days, so you're seeing less focus on retention packages.

That being said, the right candidates can still go get ~$350k from Amazon and more from other FAANGs, etc.

Two reasons:

1. Significant decrease of funding available for speculative projects due to end of ZIRP in 2022.

2. Oversupply of people who want to work in tech due to overhyping and perception of that being easy kind of money until the crash happened. #learntocode, they were saying.

your answer is missing some perspectives. The decline in IT salaries stems from more than just economic and technological factors. While automation, offshoring, increased labor supply, and standardization contribute significantly, additional perspectives are important. Industry trends show a post-pandemic correction and shift toward profitability over growth. Political factors include changing immigration policies and government investments in tech education. Geographic influences have intensified as remote work normalizes cross-regional salary expectations. Educational changes have democratized tech training, creating faster workforce entry paths. Organizational shifts toward flatter hierarchies and project-based work have also impacted compensation structures. This broader view explains the complex pressures affecting IT salaries globally.

Organizational shifts toward flatter hierarchies and project-based work have also impacted compensation structures. This broader view explains the complex pressures affecting IT salaries globally. reply

There is a larger pool of ready and available players, so the market will respond accordingly.

Also cost savings and efficiencies are in play and so salaries may be influenced

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