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Given the compensation mix in Silicon Valley (benefits, employee stock-based compensation), comparing hourly wages with other occupations is not apples-to-apple

Given the compensation mix in Silicon Valley (benefits, employee stock-based compensation), comparing hourly wages with other occupations is not apples-to-apples. Additionally, STEM vs Computer Science jobs has been discussed before.

pmiller2 11y ago
Stock options at most companies are the equivalent of lottery tickets, and should be valued at or near 0. Many companies offer a 401(k), but with no match. Don't even get me started on "unlimited vacation".... Besides health insurance (which really ought to be considered a basic requirement rather than a "fringe" benefit), catered meals, and a flexible WFH policy, what do Silicon Valley/SF companies even really offer in terms of benefits?
- estsauver 11y ago
  That might be true for a random seed/series A company, if you have substantial equity in a later stage company it's usually worth real money. If you have any options you want to sell for close to zero in post series A companies that are still around, I'd love to chat...
  - pmiller2 11y ago
    If you have substantial equity in a later stage company, you got it early on. In other words, you won the lottery. Congratulations.
- srinivasan 11y ago
  > if there were a real shortage, wages would be expected to grow. This is because employers would compete over a small number of workers, and they would need to raise wages to attract those workers. This is the crux of the article's argument, and I disagree. In a shortage, employers would need to raise compensation, not necessarily wages, to attract workers. (a) You're missing my point. The study cites hourly wage data for years 2009 through 2014. How large, or even how common, were sign-on bonuses (not perf bonuses) in 2009, and what are they at now? Sign-on bonuses are trivial to value. Any fair study would make an attempt to include that data - this one doesn't. (b) How common were were shuttles, day care, onsite yoga/fitness lessons, gender reassignment surgery, egg freezing, and whatever else in 2009? These things do have some value - to me at least, it's the amount of post-tax money I would have spent for these amenities elsewhere. People are unlikely to use all of the benefits of course, but the basket has grown. Health insurance as a benefit can't be considered to be a "basic requirement" and ignored, since plans vary a lot in coverage. (c) While the stock of "most companies" might be worth nothing, those companies tend to be small and short-lived. Regardless, the majority of engineers work at larger established companies, and most of those working at a startup that might fail in a month are doing it out of choice. TL;DR I am making an argument against the merits of the study. Rise in total compensation, and not rise in wages, is what matters.
  - pmiller2 11y ago
    No, I'm not missing the point at all. * Signing bonuses, I'll give you; they are trivial to value and probably should have been included. * I would doubt that most companies are offering shuttles, day care, or any of these other benefits. Of that list of more esoteric benfits, my company offers yoga and Pilates classes. I'd value them about as highly as catered lunch (if I took advantage of them), because that's about what it would cost me to go do that stuff on my own. I guess I'd go even farther on health insurance, then, and say that for a valued professional employee, good health insurance should be a basic requirement. You know what the most common tech company "benefits" have in common? They allow people to stay at the office longer. * Finally, stock and stock options. Ok, if you're going to give me straight up liquid stock, I'm going to value that as a part of my compensation. But, options are literally worth the paper they're printed on until they're exercised. And after that, unless the company has gone public, they're still hugely illiquid. Exercising them can be an issue in itself, depending on the strike price. And, then there are the taxes to contend with. Let's just say I don't put a lot of value in stock options, in general.
    - srinivasan 11y ago
      Of course companies want their employees to work more. And I'm from the "exercise your RSU's immediately" school of thought as well. All I was pointing out is that imo, the study is flawed in its central argument. As for the benefits, while it is true that most companies don't offer all of those benefits, it's offset by the fact that the larger companies do. Most large companies have shuttles now, for instance. So, the % of engineers who have these benefits is higher now than it was in, say, 2009 :) I think that benefits that are actually used are more valuable than they appear to be because they are untaxed. But of course, depending on what your indifference curve looks like, you might well prefer post-tax cash to pre-tax benefits.

pmiller2 11y ago

Stock options at most companies are the equivalent of lottery tickets, and should be valued at or near 0. Many companies offer a 401(k), but with no match. Don't even get me started on "unlimited vacation".... Besides health insurance (which really ought to be considered a basic requirement rather than a "fringe" benefit), catered meals, and a flexible WFH policy, what do Silicon Valley/SF companies even really offer in terms of benefits?

estsauver 11y ago
That might be true for a random seed/series A company, if you have substantial equity in a later stage company it's usually worth real money. If you have any options you want to sell for close to zero in post series A companies that are still around, I'd love to chat...
- pmiller2 11y ago
  If you have substantial equity in a later stage company, you got it early on. In other words, you won the lottery. Congratulations.
srinivasan 11y ago
> if there were a real shortage, wages would be expected to grow. This is because employers would compete over a small number of workers, and they would need to raise wages to attract those workers. This is the crux of the article's argument, and I disagree. In a shortage, employers would need to raise compensation, not necessarily wages, to attract workers. (a) You're missing my point. The study cites hourly wage data for years 2009 through 2014. How large, or even how common, were sign-on bonuses (not perf bonuses) in 2009, and what are they at now? Sign-on bonuses are trivial to value. Any fair study would make an attempt to include that data - this one doesn't. (b) How common were were shuttles, day care, onsite yoga/fitness lessons, gender reassignment surgery, egg freezing, and whatever else in 2009? These things do have some value - to me at least, it's the amount of post-tax money I would have spent for these amenities elsewhere. People are unlikely to use all of the benefits of course, but the basket has grown. Health insurance as a benefit can't be considered to be a "basic requirement" and ignored, since plans vary a lot in coverage. (c) While the stock of "most companies" might be worth nothing, those companies tend to be small and short-lived. Regardless, the majority of engineers work at larger established companies, and most of those working at a startup that might fail in a month are doing it out of choice. TL;DR I am making an argument against the merits of the study. Rise in total compensation, and not rise in wages, is what matters.
- pmiller2 11y ago
  No, I'm not missing the point at all. * Signing bonuses, I'll give you; they are trivial to value and probably should have been included. * I would doubt that most companies are offering shuttles, day care, or any of these other benefits. Of that list of more esoteric benfits, my company offers yoga and Pilates classes. I'd value them about as highly as catered lunch (if I took advantage of them), because that's about what it would cost me to go do that stuff on my own. I guess I'd go even farther on health insurance, then, and say that for a valued professional employee, good health insurance should be a basic requirement. You know what the most common tech company "benefits" have in common? They allow people to stay at the office longer. * Finally, stock and stock options. Ok, if you're going to give me straight up liquid stock, I'm going to value that as a part of my compensation. But, options are literally worth the paper they're printed on until they're exercised. And after that, unless the company has gone public, they're still hugely illiquid. Exercising them can be an issue in itself, depending on the strike price. And, then there are the taxes to contend with. Let's just say I don't put a lot of value in stock options, in general.
  - srinivasan 11y ago
    Of course companies want their employees to work more. And I'm from the "exercise your RSU's immediately" school of thought as well. All I was pointing out is that imo, the study is flawed in its central argument. As for the benefits, while it is true that most companies don't offer all of those benefits, it's offset by the fact that the larger companies do. Most large companies have shuttles now, for instance. So, the % of engineers who have these benefits is higher now than it was in, say, 2009 :) I think that benefits that are actually used are more valuable than they appear to be because they are untaxed. But of course, depending on what your indifference curve looks like, you might well prefer post-tax cash to pre-tax benefits.