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The labor market for programers in the tech industry has two features (anecdotally observed) that are interesting to me: 1. Labor does not receive (or insist o

by sl8r 11y ago

The labor market for programers in the tech industry has two features (anecdotally observed) that are interesting to me: 1. Labor does not receive (or insist on) percent-of-value or percent-of-transaction compensation. This is in contrast to some other professional disciplines (e.g., salespeople often get paid on a percentage or commission, bankers often take a % cut, pe / vc / hf has 2% and 20%, real estate is on a %, lawyers may get paid on a % ("contingent fees"), etc.) 2. Initial salaries are good, but there is wage stagnation. Just-out-of-college salaries for programming are often better than virtually everything else (notably, banking and consulting); but after ten years, the opposite is relationship is reversed (considerably so). The difference between a newgrad salary and a 10-yearer salary for tech-industry programmers is often (in my anecdotal experience) less than 2x. In contrast, 5x or more is not unusual in other fields.

gizi 11y ago
You can never make good money as a programmer, if you let non-programmers pick the subject, or let non-programmers monetize the platform in your stead. Google and Facebook are worth hundreds of billions of dollars exactly because there is not one non-programmer with a say in them.
- vehementi 11y ago
  Others claim other reasons for Google and Facebook's success: how did you determine that your reason is right and theirs are wrong?
  - gizi 11y ago
    I did not say that I believe this because it would be true. Of course, I only believe this because I want to believe this. You see, I am a programmer. So, my belief is that programmers are superior and non-programmers are inferior. So, everything I claim will always further that view. Therefore, my every political move is always aimed at confiscating any possible say or decision power from non-programmers and to eject them out of the game. Seriously, when push comes to shove, I only listen to other programmers. Isn't that obvious?
    - jon-wood 11y ago
      Wow, I guess there's something to be said for being aware of your own biases at least.
- cynicalkane 11y ago
  Steve Jobs knew programming, but I wouldn't really call him a "programmer" in the way you're thinking about it.
  - phaus 11y ago
    Steve Jobs probably didn't "know" programming. http://www.woz.org/letters/does-steve-jobs-know-how-code http://www.woz.org/letters/does-steve-jobs-know-how-code
- dasil003 11y ago
  I actually think your first sentence is an interesting thesis that bears examination, but your second sentence is an unnuanced non-sequitur.
- fsloth 11y ago
  I think you confuse the founder/owner status with the work role. I would rephraze this - you can never make good money as a salaried employee (google with it's early-stock-millionaires is an exception). The second question is, how can a company be succesfull? I know several very succesfull software businesses which were not directed by software engineers. The question about competence to run a company is far more complex than saying if domaim specialists won't run the show it will tank.
uptownfunk 11y ago
This is interesting, I would be more bold and call these problems instead of features, as I think programmers deserve better. (Then again I may be biased!) Problem 1 is more systemic and harder to solve. For Problem 2 I feel there may be a way to strategize around it. Specifically, wondering if there is a point where salaries increase, and then after a certain point, rate of salary increase drops off at which point it may be beneficial to do a masters, phd, MBA or some professional work to refresh the resume. Either that, or perhaps dedicate some time (in lieu of higher ed) to some interesting open source project. Thinking more about economy of time here than education, education is just a way to make this concrete.
- douche 11y ago
  I'd be very hesitant to push a system that gave significant bonuses to salary increases based on going out and getting an additional degree. A.) Does the material in the additional education in any way contribute to making you better/more efficient/whatever at your job? B.) The risk of bullshit diploma mills goes up again. I have family in education, and many districts have incentive programs for teachers to get Master's degrees, so that in addition to the pay bump, they get some or all of the tuition covered. I've known a number of people who've done this, and not one says that it helped them do a better job as a teacher - the programs were big rubber-stampers, and the only real outcome is that they are now not quite so pitifully paid.
  - devonkim 11y ago
    This is very much a requirement for promotion in federal service. I've joked I'd get paid less than my wife whom holds a masters in government when I currently make 5x what she does and I'm currently underpaid.
slapshot 11y ago
> out-of-college salaries for programming are often better than virtually everything else (notably, banking and consulting); but after ten years, the opposite is relationship is reversed (considerably so) Don't forget that there is huge flight from banking and consulting, but much less so for programming. Of 10 people who start as bankers or consultants, 80% will likely leave the industry within 5 years, and 90% within 10 years. So, in a way you're comparing the salary growth of a median programmer to the salary growth of a top 5-10% banker.
- sl8r 11y ago
  This is an interesting point; thanks! Found this article incase anyone is interested. One quote stood out to me: > Private equity recruitment firm PER conducts an ‘unofficial count’ into how many analysts join the M&A and corporate finance teams of six leading banks in London. In 2010, PER calculated that 250 people joined a combination of Bank of America, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan and Morgan Stanley. After tracking those individuals for three years, it recently calculated that 140 of them are still working in banking. That’s an attrition rate of 44%. (http://news.efinancialcareers.com/us-en/139375/nearly-half-of-junior-ma-bankers-at-top-banks-quit-within-three-years/ http://news.efinancialcareers.com/us-en/139375/nearly-half-o...)
- sien 11y ago
  That's an interesting comment. Do sources for those stats and numbers on how many people leave banking? What about programming? Just searching around doesn't show anything solid up.
  - slapshot 11y ago
    In short, the "up or out" policy of banks and consultancies is notorious for having more "out" than "up": https://en.wikipedia.org/wiki/Up_or_out https://en.wikipedia.org/wiki/Up_or_out To put hard numbers on it, McKinsey is one of top management consulting firms. According to an employee, its average tenure among new consultants is 2.5 years. https://www.quora.com/Why-are-employees-loyal-to-McKinsey https://www.quora.com/Why-are-employees-loyal-to-McKinsey That's consistent with the staffing ratios within the firm (Wikipedia suggests thare are ~400 directors compared to about 9000 total consultants). Those are the ones who stuck around for more than a decade.
thedufer 11y ago
Point 1 makes sense, to the degree that it's true. Programmers are typically too far removed from actual transactions to get paid in the way that sales, bankers, real estate agents, etc. are paid. Thus, measuring what they're actually responsible for is difficult. To the extent it can be done at that level of abstraction, I'd argue that programmers are actually very over-represented in being paid based on hard outcomes. I haven't heard of any other profession with such a focus on equity grants.
freyr 11y ago
> Labor does not receive (or insist on) percent-of-value or percent-of-transaction compensation. This is true of pretty much all engineering jobs, and more broadly, most non-sales jobs. Commission becomes feasible when you can directly attribute sales or billable hours to a specific person. > Initial salaries are good, but there is wage stagnation. This is true for all engineering jobs, and also most jobs in general. Banking and consulting are exceptions, and as others have pointed out, the attrition rate is quite high in these fields and that skews the numbers somewhat. > In contrast, 5x or more is not unusual in other fields. Care to name some, besides banking and consulting, and possibly corporate law? I'd suggest that in most fields, you don't make significantly more money until you're managing a significant percentage of people, or tasked with making decisions that set the direction the company. Why should programmers be an exception?
- sl8r 11y ago
  > Care to name some, besides banking and consulting, and possibly corporate law? I'd suggest that in most fields, you don't make significantly more money until you're managing a significant percentage of people, or tasked with making decisions that set the direction the company. This is fair / you're right: I was mainly thinking of banking, consulting, law, and buy-side finance. As you say, though, there are plenty of highly-trained professionals who don't experience a 5x earnings increase over 10 years; functional medical roles (e.g., anesthesiologists) come to mind. Something I was wondering when I wrote the original question -- and I may be way off here -- is whether there are cultural or structural effects in tech-industry programming that cause wage stagnation. For example, there is less wage stagnation for programmers in quant hedge funds than there is in the tech industry; part of this is the clear p&l, of course, but perhaps there is a cultural / structural component as well? I'm not a programmer, but I once heard something that stood out to me: A friend, who was a senior programmer, discovered an inefficient process where he worked. In brief, whenever a certain "event" occurred, the company lost money; the senior programmer noticed this, and built a fix -- no more "events", and hence lots of money saved. From what he told me, my back of the envelope was that by building this (which took him about a week), he saved the company more than $600k a year. I mentioned to him that if he had come in as an outside consultant with a black box solution and offered to charge $100k a year to save the company $600k per year, there was a nonzero chance they would have said "yes"; he laughed and shrugged. This made me wonder whether there is something intrinsically non-value-capturing going on; perhaps (1) tech-industry programming doesn't have a culture of individual-value-capturing, or (2) the role of a programmer doesn't have the structural leverage to reliably capture value. Of course, this story is just anec-data; there may be no conclusions here.

by sl8r 11y ago

gizi 11y ago

You can never make good money as a programmer, if you let non-programmers pick the subject, or let non-programmers monetize the platform in your stead. Google and Facebook are worth hundreds of billions of dollars exactly because there is not one non-programmer with a say in them.

vehementi 11y ago
Others claim other reasons for Google and Facebook's success: how did you determine that your reason is right and theirs are wrong?
- gizi 11y ago
  I did not say that I believe this because it would be true. Of course, I only believe this because I want to believe this. You see, I am a programmer. So, my belief is that programmers are superior and non-programmers are inferior. So, everything I claim will always further that view. Therefore, my every political move is always aimed at confiscating any possible say or decision power from non-programmers and to eject them out of the game. Seriously, when push comes to shove, I only listen to other programmers. Isn't that obvious?
  - jon-wood 11y ago
    Wow, I guess there's something to be said for being aware of your own biases at least.
cynicalkane 11y ago
Steve Jobs knew programming, but I wouldn't really call him a "programmer" in the way you're thinking about it.
- phaus 11y ago
  Steve Jobs probably didn't "know" programming. http://www.woz.org/letters/does-steve-jobs-know-how-code http://www.woz.org/letters/does-steve-jobs-know-how-code
dasil003 11y ago
I actually think your first sentence is an interesting thesis that bears examination, but your second sentence is an unnuanced non-sequitur.
fsloth 11y ago
I think you confuse the founder/owner status with the work role. I would rephraze this - you can never make good money as a salaried employee (google with it's early-stock-millionaires is an exception). The second question is, how can a company be succesfull? I know several very succesfull software businesses which were not directed by software engineers. The question about competence to run a company is far more complex than saying if domaim specialists won't run the show it will tank.

uptownfunk 11y ago

This is interesting, I would be more bold and call these problems instead of features, as I think programmers deserve better. (Then again I may be biased!) Problem 1 is more systemic and harder to solve. For Problem 2 I feel there may be a way to strategize around it. Specifically, wondering if there is a point where salaries increase, and then after a certain point, rate of salary increase drops off at which point it may be beneficial to do a masters, phd, MBA or some professional work to refresh the resume. Either that, or perhaps dedicate some time (in lieu of higher ed) to some interesting open source project. Thinking more about economy of time here than education, education is just a way to make this concrete.

douche 11y ago
I'd be very hesitant to push a system that gave significant bonuses to salary increases based on going out and getting an additional degree. A.) Does the material in the additional education in any way contribute to making you better/more efficient/whatever at your job? B.) The risk of bullshit diploma mills goes up again. I have family in education, and many districts have incentive programs for teachers to get Master's degrees, so that in addition to the pay bump, they get some or all of the tuition covered. I've known a number of people who've done this, and not one says that it helped them do a better job as a teacher - the programs were big rubber-stampers, and the only real outcome is that they are now not quite so pitifully paid.
- devonkim 11y ago
  This is very much a requirement for promotion in federal service. I've joked I'd get paid less than my wife whom holds a masters in government when I currently make 5x what she does and I'm currently underpaid.

slapshot 11y ago

> out-of-college salaries for programming are often better than virtually everything else (notably, banking and consulting); but after ten years, the opposite is relationship is reversed (considerably so) Don't forget that there is huge flight from banking and consulting, but much less so for programming. Of 10 people who start as bankers or consultants, 80% will likely leave the industry within 5 years, and 90% within 10 years. So, in a way you're comparing the salary growth of a median programmer to the salary growth of a top 5-10% banker.

sl8r 11y ago
This is an interesting point; thanks! Found this article incase anyone is interested. One quote stood out to me: > Private equity recruitment firm PER conducts an ‘unofficial count’ into how many analysts join the M&A and corporate finance teams of six leading banks in London. In 2010, PER calculated that 250 people joined a combination of Bank of America, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan and Morgan Stanley. After tracking those individuals for three years, it recently calculated that 140 of them are still working in banking. That’s an attrition rate of 44%. (http://news.efinancialcareers.com/us-en/139375/nearly-half-of-junior-ma-bankers-at-top-banks-quit-within-three-years/ http://news.efinancialcareers.com/us-en/139375/nearly-half-o...)
sien 11y ago
That's an interesting comment. Do sources for those stats and numbers on how many people leave banking? What about programming? Just searching around doesn't show anything solid up.
- slapshot 11y ago
  In short, the "up or out" policy of banks and consultancies is notorious for having more "out" than "up": https://en.wikipedia.org/wiki/Up_or_out https://en.wikipedia.org/wiki/Up_or_out To put hard numbers on it, McKinsey is one of top management consulting firms. According to an employee, its average tenure among new consultants is 2.5 years. https://www.quora.com/Why-are-employees-loyal-to-McKinsey https://www.quora.com/Why-are-employees-loyal-to-McKinsey That's consistent with the staffing ratios within the firm (Wikipedia suggests thare are ~400 directors compared to about 9000 total consultants). Those are the ones who stuck around for more than a decade.

thedufer 11y ago

Point 1 makes sense, to the degree that it's true. Programmers are typically too far removed from actual transactions to get paid in the way that sales, bankers, real estate agents, etc. are paid. Thus, measuring what they're actually responsible for is difficult. To the extent it can be done at that level of abstraction, I'd argue that programmers are actually very over-represented in being paid based on hard outcomes. I haven't heard of any other profession with such a focus on equity grants.

freyr 11y ago

> Labor does not receive (or insist on) percent-of-value or percent-of-transaction compensation. This is true of pretty much all engineering jobs, and more broadly, most non-sales jobs. Commission becomes feasible when you can directly attribute sales or billable hours to a specific person. > Initial salaries are good, but there is wage stagnation. This is true for all engineering jobs, and also most jobs in general. Banking and consulting are exceptions, and as others have pointed out, the attrition rate is quite high in these fields and that skews the numbers somewhat. > In contrast, 5x or more is not unusual in other fields. Care to name some, besides banking and consulting, and possibly corporate law? I'd suggest that in most fields, you don't make significantly more money until you're managing a significant percentage of people, or tasked with making decisions that set the direction the company. Why should programmers be an exception?

sl8r 11y ago
> Care to name some, besides banking and consulting, and possibly corporate law? I'd suggest that in most fields, you don't make significantly more money until you're managing a significant percentage of people, or tasked with making decisions that set the direction the company. This is fair / you're right: I was mainly thinking of banking, consulting, law, and buy-side finance. As you say, though, there are plenty of highly-trained professionals who don't experience a 5x earnings increase over 10 years; functional medical roles (e.g., anesthesiologists) come to mind. Something I was wondering when I wrote the original question -- and I may be way off here -- is whether there are cultural or structural effects in tech-industry programming that cause wage stagnation. For example, there is less wage stagnation for programmers in quant hedge funds than there is in the tech industry; part of this is the clear p&l, of course, but perhaps there is a cultural / structural component as well? I'm not a programmer, but I once heard something that stood out to me: A friend, who was a senior programmer, discovered an inefficient process where he worked. In brief, whenever a certain "event" occurred, the company lost money; the senior programmer noticed this, and built a fix -- no more "events", and hence lots of money saved. From what he told me, my back of the envelope was that by building this (which took him about a week), he saved the company more than $600k a year. I mentioned to him that if he had come in as an outside consultant with a black box solution and offered to charge $100k a year to save the company $600k per year, there was a nonzero chance they would have said "yes"; he laughed and shrugged. This made me wonder whether there is something intrinsically non-value-capturing going on; perhaps (1) tech-industry programming doesn't have a culture of individual-value-capturing, or (2) the role of a programmer doesn't have the structural leverage to reliably capture value. Of course, this story is just anec-data; there may be no conclusions here.