5 ms·

One of the interesting trends of the past 10 years is the degree to which "big tech" has replaced "big finance" as the place for the elite to go to collect huge

One of the interesting trends of the past 10 years is the degree to which "big tech" has replaced "big finance" as the place for the elite to go to collect huge paychecks for relatively "nice" white collar work. It makes total sense for top SV engineers to get paid well, IMO. But I am afraid working for these big tech firms is starting to have that feeling of "elite pedigree" that pervades complacent industries, like finance. In 2002-2006, one could have written a similar article, but about top staff at Goldman, Morgan, UBS, etc. There were plenty of $300k-$500k salaries being paid for maintenance work for profitable business lines. Options and RSUs are an interesting twist in Silicon Valley. To compete with the stock option packages given out by startups to early employees, Google and Facebook grant RSUs (and similar) instead. In Wall Street, the "golden handcuffs" used to be a near-guarantee of a year-on-year raise, an end-of-year cash bonus, and a track toward promotions that had built-in pay increases. No one wanted to throw away their time invested in a single firm. SV firms are different in that turnover is high, so vesting acts to counteract that. They have such fast-growing stock values, the stock grants can also be used in lieu of bonuses. Plus, to management, it really is "funny money" that does not actually increase operating expense. Anyway, though the mechanics are different, it seems the net result is the same. "Golden handcuffs" are as real in tech as they are in finance. The saddest reflection I have on reading this article is on how capitalism seems to value different professions wrongly. These salaries are bigger than top specialist physician salaries. And physicians need 12-17 years of post-undergrad training, as well as often requiring $200k of medical school student loan debt. It just seems like if Google and Facebook can afford to pay this price for engineers (who add leveraged value via their software contributions), capitalism should figure out how to pay doctors more, as well. And go down the list of other "non-BS, but comparatively underpaid" professions like teachers, firefighters, etc. They could all use a compensation upgrade. But what is the exact mechanism that is making it so finance and tech are among the only fields where labor compensation is commensurate with leveraged value-add?

IBM 9y ago
I had a similar thought. I'd say that tech has been firmly in the "masters of the universe" phase for a while now and while I don't think the end of it will be the same as in finance (the nature of the businesses are completely different, there's no systemic risk), I think tech's comeuppance will be anti-trust. It's already happening in the EU, and in the US Democrats are making that a big part of their platform [1]. The election of Trump has revealed the shift towards populism in American politics, and I think Democrats see anti-trust as good politics to capitalize on it. Personally I think it's smart both from a political and policy perspective. Tech seems to tend toward monopoly, and anti-trust is critical to combating that. It's also a perfectly good and necessary counterbalance in capitalism. [1] https://www.vox.com/policy-and-politics/2017/7/31/16021844/antitrust-better-deal https://www.vox.com/policy-and-politics/2017/7/31/16021844/a...
- wbl 9y ago
  The competition is a click away and has very low barriers to entry. Facebook might have network effects, but Google doesn't. If someone made a better search engine, people would switch. What evidence that Google's search monopoly is anti-consumer is there?
  - shopkins 9y ago
    Google has such a vast amount of data on users that its search really can't be beat right now. If you're fully in the ecosystem with mail, maps, contacts, calendar, smartphone, apps, etc. you're going to get better results -- not to mention switching could mean giving up these integrated products.
    - wbl 9y ago
      So if we break up Google, this harms consumers by stopping the integration.
      - ocdtrekkie 9y ago
        No, it's more likely that either breaking up Google, or heavily regulating Google into playing fair would lead to integrations that worked between services. Why be locked in, if those integrated data features could work between the best services from different companies? We need to stop letting Google protect it's poor quality products by bundling them with their good ones.
    - rimliu 9y ago
      I'd say it has too much data and it is already hurting search results. You get tons of unrelated stuff.
  - MagnumOpus 9y ago
    The barriers to entry in their fields are huge. - As you mentioned, in anything social, the network effects are immense. - In anything where inputs are fuzzy and machine learning is required, the biggest data corpus wins (language recognition, image recognition, video recognition, translation, self-driving cars, payment fraud detection, etc etc). Open training corpuses won't ever be as extensive or fast to access as the proprietary hoards that the Big 5 US tech giants or the Big 4 Chinese giants have. - Given their value-add in terms of phone OSs+cloud storage+apps+mapping, Apple/Google/Facebook/MS get data that anyone else will never get. 24/7 location updates PLUS your full contact list PLUS most of your photos with pre-tagged content - enables targeting and monetisation of a vast scale and scope. Basically, the antitrust issues are already so huge that I would not be willing to bet on firms outside the Big 5 in any profitable area that touches tech - whether it is self-driving taxis, cord-cutting smart TVs, home automation - and probably also online payments eventually. They will not just eat Uber's lunch and Netflix's and Spotify's, but eventually also that of the cable-cos and of the VISAs and MasterCards -- just like Tencent and Alibaba are demonstrating on the Chinese market.
sidlls 9y ago
> But what is the exact mechanism that is making it so finance and tech are among the only fields where labor compensation is commensurate with leveraged value-add? What makes you think labor compensation in tech is commensurate with the leveraged value-add? I think you're generalizing too broadly. The vast majority of tech workers, even at the "Big Names", are not anywhere near a position where they can "rest and vest". Also their compensation per unit of added value really isn't comparable to their similarly skilled/socially connected peers in finance. A "rest and vest" Google Engineer whose blood, sweat, and tears made Google a multi-billion dollar product might make in the very low 7 figures per year, while a moderately skilled investment banker earning his bank tens of millions of dollars in a year might make a similar salary.
- pixelmonkey 9y ago
  You are right that compensation is uneven in every industry. You are also right I am generalizing a bit too much. My main point, though, is more that in tech/finance it is very possible for compensation to be (largely) commensurate with leveraged value-add. Whereas in professions like teaching and firefighting, it is simply impossible.
  - user5994461 9y ago
    You can teach and firefight anywhere on the planet. You can only work for the GAFA in a couple of cities, that happen to be the most expensive in the world.
    - sidlls 9y ago
      The parent's point, I think, is that teachers and firefighters (in this country) are rarely (effectively never) compensated according to the value they provide. I happen to agree with that point.
      - user5994461 9y ago
        Even in the US. I doubt that's a general truth. The 4 million American developers outside of the GAFA and HN circle have nothing outstanding. By the way, in the country I come from, they are both compensated more or equally than developers.
muninn_ 9y ago
With respect to your final point about teachers, firefighters, and doctors (please keep in mind I'm not against what I'm about to say) it comes down to the public nature of these jobs. When it's tax money, it's everyone's business. When it's a corporations money, it's only their business. Now obviously it's more nuanced than that, companies receive tax breaks and what have you, but I think that is largely to blame. Software engineer salaries aren't a matter of public discourse or political whims. Doctors, teachers, firefighters, and police officers are.
- pixelmonkey 9y ago
  I think you have a point about the public nature of these jobs. That said, I picked these 3 somewhat at random. And though teacher and firefighter salaries are very much set by state budgets in the US, doctor salaries are not. (They are, instead, mainly set by a complex interplay of state funds, insurance company profit margins, and hospital/practice competition for doctors.) Take, for two other examples, commercial airline pilots ($75k-125k per year) or paramedics/EMTs ($36-50k per year), neither of whose salaries are set exclusively by state budgets. Consider this note I just found in researching EMT salaries: "Private ambulance companies generally have the lowest rates of pay, but may be more likely to hire newer or less experienced employees. Many EMTs start with private companies to get their feet wet. Government agencies such as [...] state ambulance services generally pay the highest, but they’re more competitive to get into and may have higher education requirements."
  - nugget 9y ago
    The State and Federal Governments already provide health insurance for a majority of citizens, and we seem to be rapidly headed towards some version of "single payer" universal health insurance. I think we'll start to see much more political pressure applied to physician compensation in the future.
lmm 9y ago
Our human instincts can't deal with how many people there are in the world. A doctor can only treat one person at a time; even one who was saving a life every time they operated - let's say twice a day - would probably be saving less person-hours than someone who can make Google's results 1% faster. Our instincts recoil at the idea that that's more important (mine included), but our instincts were formed in a time when we lived in tribes of at most a few hundred.
- pixelmonkey 9y ago
  You really think a single engineer's marginal contribution to speed improvements of Google search results or engagement improvements in Facebook's newsfeed are of similar value to highly-technical life-saving treatment, delivered at scale in hospitals? Certainly, I could imagine the latter being devalued, at the physician level, if there were good automated alternatives. But, there aren't. Does your opinion hold of engineers working on Snap and Instagram?
  - lmm 9y ago
    > You really think a single engineer's marginal contribution to speed improvements of Google search results or engagement improvements in Facebook's newsfeed are of similar value to highly-technical life-saving treatment, delivered at scale in hospitals? It's not "at scale" though if we're talking about a single doctor, is my point. Of course saving a life is more important than saving one person a tenth of a second or making them slightly happier - but if you do enough of the latter then it adds up to something just as important as the former. > Certainly, I could imagine the latter being devalued, at the physician level, if there were good automated alternatives. But, there aren't. There's a limit to how much impact one doctor can have. A "10x doctor" can't save that many more lives, because they only ever save lives on a 1:1 basis. > Does your opinion hold of engineers working on Snap and Instagram? Yes, to the extent that they're actually enhancing people's lives. I've known Snapchat bring a lot of happiness to people, in a very human, social-based way; I don't know Instagram well enough but I'd imagine it's similar. It's certainly possible for well-paid engineers to be producing things that negatively impact other people (e.g. "dark patterns" in UI), but I think that's very much the exception rather than the rule.
Applejinx 9y ago
Capital.
fh973 9y ago
For physicians, is this really a 12-17 year training or just an artificial structure to defend lower salaries?

IBM 9y ago

I had a similar thought. I'd say that tech has been firmly in the "masters of the universe" phase for a while now and while I don't think the end of it will be the same as in finance (the nature of the businesses are completely different, there's no systemic risk), I think tech's comeuppance will be anti-trust. It's already happening in the EU, and in the US Democrats are making that a big part of their platform [1]. The election of Trump has revealed the shift towards populism in American politics, and I think Democrats see anti-trust as good politics to capitalize on it. Personally I think it's smart both from a political and policy perspective. Tech seems to tend toward monopoly, and anti-trust is critical to combating that. It's also a perfectly good and necessary counterbalance in capitalism. [1] https://www.vox.com/policy-and-politics/2017/7/31/16021844/antitrust-better-deal https://www.vox.com/policy-and-politics/2017/7/31/16021844/a...

wbl 9y ago
The competition is a click away and has very low barriers to entry. Facebook might have network effects, but Google doesn't. If someone made a better search engine, people would switch. What evidence that Google's search monopoly is anti-consumer is there?
- shopkins 9y ago
  Google has such a vast amount of data on users that its search really can't be beat right now. If you're fully in the ecosystem with mail, maps, contacts, calendar, smartphone, apps, etc. you're going to get better results -- not to mention switching could mean giving up these integrated products.
  - wbl 9y ago
    So if we break up Google, this harms consumers by stopping the integration.
    - ocdtrekkie 9y ago
      No, it's more likely that either breaking up Google, or heavily regulating Google into playing fair would lead to integrations that worked between services. Why be locked in, if those integrated data features could work between the best services from different companies? We need to stop letting Google protect it's poor quality products by bundling them with their good ones.
  - rimliu 9y ago
    I'd say it has too much data and it is already hurting search results. You get tons of unrelated stuff.
- MagnumOpus 9y ago
  The barriers to entry in their fields are huge. - As you mentioned, in anything social, the network effects are immense. - In anything where inputs are fuzzy and machine learning is required, the biggest data corpus wins (language recognition, image recognition, video recognition, translation, self-driving cars, payment fraud detection, etc etc). Open training corpuses won't ever be as extensive or fast to access as the proprietary hoards that the Big 5 US tech giants or the Big 4 Chinese giants have. - Given their value-add in terms of phone OSs+cloud storage+apps+mapping, Apple/Google/Facebook/MS get data that anyone else will never get. 24/7 location updates PLUS your full contact list PLUS most of your photos with pre-tagged content - enables targeting and monetisation of a vast scale and scope. Basically, the antitrust issues are already so huge that I would not be willing to bet on firms outside the Big 5 in any profitable area that touches tech - whether it is self-driving taxis, cord-cutting smart TVs, home automation - and probably also online payments eventually. They will not just eat Uber's lunch and Netflix's and Spotify's, but eventually also that of the cable-cos and of the VISAs and MasterCards -- just like Tencent and Alibaba are demonstrating on the Chinese market.

sidlls 9y ago

> But what is the exact mechanism that is making it so finance and tech are among the only fields where labor compensation is commensurate with leveraged value-add? What makes you think labor compensation in tech is commensurate with the leveraged value-add? I think you're generalizing too broadly. The vast majority of tech workers, even at the "Big Names", are not anywhere near a position where they can "rest and vest". Also their compensation per unit of added value really isn't comparable to their similarly skilled/socially connected peers in finance. A "rest and vest" Google Engineer whose blood, sweat, and tears made Google a multi-billion dollar product might make in the very low 7 figures per year, while a moderately skilled investment banker earning his bank tens of millions of dollars in a year might make a similar salary.

pixelmonkey 9y ago
You are right that compensation is uneven in every industry. You are also right I am generalizing a bit too much. My main point, though, is more that in tech/finance it is very possible for compensation to be (largely) commensurate with leveraged value-add. Whereas in professions like teaching and firefighting, it is simply impossible.
- user5994461 9y ago
  You can teach and firefight anywhere on the planet. You can only work for the GAFA in a couple of cities, that happen to be the most expensive in the world.
  - sidlls 9y ago
    The parent's point, I think, is that teachers and firefighters (in this country) are rarely (effectively never) compensated according to the value they provide. I happen to agree with that point.
    - user5994461 9y ago
      Even in the US. I doubt that's a general truth. The 4 million American developers outside of the GAFA and HN circle have nothing outstanding. By the way, in the country I come from, they are both compensated more or equally than developers.

muninn_ 9y ago

With respect to your final point about teachers, firefighters, and doctors (please keep in mind I'm not against what I'm about to say) it comes down to the public nature of these jobs. When it's tax money, it's everyone's business. When it's a corporations money, it's only their business. Now obviously it's more nuanced than that, companies receive tax breaks and what have you, but I think that is largely to blame. Software engineer salaries aren't a matter of public discourse or political whims. Doctors, teachers, firefighters, and police officers are.

pixelmonkey 9y ago
I think you have a point about the public nature of these jobs. That said, I picked these 3 somewhat at random. And though teacher and firefighter salaries are very much set by state budgets in the US, doctor salaries are not. (They are, instead, mainly set by a complex interplay of state funds, insurance company profit margins, and hospital/practice competition for doctors.) Take, for two other examples, commercial airline pilots ($75k-125k per year) or paramedics/EMTs ($36-50k per year), neither of whose salaries are set exclusively by state budgets. Consider this note I just found in researching EMT salaries: "Private ambulance companies generally have the lowest rates of pay, but may be more likely to hire newer or less experienced employees. Many EMTs start with private companies to get their feet wet. Government agencies such as [...] state ambulance services generally pay the highest, but they’re more competitive to get into and may have higher education requirements."
- nugget 9y ago
  The State and Federal Governments already provide health insurance for a majority of citizens, and we seem to be rapidly headed towards some version of "single payer" universal health insurance. I think we'll start to see much more political pressure applied to physician compensation in the future.

lmm 9y ago

Our human instincts can't deal with how many people there are in the world. A doctor can only treat one person at a time; even one who was saving a life every time they operated - let's say twice a day - would probably be saving less person-hours than someone who can make Google's results 1% faster. Our instincts recoil at the idea that that's more important (mine included), but our instincts were formed in a time when we lived in tribes of at most a few hundred.

pixelmonkey 9y ago
You really think a single engineer's marginal contribution to speed improvements of Google search results or engagement improvements in Facebook's newsfeed are of similar value to highly-technical life-saving treatment, delivered at scale in hospitals? Certainly, I could imagine the latter being devalued, at the physician level, if there were good automated alternatives. But, there aren't. Does your opinion hold of engineers working on Snap and Instagram?
- lmm 9y ago
  > You really think a single engineer's marginal contribution to speed improvements of Google search results or engagement improvements in Facebook's newsfeed are of similar value to highly-technical life-saving treatment, delivered at scale in hospitals? It's not "at scale" though if we're talking about a single doctor, is my point. Of course saving a life is more important than saving one person a tenth of a second or making them slightly happier - but if you do enough of the latter then it adds up to something just as important as the former. > Certainly, I could imagine the latter being devalued, at the physician level, if there were good automated alternatives. But, there aren't. There's a limit to how much impact one doctor can have. A "10x doctor" can't save that many more lives, because they only ever save lives on a 1:1 basis. > Does your opinion hold of engineers working on Snap and Instagram? Yes, to the extent that they're actually enhancing people's lives. I've known Snapchat bring a lot of happiness to people, in a very human, social-based way; I don't know Instagram well enough but I'd imagine it's similar. It's certainly possible for well-paid engineers to be producing things that negatively impact other people (e.g. "dark patterns" in UI), but I think that's very much the exception rather than the rule.

Applejinx 9y ago

Capital.

fh973 9y ago

For physicians, is this really a 12-17 year training or just an artificial structure to defend lower salaries?