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That dam has burst years ago. Facebook, then Google, significantly increased their pay to software engineers and it lifted all the salaries in the bay area. Wh

That dam has burst years ago. Facebook, then Google, significantly increased their pay to software engineers and it lifted all the salaries in the bay area. What's interesting is that this tide hasn't propagated very far outside California yet.

jasonlotito 9y ago
Are you sure? Google participated in an anti-poaching deal that would result in lower pay because of less competition. Even if they did increase pay, it could still be below what they would have paid if they had not had this policy in the first place. I'd need to see something that takes this into account before I believe it.
- stephenhuey 9y ago
  Exactly. It began at least a dozen years ago and the case lasted a long time: https://www.justice.gov/opa/pr/justice-department-requires-six-high-tech-companies-stop-entering-anticompetitive-employee https://www.justice.gov/opa/pr/justice-department-requires-s... http://fortune.com/2015/09/03/koh-anti-poach-order/ http://fortune.com/2015/09/03/koh-anti-poach-order/ Most likely the $5K payout per employee was 5-10 times lower than what was lost by all the employees collectively. Maybe that's not true and the tech giants wouldn't have hired as many people but I think all those companies collectively could've easily afforded an extra $5 billion over that timespan. Perhaps they would've innovated even more! I expect the effects of this to last a lot longer. Edit: I changed "nearly a dozen" to "at least a dozen"
ChuckMcM 9y ago
Not the tension I'm seeing. I'm seeing it in the rank and file all across the country as the article points out. Office admins, waitstaff, hospitality positions, janitorial, etc. These generally blue collar positions have had negative wage growth between 2009 and today but that has slowed or nearly stopped according to the labor statistics put out by Bureau of Labor Statistics[1]. As an example, at some point the customer complaints about room cleanliness will force hotel chains to increase their wages offered to fill positions that have gone unfilled for too long. That change will be reflected in higher hotel rates. Restaurants that can't keep all their tables open during 'peak' times will have to raise prices to add staff Etc. It isn't a 'big deal' for Facebook or Google to raise wages because it just slows the free cash flow into their bank accounts. But it is a big deal for business models where personnel costs are a material factor in the company's operating margin. [1] https://www.bls.gov/news.release/pdf/realer.pdf https://www.bls.gov/news.release/pdf/realer.pdf
- sdenton4 9y ago
  And then all of these new janitors and clerical staff will have paychecks, which they can use to play for hotel rooms on their new paid vacations... There's a strong argument that the wage stagnation in the middle and lower classes in the US is slowing down the economy across the board. In fact, I wonder if the increasing concentration of profits in a handful of companies is contributing to the inability of companies further down the food chain to pay workers market rates.
  - ChuckMcM 9y ago
    > In fact, I wonder if the increasing concentration of profits in a handful of companies is contributing to the inability of companies further down the food chain to pay workers market rates. You would not be the only one wondering that :-). A friend of mine who used to be an economist working at Google and I were discussing what the impact of having over a Trillion dollars locked up in 'cash and cash equivalents'[1] by the top 50 international companies. By its nature, cash equivalents can't be lent out by banks for longer term investment (they are required to be able to exchange the investments for cash on short notice) so that hoard just sits there. [1]https://www.gfmag.com/magazine/september-2016/global-cash-25-2016 https://www.gfmag.com/magazine/september-2016/global-cash-25...

jasonlotito 9y ago

Are you sure? Google participated in an anti-poaching deal that would result in lower pay because of less competition. Even if they did increase pay, it could still be below what they would have paid if they had not had this policy in the first place. I'd need to see something that takes this into account before I believe it.

stephenhuey 9y ago
Exactly. It began at least a dozen years ago and the case lasted a long time: https://www.justice.gov/opa/pr/justice-department-requires-six-high-tech-companies-stop-entering-anticompetitive-employee https://www.justice.gov/opa/pr/justice-department-requires-s... http://fortune.com/2015/09/03/koh-anti-poach-order/ http://fortune.com/2015/09/03/koh-anti-poach-order/ Most likely the $5K payout per employee was 5-10 times lower than what was lost by all the employees collectively. Maybe that's not true and the tech giants wouldn't have hired as many people but I think all those companies collectively could've easily afforded an extra $5 billion over that timespan. Perhaps they would've innovated even more! I expect the effects of this to last a lot longer. Edit: I changed "nearly a dozen" to "at least a dozen"

ChuckMcM 9y ago

Not the tension I'm seeing. I'm seeing it in the rank and file all across the country as the article points out. Office admins, waitstaff, hospitality positions, janitorial, etc. These generally blue collar positions have had negative wage growth between 2009 and today but that has slowed or nearly stopped according to the labor statistics put out by Bureau of Labor Statistics[1]. As an example, at some point the customer complaints about room cleanliness will force hotel chains to increase their wages offered to fill positions that have gone unfilled for too long. That change will be reflected in higher hotel rates. Restaurants that can't keep all their tables open during 'peak' times will have to raise prices to add staff Etc. It isn't a 'big deal' for Facebook or Google to raise wages because it just slows the free cash flow into their bank accounts. But it is a big deal for business models where personnel costs are a material factor in the company's operating margin. [1] https://www.bls.gov/news.release/pdf/realer.pdf https://www.bls.gov/news.release/pdf/realer.pdf

sdenton4 9y ago
And then all of these new janitors and clerical staff will have paychecks, which they can use to play for hotel rooms on their new paid vacations... There's a strong argument that the wage stagnation in the middle and lower classes in the US is slowing down the economy across the board. In fact, I wonder if the increasing concentration of profits in a handful of companies is contributing to the inability of companies further down the food chain to pay workers market rates.
- ChuckMcM 9y ago
  > In fact, I wonder if the increasing concentration of profits in a handful of companies is contributing to the inability of companies further down the food chain to pay workers market rates. You would not be the only one wondering that :-). A friend of mine who used to be an economist working at Google and I were discussing what the impact of having over a Trillion dollars locked up in 'cash and cash equivalents'[1] by the top 50 international companies. By its nature, cash equivalents can't be lent out by banks for longer term investment (they are required to be able to exchange the investments for cash on short notice) so that hoard just sits there. [1]https://www.gfmag.com/magazine/september-2016/global-cash-25-2016 https://www.gfmag.com/magazine/september-2016/global-cash-25...