15 ms·

Employers will do almost anything to find workers except pay them more

427 points by SQL2219 8y ago

Rjevski 8y ago
Shit-free & GDPR-compliant version: http://archive.is/aT8G1 http://archive.is/aT8G1
peteretep 8y ago
CapEx vs OpEx shocker.
lkrubner 8y ago
It’s interesting how much momentum there is in these processes. After several decades of big wage gains, during the 1940s, 1950s, and 1960s, the nominal increases could not be stopped, even as the economy weakened in the 1970s and 1980s. Back then all the wage cuts had to done through inflation. Nowadays there is no inflation, and no momentum to restart wage increases. This part of the article says it right: “””The underlying cause of the “labor shortage” is hiding in plain sight. It’s the long-term trend of funneling the gains from labor productivity not to the workforce, but to shareholders. As with any addiction, this process produces short-term euphoria, reflected in share prices, but long-term pathology, reflected in income inequality, poverty and social unrest.“””
- crankylinuxuser 8y ago
  Well, yeah. This is fully intended. It keeps the proletariat in tatters. With threats to food and lodging, they won't protest and won't rise up. It's a very effective means of control. Bread and circuses, people.
  - sharemywin 8y ago
    I thought Bread and circuses refers to the opposite. give the people just enough bread and circuses to keep them from rising up.
    - CamTin 8y ago
      Right, the bread and circuses are the bit that keep us distracted from the important bit, which is our disenfranchisement as citizens. Now it takes the place of shareholders/bankers/pension fund managers seizing all the power in society by buying politicians, setting themselves up as monopolists (and, for labor, monopsonists), and generally being in charge of every decision that citizens (as consumers and producers) might conceivably make in a way adverse to those in power. The great thing about our system is that the ruling class even make money on the bread (farm subsidies, school lunch programs designed mainly as more farm subsidies rather than as a way to feed schoolkids healthy food, more farm subsidies) and the circus (monopolistic ISPs, cable companies, media holding companies, and content aggregators, now seemingly in the process of all merging into one by gobbling each other up) parts too!
    - Mikhail_Edoshin 8y ago
      As far as I remember it was more about the moral decline of the people who do not want anything besides bread and circuses :) Just checked Wikipedia: "People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses." (Juvenal).
  - dang 8y ago
    Please don't post ideological rants to HN. We're looking for substantive comments here. That means comments that contain information rather than rhetoric. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- baxtr 8y ago
  Which is somewhat great because if they don’t pay well startups can exploit opportunities that open up as a consequence. However, my experience lately from Germany is that large companies are becoming more and more popular for developers. This was also reflected in a recent HN discussion https://news.ycombinator.com/item?id=17286939 https://news.ycombinator.com/item?id=17286939
  - m3rc 8y ago
    Haha, something that should theoretically help small players actually only helps huge corps? That's CRAZY. I bet that's never happened before.
  - jimbofisher1 8y ago
    It seems like a very poor financial decision to turn down 300k from Google to make 150k + fairy dust money from a Startup. Even if the 300k is lower than what Google ought to be paying.
    - baxtr 8y ago
      Financially, I’d agree. But what about your lifetime?
      - jimbofisher1 8y ago
        Lifetime? Not sure what you mean. Given that the vast majority of Startups fail and any equity you were granted would be worthless and even those that do payout are usually just getting you to parity to people who were at a FAANG over the same time frame I fail to see how a Startup would benefit. Even Resume wise, recruiters won't care that you worked at a startup that had a $100M exit but they definitely will if you worked at Google for 5 years.
- rohitb91 8y ago
  If profits don't grow or profits don't reach or surpass expectations, board members get fired. If board members are threatened, management is threatened. If management is threatened, workers are threatened. Profits change by increasing revenue and/or decreasing costs. Wages are an obvious way of optimizing wages further.
- mistermann 8y ago
  > Nowadays there is no inflation If you ignore most people's largest expense: housing costs, the price increases of which are "adjusted" away in inflation calculations.
  - guelo 8y ago
    That is incorrect. Here you can see that the US CPI-U includes shelter which is running at 3.5% inflation https://www.bls.gov/news.release/cpi.htm https://www.bls.gov/news.release/cpi.htm
    - mistermann 8y ago
      > That is incorrect. Maybe, show me your math proving that number is correct. I can't speak for the US, but in Canada the housing component of the CPI has utterly no connection to actual observed costs of owning or renting, at the national level as well as the municipal level. You don't have to take this as a fact (I can't really prove it if the government doesn't share their data or calculations, can I), but moreso something to think about in the formation of your world view.
      - nradov 8y ago
        Don't be lazy. The BLS publishes their methodology in detail. What specific part of it do you disagree with?
        mistermann 8y ago
        "I can't speak for the US..."
        mistermann 8y ago
        https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm https://www.bls.gov/cpi/factsheets/common-misconceptions-abo... "The CPI used to include the value of a house in calculating inflation and now they use an estimate of what each house would rent for -- doesn't this switch simply lower the official inflation rate?" "No. Until 1983, the CPI measure of homeowner cost was based largely on house prices. The long-recognized flaw of that approach was that owner-occupied housing combines both consumption and investment elements, and the CPI is designed to exclude investment items. The approach now used in the CPI, called rental equivalence, measures the value of shelter to owner-occupants as the amount they forgo by not renting out their homes. The rental equivalence approach is grounded in economic theory, receives broad support from academic economists and each of the prominent panels, and agencies that have reviewed the CPI, and is the most commonly used method by countries in the Organization for Economic Cooperation and Development (OECD). Critics often assume that the BLS adopted rental equivalence in order to lower the measured rate of inflation. It is certainly true that an index based on home prices would be more volatile, and might move differently from other CPI indexes over any given time period. However, when it was first introduced, rental equivalence actually increased the rate of change of the CPI shelter index, and in the long run there is no evidence that the CPI method yields lower inflation rates than some other alternatives. For example, according to the National Association of Realtors, between 1983 and 2007 the monthly principal and interest payment required to purchase a median-priced existing home in the United States rose by 79 percent, much less than the rental equivalence increase of 140 percent over that same period." Now, one can certainly make a reasoned argument that this is a reasonable change to tracking shelter costs in the CPI, but it is a fact that housing purchase prices are not included in CPI calculations for shelter, and it is also a fact that the majority of people choose to own their home, for very good reasons. https://tradingeconomics.com/united-states/home-ownership-rate https://tradingeconomics.com/united-states/home-ownership-ra... "Home Ownership Rate in the United States remained unchanged at 64.20 percent in the first quarter of 2018 from 64.20 percent in the fourth quarter of 2017. Home Ownership Rate in the United States averaged 65.24 percent from 1965 until 2018, reaching an all time high of 69.20 percent in the second quarter of 2004 and a record low of 62.90 percent in the second quarter of 1965." And again, I don't know about the US, but in Canada it is a little known fact that our government "just so happens" to choose their representative rental properties for CPI calculations such that the numbers they produce don't even remotely resemble the actual increase in renting costs. The fact of the matter is, in the current environment of skyrocketing housing costs in much of the Western world, the CPI does not reflect actual cost of living increases for the citizens whose tax dollars pay the salaries of the people printing the numbers, and for statistical agencies to dismiss this by simply pointing at some technical "reason" tucked away on a website (that almost no one knows about) is a failure of democracy.
- snarf21 8y ago
  This is absolutely correct however the one dichotomy is that we are also the collective shareholders (obviously not majority). People love seeing their 401K go up 15% annually year over year. That is only happening because of this funneling. Collectively we need to stop wanting it both ways. We want cheap goods but then complain about offshoring and outsourcing of labor. Look at dollar stores: Their boom happened almost immediately after Clinton re-opened trade with China. Wal-Mart went from "proudly made in the USA" to cheapest crap they can buy. It annoys me when some people talk about changing X but neglect to even try to think about what change that might cause for Y and Z.
  - pjmorris 8y ago
    > we are also the collective shareholders (obviously not majority) It's that 'not the majority' thing that's the fly in the ointment. I owe this claim a link, but most shareholders are part of the wealthy and/or the professional classes, skewing stock gains toward a few, and away from the many. EDIT: Added link supporting claim. Per WP article, chart 'Stock ownership is heavily concentrated', top 20% of US households by wealth own 90% of stock, and even that's skewed heavily to the top. [0] https://www.washingtonpost.com/news/wonk/wp/2017/12/18/for-roughly-half-of-americans-the-stock-markets-record-highs-dont-help-at-all/?utm_term=.85c6383d91ed https://www.washingtonpost.com/news/wonk/wp/2017/12/18/for-r...
    - sdhgaiojfsa 8y ago
      Most shareholders (holders of the wealth represented by companies) are members of the wealthy class? :P You don't say. I'm of two minds on this. Wealth and income are not the same. You get wealth by not consuming all of your income, and instead by investing it. Of course, if you have just enough income to survive, then you cannot accumulate wealth. But most people (in the US) are not in that boat. One of the phenomena that continuously fascinates me are the differences in wealth accumulation between people in the same income brackets. Sometimes there are good reasons for it (e.g. medical issues), but my sense is that in the vast majority of cases, there is simply a difference between the elective consumption levels of different households. http://www.visualcapitalist.com/relationship-income-and-wealth/ http://www.visualcapitalist.com/relationship-income-and-weal... For example, I have a sibling whose wealth is in the 98th percentile for his age bracket. However, his income has never been above the 60th percentile, and has often been lower. This is an example of how a certain attitude about consumption can have a strong impact on wealth accumulation. I definitely think that the rich (broadly defined -- both via high income or high wealth) need to be contributing more back to society than we are. But, as a saver, I'm biased towards targeting high-income more than high-wealth.
- candiodari 8y ago
  But people have been working for a decade and a half to open up global migration of workers, as well as allowing China and others to export whatever it wants at any price (and several other "details", like IP theft of course). When 2 markets merge, prices converge. What are engineer wages in China, the Phillipines, India, ... ? Oh wait ... Second: with opening up markets, ... if there is one well-known fact in economics it's that when money can move over a wider area it concentrates into fewer hands. The bigger the markets operated, the fewer rich there are. And therefore, the more "ultra" the ultra-rich are. The shareholder "wealth transfer" seems to me to be this effect playing out. That explains some of it. And that's with the minimal opening up of borders that has occurred over the past 2 decades (ie. mostly the EU and America, and in terms of population it's not that much). That's a bit of a question I have for globalists : global average wage is $2000. Not per month, not net after tax. Not actual dollars. That's yearly, before tax, PPP dollars, not actual dollars. (PPP dollars means it's $2000 worth of, say, food (say strawberries or big macs), but it's actually only $400 worth of things like Gold or perhaps more relevant, iPads/Phones, that have global prices) If one opens up global labor migration, that's the average wage that will be seen worldwide, and that's the expected result. Note: I am NOT saying that letting 1% of people migrate will drop wages like a stone immediately. But it will move in that direction. Nor am I saying that this has anything to do with work attitudes or ... The "big secrets" about the economy that must be denied because they are thoroughly at odds with policy that we want to pursue: 1) there is a global oversupply of labor. You could pick ~16% of humans worldwide, disappear everyone else, and have almost zero effect on the economy. That means wages everywhere (even in places with dismal wages like Bangladesh) are too high in market terms. And I would like to point out that at least 2/3rds of those 16% work for governments, directly or indirectly, and "if everyone just behaved correctly" we also wouldn't need them. (and note: this cannot be fixed with minimum wage laws for obvious reasons) 2) The global economy is demand-limited. Producing more goods would NOT result in more sales. We have "everything we want" (in economic terms, that means everything you're willing to work extra for). This means, loosely stated, that the above problem does not just apply to workers, but to companies in general as well.
  - rorykoehler 8y ago
    Engineers wages in China often surpass even SV wages. China is not cheap anymore if you live in Beijing or Shanghai for example.
- neilwilson 8y ago
  It's a little more than that. It is the financialisation of the economy. If you stop paying workers, then they don't have the money to buy your output and you go out of business. That's the basic philosophy behind Ford's approach - high wages = high sales. However if you deregulate banks then you can replace wage growth with credit growth - increased private debt - which keeps the plates turning. You don't increase wages, you increase the debt people put themselves in overall - student debt, mortgage debt, credit cards. That has the advantage of putting a huge monkey on people's back forcing them to work ever harder in a system that structurally has fewer jobs than people that want them. Then when that falls apart, you plead with the government to plough huge amounts of public money into the banks, so they can restart the credit engine. The cycle that lead to 2008 will repeat again with ever lower interest rate peaks in each cycle.
jdhn 8y ago
"That money won’t disappear, of course—it will go into the pockets of workers, and then find its way back into the coffers of corporate America via higher sales." Do people really go out and spend money immediately if they get raises? Personally, if I get a raise, I may treat myself to something nice, but then I immediately go back to my old spending habits so I have more money to save.
- Talyen42 8y ago
  The average person spends almost exactly as much as they make as income rises. It's a hedonic treadmill https://en.wikipedia.org/wiki/Hedonic_treadmill https://en.wikipedia.org/wiki/Hedonic_treadmill
  - bungie4 8y ago
    Thanks HN, I didn't realize this phenomena was named. Learn something new everyday. I always just said, expenses rises to meet income, + 25%.
    - HenryBemis 8y ago
      ..and the “Rat race” I mentioned on a previous comment above is that exactly perpetual effort to cover that +25% as you very correctly stated of “more expensive lifestyle” that we impose to ourselves.
      - matte_black 8y ago
        As a counter argument, never forget you can be a responsible saver one day, only to be dead and buried the next. If you want to guarantee an expensive lifestyle, it’s best to obtain it as immediately as possible.
        aplummer 8y ago
        Thank god somebody said it. We are in the golden age of cheap travel and leisure, perhaps the golden age of all ages (and certainly of all past). People spend your easy money and enjoy youth IMO.
saw-lau 8y ago
When accessing from The UK: Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and committed to looking at options that support our full range of digital offerings to the EU market. We continue to identify technical compliance solutions that will provide all readers with our award-winning journalism.
- ge0rg 8y ago
  You might want to indicate that this is a quote from the web site, not a statement of yours. I'd suggest to edit it and to add asterisks around the text to make it render in italics.
  - saw-lau 8y ago
    Thanks for the advice!
- pmontra 8y ago
  Click web at the top of this page, ask your browser to show the desktop version if on mobile, show the cached version of the page.
  - saw-lau 8y ago
    Was trying to look at it on the desktop...
- CapacitorSet 8y ago
  That's a really weak commitment, considering that they had 2 years to comply with GDPR.
  - pmontra 8y ago
    Maybe they don't care about European readers. I'm European but they are from Los Angeles so I don't complain. Would I comply with a US law if all my customers were in the EU? To be fair, they're probably blocking also US readers occasionally or permanently in Europe. They could be annoyed by that.
Forge36 8y ago
I wonder to what degree company size and current employee wage plays a role in this (in the U.S. the pressure to not share salary with coworkers tried a wrench in this theory). Given a shortage, raising starting wages would encourage people to change jobs, however employees (recently hired or existing) before the increase would also want that new increased rate. Combined with companies hiring thousands (think Walmart) a wage increase becomes multiple millions per year (that's a lot harder to sell to a board)
madengr 8y ago
I’d like to earn more, but I also want the market to keep on going up for my retirement investments. At mid career, my 401k performance over the next 20 years is now market driven, rather than by contributions over the next 20. So at this point, I’d rather have better investment returns than a higher salary.
- bmcusick 8y ago
  Everyone does. Hell, I do too. But it's not realistic to expect this music to keep playing. The ratio of workers to retirees keeps getting worse, from 10:1 in the 1950s to 3:1 today, and falling. The economy can grow over time, but on any given day it's a fixed pie, and it has to be divided among workers (who are doing the labor now) and retirees (who accumulated the capital in previous decades that today's labor uses to magnify their productivity). Everyone is feeling squeezed as individuals because of falling incomes, but the real culprit is a falling ratio of income-makers (labor) to income-takers (capital, whether retired individuals or just wealthy). This cannot last. The ratio of labor income to capital income will eventually be restored (hopefully in a peaceful manner, but we can't rule out alternatives). The reasonable fix will be raising retirement ages, but good luck getting a sufficient raise there to restore a 10:1 ratio.
- nimish 8y ago
  If you read the article you would know that labor wage increases are laughably low compared to share buybacks. Raising salaries 10% would barely even touch cash returns to shareholders
  - madengr 8y ago
    You conveniently ignored the 8% drop in AA stock. Doesn’t matter if that was due to dividend reduction or spooking investors, it’s still a big drop.
    - nimish 8y ago
      And Wal-mart shares rose by 8% in the year after they announced wage increases. The broader issue is that shareholders have deluded themselves into thinking that they are the end-all-be-all of a company when in fact their contribution is limited.
sametmax 8y ago
And if you think it's bad, it's even worse in Europe. Taking the French example: I'm an freelancer, but I used to have a contract with an American company. They gave me 3x the salary most of my French colleagues would get, while keeping the exact same social advantages (they paid me through a French branch). However, to them, the salary was twice lower than what they would have paid for the same guy in the Valley. Now as a freelancer, I move a lot from companies to companies, and I hear the same complaint over and over: we can't find good devs. But when I look at the job offers they publish, it's full of buzzwords and cool attitude, yet the pay is not remotely matching the skills they are hiring for. You want somebody speaking 2 tongues, coding expertly in 3 languages (e.g: server lang + js + css), knowing a bit of sysadmin, ergonomics, architectural design, data base, and capable of understanding your undocumented stack du jour + infra. No, you can't pay that $2500 a month.
- Zeebrommer 8y ago
  Can you read this article? I'm in Europe and run into a message saying "Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and committed to looking at options that support our full range of digital offerings to the EU market. We continue to identify technical compliance solutions that will provide all readers with our award-winning journalism." with the LA times since the GDPA.
  - dijit 8y ago
    I have the same message in Sweden, shame they can't find to operate business without abusing user data. Still there's an archive.is link listed here: https://news.ycombinator.com/item?id=17506215 https://news.ycombinator.com/item?id=17506215
    - samsolomon 8y ago
      Would you pay for an LA Times subscription? Do you know anybody that would? The newspaper business is struggling as is. Every time a publication is blocked in Europe people complain. Ads were the answer for most online publications, but showing targeted ads now pose a legal risk. I don't know about their business ops, but I'd suspect they've done the math and decided it isn't worth the effort to change their platform so people can read for free in Europe.
tmaly 8y ago
Wages are not the only issue here. If you look at inflation, the price of food and energy has increased massively since 1999. I know economists like to exclude these figures in their computation of inflation, but they sure do put a dent in the regular workers wallet. I can remember paying 99 cents a gallon for fuel in the late 90's. Now its $3.49 a gallon. I can think back even farther to the 1980s when you could get a meal for $3 at a fast food chain. Now your shelling out $8 - $10 for the same meal.
- derptron 8y ago
  What was the average fuel economy in the late 90's though?
le-mark 8y ago
The phrase "the harvest" is used at least two times in this piece in a similar way: But it didn’t take long for CEOs to divine the wisdom of a viewpoint that hit them where they lived, in their wallets. The harvest has been decades of increasing income and wealth inequality. I find it to be very odd, the author is Pulitzer winner, so there's that I guess.
creaghpatr 8y ago
Love it when people compile montages of article headlines that circulate every year to encourage the importation of more cheap labor. Here's a recent favorite byline: "America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying [their workers more]. https://www.cnbc.com/2018/07/05/the-us-labor-shortage-is-reaching-a-critical-point.html https://www.cnbc.com/2018/07/05/the-us-labor-shortage-is-rea... Epidemic proportions!
- SketchySeaBeast 8y ago
  >> and it could be employers who end up paying [their workers more] What a bizarre statement. Who else would pay them more? And why is that framed like a bad thing?
- adventured 8y ago
  You get those incredible dueling headlines from the same media outlets of how wages are not rising fast enough, and how we need to have open borders allowing in unlimited low skill, low wage labor. Who will pick the strawberries if we don't import ten million low skill laborers in the next decade? The Koch brothers must have their cheap labor or their industrial profits will suffer. Wages must be carefully constrained or inflation might tick up a bit after a decade of the Fed proclaiming they desperately want more inflation (of course what they actually mean by inflation risk is that business profit margins will take a hit and prices might climb some - if the businesses have pricing power - due to the bottom half of workers earning more). And that income stagnation at the median? It's amazing what happens when the middle class moves up [1], your natural population growth drops toward zero, but you import tens of millions of low skill, cheap laborers over 30-40 years: your median doesn't move up because you're treading water by offsetting everyone that moved up. [1] https://i.imgur.com/IOgZLDc.png https://i.imgur.com/IOgZLDc.png
Waterluvian 8y ago
I worked for a Canadian company that's absolutely hemmoraging talent because they refuse to pay well. I'm now paid about 50% more to work remotely for a US company in an environment that is far far more fitting of my life goals of being with my kids as they grow up. It's beyond bizarre to watch them continue to refuse to pay anyone properly despite their imminent collapse.
- maxerickson 8y ago
  Are they selling into a market that pays enough for them to raise wages? I'm not defending them there, just wondering if the imminent part of the collapse might be external.
  - Waterluvian 8y ago
    That's completely fair. They're struggling in a lot of ways. They've always insisted that they're simply not underpaying for any external reason and claim that's what everyone is worth. But maybe the truth is that their model can't afford to pay engineers properly. Which is a pretty bad model for a tech startup. Because then all your talent leaves, which all but dooms you.
- eloff 8y ago
  It's bizarre. Even Amazon Seattle pays 2x the salaries of Amazon Vancouver, even although they are separated by only 200km and are the same company! I ask every Canadian developer I meet, why are you still here? I like living in Canada, so I work remotely even although I don't really like remote work. Instant 70% raise.
  - Waterluvian 8y ago
    Yeah I've had a number of jobs I turned down because I simply don't want to live in the US. There's just something about the calm nature of where I live that's worth a lot to me.
    - coryfklein 8y ago
kinkstone 8y ago
"....As with any addiction, this process produces short-term euphoria, reflected in share prices, but long-term pathology, reflected in income inequality, poverty and social unrest." Addiction is right, but it's not limited to wages in a corporate environment. The same addiction in our overly-concentrated power structure is driving the decisions to underfund schools, infrastructure, healthcare, etc. The same "me-first" philosophy produced the recent tax law that will add billions to the deficit in the coming years. So frustrating.
Markoff 8y ago
yeah i work currently as contractor around 30 hours per month from home for Chinese company without any commuting anytime i want to cover expenses of my family on the other hand i could work 160-170 hours per month for local EU employer and get like double salary (a bit more with bigger retirement savings and paid vacation) somehow i am not rushing to get stable job and get employed locally to work five times more plus wasted time on commuting (so make it six times more hours wasted on work) to earn double salary
- scarecrowbob 8y ago
  Same-ish, but I'm in rural Texas. I work 30 hours a week for a US firm, working remote and finishing up raising my kid. I could probably multiply my income by 1.5, but I'd have to work 15 hours a week more and come into an office. I've had several interviews with people but no one seems to understand how much they would actually have to pay me to come into an office because they are used to discounting the time spent commuting as if weren't time they should pay for; they think I am crazy for calculating that as time for which I should be compensated.
  - Markoff 8y ago
    similar, though i said 30 hours per month, not per week also i have two small children, nobody will pay me for priceless time away from them now they are both under 3, i feel sad for people seeing their children in evenings or just weekends
    - scarecrowbob 8y ago
      Yeah, I caught that... I haven't figured out how to get the hours down to that, but I am working on it. Mostly I just end up doing stuff like visiting my parents while I'm at "work". I have a 17 year old and basically have ended up remote working just to be around him and his sister. For me, that's definitely a thing that I feel like was a great deal for both our lives. Also, now I'm just turning 40 and he's graduating high school, I've started traveling and working that that's also quite fulfilling. I feel sad for those folks to- it's not a judgment thing, I just know how much I got from being around my kids and how much I personally would have lost out on.
dnomad 8y ago
Low wages are not a problem per se. In the situation of low wages what is supposed to happen is the best workers either (a) move to competitors or (b) just strike out on their own and start their own business. If businesses are colluding on low wages (and it's very clear they are) then eventually we should see people starting new businesses. This dynamic by the way is absolutely clear in East Asia and China, in particular. Wages are rising fast and the best workers aren't afraid to bounce away for higher salary or, if it comes down to it, to buckle down and strike out on their own. But this dynamic has been completely lost in the US. Even as the economy "improves" we are seeing labor market fluidity has collapsed the US [1]. This has been going on since the 80s. Entrepeneurship and new firm formation have been declining for the last 40 years [2]. The end result: lots of people stuck in jobs they don't like and businesses, knowing full well that their workers are stuck and won't go, offer essentially zero wage increases. [1] https://www.federalreserve.gov/econresdata/feds/2016/files/2016015pap.pdf https://www.federalreserve.gov/econresdata/feds/2016/files/2... [2] https://www.nytimes.com/2017/09/20/business/economy/startup-business.html https://www.nytimes.com/2017/09/20/business/economy/startup-...
wonderwonder 8y ago
Why would they pay more, if they just hold out long enough, someone will take the job. If enough companies do this, a new wage rate is established. We are in a strange time with globalism, companies are in a race to the bottom in regards to employee pay. Employees are losing negotiating leverage as their employer can simply turn to emerging markets to hire talent for half the price. Granted that talent may not be as good but they also save on benefits. There is also a critical level where if enough companies are paying low wages, the employees cant just threaten to go somewhere else and make more, there is no where else. So they have to eat and take the lower salary job, setting a new lower median wage for the market place. Meanwhile the cost of basic goods continues to rise. Communism is nonsense, but Marxism has a very important point in that the primary driver of world power is not countries but classes, those that hold the means of production and money against everyone else.
fifnir 8y ago
Academia: Oh you have a degree, a masters, a PHD, knowledge in super-niche molecular technology techniques, speak 3 languages and can code in a couple more... Best I can do is 1200 per month
- jopsen 8y ago
  Move north, maybe?
  - fifnir 8y ago
    In the north you get paid more but I think your buying power is pretty much the same. From a quick google, a postdoc can expect something like 2500per month in sweeden, but how much do you need to spend on rent and food etc there? In any case, I did move some 7 years ago, but the whole thing is depressing, you know? I can give my work to some capitalist megaCorp and get paid nicely, or to the public and get paid shit...
saturdaysaint 8y ago
I wonder how other aspects of compensation like paid vacation time play into this. I've fielded interest from a lot of recruiters and interested companies. Moderate pay increases seem easily available - the sticking point is that they will all fight tooth and nail for anything beyond the bare minimum of vacation time. I'm in my late 30's with kids, and my wife is a doctor. There really isn't a realistic pay raise that is worth losing weeks with my family every year. I wonder how many other people in prime earnings ages with families are running into this resistance from HR departments - it feels like a successful anti-competitive strategy to tamp down on turnover and wages.
lewis500 8y ago
I keep reading stories about how it's a puzzle that more jobs are being created but wages aren't going up. Part of it seems to be this new ingenuity at finding marginal workers and getting them to take jobs. Paul Krugman has a theory that the recession has made companies averse to raising wages, because it's hard to claw wage gains back if there's a recession. So instead they are offering bonuses, because if a recession hits you can just say "we don't have money for bonuses this year" which is a lot easier than saying "everybody's salary is going down." I'd say, while the cause (recession) is right, the companies are doing even more than switching to bonuses: it's also aggressive recruiting, allowing remote work, making workplaces cool, inflating the job's prestige, etc.
at-fates-hands 8y ago
So then, the basic premise here is: Employers: "We can't find good devs/workers!" Devs/Workers: "Well, you don't pay enough!" My advice to employers is what a lot of companies started doing when there was a gold rush of developers and people were scarce. Find a few average devs or newbies with little or no coding experience, train them into your "system" and then work to promote them up into senior positions and give them a reason to stick around. My advice to devs is get a role at a company, get into the habit of being able to code on a daily basis, grow your skills, then jump ship, or angle your skills for an increase in pay. The important part is coding every day and getting better at your craft. Sometimes getting paid less and acquiring skills is more important for the long run than simply turning offers down because you think it's not a good salary or hourly rate.
- commandlinefan 8y ago
  > then jump ship But be careful... I did this back in the late 90's; I changed jobs four times in four years, getting a 25-30% pay increase each time. Then one day I tried to do it again, and they told me up front, "we're not interested in hiring you because you change jobs too often". Although I eventually did find something and have kept each job I've had since for at least 3 years, I'm pretty sure my "shady job hopping past" cost me a job opportunity just a few years ago.
  - logfromblammo 8y ago
    Job-hopping is no sin when you can get a 25% pay increase whenever you do it, and companies will only give their retained employees 2.5% raises (while cutting their benefits by 5%). Job-hopping is no sin when you are an "at will" employee with no contract. Some companies think nothing of firing 10% of their employees every year, and replacing them with fresh faces. Is that not the same thing from the other side of the table? The company who rejects you for job-hopping is explicitly rejecting your self-agency and your right to continually re-evaluate your business relationships, in exactly the same way that companies do when they fire bad employees. You fire bad employers. It is no different. The relationship is work for pay. If they want you to stay, they have to ensure that relationship stays mutually beneficial every week that you work for them. No, don't be careful. If there is no contract specifying otherwise, you owe your employer nothing next week, and they will owe you your pay for this week. That is all. Corporate loyalty is dead, and the corporate employers killed it. It is not our fault that the harvest they are now reaping is bitter in their mouths. If you are offered higher pay somewhere else, start there next Monday, and tell your current employer on Friday that you won't be back next week. We have all done it in this industry. 25% more is too good to pass up, and they know it. Let them be the ones to start offering contracts with severances and notice periods and guaranteed raises and bonuses. That company who won't hire job-hoppers will find that word gets around, and qualified people will simply stop sending their resumes and entertaining interview requests.
commandlinefan 8y ago
I'm not sure the premise of the title - that employers will do almost anything (or anything at all) to find or retain workers - is accurate. Setting aside pay - will they offer livable working conditions, or will they cram everybody elbow to elbow in a noisy airplane hangar with no dividers like cattle? I don't see that any employers, anywhere, are doing anything to find good employees, paying more being just one of the things they're not doing.
whack 8y ago
Expecting public companies to do anything except optimize for shareholder value, is pure folly. We can debate morality all day, but there's a more practical reason for this: shareholders hold all the power over management. Regardless of how unhappy you as a customer/employee are, you do not have the direct power to fire the directors/executives. You only have the indirect power of pressuring the shareholders, and hoping they will pass it along. Hence why CEOs and Board of Directors will optimize for shareholders interests above customers/employees/society. Because if they don't, they will get fired and get replaced with someone else who does. This is textbook Evolution and Natural Selection. If we aren't happy with the way corporations are paying their employees, the solution has to come from outside the corporations. Demand that your government increase the minimum wage, increase the capital gains tax rates, raise tax rates for the 0.1%, and use the proceeds to fund basic income or a better social safety net. he private sector does a great job of generating wealth, but don't ever expect it to distribute it fairly.
- scroot 8y ago
  Time to also reconsider different kinds of corporations, specifically those that are wholly owned and operated by the people who work for them.
  - tjr225 8y ago
    It is a pleasure to have the opportunity to work for one.
    - scroot 8y ago
      Do you? If so, which?
  - jimbofisher1 8y ago
    Coops, I'm not familiar with any in the IT space, care to share?
    - scroot 8y ago
santiagobasulto 8y ago
https://i.imgflip.com/2dswyy.jpg https://i.imgflip.com/2dswyy.jpg
gwbas1c 8y ago
I remember working for a startup a few years back. When I joined it was kind of "scrappy," and I really couldn't negotiate for market rate. It didn't matter, though. I loved the job, and really wanted the early-stage startup experience. A year later we were in a nicer office, and definitely not "scrappy." We interviewed a lot of candidates, and when we made an offer, it was always rejected. Why? We were too far below market rate. At the time, I still loved the job. (It was also a very short commute by bike.) Another year later (two years after I started,) we were acquired by a large, and very profitable company. People started demanding market rate or leaving. The point is this: People work to get paid. Crumbs work for a short period of time, but at a certain point, people's lives move on. That's when employees jump ship because they need the extra $20-50,000 / year. Many people will choose better working conditions over the highest salary possible, but the difference should be very, very minor. No one's making a lifestyle change because your office is cooler than the one down the street.
habaryu 8y ago
At the end of the article, there's a link to a Cardiff Garcia's post showing how the workers shortage headlines are repeated over and over. https://threader.app/thread/1014944737978175488 https://threader.app/thread/1014944737978175488 It'd be funny to change some of them and show the problem as being caused by the companies. Instead of "Great job openings, no candidates" it could be "Great skilled workforce, no employers". https://money.cnn.com/2009/11/03/news/economy/jobs_sit_open/index.htm?postver https://money.cnn.com/2009/11/03/news/economy/jobs_sit_open/...
kev009 8y ago
The tech industry is unwell, in our case despite abundant cashflow it's based in the completely irrational. Your salary would be a full 10-20% higher with average turnover numbers if it weren't wasted on modern tech recruiting practices. And your company would quickly have less than average turnover number to boot. You'd get organic interest, and would properly pay attention to employee and manager referral. Hiring practices are almost entirely cargo cult, and much more value for companies is being destroyed in all these terrible HR practices that have been latched on to. To me it appears like empire building and a complete lack of understanding in how and who works.
jsoc815 8y ago
Yes, many employers have deflationary expectations in an inflationary environment. The most difficult part about disabusing them of this notion is that there are still too many current and potential employees who are all too willing to encourage this. That's why I implore people to 1) know the value of their labor; 2) do the math concerning their (long-term) cost of living. Lots of folks seem to think that they can take a pay hit here or there just to get a foot in the door or tide themselves over, not understanding that they generally setting the bar for their future pay 1) because many (at least US) employers will ask for salary history; and 2) even if they don't, the information is probably available via a data broker.
sp332 8y ago
That makes it even more distressing for workers who can't find a job. Apparently employers won't hire disabled employees even if they will work for less money. https://twitter.com/ForgetAmnesia/status/1016770557709307904 https://twitter.com/ForgetAmnesia/status/1016770557709307904
hamilyon2 8y ago
Well, I guess, this may be good. If a lot of dollars seek few resources, and resources pool does not increase much, you get unbounded price increase. Which is not good. Developer have to do something productive for economy. Their wages should be bound to value they produce. If they are consistently paid more then they are producing, whole sector is heading into collapse. In healthy job market, job ads are going to attract employee with salary based on value that employee is going to produce. Failure to attract her does not mean someone is irrational or wages are low. It just means there is a lot of low-value work for developers in this world. Someone will notice that and maybe innovate those jobs away or something.
- bluGill 8y ago
  Replace Developer with maid in your post and read it again. I don't have a maid, instead I clean my own house, and drive my own car. My understanding is in India people with half my income would have maids to do those tasks. However in my country the value a maid produces isn't as much as their value and so I don't pay one. I know what a maid would cost (some advertise in my local newspaper), and they are not worth it. Same with developers. If the wages go too high some things we could automate will no longer be automated.
Bromskloss 8y ago
Is it argued that the trade-off between getting good people and keeping costs down is poorly made? (Due to GDPR compliance, I can't read the article.)
exabrial 8y ago
Quit rewarding these companies but staying at your job. No one gets the golden rolex anymore and there's no pension. The advice of 'find a good company and stick with it' no longer applies.
graeme 8y ago
I've been thinking about this. Let's say a company has 1000 employees at $50,000 per year. They were able to find enough workers at that rate. Now let's say they need 100 extra workers. They'd expect their labour costs to go up 10%. But, it turns out there isn't a supply of 100 workers at $50,000. To pull in extra workers, they'd need to offer $60,000. So far, so good. Extra labour costs are only $6,000,000, and only $1,000,000 are from higher wages. Prior total was $50,000,000. But, you can't just pay the old workers $50,000. Humans don't work like that. You can't say "you were happy before, but these new people needed more money, so they get more" Instead, you pay everyone $60,000. So your new labour costs are $66,000,000. That's a 32% increase in wage costs for a 10% increase in labour. Is there a name for this? And does this explain why companies avoid raising wages when they want a higher number of workers?
- ihsw2 8y ago
  I'm not sure of an exact name for that but what you're describing can be considered the theory of marginal productivity[1]. Your argument that the 10% cost in labor (to hire those 100 extra workers) is where the additional cost ends is a common logical fallacy -- those 100 extra workers will not be operating at 100% efficiency from the get-go. They will need to be trained and there will be a ramp-up period, and up until then they will likely have a negative return on investment. What this means is that the value derived from these new employees will be net-negative for a period of time. One could say that ~10-30% of that $6M in new labor costs for the next 12 months will not be recovered. Your theoretical scenario could result in: * current employees departing (taking institutional knowledge with them, decreasing the efficiency of your organization) * current employees using their hours at work helping ramp up their new co-workers (decreasing the efficiency of your organization) * new employees taking on tasks they're not yet trained for (decreasing the efficiency of your organization) Furthermore, some new employees will not stick around for multiple reasons (eg: family events like a spouse moving to another city, being unqualified but passing the interview process, etc), and therefore the significant investment in them will be gone for good. Now, that said, is it better to give everybody a 10%? Of course not, but only because everybody is not equal. Raises should be handed out based on competence-based metrics (be it qualitative reports from co-workers and managers or self-reported quantitative data pertaining to their individual impact). Real bottom-line pushers would even qualify for 20% raises. [1] https://en.wikipedia.org/wiki/Marginal_revenue_productivity_theory_of_wages https://en.wikipedia.org/wiki/Marginal_revenue_productivity_...
ggg9990 8y ago
This makes sense. It’s very hard to 1) pay new hires more than existing employees, or 2) ever reduce anyone’s salary. So raising salaries to hire people means raising everyone’s salary in the company, permanently. Not a good idea if your employment needs may be the temporary result of a bull economy.
tweedledee 8y ago
Labor ‘shortages’ are simply an excuse to import cheap labor. There exist talent that will take a discount on pay for the fringe benefit of immigrating. This in effect is a community subsidy to the company. This is one reason why lobbying is a hugely profitable enterprise. Eventually the community becomes too taxed and social problems occur and we get populist uprisings. I consider this both an unfortunate and an entirely predictable outcome.
mnm1 8y ago
You have to be dumb to believe the employers and their lobbying industry that there is a shortage. By definition, there cannot be a shortage. This is basic economics 101. Workers exist and they want to work. If business owners won't pay them, that's not a shortage of workers, that's a shortage of competent business owners. In other words, these business owners are not competent enough to run their own business. I hope all of them go out of business because of that. What a bunch of inept, greedy scumbags. Instead they go on the internet and other places and cry about shortages like babies. These people have no human decency at all. They will do anything for their greed. I wish the masses weren't so dumb to fall for this kind of stupidity. This particular article is rather refreshing as it cuts through some of the bullshit. Here's some ideas for these incompetent business owners of how to get and retain employees: * higher salaries * work from home * 25 - 35 days vacation to start, increasing every year * guaranteed 2-8% raise to compensate for inflation every year * bonuses * Fridays off in the summer I could go on and on and on but it's stubbornness that makes these business owners so greedy, not the lack of good ideas in how to hire. I hope the market turns against them and they go bankrupt.
RickJWagner 8y ago
It's always best to be the company owner. If you're in a position that allows it, save what you can and invest it in the market. Buffet, Dalio, etc. etc. have been preaching this for decades.
known 8y ago
So job hopping for better salary is not unethical;
amai 8y ago
Maybe software developers should create a union or something like that? Maybe the fact that unions have been destroyed since the 1970s has something to do with the wages not increasing that much anymore?

427 points by SQL2219 8y ago

Rjevski 8y ago

Shit-free & GDPR-compliant version: http://archive.is/aT8G1 http://archive.is/aT8G1

peteretep 8y ago

CapEx vs OpEx shocker.

lkrubner 8y ago

It’s interesting how much momentum there is in these processes. After several decades of big wage gains, during the 1940s, 1950s, and 1960s, the nominal increases could not be stopped, even as the economy weakened in the 1970s and 1980s. Back then all the wage cuts had to done through inflation. Nowadays there is no inflation, and no momentum to restart wage increases. This part of the article says it right: “””The underlying cause of the “labor shortage” is hiding in plain sight. It’s the long-term trend of funneling the gains from labor productivity not to the workforce, but to shareholders. As with any addiction, this process produces short-term euphoria, reflected in share prices, but long-term pathology, reflected in income inequality, poverty and social unrest.“””

crankylinuxuser 8y ago
Well, yeah. This is fully intended. It keeps the proletariat in tatters. With threats to food and lodging, they won't protest and won't rise up. It's a very effective means of control. Bread and circuses, people.
- sharemywin 8y ago
  I thought Bread and circuses refers to the opposite. give the people just enough bread and circuses to keep them from rising up.
  - CamTin 8y ago
    Right, the bread and circuses are the bit that keep us distracted from the important bit, which is our disenfranchisement as citizens. Now it takes the place of shareholders/bankers/pension fund managers seizing all the power in society by buying politicians, setting themselves up as monopolists (and, for labor, monopsonists), and generally being in charge of every decision that citizens (as consumers and producers) might conceivably make in a way adverse to those in power. The great thing about our system is that the ruling class even make money on the bread (farm subsidies, school lunch programs designed mainly as more farm subsidies rather than as a way to feed schoolkids healthy food, more farm subsidies) and the circus (monopolistic ISPs, cable companies, media holding companies, and content aggregators, now seemingly in the process of all merging into one by gobbling each other up) parts too!
  - Mikhail_Edoshin 8y ago
    As far as I remember it was more about the moral decline of the people who do not want anything besides bread and circuses :) Just checked Wikipedia: "People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses." (Juvenal).
- dang 8y ago
  Please don't post ideological rants to HN. We're looking for substantive comments here. That means comments that contain information rather than rhetoric. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
baxtr 8y ago
Which is somewhat great because if they don’t pay well startups can exploit opportunities that open up as a consequence. However, my experience lately from Germany is that large companies are becoming more and more popular for developers. This was also reflected in a recent HN discussion https://news.ycombinator.com/item?id=17286939 https://news.ycombinator.com/item?id=17286939
- m3rc 8y ago
  Haha, something that should theoretically help small players actually only helps huge corps? That's CRAZY. I bet that's never happened before.
- jimbofisher1 8y ago
  It seems like a very poor financial decision to turn down 300k from Google to make 150k + fairy dust money from a Startup. Even if the 300k is lower than what Google ought to be paying.
  - baxtr 8y ago
    Financially, I’d agree. But what about your lifetime?
    - jimbofisher1 8y ago
      Lifetime? Not sure what you mean. Given that the vast majority of Startups fail and any equity you were granted would be worthless and even those that do payout are usually just getting you to parity to people who were at a FAANG over the same time frame I fail to see how a Startup would benefit. Even Resume wise, recruiters won't care that you worked at a startup that had a $100M exit but they definitely will if you worked at Google for 5 years.
rohitb91 8y ago
If profits don't grow or profits don't reach or surpass expectations, board members get fired. If board members are threatened, management is threatened. If management is threatened, workers are threatened. Profits change by increasing revenue and/or decreasing costs. Wages are an obvious way of optimizing wages further.
mistermann 8y ago
> Nowadays there is no inflation If you ignore most people's largest expense: housing costs, the price increases of which are "adjusted" away in inflation calculations.
- guelo 8y ago
  That is incorrect. Here you can see that the US CPI-U includes shelter which is running at 3.5% inflation https://www.bls.gov/news.release/cpi.htm https://www.bls.gov/news.release/cpi.htm
  - mistermann 8y ago
    > That is incorrect. Maybe, show me your math proving that number is correct. I can't speak for the US, but in Canada the housing component of the CPI has utterly no connection to actual observed costs of owning or renting, at the national level as well as the municipal level. You don't have to take this as a fact (I can't really prove it if the government doesn't share their data or calculations, can I), but moreso something to think about in the formation of your world view.
    - nradov 8y ago
      Don't be lazy. The BLS publishes their methodology in detail. What specific part of it do you disagree with?
      - mistermann 8y ago
        "I can't speak for the US..."
      - mistermann 8y ago
        https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm https://www.bls.gov/cpi/factsheets/common-misconceptions-abo... "The CPI used to include the value of a house in calculating inflation and now they use an estimate of what each house would rent for -- doesn't this switch simply lower the official inflation rate?" "No. Until 1983, the CPI measure of homeowner cost was based largely on house prices. The long-recognized flaw of that approach was that owner-occupied housing combines both consumption and investment elements, and the CPI is designed to exclude investment items. The approach now used in the CPI, called rental equivalence, measures the value of shelter to owner-occupants as the amount they forgo by not renting out their homes. The rental equivalence approach is grounded in economic theory, receives broad support from academic economists and each of the prominent panels, and agencies that have reviewed the CPI, and is the most commonly used method by countries in the Organization for Economic Cooperation and Development (OECD). Critics often assume that the BLS adopted rental equivalence in order to lower the measured rate of inflation. It is certainly true that an index based on home prices would be more volatile, and might move differently from other CPI indexes over any given time period. However, when it was first introduced, rental equivalence actually increased the rate of change of the CPI shelter index, and in the long run there is no evidence that the CPI method yields lower inflation rates than some other alternatives. For example, according to the National Association of Realtors, between 1983 and 2007 the monthly principal and interest payment required to purchase a median-priced existing home in the United States rose by 79 percent, much less than the rental equivalence increase of 140 percent over that same period." Now, one can certainly make a reasoned argument that this is a reasonable change to tracking shelter costs in the CPI, but it is a fact that housing purchase prices are not included in CPI calculations for shelter, and it is also a fact that the majority of people choose to own their home, for very good reasons. https://tradingeconomics.com/united-states/home-ownership-rate https://tradingeconomics.com/united-states/home-ownership-ra... "Home Ownership Rate in the United States remained unchanged at 64.20 percent in the first quarter of 2018 from 64.20 percent in the fourth quarter of 2017. Home Ownership Rate in the United States averaged 65.24 percent from 1965 until 2018, reaching an all time high of 69.20 percent in the second quarter of 2004 and a record low of 62.90 percent in the second quarter of 1965." And again, I don't know about the US, but in Canada it is a little known fact that our government "just so happens" to choose their representative rental properties for CPI calculations such that the numbers they produce don't even remotely resemble the actual increase in renting costs. The fact of the matter is, in the current environment of skyrocketing housing costs in much of the Western world, the CPI does not reflect actual cost of living increases for the citizens whose tax dollars pay the salaries of the people printing the numbers, and for statistical agencies to dismiss this by simply pointing at some technical "reason" tucked away on a website (that almost no one knows about) is a failure of democracy.
snarf21 8y ago
This is absolutely correct however the one dichotomy is that we are also the collective shareholders (obviously not majority). People love seeing their 401K go up 15% annually year over year. That is only happening because of this funneling. Collectively we need to stop wanting it both ways. We want cheap goods but then complain about offshoring and outsourcing of labor. Look at dollar stores: Their boom happened almost immediately after Clinton re-opened trade with China. Wal-Mart went from "proudly made in the USA" to cheapest crap they can buy. It annoys me when some people talk about changing X but neglect to even try to think about what change that might cause for Y and Z.
- pjmorris 8y ago
  > we are also the collective shareholders (obviously not majority) It's that 'not the majority' thing that's the fly in the ointment. I owe this claim a link, but most shareholders are part of the wealthy and/or the professional classes, skewing stock gains toward a few, and away from the many. EDIT: Added link supporting claim. Per WP article, chart 'Stock ownership is heavily concentrated', top 20% of US households by wealth own 90% of stock, and even that's skewed heavily to the top. [0] https://www.washingtonpost.com/news/wonk/wp/2017/12/18/for-roughly-half-of-americans-the-stock-markets-record-highs-dont-help-at-all/?utm_term=.85c6383d91ed https://www.washingtonpost.com/news/wonk/wp/2017/12/18/for-r...
  - sdhgaiojfsa 8y ago
    Most shareholders (holders of the wealth represented by companies) are members of the wealthy class? :P You don't say. I'm of two minds on this. Wealth and income are not the same. You get wealth by not consuming all of your income, and instead by investing it. Of course, if you have just enough income to survive, then you cannot accumulate wealth. But most people (in the US) are not in that boat. One of the phenomena that continuously fascinates me are the differences in wealth accumulation between people in the same income brackets. Sometimes there are good reasons for it (e.g. medical issues), but my sense is that in the vast majority of cases, there is simply a difference between the elective consumption levels of different households. http://www.visualcapitalist.com/relationship-income-and-wealth/ http://www.visualcapitalist.com/relationship-income-and-weal... For example, I have a sibling whose wealth is in the 98th percentile for his age bracket. However, his income has never been above the 60th percentile, and has often been lower. This is an example of how a certain attitude about consumption can have a strong impact on wealth accumulation. I definitely think that the rich (broadly defined -- both via high income or high wealth) need to be contributing more back to society than we are. But, as a saver, I'm biased towards targeting high-income more than high-wealth.
candiodari 8y ago
But people have been working for a decade and a half to open up global migration of workers, as well as allowing China and others to export whatever it wants at any price (and several other "details", like IP theft of course). When 2 markets merge, prices converge. What are engineer wages in China, the Phillipines, India, ... ? Oh wait ... Second: with opening up markets, ... if there is one well-known fact in economics it's that when money can move over a wider area it concentrates into fewer hands. The bigger the markets operated, the fewer rich there are. And therefore, the more "ultra" the ultra-rich are. The shareholder "wealth transfer" seems to me to be this effect playing out. That explains some of it. And that's with the minimal opening up of borders that has occurred over the past 2 decades (ie. mostly the EU and America, and in terms of population it's not that much). That's a bit of a question I have for globalists : global average wage is $2000. Not per month, not net after tax. Not actual dollars. That's yearly, before tax, PPP dollars, not actual dollars. (PPP dollars means it's $2000 worth of, say, food (say strawberries or big macs), but it's actually only $400 worth of things like Gold or perhaps more relevant, iPads/Phones, that have global prices) If one opens up global labor migration, that's the average wage that will be seen worldwide, and that's the expected result. Note: I am NOT saying that letting 1% of people migrate will drop wages like a stone immediately. But it will move in that direction. Nor am I saying that this has anything to do with work attitudes or ... The "big secrets" about the economy that must be denied because they are thoroughly at odds with policy that we want to pursue: 1) there is a global oversupply of labor. You could pick ~16% of humans worldwide, disappear everyone else, and have almost zero effect on the economy. That means wages everywhere (even in places with dismal wages like Bangladesh) are too high in market terms. And I would like to point out that at least 2/3rds of those 16% work for governments, directly or indirectly, and "if everyone just behaved correctly" we also wouldn't need them. (and note: this cannot be fixed with minimum wage laws for obvious reasons) 2) The global economy is demand-limited. Producing more goods would NOT result in more sales. We have "everything we want" (in economic terms, that means everything you're willing to work extra for). This means, loosely stated, that the above problem does not just apply to workers, but to companies in general as well.
- rorykoehler 8y ago
  Engineers wages in China often surpass even SV wages. China is not cheap anymore if you live in Beijing or Shanghai for example.
neilwilson 8y ago
It's a little more than that. It is the financialisation of the economy. If you stop paying workers, then they don't have the money to buy your output and you go out of business. That's the basic philosophy behind Ford's approach - high wages = high sales. However if you deregulate banks then you can replace wage growth with credit growth - increased private debt - which keeps the plates turning. You don't increase wages, you increase the debt people put themselves in overall - student debt, mortgage debt, credit cards. That has the advantage of putting a huge monkey on people's back forcing them to work ever harder in a system that structurally has fewer jobs than people that want them. Then when that falls apart, you plead with the government to plough huge amounts of public money into the banks, so they can restart the credit engine. The cycle that lead to 2008 will repeat again with ever lower interest rate peaks in each cycle.

jdhn 8y ago

"That money won’t disappear, of course—it will go into the pockets of workers, and then find its way back into the coffers of corporate America via higher sales." Do people really go out and spend money immediately if they get raises? Personally, if I get a raise, I may treat myself to something nice, but then I immediately go back to my old spending habits so I have more money to save.

Talyen42 8y ago
The average person spends almost exactly as much as they make as income rises. It's a hedonic treadmill https://en.wikipedia.org/wiki/Hedonic_treadmill https://en.wikipedia.org/wiki/Hedonic_treadmill
- bungie4 8y ago
  Thanks HN, I didn't realize this phenomena was named. Learn something new everyday. I always just said, expenses rises to meet income, + 25%.
  - HenryBemis 8y ago
    ..and the “Rat race” I mentioned on a previous comment above is that exactly perpetual effort to cover that +25% as you very correctly stated of “more expensive lifestyle” that we impose to ourselves.
    - matte_black 8y ago
      As a counter argument, never forget you can be a responsible saver one day, only to be dead and buried the next. If you want to guarantee an expensive lifestyle, it’s best to obtain it as immediately as possible.
      - aplummer 8y ago
        Thank god somebody said it. We are in the golden age of cheap travel and leisure, perhaps the golden age of all ages (and certainly of all past). People spend your easy money and enjoy youth IMO.

saw-lau 8y ago

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ge0rg 8y ago
You might want to indicate that this is a quote from the web site, not a statement of yours. I'd suggest to edit it and to add asterisks around the text to make it render in italics.
- saw-lau 8y ago
  Thanks for the advice!
pmontra 8y ago
Click web at the top of this page, ask your browser to show the desktop version if on mobile, show the cached version of the page.
- saw-lau 8y ago
  Was trying to look at it on the desktop...
CapacitorSet 8y ago
That's a really weak commitment, considering that they had 2 years to comply with GDPR.
- pmontra 8y ago
  Maybe they don't care about European readers. I'm European but they are from Los Angeles so I don't complain. Would I comply with a US law if all my customers were in the EU? To be fair, they're probably blocking also US readers occasionally or permanently in Europe. They could be annoyed by that.

Forge36 8y ago

I wonder to what degree company size and current employee wage plays a role in this (in the U.S. the pressure to not share salary with coworkers tried a wrench in this theory). Given a shortage, raising starting wages would encourage people to change jobs, however employees (recently hired or existing) before the increase would also want that new increased rate. Combined with companies hiring thousands (think Walmart) a wage increase becomes multiple millions per year (that's a lot harder to sell to a board)

madengr 8y ago

I’d like to earn more, but I also want the market to keep on going up for my retirement investments. At mid career, my 401k performance over the next 20 years is now market driven, rather than by contributions over the next 20. So at this point, I’d rather have better investment returns than a higher salary.

bmcusick 8y ago
Everyone does. Hell, I do too. But it's not realistic to expect this music to keep playing. The ratio of workers to retirees keeps getting worse, from 10:1 in the 1950s to 3:1 today, and falling. The economy can grow over time, but on any given day it's a fixed pie, and it has to be divided among workers (who are doing the labor now) and retirees (who accumulated the capital in previous decades that today's labor uses to magnify their productivity). Everyone is feeling squeezed as individuals because of falling incomes, but the real culprit is a falling ratio of income-makers (labor) to income-takers (capital, whether retired individuals or just wealthy). This cannot last. The ratio of labor income to capital income will eventually be restored (hopefully in a peaceful manner, but we can't rule out alternatives). The reasonable fix will be raising retirement ages, but good luck getting a sufficient raise there to restore a 10:1 ratio.
nimish 8y ago
If you read the article you would know that labor wage increases are laughably low compared to share buybacks. Raising salaries 10% would barely even touch cash returns to shareholders
- madengr 8y ago
  You conveniently ignored the 8% drop in AA stock. Doesn’t matter if that was due to dividend reduction or spooking investors, it’s still a big drop.
  - nimish 8y ago
    And Wal-mart shares rose by 8% in the year after they announced wage increases. The broader issue is that shareholders have deluded themselves into thinking that they are the end-all-be-all of a company when in fact their contribution is limited.

sametmax 8y ago

And if you think it's bad, it's even worse in Europe. Taking the French example: I'm an freelancer, but I used to have a contract with an American company. They gave me 3x the salary most of my French colleagues would get, while keeping the exact same social advantages (they paid me through a French branch). However, to them, the salary was twice lower than what they would have paid for the same guy in the Valley. Now as a freelancer, I move a lot from companies to companies, and I hear the same complaint over and over: we can't find good devs. But when I look at the job offers they publish, it's full of buzzwords and cool attitude, yet the pay is not remotely matching the skills they are hiring for. You want somebody speaking 2 tongues, coding expertly in 3 languages (e.g: server lang + js + css), knowing a bit of sysadmin, ergonomics, architectural design, data base, and capable of understanding your undocumented stack du jour + infra. No, you can't pay that $2500 a month.

Zeebrommer 8y ago
Can you read this article? I'm in Europe and run into a message saying "Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and committed to looking at options that support our full range of digital offerings to the EU market. We continue to identify technical compliance solutions that will provide all readers with our award-winning journalism." with the LA times since the GDPA.
- dijit 8y ago
  I have the same message in Sweden, shame they can't find to operate business without abusing user data. Still there's an archive.is link listed here: https://news.ycombinator.com/item?id=17506215 https://news.ycombinator.com/item?id=17506215
  - samsolomon 8y ago
    Would you pay for an LA Times subscription? Do you know anybody that would? The newspaper business is struggling as is. Every time a publication is blocked in Europe people complain. Ads were the answer for most online publications, but showing targeted ads now pose a legal risk. I don't know about their business ops, but I'd suspect they've done the math and decided it isn't worth the effort to change their platform so people can read for free in Europe.

tmaly 8y ago

Wages are not the only issue here. If you look at inflation, the price of food and energy has increased massively since 1999. I know economists like to exclude these figures in their computation of inflation, but they sure do put a dent in the regular workers wallet. I can remember paying 99 cents a gallon for fuel in the late 90's. Now its $3.49 a gallon. I can think back even farther to the 1980s when you could get a meal for $3 at a fast food chain. Now your shelling out $8 - $10 for the same meal.

derptron 8y ago
What was the average fuel economy in the late 90's though?

le-mark 8y ago

The phrase "the harvest" is used at least two times in this piece in a similar way: But it didn’t take long for CEOs to divine the wisdom of a viewpoint that hit them where they lived, in their wallets. The harvest has been decades of increasing income and wealth inequality. I find it to be very odd, the author is Pulitzer winner, so there's that I guess.

creaghpatr 8y ago

Love it when people compile montages of article headlines that circulate every year to encourage the importation of more cheap labor. Here's a recent favorite byline: "America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying [their workers more]. https://www.cnbc.com/2018/07/05/the-us-labor-shortage-is-reaching-a-critical-point.html https://www.cnbc.com/2018/07/05/the-us-labor-shortage-is-rea... Epidemic proportions!

SketchySeaBeast 8y ago
>> and it could be employers who end up paying [their workers more] What a bizarre statement. Who else would pay them more? And why is that framed like a bad thing?
adventured 8y ago
You get those incredible dueling headlines from the same media outlets of how wages are not rising fast enough, and how we need to have open borders allowing in unlimited low skill, low wage labor. Who will pick the strawberries if we don't import ten million low skill laborers in the next decade? The Koch brothers must have their cheap labor or their industrial profits will suffer. Wages must be carefully constrained or inflation might tick up a bit after a decade of the Fed proclaiming they desperately want more inflation (of course what they actually mean by inflation risk is that business profit margins will take a hit and prices might climb some - if the businesses have pricing power - due to the bottom half of workers earning more). And that income stagnation at the median? It's amazing what happens when the middle class moves up [1], your natural population growth drops toward zero, but you import tens of millions of low skill, cheap laborers over 30-40 years: your median doesn't move up because you're treading water by offsetting everyone that moved up. [1] https://i.imgur.com/IOgZLDc.png https://i.imgur.com/IOgZLDc.png

Waterluvian 8y ago

I worked for a Canadian company that's absolutely hemmoraging talent because they refuse to pay well. I'm now paid about 50% more to work remotely for a US company in an environment that is far far more fitting of my life goals of being with my kids as they grow up. It's beyond bizarre to watch them continue to refuse to pay anyone properly despite their imminent collapse.

maxerickson 8y ago
Are they selling into a market that pays enough for them to raise wages? I'm not defending them there, just wondering if the imminent part of the collapse might be external.
- Waterluvian 8y ago
  That's completely fair. They're struggling in a lot of ways. They've always insisted that they're simply not underpaying for any external reason and claim that's what everyone is worth. But maybe the truth is that their model can't afford to pay engineers properly. Which is a pretty bad model for a tech startup. Because then all your talent leaves, which all but dooms you.
eloff 8y ago
It's bizarre. Even Amazon Seattle pays 2x the salaries of Amazon Vancouver, even although they are separated by only 200km and are the same company! I ask every Canadian developer I meet, why are you still here? I like living in Canada, so I work remotely even although I don't really like remote work. Instant 70% raise.
- Waterluvian 8y ago
  Yeah I've had a number of jobs I turned down because I simply don't want to live in the US. There's just something about the calm nature of where I live that's worth a lot to me.
  - coryfklein 8y ago

kinkstone 8y ago

"....As with any addiction, this process produces short-term euphoria, reflected in share prices, but long-term pathology, reflected in income inequality, poverty and social unrest." Addiction is right, but it's not limited to wages in a corporate environment. The same addiction in our overly-concentrated power structure is driving the decisions to underfund schools, infrastructure, healthcare, etc. The same "me-first" philosophy produced the recent tax law that will add billions to the deficit in the coming years. So frustrating.

Markoff 8y ago

yeah i work currently as contractor around 30 hours per month from home for Chinese company without any commuting anytime i want to cover expenses of my family on the other hand i could work 160-170 hours per month for local EU employer and get like double salary (a bit more with bigger retirement savings and paid vacation) somehow i am not rushing to get stable job and get employed locally to work five times more plus wasted time on commuting (so make it six times more hours wasted on work) to earn double salary

scarecrowbob 8y ago
Same-ish, but I'm in rural Texas. I work 30 hours a week for a US firm, working remote and finishing up raising my kid. I could probably multiply my income by 1.5, but I'd have to work 15 hours a week more and come into an office. I've had several interviews with people but no one seems to understand how much they would actually have to pay me to come into an office because they are used to discounting the time spent commuting as if weren't time they should pay for; they think I am crazy for calculating that as time for which I should be compensated.
- Markoff 8y ago
  similar, though i said 30 hours per month, not per week also i have two small children, nobody will pay me for priceless time away from them now they are both under 3, i feel sad for people seeing their children in evenings or just weekends
  - scarecrowbob 8y ago
    Yeah, I caught that... I haven't figured out how to get the hours down to that, but I am working on it. Mostly I just end up doing stuff like visiting my parents while I'm at "work". I have a 17 year old and basically have ended up remote working just to be around him and his sister. For me, that's definitely a thing that I feel like was a great deal for both our lives. Also, now I'm just turning 40 and he's graduating high school, I've started traveling and working that that's also quite fulfilling. I feel sad for those folks to- it's not a judgment thing, I just know how much I got from being around my kids and how much I personally would have lost out on.

dnomad 8y ago

Low wages are not a problem per se. In the situation of low wages what is supposed to happen is the best workers either (a) move to competitors or (b) just strike out on their own and start their own business. If businesses are colluding on low wages (and it's very clear they are) then eventually we should see people starting new businesses. This dynamic by the way is absolutely clear in East Asia and China, in particular. Wages are rising fast and the best workers aren't afraid to bounce away for higher salary or, if it comes down to it, to buckle down and strike out on their own. But this dynamic has been completely lost in the US. Even as the economy "improves" we are seeing labor market fluidity has collapsed the US [1]. This has been going on since the 80s. Entrepeneurship and new firm formation have been declining for the last 40 years [2]. The end result: lots of people stuck in jobs they don't like and businesses, knowing full well that their workers are stuck and won't go, offer essentially zero wage increases. [1] https://www.federalreserve.gov/econresdata/feds/2016/files/2016015pap.pdf https://www.federalreserve.gov/econresdata/feds/2016/files/2... [2] https://www.nytimes.com/2017/09/20/business/economy/startup-business.html https://www.nytimes.com/2017/09/20/business/economy/startup-...

wonderwonder 8y ago

Why would they pay more, if they just hold out long enough, someone will take the job. If enough companies do this, a new wage rate is established. We are in a strange time with globalism, companies are in a race to the bottom in regards to employee pay. Employees are losing negotiating leverage as their employer can simply turn to emerging markets to hire talent for half the price. Granted that talent may not be as good but they also save on benefits. There is also a critical level where if enough companies are paying low wages, the employees cant just threaten to go somewhere else and make more, there is no where else. So they have to eat and take the lower salary job, setting a new lower median wage for the market place. Meanwhile the cost of basic goods continues to rise. Communism is nonsense, but Marxism has a very important point in that the primary driver of world power is not countries but classes, those that hold the means of production and money against everyone else.

fifnir 8y ago

Academia: Oh you have a degree, a masters, a PHD, knowledge in super-niche molecular technology techniques, speak 3 languages and can code in a couple more... Best I can do is 1200 per month

jopsen 8y ago
Move north, maybe?
- fifnir 8y ago
  In the north you get paid more but I think your buying power is pretty much the same. From a quick google, a postdoc can expect something like 2500per month in sweeden, but how much do you need to spend on rent and food etc there? In any case, I did move some 7 years ago, but the whole thing is depressing, you know? I can give my work to some capitalist megaCorp and get paid nicely, or to the public and get paid shit...

saturdaysaint 8y ago

I wonder how other aspects of compensation like paid vacation time play into this. I've fielded interest from a lot of recruiters and interested companies. Moderate pay increases seem easily available - the sticking point is that they will all fight tooth and nail for anything beyond the bare minimum of vacation time. I'm in my late 30's with kids, and my wife is a doctor. There really isn't a realistic pay raise that is worth losing weeks with my family every year. I wonder how many other people in prime earnings ages with families are running into this resistance from HR departments - it feels like a successful anti-competitive strategy to tamp down on turnover and wages.

lewis500 8y ago

I keep reading stories about how it's a puzzle that more jobs are being created but wages aren't going up. Part of it seems to be this new ingenuity at finding marginal workers and getting them to take jobs. Paul Krugman has a theory that the recession has made companies averse to raising wages, because it's hard to claw wage gains back if there's a recession. So instead they are offering bonuses, because if a recession hits you can just say "we don't have money for bonuses this year" which is a lot easier than saying "everybody's salary is going down." I'd say, while the cause (recession) is right, the companies are doing even more than switching to bonuses: it's also aggressive recruiting, allowing remote work, making workplaces cool, inflating the job's prestige, etc.

at-fates-hands 8y ago

So then, the basic premise here is: Employers: "We can't find good devs/workers!" Devs/Workers: "Well, you don't pay enough!" My advice to employers is what a lot of companies started doing when there was a gold rush of developers and people were scarce. Find a few average devs or newbies with little or no coding experience, train them into your "system" and then work to promote them up into senior positions and give them a reason to stick around. My advice to devs is get a role at a company, get into the habit of being able to code on a daily basis, grow your skills, then jump ship, or angle your skills for an increase in pay. The important part is coding every day and getting better at your craft. Sometimes getting paid less and acquiring skills is more important for the long run than simply turning offers down because you think it's not a good salary or hourly rate.

commandlinefan 8y ago
> then jump ship But be careful... I did this back in the late 90's; I changed jobs four times in four years, getting a 25-30% pay increase each time. Then one day I tried to do it again, and they told me up front, "we're not interested in hiring you because you change jobs too often". Although I eventually did find something and have kept each job I've had since for at least 3 years, I'm pretty sure my "shady job hopping past" cost me a job opportunity just a few years ago.
- logfromblammo 8y ago
  Job-hopping is no sin when you can get a 25% pay increase whenever you do it, and companies will only give their retained employees 2.5% raises (while cutting their benefits by 5%). Job-hopping is no sin when you are an "at will" employee with no contract. Some companies think nothing of firing 10% of their employees every year, and replacing them with fresh faces. Is that not the same thing from the other side of the table? The company who rejects you for job-hopping is explicitly rejecting your self-agency and your right to continually re-evaluate your business relationships, in exactly the same way that companies do when they fire bad employees. You fire bad employers. It is no different. The relationship is work for pay. If they want you to stay, they have to ensure that relationship stays mutually beneficial every week that you work for them. No, don't be careful. If there is no contract specifying otherwise, you owe your employer nothing next week, and they will owe you your pay for this week. That is all. Corporate loyalty is dead, and the corporate employers killed it. It is not our fault that the harvest they are now reaping is bitter in their mouths. If you are offered higher pay somewhere else, start there next Monday, and tell your current employer on Friday that you won't be back next week. We have all done it in this industry. 25% more is too good to pass up, and they know it. Let them be the ones to start offering contracts with severances and notice periods and guaranteed raises and bonuses. That company who won't hire job-hoppers will find that word gets around, and qualified people will simply stop sending their resumes and entertaining interview requests.

commandlinefan 8y ago

I'm not sure the premise of the title - that employers will do almost anything (or anything at all) to find or retain workers - is accurate. Setting aside pay - will they offer livable working conditions, or will they cram everybody elbow to elbow in a noisy airplane hangar with no dividers like cattle? I don't see that any employers, anywhere, are doing anything to find good employees, paying more being just one of the things they're not doing.

whack 8y ago

Expecting public companies to do anything except optimize for shareholder value, is pure folly. We can debate morality all day, but there's a more practical reason for this: shareholders hold all the power over management. Regardless of how unhappy you as a customer/employee are, you do not have the direct power to fire the directors/executives. You only have the indirect power of pressuring the shareholders, and hoping they will pass it along. Hence why CEOs and Board of Directors will optimize for shareholders interests above customers/employees/society. Because if they don't, they will get fired and get replaced with someone else who does. This is textbook Evolution and Natural Selection. If we aren't happy with the way corporations are paying their employees, the solution has to come from outside the corporations. Demand that your government increase the minimum wage, increase the capital gains tax rates, raise tax rates for the 0.1%, and use the proceeds to fund basic income or a better social safety net. he private sector does a great job of generating wealth, but don't ever expect it to distribute it fairly.

scroot 8y ago
Time to also reconsider different kinds of corporations, specifically those that are wholly owned and operated by the people who work for them.
- tjr225 8y ago
  It is a pleasure to have the opportunity to work for one.
  - scroot 8y ago
    Do you? If so, which?
- jimbofisher1 8y ago
  Coops, I'm not familiar with any in the IT space, care to share?
  - scroot 8y ago

santiagobasulto 8y ago

https://i.imgflip.com/2dswyy.jpg https://i.imgflip.com/2dswyy.jpg

gwbas1c 8y ago

I remember working for a startup a few years back. When I joined it was kind of "scrappy," and I really couldn't negotiate for market rate. It didn't matter, though. I loved the job, and really wanted the early-stage startup experience. A year later we were in a nicer office, and definitely not "scrappy." We interviewed a lot of candidates, and when we made an offer, it was always rejected. Why? We were too far below market rate. At the time, I still loved the job. (It was also a very short commute by bike.) Another year later (two years after I started,) we were acquired by a large, and very profitable company. People started demanding market rate or leaving. The point is this: People work to get paid. Crumbs work for a short period of time, but at a certain point, people's lives move on. That's when employees jump ship because they need the extra $20-50,000 / year. Many people will choose better working conditions over the highest salary possible, but the difference should be very, very minor. No one's making a lifestyle change because your office is cooler than the one down the street.

habaryu 8y ago

At the end of the article, there's a link to a Cardiff Garcia's post showing how the workers shortage headlines are repeated over and over. https://threader.app/thread/1014944737978175488 https://threader.app/thread/1014944737978175488 It'd be funny to change some of them and show the problem as being caused by the companies. Instead of "Great job openings, no candidates" it could be "Great skilled workforce, no employers". https://money.cnn.com/2009/11/03/news/economy/jobs_sit_open/index.htm?postver https://money.cnn.com/2009/11/03/news/economy/jobs_sit_open/...

kev009 8y ago

The tech industry is unwell, in our case despite abundant cashflow it's based in the completely irrational. Your salary would be a full 10-20% higher with average turnover numbers if it weren't wasted on modern tech recruiting practices. And your company would quickly have less than average turnover number to boot. You'd get organic interest, and would properly pay attention to employee and manager referral. Hiring practices are almost entirely cargo cult, and much more value for companies is being destroyed in all these terrible HR practices that have been latched on to. To me it appears like empire building and a complete lack of understanding in how and who works.

jsoc815 8y ago

Yes, many employers have deflationary expectations in an inflationary environment. The most difficult part about disabusing them of this notion is that there are still too many current and potential employees who are all too willing to encourage this. That's why I implore people to 1) know the value of their labor; 2) do the math concerning their (long-term) cost of living. Lots of folks seem to think that they can take a pay hit here or there just to get a foot in the door or tide themselves over, not understanding that they generally setting the bar for their future pay 1) because many (at least US) employers will ask for salary history; and 2) even if they don't, the information is probably available via a data broker.

sp332 8y ago

That makes it even more distressing for workers who can't find a job. Apparently employers won't hire disabled employees even if they will work for less money. https://twitter.com/ForgetAmnesia/status/1016770557709307904 https://twitter.com/ForgetAmnesia/status/1016770557709307904

hamilyon2 8y ago

Well, I guess, this may be good. If a lot of dollars seek few resources, and resources pool does not increase much, you get unbounded price increase. Which is not good. Developer have to do something productive for economy. Their wages should be bound to value they produce. If they are consistently paid more then they are producing, whole sector is heading into collapse. In healthy job market, job ads are going to attract employee with salary based on value that employee is going to produce. Failure to attract her does not mean someone is irrational or wages are low. It just means there is a lot of low-value work for developers in this world. Someone will notice that and maybe innovate those jobs away or something.

bluGill 8y ago
Replace Developer with maid in your post and read it again. I don't have a maid, instead I clean my own house, and drive my own car. My understanding is in India people with half my income would have maids to do those tasks. However in my country the value a maid produces isn't as much as their value and so I don't pay one. I know what a maid would cost (some advertise in my local newspaper), and they are not worth it. Same with developers. If the wages go too high some things we could automate will no longer be automated.

Bromskloss 8y ago

Is it argued that the trade-off between getting good people and keeping costs down is poorly made? (Due to GDPR compliance, I can't read the article.)

exabrial 8y ago

Quit rewarding these companies but staying at your job. No one gets the golden rolex anymore and there's no pension. The advice of 'find a good company and stick with it' no longer applies.

graeme 8y ago

I've been thinking about this. Let's say a company has 1000 employees at $50,000 per year. They were able to find enough workers at that rate. Now let's say they need 100 extra workers. They'd expect their labour costs to go up 10%. But, it turns out there isn't a supply of 100 workers at $50,000. To pull in extra workers, they'd need to offer $60,000. So far, so good. Extra labour costs are only $6,000,000, and only $1,000,000 are from higher wages. Prior total was $50,000,000. But, you can't just pay the old workers $50,000. Humans don't work like that. You can't say "you were happy before, but these new people needed more money, so they get more" Instead, you pay everyone $60,000. So your new labour costs are $66,000,000. That's a 32% increase in wage costs for a 10% increase in labour. Is there a name for this? And does this explain why companies avoid raising wages when they want a higher number of workers?

ihsw2 8y ago
I'm not sure of an exact name for that but what you're describing can be considered the theory of marginal productivity[1]. Your argument that the 10% cost in labor (to hire those 100 extra workers) is where the additional cost ends is a common logical fallacy -- those 100 extra workers will not be operating at 100% efficiency from the get-go. They will need to be trained and there will be a ramp-up period, and up until then they will likely have a negative return on investment. What this means is that the value derived from these new employees will be net-negative for a period of time. One could say that ~10-30% of that $6M in new labor costs for the next 12 months will not be recovered. Your theoretical scenario could result in: * current employees departing (taking institutional knowledge with them, decreasing the efficiency of your organization) * current employees using their hours at work helping ramp up their new co-workers (decreasing the efficiency of your organization) * new employees taking on tasks they're not yet trained for (decreasing the efficiency of your organization) Furthermore, some new employees will not stick around for multiple reasons (eg: family events like a spouse moving to another city, being unqualified but passing the interview process, etc), and therefore the significant investment in them will be gone for good. Now, that said, is it better to give everybody a 10%? Of course not, but only because everybody is not equal. Raises should be handed out based on competence-based metrics (be it qualitative reports from co-workers and managers or self-reported quantitative data pertaining to their individual impact). Real bottom-line pushers would even qualify for 20% raises. [1] https://en.wikipedia.org/wiki/Marginal_revenue_productivity_theory_of_wages https://en.wikipedia.org/wiki/Marginal_revenue_productivity_...

ggg9990 8y ago

This makes sense. It’s very hard to 1) pay new hires more than existing employees, or 2) ever reduce anyone’s salary. So raising salaries to hire people means raising everyone’s salary in the company, permanently. Not a good idea if your employment needs may be the temporary result of a bull economy.

tweedledee 8y ago

Labor ‘shortages’ are simply an excuse to import cheap labor. There exist talent that will take a discount on pay for the fringe benefit of immigrating. This in effect is a community subsidy to the company. This is one reason why lobbying is a hugely profitable enterprise. Eventually the community becomes too taxed and social problems occur and we get populist uprisings. I consider this both an unfortunate and an entirely predictable outcome.

mnm1 8y ago

You have to be dumb to believe the employers and their lobbying industry that there is a shortage. By definition, there cannot be a shortage. This is basic economics 101. Workers exist and they want to work. If business owners won't pay them, that's not a shortage of workers, that's a shortage of competent business owners. In other words, these business owners are not competent enough to run their own business. I hope all of them go out of business because of that. What a bunch of inept, greedy scumbags. Instead they go on the internet and other places and cry about shortages like babies. These people have no human decency at all. They will do anything for their greed. I wish the masses weren't so dumb to fall for this kind of stupidity. This particular article is rather refreshing as it cuts through some of the bullshit. Here's some ideas for these incompetent business owners of how to get and retain employees: * higher salaries * work from home * 25 - 35 days vacation to start, increasing every year * guaranteed 2-8% raise to compensate for inflation every year * bonuses * Fridays off in the summer I could go on and on and on but it's stubbornness that makes these business owners so greedy, not the lack of good ideas in how to hire. I hope the market turns against them and they go bankrupt.

RickJWagner 8y ago

It's always best to be the company owner. If you're in a position that allows it, save what you can and invest it in the market. Buffet, Dalio, etc. etc. have been preaching this for decades.

known 8y ago

So job hopping for better salary is not unethical;

amai 8y ago

Maybe software developers should create a union or something like that? Maybe the fact that unions have been destroyed since the 1970s has something to do with the wages not increasing that much anymore?