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> Statistically, you’re probably not a special snowflake. Everyone thinks that they are and deserve way above what the local market is paying. You probably don’

by geofft 8y ago

> Statistically, you’re probably not a special snowflake. Everyone thinks that they are and deserve way above what the local market is paying. You probably don’t. It's certainly possible that everyone deserves (or more precisely, is able to negotiate) a salary much higher than they have, but social pressures and norms and the fact that potential employees have much more to lose than potential employers over a single negotiation failing means that market value is much lower than it should be. The efficient market hypothesis, if it is even true, is only true in liquid markets with free flow of information. Hiring is neither.

scarface74 8y ago
The efficient market hypothesis, if it is even true, is only true in liquid markets with free flow of information. Hiring is neither. My local market, has been very liquid for the past 20 years, if you have the right skillset. I’ve been able to find a job within two or three weeks each time that I was looking usually with two or three offers. It’s not a free flow of information but it is out there. I talk to recruiters and former coworkers all of the time to compare salaries. From the market perspective, it’s because I haven’t been asking more than the median based on my skillset during the last 10 years. From my perspective, I’ve been prioritizing learning skills and building a resume over maximizing wages. I can’t both ask a company to hire me knowing that I’m barely qualified and ask for the highest part of the range. The second issue is a collective action issue. There are plenty of qualified “full stack developers” who can make yet another B2B Software as a service CRUD app. You can’t negotiate too far over your local market rates or there are other developers who are “good enough” who will take the job. I’m able to slowly get on the right side of the bell curve by being a “enterprise cloud architect” (yeah I die a little bit everytime I say that). My next step is a “consultant”.
- pmiller2 8y ago
  > I can’t both ask a company to hire me knowing that I’m barely qualified and ask for the highest part of the range. If you know what the range even is, you’re ahead of the game.
  - scarface74 8y ago
    That’s where recruiters come in. They know the range and you can ask them before you even start the interview process. I once told a recruiter I would accept the offer from the hiring company if they offered slightly above the range - which was still below what I was offered as an “architect” for a company using a technology stack that I was good at, but was on the decline. They did the negotiating for me. Why would I waste my time interviewing before knowing the range? It’s not proper to ask the hiring company from the offset the salary range but it is okay to ask the recruiter.
    - dunpeal 8y ago
      > That’s where recruiters come in. They know the range and you can ask them before you even start the interview process. True, with the caveat that all benefits of (external) recruiters depend on the degree of alignment between your respective interests. For example, if you choose a recruiter who only works with positions up to $X, I guarantee the top of the range he will assess you is going to be... you guessed it, $X. Some recruiters also get paid more by some employers for some positions. So a recruiter may steer you towards a position that is inferior, including pay-wise, because he'll personally get paid more if you take it. This can end really bad for you, since some of the employers who pay recruiters the most are those with the highest turnover... which usually has its own good reasons. Always remember: recruiters ultimately get paid by the employers, not by you. The best strategy is to work with several external recruiters, and ideally also interview with some employers directly.
      - scarface74 8y ago
        True. When I’m looking for a job, I am working with 7 or 8 different companies most of the time. But if you already know your range. All the steering in the world is not going to convince you to take a lower paying job. My experience is that recruiters get paid a percentage of your first years salary from the company. They have an incentive to get you a higher wage, but like real estate agents, that incentive isn’t perfectly aligned. (http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...)
- geofft 8y ago
  You can find a job within two or three weeks, sure, but you're not switching jobs every two or three weeks. If there's a company that's willing to hire you for $10K more but doesn't have headcount until next quarter, you're not getting that $10K, and you'll typically go years before the next time you negotiate. (And if you jump ship after a quarter, your market value goes down because people start looking at your resume suspiciously; in exchange that company would have to offer significantly more than $10K to compensate you for that risk and encourage you to jump ship.) A liquid market typically doesn't have the restriction that after a trade, the asset stays off the market for years until the next trade. A liquid market typically has market makers, who buy whenever sellers are ready and sell whenever buyers are ready and make a little profit from the spread, and thereby ensure that the market itself serves as a mechanism for price discovery. There's no equivalent of that in the hiring market. Nobody will hire you now for $9K more in the expectation that in a quarter they can contract you out for $10K more. The hiring market does sort of compensate for this with raises, but - because everyone knows that there's a cost to switching jobs - raises don't have to match your current market value. They just have to get to your current market value minus the cost of switching jobs right now.
  - scarface74 8y ago
    I agree, even though I switched jobs 5 times in 10 years I had to have a story to tell - one company went out of business, one product was cancelled, one was a “change of direction and they didn’t want to be a software company”, but they did want me to finish a project and paid me well enough to lead it to completion. But now I am starting to get the job hopping stench about myself. But if you really want to stay liquid - contract. You don’t get the job hoppers stench about you if you do want to go full time later on.
  - dunpeal 8y ago
    Insightful comment overall, but I disagree with your implication that the formula for pay raises is generally "current market value minus the cost of switching jobs right now". First of all, what "cost of switching jobs" are you referring to? If I live in SF, "switching jobs" likely means getting off at a different BART station. Hell, I might be able to walk to my next job. I think the well-known fact that pay raises fail to keep up with market wages in tech - isn't some brilliantly efficient calculation like "current market value minus the cost of switching jobs right now" as you suggest. It's clearly not working very well, since job hopping in the valley is crazy high, and everyone knows that's done because of pay. To wit, the longer you work for the same company, the farther your market comp will drift away from you, and the only way to catch up with the runaway comp-train is to hop jobs. I think it's simply the traditional American 2-3% raise model clashing with a booming tech reality where your market wage will likely increase much higher. Plus, the traditional model itself never worked very well for well-performing employees: > It used to be that jumping ship meant landing a salary 10 percent to 20 percent higher than your previous one. While increases of that size aren’t as widespread as they used to be, switching jobs is still the most common path to the best pay raise. > If you stay at the same organization, your annual increases may be restricted by your current base salary because companies have a narrow percentage range within which they can boost your pay. https://www.investopedia.com/articles/personal-finance/090415/salary-secrets-what-considered-big-raise.asp https://www.investopedia.com/articles/personal-finance/09041... Simply stated: employers were never very efficient at raising comp for good performers. Even decades ago, in industries nowhere near the growth rate of current tech, top performers were much better off job-hopping. Tech just made it even more lucrative.

by geofft 8y ago

scarface74 8y ago

The efficient market hypothesis, if it is even true, is only true in liquid markets with free flow of information. Hiring is neither. My local market, has been very liquid for the past 20 years, if you have the right skillset. I’ve been able to find a job within two or three weeks each time that I was looking usually with two or three offers. It’s not a free flow of information but it is out there. I talk to recruiters and former coworkers all of the time to compare salaries. From the market perspective, it’s because I haven’t been asking more than the median based on my skillset during the last 10 years. From my perspective, I’ve been prioritizing learning skills and building a resume over maximizing wages. I can’t both ask a company to hire me knowing that I’m barely qualified and ask for the highest part of the range. The second issue is a collective action issue. There are plenty of qualified “full stack developers” who can make yet another B2B Software as a service CRUD app. You can’t negotiate too far over your local market rates or there are other developers who are “good enough” who will take the job. I’m able to slowly get on the right side of the bell curve by being a “enterprise cloud architect” (yeah I die a little bit everytime I say that). My next step is a “consultant”.

pmiller2 8y ago
> I can’t both ask a company to hire me knowing that I’m barely qualified and ask for the highest part of the range. If you know what the range even is, you’re ahead of the game.
- scarface74 8y ago
  That’s where recruiters come in. They know the range and you can ask them before you even start the interview process. I once told a recruiter I would accept the offer from the hiring company if they offered slightly above the range - which was still below what I was offered as an “architect” for a company using a technology stack that I was good at, but was on the decline. They did the negotiating for me. Why would I waste my time interviewing before knowing the range? It’s not proper to ask the hiring company from the offset the salary range but it is okay to ask the recruiter.
  - dunpeal 8y ago
    > That’s where recruiters come in. They know the range and you can ask them before you even start the interview process. True, with the caveat that all benefits of (external) recruiters depend on the degree of alignment between your respective interests. For example, if you choose a recruiter who only works with positions up to $X, I guarantee the top of the range he will assess you is going to be... you guessed it, $X. Some recruiters also get paid more by some employers for some positions. So a recruiter may steer you towards a position that is inferior, including pay-wise, because he'll personally get paid more if you take it. This can end really bad for you, since some of the employers who pay recruiters the most are those with the highest turnover... which usually has its own good reasons. Always remember: recruiters ultimately get paid by the employers, not by you. The best strategy is to work with several external recruiters, and ideally also interview with some employers directly.
    - scarface74 8y ago
      True. When I’m looking for a job, I am working with 7 or 8 different companies most of the time. But if you already know your range. All the steering in the world is not going to convince you to take a lower paying job. My experience is that recruiters get paid a percentage of your first years salary from the company. They have an incentive to get you a higher wage, but like real estate agents, that incentive isn’t perfectly aligned. (http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...)
geofft 8y ago
You can find a job within two or three weeks, sure, but you're not switching jobs every two or three weeks. If there's a company that's willing to hire you for $10K more but doesn't have headcount until next quarter, you're not getting that $10K, and you'll typically go years before the next time you negotiate. (And if you jump ship after a quarter, your market value goes down because people start looking at your resume suspiciously; in exchange that company would have to offer significantly more than $10K to compensate you for that risk and encourage you to jump ship.) A liquid market typically doesn't have the restriction that after a trade, the asset stays off the market for years until the next trade. A liquid market typically has market makers, who buy whenever sellers are ready and sell whenever buyers are ready and make a little profit from the spread, and thereby ensure that the market itself serves as a mechanism for price discovery. There's no equivalent of that in the hiring market. Nobody will hire you now for $9K more in the expectation that in a quarter they can contract you out for $10K more. The hiring market does sort of compensate for this with raises, but - because everyone knows that there's a cost to switching jobs - raises don't have to match your current market value. They just have to get to your current market value minus the cost of switching jobs right now.
- scarface74 8y ago
  I agree, even though I switched jobs 5 times in 10 years I had to have a story to tell - one company went out of business, one product was cancelled, one was a “change of direction and they didn’t want to be a software company”, but they did want me to finish a project and paid me well enough to lead it to completion. But now I am starting to get the job hopping stench about myself. But if you really want to stay liquid - contract. You don’t get the job hoppers stench about you if you do want to go full time later on.
- dunpeal 8y ago
  Insightful comment overall, but I disagree with your implication that the formula for pay raises is generally "current market value minus the cost of switching jobs right now". First of all, what "cost of switching jobs" are you referring to? If I live in SF, "switching jobs" likely means getting off at a different BART station. Hell, I might be able to walk to my next job. I think the well-known fact that pay raises fail to keep up with market wages in tech - isn't some brilliantly efficient calculation like "current market value minus the cost of switching jobs right now" as you suggest. It's clearly not working very well, since job hopping in the valley is crazy high, and everyone knows that's done because of pay. To wit, the longer you work for the same company, the farther your market comp will drift away from you, and the only way to catch up with the runaway comp-train is to hop jobs. I think it's simply the traditional American 2-3% raise model clashing with a booming tech reality where your market wage will likely increase much higher. Plus, the traditional model itself never worked very well for well-performing employees: > It used to be that jumping ship meant landing a salary 10 percent to 20 percent higher than your previous one. While increases of that size aren’t as widespread as they used to be, switching jobs is still the most common path to the best pay raise. > If you stay at the same organization, your annual increases may be restricted by your current base salary because companies have a narrow percentage range within which they can boost your pay. https://www.investopedia.com/articles/personal-finance/090415/salary-secrets-what-considered-big-raise.asp https://www.investopedia.com/articles/personal-finance/09041... Simply stated: employers were never very efficient at raising comp for good performers. Even decades ago, in industries nowhere near the growth rate of current tech, top performers were much better off job-hopping. Tech just made it even more lucrative.