5 ms·

> many (most) companies are grossly underpaying their engineers. No, that's simply unfair to the companies who don't have billions of dollars in free cash flow

by meritt 7y ago

> many (most) companies are grossly underpaying their engineers. No, that's simply unfair to the companies who don't have billions of dollars in free cash flow or effectively infinite amounts of VC money. The top firms have gotten themselves into an insane bidding war which has a side effect of creating an oligopoly on talent, as it's simply unrealistic to impossible for many firms to compete. Not to mention they apparently pay many people these sort of salaries to do basically nothing [1]: they've decided it's better to simply retain talent than risk them going to a competitor, regardless if they provide any value or not. That all said, as an employee in whole debacle, you should simply focus your interviews on firms willing to pay these levels and maximize your income while you can. [1] https://news.ycombinator.com/item?id=21961560 https://news.ycombinator.com/item?id=21961560

solveit 7y ago
Under/overpaying has nothing to do with how much any particular firm has and everything to do with what other companies are willing to pay. If there's a bidding war, then whatever that produces is the fair market rate.
- skybrian 7y ago
  Yes, it's the market rate but no, that doesn't mean it's necessarily a good buy; it's set by the most optimistic buyer. Buyer's remorse is sometimes a thing in auctions too.
  - sokoloff 7y ago
    I think of open (non-sealed bid) auctions as effectively discovering the price by the second most willing buyer, not the most willing buyer.
  - jiveturkey 7y ago
    > it's set by the most optimistic buyer. No, it's set by the least optimistic seller. That's the reason we have labor unions -- to stop those that otherwise would work for low wages and/or in deplorable conditions, from doing so. Thus undercutting those that "hold out" for fair wages and conditions. Think about it. If the entire graduating BSCS class of 2020 banded together and declared they would not work for less than $400k/yr starting, FAANG would simply have to pay that (they have the cash). It's because there's one dipshit willing to work for $250k TC that all the rest have to take that salary as well.
amznthrowaway5 7y ago
>> Not to mention they apparently pay many people these sort of salaries to do basically nothing [1]: they've decided it's better to simply retain talent than risk them going to a competitor, regardless if they provide any value or not. I don't think Google is purposely ok with some of their employees doing basically nothing. I've heard the theory that companies pay for some top talent who don't generate value just to prevent them from going to competitors, but is there any hard evidence for it?
- meritt 7y ago
  [1] https://www.networkworld.com/article/2920903/google-really-keeps-employees-on-the-bench-like-in-hbos-silicon-valley.html https://www.networkworld.com/article/2920903/google-really-k... [2] https://www.businessinsider.com/rest-and-vest-millionaire-engineers-who-barely-work-silicon-valley-2017-7 https://www.businessinsider.com/rest-and-vest-millionaire-en... [3] https://www.quora.com/Silicon-Valley-TV-series-Do-low-performing-Googlers-really-get-unassigned https://www.quora.com/Silicon-Valley-TV-series-Do-low-perfor... [4] https://money.cnn.com/2007/01/05/magazines/fortune/Search_and_enjoy.fortune/index2.htm https://money.cnn.com/2007/01/05/magazines/fortune/Search_an...
thatsenough 7y ago
> The top firms have gotten themselves into an insane bidding war. That may be true, but there's more to it than that. The first wave of successful IPOs (Facebook, Amazon, Google, Twitter, etc.) caused a spike in housing prices as employees purchased houses. On top of that, companies have added tens of thousands of new jobs, without proportional growth in the housing supply. So housing prices are now absurd, and these companies need to pay more so their employees can buy smallish houses on the peninsula at $1.5-$2.5M a piece and have a middle-class quality of life.
- cletus 7y ago
  Yeah I think this part is a stretch. Just look at Vancouver as a far more extreme example of how local property prices can be out of whack with wages. House prices are a function of wages (or, more accurately, have a floor set by wages if land is constrained) not the other way around. Also, the level of entitlement by a lot of such engineers I find to be borderline disgusting. Why do you think you're entitled to a $1.5m house at all let alone 3 years out of college? If you really want cheaper housing (as a function of income) just move to a lower income area. It's actually pretty simple. But the most objectionable part for me is not just how much of a non-problem this is but it completely ignores people with real problems, like, oh I don't know, the people who drive the shiny white buses who need to live 2+ hours away. Or those not in tech who have to do the same. Engineers are compensated well now because of the value they create for their employer, nothing more, nothing less.
  - thatsenough 7y ago
    > House prices are a function of wages (or, more accurately, have a floor set by wages if land is constrained) not the other way around. I guess if you state it as a fact, that makes it true? But if that’s the case, why would the company pay an engineer more when she moves from the Austin office to the NYC office? She has become more valuable to the company overnight? And the most valuable engineers just happen to live in the most expensive cities? Sorry, but salaries are impacted by cost of living. Because if they’re paying top talent too low relative to cost of living, those engineers will just move elsewhere, as you suggest. Yes, this puts a tremendous amount of pressure on the housing market, affecting everyone in the Bay Area. I’m not claiming this is good. Vancouver is a different situation entirely. > Why do you think you're entitled to a $1.5m house at all let alone 3 years out of college? This is not at all what I said. And most people I know here cannot afford a house 10+ years out of college, unless they’ve worked at a top-paying company all those years. Who is claiming they’re entitled to it? I’m saying companies are offering it to retain employees, because it’s in the companies’ best interest. > it completely ignores people with real problems, like, oh I don't know, the people who drive the shiny white buses who need to live 2+ hours away. And there are plenty of people less fortunate than the bus drivers. By your logic, if they don’t like it, they can just move somewhere cheaper. Maybe it’s just too late in the evening, but I’m not really seeing your point here.
stale2002 7y ago
> No, that's simply unfair to the companies who don't have billions of dollars in free cash flow or effectively infinite amounts of VC money. I mean.... so what? Why should I, as an engineer, care if some companies are suffering under the "unfairness" of high salaries? > which has a side effect of creating an oligopoly on talent It doesn't really make sense to use the work oligopoly, which has certain negative connotations, for a situation where companies are merely choosing to outbid others. I would only use the term oligopoly, if there is some sort of unfair barrier to entry, such as because of some government law that is hindering competition.
- meritt 7y ago
  > I mean.... so what? Why should I, as an engineer, care You shouldn't, you should always maximize your income. That wasn't my point. My point was the guy shouldn't interview at a 5-person bootstrapped startup and act bewildered when they cannot offer Facebook level comp packages. > oligopoly It's absolutely an oligopoly. There are a small number of firms who possess the capital to compete on salary and that creates a extremely high barrier to entry. It's not a bad thing, it's just the reality of the situation. There's plenty of options though, e.g. don't decide your HQ must be in San Francisco.
  - afthonos 7y ago
    I think the technical term would be “oligopsony”.
walshemj 7y ago
"Unfair" sorry that's not how capitalism works
bradleyjg 7y ago
> No, that's simply unfair to the companies Maybe that's true of Walmart and GM, but your random A/B round startup? I don't think it is unfair at all. They could offer legitimate equity of they choose not to. Sure, it would be still be a gamble but at least it would be French roulette and not the West Virginia lottery.

by meritt 7y ago

solveit 7y ago

Under/overpaying has nothing to do with how much any particular firm has and everything to do with what other companies are willing to pay. If there's a bidding war, then whatever that produces is the fair market rate.

skybrian 7y ago
Yes, it's the market rate but no, that doesn't mean it's necessarily a good buy; it's set by the most optimistic buyer. Buyer's remorse is sometimes a thing in auctions too.
- sokoloff 7y ago
  I think of open (non-sealed bid) auctions as effectively discovering the price by the second most willing buyer, not the most willing buyer.
- jiveturkey 7y ago
  > it's set by the most optimistic buyer. No, it's set by the least optimistic seller. That's the reason we have labor unions -- to stop those that otherwise would work for low wages and/or in deplorable conditions, from doing so. Thus undercutting those that "hold out" for fair wages and conditions. Think about it. If the entire graduating BSCS class of 2020 banded together and declared they would not work for less than $400k/yr starting, FAANG would simply have to pay that (they have the cash). It's because there's one dipshit willing to work for $250k TC that all the rest have to take that salary as well.

amznthrowaway5 7y ago

>> Not to mention they apparently pay many people these sort of salaries to do basically nothing [1]: they've decided it's better to simply retain talent than risk them going to a competitor, regardless if they provide any value or not. I don't think Google is purposely ok with some of their employees doing basically nothing. I've heard the theory that companies pay for some top talent who don't generate value just to prevent them from going to competitors, but is there any hard evidence for it?

meritt 7y ago
[1] https://www.networkworld.com/article/2920903/google-really-keeps-employees-on-the-bench-like-in-hbos-silicon-valley.html https://www.networkworld.com/article/2920903/google-really-k... [2] https://www.businessinsider.com/rest-and-vest-millionaire-engineers-who-barely-work-silicon-valley-2017-7 https://www.businessinsider.com/rest-and-vest-millionaire-en... [3] https://www.quora.com/Silicon-Valley-TV-series-Do-low-performing-Googlers-really-get-unassigned https://www.quora.com/Silicon-Valley-TV-series-Do-low-perfor... [4] https://money.cnn.com/2007/01/05/magazines/fortune/Search_and_enjoy.fortune/index2.htm https://money.cnn.com/2007/01/05/magazines/fortune/Search_an...

thatsenough 7y ago

> The top firms have gotten themselves into an insane bidding war. That may be true, but there's more to it than that. The first wave of successful IPOs (Facebook, Amazon, Google, Twitter, etc.) caused a spike in housing prices as employees purchased houses. On top of that, companies have added tens of thousands of new jobs, without proportional growth in the housing supply. So housing prices are now absurd, and these companies need to pay more so their employees can buy smallish houses on the peninsula at $1.5-$2.5M a piece and have a middle-class quality of life.

cletus 7y ago
Yeah I think this part is a stretch. Just look at Vancouver as a far more extreme example of how local property prices can be out of whack with wages. House prices are a function of wages (or, more accurately, have a floor set by wages if land is constrained) not the other way around. Also, the level of entitlement by a lot of such engineers I find to be borderline disgusting. Why do you think you're entitled to a $1.5m house at all let alone 3 years out of college? If you really want cheaper housing (as a function of income) just move to a lower income area. It's actually pretty simple. But the most objectionable part for me is not just how much of a non-problem this is but it completely ignores people with real problems, like, oh I don't know, the people who drive the shiny white buses who need to live 2+ hours away. Or those not in tech who have to do the same. Engineers are compensated well now because of the value they create for their employer, nothing more, nothing less.
- thatsenough 7y ago
  > House prices are a function of wages (or, more accurately, have a floor set by wages if land is constrained) not the other way around. I guess if you state it as a fact, that makes it true? But if that’s the case, why would the company pay an engineer more when she moves from the Austin office to the NYC office? She has become more valuable to the company overnight? And the most valuable engineers just happen to live in the most expensive cities? Sorry, but salaries are impacted by cost of living. Because if they’re paying top talent too low relative to cost of living, those engineers will just move elsewhere, as you suggest. Yes, this puts a tremendous amount of pressure on the housing market, affecting everyone in the Bay Area. I’m not claiming this is good. Vancouver is a different situation entirely. > Why do you think you're entitled to a $1.5m house at all let alone 3 years out of college? This is not at all what I said. And most people I know here cannot afford a house 10+ years out of college, unless they’ve worked at a top-paying company all those years. Who is claiming they’re entitled to it? I’m saying companies are offering it to retain employees, because it’s in the companies’ best interest. > it completely ignores people with real problems, like, oh I don't know, the people who drive the shiny white buses who need to live 2+ hours away. And there are plenty of people less fortunate than the bus drivers. By your logic, if they don’t like it, they can just move somewhere cheaper. Maybe it’s just too late in the evening, but I’m not really seeing your point here.

stale2002 7y ago

> No, that's simply unfair to the companies who don't have billions of dollars in free cash flow or effectively infinite amounts of VC money. I mean.... so what? Why should I, as an engineer, care if some companies are suffering under the "unfairness" of high salaries? > which has a side effect of creating an oligopoly on talent It doesn't really make sense to use the work oligopoly, which has certain negative connotations, for a situation where companies are merely choosing to outbid others. I would only use the term oligopoly, if there is some sort of unfair barrier to entry, such as because of some government law that is hindering competition.

meritt 7y ago
> I mean.... so what? Why should I, as an engineer, care You shouldn't, you should always maximize your income. That wasn't my point. My point was the guy shouldn't interview at a 5-person bootstrapped startup and act bewildered when they cannot offer Facebook level comp packages. > oligopoly It's absolutely an oligopoly. There are a small number of firms who possess the capital to compete on salary and that creates a extremely high barrier to entry. It's not a bad thing, it's just the reality of the situation. There's plenty of options though, e.g. don't decide your HQ must be in San Francisco.
- afthonos 7y ago
  I think the technical term would be “oligopsony”.

walshemj 7y ago

"Unfair" sorry that's not how capitalism works

bradleyjg 7y ago

> No, that's simply unfair to the companies Maybe that's true of Walmart and GM, but your random A/B round startup? I don't think it is unfair at all. They could offer legitimate equity of they choose not to. Sure, it would be still be a gamble but at least it would be French roulette and not the West Virginia lottery.