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A few thoughts: 1. Americans need to buy and hold equities. Period. When Google cuts costs or makes more money, I benefit as a shareholder (or you can hold tot

A few thoughts: 1. Americans need to buy and hold equities. Period. When Google cuts costs or makes more money, I benefit as a shareholder (or you can hold total market indexes and the like). 2. Maybe the money will go to new hires, capabilities, expenditures, etc. ? 3. Sure, but this is certainly a good arguing point against immigration, population growth and H1-B visa programs and the like. 4. Increase taxes on the wealthy, etc. One arguing point I'd like to make though is that if this doesn't result in wealth redistribution (companies will pay less and this is fine) should we all begin moving to a few cities?

arcturus17 6y ago
How much equity would you need to hold to compensate for a 30-40% decrease in wages?
- ericmay 6y ago
  Who is experiencing the decrease in wages? For many Americans the distribution of these jobs to other locations would result in an increase in wages. Not to mention, the top companies would still hire top talent in a competitive market.
  - devilduck 6y ago
    I don't know, maybe the millions of people who are currently out of work due to covid are experiencing a decrease in wages? Just a guess.
  - gabereiser 6y ago
    Exactly. This argument that cheaper workforce is out in the sticks, waiting for “remote work” is a lie corporate America has told to keep people in the office. The truth is, no matter where you are, talent knows what talent is worth. We price accordingly and in the end the market is stable at a certain price level. We’ve been seeing this over the last decade in major US cities competing for SF-level talent. Tech is one of the highest paid professions. Remote or otherwise. To say companies will just go hire someone cheaper assumes they can find someone cheaper. In the end I think the real winners are rural America (or Europe or where ever you live). Having a lifeblood of capital come back to small towns and the like will decentralize our cities, improve our quality of life, reinforce the need for infrastructure, and allow innovation to solve those problems. Exciting times.
    - ericmay 6y ago
      Thanks, Gabe. And I don't think it's SV -> Rural America exclusively. Many of these jobs will filter back into medium to large sized metros across the country. Places like Columbus, Indianapolis, St Louis, Atlanta, Nashville, etc. . There are scores of talented developers in these areas that would be open to remote work, but not relocation to the major metro areas.
      - throwaway201103 6y ago
        Not to mention eastern Europe, South America, Asia, etc.
      - babesh 6y ago
        Is this what is actually happening? We should look at the statistics as to where people move to. From what I can tell, people are actually mostly moving to other tech hubs (but lower priced) and to high end vacation areas. Think Austin, Denver, Park City Utah, Lake Tahoe, etc... The underlying dynamics are still at play (even tech but to a lesser extent).
        ericmay 6y ago
        Oh no doubt these areas will see an uptick in jobs... but they won’t be the only ones.
    - jelliclesfarm 6y ago
      200 acre tech village clusters in the mid west that are modern and sustainable islands. They can bring in capital and still not step on the toes of rural America if they don’t want to change the fabric of their society. It makes me uncomfortable to think tech population from Ca descending onto unsuspecting laid back mid western towns. Integration should be gentle and respectful and with consent.
      - callinOutLiars 6y ago
        With consent? Shouldn’t everyone have the right to move where they want? Others it sounds like segregation.
  - momokoko 6y ago
    Current company just released yesterday pay tiers for those that move out of Bay Area and that is about the salary reduction most are looking at.
  - basseq 6y ago
    Aggregate price for talent probably doesn't change. Demand for talent in key markets goes down (as companies in those markets start looking for non-local talent[1]), but demand for talent in any market goes up (as non-local companies seek local talent). So it would follow that overpriced talent in high-demand markets would see a decrease, where underpriced talent in low-demand markets would see an increase. This would be the same concerns with offshoring as well, but that hasn't led to massive salary drops. Because there's still a big cost to switching people. If you could fire all your SF SWEs today and replace them with identical, knowledgable, fully-ramped, culture-carried SWEs in $secondary_market for half price, you would. You can't, so you threaten and you try to convince your SF SWE that you could just enough to keep their expectations low, but not so much that they actually quit. I see a lot of companies still trying the "CoLA trick" on employees moving to secondary markets. "We can hire your position in $market for cheaper," so the argument goes. The best move there is to call their bluff: "go do it then". Most people won't do it because a) conflict is hard and b) finding a new job on top of moving is annoying. So they'll take it on the chin and just resign 6-12 months later after they're settled. [1] In the old world, there's still a premium to convince talent to relocate. So companies in high-demand markets (e.g., SF) either have to pay +x% to tap non-local talent and get them to move to the high-demand market (where they become local talent). Even in the new world, non-local talent isn't going to sit by and let themselves be underpaid. "I'm doing the exact same thing, delivering the exact same value, but someone is getting paid 30% more to sit in the office? Oh, and you don't even pay for my home office?"
  - nostrademons 6y ago
    I do wonder why people assume that the beneficiaries will be American. You can hire competent Thai or Vietnamese programmers for $20K/year on Upwork, which is a princely sum in their countries. If all you want is someone to implement a spec, they'll do the job just as good or better than any American. Why would you pay $100K/year? Most markets bifurcate into a commoditized low-end that makes all the volume and a differentiated high-end that makes all the profits. Think Android/iPhone, Windows/Mac, TSMC/Intel, Volkswagon/Porsche, etc. The commodity low-end programmer isn't the guy in Missouri, it's the guy in Minsk or Bangkok. You're either the one making up the specs (which will probably still be in Silicon Valley, because that requires communication and trust more than coding ability), or the one implementing the specs (which can be anywhere, with commensurate wages).
throwaway45349 6y ago
> Increase taxes on the wealthy, etc. Anyone working for a Silicon Valley company as an engineer is almost certainly considered "the wealthy" by most of America.
- ericmay 6y ago
  Yep.
- sandworm101 6y ago
  >> Anyone working for a Silicon Valley Depending on your definition of wealthy, "anyone working" full stop. A large number of americans do not work (too young/old etc). Others are sick. Many at the top of society don't earn much income (tax voodoo). And automation is coming. If we define "wealthy" as the top 25/15/10% of wage earners, how soon before that is basically just anyone with a fulltime job?
  - iso1631 6y ago
    Wealthy is about how much wealth you have, not your income. In 2020, $121,411 was the median household net worth in the United States. This is up from $97,225.55 in 2017. The average household net worth in 2020 was $746,821. It was $692,100 in 2017. The disparity between these two numbers is itself a major problem, but not the point. If you have a net work of $120k you aren't wealthy, even if you earnt that all in the last month. The way you get from having no wealth to having an average amount is by working harder and earning more. However the tax system is built to punish people who earn more money from work, and reward people who gain more wealth through things like capital gains -- you pay more tax if you increase your wealth by a dollar from working than from the side-effect of being already wealthy and seeing your assets gain value. You're also far more likely to have higher outgoings if you're working (higher cost to live near a high paying job, commuting costs etc) If you are on the median ohio wage on 37k a year, so $30,427.47 net, and spending 37k to live, your wealth doesn't increase. If you work an extra 1k, you take home $31,202.47 -- $775, 22.5% tax. If you make 1k in capital gains, you keep $971, 3% tax. Look at twice median wage of 74k a year. Take home 57,439.49. Extra $1k will give you 58,109.69, an extra $670 - 33% tax. Make 1k in capital gains and you pay 18% tax. Earn 10 times the median wage at $370k and you keep 239,713.20, 42% tax. Get 1k in capital gains and you keep $764, 24% tax. https://dqydj.com/average-median-top-net-worth-percentiles/ https://dqydj.com/average-median-top-net-worth-percentiles/ https://www.thebalance.com/breakdown-of-average-monthly-household-expenses-4687519 https://www.thebalance.com/breakdown-of-average-monthly-hous... https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://smartasset.com/investing/capital-gains-tax-calculator https://smartasset.com/investing/capital-gains-tax-calculato...
bendbro 6y ago
> 1. Americans need to buy and hold equities. Period. When Google cuts costs or makes more money, I benefit as a shareholder (or you can hold total market indexes and the like). Yes, but it is not good that your "compensation" will be coming from something that isn't tied to your job performance. Wages at least have some tenuous connection to how well you perform at work. > 2. Maybe the money will go to new hires, capabilities, expenditures, etc. ? Based on recent trends, this will not happen. > 3. Sure, but this is certainly a good arguing point against immigration, population growth and H1-B visa programs and the like. Yes, definitely. > 4. Increase taxes on the wealthy, etc. Yes, or nationalize the banks.
- ericd 6y ago
  Why is it bad that part of your compensation comes from things that aren't tied to your performance at work?
- Proziam 6y ago
  > Yes, but it is not good that your "compensation" will be coming from something that isn't tied to your job performance. Wages at least have some tenuous connection to how well you perform at work. It also doesn't account for the fact that these equities can lose substantial value, or may be over-valued. > Yes, or nationalize the banks. Re-implement the Glass-Steagall Act, or similar. Nationalization leaves the levers of power in the hands of the wrong people. Keeping commercial and investment banking separate while implementing strong consumer protections was shown to work well in the past. Also, it has shown that the repeal massively reduced the amount of banks (killing competition) so it stands to reason that trend could be reversed and improve the consumer banking experience over time.
jelliclesfarm 6y ago
> 4. Increase taxes on the wealthy, etc. This won’t work. When the tech exodus begins, it’s going to cause CA to buckle at its knees because the wealthy has been subsidizing more than 80% of the population. It is not sustainable or healthy at all to suckle at the teat of the wealthy. We should abolish all taxes and only retain taxes based on consumption. And a flat modest capital gains tax. With dedications gone, this might actually bring in more public money. Public spending will also decrease if we figure a way out of unfunded pension liabilities. This is huge. Don’t know how it can be resolved.
- DeRock 6y ago
  > the wealthy has been subsidizing more than 80% of the population CA does not tax wealth, they tax (predominately) income, and I wouldn't be so quick to equate the 2. Prop 13, for example, can mean that wealthy land owners pay almost nothing in tax if they've owned their property for a long time.
  - rcpt 6y ago
    > Prop 13 https://www.taxfairnessproject.org/ https://www.taxfairnessproject.org/ generally the wealthier you are the bigger your tax cut.

arcturus17 6y ago

How much equity would you need to hold to compensate for a 30-40% decrease in wages?

ericmay 6y ago
Who is experiencing the decrease in wages? For many Americans the distribution of these jobs to other locations would result in an increase in wages. Not to mention, the top companies would still hire top talent in a competitive market.
- devilduck 6y ago
  I don't know, maybe the millions of people who are currently out of work due to covid are experiencing a decrease in wages? Just a guess.
- gabereiser 6y ago
  Exactly. This argument that cheaper workforce is out in the sticks, waiting for “remote work” is a lie corporate America has told to keep people in the office. The truth is, no matter where you are, talent knows what talent is worth. We price accordingly and in the end the market is stable at a certain price level. We’ve been seeing this over the last decade in major US cities competing for SF-level talent. Tech is one of the highest paid professions. Remote or otherwise. To say companies will just go hire someone cheaper assumes they can find someone cheaper. In the end I think the real winners are rural America (or Europe or where ever you live). Having a lifeblood of capital come back to small towns and the like will decentralize our cities, improve our quality of life, reinforce the need for infrastructure, and allow innovation to solve those problems. Exciting times.
  - ericmay 6y ago
    Thanks, Gabe. And I don't think it's SV -> Rural America exclusively. Many of these jobs will filter back into medium to large sized metros across the country. Places like Columbus, Indianapolis, St Louis, Atlanta, Nashville, etc. . There are scores of talented developers in these areas that would be open to remote work, but not relocation to the major metro areas.
    - throwaway201103 6y ago
      Not to mention eastern Europe, South America, Asia, etc.
    - babesh 6y ago
      Is this what is actually happening? We should look at the statistics as to where people move to. From what I can tell, people are actually mostly moving to other tech hubs (but lower priced) and to high end vacation areas. Think Austin, Denver, Park City Utah, Lake Tahoe, etc... The underlying dynamics are still at play (even tech but to a lesser extent).
      - ericmay 6y ago
        Oh no doubt these areas will see an uptick in jobs... but they won’t be the only ones.
  - jelliclesfarm 6y ago
    200 acre tech village clusters in the mid west that are modern and sustainable islands. They can bring in capital and still not step on the toes of rural America if they don’t want to change the fabric of their society. It makes me uncomfortable to think tech population from Ca descending onto unsuspecting laid back mid western towns. Integration should be gentle and respectful and with consent.
    - callinOutLiars 6y ago
      With consent? Shouldn’t everyone have the right to move where they want? Others it sounds like segregation.
- momokoko 6y ago
  Current company just released yesterday pay tiers for those that move out of Bay Area and that is about the salary reduction most are looking at.
- basseq 6y ago
  Aggregate price for talent probably doesn't change. Demand for talent in key markets goes down (as companies in those markets start looking for non-local talent[1]), but demand for talent in any market goes up (as non-local companies seek local talent). So it would follow that overpriced talent in high-demand markets would see a decrease, where underpriced talent in low-demand markets would see an increase. This would be the same concerns with offshoring as well, but that hasn't led to massive salary drops. Because there's still a big cost to switching people. If you could fire all your SF SWEs today and replace them with identical, knowledgable, fully-ramped, culture-carried SWEs in $secondary_market for half price, you would. You can't, so you threaten and you try to convince your SF SWE that you could just enough to keep their expectations low, but not so much that they actually quit. I see a lot of companies still trying the "CoLA trick" on employees moving to secondary markets. "We can hire your position in $market for cheaper," so the argument goes. The best move there is to call their bluff: "go do it then". Most people won't do it because a) conflict is hard and b) finding a new job on top of moving is annoying. So they'll take it on the chin and just resign 6-12 months later after they're settled. [1] In the old world, there's still a premium to convince talent to relocate. So companies in high-demand markets (e.g., SF) either have to pay +x% to tap non-local talent and get them to move to the high-demand market (where they become local talent). Even in the new world, non-local talent isn't going to sit by and let themselves be underpaid. "I'm doing the exact same thing, delivering the exact same value, but someone is getting paid 30% more to sit in the office? Oh, and you don't even pay for my home office?"
- nostrademons 6y ago
  I do wonder why people assume that the beneficiaries will be American. You can hire competent Thai or Vietnamese programmers for $20K/year on Upwork, which is a princely sum in their countries. If all you want is someone to implement a spec, they'll do the job just as good or better than any American. Why would you pay $100K/year? Most markets bifurcate into a commoditized low-end that makes all the volume and a differentiated high-end that makes all the profits. Think Android/iPhone, Windows/Mac, TSMC/Intel, Volkswagon/Porsche, etc. The commodity low-end programmer isn't the guy in Missouri, it's the guy in Minsk or Bangkok. You're either the one making up the specs (which will probably still be in Silicon Valley, because that requires communication and trust more than coding ability), or the one implementing the specs (which can be anywhere, with commensurate wages).

throwaway45349 6y ago

> Increase taxes on the wealthy, etc. Anyone working for a Silicon Valley company as an engineer is almost certainly considered "the wealthy" by most of America.

ericmay 6y ago
Yep.
sandworm101 6y ago
>> Anyone working for a Silicon Valley Depending on your definition of wealthy, "anyone working" full stop. A large number of americans do not work (too young/old etc). Others are sick. Many at the top of society don't earn much income (tax voodoo). And automation is coming. If we define "wealthy" as the top 25/15/10% of wage earners, how soon before that is basically just anyone with a fulltime job?
- iso1631 6y ago
  Wealthy is about how much wealth you have, not your income. In 2020, $121,411 was the median household net worth in the United States. This is up from $97,225.55 in 2017. The average household net worth in 2020 was $746,821. It was $692,100 in 2017. The disparity between these two numbers is itself a major problem, but not the point. If you have a net work of $120k you aren't wealthy, even if you earnt that all in the last month. The way you get from having no wealth to having an average amount is by working harder and earning more. However the tax system is built to punish people who earn more money from work, and reward people who gain more wealth through things like capital gains -- you pay more tax if you increase your wealth by a dollar from working than from the side-effect of being already wealthy and seeing your assets gain value. You're also far more likely to have higher outgoings if you're working (higher cost to live near a high paying job, commuting costs etc) If you are on the median ohio wage on 37k a year, so $30,427.47 net, and spending 37k to live, your wealth doesn't increase. If you work an extra 1k, you take home $31,202.47 -- $775, 22.5% tax. If you make 1k in capital gains, you keep $971, 3% tax. Look at twice median wage of 74k a year. Take home 57,439.49. Extra $1k will give you 58,109.69, an extra $670 - 33% tax. Make 1k in capital gains and you pay 18% tax. Earn 10 times the median wage at $370k and you keep 239,713.20, 42% tax. Get 1k in capital gains and you keep $764, 24% tax. https://dqydj.com/average-median-top-net-worth-percentiles/ https://dqydj.com/average-median-top-net-worth-percentiles/ https://www.thebalance.com/breakdown-of-average-monthly-household-expenses-4687519 https://www.thebalance.com/breakdown-of-average-monthly-hous... https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://smartasset.com/investing/capital-gains-tax-calculator https://smartasset.com/investing/capital-gains-tax-calculato...

bendbro 6y ago

> 1. Americans need to buy and hold equities. Period. When Google cuts costs or makes more money, I benefit as a shareholder (or you can hold total market indexes and the like). Yes, but it is not good that your "compensation" will be coming from something that isn't tied to your job performance. Wages at least have some tenuous connection to how well you perform at work. > 2. Maybe the money will go to new hires, capabilities, expenditures, etc. ? Based on recent trends, this will not happen. > 3. Sure, but this is certainly a good arguing point against immigration, population growth and H1-B visa programs and the like. Yes, definitely. > 4. Increase taxes on the wealthy, etc. Yes, or nationalize the banks.

ericd 6y ago
Why is it bad that part of your compensation comes from things that aren't tied to your performance at work?
Proziam 6y ago
> Yes, but it is not good that your "compensation" will be coming from something that isn't tied to your job performance. Wages at least have some tenuous connection to how well you perform at work. It also doesn't account for the fact that these equities can lose substantial value, or may be over-valued. > Yes, or nationalize the banks. Re-implement the Glass-Steagall Act, or similar. Nationalization leaves the levers of power in the hands of the wrong people. Keeping commercial and investment banking separate while implementing strong consumer protections was shown to work well in the past. Also, it has shown that the repeal massively reduced the amount of banks (killing competition) so it stands to reason that trend could be reversed and improve the consumer banking experience over time.

jelliclesfarm 6y ago

> 4. Increase taxes on the wealthy, etc. This won’t work. When the tech exodus begins, it’s going to cause CA to buckle at its knees because the wealthy has been subsidizing more than 80% of the population. It is not sustainable or healthy at all to suckle at the teat of the wealthy. We should abolish all taxes and only retain taxes based on consumption. And a flat modest capital gains tax. With dedications gone, this might actually bring in more public money. Public spending will also decrease if we figure a way out of unfunded pension liabilities. This is huge. Don’t know how it can be resolved.

DeRock 6y ago
> the wealthy has been subsidizing more than 80% of the population CA does not tax wealth, they tax (predominately) income, and I wouldn't be so quick to equate the 2. Prop 13, for example, can mean that wealthy land owners pay almost nothing in tax if they've owned their property for a long time.
- rcpt 6y ago
  > Prop 13 https://www.taxfairnessproject.org/ https://www.taxfairnessproject.org/ generally the wealthier you are the bigger your tax cut.