6 ms·

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.
      - jelliclesfarm 6y ago
        integration of silicon valley values with mid western values.
  - throwaway201103 6y ago
    "talent knows what talent is worth" This is a pipe dream and quite conceited. Talent is worth what the market will pay for it. No escaping supply and demand. If you no longer need to be in the office, the labor pool is immensely expanded. Unless you think that all the smart people in the world were already working for SF employers.
  - odessacubbage 6y ago
    my fear is that an influx of zoom professionals to places in the desirable parts of 'flyover country' will cause us to repeat the mistakes of sf and seattle in hundreds of times over across the country. most people here were still barely hanging from the recession and now the combination of rapid expansion and quickly rising prices on top of shutdowns is not giving lifeblood to the people who need it, they're being pushed out and the californians are moving in along with big box stores and sodosopa >https://www.youtube.com/watch?v=eoUtoqeEw8U https://www.youtube.com/watch?v=eoUtoqeEw8U you can excuse the resentment
    - gabereiser 6y ago
      Yup, you’re right, we have an existential crisis brewing in rural America with remote work and the influx of residents driving cost of housing up when residents who were there already are still struggling from the recession of 2008. I don’t have a comment or solution to this problem (is it even a problem?) otherwise I’d suggest something. I’m just observing like others, but I will admit to browsing Zillow for a farm if remote work has staying power. I think being able to provide some stimulus economically from this will help those smaller rural businesses. I don’t know. I’m not qualified in economics to predict the outcome, only some hope and some fear of possibilities.
- 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).

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.
    - jelliclesfarm 6y ago
      integration of silicon valley values with mid western values.
- throwaway201103 6y ago
  "talent knows what talent is worth" This is a pipe dream and quite conceited. Talent is worth what the market will pay for it. No escaping supply and demand. If you no longer need to be in the office, the labor pool is immensely expanded. Unless you think that all the smart people in the world were already working for SF employers.
- odessacubbage 6y ago
  my fear is that an influx of zoom professionals to places in the desirable parts of 'flyover country' will cause us to repeat the mistakes of sf and seattle in hundreds of times over across the country. most people here were still barely hanging from the recession and now the combination of rapid expansion and quickly rising prices on top of shutdowns is not giving lifeblood to the people who need it, they're being pushed out and the californians are moving in along with big box stores and sodosopa >https://www.youtube.com/watch?v=eoUtoqeEw8U https://www.youtube.com/watch?v=eoUtoqeEw8U you can excuse the resentment
  - gabereiser 6y ago
    Yup, you’re right, we have an existential crisis brewing in rural America with remote work and the influx of residents driving cost of housing up when residents who were there already are still struggling from the recession of 2008. I don’t have a comment or solution to this problem (is it even a problem?) otherwise I’d suggest something. I’m just observing like others, but I will admit to browsing Zillow for a farm if remote work has staying power. I think being able to provide some stimulus economically from this will help those smaller rural businesses. I don’t know. I’m not qualified in economics to predict the outcome, only some hope and some fear of possibilities.
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).