5 ms·

Soon after implementation, I feel that companies would like to reduce pay as well. Maybe not by 20%, but it's an easy way to increase profitability.

munk-a 5y ago
I think they might want to - but they won't be able to. Unless it's done as a cartel action (and some of the FAANGs in particular have gotten trouble for cartel labour actions before) - then one company is going to go first and lose all their valuable employees - while the companies that lag behind will scoop up all those high value employees and probably decide not to risk it after all. People talking about macroeconomics often talk about how markets respond to certain pressures - as this gets further from the academics it gets watered down and that response is assumed to be instantaneous - but it isn't. In theory a payroll tax on the employer and income tax on the employee have the same long term economic outcomes - in practice that long term realization takes so long to work through the system that the effects of decreased take home usually end up being swallowed many times over by inflation before anyone feels any affect of it.
- tshaddox 5y ago
  Wages might be sticky, but surely it wouldn't be difficult for employers to simply slow down the increase in wages, both by decreasing the compensation and/or number of new entry-level roles, and by decreasing and/or delaying promotions. This seems to me that in many industries/markets this could be done by employers without any sort of identifiable cartelization.
  - munk-a 5y ago
    I think we can safely ignore entry-level roles here - for a while in the early 00s everyone with an MBA thought that entry level engineers were just like other engineers but at 20% of the cost - what savings! Then the industry realized that both junior employees and off-shoring come with real costs that need to be analyzed in advance - they can be the right answer, but you need to tread very carefully. So I'd take a look at senior employees which tend to be a pretty curmudgeonly bunch that have been through wage freezes and non-monetary compensation circuses before and will jump ship if they get a wiff of it happening again. Companies won't feel any loss of revenue for a few years after work weeks are slashed - it takes a while for consumer spending to adjust to lower income - instead we'd likely eat a fair bit of inflation (which has been unhealthily stagnate for a while now) and everything would move on from there. If the companies are responding to a natural decrease in effective revenue it'll be staggered and upstream companies will be shielded from it for longer - so you'll likely see a value shift from customer facing companies to B2B companies aaaaand - any wage slashing that goes on will just reinforce that value shift as valuable employees jump ship. All these ripples that go through the economy do so slowly - and no MBA worth their salt is going to say (on the monday after switching to a reduced workweek) "Welp all our employees know this will eventually impact us so lets just slash their wages now". No, they'll wait and see if their business is able to ride out the shifting terrain without decreasing wages since that's a more stable approach and puts the company at less danger - and if that company happens to need to adjust employee costs it won't be evident until multi-year contracts are re-negotiated to lower rates and customers refuse to renew since their pocketbooks are empty. Economics moves sloooow - maybe it'd be better to imagine the invisible snail of the market!
    - tshaddox 5y ago
      > I think we can safely ignore entry-level roles here You mean, as long as we're personally beyond entry-level? My own career and compensation isn't my only concern.
      - munk-a 5y ago
        No - because I think their wages are far too volatile to easily track. When I entered into software development (like fifteen years ago - not in the 70's) I initially made 45k - while first years in SV were pulling in 120k-140k. I wanted to look at more senior positions first because I think they're more stable over time and the employees there will advocate stronger against paycuts... And if the senior employees are stubborn in their advocacy then junior employees tend to benefit from it - if senior employees consent to letting their wages slip then everyone below them in experience is expected to just go along with it.
        tshaddox 5y ago
        My point wasn't that only entry-level positions would be affected over time, but rather that the compensation of all roles could be affected simply by starting new people out with lower compensation and increasing compensation more slowly throughout each worker's career. In other words, the average pay of a senior engineer could be lower in 20 years than it is now without any individual's pay ever decreasing.
        munk-a 5y ago
        I think that entry-level positions (outside of SF) are usually driven mostly by whatever the local cost of living is plus a bit to keep the positions clearly above what retail positions can offer - CoL would similarly take a while to adjust to the new lower income of folks so I wouldn't expect it to respond particularly quickly. But yea, I agree that that's one way to pull down the wages. I do think they'd end up suffering from the same sort of pressure though - if you pull on an entry level person at a low rate then there will be a lot of tempting competing offers they'll be considering when they've got a year or two under their belt - and then they'll be in the same pool as the other junior devs (or maybe the intermediate ones). I hasn't really thought about the zero experience folk though - thanks for mentioning it!
klyrs 5y ago
In general, I'd be willing to split the difference. Not because I think I'll be less valuable to the company, but because my time is valuable and I'd be content with less. I've tried to negotiate this in the past and they always look at me like I've got 3 heads, or make some blandishment about how that wouldn't be fair for everybody (despite my job being unique). Later, I learned that full time employment is 35 hours, and insurance/benefits for part-time work gets really complicated for the stupidest of reasons. So despite the stupid responses, employers actually do have some obstacles to overcome even if they want to implement shorter weeks.
- jrib 5y ago
  Does PTO count towards those hours? Just give employees enough PTO to take Fridays off.
foxpurple 5y ago
For me I don’t really care that much. I realised I earn far more than I spend and most of my spending is not essential anyway. I’ll take the pay cut and live a happier life rather than working every last bit of energy left and trying to recover with mindless consumerism on the weekend.

munk-a 5y ago

I think they might want to - but they won't be able to. Unless it's done as a cartel action (and some of the FAANGs in particular have gotten trouble for cartel labour actions before) - then one company is going to go first and lose all their valuable employees - while the companies that lag behind will scoop up all those high value employees and probably decide not to risk it after all. People talking about macroeconomics often talk about how markets respond to certain pressures - as this gets further from the academics it gets watered down and that response is assumed to be instantaneous - but it isn't. In theory a payroll tax on the employer and income tax on the employee have the same long term economic outcomes - in practice that long term realization takes so long to work through the system that the effects of decreased take home usually end up being swallowed many times over by inflation before anyone feels any affect of it.

tshaddox 5y ago
Wages might be sticky, but surely it wouldn't be difficult for employers to simply slow down the increase in wages, both by decreasing the compensation and/or number of new entry-level roles, and by decreasing and/or delaying promotions. This seems to me that in many industries/markets this could be done by employers without any sort of identifiable cartelization.
- munk-a 5y ago
  I think we can safely ignore entry-level roles here - for a while in the early 00s everyone with an MBA thought that entry level engineers were just like other engineers but at 20% of the cost - what savings! Then the industry realized that both junior employees and off-shoring come with real costs that need to be analyzed in advance - they can be the right answer, but you need to tread very carefully. So I'd take a look at senior employees which tend to be a pretty curmudgeonly bunch that have been through wage freezes and non-monetary compensation circuses before and will jump ship if they get a wiff of it happening again. Companies won't feel any loss of revenue for a few years after work weeks are slashed - it takes a while for consumer spending to adjust to lower income - instead we'd likely eat a fair bit of inflation (which has been unhealthily stagnate for a while now) and everything would move on from there. If the companies are responding to a natural decrease in effective revenue it'll be staggered and upstream companies will be shielded from it for longer - so you'll likely see a value shift from customer facing companies to B2B companies aaaaand - any wage slashing that goes on will just reinforce that value shift as valuable employees jump ship. All these ripples that go through the economy do so slowly - and no MBA worth their salt is going to say (on the monday after switching to a reduced workweek) "Welp all our employees know this will eventually impact us so lets just slash their wages now". No, they'll wait and see if their business is able to ride out the shifting terrain without decreasing wages since that's a more stable approach and puts the company at less danger - and if that company happens to need to adjust employee costs it won't be evident until multi-year contracts are re-negotiated to lower rates and customers refuse to renew since their pocketbooks are empty. Economics moves sloooow - maybe it'd be better to imagine the invisible snail of the market!
  - tshaddox 5y ago
    > I think we can safely ignore entry-level roles here You mean, as long as we're personally beyond entry-level? My own career and compensation isn't my only concern.
    - munk-a 5y ago
      No - because I think their wages are far too volatile to easily track. When I entered into software development (like fifteen years ago - not in the 70's) I initially made 45k - while first years in SV were pulling in 120k-140k. I wanted to look at more senior positions first because I think they're more stable over time and the employees there will advocate stronger against paycuts... And if the senior employees are stubborn in their advocacy then junior employees tend to benefit from it - if senior employees consent to letting their wages slip then everyone below them in experience is expected to just go along with it.
      - tshaddox 5y ago
        My point wasn't that only entry-level positions would be affected over time, but rather that the compensation of all roles could be affected simply by starting new people out with lower compensation and increasing compensation more slowly throughout each worker's career. In other words, the average pay of a senior engineer could be lower in 20 years than it is now without any individual's pay ever decreasing.
        munk-a 5y ago
        I think that entry-level positions (outside of SF) are usually driven mostly by whatever the local cost of living is plus a bit to keep the positions clearly above what retail positions can offer - CoL would similarly take a while to adjust to the new lower income of folks so I wouldn't expect it to respond particularly quickly. But yea, I agree that that's one way to pull down the wages. I do think they'd end up suffering from the same sort of pressure though - if you pull on an entry level person at a low rate then there will be a lot of tempting competing offers they'll be considering when they've got a year or two under their belt - and then they'll be in the same pool as the other junior devs (or maybe the intermediate ones). I hasn't really thought about the zero experience folk though - thanks for mentioning it!

klyrs 5y ago

In general, I'd be willing to split the difference. Not because I think I'll be less valuable to the company, but because my time is valuable and I'd be content with less. I've tried to negotiate this in the past and they always look at me like I've got 3 heads, or make some blandishment about how that wouldn't be fair for everybody (despite my job being unique). Later, I learned that full time employment is 35 hours, and insurance/benefits for part-time work gets really complicated for the stupidest of reasons. So despite the stupid responses, employers actually do have some obstacles to overcome even if they want to implement shorter weeks.

jrib 5y ago
Does PTO count towards those hours? Just give employees enough PTO to take Fridays off.

foxpurple 5y ago

For me I don’t really care that much. I realised I earn far more than I spend and most of my spending is not essential anyway. I’ll take the pay cut and live a happier life rather than working every last bit of energy left and trying to recover with mindless consumerism on the weekend.