5 ms·

This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. It strikes me that these sort of practices where emp

This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. It strikes me that these sort of practices where employers share salary data with each other with the aim of keep salaries low is pretty sketchy and shady. A load of companies get together with the aim of making sure they don't pay a penny more than anyone else etc. In finance salaries and bonuses are to rocketing to attract and keep talent, yet in tech all the companies get together and basically implicitly agree not to compete. It is a shame that this appears to be legal. I guess we can vote with our feet/keyboards. How would a union work here if the company just turn around and say "sorry - your members are already at the top of the rate in this market. Our policy is not to pay more than the market rate. End of discussion."? You could move to another company, but they also only pay market rate etc.

ketzo 5y ago
> A load of companies get together with the aim of making sure they don't pay a penny more than anyone else etc. Are you referring to a general suspicion you have, or a specific case? Because this is categorically illegal, and has been punished before [1] to the tune of $415 million. [1] https://www.latimes.com/business/technology/la-fi-tn-tech-jobs-settlement-20150903-story.html https://www.latimes.com/business/technology/la-fi-tn-tech-jo...
- abhorrence 5y ago
  Lots of companies engage third party companies that give "industry averages" or "comparable company averages". The company pays them with dollars and also their own average pay information. None of the companies are explicitly getting together and saying "let's keep pay at this level", but there's definitely some fishy stuff going on.
  - ghaff 5y ago
    Since forever, there has been a huge industry of essentially information middlemen who act as a conduit for information companies can't directly ask a competitor for and wouldn't be given it if they could. Totally outside of the HR realm, when I was a computer system product manager pre-Web, we had a consulting firm that we paid way too much money to and when we were going to have a product launch, we asked them to, yes, fax us data sheets on various products we were positioning against. Later, there was another firm that collected pricing information which we needed for our pricing proposals.
- muro 5y ago
  The companies will call it differently - they all share salary data with a third party, which for a discount shares numbers (probably aggregated by role, experience etc) back to the all those companies. Thus, they do "research" to understand the market rate, which they then use for salary negotiations.
kenave 5y ago
They would just strike, no?
- ketzo 5y ago
  What would they be striking for? Collective bargaining is just that – a bargain. At the end of the day, the goal is to come to some kind of agreement. I guess the answer is that, assuming the union were national, they would try to set nationwide salaries and enforce them across the board.
lozenge 5y ago
Implicitly agree? They explicitly colluded once already. Expect a fine for their current behaviour that's a tenth of the money they saved, in ten years time.
charcircuit 5y ago
There are sites like levels.fyi where employees can work together to also see what companies are paying.
CaveTech 5y ago
You will never be paid what a job is "worth". You will (in aggregate) always be paid what the market demands. Value creation needs to be >> value extraction. I don't believe many companies can compete with Google on salary. Paying "market rate" is well... market rate. The discussion would in fact end there, because if you could easily seek employment for more than that elsewhere then it would no longer be the market rate. The alternative is to settle for the same or less elsewhere which brings into perspective that Google is no more wrong than any other employer.
- ghaff 5y ago
  >I don't believe many companies can compete with Google on salary. Paying "market rate" is well... market rate. In my broader circle, I see a lot more movement towards the likes of Google than away from--and most of the latter are senior people who don't need the money (or really didn't click with the job). Most companies that can will do creative things to snag or hold onto the people they want but I expect that most people who can land a Bay Area-salaried Google etc. position will just take that if money is the deal-breaker. Because most companies won't match in general.
- falcolas 5y ago
  > You will never be paid what a job is "worth". Unless you're in sales, a major league sport, or a C-level position. Then you're paid according to the "value" you bring to your team.
  - CaveTech 5y ago
    You're not. I hold a C level position, I create more value than I capture. These positions are not loss leaders, the organization (in aggregate) ends up ahead.
  - seanmcdirmid 5y ago
    Even in sales and C-level positions and in major league sports, you are still getting paid based on demand (and supply) for your talent. They are going to pay as little as possible for the value you provide, but at the top talent has a much better negotiating position.
matwood 5y ago
> This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. What is the job worth? Outside of sales (or dealing with money directly like finance), it becomes hard to pin an exact $ value on the worth of a particular job. The reality is, almost all salaries are market based. What I expect to see over time as more companies move remote, is for the salaries to normalize to a country/region market which means less money in SF, but more if someone lives in the south.
- enriquto 5y ago
  > What is the job worth? Total profit divided by the number of employees?
  - chrischen 5y ago
    That’s a very generous way to calculate it, but that is not market rate.
    - falcolas 5y ago
      Of course it's not the market rate... it's generous after all.
  - lupire 5y ago
    what about contractors and vendors?
  - BeetleB 5y ago
    So, everyone gets paid the same?
    - enriquto 5y ago
      It's just an approximation, which should be correct up to an order of magnitude. I guess it's alright if there's a factor of 5 between the highest and lowest paid employees.
UncleMeat 5y ago
> How would a union work here if the company just turn around and say "sorry - your members are already at the top of the rate in this market. Our policy is not to pay more than the market rate. End of discussion."? The union could organize a strike and demand different policies. Choosing not to work is the one piece of pressure that employees can leverage. Of course if you ask politely it won't change things. AWU does not yet have the scale to really make that happen yet, though.
pjc50 5y ago
> How would a union work here if the company just turn around and say "sorry - your members are already at the top of the rate in this market. Our policy is not to pay more than the market rate. End of discussion."? Then you have to change the market rate by withdrawing supply. That's essentially how strikes work. Sure, if they can sack everyone and find and onboard several hundred programmers overnight at the same rate, it's not going to work. Tends not to be that easy. Of course, the main reason programmers are already paid quite well is that the supply is short and the market rate is pretty high.
NikolaNovak 5y ago
>> This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. I mean, it does and it doesn't. In my limited experience, it works both ways almost exactly the same percentage of time. - Developers who want to move and work remotely in low cost areas but want to keep high salary - Employees of any kind who move to a bigger city and want cost-of-living wage increase, even though their job is the same Further more, "What job is worth" is so incredibly dependent on the market, I don't even know what other feasible (as opposed to theoretical) definition there may be. "Paying what the local market offers" and "what the job is worth" might as well be synonyms in a practical sense. OTOH, Anybody who wants to say we should pay salaries based on global market, should be aware that vast vast vast majority of developers worldwide get tiny fraction of SV salary. Even up here in frozen Canada, I have zero understanding of the salaries HN team members post. My understanding is that UK is similar - and that's without going to Easter Europe, or any other continent.
BeetleB 5y ago
> rather than what the job is worth kinda sucks. Outside of things like sales, no one knows what your job is worth. Not you, and not your employer. It's incredibly hard to figure out how much your contributions affected the bottom line. Your accomplishments are dependent on many other employee's efforts. There's no good way to disentangle that. That's why everyone just looks at the market value.
kodah 5y ago
Geographical pay in any industry with a geographically stable product pricing is wage suppression. If the product is a SaaS offering and it is sold from state to state for the same price then employees in each of those states should get the same amount of money for their work. Companies should not get to hand $300k in RSU's plus a $200k salary to someone in Mountain View, CA and only offer $150k in cash benefits plus a dental plan to someone in Texas. This contributes to the problem that I colloquially call state-to-state income inequality.
- deleted 5y ago
  [deleted]
kar5pt 5y ago
I dont know when or how people got the idea that salaries are based on what a job is "worth" (a perfect tautology). Standard econ theory would predict salaries are based on supply and demand like everything else, not some metaphysical property called "value". If you don't like that, you need an economic system that doesn't base people's incomes on the market.
seanmcdirmid 5y ago
> I guess we can vote with our feet/keyboards. If Facebook or Apple offer more money than Google in North Carolina, isn't that what would happen? If Google is already the top, and is just offering less than it is in other markets, it's not like they have much competition for top talent. Actually, it also works out that someone might be able to get a position at Google in one market and not another because more open headcount is available in the former market...and I don't think many people would complain about gaming the system that way.
foogazi 5y ago
> I guess we can vote with our feet In this case, both options are available: switching employees or switching to a city with higher pay
deleted 5y ago
[deleted]
jaredklewis 5y ago
Has it ever been common to pay people by the value they create as opposed to their replacement cost? It’s a market. You can create millions in value but if someone else can create the same value and will take the job for $100k, why not just hire them?
phendrenad2 5y ago
Meh, the alternative is Google closes their North Carolina office and moves back to Mountain View. You're right, it does suck, but you can't have it both ways.
jjav 5y ago
> This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. Yes, it kinda sucks. The alternative though, seems worse. It's nice to be able to move to a low cost area and still have a very good salary vs. local cost of living even if it is lower than in silicon valley. It's also nice to be able to live in silicon valley or NYC and get a living wage (much higher since it's needed). What's the alternative? Same pay scale everywhere? Sure, but it won't be the silicon valley scale. It would be based on the lowest cost of living location the company cares to cater to, making it impossible to live in silicon valley. That's worse.

ketzo 5y ago

> A load of companies get together with the aim of making sure they don't pay a penny more than anyone else etc. Are you referring to a general suspicion you have, or a specific case? Because this is categorically illegal, and has been punished before [1] to the tune of $415 million. [1] https://www.latimes.com/business/technology/la-fi-tn-tech-jobs-settlement-20150903-story.html https://www.latimes.com/business/technology/la-fi-tn-tech-jo...

abhorrence 5y ago
Lots of companies engage third party companies that give "industry averages" or "comparable company averages". The company pays them with dollars and also their own average pay information. None of the companies are explicitly getting together and saying "let's keep pay at this level", but there's definitely some fishy stuff going on.
- ghaff 5y ago
  Since forever, there has been a huge industry of essentially information middlemen who act as a conduit for information companies can't directly ask a competitor for and wouldn't be given it if they could. Totally outside of the HR realm, when I was a computer system product manager pre-Web, we had a consulting firm that we paid way too much money to and when we were going to have a product launch, we asked them to, yes, fax us data sheets on various products we were positioning against. Later, there was another firm that collected pricing information which we needed for our pricing proposals.
muro 5y ago
The companies will call it differently - they all share salary data with a third party, which for a discount shares numbers (probably aggregated by role, experience etc) back to the all those companies. Thus, they do "research" to understand the market rate, which they then use for salary negotiations.

kenave 5y ago

They would just strike, no?

ketzo 5y ago
What would they be striking for? Collective bargaining is just that – a bargain. At the end of the day, the goal is to come to some kind of agreement. I guess the answer is that, assuming the union were national, they would try to set nationwide salaries and enforce them across the board.

lozenge 5y ago

Implicitly agree? They explicitly colluded once already. Expect a fine for their current behaviour that's a tenth of the money they saved, in ten years time.

charcircuit 5y ago

There are sites like levels.fyi where employees can work together to also see what companies are paying.

CaveTech 5y ago

You will never be paid what a job is "worth". You will (in aggregate) always be paid what the market demands. Value creation needs to be >> value extraction. I don't believe many companies can compete with Google on salary. Paying "market rate" is well... market rate. The discussion would in fact end there, because if you could easily seek employment for more than that elsewhere then it would no longer be the market rate. The alternative is to settle for the same or less elsewhere which brings into perspective that Google is no more wrong than any other employer.

ghaff 5y ago
>I don't believe many companies can compete with Google on salary. Paying "market rate" is well... market rate. In my broader circle, I see a lot more movement towards the likes of Google than away from--and most of the latter are senior people who don't need the money (or really didn't click with the job). Most companies that can will do creative things to snag or hold onto the people they want but I expect that most people who can land a Bay Area-salaried Google etc. position will just take that if money is the deal-breaker. Because most companies won't match in general.
falcolas 5y ago
> You will never be paid what a job is "worth". Unless you're in sales, a major league sport, or a C-level position. Then you're paid according to the "value" you bring to your team.
- CaveTech 5y ago
  You're not. I hold a C level position, I create more value than I capture. These positions are not loss leaders, the organization (in aggregate) ends up ahead.
- seanmcdirmid 5y ago
  Even in sales and C-level positions and in major league sports, you are still getting paid based on demand (and supply) for your talent. They are going to pay as little as possible for the value you provide, but at the top talent has a much better negotiating position.

matwood 5y ago

> This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. What is the job worth? Outside of sales (or dealing with money directly like finance), it becomes hard to pin an exact $ value on the worth of a particular job. The reality is, almost all salaries are market based. What I expect to see over time as more companies move remote, is for the salaries to normalize to a country/region market which means less money in SF, but more if someone lives in the south.

enriquto 5y ago
> What is the job worth? Total profit divided by the number of employees?
- chrischen 5y ago
  That’s a very generous way to calculate it, but that is not market rate.
  - falcolas 5y ago
    Of course it's not the market rate... it's generous after all.
- lupire 5y ago
  what about contractors and vendors?
- BeetleB 5y ago
  So, everyone gets paid the same?
  - enriquto 5y ago
    It's just an approximation, which should be correct up to an order of magnitude. I guess it's alright if there's a factor of 5 between the highest and lowest paid employees.

UncleMeat 5y ago

> How would a union work here if the company just turn around and say "sorry - your members are already at the top of the rate in this market. Our policy is not to pay more than the market rate. End of discussion."? The union could organize a strike and demand different policies. Choosing not to work is the one piece of pressure that employees can leverage. Of course if you ask politely it won't change things. AWU does not yet have the scale to really make that happen yet, though.

pjc50 5y ago

> How would a union work here if the company just turn around and say "sorry - your members are already at the top of the rate in this market. Our policy is not to pay more than the market rate. End of discussion."? Then you have to change the market rate by withdrawing supply. That's essentially how strikes work. Sure, if they can sack everyone and find and onboard several hundred programmers overnight at the same rate, it's not going to work. Tends not to be that easy. Of course, the main reason programmers are already paid quite well is that the supply is short and the market rate is pretty high.

NikolaNovak 5y ago

>> This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. I mean, it does and it doesn't. In my limited experience, it works both ways almost exactly the same percentage of time. - Developers who want to move and work remotely in low cost areas but want to keep high salary - Employees of any kind who move to a bigger city and want cost-of-living wage increase, even though their job is the same Further more, "What job is worth" is so incredibly dependent on the market, I don't even know what other feasible (as opposed to theoretical) definition there may be. "Paying what the local market offers" and "what the job is worth" might as well be synonyms in a practical sense. OTOH, Anybody who wants to say we should pay salaries based on global market, should be aware that vast vast vast majority of developers worldwide get tiny fraction of SV salary. Even up here in frozen Canada, I have zero understanding of the salaries HN team members post. My understanding is that UK is similar - and that's without going to Easter Europe, or any other continent.

BeetleB 5y ago

> rather than what the job is worth kinda sucks. Outside of things like sales, no one knows what your job is worth. Not you, and not your employer. It's incredibly hard to figure out how much your contributions affected the bottom line. Your accomplishments are dependent on many other employee's efforts. There's no good way to disentangle that. That's why everyone just looks at the market value.

kodah 5y ago

Geographical pay in any industry with a geographically stable product pricing is wage suppression. If the product is a SaaS offering and it is sold from state to state for the same price then employees in each of those states should get the same amount of money for their work. Companies should not get to hand $300k in RSU's plus a $200k salary to someone in Mountain View, CA and only offer $150k in cash benefits plus a dental plan to someone in Texas. This contributes to the problem that I colloquially call state-to-state income inequality.

deleted 5y ago
[deleted]

kar5pt 5y ago

I dont know when or how people got the idea that salaries are based on what a job is "worth" (a perfect tautology). Standard econ theory would predict salaries are based on supply and demand like everything else, not some metaphysical property called "value". If you don't like that, you need an economic system that doesn't base people's incomes on the market.

seanmcdirmid 5y ago

> I guess we can vote with our feet/keyboards. If Facebook or Apple offer more money than Google in North Carolina, isn't that what would happen? If Google is already the top, and is just offering less than it is in other markets, it's not like they have much competition for top talent. Actually, it also works out that someone might be able to get a position at Google in one market and not another because more open headcount is available in the former market...and I don't think many people would complain about gaming the system that way.

foogazi 5y ago

> I guess we can vote with our feet In this case, both options are available: switching employees or switching to a city with higher pay

deleted 5y ago

[deleted]

jaredklewis 5y ago

Has it ever been common to pay people by the value they create as opposed to their replacement cost? It’s a market. You can create millions in value but if someone else can create the same value and will take the job for $100k, why not just hire them?

phendrenad2 5y ago

Meh, the alternative is Google closes their North Carolina office and moves back to Mountain View. You're right, it does suck, but you can't have it both ways.

jjav 5y ago

> This whole approach of paying what the local market offers, rather than what the job is worth kinda sucks. Yes, it kinda sucks. The alternative though, seems worse. It's nice to be able to move to a low cost area and still have a very good salary vs. local cost of living even if it is lower than in silicon valley. It's also nice to be able to live in silicon valley or NYC and get a living wage (much higher since it's needed). What's the alternative? Same pay scale everywhere? Sure, but it won't be the silicon valley scale. It would be based on the lowest cost of living location the company cares to cater to, making it impossible to live in silicon valley. That's worse.