3 ms·

>I care what the company is earning from my labor and getting my fair share. I have no problem extorting more from a company that has no problem extorting more

by slg 4y ago

>I care what the company is earning from my labor and getting my fair share. I have no problem extorting more from a company that has no problem extorting more from me. This just feels naive to me. You aren't being paid based on what your labor is earning your company. That number is totally irrelevant in a world in which businesses can run on VC money instead of actual revenue. You are paid based of both yours and your employers next best alternative. The reason people in high cost of living areas have traditionally had higher salaries is because there are more jobs in high cost of living areas and therefore more alternatives for potential employees. It is easier for an engineer in the Bay Area to get a competitive offer than it is for an engineer in Akron, Ohio. That is why companies in Akron pay less, there are fewer employers there looking to hire developers. While I understand all the arguments about fairness, we can't ignore that all these companies are purely responding to capitalist incentives. If we demand they pay employees the same regardless of location, the wage rate they pay will drop. This is because there are more developers living in low cost of living areas willing to work for that set price than in high cost of living areas. Why would a tech company hire a developer in San Francisco for $300k when they can get a similar one for $100k in Akron? That company isn't suddenly going to be generous and decide that the employee in Akron deserves $300k too. They are going to decide that cost of living shouldn't matter and maybe pay everyone $110k. Sure, that improves the situation for people living in Akron, but does it improve the situation for developers as a whole?

tomnipotent 4y ago
> You aren't being paid based on what your labor is earning your company. I've managed P&L at multiple companies. Salaries are inevitably influenced by cash flow projections and revenues, and are absolutely aligned in multiple dimensions to revenues. > cost of living shouldn't matter and maybe pay everyone $110k No, they're going to pay whatever their margins can tolerate while competing for labor. If Google can manage the salaries they have with staff living mostly in high cost-of-living cities, so they can also support those margins with staff living anywhere else in the world. Why is it only capitalism when the company is greedy?
- slg 4y ago
  >I've managed P&L at multiple companies. Salaries are inevitably influenced by cash flow projections and revenues, and are absolutely aligned in multiple dimensions to revenues. How mature were those companies? Did they have investors willing to accept extended periods of time without profit like many VC and Wall Street investors have come to accept from many tech companies? Did increases in cash flow or revenue lead to across the board raises? Or did cash flow and revenue exist purely as a cap on salaries? >No, they're going to pay whatever their margins can tolerate while competing for labor. If Google can manage the salaries they have with staff living mostly in high cost-of-living cities, so they can also support those margins with staff living anywhere else in the world. Yes, Google can support those margins, but why would they? Why would Google pay a developer a dollar more than they need to? If they can get the same work out of employees in low cost of living areas, they will expect to pay all employees low cost of living salaries. >Why is it only capitalism when the company is greedy? I'm not sure what you mean by this. There was no positive value judgement on my use of the word "capitalism". I was not praising companies for this behavior. I was making a value neutral observation on their behavior. Don't take my observation of behavior as and endorsement of that behavior.
  - tomnipotent 4y ago
    > How mature were those companies? Early stage to public, all VC-backed. > Did increases in cash flow or revenue lead to across the board raises? That doesn't happen anywhere, unless a board member recommends it or you have a very generous CEO (like Gravity Payments). Either an employee asks for a raise, or a manager fights for one using new hires/open req salaries as negotiating leverage. Turnover is part of life, and if no one is fighting for you then you're expected to fight for yourself. > Or did cash flow and revenue exist purely as a cap on salaries? G&A is a huge chunk of expenses for most companies, and after a few years of operating you'll have reasonable historical data combined with future financial projections to figure out where you want that G&A % to hover around. This is what determines salary caps, as your leadership team juggles figuring out whom they need to hire to hit those projections and how much they can pay in the given market to find the talent they need/want. For an e-comm business that might be 30-35% of total expenses. For SaaS, could be as high as 70%. So your leadership agrees on some growth plan, and the CEO hits the button on hiring X new heads with a combined Z salary cap. What ends up happening is that you max out Z by X-N new hires, and the CEO has to decide to spend more to reach X hires or tell teams to make due with the headcount they have while reminding them to "hire faster next time". Over a long enough period of time, the executive and finance teams will implicitly agree on some tolerance that G&A needs to stay within, and the company will be managed and decisions will be made to make sure those commitments are made. We've probably all seen this as sudden hiring freezes or lay-offs, when either current results or projections show that some target isn't going to be met but that tweaking these other numbers (headcount, payroll) the company can keep the first number (costs as % of revenues) consistent. Over an even longer period of times, those salary bands will ossify into comp levels like "SDE 5" or some-such and this becomes the aggregate in which salary is managed. So for a company like Google that has its finances literally down to a science, which is already operating multi-year roadmaps with high salaries baked into every assumption and model and even the stock price, would not want to rock the boat of missing those targets by tweaking something that could cause more harm than good. It's not worth it to them. Keep in mind that Google's margin are still healthy even after salaries have skyrocketed since they were discovered colluding with other companies to artificially keep salaries low.

by slg 4y ago

tomnipotent 4y ago

> You aren't being paid based on what your labor is earning your company. I've managed P&L at multiple companies. Salaries are inevitably influenced by cash flow projections and revenues, and are absolutely aligned in multiple dimensions to revenues. > cost of living shouldn't matter and maybe pay everyone $110k No, they're going to pay whatever their margins can tolerate while competing for labor. If Google can manage the salaries they have with staff living mostly in high cost-of-living cities, so they can also support those margins with staff living anywhere else in the world. Why is it only capitalism when the company is greedy?

slg 4y ago
>I've managed P&L at multiple companies. Salaries are inevitably influenced by cash flow projections and revenues, and are absolutely aligned in multiple dimensions to revenues. How mature were those companies? Did they have investors willing to accept extended periods of time without profit like many VC and Wall Street investors have come to accept from many tech companies? Did increases in cash flow or revenue lead to across the board raises? Or did cash flow and revenue exist purely as a cap on salaries? >No, they're going to pay whatever their margins can tolerate while competing for labor. If Google can manage the salaries they have with staff living mostly in high cost-of-living cities, so they can also support those margins with staff living anywhere else in the world. Yes, Google can support those margins, but why would they? Why would Google pay a developer a dollar more than they need to? If they can get the same work out of employees in low cost of living areas, they will expect to pay all employees low cost of living salaries. >Why is it only capitalism when the company is greedy? I'm not sure what you mean by this. There was no positive value judgement on my use of the word "capitalism". I was not praising companies for this behavior. I was making a value neutral observation on their behavior. Don't take my observation of behavior as and endorsement of that behavior.
- tomnipotent 4y ago
  > How mature were those companies? Early stage to public, all VC-backed. > Did increases in cash flow or revenue lead to across the board raises? That doesn't happen anywhere, unless a board member recommends it or you have a very generous CEO (like Gravity Payments). Either an employee asks for a raise, or a manager fights for one using new hires/open req salaries as negotiating leverage. Turnover is part of life, and if no one is fighting for you then you're expected to fight for yourself. > Or did cash flow and revenue exist purely as a cap on salaries? G&A is a huge chunk of expenses for most companies, and after a few years of operating you'll have reasonable historical data combined with future financial projections to figure out where you want that G&A % to hover around. This is what determines salary caps, as your leadership team juggles figuring out whom they need to hire to hit those projections and how much they can pay in the given market to find the talent they need/want. For an e-comm business that might be 30-35% of total expenses. For SaaS, could be as high as 70%. So your leadership agrees on some growth plan, and the CEO hits the button on hiring X new heads with a combined Z salary cap. What ends up happening is that you max out Z by X-N new hires, and the CEO has to decide to spend more to reach X hires or tell teams to make due with the headcount they have while reminding them to "hire faster next time". Over a long enough period of time, the executive and finance teams will implicitly agree on some tolerance that G&A needs to stay within, and the company will be managed and decisions will be made to make sure those commitments are made. We've probably all seen this as sudden hiring freezes or lay-offs, when either current results or projections show that some target isn't going to be met but that tweaking these other numbers (headcount, payroll) the company can keep the first number (costs as % of revenues) consistent. Over an even longer period of times, those salary bands will ossify into comp levels like "SDE 5" or some-such and this becomes the aggregate in which salary is managed. So for a company like Google that has its finances literally down to a science, which is already operating multi-year roadmaps with high salaries baked into every assumption and model and even the stock price, would not want to rock the boat of missing those targets by tweaking something that could cause more harm than good. It's not worth it to them. Keep in mind that Google's margin are still healthy even after salaries have skyrocketed since they were discovered colluding with other companies to artificially keep salaries low.