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US tech salaries are good for only one reason, the largest tech companies went the path of public stock valuations and paid employees with stock. If anything,

US tech salaries are good for only one reason, the largest tech companies went the path of public stock valuations and paid employees with stock. If anything, it's an indicator of the vast difference in income for people who make a living with assets vs people who still need to trade their labor for a paycheck. Tech salaries are going to be on a decline for a while with the Fed rate hike, like it or not, most tech companies are floating on VC money and that all depends on a stock market giving them high valuations. In situations we're in now, fundamentals start to matter and the phony valuations get corrected.

pid-1 4y ago
> Tech salaries are going to be on a decline for a while with the Fed rate hike Isn't that true for the whole economy?
- bottled_poe 4y ago
  No. Another hard truth is that some jobs are more essential than others.
  - dsr_ 4y ago
    Sanitation. Childcare. Primary education. Fire departments. Groceries. If your city doesn't have those, it stops being a livable place pretty quickly.
    - toast0 4y ago
      Cost of housing goes down quite a bit too.
- giantg2 4y ago
  In fact, were seeing the largest increases in pay over the past two years (and i think in real pay too), and they're forecasting that will continue this year as well. This is much more prominent in the lower paying jobs than in professional ones.
  - andsoitis 4y ago
    > In fact, were seeing the largest increases in pay over the past two years (and i think in real pay too), and they're forecasting that will continue this year as well. Last two years I agree, and fueled by a acceleration of business for tech companies. But continue this year? Who is forecasting that?
    - giantg2 4y ago
      The Federal Reserve, among others. https://www.washingtonpost.com/business/2021/12/08/wages-2022-raises-inflation/ https://www.washingtonpost.com/business/2021/12/08/wages-202...
      - andsoitis 4y ago
        Thanks for the link; I can’t read the article because I’m not a WaPo subscriber (I’ll see if I can find a copy somehow). Do you know whether the Fed forecasts that for software engineering jobs? I think that is what’s most relevant for a large number of folks in this thread.
        giantg2 4y ago
        This was in response to the comment about wages decreasing for the whole economy. I don't know of any specific forecasts. It's possible the actual report by the Fed does break down by industry, but I'm not sure.
      - jaynetics 4y ago
        without paywall: https://archive.ph/qqQMw https://archive.ph/qqQMw (article is 9 months old, though)
      - jlbbellefeuille 4y ago
        Wage spirals are an untested economic theory and economists are split about the effectiveness of what the fed is doing. The fed is assuming that inflation is being driven by wage increases. Thus they raise rates to force employers to cut back on compensation and job openings. How they do this with a clear conscience is beyond me. Wage growth has lagged behind inflation, let alone productivity for 40+ years! Inflation is caused by a lot of different factors, but wage growth doesn’t appear to be one of them.
savanaly 4y ago
>US tech salaries are good for only one reason, the largest tech companies went the path of public stock valuations and paid employees with stock. That's a reason for first-generation employees to get paid highly, not a reason to continue to pay that highly to new employees joining today. The real determinants of tech company salaries are the same old boring ones that govern salaries in most lightly regulated industries: productivity and competition. Each marginal employee earns a lot of revenue for a company, and competition ensures most of that is paid out in salary to them (I'm aware the company makes more from you than it pays you, but that's about average productivity not marginal productivity).
- partizanos 4y ago
  Can you please define the difference between average and marginal productivity?
  - deleted 4y ago
    [deleted]
  - savanaly 4y ago
    Average productivity is exactly what it sounds like. If google is making one million dollars in a year and has 1000 employees their average productivity is $1000. Marginal productivity is harder to pin down empirically, it's the first derivative of productivity with respect to inputs of labor. Not all labor is productive to the same degree, it was hired at different times, and there's variance in negotiation so your comp definitely doesn't (===) your marginal productivity. It's also probably greatly distorted for startups that are banking on a unicorn valuation where the expected productivity is something like (0.99 * 0 + 0.009 * 1 million + 0.0001 * 1 billion). But for Google et. al where they're in a relative steady state, they have a good idea of how much revenue grows when they add an employee and they'll be willing to pay up to that.
importantbrian 4y ago
Maybe in real terms, but there is quite a bit of research showing that nominal wages are sticky-down. https://en.wikipedia.org/wiki/Nominal_rigidity https://en.wikipedia.org/wiki/Nominal_rigidity

pid-1 4y ago

> Tech salaries are going to be on a decline for a while with the Fed rate hike Isn't that true for the whole economy?

bottled_poe 4y ago
No. Another hard truth is that some jobs are more essential than others.
- dsr_ 4y ago
  Sanitation. Childcare. Primary education. Fire departments. Groceries. If your city doesn't have those, it stops being a livable place pretty quickly.
  - toast0 4y ago
    Cost of housing goes down quite a bit too.
giantg2 4y ago
In fact, were seeing the largest increases in pay over the past two years (and i think in real pay too), and they're forecasting that will continue this year as well. This is much more prominent in the lower paying jobs than in professional ones.
- andsoitis 4y ago
  > In fact, were seeing the largest increases in pay over the past two years (and i think in real pay too), and they're forecasting that will continue this year as well. Last two years I agree, and fueled by a acceleration of business for tech companies. But continue this year? Who is forecasting that?
  - giantg2 4y ago
    The Federal Reserve, among others. https://www.washingtonpost.com/business/2021/12/08/wages-2022-raises-inflation/ https://www.washingtonpost.com/business/2021/12/08/wages-202...
    - andsoitis 4y ago
      Thanks for the link; I can’t read the article because I’m not a WaPo subscriber (I’ll see if I can find a copy somehow). Do you know whether the Fed forecasts that for software engineering jobs? I think that is what’s most relevant for a large number of folks in this thread.
      - giantg2 4y ago
        This was in response to the comment about wages decreasing for the whole economy. I don't know of any specific forecasts. It's possible the actual report by the Fed does break down by industry, but I'm not sure.
    - jaynetics 4y ago
      without paywall: https://archive.ph/qqQMw https://archive.ph/qqQMw (article is 9 months old, though)
    - jlbbellefeuille 4y ago
      Wage spirals are an untested economic theory and economists are split about the effectiveness of what the fed is doing. The fed is assuming that inflation is being driven by wage increases. Thus they raise rates to force employers to cut back on compensation and job openings. How they do this with a clear conscience is beyond me. Wage growth has lagged behind inflation, let alone productivity for 40+ years! Inflation is caused by a lot of different factors, but wage growth doesn’t appear to be one of them.

savanaly 4y ago

>US tech salaries are good for only one reason, the largest tech companies went the path of public stock valuations and paid employees with stock. That's a reason for first-generation employees to get paid highly, not a reason to continue to pay that highly to new employees joining today. The real determinants of tech company salaries are the same old boring ones that govern salaries in most lightly regulated industries: productivity and competition. Each marginal employee earns a lot of revenue for a company, and competition ensures most of that is paid out in salary to them (I'm aware the company makes more from you than it pays you, but that's about average productivity not marginal productivity).

partizanos 4y ago
Can you please define the difference between average and marginal productivity?
- deleted 4y ago
  [deleted]
- savanaly 4y ago
  Average productivity is exactly what it sounds like. If google is making one million dollars in a year and has 1000 employees their average productivity is $1000. Marginal productivity is harder to pin down empirically, it's the first derivative of productivity with respect to inputs of labor. Not all labor is productive to the same degree, it was hired at different times, and there's variance in negotiation so your comp definitely doesn't (===) your marginal productivity. It's also probably greatly distorted for startups that are banking on a unicorn valuation where the expected productivity is something like (0.99 * 0 + 0.009 * 1 million + 0.0001 * 1 billion). But for Google et. al where they're in a relative steady state, they have a good idea of how much revenue grows when they add an employee and they'll be willing to pay up to that.

importantbrian 4y ago

Maybe in real terms, but there is quite a bit of research showing that nominal wages are sticky-down. https://en.wikipedia.org/wiki/Nominal_rigidity https://en.wikipedia.org/wiki/Nominal_rigidity