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> 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?

by pid-1 4y ago

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.
- Victerius 4y ago
  A little mentioned dynamic is that tech salaries can't be too much out-of-sync with non-tech salaries, because overpriced housing bought up by SWEs making 300K+ eventually leads to non-SWEs demanding wage increases to keep up with rent payments and/or remain able to save for a downpayment on newly priced homes. In turn, the lower disposable income from workers being squeezed by housing costs is lowering growth and tech growth in particular, which puts pressure on tech wages, stock valuations, and headcount. In other words, free market mechanisms are slowly starting to redistribute wealth from high-earning SWEs and other high earners to middle class workers and lower. In other words, it is not possible for too many people to be making 5x+ the median household income regardless of the value they may create. In other words, expect non-tech wages to rise faster than tech wages for the foreseeable future.
  - Temporary_31337 4y ago
    Ah so you still believe in the trickle down economy. The problem with that is that anyone making 500k is not going to be able to spend fast enough to keep people around them equally wealthy and it gets worse the higher you go - you physically can’t spend 10M+ on groceries and haircuts near you so the higher proportion goes to financial instruments and assets which does not trickle down to neighbours
    - giantg2 4y ago
      They're not talking about trickle down. They're talking about market pricing (COL) affecting pay. This is clearly evident looking at non-tech jobs in someplace like SV vs Philly.
    - embeng4096 4y ago
      I think trickle down would actually go against GP's point. Their point seems to be that even as richer SWEs make more money, they price out middle class workers on housing -- then as workers pay more for housing, they have less money to buy things from the companies that pay the SWEs, with a result of putting downward pressure on SWE salaries. Believing in trickle down would actually undermine GP's point. If trickle down was true, SWEs' spending would offset the housing cost increases caused by SWEs, so middle class workers would have more disposable income to buy things from companies that pay the SWEs -- and that would be the opposite of what GP is describing.

> 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?

by 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.
Victerius 4y ago
A little mentioned dynamic is that tech salaries can't be too much out-of-sync with non-tech salaries, because overpriced housing bought up by SWEs making 300K+ eventually leads to non-SWEs demanding wage increases to keep up with rent payments and/or remain able to save for a downpayment on newly priced homes. In turn, the lower disposable income from workers being squeezed by housing costs is lowering growth and tech growth in particular, which puts pressure on tech wages, stock valuations, and headcount. In other words, free market mechanisms are slowly starting to redistribute wealth from high-earning SWEs and other high earners to middle class workers and lower. In other words, it is not possible for too many people to be making 5x+ the median household income regardless of the value they may create. In other words, expect non-tech wages to rise faster than tech wages for the foreseeable future.
- Temporary_31337 4y ago
  Ah so you still believe in the trickle down economy. The problem with that is that anyone making 500k is not going to be able to spend fast enough to keep people around them equally wealthy and it gets worse the higher you go - you physically can’t spend 10M+ on groceries and haircuts near you so the higher proportion goes to financial instruments and assets which does not trickle down to neighbours
  - giantg2 4y ago
    They're not talking about trickle down. They're talking about market pricing (COL) affecting pay. This is clearly evident looking at non-tech jobs in someplace like SV vs Philly.
  - embeng4096 4y ago
    I think trickle down would actually go against GP's point. Their point seems to be that even as richer SWEs make more money, they price out middle class workers on housing -- then as workers pay more for housing, they have less money to buy things from the companies that pay the SWEs, with a result of putting downward pressure on SWE salaries. Believing in trickle down would actually undermine GP's point. If trickle down was true, SWEs' spending would offset the housing cost increases caused by SWEs, so middle class workers would have more disposable income to buy things from companies that pay the SWEs -- and that would be the opposite of what GP is describing.