5 ms·

Unfortunately salaries rot. Like vegetables in the fridge. I've been doing this a long time, I can assure you that most if not almost all companies let your s

Unfortunately salaries rot. Like vegetables in the fridge. I've been doing this a long time, I can assure you that most if not almost all companies let your salary go through attrition by itself with inflation, while new hires get paid market rates. You can observe this as a manager, when you can see the salaries of people and watch the pay inequity get worse and worse to punish people who have been there a while. I don't know what mechanism causes this, but it's likely related to leverage: when you don't work there, you have leverage to ask for more. Now that you're there, especially if you are loyal, they have the leverage unless another offer comes along.

throwawaysleep 4y ago
Yeah, I don't see how you could be a lifer without having your standard of living collapse compared to peers over time because of that. If you want market rate, you must move. Heck, I don't get the incentive to really work all that hard for your employer because of it. You are leaving anyway.
snowwrestler 4y ago
The reverse of this is that if you find a place that does keep their salaries up with the market over time, then you might have a good opportunity to be a long-term employee if you want to. It's not like it is hard for employees to check their salaries against the market these days. Aside from the websites and local communities that exist for this purpose, you can apply and interview at other jobs to see where the offers come in.
myth_drannon 4y ago
It's just basic math. You can't increase salaries up to the market rate for all 10,000 employees. Most employees will stay and accept 3% yearly increases and only few will leave and then the company will pay higher salary for the newly hired employee. #replaced employees < #lifers.
- avisser 4y ago
  Not to be too pedantic, but you showed 0 math. If the company's revenue grows at or above 3%, there is no math "problem".
  - myth_drannon 4y ago
    My Fields prize worthy math... salary increase on average by 30,000$ to 10,000 employees = 300 million vs hiring new employees to backfill that left with higher salary 30,000$ * 1000 = 30 million + cost of replacement 70000$*1000 = 70 million. total 100 million. 200 million difference is not a small change, that can be given as a bonus to executives.
    - avisser 4y ago
      Thanks for obliging me. But I think the math ended up being superfluous. It's about the rich getting richer. Which makes sense to me, unfortunately.
- wilde 4y ago
  Lol of course they could. Netflix does. But like you said market rate includes the cost of interviewing, which is usually enough to deter 80% of folks so why would you overpay.
- wpietri 4y ago
  That's ridiculous. Most companies can do it. You're just saying you don't want to because you can get away with exploiting employees' aversion to changing jobs. Pretending that greed is "basic math" is just deflection.
  - marktangotango 4y ago
    > Most companies can do it. Compensation is a Huge lever on earnings. There would certainly be a consequence on the stock price if margins diminished due to overly extravagant raises, which they most certainly would in a most if not all cases.
    - oblio 4y ago
      Any medium or large company can very easily find out current market rates. If they focus on those, it wouldn't be "overly extravagant raises", just... "staying up to date".
    - wpietri 4y ago
      Yes, that would be the greed part I was talking about. If the current stock pricing depends upon worker exploitation, then obviously ceasing to exploit workers would cause the stock price to fall, at least in the short term. (In my experience, treating workers well pays off in the long.) But that doesn't turn the continued exploitation into "basic math".
      - edmundsauto 4y ago
        For big tech, a lot of your comp is in stock. So this would diminish the salary increase effectively by reducing the stock price. IME, people are a lot more sensitive to lowered stock prices than meager annual increases. The latter doesn’t feel emotionally like a loss.
        wpietri 4y ago
        I don't think that's generally true for people in big tech. Just the highest strata. And to the extent that causes problems, I expect they'll be much smaller than the sorts of market fluctuations we're seeing lately, which companies already have tools to deal with.
NoGravitas 4y ago
> Unfortunately salaries rot. Like vegetables in the fridge. I've been doing this a long time, I can assure you that most if not almost all companies let your salary go through attrition by itself with inflation, while new hires get paid market rates. This is one reason that co-workers should absolutely talk about their salaries. Especially when management tells them not to. This is one of those problems that has a known solution, which is collective bargaining. It's just that every programmer thinks they're a special 10x snowflake and that they're going to lose out on their good-boy treats if they don't compete with their co-workers.
- danuker 4y ago
  > collective bargaining I absolutely agree with unions. When an employee quits a company of 100, the company loses 1% of their productivity. But when an employee is fired, they lose 100% of their income. Barring unions, employees should constantly be looking for a workplace, and change them regularly. There is no other way to capture their work's productivity. The proportion of money captured by workers has been going down for decades, at least in the US. https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
  - usui 4y ago
    > When an employee quits a company of 100, the company loses 1% of their productivity. Err.... that doesn't seem to check out on first glance. What makes you say that?
    - danuker 4y ago
      It makes a lot of assumptions, such that all employees are equal in productivity. Of course that's not true, but it might not be far off either. The point is, a company is typically not significantly affected (and therefore has an easier time negotiating).
    - renonce 4y ago
      At least it’s significantly smaller than 100% I think.
TheCondor 4y ago
wanting to work there hurts your value. That’s just logic, if you are happy and want to be there, they don’t have to work as hard to keep you. Smooth operations do too, if your group is running like a top and doesn’t need a lot of attention, then it typically doesn’t get the attention. Good managers will point that out and try to reward that but it fades. IBM, Microsoft, Google, etc.. have all come up with different strategies to rank people, they tend to be disliked by many and often create incentives to be less than the best teammates. It’s hard. It’s very hard.
marktangotango 4y ago
The phenomena been written about as "Who moved my cheese?" A lot of people value comfort and reliability over chasing higher salaries and more reward. But the "cheese" gets depleted over time. https://en.wikipedia.org/wiki/Who_Moved_My_Cheese%3F https://en.wikipedia.org/wiki/Who_Moved_My_Cheese%3F There's also an aspect of the "Dead Sea Effect". The people who stay and settle for the below market salary also tend to be the less talented and/or motivated. I've seen this and done this. In low performance teams and organizations it's easy to "rest and vest" and keep a good work life balance. http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-dead-sea-effect/ http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d...
JohnBooty 4y ago
Skills rot too. Any company may let you go at any moment, for reasons that might be entirely outside your control. Any developer should have a plan for this.
JohnBooty 4y ago
Skills rot too. Any company may let us go at any moment, for reasons that might be entirely outside our control. Any developer should have a plan for this and it has to involve keeping one's skills reasonably current. In my experience this has been extremely difficult to do while sticking with a single company for an extended amount of time. Though certainly it can be possible, I don't think it's the norm.
JeremyNT 4y ago
I'm maybe a lifer like the OP. Similar age, some similar concerns. I haven't really decided yet, but my motivation to put myself back on the market has dramatically declined. I've been... OK to let my salary rot a little. I think it's an implicit part of the lifer "bargain." I've found, though, that you can sometimes get a correction by talking to management about market rates and where your salary stands (without making any implied threats or anything, just raising the concern). The HN mindset is that, if you want more money, you need to switch jobs. But you can't get what you don't ask for, and if you're a strong contributor, you might be surprised at how responsive your management can be. A long term employee brings their own form of value that management may well recognize. A disclaimer here is that I work in higher ed, where programmer salaries will never be competitive with for-profit tech companies. This is kind of a given. But I have observed that I can at least keep my salary commensurate with jobs at other institutions.
roland35 4y ago
I think people make the mistake of thinking that 100% retention is even desirable. The company isn't paying me what I am _worth_, they are paying me what I am _worth to them_. If my unique combination of skills is a better fit and more valuable to another company, then it is more worthwhile for me to move on and it is not worth my old company to pay me above what they can afford for the role. Plus some turnover and fresh ideas are always healthy. Just look at baseball teams. Could the Cleveland Guardians have paid Francisco Lindor what his market rate was? Maybe, but it would have blown up the budget for the rest of the team. So he was traded to New York for some cheaper, younger (and less skilled at present) players which fit the team's plan. Win-win in this case, obviously there are many bad examples too!
vineyardmike 4y ago
> You can observe this as a manager, when you can see the salaries of people and watch the pay inequity get worse and worse to punish people who have been there a while. If you’re the manager… do you let this happen intentionally? Why not fight it? I constantly hear how people want to retain their employees since it’s cheaper than new hires. Why not take actions to reward the loyalty?
- Infinitesimus 4y ago
  Power to do this is limited at many Big Co (or small Co copying Big Co policies blindly). 1. Usually, policies around max % pay raises are set the organization level. In the name of equity, the right battle to fight is having a higher cap for everyone which a middle manager is ill-equipped to do well. 2. Yearly budgets are set early partly based in the above formula, you'll need to be in a room with the C-suite to make the case that costs should be higher than they are next year to right-size everyone. 3. Sometimes, you requests for outsized adjustments get rejected. "Hey we're paying Senior XYZ less than New Hire XYZ, can we increase Senior XYZ's comp by 20% to match the market rate?". Some answers: A. "No, it's against policy and needs an excalation. Sr XYZ isn't critical enough to the business to change the rules. B. "Sure, but you still have $ABC budget for the year. That raise will mean reduced budget for person G's promotion or we give up headcount next year and Project U is at risk, etc etc". I'm sure others here can add even more examples. I've come to the conclusion that any policy that is not "We will automatically raise you to top of market"* like Netflix will have this problem. For the C-Suite, that means costs are a bit harder to predict and it also means that in some world, you should be ready to accept your salary going _down_ if the market moves downwards and you're well above the pay to hire a new person.

throwawaysleep 4y ago

Yeah, I don't see how you could be a lifer without having your standard of living collapse compared to peers over time because of that. If you want market rate, you must move. Heck, I don't get the incentive to really work all that hard for your employer because of it. You are leaving anyway.

snowwrestler 4y ago

The reverse of this is that if you find a place that does keep their salaries up with the market over time, then you might have a good opportunity to be a long-term employee if you want to. It's not like it is hard for employees to check their salaries against the market these days. Aside from the websites and local communities that exist for this purpose, you can apply and interview at other jobs to see where the offers come in.

myth_drannon 4y ago

It's just basic math. You can't increase salaries up to the market rate for all 10,000 employees. Most employees will stay and accept 3% yearly increases and only few will leave and then the company will pay higher salary for the newly hired employee. #replaced employees < #lifers.

avisser 4y ago
Not to be too pedantic, but you showed 0 math. If the company's revenue grows at or above 3%, there is no math "problem".
- myth_drannon 4y ago
  My Fields prize worthy math... salary increase on average by 30,000$ to 10,000 employees = 300 million vs hiring new employees to backfill that left with higher salary 30,000$ * 1000 = 30 million + cost of replacement 70000$*1000 = 70 million. total 100 million. 200 million difference is not a small change, that can be given as a bonus to executives.
  - avisser 4y ago
    Thanks for obliging me. But I think the math ended up being superfluous. It's about the rich getting richer. Which makes sense to me, unfortunately.
wilde 4y ago
Lol of course they could. Netflix does. But like you said market rate includes the cost of interviewing, which is usually enough to deter 80% of folks so why would you overpay.
wpietri 4y ago
That's ridiculous. Most companies can do it. You're just saying you don't want to because you can get away with exploiting employees' aversion to changing jobs. Pretending that greed is "basic math" is just deflection.
- marktangotango 4y ago
  > Most companies can do it. Compensation is a Huge lever on earnings. There would certainly be a consequence on the stock price if margins diminished due to overly extravagant raises, which they most certainly would in a most if not all cases.
  - oblio 4y ago
    Any medium or large company can very easily find out current market rates. If they focus on those, it wouldn't be "overly extravagant raises", just... "staying up to date".
  - wpietri 4y ago
    Yes, that would be the greed part I was talking about. If the current stock pricing depends upon worker exploitation, then obviously ceasing to exploit workers would cause the stock price to fall, at least in the short term. (In my experience, treating workers well pays off in the long.) But that doesn't turn the continued exploitation into "basic math".
    - edmundsauto 4y ago
      For big tech, a lot of your comp is in stock. So this would diminish the salary increase effectively by reducing the stock price. IME, people are a lot more sensitive to lowered stock prices than meager annual increases. The latter doesn’t feel emotionally like a loss.
      - wpietri 4y ago
        I don't think that's generally true for people in big tech. Just the highest strata. And to the extent that causes problems, I expect they'll be much smaller than the sorts of market fluctuations we're seeing lately, which companies already have tools to deal with.

NoGravitas 4y ago

> Unfortunately salaries rot. Like vegetables in the fridge. I've been doing this a long time, I can assure you that most if not almost all companies let your salary go through attrition by itself with inflation, while new hires get paid market rates. This is one reason that co-workers should absolutely talk about their salaries. Especially when management tells them not to. This is one of those problems that has a known solution, which is collective bargaining. It's just that every programmer thinks they're a special 10x snowflake and that they're going to lose out on their good-boy treats if they don't compete with their co-workers.

danuker 4y ago
> collective bargaining I absolutely agree with unions. When an employee quits a company of 100, the company loses 1% of their productivity. But when an employee is fired, they lose 100% of their income. Barring unions, employees should constantly be looking for a workplace, and change them regularly. There is no other way to capture their work's productivity. The proportion of money captured by workers has been going down for decades, at least in the US. https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- usui 4y ago
  > When an employee quits a company of 100, the company loses 1% of their productivity. Err.... that doesn't seem to check out on first glance. What makes you say that?
  - danuker 4y ago
    It makes a lot of assumptions, such that all employees are equal in productivity. Of course that's not true, but it might not be far off either. The point is, a company is typically not significantly affected (and therefore has an easier time negotiating).
  - renonce 4y ago
    At least it’s significantly smaller than 100% I think.

TheCondor 4y ago

wanting to work there hurts your value. That’s just logic, if you are happy and want to be there, they don’t have to work as hard to keep you. Smooth operations do too, if your group is running like a top and doesn’t need a lot of attention, then it typically doesn’t get the attention. Good managers will point that out and try to reward that but it fades. IBM, Microsoft, Google, etc.. have all come up with different strategies to rank people, they tend to be disliked by many and often create incentives to be less than the best teammates. It’s hard. It’s very hard.

marktangotango 4y ago

The phenomena been written about as "Who moved my cheese?" A lot of people value comfort and reliability over chasing higher salaries and more reward. But the "cheese" gets depleted over time. https://en.wikipedia.org/wiki/Who_Moved_My_Cheese%3F https://en.wikipedia.org/wiki/Who_Moved_My_Cheese%3F There's also an aspect of the "Dead Sea Effect". The people who stay and settle for the below market salary also tend to be the less talented and/or motivated. I've seen this and done this. In low performance teams and organizations it's easy to "rest and vest" and keep a good work life balance. http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-dead-sea-effect/ http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d...

JohnBooty 4y ago

Skills rot too. Any company may let you go at any moment, for reasons that might be entirely outside your control. Any developer should have a plan for this.

JohnBooty 4y ago

Skills rot too. Any company may let us go at any moment, for reasons that might be entirely outside our control. Any developer should have a plan for this and it has to involve keeping one's skills reasonably current. In my experience this has been extremely difficult to do while sticking with a single company for an extended amount of time. Though certainly it can be possible, I don't think it's the norm.

JeremyNT 4y ago

I'm maybe a lifer like the OP. Similar age, some similar concerns. I haven't really decided yet, but my motivation to put myself back on the market has dramatically declined. I've been... OK to let my salary rot a little. I think it's an implicit part of the lifer "bargain." I've found, though, that you can sometimes get a correction by talking to management about market rates and where your salary stands (without making any implied threats or anything, just raising the concern). The HN mindset is that, if you want more money, you need to switch jobs. But you can't get what you don't ask for, and if you're a strong contributor, you might be surprised at how responsive your management can be. A long term employee brings their own form of value that management may well recognize. A disclaimer here is that I work in higher ed, where programmer salaries will never be competitive with for-profit tech companies. This is kind of a given. But I have observed that I can at least keep my salary commensurate with jobs at other institutions.

roland35 4y ago

I think people make the mistake of thinking that 100% retention is even desirable. The company isn't paying me what I am _worth_, they are paying me what I am _worth to them_. If my unique combination of skills is a better fit and more valuable to another company, then it is more worthwhile for me to move on and it is not worth my old company to pay me above what they can afford for the role. Plus some turnover and fresh ideas are always healthy. Just look at baseball teams. Could the Cleveland Guardians have paid Francisco Lindor what his market rate was? Maybe, but it would have blown up the budget for the rest of the team. So he was traded to New York for some cheaper, younger (and less skilled at present) players which fit the team's plan. Win-win in this case, obviously there are many bad examples too!

vineyardmike 4y ago

> You can observe this as a manager, when you can see the salaries of people and watch the pay inequity get worse and worse to punish people who have been there a while. If you’re the manager… do you let this happen intentionally? Why not fight it? I constantly hear how people want to retain their employees since it’s cheaper than new hires. Why not take actions to reward the loyalty?

Infinitesimus 4y ago
Power to do this is limited at many Big Co (or small Co copying Big Co policies blindly). 1. Usually, policies around max % pay raises are set the organization level. In the name of equity, the right battle to fight is having a higher cap for everyone which a middle manager is ill-equipped to do well. 2. Yearly budgets are set early partly based in the above formula, you'll need to be in a room with the C-suite to make the case that costs should be higher than they are next year to right-size everyone. 3. Sometimes, you requests for outsized adjustments get rejected. "Hey we're paying Senior XYZ less than New Hire XYZ, can we increase Senior XYZ's comp by 20% to match the market rate?". Some answers: A. "No, it's against policy and needs an excalation. Sr XYZ isn't critical enough to the business to change the rules. B. "Sure, but you still have $ABC budget for the year. That raise will mean reduced budget for person G's promotion or we give up headcount next year and Project U is at risk, etc etc". I'm sure others here can add even more examples. I've come to the conclusion that any policy that is not "We will automatically raise you to top of market"* like Netflix will have this problem. For the C-Suite, that means costs are a bit harder to predict and it also means that in some world, you should be ready to accept your salary going _down_ if the market moves downwards and you're well above the pay to hire a new person.