4 ms·

>Consider the price of water compared to the price of diamonds. Diamonds are far more expensive than water, even though water is essential for life and diamonds

by aftbit 4y ago

>Consider the price of water compared to the price of diamonds. Diamonds are far more expensive than water, even though water is essential for life and diamonds are basically useless. >Water is cheap because it’s relatively easy to acquire, whereas diamonds are much harder to get. Salaries work precisely this way. Diamonds are expensive not because they're hard to get, but because their sales and distribution channels are controlled by a cartel. Oddly similar to SWE salaries, now that I think about it. :P

akavi 4y ago
What's the cartel keeping SWE salaries high?
- hguant 4y ago
  Superficially, FAANG offering massive compensation packages to anyone who fits their model of "Stanford/MIT degree, willing to suffer through LeetCode challenges", which has a massive effect on the market for SWE, as it changes the bar for what's _possible_ in the realm of compensation, and ensures that the cartel gets its pick of SWE talent, simply because it can offer substantially more than most other companies. Interestingly, those companies are also the ones that I think have put the most effort into quantifying the value of a software developer to the business as a whole. The salaries look obscene to many people, but the cartel pays them because it believes it's getting more value than it's paying for.
  - williamDafoe 4y ago
    Don't forget the 50-60 hr real workweeks (more than 10% of the search team I was on was always working 11pm-12pm midnight). Turnover is actually pretty high at Google. My whole team (9 people) quit in the year that I left.
  - csdvrx 4y ago
    > the cartel gets its pick of SWE talent, simply because it can offer substantially more than most other companies. Some people will refuse to work for a FAANG as a matter of principle, and they don't have a monopsony, so it's not exactly a cartel I'd say
  - thirtyseven 4y ago
    That's... not a cartel though? A cartel is a group of firms conspiring to artificially control the supply of some good in order to increase its price, what you described is just several independent firms that have a high demand for workers and are bidding up salaries for them. It was more cartel-like when Apple and Google were conspiring to keep tech salaries down by setting salary caps.
  - givemeethekeys 4y ago
    Do you know how much money the sales people in these organizations make on the backs of those engineers?
  - 908B64B197 4y ago
    > Stanford/MIT degree, willing to suffer through LeetCode challenges Or who actually completed a data structure and algorithm course as well as a discrete math course. I mean someone could grind leetcode for hours and rote instead of putting the work to complete these classes I suppose.
- drelihan 4y ago
  Probably referring to recent articles / interviews that claim how large tech companies over-hired in efforts to take supply out of the market for competitors. https://fortune.com/2023/03/10/google-over-hired-talent-do-nothing-fake-work-stop-working-rivals-former-paypal-boss-keith-rabois/amp/ https://fortune.com/2023/03/10/google-over-hired-talent-do-n...
- apercu 4y ago
  High? Based on what data? Is inventing things all day and understanding rapidly changing complex systems easier than family law? Outside a few thousand high paying jobs concentrated in a few regions, if you objectively look at most software developers worldwide, they're barely middle class.
  - jltsiren 4y ago
    I'd say most software developers are comfortably middle class. They are not upper middle class professionals in the same way as lawyers and doctors often are. Median full-time income is a good starting point for defining the middle class, at least in developed countries. People earning around the median tend to be pretty good examples of what middle-class life looks like. Most software developers earn above the median, but not so much above that their lives would be qualitatively different. In the US, the median is currently somewhere between $55k and $60k.
    - apercu 4y ago
      I guess I define middle class as somewhat comfortable.
    - jwestbury 4y ago
      This is a fundamental misunderstanding of "middle class," which has no connection to median income, but is exactly what it says on the tin -- a class between the upper classes and the lower classes. The earliest recognised middle classes were the wealthy merchant class who had similar wealth to the upper classes, but less social capital -- they were definitively above the lower class, whose labour was owned by the upper classes. These were the free men, or yeomen, of the middle ages, for instance -- people who owned their land, likely had their own businesses, and weren't beholden to the upper class. In more recent times, such as the 18th-19th century, the middle class expanded dramatically to include typical professionals, such as doctors and lawyers -- people who may rub shoulders with the elites, but whose wealth was still tied to their jobs. If their business failed, they would often no longer be middle class, whereas the upper class could likely fall back on connections and maintain good social standing. The median worker was decidedly lower class. This structure broke down somewhat in the US and, to a lesser extent, in western Europe in the post-war era, due to an abundance of demand for labour, which allowed lower class workers to enjoy traditionally middle-class luxuries, which included widespread homeownership, often multiple cars per family, etc. But don't make the mistake of thinking a well-paid factory worker was middle class -- they were working class. Most software engineers worldwide are working class. In certain pockets -- the Bay Area, Seattle, etc. -- or certain industries -- such as finance -- they are closer to middle class by earnings, but still working class by vocation, as they (we) work for a living and do not own our own businesses (as many doctors and lawyers do).
- pwinnski 4y ago
  You might have misunderstood. Historically cartels have worked to keep SWE salaries low, not high[0]. 0. https://qz.com/247251/silicon-valley-hasnt-got-away-with-its-no-poaching-cartel-just-yet https://qz.com/247251/silicon-valley-hasnt-got-away-with-its...
  - nonethewiser 4y ago
    That doesn’t fit his analogy though. It also doesn’t make sense that the cartel would also be the primary source of income (the company, compared to diamond mine + cartel).
    - pwinnski 4y ago
      Ah, okay, I see now. Feel free to define analogy as a thing in which everything applies in exactly the same way to the level of detail that it really means you're describing the exact same thing using different words, while the rest of us go on with understanding that analogies are limited-purpose.
lysecret 4y ago
Take meteroits then. Ah do me a favour and google meteroits.
Domenic_S 4y ago
> because their sales and distribution channels are controlled by a cartel. ...which is only effective because naturally-occurring diamonds are hard for the average person to get. If there could be a water cartel there would be, but it doesn't work because 1) you can just go down to the river/find some snow/dig a well/etc/etc, and 2) water is inefficient to move in large quantities. You could fit millions of dollars worth of diamonds in the space of 1L of water (maybe $10-$100 at cartel prices)
francisofascii 4y ago
Medical schools certainly acted like a cartel to keep the number of physicians low. But SWEs? There is no gatekeeping authority AFAIK. Unless you are talking about the H-1B Program.
nonethewiser 4y ago
> Diamonds are expensive not because they're hard to get, but because their sales and distribution channels are controlled by a cartel. That’s _why_ they’re hard to get. I also don’t think SWE salaries are similar. A union would be analogous to the cartel, which are pretty much non existent in tech. Not necessarily in terms of good/bad but in terms of controlling the supply of labor. What do you see as the analog to cartels?
- pydry 4y ago
  Cartels can be for buying or selling. For example, the new EU gas buying cartel or the Apple/Google/Intel/Adobe wage fixing cartel: https://www.cnet.com/tech/tech-industry/apple-google-others-settle-anti-poaching-lawsuit-for-415-million/ https://www.cnet.com/tech/tech-industry/apple-google-others-...
beebmam 4y ago
Supply of engineers is bottlenecked by education and experience. Not similar to diamonds

by aftbit 4y ago

akavi 4y ago

What's the cartel keeping SWE salaries high?

hguant 4y ago
Superficially, FAANG offering massive compensation packages to anyone who fits their model of "Stanford/MIT degree, willing to suffer through LeetCode challenges", which has a massive effect on the market for SWE, as it changes the bar for what's _possible_ in the realm of compensation, and ensures that the cartel gets its pick of SWE talent, simply because it can offer substantially more than most other companies. Interestingly, those companies are also the ones that I think have put the most effort into quantifying the value of a software developer to the business as a whole. The salaries look obscene to many people, but the cartel pays them because it believes it's getting more value than it's paying for.
- williamDafoe 4y ago
  Don't forget the 50-60 hr real workweeks (more than 10% of the search team I was on was always working 11pm-12pm midnight). Turnover is actually pretty high at Google. My whole team (9 people) quit in the year that I left.
- csdvrx 4y ago
  > the cartel gets its pick of SWE talent, simply because it can offer substantially more than most other companies. Some people will refuse to work for a FAANG as a matter of principle, and they don't have a monopsony, so it's not exactly a cartel I'd say
- thirtyseven 4y ago
  That's... not a cartel though? A cartel is a group of firms conspiring to artificially control the supply of some good in order to increase its price, what you described is just several independent firms that have a high demand for workers and are bidding up salaries for them. It was more cartel-like when Apple and Google were conspiring to keep tech salaries down by setting salary caps.
- givemeethekeys 4y ago
  Do you know how much money the sales people in these organizations make on the backs of those engineers?
- 908B64B197 4y ago
  > Stanford/MIT degree, willing to suffer through LeetCode challenges Or who actually completed a data structure and algorithm course as well as a discrete math course. I mean someone could grind leetcode for hours and rote instead of putting the work to complete these classes I suppose.
drelihan 4y ago
Probably referring to recent articles / interviews that claim how large tech companies over-hired in efforts to take supply out of the market for competitors. https://fortune.com/2023/03/10/google-over-hired-talent-do-nothing-fake-work-stop-working-rivals-former-paypal-boss-keith-rabois/amp/ https://fortune.com/2023/03/10/google-over-hired-talent-do-n...
apercu 4y ago
High? Based on what data? Is inventing things all day and understanding rapidly changing complex systems easier than family law? Outside a few thousand high paying jobs concentrated in a few regions, if you objectively look at most software developers worldwide, they're barely middle class.
- jltsiren 4y ago
  I'd say most software developers are comfortably middle class. They are not upper middle class professionals in the same way as lawyers and doctors often are. Median full-time income is a good starting point for defining the middle class, at least in developed countries. People earning around the median tend to be pretty good examples of what middle-class life looks like. Most software developers earn above the median, but not so much above that their lives would be qualitatively different. In the US, the median is currently somewhere between $55k and $60k.
  - apercu 4y ago
    I guess I define middle class as somewhat comfortable.
  - jwestbury 4y ago
    This is a fundamental misunderstanding of "middle class," which has no connection to median income, but is exactly what it says on the tin -- a class between the upper classes and the lower classes. The earliest recognised middle classes were the wealthy merchant class who had similar wealth to the upper classes, but less social capital -- they were definitively above the lower class, whose labour was owned by the upper classes. These were the free men, or yeomen, of the middle ages, for instance -- people who owned their land, likely had their own businesses, and weren't beholden to the upper class. In more recent times, such as the 18th-19th century, the middle class expanded dramatically to include typical professionals, such as doctors and lawyers -- people who may rub shoulders with the elites, but whose wealth was still tied to their jobs. If their business failed, they would often no longer be middle class, whereas the upper class could likely fall back on connections and maintain good social standing. The median worker was decidedly lower class. This structure broke down somewhat in the US and, to a lesser extent, in western Europe in the post-war era, due to an abundance of demand for labour, which allowed lower class workers to enjoy traditionally middle-class luxuries, which included widespread homeownership, often multiple cars per family, etc. But don't make the mistake of thinking a well-paid factory worker was middle class -- they were working class. Most software engineers worldwide are working class. In certain pockets -- the Bay Area, Seattle, etc. -- or certain industries -- such as finance -- they are closer to middle class by earnings, but still working class by vocation, as they (we) work for a living and do not own our own businesses (as many doctors and lawyers do).
pwinnski 4y ago
You might have misunderstood. Historically cartels have worked to keep SWE salaries low, not high[0]. 0. https://qz.com/247251/silicon-valley-hasnt-got-away-with-its-no-poaching-cartel-just-yet https://qz.com/247251/silicon-valley-hasnt-got-away-with-its...
- nonethewiser 4y ago
  That doesn’t fit his analogy though. It also doesn’t make sense that the cartel would also be the primary source of income (the company, compared to diamond mine + cartel).
  - pwinnski 4y ago
    Ah, okay, I see now. Feel free to define analogy as a thing in which everything applies in exactly the same way to the level of detail that it really means you're describing the exact same thing using different words, while the rest of us go on with understanding that analogies are limited-purpose.

lysecret 4y ago

Take meteroits then. Ah do me a favour and google meteroits.

Domenic_S 4y ago

> because their sales and distribution channels are controlled by a cartel. ...which is only effective because naturally-occurring diamonds are hard for the average person to get. If there could be a water cartel there would be, but it doesn't work because 1) you can just go down to the river/find some snow/dig a well/etc/etc, and 2) water is inefficient to move in large quantities. You could fit millions of dollars worth of diamonds in the space of 1L of water (maybe $10-$100 at cartel prices)

francisofascii 4y ago

Medical schools certainly acted like a cartel to keep the number of physicians low. But SWEs? There is no gatekeeping authority AFAIK. Unless you are talking about the H-1B Program.

nonethewiser 4y ago

> Diamonds are expensive not because they're hard to get, but because their sales and distribution channels are controlled by a cartel. That’s _why_ they’re hard to get. I also don’t think SWE salaries are similar. A union would be analogous to the cartel, which are pretty much non existent in tech. Not necessarily in terms of good/bad but in terms of controlling the supply of labor. What do you see as the analog to cartels?

pydry 4y ago
Cartels can be for buying or selling. For example, the new EU gas buying cartel or the Apple/Google/Intel/Adobe wage fixing cartel: https://www.cnet.com/tech/tech-industry/apple-google-others-settle-anti-poaching-lawsuit-for-415-million/ https://www.cnet.com/tech/tech-industry/apple-google-others-...

beebmam 4y ago

Supply of engineers is bottlenecked by education and experience. Not similar to diamonds