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Colluding to hold down wages is terrible and I hope they get in a lot of trouble for it. But this doesn't follow: > Maybe if CEO's weren't illegally conspiring

Colluding to hold down wages is terrible and I hope they get in a lot of trouble for it. But this doesn't follow: > Maybe if CEO's weren't illegally conspiring to drive wages below their market value, there wouldn't be a so-called "engineer shortage"? What illegally driven-down wages mean is that the shortage is more acute that previously thought. That's because the main way to measure the relationship of supply and demand is through price; i.e. the more the salaries grow, the less supply there is relative to demand. So if salaries have been held down, some of that evidence was masked. Secondly, it means that non-giant companies could be competitive in making job offers, whereas perhaps in a more free labor market they might not be able to compete salarywise with Google, Apple, Microsoft, etc. Thus, as seen from say, a startup's vantage point, this check on the upward price pressure actually kept the supply of affordable engineers up. So I remain sympathetic to the there-aren't-enough-programmers line of thinking, and certainly don't think of this as hypocritical or antithetical to that line. Of course, that doesn't excuse any of Google's behavior here; they've effectively stolen a great deal of money from all of us through illegal collusion, pocketing the money that an honest market would direct into the engineers' bank accounts. I hope there's hell to pay. Edit: I suppose it's theoretically possible that if the salaries went up to their natural levels, then people would pour into the field, and perhaps that's what you're trying to say. I think that's very unlikely, since software engineers are already paid a great deal more than most fields, so these people are either people who don't care about money unless it's a lot of money, or they're people who instead chose to be doctors and lawyers. I'm sure more people would say, "hmm, maybe I should be a programmer", but you have to ask why those people aren't doing it now. As economists might put it, this is a structural problem, not a market problem (I hope I'm using those terms right).

TheCoelacanth 13y ago
> What illegally driven-down wages mean is that the shortage is more acute that previously thought. That's because the main way to measure the relationship of supply and demand is through price; i.e. the more the salaries grow, the less supply there is relative to demand. So if salaries have been held down, some of that evidence was masked. Not really, price ceilings have a well-known effect of causing shortages because purchasers who should have been priced out of the market use up some of the supply. If the price had been allowed to rise naturally, those willing to pay the higher price would get what they need.
- femto 13y ago
  The lower price will further reduce supply, by encouraging potential employees to move to better paying alternatives, outside the domains in which salaries are being fixed.
- legutierr 13y ago
  You also can't look at the market statically. Higher wages will create incentives for new people to enter the profession, increasing overall supply (and eventually putting some downward pressure on salaries once again).
  - brianchu 13y ago
    TheCoelacanth is looking at the market over the short and medium term, which is the correct way to look at it if we're arguing over whether there is a shortage today. Furthermore, it's not like quantity supplied is perfectly responsive to price. It takes time for new people to enter the industry. Talking about the long-term is rather pointless because technically, from a theoretical standpoint, everything is supposed to equilibriate over the long term. All shortages self-correct over the long term. Again, this is theoretical.
    - SixSigma 13y ago
      As the saying goes : In theory, theory amd practice are the same.
  - anigbrowl 13y ago
    That's true in theory, but I don't think there are a lot of people ignoring the tech sector because median pay for a competent engineer is only ~$100k. Sure, you can find examples of people who went into other areas, but given the very low barriers to entry (put some good stuff on Github repeatably, no industry requirement for an advanced or even undergraduate degree if you have talent, no unions or guilds, no competency certifications required to practice software engineering), I don't think there's such a big pent-up supply.
briantakita 13y ago
> Secondly, it means that non-giant companies could be competitive in making job offers, whereas perhaps in a more free labor market they might not be able to compete salarywise with Google, Apple, Microsoft, etc. Thus, as seen from say, a startup's vantage point, this check on the upward price pressure actually kept the supply of affordable engineers up. Actually, it just gave the non-engineers more leverage. If the engineering rates where higher, there would be more engineers who would be founders. Engineers would have a larger % of the startup, since non-cash compensation would have to be offered. Also, the artificial deflation caused some engineers to be stuck in a bad job. That's why I won't be anyone's employee. It's a bad deal for me. It's a bad deal for many engineers who are employees right now. Unfortunately, it took me a while to learn the game. There's a business side to being an engineer. You don't learn that being an employee. It's against the interest of the management to have their employed engineers think that way.
vilda 13y ago
If I read it correctly then they are not holding wages down as such, but are trying to avoid employee poaching. Raising wages might be a result of active competition, the question is how much. My guess it would relate to only a small set of exceptional individuals. Rules for wage negotiation for ordinary employees have generally much bigger impact.
- icambron 13y ago
  This is true and of course it's hard to quantify how much wage impact this had on the numbers. But since the companies' explicit goal in these poaching rules was to keep salaries in check ("we are driving up salaries across the board"), I think it's safe to say it was substantial. Poaching usually requires giving the poachy a raise.
- firstOrder 13y ago
  > If I read it correctly then they are not holding wages down as such, but are trying to avoid employee poaching. Well then you are not reading it correctly. What does it say? >> Google is the talk of the valley because we are driving salaries up across the board Schmidt says as plain as day, in e-mails that escaped his admitted attempts to remove a paper trail, that this is about holding down wages. He says it as plain as you can say it. I can read this, and the other HN readers can read this in black and white. That people like you feel the need to deny this happened when they have been caught red-handed says more about you then it does about what happened.
  - vilda 13y ago
    I'm not taking the route of personal insults as I believe this type of comments should not be in HN in first place. Yes, I read it very well. Schmidt indeed mentioned holding the wages down, BUT from the context it's clear they mean those who are targets of employee poaching. And that's certainly not everyone - quite the opposite, only exceptional individuals or strategy hires.
    - rhizome 13y ago
crassus 13y ago
The brilliant Ivy League kids that go into finance are still going into finance. The pay after 3 or 4 years of experience is way better than in the software industry. When Harvard grads start choosing Google over Goldman Sachs, I'll believe in the engineering shortage. Now excuse me while I return to my 10 hour Craigslist odyssey to find an affordable Bay Area apartment...
- usaar333 13y ago
  Plenty of CS majors do. I'm not even sure if finance beats CS pay for those in the top-tier, especially on a per-hour worked basis. It may be hard to track as so much comp in finance is bonus and so much in CS is equity.
- taude 13y ago
  There's not nearly as many Wall Street jobs as there used to be, which is why a lot of these smart college grads end up in in S.V. chasing VC money to start companies...
mabhatter 13y ago
The bigger problem is that these companies all want "rockstars" at age 22 AND ones that will be "company men". Neither Bill Gates nor Steve Jobs would get in the DOOR at a tech company today. They didn't finish college... Or the RIGHT college. Their own companies would buy their startup and boot them. It's a culture of childishness that they have so much money and resources they don't have to value WISDOM that employees might bring. In fact they actively ROOT OUT those employees in their hiring processes.. That's why all the games.. They don't want employees that won't play. They have myopic NIH syndrome hard.
- _pmf_ 13y ago
  > Neither Bill Gates nor Steve Jobs would get in the DOOR at a tech company today. They didn't finish college... Or the RIGHT college. It helps a bit if you are filthy rich at the beginning.
  - kstop 13y ago
    Jobs was many things, but not filthy rich at the beginning.
- CamperBob2 13y ago
  Neither Bill Gates nor Steve Jobs would get in the DOOR at a tech company today. Oh, I have a feeling they'd squeak by, somehow.
  - syntheticlife 13y ago
    Technically.. wouldn't they start their own companies and be in charge of the door anyway?
crdoconnor 13y ago
>What illegally driven-down wages mean is that the shortage is more acute that previously thought. No, it just means the sense of entitlement amongst tech CEOs is even greater than previously thought.
lionspaw 13y ago
I used to be a full time software engineer for a major tech company in the US, but quit after one year. The low six figures salary wasn't enough incentive for me to stay at that job, given how much I disliked the nature of the work. But if the salary was higher, there is a good chance that I would have worked at that job for longer than I did. So I think salary does affect labor supply, and the supply of engineering talent is not as inelastic as you may think.
antocv 13y ago
It also means that tech giants do not really value the product and output of their engineers. They're willing to screw them over. It also means that the deflated salaries/compensation may have led to managers/business/finance decisions being all wrong - investing in some projects but not others and skeweing the technical landscape. Im thinking of things like GWT or dartlanguage, and the like, which if engineer prices would have been correct probably would not have been made at all. The conspiring to lower compensation has hurt the field and profession of software engineering as a whole. This shortage of "engineers" is another excuse to make government pay for education or take more immigrants and pay for them, their health care costs, language education etc, to make tax-payers pay for recruiting engineers to the tech giants.
- TeMPOraL 13y ago
  > It also means that tech giants do not really value the product and output of their engineers. I think the opposite. It is not in the best interest of "the product and output" for engineers to keep switching jobs every few months to get increasingly greater salaries for the same work. It creates incentives to not care about the product.
  - antocv 13y ago
    What has switching jobs to do with this? How many lawyers do you see switching jobs every few months? Anyway software engineers shouldnt care about the product once the project is completed - the job to take care of the product is with devops or maintanence people. Development, and thats it.
djb_hackernews 13y ago
I think your edit hits the nail on the head in regards to higher salaries attracting more people to the profession. I've posted about this a few times here on HN if you care to look at my comment history but basically the efforts our politicians and our bosses go through to bring in foreign workers and suppress wages results in signalling to potential entrants into the tech employment market. If you take a smart person (which we've acknowledged tech workers are, because gosh, we need to drink from the global talent pool to find such smart people), and they have many options including protected professions that are definitely more lucrative and don't have any of this downward pressure, what choice do you think this smart person would make?
kagali 13y ago
> Secondly, it means that non-giant companies could be competitive in making job offers, whereas perhaps in a more free labor market they might not be able to compete salarywise with Google, Apple, Microsoft, etc. Thus, as seen from say, a startup's vantage point, this check on the upward price pressure actually kept the supply of affordable engineers up. Amazingly short-sited argument. It forces people to either accept a low paying job in a field they love, or find another field just to make ends meet.
mcv 13y ago
High price isn't simply a signal that there's not enough supply, it's also the mechanism that increases the supply. If engineers get higher pay, more people will choose an engineering career (rather than management, law, medicine or other high paid professional careers Edit: or Wallstreet, which does pay top dollar for math geniuses to create new derivatives that bring down the economy). The companies themselves have created the shortage they're complaining about.
james1071 13y ago
No, you measure a shortage by the number of unfilled vacancies.

TheCoelacanth 13y ago

> What illegally driven-down wages mean is that the shortage is more acute that previously thought. That's because the main way to measure the relationship of supply and demand is through price; i.e. the more the salaries grow, the less supply there is relative to demand. So if salaries have been held down, some of that evidence was masked. Not really, price ceilings have a well-known effect of causing shortages because purchasers who should have been priced out of the market use up some of the supply. If the price had been allowed to rise naturally, those willing to pay the higher price would get what they need.

femto 13y ago
The lower price will further reduce supply, by encouraging potential employees to move to better paying alternatives, outside the domains in which salaries are being fixed.
legutierr 13y ago
You also can't look at the market statically. Higher wages will create incentives for new people to enter the profession, increasing overall supply (and eventually putting some downward pressure on salaries once again).
- brianchu 13y ago
  TheCoelacanth is looking at the market over the short and medium term, which is the correct way to look at it if we're arguing over whether there is a shortage today. Furthermore, it's not like quantity supplied is perfectly responsive to price. It takes time for new people to enter the industry. Talking about the long-term is rather pointless because technically, from a theoretical standpoint, everything is supposed to equilibriate over the long term. All shortages self-correct over the long term. Again, this is theoretical.
  - SixSigma 13y ago
    As the saying goes : In theory, theory amd practice are the same.
- anigbrowl 13y ago
  That's true in theory, but I don't think there are a lot of people ignoring the tech sector because median pay for a competent engineer is only ~$100k. Sure, you can find examples of people who went into other areas, but given the very low barriers to entry (put some good stuff on Github repeatably, no industry requirement for an advanced or even undergraduate degree if you have talent, no unions or guilds, no competency certifications required to practice software engineering), I don't think there's such a big pent-up supply.

briantakita 13y ago

> Secondly, it means that non-giant companies could be competitive in making job offers, whereas perhaps in a more free labor market they might not be able to compete salarywise with Google, Apple, Microsoft, etc. Thus, as seen from say, a startup's vantage point, this check on the upward price pressure actually kept the supply of affordable engineers up. Actually, it just gave the non-engineers more leverage. If the engineering rates where higher, there would be more engineers who would be founders. Engineers would have a larger % of the startup, since non-cash compensation would have to be offered. Also, the artificial deflation caused some engineers to be stuck in a bad job. That's why I won't be anyone's employee. It's a bad deal for me. It's a bad deal for many engineers who are employees right now. Unfortunately, it took me a while to learn the game. There's a business side to being an engineer. You don't learn that being an employee. It's against the interest of the management to have their employed engineers think that way.

vilda 13y ago

If I read it correctly then they are not holding wages down as such, but are trying to avoid employee poaching. Raising wages might be a result of active competition, the question is how much. My guess it would relate to only a small set of exceptional individuals. Rules for wage negotiation for ordinary employees have generally much bigger impact.

icambron 13y ago
This is true and of course it's hard to quantify how much wage impact this had on the numbers. But since the companies' explicit goal in these poaching rules was to keep salaries in check ("we are driving up salaries across the board"), I think it's safe to say it was substantial. Poaching usually requires giving the poachy a raise.
firstOrder 13y ago
> If I read it correctly then they are not holding wages down as such, but are trying to avoid employee poaching. Well then you are not reading it correctly. What does it say? >> Google is the talk of the valley because we are driving salaries up across the board Schmidt says as plain as day, in e-mails that escaped his admitted attempts to remove a paper trail, that this is about holding down wages. He says it as plain as you can say it. I can read this, and the other HN readers can read this in black and white. That people like you feel the need to deny this happened when they have been caught red-handed says more about you then it does about what happened.
- vilda 13y ago
  I'm not taking the route of personal insults as I believe this type of comments should not be in HN in first place. Yes, I read it very well. Schmidt indeed mentioned holding the wages down, BUT from the context it's clear they mean those who are targets of employee poaching. And that's certainly not everyone - quite the opposite, only exceptional individuals or strategy hires.
  - rhizome 13y ago

crassus 13y ago

The brilliant Ivy League kids that go into finance are still going into finance. The pay after 3 or 4 years of experience is way better than in the software industry. When Harvard grads start choosing Google over Goldman Sachs, I'll believe in the engineering shortage. Now excuse me while I return to my 10 hour Craigslist odyssey to find an affordable Bay Area apartment...

usaar333 13y ago
Plenty of CS majors do. I'm not even sure if finance beats CS pay for those in the top-tier, especially on a per-hour worked basis. It may be hard to track as so much comp in finance is bonus and so much in CS is equity.
taude 13y ago
There's not nearly as many Wall Street jobs as there used to be, which is why a lot of these smart college grads end up in in S.V. chasing VC money to start companies...

mabhatter 13y ago

The bigger problem is that these companies all want "rockstars" at age 22 AND ones that will be "company men". Neither Bill Gates nor Steve Jobs would get in the DOOR at a tech company today. They didn't finish college... Or the RIGHT college. Their own companies would buy their startup and boot them. It's a culture of childishness that they have so much money and resources they don't have to value WISDOM that employees might bring. In fact they actively ROOT OUT those employees in their hiring processes.. That's why all the games.. They don't want employees that won't play. They have myopic NIH syndrome hard.

_pmf_ 13y ago
> Neither Bill Gates nor Steve Jobs would get in the DOOR at a tech company today. They didn't finish college... Or the RIGHT college. It helps a bit if you are filthy rich at the beginning.
- kstop 13y ago
  Jobs was many things, but not filthy rich at the beginning.
CamperBob2 13y ago
Neither Bill Gates nor Steve Jobs would get in the DOOR at a tech company today. Oh, I have a feeling they'd squeak by, somehow.
- syntheticlife 13y ago
  Technically.. wouldn't they start their own companies and be in charge of the door anyway?

crdoconnor 13y ago

>What illegally driven-down wages mean is that the shortage is more acute that previously thought. No, it just means the sense of entitlement amongst tech CEOs is even greater than previously thought.

lionspaw 13y ago

I used to be a full time software engineer for a major tech company in the US, but quit after one year. The low six figures salary wasn't enough incentive for me to stay at that job, given how much I disliked the nature of the work. But if the salary was higher, there is a good chance that I would have worked at that job for longer than I did. So I think salary does affect labor supply, and the supply of engineering talent is not as inelastic as you may think.

antocv 13y ago

It also means that tech giants do not really value the product and output of their engineers. They're willing to screw them over. It also means that the deflated salaries/compensation may have led to managers/business/finance decisions being all wrong - investing in some projects but not others and skeweing the technical landscape. Im thinking of things like GWT or dartlanguage, and the like, which if engineer prices would have been correct probably would not have been made at all. The conspiring to lower compensation has hurt the field and profession of software engineering as a whole. This shortage of "engineers" is another excuse to make government pay for education or take more immigrants and pay for them, their health care costs, language education etc, to make tax-payers pay for recruiting engineers to the tech giants.

TeMPOraL 13y ago
> It also means that tech giants do not really value the product and output of their engineers. I think the opposite. It is not in the best interest of "the product and output" for engineers to keep switching jobs every few months to get increasingly greater salaries for the same work. It creates incentives to not care about the product.
- antocv 13y ago
  What has switching jobs to do with this? How many lawyers do you see switching jobs every few months? Anyway software engineers shouldnt care about the product once the project is completed - the job to take care of the product is with devops or maintanence people. Development, and thats it.

djb_hackernews 13y ago

I think your edit hits the nail on the head in regards to higher salaries attracting more people to the profession. I've posted about this a few times here on HN if you care to look at my comment history but basically the efforts our politicians and our bosses go through to bring in foreign workers and suppress wages results in signalling to potential entrants into the tech employment market. If you take a smart person (which we've acknowledged tech workers are, because gosh, we need to drink from the global talent pool to find such smart people), and they have many options including protected professions that are definitely more lucrative and don't have any of this downward pressure, what choice do you think this smart person would make?

kagali 13y ago

mcv 13y ago

High price isn't simply a signal that there's not enough supply, it's also the mechanism that increases the supply. If engineers get higher pay, more people will choose an engineering career (rather than management, law, medicine or other high paid professional careers Edit: or Wallstreet, which does pay top dollar for math geniuses to create new derivatives that bring down the economy). The companies themselves have created the shortage they're complaining about.

james1071 13y ago

No, you measure a shortage by the number of unfilled vacancies.