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mike-cardwell

"laying off 3,200 employees"

"in a move that should trim its wage bill by an estimated $1.35 billion per year."

$1,350,000,000 / 3,200 = $421,875

I need a payrise.

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I don't know if it is different were Lenovo operates, bu there in Sweden if i get 100 in salary, the company has a cost of 200 because of social taxes, employment tax etc.. I guess also HR will have less to do, which contributes to the cost-save.

Yeah. Employee cost > employee salary. Still... $421,875... Somebody has got their math wrong.

~~Taking Sweden as the example the take-home salary would be $126000pa. That's not entirely unreasonable.~~

Edit: scratch that, I read it as "the company has an additional cost of 200" for some reason. Yeah, something is wrong with the math.

I'm not sure you can count what you get after taxes as salary, your personal taxes is normally considered part of your salary.

The "arbetsgivaravgift" (i.e. taxes that your employer pays) is about 30% of your salary, so if you're going to get a salary of 100 that costs your employer about 130. The cash you get in hand varies depending on your personal tax rate, but normally you would receive between 50 and 70.

Edit: This is for Sweden. YMMV. :)

Very true. There is a legal standard for "gross" pay which is not gross pay at all. In Northern countries gross pay is ~20-35% lower than the employer pays, and after that the employee also pays 40-55% on the "gross" amount after that.

(Example "non-gross" income tax: patronal national insurance tax, corporation closure insurance tax, tax on vacation pay, tax for employment of permanently disabled persons, ... It totals ~18% in Germany, up to 38.5% in Belgium, depending on the sector (specific sectors have specific taxes - yes really))

These sorts of measures make sure that taxation is a lot less visible for "normal" people (ie. voters) in Europe than it is in America. Employers have to advertise "net pay", which is the amount you generally negotiate for. Also, for instance, the prices displayed in stores have to be tax-inclusive (there's a VAT of 18-25% as well), the prices displayed at the pump include all taxes (not just VAT), tobacco and alcohol have to be advertised with prices including all taxes.

That means a European kid might very well not hear the word "tax" until they're 24-25 and get a real, first job, and will likely think they're only paying an income tax of 40-55%, when in fact they are paying a tax of 1/1.200.60.82 = 61% (and up to 76%) (money that they can spend divided by money that is paid for their labour, inverted). And that still doesn't include property tax, car tax, and the like.

Companies also have to provide services to employees. Less employees == less office space, less IT equipment, less IT support, less cleaning, less HR overhead, ... etc.

> I need a payrise.

Many software engineers do. Considering how much value they create with their work, they are massively underpaid.

You could ask why? I'd argue it's anchoring to the magical 150k. For some reason SEs think that's peak engineering pay. It's not, and if you're doing meaningful work that adds top tier value you should be paid a lot more, or at a minimum given equity.

> Considering how much value they create with their work, they are massively underpaid.

Nothing preventing them from starting their own business if they believe they can earn much more.

Starting a business might not have anything to do with being a good engineer

Then one has to accept the salary they get then.

Some skill sets are only applicable at massive scale. So it's get hired by the company, or they hire you as a consultant for the project.

Sadly, not everything rolls neatly into a startup.

High pay is a function of supply and demand in the employment market, not value created.

It's a lot more complex than that. Missing, but vital, variables in your oversimplification include: Market lag, value perception over actual, price anchoring.

All true but expecting salary to mirror the value provided to the employer is like living in cloud cuckoo land.

An employer might make a million pounds from your work but if the going rate for the skills they need is £50K then that is what they will pay.

Only if the market conditions can be described as such that are close to perfect competition. When top employers collude to prevent poaching of employees (Google, Apple, etc) the opposite happens. Compensation is artificially kept low in the interests of megacorps.

That is a somewhat separate issue though and I believe it is outside the law.

It shows that compensation is not a "function of supply and demand".

You could add the indentured servitude of H1B visas to that list.

Sure. Long stock options vesting periods also decrease the opportunities for engineers to switch jobs.

> Many software engineers do. Considering how much value they create with their work, they are massively underpaid

I hear this a lot, but what is your reference point that allow you to conclude that the engineers are underpaid. Do you use a percentage of profit generated from your contribution? (would you also pay the company for products that made a loss?)

Really, how is this measured?

They may be closing down whole departments, cutting other costs than just salaries.

It specifically said "trim its wage bill"

You're right. My guess is that's the journalists wording.

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