That's good for most HN readers, as the tech industry depends entirely on low interest rates to make insane amounts of capital available to unprofitable businesses. If you're enjoying your inflated salary, thank Janet Yellen.
Also even if you were right, it's not just the tech industry that relies on low rates. Anyone who needs capital, which is everyone, relies on low interest rates.
How much money someone "brings in" is not the sole determinant of how much money they make.
And do you believe that engineers should be making the same as doctors?
Case: a support Engineer of my acquaintance worked to retain $24M worth of at-risk customer contracts last year. He got a better job offer, and when he told his employer he was leaving they said "Tell us what it would take to keep you"
He replied "$3M paid over a two year contract"
They said "No, really, what would it take?"
That's how badly Engineers get treated. Given a proven track record, they still couldn't imagine paying him what he was worth. They'd rather lose the next customer.
Some people find this out the hard way, as non-competes are short or hard to enforce (if enforceable at all).
And they usually have lower salaries because of this. Many "eat what they kill" and if they don't sell they don't make money.
> Executives get bonuses when the quarter is good
Everyone in the company I work for gets bonuses commensurate with how well the company does, even the engineers.
You just listed a very, very small part of every company. Other than sales people and high level execs, no one else has their compensation tied by a significant extent to their productivity. The rest, the accountants, financial analysts, business analysts, strategy analysts, marketers, billing analysts, researchers, designers, managers, etc. all are in the same boats as the engineers.
>But Engineers, who actually do the f'ing work
Construction workers actually "do the f'ing work" as well and they aren't compensated extremely well because although it is a very hard job there are many people who can do the job. There are also many competent engineers who can probably do your job as well, lowering your salary. I work in finance, and there are even more people who can do my job well than there are engineers who can do your job well, thus I am not paid like an engineer. This is how the labor market works.
Its that attitude, that engineers can be bought by the 6-pack for any application, that causes tragedies like this. Any new guy will fail to save contracts at a much higher rate, perhaps not having any benefit at all until a relationship is built up over a period of years (with new customers of course; the old ones will leave).
Friend of mine leads a team that has a 30 million dollar contract with a government client. It's a team of 5 or 6 I believe. He's paid I think about 110K a year. Personally, I wouldn't be okay with that.
Also, sales staff make commission on all their sales. They're paid based on how much business they bring in. I believe that as engineers retain business and help businesses grow and make more, they should be compensated accordingly.
I'm not saying anyone should or shouldn't be making any amount. I am saying that it doesn't make economic sense to pay an engineer millions when you can pay another $150k to do the same job with some productivity loss. If I ran a company and I thought an engineer added a large amount of value relative to other engineers in the labor market you bet I would pay him/her an astounding sum of money, but only up to the point it made economic sense.
>Friend of mine leads a team that has a 30 million dollar contract with a government client. It's a team of 5 or 6 I believe. He's paid I think about 110K a year. Personally, I wouldn't be okay with that.
So how much do you think they should be paid? $300k? $500k? Why would an employer pay them that much when they could hire another engineer for $110k and experience some productivity loss?
Unprofitable businesses (startups) don't even pay their employees that much. The established/big players pay higher salaries and do not depend on much credit at all.
Btw, big players are also dependent on a ZIRP, which goes beyond simply 'more credit'.
Doctors are a different ball of wax. They require effectively PhD-level education plus a seriously underpaid multi-year residency before they can actually practice. They also have debt loads that make law degrees look cheap.
[1] Search "lawyer salary" and "software engineer salary"
[2] http://money.cnn.com/2014/07/15/pf/jobs/lawyer-salaries/
Lawschool is a strange thing somewhere between a gradschool and a doctorate. It's a professional school that, like med school, isn't directly comparable to other degree programs.
A law degree is an almost entirely coursework based degree with no dissertation. Attrition rates at elite law schools are vanishingly low (like, less than a half of a percent, whereas PhDs are as high as 50%, 100 times higher). Undergraduate majors prior to law school tend to be the easier ones.
They're smart and hard working students, but no, I wouldn't consider a law degree to be a "doctoral" level accomplishment by any external standard. Personally, I think that simply majoring in CS or other rigorous undergraduate majors represents a greater academic accomplishment than Poly Sci or Lit + Law School.
Think of it this way - to me, a law degree is like running for 70 minutes at an 8 minute mile pace. Not bad, you're certainly fit. Majoring in CS at a tough program is like running a 6 minute mile for 40 minutes. You aren't running as long, or even as far, but the athletic challenge is greater.
That statement would be more true if you substituted "startup scene" for "tech industry". There's a lot of solidly-profitable tech-industry businesses. At least, as regards the need for "insane amounts of capital" being made available to "unprofitable businesses".
The relation to low interest rates and the direct sensitivity to small changes in the Fed Funds rate is, even in that case, far from clear.
Chapter 10: Of Wages and Profit in the different Employments of Labour and Stock
https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...
"Part 1: Inequalities arising from the Nature of the Employments themselves[edit]
"The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others: first, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them."
The section continues to explore each of these in detail.
Note particularly the risks and preparation components: training, stability of employment, and probability of success. Also the "trust premium" for certain professions:
"the wages of labour vary accordingly to the small or great trust which must be reposed in the workmen.
"The wages of goldsmiths and jewellers are everywhere superior to those of many other workmen, not only of equal, but of much superior ingenuity, on account of the precious materials with which they are intrusted.
"We trust our health to the physician: our fortune and sometimes our life and reputation to the lawyer and attorney. Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires. The long time and the great expense which must be laid out in their education, when combined with this circumstance, necessarily enhance still further the price of their labour...."
Another factor, one Smith doesn't consider, is the durability of skill or ability within a profession or trade. In the Tech world, state-of-the-art is constantly evolving, to the extent that professional obsolesence is a real risk. This is the case in other trades as well (Car Talk discussed this in auto repair som years back). But it's a consideration not much weighed in the market.
Also cumulative stress and burnout.
Pricing these into the market is a challenge.
Toda תודה Madame Yellen
Don't you love trickle-down economics, crony capitalism and the Fed/Wall St. cartel?
I really like how Americans have no qualms about the fact that a private institution controlling their currency and their economy and in turn their life but whatever floats their boat.
Seriously, I've heard that claim a lot, but I don't see any plausible mechanism for the two to be related. The folks investing in tech startups aren't the same ones with easy access to cheap capital who pick nits over a few bps on bonds.
The ones buying startups are the larger corporate entities who are quite liquid right now due to all the money sloshing around. Especially digital media entities like Google, Facebook, Yahoo, et al who have been making a killing on advertising revenue from other highly liquid industries. They may adjust decisions to purchase startups if that no longer becomes the case.