If the cost of beef was increased 4x for whatever reason, then most people would just switch their preference for meat.
There are ofcourse a lot of greedy companies.
But a lot of the time the consumer demands a price point for software product, many startups cannot afford to pay 400K to developers.
I think its not a reflection of how difficult it might be to create software but stagnant wages for the average person.
Secondly, only the technology industry has a massive pipeline of overseas workers available...so naturally there is constantly a "shortage" as a means to increase the pipeline of overseas workers.
I'm not saying NOT to hire overseas workers. I'm saying to be honest about it. Say -- we refuse to pay market wages and would rather that new graduates not find work than pay them a living wage for the Bay Area, instead we'll hire offshore workers desperate to flee their countries and willing to shack up 3 to a studio apartment.
So then the talk turns to bringing in H1Bs who will work for the low end of the "prevailing" (Ha!) salary.
Why don't these companies cut to the chase and just open an office in India? Or have the entire operation there?
Or are some of them actually not trying to change the world by delivering better toast to your door, and they just want to live in the Bay Area?
This is untrue in my experience as the equivalent in an office environment to hiring an illegal immigrant would be subcontracting a 'job' to either a staffing agency whose H1B employees get paid piecemeal and billed out for different amounts. I've also worked with independent contractors who if you added up their low pay on the level, wouldn't be making adequate pay.
Heck, I've worked contract jobs through staffing agencies trying to make end meets and had the job location charge for parking which would be reimbursed 3 months later. Good luck getting ur money if you are working the next job and can't afford the time to follow up for that check.
There are plenty of ways companies dance around the same entity of illegal immigrant wages.
Why is silicon valley more expensive to rent in? Because people came with money and the banks agreed to loan at a multiple of the new wage ceiling.
If wages increase x4 guess what will happen?
We need to stop banks creating debt to issue against land otherwise it will always absorb all income. And therefore all productivity gains flow to the land owner.
Come on, let's hear how rents are not tied to wages in a thread about remote working providing higher wages than the local area but lower wages than the hot-spot.
Let's hear it HN.
Because supply and demand. High salaries attract a lot of people to the bay and communities systematically refuse to build new housing to meet the demand so the price goes up.
You can do whatever you want to the banks but that won't change the fundamental of 2X people trying to live in X houses.
Credit also typically increases ahead of wages which squeezes people further.
This isn't supply of people vs supply of homes, this is supply of credit. If you neutralise this you will see prices fall and be paying less of your labour to banks.
2008 - the credit taps ran dry => huge crash. Before that near unlimited credit saw land prices increase hugely. Neither on the up or the down did we see wages have such volatility.
We shouldn't worry about "squeezing" people out. Ours is a HUGE nation. We have A LOT of natural resources and there is no reason why we can't let people build more (outside of protected areas, of course).
People who are "priced out" should move to places where rent costs less. I keep hearing about property owners having enough political clout to block further development, depressing supply. They placate existing residents with tiny portions of rent-controlled apartments.
I fail to see how "gentrification" is a problem at all in the bigger scheme of things.
I don't think people renting out more places is a problem. If landlords hold supply out of the market to prop up prices, we can discourage such actions with a more dynamic property tax that places a realistic tax burden on under occupied or unoccupied property.
All that being said, we definitely need to figure out some way to peoperly educate people about personal finance.
https://www.amazon.com/Progress-Poverty-Industrial-Depressio...
I agree to some extent. Property (land) taxes have to be high enough to discourage people from leaving it unused. I have no problems with fully replacing personal income tax but I'm not an expert and I have no idea if we can realistically raise the same tax revenue from land tax alone.
It is a huge nation, but one where 70% of the tech jobs are stuck in SF/SV. I can move to Lincoln Nebraska and pay $400/mo in rent, but I sure as heck wont find an employer seeking a python job.
[1] http://python.jobs.net/jobs/lincoln,nebraska.aspx
[2] https://www.linkedin.com/jobs/python-jobs-lincoln-ne
[3] http://www.indeed.com/q-Python-Developer-l-Nebraska-jobs.htm...
Software gets written in a lot of places.
1. banks creating near unlimited credit against land which at best eclipses productivity gains leaving workers no better off and rentiers collecting all the gains
2. the rest of the population working out that the game is rigged and piling into real-estate speculation as the only game in town.
I'd have expected someone in a country with a crippling house price bubble in many cities to get this.
Bay area is infamous for many housing supply constraints in regulations. As far as loans increasing the demand side, banks can be pretty strict with %20 down payment restrictions. Which is why once houses go out of the dual income high earner price range ($1-1.5 million), you start seeing it overflow to other less desirable regions in the bay area.
it has not happened yet but it is certainly pricing many out at lower ends of the income scale.
It's very naive to think that this is simply any one factor, especially supply and demand alone.
Why are economics conversations so limited?
The best way to avoid speculative run ups in prices (and subsequent crashes) is effective taxation. Of course taxation of land is not popular with the rich and powerful as it can’t be avoid.
It amazes me on HN where on most other complex behavioural problems if someone came along and shouted "it's because of X" they would be laughed out to cries of "it's more complicated than just one thing".
Yet when it comes to millions of people with varying priorities interacting with government and the banks anyone who comes up with anything more complex than "it's supply and demand" is told "no, I've done econ 101 thank you".
Hacker news can't be bothered with Georgism, they've done econ 101 syllabus (provided by their establishment).
https://www.amazon.com/Progress-Poverty-Industrial-Depressio...
Personally I do think it is a good idea to try and avoid speculative bubbles in assets and the best way to do this is via taxation.
Credit however is not constrained except by a willingness to borrow and on the up this is near-unlimited. Fortunes are made not by doing but by speculating and then at the end the workers pick up the tab.
Then hire remote devs. Or move your startup to a more affordable location.
If you need to have developers work onsite, and you need to be in the Bay Area, then you need to pay accordingly.
It's a good point, but I wouldn't expect a construction company that could only pay 20% of cost to hire cranes to complete many buildings.
So maybe startups in that bracket just aren't viable under their current models. Maybe they need to rethink their salary/equity mix to make up for lack of cash.
Then comes kids...
If you're willing to share you can get for cheaper. If you want 1 bedroom you're going to struggle to find something for $3k.
From what I have seen the salary spread between say SF and NYC is not enough to compensate for the higher rental costs in SF.
Good luck with burning out at 35 with no passive income streams. I'd rather build equity, and even have a couple of rental properties from being a top 10% earner in a smaller area. That's a million dollar piggy bank being filled by someone else AND a passive income stream on which to retire.
Americans tend to believe they are wealthier than anyone else. Not so! Apart of the fact several countries in Europe have higher salaries (and cost of living than the US) there's the fact major cities are much more expensive than smaller ones, even in poorer countries.
Case in point: The most expensive cities in the Americas are Sao Paulo, Bogota and New York. You can easily enjoy a higher standard of living earning $70k in most of the US than you can in Sao Paulo or Bogota (I've lived in both, I know it for a fact)
$70k in Sao Paulo doesn't go much further than $70k in New York (or Tokyo, London, Paris, Singapore...)
Do I have to remind you how much a computer, a smartphone or a car costs in Brazil compared to the US?
I doubt your claim of finding "good enough" developers for $35k. I was making more than that in my first job, fresh out of school, when I had zero real world experience, working remotely for an American company, and that was in the early 2000s.
Most companies would be elated to find even a competent html/css/js coder for that price.
About the $35k claim, let's make the math: currently USD 35k ~= BRL 115k. 115k/12 ~= 9.6k. That means USD 35k/year is roughly BRL 9.6k/month, which is the salary of a Senior Java guy here. Idk about 2000, but it seems like you were doing very good back then.
Most software developers, as most people, in South America simply cannot afford the standard of living of a first world country, even when they make a great salary for local standards. Most things don't cost any less just because the local population cannot afford it (and very often they cost more).
You're comparing local salaries with remote salaries. It's very different, 95% of local guys are unemployable remotely due to a combination of lack of language skills (huge factor), low skill level, shitty work ethics (another huge factor) and being stuck in dead-end technologies like Java.
When American companies look for remote developers they want people who speak excellent/perfect English, are in the same time zone, have (at least) above average skills and are willing to work like Americans do (Americans are workaholics, you'll be surprised at how damn lazy/unproductive most people are). I've been working remotely for 10+ years and I've been asked to find local talent several times, and finding it is hard. I've only vouched for one guy in all this time, and he quit after 6 months and moved to the US (and the pay was spectacular for local standards).
It's not like engineers prefer living on social welfare to an underpaid engineering job.
Just to reiterate this, I know many people who would become developers if they could make $400k. These are smart people with strong technical skills.
And on the other hand: Can they afford these wages? I would guess that many companies would have trouble justifying that salary on a broad level.
[0] And even for lower-paying specialties (like UI/UX), 400k isn't even 2x market rate.
(For the curious, I opted for tremendous work-life balance instead)
Bay area engineers like to pretend that there are no people of their calibre elsewhere in the world, but that is just flat out wrong.
Beyond a certain level of salary, salary stops varying too much by cost of living or geography. If I make well over 200K per year in a major city, I'm going to expect someone else to pay me 200K/yr at least no matter where I live.
I wouldn't even try to get other job offers to negotiate you on it -- I'll just simply believe you're not meritorcratic and flat out reject your offer and view your company skeptically from then on. Low-balling an exceptional engineer over geography is dysfunctional in the same way as working really hard to hire a senior, experienced engineer and then telling them "2 weeks vacation is the standard for all new hires.." or something. It's just a big red flag.
I've worked in quant finance before too and the trouble there is that pay is more political. Firm sizes are smaller and the people with political power extract a bunch of rent, then leave a comparatively tiny bonus pool for all of the low level workers. It takes years of soul crushing political games to get up into that stratosphere of much higher bonuses. On the bottom, the firms will also hassle you hard during negotiations to try to ratchet down your base wage too, and make lots of unverifiable promises about how compensation will be made up out of bonuses. Whether this turns out true or not is largely a function of whose political darling you are. Ironically, as boring as the work is, this happens far less in rank and file companies.
I think there are so many confounding variables that it's not useful to draw sweeping conclusions about this. Sometimes big box corporate type companies will pay huge wages for someone who just maintains something that is not a revenue powerhouse at all. Sometimes firms will restructure to have fancy new divisions that "are like a start-up inside of an established company" (ugh) and they'll hammer down on only hiring young, inexperienced workers on cheap wages in a shiny new urban office who will work a ton of hours. It varies basically as much as the hyper local political circumstances of the teams vary.
The bay area gets a lot of attention because it's the software capital of the world, and software has these crazy gross margins and rapid life cycles that allow companies to be born, experience explosive growth, make insane profits, (potentially) suffer radical declines, leading to a quick boom or bust. Software companies make great news stories, so the bay area gets a lot of attention, and many talented people who aren't sure where to go decide to move there.
I live there now and work out of coworking spaces where I've met a number of startup founders. Many of them are self-proclaimed visionaries hyped up by VR and AR or IoT. Few of them are as smart as my friends who are getting their Masters and PhD degrees at Duke, Wash U, or Case Western. The most impressive startup I saw in the last year was being made by a self-taught programmer/entrepreneur building his own company out of Colorado Springs.
Beyond just my anecdotal evidence, where do MIT and Harvard graduates go? Where do Georgia Tech, Rice U, John's Hopkins, Carnegie Mellon graduates go? Silicon Valley doesn't take all of their students nor just the top in their class. Some people move to DC, Seattle, Chicago, Boston, Austin, NYC, or Denver because they have family or friends there, or because the kind of work in these other cities is more appealing than The Bay.
Apologies for the rant. I realized after writing it that your 'Not really' comment was probably in response to the parent's assertion that companies should hire from outside the bay area, while I took it as 'Not really' in that there are no engineers of the same calibre outside SV.
Regardless, the amount of hubris and hype over the Bay Area is staggering when there are so many equally talented engineers all over the US.
I agree about the hubris. And for as much hubris as there is about the coveted "SV developer" it's at least 10x worse hubris regarding the coveted SV startup as employment destination.
Seriously, I work for a US company in Europe, and am massively surprised (and disconcerted) by the fixation on where someone went to school.
We had an awesome candidate a few months back, did 4 interviews with us, aced them all, and one of the final interviewers (US-based) was obsessed with where they got their university education, whereas I don't think anyone else had even noticed it (being more focused on their skills).
Turns out she'd gone to Oxford though, so it was all good :/
Effects like this snowball. So once a school is known for producing graduates that others are desperate to affiliate with in a certain field, like say art or law, then impressive people from other fields may be drawn to work there, like an excellent professor of computer science who thereby actually does elevate the level of education granted to computer science graduates, making graduates into the sorts of people that tech companies want to get on-paper for acqui-hires because acquirers will want to affiliate with them.
One general trend I see in humanity is that the more that we advance a sort of scientific and rational understanding of the world -- something that should supplant most of these systems of credential -- the more that human politics is used to build Dutch book-like circumstances in which, no matter what the outcome, impressive-seeming-ness and competition to affiliate with "fancy" people will continue to be the dominant manner of achieving wealth and autonomy.
To be clear, even though I attended an Ivy school, I find this lamentable. I did not enjoy my time there and feel basically how Mike Reiss feels. But at the same time, I also see all the banter on Hacker News about how the degree doesn't matter and I just roll my eyes. What is it that people think? That something like HackerRank or TripleByte are going to democratize tech hiring? Please. They will be (and already are being) used as just additional tools in the political toolbox to allow people to make up whatever arbitrary standards they desire for the sake of favoring candidates based on political reasons.
Then hire them either remotely or open an office at a place where the living expenses are much cheaper (but the latter also costs money for the company which it could also spend in salaries). Where is the problem?
I want to buy a BMW M3, but I will only pay $5,000. I can't find any, therefore there is a shortage of BMWs??