Lawyers and doctors have strong "guild" protections to stop overseas labor competing. Software devs do not.
I'd be interested in reading more about this if you have a link handy.
http://www.nytimes.com/2013/08/12/business/economy/long-slog...
Professional associations like the AMA (American Medical Association) for doctors and American Bar Association for Lawyers act as de facto unions w/o drawing the negative connotations that unions sometimes do in modern politics. The AMA even lobbies the government which sets the rates doctors get paid for medicare procedures and medicare is the largest payer in the healthcare system.
For medicine, this is wrong. The bottleneck is residency programs, not medical school. We graduate more medical students each year than we have residency spots available.
And for residency programs, the limit isn't artificial - it's funding-driven. Residency programs run at a loss for hospitals, so most residency programs are funded through Medicare.
> Even if you did it in your home country and are unquestionably qualified there is a long process you have to go through.
Yes, and that's not to artificially limit the supply, but because training differs by country, and just because you're qualified by one country's standards doesn't mean you're qualified by another. And for what it's worth, the residency process is oftentimes much shorter for people who are licensed to practice in other countries, so it's not like they're starting from scratch.
> Professional associations like the AMA (American Medical Association)... act as de facto unions w/o drawing the negative connotations that unions sometimes do in modern politics.
The AMA may be the most-hated organization in the medical field. People who don't practice medicine hate the AMA, largely because they aren't clear on what the AMA is and is not responsible for, and often misattibute things to the AMA[0]. And practitioners hate the AMA because they are actually aware of what it does, and because the AMA has a long history of siding with payers (insurers) over practitioners.
> The AMA even lobbies the government which sets the rates doctors get paid for medicare procedures and medicare is the largest payer in the healthcare system.
If you think the role of the AMA is to ensure doctors get paid well by Medicare, then they're clearly not doing their job. Medicare reimburses, in the aggregate, 7% less than COGS. This means that, in effect, for every Medicare patient a private practitioner treats, they would end up having to provide their services for free, and then still pay an additional 7% out-of-pocket for each Medicare patient they treat, to cover the costs that Medicare doesn't.
This is the reason that private practices are a dying breed, and why it's actually very difficult to find small practices which will accept "vanilla" Medicare.
[0] For example, people often blame the AMA for limiting the number of medical school spots that are available, which is wrong on three counts: (1) The AAMC was responsible for this, not the AMA, (2) The AAMC has changed their policy and is now aggressively lifting this cap year upon year for a long time now, and (3) as I explained above, the number of medical school graduates isn't the bottleneck, so the AAMC's policy has no effect on the supply of doctors entering the market each year.
Here is an article from fortune on the AMA...
http://www.forbes.com/sites/johngoodman/2014/09/03/the-docto...
Not necessarily. This is only true for companies where minimizing the cost is the best (sometimes only) strategy to increase profits. Tata, EDS, Accenture, and the many IT body shops are all in this camp.
For the so-called "SV tech companies", they need a steady supply of talents to continue creating products that in turn generate new revenue streams. This is much more valuable than saving 30% off in an individual's compensation -- at the expense of high turnover, when said worker realizes he/she is being underpaid.
Artificially reducing an already dwindling supply of talents in the top tech hubs won't make salaries go up; it will simply shift the jobs elsewhere. That is already happening for many companies.
It's true for any company. Did we forget about the Silicon Valley wage fixing already?
> This is much more valuable than saving 30% off in an individual's compensation -- at the expense of high turnover, when said worker realizes he/she is being underpaid.
That's the entire point, if you underpay, you get high turnover. But what is considered underpaying is relative to the market rates. And if you get more supply, market rates drop.
As an example, interns at Google in the US earn about $7000 a month, while in London they get about £2000. That's because of market rates in London are far lower than in the US. Ideally, tech companies in Silicon Valley would really love it if they could have the same employees as they do now for half the price.
Just speculating, but I imagine for Google the real estate cost of moving their headquarters to London would far outweigh the small amount they'd save on labor.
Google has about 40000 engineers. If they paid $70k less per year per engineer (median total compensation for a Google engineer is probably around $200k), that's a saving of about $3 bilion a year.
I cannot understand why so few US companies open engineering sites in Europe, and when they do, they are much smaller than in the US. It's really easy to get good engineers in Europe.
So while there appears to be a large salary gap, the total cost to employ someone isn't quite as divergent.
Fast forward today, programmers rake serious money getting better than average salaries, in some places several times more than peer salaries. But supply also increased several times. It's just that demand increased faster. I think that if supply would fail to increase we'll see smaller wages today as the market will fail to evolve.