Facebook Median Pay now $240k | Hacker News Reader

Facebook Median Pay now $240k

sfgate.com

83 pointsf00biebletch79 comments

That is only possible because of outsourcing. If you only employ the highest paid earners and use contractors for all support staff, you artificially inflate your median salary. I'd bet that FB has much lower salaries if you count anyone working full time for Facebook.

What percentage of Facebook workers are contractors?

He probably means cleaning staff, cooks and other auxiliary functions.

Cleaning staff, cooks, etc, scale with the size of buildings. Customer support staff, content flag reviewers, etc, scale with the number of users. Since Facebook has so many users, I would expect the second category to be much larger.

Facebook runs a low-support model. At the same time, they offer a lot of perks to their developers. I haven't been to their HQ but from my experience with other companies I would guess that a significant part of the people working there (20-30%+) are working in maintenance, security, hospitality, cleaning, restaurants, etc.

Keeping large offices running smoothly and in nice conditions takes an enormous amount of manual work, a lot of which other employees never see (much of cleaning/maintenance is done over weekends and at night).

> Facebook runs a low-support model.

Not for large advertisers they don't. Here in Ireland for example their outsourced advertising support & soft-sales, a large part handled by Accenture, are huge. Possibly more numerous than the Facebook EU HQ here. I'm sure the case is similar elsewhere.

I don't know and they don't disclose it. It's the vast majority of what they pay for physical security, building maintenance, cleaning, hospitality, etc. This happened across all industries. A few decades ago, janitors and cleaners worked for the company, now they're outsourced to keep them out of scope for unions and to be more "flexible" (i.e. hire and fire at will without negative press).

The NYT has a great article on that, not related to Facebook but it shows the general trend: https://www.nytimes.com/2017/09/03/upshot/to-understand-risi...

All the "Facebook" content screeners in Berlin, Germany, are actually employees of a contractor (Arvato-Bertelsmann) who is mostly hiring them through job agencies. They're in charge of deciding what has to be banned according to Facebook Community Guidelines. They get to see gore, suicide videos, racial slurs etc. all the time, with no proper psychological training. They earn minimum wage (around 10$ per hour) and they're completely disposable.

Nonetheless, when Facebook had to face a small content-related crisis in Germany in 2016, that didn't stop Zuckerberg from saying the the company hires teams of hundreds in Germany to stop the spreading of hate content. They don't.

Source: Inside Facebook - Im Netz des Bösen, Süddeutsche Zeitung, 2016. (sorry, paywall). http://www.sueddeutsche.de/digital/inside-facebook-im-netz-d...

Thanks for the example. I'd be surprised if content screeners are employed with Facebook anywhere in the world. Most don't make that job for a long time and they probably want to avoid being sued for compensation, I could imagine viewing those videos/images without proper training will lead to long-term psychological issues for many. It's easy if FB can just hire a subcontractor that files for bankruptcy once claims come in.

I’ve always been curious as to what “psychological training” would consist of to prepare for seeing such explicit content day in and day out. Perhaps something similar to military/war psychological practices?

Even in the military there is no such thing as this type of training.

source: was infantry.

Not exactly what you asked for, but similar enough:

https://www.forensicfocus.com/Forums/viewtopic/t=2329/

More than "training" it is "assistance" and "psychological support".

Wow, racial slurs. I'm sure that can trigger some kind of trauma on them

I'm sure most people reading HN scanning the title have SDE's come to mind immediately, without taking support staff into consideration, so the median is probably a good estimator for this audience, given your point.

Maybe it doesn't belong on the same table as a company like Wells Fargo since it's a different basis of comparison

I've been thinking a lot about the merits of the (highest income / median income) ratio in creating a society that is a little more resistant to eventual inequality. Rather than setting absolute tax brackets, what if we define tax brackets by this ratio? That way, it will be in the interest of the highest income earners to raise the median income.

It's easily gamed by contracting out for lower paid workers. What if Facebook came in at highest median pay because it relies more on contractors than other companies?

The data would be a bit more useful if they reported the job title of the median worker.

I was thinking more about this applying to all adult citizens of a country and not any particular corporation...

> It's easily gamed by contracting out for lower paid workers. What if Facebook came in at highest median pay because it relies more on contractors than other companies?

Easy gaming like that is easy to anticipate and account for. You just have to define "workers for the company" in a way that includes contractors and controlled entities, etc.

Ben & Jerry's originally capped the pay ratio of their highest salaried executive and lowest-earning-worker to 5:1 ($150,000/year and $12/hour in 1995), but over the years they raised the ratio to 7:1, 17:1, and then stopped sharing a ratio after Unilever acquired them in 2000.

http://abcnews.go.com/Business/companies-follow-ben-jerrys-l...

Fascinating.

A hard ratio seems fair minded, but seemed to have failed here because I think there was a misunderstanding around compensation. Compensation is a product of many variables including value created for the company and supply/demand for skillset/talent. As a business climbs the value chain or seeks to hire and compensate those that create greater amounts of value, and it maintains a compensation ratio, it must seek to increase the value produced by the lowest earners (or lose business to competition).

Never heard of that but it sounds like a good idea intuitively! I’ve always thought median was meaningless, and an average without the standard deviation was as well.

Probably closest you can come to this in real world is Switzerland (maybe some nordic countries too). Very strong middle class (although there is no minimum wage codified in law), salaries disparities ie in IT vs normal people is much much smaller (meaning even a guy filling shelves in supermarket gets decent wage, if you get 3x his wage you are probably in top 1% earners). There is even a law enacted recently that highest earner in company (ie CEO) can't have salary more than 20x the lowest one (at least that's how I remember it).

It has far-reaching consequences where whole population has high standards of living which transpills into high overall happiness, low criminality, and there is no predatory mentality to screw other people over just for one's own benefit (that I can see massively in eastern europe where I come from, and many other developing countries all around the world).

Really, Suisse could be model in many things for rest of the world, if only their mentality would be more 'transferable'.

There is even a law enacted recently that highest earner in company (ie CEO) can't have salary more than 20x the lowest one (at least that's how I remember it).

There was a referendum to implement that cap (and at only 12x!) but it was rejected by voters.

> if only their mentality would be more 'transferable'

There's a reason why there is only one Scandinavia and it's so tiny population wise. It's strictly cultural, ingrained over hundreds or thousands of years, and can't be replicated across a massive population base. That it's cultural is also the reason why Scandinavians have historically done even better in the US than they do in Scandinavia (a system with superior economic potential, combined with a culture that produces superior outcomes).

The closest a large nation has gotten to what Scandinavia accomplished, is probably Japan. However Japan has never sustained a standard of living at the median anywhere near what Denmark or Sweden reached (the Japanese are also over-worked to accomplish their lower economic output, which is a bit of a cheat if you're contrasting it with the economic output of Scandinavia).

When it comes to Switzerland, you can't replicate what they've done because there isn't enough banking to go around. That isn't a dig on Switzerland, it's the same reason most countries could never replicate Norway (oil).

Switzerland has a dozen banks that together are worth around $200-$250 billion, with just a population of eight million people. That'd be like if the top dozen banks in the US were worth $8 trillion. The total Swiss banking system has something like $7 to $10 trillion in assets under management; which would be like the US banking system having ~$350 trillion under management, a laughable sum.

That sounds interesting but would probably be a paradise for tax lawyers. You just create a network of companies, one for each income band. That way, an employee never makes more than the average. Of course only large corperations can afford that so that smaller companies will have a harder time hiring talent.

In most jurisdictions a limit a limited company has to have a board and a CEO. You can outsource middle management- this is what McKinsey, Bain, BSG etc essentially do, but you can't legally outsource the guys at the very top.

So what? They would just be the department heads of the previously monolith company (e.g. instead of having a sales department with a VP of sales and a few top managers, you just have a Sales Company subsidiary with a CEO and a few board members).

You already have that at large companies, the CEO is also head of a lot of subsidiaries. You can then compensate at that company as it best fits and channel the main compensation through another company.

> That sounds interesting but would probably be a paradise for tax lawyers. You just create a network of companies, one for each income band. That way, an employee never makes more than the average. Of course only large corperations can afford that so that smaller companies will have a harder time hiring talent.

You could probably define company, for the purposes of such a law, that excluded those kinds of structural shenanigans. Basically, define it in terms of its qualities rather than in terms of legal instruments.

I'd also guess that the IRS has already authored those definitions, or it at least a good distance of the way there.

This way you are adding more complexity which in turn adds more loopholes. A good tax framework should be as simple as possible to avoid this type of shenanigans.

> This way you are adding more complexity which in turn adds more loopholes.

I don't agree. Simple but dumb rules lead to easy to exploit loopholes. Saying they shouldn't be fixed in the name of "simplicity" is like saying a particular unhanded-case bug shouldn't be fixed because the extra case adds "complexity."

> A good tax framework should be as simple as possible to avoid this type of shenanigans.

The idea we're discussing is one where the tax framework is used as an instrument of regulation. If a behavior is found to be detrimental to society, I think society should rise to the task of regulating it rather than shirk that responsibility because of a fear of "complexity."

Again, I'm thinking about applying this to all individual (and human) adult citizens of a country, which will probably obviate the need to repeat the process at smaller scales like companies, where the problem is compounded by artificial constructs such as corporate personhood.

1. The current explosion in employee perks (free medical, gym, lunch, etc.) is almost certainly driven my the tax system. Your suggestion would take it to the next level (along the lines of college athletes).

2. People can move. Labor is more geographically sticky than capital, but it is not infinitely so. I doubt you'd ever succeed in getting Singapore to stop being the capitalist's paradise through foreign policy.

It’s (basically) called utilitarianism

I’m sure I’ll get downvoted for saying this, but lazy people will take advantage of the system and it will fall apart

> I've been thinking a lot about the merits of the (highest income / median income) ratio in creating a society that is a little more resistant to eventual inequality.

That metric is very sensitive to outliers. If you have even one individual with enormous income, that ratio will be enormous. Now you might say "that's precisely the point", but I would argue that having how we design a society hinge on what one individual earns, is not statistically sound.

A more appropriate metric along the same line of thought would be something like top 10-percent excluding outliers divided by median income, where "excluding outliers" could be calculated in an admitedly somewhat arbitrary, but common way like e.g. https://en.wikipedia.org/wiki/Interquartile_range#Outliers.

Or just use something that already exists instead of re-inventing the wheel https://en.wikipedia.org/wiki/Gini_index

That's great for those with the moral flexibility to work on such a profoundly evil company, for the detriment of mankind.

Facebook is a cancer that feeds on humanity's attention

"...manipulating and feeding on humanity's attention" is a broader description, IMO.

It's clear that many people have a price at which they'd do things that they otherwise would not.

The question is, aren't there?

Includes RSUs, for those who don’t feel like reading the article.

IIRC this article includes stock options for engineers but not the CEO. Meanwhile, not counted, are the legions of Facebook contractors (e.g. food service, janitorial, and some? a plurality? engineers).

> Zuckerberg took a $1 salary last year and got no new stock grants (on top of the $70 billion in Facebook stock he already owns). His $8.8 million in compensation last year was mainly for his personal security detail and private aircraft use.

Not so much in H1B data: http://www.myvisajobs.com/Visa-Sponsor/Facebook/189973_Salar...

At least for the base salary I guess.

Stock is a significant part of the remuneration for Facebook employees. Probably close to 50% for engineers.

> Gap said its median-paid employee, a real person, was a part-time sales associate in Alabama who worked a partial year and whose pay was not annualized.

It seems odd to compare the non-annualised salary of a part-time worker to those of full-time/annualised. Is this a strategy by Gap to deflect attention (I know $5375 is extremely low, but I have no ration/scale/factor to compare it by, so I don't know exactly how low. This employee in Alabama could be working a day a month), or is this format of reporting actually required by Dodd-Frank?

I've definitely felt the challenge of hiring in a startup as a result of these kinds of numbers. I'm curious what others think will come of this seeming bubble in compensation.

Why “bubble”? Their business is more profitable than crack cocaine, and their profit per employee is over a million dollars. Seems like fair compensation for once.

Why is it a bubble when they have an incredibly successful business that prints money where the people building the service are being rewarded for helping build such a successful outcome?

There might be some regulatin coming their way.

Which will make their business even more solid as it will make it harder for new entrants.

Not really no. Not all regulations are like that. These will most likely go after fb very directly.

That's sloppy thinking. Here's and example why: what if a new regulation new banned targeted advertising? That would kneecap FB's business model and unique value proposition while making it easier for new entrants, since they won't have to compete with FB's now-legally-useless data trove.

Because that was exactly the argument banks used before 2008. Not that salaries in Finance are low now but a lot of the excesses have been cut back following the crisis. Banks also made a ton of money pre-2008 but that didn't come out of nowhere.

So far, there has been no industry that just continued making high margins over decades without any cut backs. I doubt tech will be the first one.

But the industry as a whole doesn't have these margins or salaries; only the top dogs do.

Pre-2008 not all banks were hugely profitable. Some investment banks were and some smaller companies. The tech sector isn't that dissimilar. Salaries in SV show that not only Google and Facebook are willing to pay $200k+ for engineers, most of the industry will (and usually can).

As tech can't print money, these salaries must come from somewhere. And at some point those sources won't be able or willing to provide it. Maybe that's a soft landing, maybe harder. I don't know but as I said previously, I'd be surprised if tech's the first industry in centuries that channels wealth into the hands of few (including SV landlords) without any consequences.

Salaries in SV show that (...) most of the industry will (and usually can).

Yeah, that's what I doubt. SV is not the tech industry as a whole. The average salary for a software developer in the US is less than half than that, and if we removed those top outliers, it'll be even less. So I'm skeptical that this is out of the ordinary; doesn't seem that different from other well-paid white-collar professions like lawyers.

And, even in SV, most of the industry cannot; certainly the AirBnB/uber/lyft's of the world can, but the smaller companies seem to be falling behind (based on anecdotal conversations at least).

If you live in a first world country, try to find out what your mid-tier technology consultancies (Accenture, Deloitte, CGI, etc) are charging customers. It is almost certainly around 250-350k per year, even if they are working for an unglamorous, boring, traditional customer. The real issue is that outside of leading tech environments, too much rent is being extracted from the wages of software engineers.

Great point, although said rent is being driven largely by FB and GOOG. I remember the first time I was outbid for a flat in 2016 when a small group of googlers paid cash for the entire first year of rent. I should have moved to Seattle that afternoon :)

Ok, but I meant rent extraction in the economic sense https://en.m.wikipedia.org/wiki/Rent-seeking

It's not a bubble by any stretch of the imagination. Facebook pays a lot because they have to pay a lot to get quality people to want to work at Facebook.

Compare this against companies like SpaceX where the median compensation is quite awful for the industry made even worse by the area (compensation is well below $90k in most cases). This poor compensation is made even more peculiar at a glance by the incredibly high standard of employee they have. But they have these incredibly well qualified people lining up outside the door wanting to work for them.

Of course refuting my argument is companies like Netflix. I don't entirely understand why they pay so much. But at least just taking examples like Facebook and SpaceX, compensation is mostly just based on supply and demand - rather than massive ongoing bubble of inflating salaries.

Exactly. Same goes for game industry.

As for Netflix - you get to paid premium for taking a non-reliable job - they brag about their high turnover rate in their "culture" deck.

I admire the Netflix philosophy- ruthlessly capitalistic.

Its not a bubble. $240k is a reasonable salary for a professional with good grades from a good university working for a highly profitable private company. In fact as long as there is such a gap between revenue per employee, and compensation per employee, there will only be upward pressure on pay and conditions.

In reality, software engineering salaries outside of established tech environments are kept artificially low because there is no "guild of software engineers", and therefore anybody can get hired no matter what level of skill they have.

I too run a software startup. The most common and serious error I see in my fellow startup founders is expecting to build better technology with worse pay and conditions. You might be able to wrangle something decent out of some poorly qualified yet smart people, but its a bit of a long shot.

Its not a bubble.

I'm pretty sure it is and I'm quite looking forward to seeing it burst.

When I attended Facebook university day, 100% of the students I spoke with were from top schools. The majority I spoke with were from Ivy League Universities, of the non Ivy League students, one was from MIT, two from UMD, one from UCLA, and one from UT Austin. This is not a bubble, this is them hiring the best. I have been in class with students who chose to enter software engineering at major companies rather than investment banking.

Although that notion of "the best" has been deeply challenged by slack, e.g. https://www.theatlantic.com/technology/archive/2018/04/how-s...

I could never get an interview at Slack, but they are not hiring the best. Their compensation is far too low.

Schadenfreude aside, why?

Edit: that sounded confrontational, it wasn't supposed to be - I'm just curious!

I was more looking at the differential between FB -> Alphabet -> Rest. As a member of the Rest in the Bay Area, hiring has become quantitatively more challenging in the last 12 months as FB continues to gobble up talent. Perhaps it's not so much a bubble as it is a deep, likely irreversible change to SV.

> tech environments are kept artificially low because there is no "guild of software engineers"

I think you would have a hard case saying Guilds and Unions are natural variations of prices.

Maybe, maybe not. See the link I posted elsewhere on this thread.

> "guild of software engineers"

Sorry, I'm not familiar with what is meant by this. Can you elaborate?

I wrote about this a while ago: https://hackernoon.com/why-isnt-software-engineering-a-profe...

Is this the same in the UK?

I know a guy working in their London office as a programmer and he makes £60k/year. So no, probably not.

Edit: in UK in general you won't be seeing £150k+ salaries as a programmer no matter who you work for, the only way to get there is contracting. Top paying salaried positions for really senior staff in London at financial companies top out at around £120-130k.

Google underpays heavily AFAIK.

Honestly, I'm more surprised that other folks are surprised. How much do ya'll think top SWEs make?

Reply on news.ycombinator.com