African tech workers push back on U.S. startup built to help them
bigtechnology.substack.com
bigtechnology.substack.com
"“The one third is fictitious,” Andela CEO Jeremy Johnson told Big Technology in a candid interview last week. Some developers make less than a third of what clients pay, some make more, varying by country and seniority level. But the number never accurately described how Andela compensates its developers. “We absolutely bear responsibility for the miscommunication,” Johnson said. “Without question.”"
- CEO
So that's it? They miscommunicated what their developers get paid? The article doesn't allege any wrongdoing on the part of the company, beyond making this mistake, or suggest that anyone is being paid unfairly.
The title line
"....but life inside the company can be less than ideal."
might as well say "it's a perfectly normal company, nothing to see here".
Did I miss something?
But you're absolutely right that the market sets rates. And did no one wonder why the hell Andela would exist and be so valuable if there wasn't significant arbitrage to be had? They're a business not a charity.
I'm reminded of a story about child laborers and Nike. In an almost Kafkaeque twist, locales where this was happening ended up experiencing significant economic setbacks when Nike decided to close up certain offending factories.
This is just another classic case of people reacting emotionally, biasing towards their own set of experiences and points of view.
I think maybe the world is starting to feel like companies that take more than they give back are ultimately parasitic and abusive. For a long time it has been considered completely okay to maximize profit over all else, but if corporations were people they wouldn't be very community oriented peoples. Much more on the manipulative and greasy gross spectrum, and maybe that's just going out of style?
Also, they kind of were acting like a charity, so that could be part of it too.
unlikely unless you have a good degree of financial security or are relatively 'in demand'
There are a lot of old myths believed on a deep level like the idea of a universal fair price, fair profit margin, and zero sum benefit from trades where if anyone is making a profit it must be doing so at somebody's expense. All of them are wrong.
If operating under those fallacious zero sum models companies always look parasitic if they survive, regardless of what they contributed and what would or wouldn't have occurred in their absense.
This is why when one sees salary comparisons, they are misleading. A correct comparison would compare what is called "total compensation" which includes that 45%. For example, whenever you hear about public teacher salaries being low, no mention is ever made of the total compensation, which is pretty generous.
Those "free" benefits aren't free at all. They come out of the employee's pocket.
This is disingenuous. It's perfectly acceptable to compare teacher salary to any other salary. The default assumption is that you're comparing W2-with-benefits to W2-with-benefits. When people talk about low teacher salary, they're talking about it in comparison to another salary with the exact same overhead. It's not necessary to assign cash value to employer-paid taxes and benefits when making an apples-to-apples comparison.
The teachers' unions have been quite clever about this, in negotiation for much of their pay in the form of benefits, so it looks like their pay is low. The newspaper, for example, often runs comparisons of salaries but never total compensation.
Most people can only make choices with the take home portion of salary, regardless of what 'total comp' is.
Benefits absolutely play a role in the jobs people take. I have been offered two jobs with identical salaries, but one had a significant employer contribution to my 401k and stock options. you can guess which job I took.
Likewise, my mother was a teacher and one of the main reasons was the incredible healthcare. She could have gone somewhere else with her 2 masters, but it was worth a ton with a sickly husband. A full salary pension is worth a lot of direct salary compensation too.
https://www.seattletimes.com/education-lab/with-a-price-tag-...
https://www.hca.wa.gov/about-hca/school-employees-benefits-b...
Those links provide facts and figures, but no figure on what the value of the employee benefit is.
I'd encourage anyone interested to ask their employer's HR dept what the value is of their employer provided health care benefit, and compare.
Same with my mom. She was a SAH mom for 14 years and switched careers and went to grad school to be a school counselor and the career change was largely attributed to the medical benefits she’d get as an employee, which became necessary because my dad’s business was going under (she was also damn good at what she did). In addition to the benefits, the work schedule that would allow her to be home not long after I got home from school (I was 8 and my sister 14) and summer’s off made it a relatively good proposition.
Now, she has a Masters, a Specialist, and a Ph.D, so her salary was significantly higher than most teachers (and her state has salaries that are on the higher end as well as some of the best retirement options), but it still pales in comparison to what she can make in private practice.
She started late and retired a little early — I don’t think she hit her 25 years — but she still gets a very large percentage of her salary from her state and county pension. And she had the good insurance until she hit Medicare age.
For educators that start out younger, say 22, a common tactic is to do the 25 years, retire/collect retirement, and then return to work in some capacity, essentially double-dipping. The ability to do this is going to vary according to your state and county, but MANY of my moms friends did this. My mom even considered it before saying “fuck it” and enjoying retirement.
I won’t dispute that on the whole, teachers in the US are underpaid, but it’s one of the few places outside of the federal government that offers the level of benefits and retirement options that it does.
My parents live in the suburbs and take home six figures a year in retirement (her pensions and my dad’s social security), not inclusive of 401k or other investments. I very seriously doubt I’ll be able to do the same in 30 years, assuming I am even able to retire, even though my total compensation is probably close to triple hers at its peak.
It sure does. It's a lot of money that pays for things like health insurance, early retirement, and retirement benefits.
> they don't have much leverage
Sure they do - the teachers' union aggressively negotiates for those benefits.
Part of the reason teacher salaries are lower on an annualized basis is that they don't work during the summer, but considering that their salaries are already on the low side given the education requirements, that washes out.
I'm not trying to paint a sob story for teachers. They're usually comfortably middle class, and if they put in 20-30 years, they're usually retiring comfortably. But you're making it sound like they have a benefits package above and beyond other employment. It's simply not true. Plenty of other jobs (and I don't just mean tech jobs) that require a four-year degree come with far better benefits, 401(k) matching, and you don't have to gamble on committing your entire career to staying in the same career in the same state in order to retain the value.
They do. The biggest clue is the difficulty in obtaining what the value of that benefits package is.
> put in 20-30 years, they're usually retiring comfortably
I find it amazing that one can retire comfortably at 42 if you're a schoolteacher. What other job in the private sector offers that?
Because you can't find the value of the benefits, that's a clue that it's excessive? Teacher pay and benefits are 100% public information. Your earlier claim that teacher health benefits in WA were $36,000 per year is patently absurd. An ACA exchange medical plan available to anyone costs under $500/mo with an annual out-of-pocket maximum of $6000. The state may pay $36,000/year for their benefits (but no, they don't, not even close), but even if that were true, if you're comparing it to market value, that's worth $12,000 at most to the teacher.
> I find it amazing that one can retire comfortably at 42 if you're a schoolteacher. What other job in the private sector offers that?
I shouldn't even have claimed that they can retire comfortably. Quoting from [1]:
> For example, under a system with a 1.5 percent multiplier: A teacher retiring with a final average salary of $60,000 and 20 years of service would collect a pension of $18,000 annually.
Now this is a nice perk if you start at age 42 and live another 40 years, but it's not a comfortable living. It's barely over the poverty line. It's unclear from this example if it's in a state that excludes Social Security benefits, but even if it doesn't exclude them, that's not a lot of money.
From the same article:
> Across the nation, teachers pay on average 16 percent of the plan premiums for individual coverage, lower than the 21 percent average for workers in private industry. But for family coverage, teachers pay a comparable portion of the premium to private-sector workers, according to 2017 data from the Labor Department.
As I stated previously, most teachers already contribute to their health insurance, and as I stated above, the maximum value of that insurance is only $12,000.
Feel free to explore further on your own. I'm tapping out.
[1]: https://www.edweek.org/ew/issues/teacher-pay/index.html
> Teacher pay and benefits are 100% public information
It's easy to find pay, but I haven't been able to find the cost of the benefits.
> I shouldn't even have claimed that they can retire comfortably.
I'd be interested if you can find any private pension plan that gives out anything at all starting at age 42 and going for the rest of their life (another 40 years). Even Social Security doesn't kick in until 62.
> most teachers already contribute to their health insurance
The figure of interest here is what does that cost the government to provide it?
The published teacher pay schedule indicates that teachers are paid around $50k for a 9 month schedule (https://www.washoeschools.net/Page/841)
At 43% that's roughly $21500 in benefits. Health insurance for a family of 4 on an ACA platinum plan is ~$19000/Year (https://news.ehealthinsurance.com/_ir/68/20205/eHealth_2020_...)
Since not all teachers will have families or elect for district health insurance, I think it's safe to assume health insurance is probably around the $9000-13000 per person range to the district.
Note that Nevada has pretty low per student spending for the US, so it is quite possible other municipalities Will spend more. This seems to be the case (or my math is bad) as the BLS reports a much higher benefits to pay ratio for state and local government employees nationwide - about 60% (https://www.bls.gov/news.release/pdf/ecec.pdf)
Switching jobs 15 years in feels like an all or nothing situation since they haven’t been paying into social security.
I don’t know any teacher friends of hers that have retired before 30 years on the job. It’s stable, but it’s not an early retirement career.
Finally, I want to acknowledge that funding in CA for teachers is difficult to adjust and complex, but it’s all inherently public. https://ed100.org/lessons/whopays
> retired before 30 years on the job. It’s stable, but it’s not an early retirement career.
I'd consider retiring at 52 early retirement, especially if it comes with a lifetime pension.
Here’s an idea of pension contribution
> Teachers contribute 8% of their monthly salaries into a state pension fund, while their employers contribute an additional 8.25%. On top of these payments, the state of California contributes another 2% into the fund.
All from https://www.teaching-certification.com/salaries-benefits/cal...
Your link also says they can retire at 50 with 30 years of service. Sure, it's not the full pension, but they'll still be receiving the pension for another 30 years. Seems generous to me.
I don't know a private company with a plan like that. SS doesn't start paying out until 62 (also at a reduced amount).
I remember something similar happened in India. Kids were sewing rugs or something, someone didn’t like it because it looked bad (like a sweatshop) and there was a boycott.
The place went out of business. International investigators later found that 50% of those children had to resort to sex work while a good percentage of the rest ended up doing hard labor jobs and such. It was absolute catastrophe. The white rich people who started the boycott? They just went on with their lives. No significant and realistic effort was made to correct anything by them.
> Baizuo (/ˈbaɪˌdzwɔː/; Chinese: 白左 báizuǒ, literally White Left) is a derogatory Chinese neologism and political epithet used to refer to Western leftist ideologies primarily espoused by white people.
Not a twist at all, it was pretty obvious that the reason those laborers worked there was because it was better than the alternatives. Nike closing means they were forced to settle for the worse alternatives.
I don’t find it obvious at all. Children don’t get to consider alternatives, they do as they are taught. That’s the whole problem with child labor.
India's landmark child labor law passed in the 80s is a dramatic, tragic example of policy effects on this margin (though not driven by the same privileged ignorance as the Nike incident). When the law was passed, it lowered the welfare of the affected children and their families on pretty much every relevant metric: calories consumed, years of schooling, mortality, income/wealth, etc. The most stubborn advocate of ignoring the holistic consequences of policy might say it was all worth it, but the most damning thing is that _it increased hours of child labor per household_, coming largely from reduced time in school. Cracking down on child labor employers reduced demand for child labor, which reduced wages. But the problem is that labor supply was inelastic, where the choice was between child labor and starvation. The upshot was that children ended up working more for less money, a tragic lose-lose of a policy responsible for immense human suffering.
This isn't an argument for sweatshops per se; it's entirely possible that one can do the legwork and realize that the actual effect of a seemingly good policy is horribly negative. It's an argument that judging policies on how they affect your privileged sensibilities instead of what they do to the people they affect is despicable. Transmuting suffering in sweatshops to much worse suffering from starvation simply because the latter is easier to deny responsibility for is disgusting, but unfortunately the average person doesn't have the moral reasoning ability to understand this.
Also we definitely live in a global, interconnected world but it feels like a hell of a stretch to invoke BLM here. African workers sharing their feelings about their place of work are just “riding the wave” because they happen to black?
The article appears address the incongruency:
> As Andela moved into 2019, many within the company felt the mood shift. It moved from something resembling an NGO to a profit-driven enterprise — which it indeed always was.
Andela appears to have been a profit-driven enterprise masquerading as a non-profit one. Until they could no longer sell the lie. Appearing as a benefits-first company drove a lot of "investment" dollars their way.
Just looks like another example of fools and their money. With a heavy price tag paid by the innocents.
The situation is almost three times as complicated as you’re theorizing here, because those companies were not passive entities. They were political organizations as well who helped remake economies. When Walmart moves into town and all of the other stores close as a result, does that mean that Walmart was better for the town?
They tried to brand themselves as an agent for massive social changes when in reality they were just another consulting company - big name investors notwithstanding. If I got fooled by their PR BS I wouldn't be too pleased.
I suppose the crime here is misleading investors as to the proportion of funds that go to salary...but I don't know what they're doing with the money, and unfortunately they might be passing on more of it than some popular charities.
Article needs work perhaps.
https://www.bizjournals.com/bizwomen/news/latest-news/2019/0...
As the article explains, some workers left for better opportunities - so clearly it wasn't acceptable to them.
the mismatch between reality and aspirations when it comes to these ventures, and I guess a broader point about private entities engaging or even substituting proper developmental policy and how often the results are straight up bad.
Given the heavy PR that these firms are engaged in it's obviously important to get an accurate view of what reality looks like. It reminds me of Yang's venture for America with a similar mission (albeit in the US rather than outside of it), which ended with barely any job creation and even a suicide at one of his incubators, but still it was used extensively to promote this new class of 'social' entrepreneur activity.
In my career, I have worked with very over paid and not so good engineers and I've also worked with very underpaid and very good engineers from "poorer" countries such as Israel, India, China or Iran who have been highly exploited (e.g. in the US on an H1B, they are contractors that we are paying $120/hr for but it turns out they are only getting ~$20/hr).
As far as the "market" is concerned, it's just arbitrage. Buy low/sell high. It doesn't matter who you are or where you come from, you will be exploited.
The only line that disturbed me is this one. “Why is it the private sector that needs to come in and innovate? Why can't schools, governments, etc, do that job?”
If I had any advice for these junior engineers is for one of them to start their own company to solve this problem because an individual can solve this problem not a government. Life's hard but it would only take one of you to find a solution to make at least some of those people life easier.
Andela raised a lot of money based on social justice capital, which is fine. The problem is that consulting is not a particularly good way to spend it. The best strategy, I think, is to combine a school, consulting company and a venture capital operation.
The school may be more or less self supporting, paid for by students or with scholarships. It can be challenging keep programmers engaged as teachers, as they can make good money for less hassle, and they need to have a particular set of interpersonal and teaching skills which is rarer in programmers. Subsidy can help to set up the school and pay teachers well.
The consulting company is a for-profit enterprise, and needs to have the right balance of skills, not too many juniors. The best graduates of the school may be hired by the consulting company.
The VC operation funds business opportunities executed using local tech teams. The business side might be local, targeting an opportunity in Africa, or remote. The VC provides seed funds for a large number of projects, and the consulting company executes. The seed round gives them money to develop an initial product and test the market. Then they are evaluated and may get another round or shut down. If they move forward, then the developers continue working full time with the startup, otherwise they go back into the consulting pool for another project.
This provides a nice, sustainable synergy between the parts. The consulting company gets a continuous stream of projects without a lot of risk. The school graduates get practical experience supervised by seniors, then a potential full time job. The seed VC gets early access to good deals, and some will work out well.
The system is financially self supporting, but can take advantage of subsidies or overseas investment.
The key problem in all of this is actually delivering projects with junior people, which means you need to make it attractive for senior people to get involved and stay engaged. They need to be paid well or have some significant share of the upside.
With the virus, we are entering a new age of remote work which will open up opportunities for people around the world. It is difficult for companies in the US to identify, nurture and manage remote talent in emerging markets. In some sense, that's the primary value of the consulting company, but it needs to be part of an ecosystem.
This is a very Western belief and one that is rooted in a lot of bias. Maybe people who have a particular set of interpersonal and teaching skills aren’t becoming programmers because the people entrenched in the field don’t value interpersonal and teaching skills?
A similar problem exists in consulting companies. It's hard to find people who are great at programming, great at managing people, great at doing sales, and great at running the business. The rare person can do it all, but you can't hire for it. Everyone like that is running their own business.
So you end up with a split between the technical part of the team and non-technical managers. In this case it's usually the non-technical managers who make all the money :-)
Is Andela an NGO/charity, or it is a VC-backed unicorn-track startup?
If it's a startup, have the employees been getting equity?
The article mentions some employees taking a pay cut to join.
I would not blame Andela for everything happening out there. Most of the developers have never worked with US based companies before. They don't understand the rigor, efficiency, and cold blooded capitalism of such enterprises. Capitalism hears one message, and that message is profit and value creation for shareholders.
I see opportunities for the continent if they try to develop locally and solve local problems.
Why can't Andela pivot to consultancy and compete with the likes of Wipro and Tata?
Disclaimer: I am African(live there) and I have no relationship with Andela.
To go in and create professional ecosystem's like IT in places where it doesn't exist is a NGO's fantastical dream, it might be possible for Andela to pull this off, but hit pieces like this, where they are just doing industry standard don't help.
Personally I'd bet against Andela, much as we want them to succeed, without an existing ecosystem, IT developers just can't get off the ground. People talk about self learning IT, but so much of that works because of the people around them, without the critical mass it's not possible. You can't just magic it up online either. If you could find a process that gets it to work, that'd be pretty amazing and world changing, but it's probably related to getting MOOCs to work, it's still missing something.