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Comment by sandworm101 | Hacker News Reader

This isn't a matter simply for the young. The young are definitely hit harder, but the real issue is that "work" is not valued as it once was. The 'economy' is doing great. Stocks go ever higher despite pandemics and money trends. Taxes are low. Luxury spending is at an all time high. Investors, be them wealthy independants or pensioned former workers, are generally happy. Young people own nothing and so the bulk of their income must come through wages rather than investments. It is those workers, those who don't own their sources of income, that are struggling to make rent.

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Good work is still highly valued, it's just that the value is not paid to the worker, but to the company owning the work. If you increase a company's profit by $500k annually through setting up a new automation system, you'll still only get your $40k internship salary. And the company will pocket the remaining $460k, to be paid out to the owners as profits.

So yes, I fully agree with you. This hits the young people the hardest because they are the ones to own the least, on average. But more in general, everyone who is not part of the elite owning those companies and their preferred stocks is suffering.

It's almost a cliche "owners vs. workers" class war at this point. But for some reason, everyone in the US expects to enter the owning elite within years - no matter how ridiculously improbable that is - so nobody is willing to stand up for the workers.

In one of my first jobs, I came up with a novel idea to automate a big chunk of work, during the early days of ML. We A/B tested it and it increased the company’s revenue by like a third while decreasing costs (and this wasn’t a tiny company). It took a whole team a few months to implement the idea, as it involved a few different skill sets.

To your point, who deserved to capture the value here? Well there was an A/B test to clearly show what caused the boost, and a simple trail from my research (done on my own initiative) to the team's implementation to the revenue, so we at least knew that this group of people was collectively responsible. Nobody got raises, bonuses, or anything. If we had captured that value it would have had to multiply our comp many times over. So why should I have ever gone above and beyond in the first place? Meanwhile my manager repeatedly complained to me that I only worked 9-5.

This early experience was formative in my workplace opinions. Go figure.

[I'm adding thoughts here instead of editing the above]

Speaking more broadly, these kinds of misaligned incentives are probably doing massive damage to the economy, in terms of lost productivity and innovation.

A huge chunk of the people who should be productive and be innovating literally don't have an incentive to do anything above and beyond keeping their job. It's all adversarial and extractive instead of cooperative. On both sides. Employers won't pay workers for the value the workers provide, and in return workers surf HN and reddit all day.

Meanwhile, apparently there's some kind of epidemic of "bullshit jobs." Again, go figure.

Arguably the incentives aren't aligned, innovation isn't happening, and "bullshit jobs" all exist because we've hit some sort of maximal productivity trough where the free market doesn't feel a need to incentivize innovation/productivity any further.

This is often what a lot of people mean when they claim we've hit "late stage capitalism": it is possible the paperclip maximizers have already "eaten the world", turned everything to paperclips, and all that is left is "bullshit jobs". There's no reason to incentivize innovation because everything is already paperclips.

This is why innovation happens in startups where the incentives are better aligned.

I hate to break this to you but what you’re describing is capitalism.

Im in the same boat as you. Have been working 2 to 4 hours each night extra for my job. I needed to come in 1 hour late twice two weeks in a row and got called into my bosses office. He said "We are an 8 to 5 office." I told him about my extra work and he just repeated the quote above.

I now work 8 to 5 only and do much less.

I had a similar experience early in my career working in a call center. We received a lot of calls about 1 problem with customer modems. I wrote a script that detected snmptraps and automatically issued bounce commands to the remote modems.

Our call volume dropped noticeably. I told my manager why. He was pissed, and asked how we were going to justify headcount if our call volume was dropping.

Lesson learned. [edit: the ambiguous lesson is intentional. I stopped trying, but he kept everyone employed. So... lesson learned :)]

It appears the mistake you made was not going to your boss's boss. As someone who came up in the political mines I feel you on this.

Weird. I tell my folks to get their work done and I expect them to schedule their own time because I trust them as professionals. If they need to work between 6pm to 2am or 4am to 10am because that's when they're the most productive, or they're dealing with something in life and they're still getting the work done I trust them. I feel folks get fully jaded because everyone sets up all this rigidity and there's a huge lost of mutual trust and respect because of it.

Coming in twice an hour late and being ridiculed about it is ridiculous. This is professional life, not some strict grade school.

In all likelihood, those people are under pressure from their bosses. They need the appearance of everyone being there and working hard. For some people in managerial positions, any kind of data showing the employees still working won't be enough... They want to see asses in seats and all at the same time.

I've had to work under many executives like this and it's pretty annoying. They can't be reasoned with.

Oh and the faster your people work - the worse it is for people who rely on headcount for their job. They can't justify a larger headcount if everyone is working efficiently...

If you made a significant contribution (and it certainly sounds like you did) then you should probably have gotten some reward for doing a good job, maybe raise or promotion etc.

However just because you increased revenue with you test in no way means you deserve to capture the value of it. You didn’t do it in isolation. At the very least the reason you were able to increase revenue by a third was because there was a revenue and a customer base to start with. You didn’t create that, that was given to you to leverage off of. I assume you had infrastructure and tooling support as well. So at the very least that increase revenue should be distributed amongst other employees that build the foundation in the first place.

Further, you can't expect to capture all or most of the upside unless you're also willing to risk the downside.

Maybe the A/B test would show no change. Maybe it would show a slight loss. Do you still expect to be paid your salary for the work that went into that? If you do, you shouldn't expect to capture all the upside.

Imagine 5 teams set out to run $100K experiments; 4 teams fail and 1 team creates a $1M gross win. On net, $500K of value was created. The company can't weather the losses from the 4 teams and pay out 100% of the upside ($900K) of the 5th experiment to the 5th team.

Funny but I think that finance does this right - give me x dollars to manage and I get some percent of the upside if any. In that case you didn't earn the capital but your effect in leveraging it is tied directly to your comp.

In a just world, you would've gotten a slice of the revenue. Especially in tech, where your performance can be a revenue multiplier and continue to pay dividends for years, it should be that the people who make the change should be incentivised to do so.

That's why companies give you stock.

I'd say this is why companies give bonuses. Stock is fungible for cash unless the company is private, in which cases a stock bonus can be meaningfully different from a cash bonus.

I (mostly) disagree. If I receive an RSU grant that vests over 4 years, it's not just because the company hopes I'll stay that long but primarily because the company hopes that will align my incentives with the shareholders' incentives. If I work to make the company better over a multi-year period, we all win together. If they instead just give me the equivalent value in cash salary, my incentive is to extend my term of employment, not the value of the company.

That works for small companies. In my large group, whether I do a stellar job or slack on HN all day won't influence the stock price by a cent.

Do you have an idea of why the shareholders permit you to stay employed then?

I believe that they, via management, believe that the aggregate of what you and your colleagues do is contributing to the overall enterprise value, even if your individual contribution is much smaller than a penny per share.

He specifically said what he does won’t change the stock price by a cent, so he is presumably talking about his individual contribution, not the aggregate one. Which is his point —- giving him RSU’s won’t allow him to capture the value of going above and beyond, because even as you acknowledge yourself, his going above and beyond won’t move the share price by even a penny.

If every software engineer can lift the share price by a hundredth of a penny every year, should the company give shares as part of comp to their 5,000 engineers or not? Should they even employ engineers at all?

The fact that some engineers can shirk and ride on the efforts of their peers does create a tragedy of the commons possibility, but the most appropriate solution there involves strong local leadership, rather than the conclusion that RSU grants are ineffective.

The point is that they are ineffective for the stated purpose of incentivizing the engineers to work harder. To that end, bonuses are much more effective.

The difference is that anyone can buy stock in their publicly held employer (with a bonus or otherwise) and have the same incentive. RSUs force the incentive to exist (instead of directly rewarding performance), but the balance between RSU growth as reward and ability to influence RSU growth may be negligible except at VP levels and above. If I am reasonably certain that keeping a backend service running within SLA is unlikely to meaningfully move the stock price I certainly won't be putting in extra hours or weekends to achieve it. Additionally, it forces a minimum risk on the risk-reward calculation made by an employee.

Whereas banks and sales teams have long given bonuses because it's tractable to assign value to individual contributions, I think bonuses are the generally preferred incentive when tractable. Making partner is roughly the VP-level equivalent of RSU grants where company performance starts being tied to individual performance.

Where this becomes a bit more evident is that RSU refreshes are almost always based on performance review, like bonuses.

I see RSUs as a cheaper/more flexible compensation for employers and a tax reduction strategy for employees (both worthwhile in their own right).

There are a few people who are capable of such remarkable profit-increasing feats. Most companies rarely encounter them, and have never bothered setting up systems to reward that kind of work.

Many of these people eventually end up working at companies that _do_ have such systems. Anecdata: a friend of mine recently found a clever hack that increased ad revenue on a major product by some fraction of a percent for one of the world's largest internet companies. His bonus that year was equivalent to a down payment on a nice house.

> There are a few people who are capable of such remarkable profit-increasing feats

My brother is an industrial engineer. His job is literally "make processes more efficient."

As in, "This month, I increased the yield efficiency by X percent, saving the company Y millions of dollars per year in perpetuity"

It'd be great for him if he got some sort of commission off those gains, but he is paid pretty well to do what he does, and he enjoys the work.

Increases in efficiency are great for profits, but they are also the reason prices of things come down over time.

This sort of thing is the ideal item to put on your resume when looking for a higher paying job. Anything concrete about value provided in your previous job is worth gold to your next employer.

I often see employers whining their employees don't go the extra mile... without giving the employees any incentives of doing so! What I tell folks I mentor is that a job isn't serious if there's no stocks or bonus in the compensation package.

For that specific example, it's because there was no risk on your end for developing the product. To capture it's value the IP would have needed to be developed outside the company and licensed to it. But that's way more risky.

> So why should I have ever gone above and beyond in the first place? Meanwhile my manager repeatedly complained to me that I only worked 9-5.

You shouldn't have, at least, not there. Clearly they had no clue how innovation happens and how to create an environment where the type of people who innovate ends up.

I've observed a correlation between successful high-complexity, high-risk, high-unknowns, high-payoff efforts and high-trust work environments, that extend down to the lowest rungs of an organization's totem pole.

I suspect it works this way because to put it into software architecture terms, the trust is a microservice delivery model prerequisite, so people can loosely couple as needed to efficiently work on blockers. I find it ironic that many laypeople see the US military as a rigidly stratified, top-down command and control organization, but speaking to many military members, I find the amount of trust (once earned) placed in startlingly young and junior members far exceeds most commercial organizations. Despite all the military war stories of ineptitude and incompetence, I don't think it is a coincidence that compared to the average commercial organization, the military is still perceived by many to "get 'er done".

This is fantastically difficult to achieve because it requires a from-the-top commitment to developing human, empathic leadership on top of management (which is already a difficult to master skill set by itself). It takes enormous emotional guts and vulnerability to be in that kind of leadership; I know it would challenge my personal limits for sure, possibly even break them. This takes decades of continuous work without interruption through top leadership succession evolutions.

Was this a job at a place that was a such a small startup that you were being paid partially in stock? Or was this a larger company where you didn't have to take that risk?

My point is that there are places where your contribution to the overall success is more directly related to what you are paid, however many people don't want to work at those places because it involves significantly more risk.

Let's say you have a nearly 100% chance of making $50k for the next 10 years for a total of $500k. Alternatively you can take a 10% chance at making $5 million total over the next 10 years. The reason that there is potential for a larger payout in the second job is because you are taking a greater risk. If you were working at a company where someone else was taking the risk, then the rewards likely flowed to those people.

For many young people, their first job gives them some data points about what they are actually capable of delivering so they can choose to work at places that trend toward rewarding contribution (startup, self-employed, etc.) or at places that don't (like your company) based on what type of performance they are capable of providing.

I believe this is how many companies get started. You consult a lawyer, build things in your free time, then rent it back to your old employer as a SaaS and maybe give them 10% off for being your first customer.

So companies are effectively driving their employees towards creating future competition, as that seems to be the only way left for inventors to capture the value they create.

>So companies are effectively driving their employees towards creating future competition,

Or future complimentary product/service. A company that runs call centers doesn't wanna make call center software but if they can buy call center SaaS (or whatever) that makes them more efficient they're happy and the guy they're buying from is happy.

Of course the company deserves to capture the value, they are already paying you and expect some return on investment (from paying you). Your contribution would’ve been zero without the company and your teammates who are also only there because the company built the team.

Yeah, but when they go ahead and capture 100% of the value by never giving bonuses or raises they're incentivizing mediocrity, both in the form of brain-drain due to the most innovative employees seeking greener pastures once their resumes are updated and in the form of employees who may have otherwise had the potential to go above and beyond never feeling any external motivation to do so.

Such companies wind up doing poorly.

Is this something you could have used to create a startup to compete with your previous employer?

It's tough to say. I was young and didn't have the kind of capital to do that myself. It was in the depths of a shitty economy and this hypothetical start up wouldn't have had much of a moat, so I don't think that it would've been easy to get outside capital either. And what would the pitch be? We can do this non-unicorn company's job better and still not be a unicorn? This was right round the beginning of the whole 'everything has to be a unicorn' thing, or at least my awareness of it.

It's unfortunate that the only way to capture the value of my innovation might have been "well, just be an owner instead of a worker."

Out of curiosity did you push for a raise? Not criticizing btw, just wondering how things played out

When early socialist/communists were researching cybernetics they latched on to the idea of predictive production management, to "guide" the collective workforce. I believe they should have used their new computation capabilities to capture the bits of workforce innovation and value addition to create positive feedback loops, to reward innovative and value added behavior.

Soviets certainly tried to create these positive feedback loops, although it's arguable how successful they were. The standard example is the Stakhanovite Movement [1], which rewarded workers for more productive output.

[1] https://en.wikipedia.org/wiki/Stakhanovite_movement

The Soviet Union had planned economy. The problem with it required constant manual intervention. So the "state projects" worked reasonably well. The defense industry worked well. Whatever was left to develop on its own quickly lost quality and only stayed competitive because of locked borders and total deficit of goods.

Socialists and communists have always fixated on capital accumulation as the reason for productivity increases; thus it would be somewhat unnatural for them to reward individuals for what they see as a collective effort.

Marxism, at least, centers on the idea that the worker should be compensated fairly for the labor/value that he or she produces. It’s in the first chapter of Capital, after all. Communism I think is about how the workers can bring about this fair compensation through politics (by the proletariat banding together, for example).

That's Marxism's initial redistributive aspect, not the core principle.

Capital was the foundation for Marxism's development, not the final stage. It's more a case of critique of laisez-faire imperialist capitalism, than anything else.

What do you make of the Hero of Labour award then? They not only went to particularly productive labourers but also do engineers and scientists (Sakharov is probably best known). Engineering and science is an individual effort, although of course you belong to a greater collective that supported you.

Hero of labor was a rare award, only given out 20812 times (according to Wikipedia); I'd be surprised if less than 20k Americans received a bonus on any given week under the current status quo.

Please remember that I was responding to a comment, not making an abstract statement that communists never give out awards. The grandparent had said that it would be good if communists and socialists were more generous with awards than capitalists, and I was making the case that it would be antithetical to the typical communist ideology.

The fact that the award was rare is precisely the point, it's a highly politicised decision to give it, comparable to a military award for exceptional valour. At a lower level, 5-year plan medals were handed out like candy. So, yes, individuals of all kinds were recognized at all levels.

In Soviet Russia you worked for people. At Amazon you work for the Machine.

I am not really sure what point you're trying to make. There was an old saying in the Soviet Union: "we pretended to work, and they pretended to pay us". Everything that you're saying is compatible with the notion that the Soviets didn't actually reward innovation and productivity, they just pretended to.

Your offhand comment is pithy, but ridiculous on its face.

> the company will pocket the remaining $460k

First, in most companies it's very hard to say who exactly managed to increase the profit. Is it you who came up with the idea? Is it your boss who picked this specific idea out of fifty other ideas you came up with last week? Is it the QA team who managed to catch the bug which would've erased all the profits? Is it HR who hired you among other candidates?

Second, no, the remaining is not $460k. In a Big Greedy Corporation I work an average annual cost of employee in "primary" location is around $200k (pre-covid). It includes office space, technology, infrastructure, salary, taxes, fees, insurances and so on.

Third, that's the premium the company gets for the risk. Intern will get his salary no matter what. The company makes a bet though. You want to own part of that risk? Build your own company.

OK so the company pockets the remaining $300k, while the intern still gets only $40k. Does that make it categorically better? I don't think so.

Also, the company probably only has to pay those $40k to $200k in salary costs for a few years, but the benefits derived from the work might outlive it. There's nothing stopping anyone from firing an employee just because they previously made a massive contribution to the company's financial success. Why keep the cow if you can get the milk for free?

So it might even be the full $500k in pure profits after the 2nd year.

The only way you can accurately evaluate and attribute the work of this hypothetical intern is to answer the question "what would happen if they took their idea and implemented it independently?"

* Does it require a big capital investment? the company provides that.

* Is it risky? The company gets a risk premium.

* Does it need a bunch of specialized resources? the company needs to provide those.

* More subtly, is it net-new or incremental value? Providing a company with something that boosts what they already do isn't evaluated on the incremental increase because you can't realize them without the previous baseline.

There are countless factors measuring value-add, making it extremely hard to allocate back to a single cog in the machine - unless you're a startup with very few cogs, hence they're responsible for all value (or costs).

If you want to be evaluated based solely on your individual contribution, put yourself into a situation where this is possible, i.e. do it all yourself. Otherwise join the broader team and take the benefits and costs that comes with that.

What if the company loses $1mil? Does the intern get no pay?

What if the advancement is in the wrong direction in the market? Like Windows Mobile was. You could have built a great system that delivered a few hundred million in sales, but two years down the road it cost the company a few billion in costs. Do you get to pay back your share?

I'm not advocating here for the work to be uncompensated - it's just when you get a risk shield, you also lose the payout shield.

Maybe a better culture of coop's would be a better solution.

> There's nothing stopping anyone from firing an employee just because they previously made a massive contribution to the company's financial success. Why keep the cow if you can get the milk for free?

If someone who can consistently deliver great value to a company is let go, they can go elsewhere and provide their value as a consultant or employee. You seem to think the company has no competition and doesn't need to compete with other businesses in the marketplace. I think you are also overlooking the fact that most interns are hired to see if they will be good to bring on full time. Some of them turn out to not provide substantial value. If an internship is how you are demonstrating your value to an employer, then your contribution is being average across all the interns that don't contribute anything or much of anything.

You’re pulling numbers out of thin air and basing your conclusions on them.

Everyone in this thread is.

Definitely not. Even GP isn't.

I couldn't have said it better. Critics of the status quo often cite strawperson numbers to villianize omnicorp, but it isn't that cut and dry. Every decision regarding capital is risky. Risk management and proper reward isn't easily quantifiable sometimes.

Isn't the social production of value the exact reason why the managerial class should not be disproportionately rewarded or in dictatorial control?

>First, in most companies it's very hard to say who exactly managed to increase the profit.

It isn't that we need to decide exactly who contributed proportionally and how much of the profits we get. We're really just reaching for something that increases wages faster than raises.

And really it highlights the issue that not only is it hard to get fair profit-sharing, it's also hard to get market-competitive raises.

But of course a company is going to say it's hard to decide who gets how much, because they have an incentive to pay their employees as little as possible, regardless if it's through base wages, raises, or profit sharing. There always seems to be an excuse.

>> something that increases wages faster than raises.

not sure if you misspoke or I don't get your point

>> fair profit-sharing

"Fair" is just a trigger that one side uses to put the other on the defensive. Companies by their very nature a designed to share profits with their owners, i.e. legal shareholders. If you want profit sharing guaranteed join an employee-owned cooperative or alternative structured org.

>not sure if you misspoke or I don't get your point

If I can't get raises that keep up with inflation or competitive market rates, I'm going to try and argue that I should seek other options for making more money. One of those options would be profit-sharing. Another option is job hopping, which tech enjoys as a luxury.

> You want to own part of that risk? Build your own company.

I was with you until your last line. You don't have to build your own company - you can simply go after a job at a company that understands how beneficial it is to align the incentives of its owners and employees.

There plenty of ways to give workers a piece of the pie: there are full-on co-ops (at one end of the spectrum), and there are more watered-down implementations like stock options, ESPP plans, etc., all of which allow the worker to take on some of the risk and share some of the gains.

Plenty of companies also distribute simple profit-sharing bonuses, which (arguably) don't require the employee to take on any risk at all.

You cannot simply go to a job at another company.

People do it all the time.

How common are moves like that, really? Sure, it must happen since people keep bringing it up, but how many businesses actually avoid rewarding individual contributions that have had a measurable, positive impact?

In medium sized companies, I would say it is quite common.

They are too large to give new employees significant stock options, yet too small to pay FAANG-competititve rates. So you're starting with less salary and no stock. If you now have an egomaniac boss who thinks his own personal brilliance is always the cause for the company's got fate, then there's a good chance he will just take credit for your invention and your bonus is gone.

And in slightly larger companies, chances are someone in the management chain will take credit for it and get the bonus. There's a reason why in most companies, you can never talk directly to the upper management: Middle management has strong financial incentives to prevent that.

>> Good work is still highly valued ... If you increase a company's profit by $500k annually

Not every job has the potential for such things. "Good work" is different than profitability. A factory line worker can be the hardest working and best worker on the planet, and not increase company profits more than a few dollars an hour. That's the point about how we now value work differently. We place value on work that has direct and immediate impact on the bottom line. We don't value the hard work that goes into just keeping the doors open from day to day.

I fully agree with you.

I chose to argue the way I did, because it is much easier to start at that end of the spectrum. If highly skilled highly productive employees who contributed massively to the company's bottom line cannot extract a fair share of the value in exchange for their work, then it's easy to convince someone that less skilled labor has these problems, too.

> If highly skilled highly productive employees who contributed massively to the company's bottom line cannot extract a fair share of the value in exchange for their work, then it's easy to convince someone that less skilled labor has these problems, too.

What is the definition of fair share?

When you are shopping for something, how do you determine what the fair price is to pay?

If I buy a car that enables me to earn $500k per year, do I owe the seller of the car more than someone who buys the same car to earn $50k per year?

If you work hard everyday, one job should suffice for a home to live in, never worry about food, or how to pay rent, quality education for your children, and a nice vacation once a year and not having a medical event bankrupt you.

If a significant part of the population work more than one job, try actively to reach this sort of life, and hardly achieve it, then something is broken.

I don't which policy will make us closer to this sort of fairness, but that's the only bottom line that interests me.

> I don't which policy will make us closer to this sort of fairness, but that's the only bottom line that interests me.

It’s government policies that impact all businesses that get us closer to that fairness. Any single business that chooses to pay outsized amounts for their COGS, including labor, will get crushed in the larger market. There might be some like Costco and Apple that can afford to pay more, but they serve middle upper class customers and have a unique product.

For everyone else, people will choose to shop at the place that sells bread for 50 cents less.

Let's not forget that the economy has transitioned to have both partners in a marriage to work. (Being dual incoming earning) That's had a few negative effects on the market and social issues (less parental involvement with kids and possibly contributing to a higher divorce rate)

This sounds really European to me. Is this also the ideal in the USA? I can't see how "a medical event bankrupt you" would ever be possible in the US.

https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most...

    Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.
    While the high cost of health care has historically been a trigger for bankruptcy filings, the research shows that the implementation of the Affordable Care Act has not improved things.
    What most people do not realize, according to one researcher, is that their health insurance may not be enough to protect them.

I would define "fair" here as roughly 3x the local rent, so that your salary is sufficient to comfortably feed a middle-class family. Let's cap that to be at max 25% of the value created for the company, and it's a strong incentive for the inventor while remaining ridiculously profitable for the company.

It is pretty much impossible to assign numerical values to “the local rent” or “value created for the company”. Hence the whole purpose of markets, where sellers can bet that on the perceived value of their goods and services, and buyers can bet on their perceived value of the goods and services and come to an agreement.

> Good work is still highly valued, it's just that the value is not paid to the worker, but to the company owning the work. If you increase a company's profit by $500k annually through setting up a new automation system, you'll still only get your $40k internship salary. And the company will pocket the remaining $460k, to be paid out to the owners as profits.

People are paid what it costs to replace them, not the profit they generate. The less replaceable you are, the more of the profit you get.

Price (pay) is the intersection of supply and demand, and nothing else.

That is why factory workers in the US got outsourced. That is why when deciding what you are going to sell for the rest of your life, you should go for something that few others are able to sell.

And everyone does this, it’s not some evil business plan. No one pays $5 more for the same loaf of bread. Everyone I know pays the least amount they have to. Creating a floor for that is the government’s job, not an individual business (and it can’t anyway, since it has to compete).

>That is why factory workers in the US got outsourced.

Nothing makes the CEO happier to know that you believe it is the employee's fault their jobs got outsourced, and not the fault of the CEO who wanted to maximize profit at the cost of millions of good paying American union jobs that actually helped families, communities, and created the 'American Dream', all so they could afford the status that brings when they show their new multi million dollar sailboat at the regatta. The job that was outsourced still needed to be done, someone still had to do it.

There's no such thing as "American Job", jut like there's no such thing as a New York job or LA job. Jobs are a product of a market, that can be as local as a building or as global as information services.

American Dream cannot exist in a world with limited resources. It only existed in a rapidly expanding resource pool - taking lands from natives, creating new tech, freeing up resources by killing millions of people or digging up stuff from the ground.

As such - it's not CEOs job to maintain your job, specially when those CEOs are pushed by your own pension fund managers to move your job somewhere more efficient.

And finally - global poverty has dropped significantly because of that outsourcing. Ignoring that is literally being the "they toork R jerbs" South Park charachter.

Except your premise that returns to capital are going up is false: https://www.vox.com/2015/4/1/8320937/this-26-year-old-grad-s... ("Rognlie finds that when you account for depreciation properly, the capital share's increase has been entirely about housing.")

Returns to owning land and housing (rents) have gone up. That has come at the expense of both returns to labor, and returns to all other kinds of capital (stock ownership, etc.). This is obvious. Stock market returns aren't what they used to be. Banks are making 4% on mortgages, versus 8% back in the day. The country is awash in 0% financing for cars, refrigerators, etc.

There is increasing inequality in how labor income is distributed. CEO salaries have gone up, programmer salaries have gone up, but secretary salaries have stagnated. But that's a separate issue than returns to capital ownership going up.

I would take the constant growth in VC investments to mean that it's profitable.

Also: https://wolfstreet.com/2015/11/04/corporate-profits-are-the-... Under "This is a new America" you can watch corporate profits grow and grow.

But both your source and my source are 5 years old already. A lot has changed since then.

Comparing corporate profits to GDP doesn’t make much sense. The BEA corporate profits number includes profits earned overseas, which aren’t included GDP. Corporate profits divided by GDP could go up without anything changing in the economic relationship between workers and corporations with respect to work done in the US.

The problem with this is, if the intern doesn't add any value to the company does the intern not get paid or still gets paid the $40k? What if the intern only added $10k worth of value (however that's measured). Does the intern return $30k?

You can't have your cake and eat it too; get all the reward without any of the risk.

If it blew up in a few months due to some unforeseen problem, the intern would receive some of that risk in the form of a pink slip and a bad reference.

Some jobs may not have directly attributable monetary contribution but still are needed.

But let’s assume we can attach a net dollar amount to each job and the company let’s go people that don’t contribute as much as they cost. Even in this case the company still loses out from the intern. That money still need to come from somewhere, most likely from profit derived from other employees.

The point is “the intern increased the company’s profit by 500k annually but only gets paid 40k” is not the problem it’s made out to be. That 500k wasn’t created out of thin air. There were other employees in supporting functions that made it possible. That extra 460k goes to pay for them too, as well as for the employees that aren’t as productive. Those are the risks the company takes on.

That's a great argument in favour of corporate taxes.

No arguments from me. Or at least close the loopholes.

No one actually expects production level quality from an intern

The reality is that the labor is only worth 500k to the company. If the individual could extract the same 500K from their labor without the company, they would (hopefully). They don't because it's not purely the labor generating that value, but the capital invested along with that labor. Being a great programmer is worthless without a computer.

I think a really good example is a story from Google. An intern changed the compression of the Google logo on the search page and shaved off a few bytes. Since Google serves that page billions of times, that saved google a 10's of thousands of dollars a year, and was literally minutes of work. If the same intern did the same work anywhere else, it would have been almost worthless.

Regulatory capture prevents from entering the market directly. Among with many other harmful regulations.

This is not far from the true numbers. I've known several management consultants - the young, educated hustlers who are on their first job - who discovered from their clients what the bill actually was. Ratios of 6+ are common.

I worked with enough consultants to now that the good ones subsidize the salary of the bad ones.

> you'll still only get your $40k internship salary. And the company will pocket the remaining $460k, to be paid out to the owners as profits.

It's because of this that I try to work as little as possible, preferably remotely. I claim to the company that I work 8 hours, in reality I work between 4 to 6 hours, and if I'm really quick, simply 2 hours (happens rarely).

That's how I keep my "profit", and if I meet expectations it's good enough for me. I don't think they'd be happy once they find out.

Any company would immediately hire someone who adds $500k annually in profit, and would steal him away from someone only paying him $40k, by offering more money.

The idea there's some large gap between value provided and value paid is unstable and completely unsustainable.

As for owning stocks, pretty much everyone can. Robinhood has $0 commissions and sells fractional shares. There's no reason why people can't buy stocks.

> Good work is still highly valued, it's just that

What about the people who don't or can't do good work, though?

Your comment is all about better compensation for what amount to elite software developers. And elite software developers are already well compensated. Maybe not as well as they should be by your calculus, but still "well" in comparison to the people the grandparent comment was talking about.

I found this diagram particularly helpful in illustrating this concept: https://i.imgur.com/DxFl1XX.png

The outer circle is also proportionally taxed in practice. Why is that left out?

An aspect of this, in much of the west, is political demography. The voting population is getting older all the time. Politics increasingly serves their interests. Often these are directly orthogonal. Labour vs capital. Real estate values vs housing costs. Opportunity vs stability.

Even this pandemic, sadly, creates opposing interests. Younger people need workplaces to operate. Older people are more susceptible to the virus. Since the stock markets are fine, retired people don't generally have financial interests at stake.

Absolutely vast majority of income of everyone apart from billionaires/top 0.01%, comes from work rather than investments... Yes even for top 1% apart from top 0.1%, share of income from investments is negligible.

Total value of U.S. stock market is $35T and given the traditional 4% "safe" withdrawal formula, it is about 7% of GDP or 10% of overall income, as profits. About half of it going to the top 0.01%.

Problem maybe is that there are no highly paid jobs available for unqualified young people anymore.

> The real issue is that "work" is not valued as it once was.

And the work indeed is more bullshit than it used to be! I'm afraid we cannot turn back the clock on this one, so we have to find another way.

eyes UBI

I don’t disagree with you about UBI, but I have to say it makes me feel sad. In my experience most people really want meaningful work, and the fact that it puts food on the table makes a lot of otherwise meh work more satisfying and meaningful.

At the end of the day it’s more important that people can meet their needs, and if UBI does that, a lot of people will be able to improvise some interesting things to apply themselves to, which I think will be great for them. But a lot of people will also sit on the couch and watch TV all day, feeling there’s no point to life. We’ll have all kinds of new and unforseeable second order effects.

I also worry that the fundamental problem is not so much income but cost of living. The way things work today, any amount of UBI that you pay but just drive up the rent. If we don’t significantly increase housing supplies to meet demand, I don’t see how we can break that loop.

> I don’t disagree with you about UBI, but I have to say it makes me feel sad. In my experience most people really want meaningful work, and the fact that it puts food on the table makes a lot of otherwise meh work more satisfying and meaningful.

I think the remaining work will be such more meaningful that it will be net dealienation. I think less stress and more free time begets curiosity, so I think it's fair to say people could get a lot out of work than they do from their current drudgery.

In the long term, think large amounts of leisure time but ones does "tours of duty" in each of the core industries that power modern society as part of liberal education of how society functions.

> I also worry that the fundamental problem is not so much income but cost of living. The way things work today, any amount of UBI that you pay but just drive up the rent. If we don’t significantly increase housing supplies to meet demand, I don’t see how we can break that loop.

See https://phenomenalworld.org/analysis/universal-basic-income-... for the results of some modeling. Rent in absolute terms and as a portion of income went down!

Average account balance before the pandemic was 3K for <30yo in Spain. I heard it was even less in the US.

That has a lot of implications, and none of them good IMO.

But is that everybody under 30? Makes much more sense to measure 25 - 30. As most will start to have a real job by that age.

FWIW, given how long people take to graduate from university in Spain, 25-30 is a more accurate measure of young working people that say 18-30.

As for a real job, well, let's say that in Spain, it's complicated

Massive Caveat: I've not lived in Spain for over 20 years though I have friends and family

> FWIW, given how long people take to graduate from university in Spain, 25-30 is a more accurate measure of young working people that say 18-30.

This seems like an obvious place to look if you're looking for reasons why 25-30 year olds don't have much money.

I would track 18-30, as that catches those who are likely to be living independently.

And it lumps them in with those who are likely still in school and have no real job yet thereby making it basically impossible to draw (useful) conclusions about independent young people.

> And it lumps them in with those who are likely still in school

I won't argue that one, but where do you draw the line with

> have no real job yet

I would argue that as long as you are working, you have a real job.

Probably the best would be to track both 25-30 and 18-30 and see how it changes.

>I would argue that as long as you are working, you have a real job.

If you're working nights in a warehouse while you finish your degree that will get you into an industry with nearly six figure starting salaries then I would argue that you're not "working yet" you're just a student with income.

What does salary have to do if somethings a "real job"?

Or what about blue collar workers who aren't going to school, and are at that same warehouse? Are they not working at a real job?

Salary has nothing to do with it. Finishing one's education for the foreseeable future has everything to do with it.

I've thought about this for a while now, and for the purposes of this discussion I agree.

That being the case, I think that the study would be best off tracking those 18-30 who are living individually and are not attending school. Thoughts?

Yeah that would be ideal but that's much harder for the people doing the study than just picking an age.

60% couldn't afford a $1000 emergency in USA, in 2019. $3k? Probably a lot higher number.

https://www.cnbc.com/2019/01/23/most-americans-dont-have-the...

In most countries holding cache is a net loss due to low interest rates so that's not necessarily a good argument.

There is the idea of having an emergency fund, which given its nature, should be stored in an instant access savings accounts.

This is money for when you lose your job for instance

Your appetite for risks and circumstances determine how big it should be (a good rule of thumb is six months worth of salary) but there are countless stories of people trying to be clever with their emergency funds and storing them in ETFs or riskier investments only to find that when the need comes, their fund is not enough and get in financial distress.

If you're a US citizen, "I Series Savings Bonds" are fantastic emergency fund vehicles. You can cash them out instantly after holding them only one year, mine are paying just under 2% right now.

Series I Savings Bonds are currently 1.06%.

https://www.treasurydirect.gov/indiv/research/indepth/ibonds...

credit union savings accounts. mine pays 2.5%. you won't have penalty.

Yes it is. That 3K is the average young person's only asset and it is just getting eaten by inflation anyway.

These people struggle to pay rent each month let alone think about "investments".

?????????????????

Sure you will lose a little bit, like 2 or 3% a year. But if you have nothing saved then what will you do in case of an emergency? such as losing a job?

29.99% interest credit cards.

The solution is to tax the unproductive part of society, which only extracts wealth from everyone else: landowners. This allows us to shift the burden away from labour.

> It is those workers, those who don't own their sources of income, that are struggling to make rent.

That is exactly how social classes are distinguished in Marxism: "[T]he class of modern wage labourers who, having no means of production of their own, are reduced to selling their labour power in order to live"

https://en.wikipedia.org/wiki/Marxism#Social_classes

Agreed. And this is a good part of the "real" grievance of both young people and working class minorities, especially in big cities in my opinion.

It's not working class wages haven't risen, they have. But, the costs of housing, healthcare, education and many other necessities have risen at a much faster pace, particularly in cities. These rises in cost are of course profits to someone so the economy is "booming. But it's become so distorted that it's becoming increasingly hard to keep up for the lower wage earners with no end in site. Of course the owners of assets don't see the problem. Their properties and stocks are appreciating nicely. And the fed has been encouraging this.

Now, one argument might be that if this wasn't occurring that low wage earners would be even worse off with no jobs and and there may be some validity to that point of view but the inequality of this isn't just an abstract ethical problem at this point but rather a system threatening problem. I don't know that there is an easy fix either. It often seems trying to fix one problem with rent controls, wage floors, progressive taxation etc. results in other problems. But the increase in costs of housing, medical care etc. while wages grow at a much slower rate isn't sustainable imo.

It's not just that 'work' is not valued. The problem is that 'value creation' is not valued (particularly in the tech sector). There are plenty of highly paid bullshit jobs.

Tech corporations are essentially empty shells; their market caps are not based on the value that they create for society but on the rate of money printing by the reserve banks of the world.

Because tech corporations are not subjected to free market forces like everybody else, they eventually lose their ability to create new value (and the kinds of people who join these companies and stay there do not have a value creator mindset). Indeed, if you compare the price of S&P500 companies relative to most stable-value commodities such as gold, it would seem that the S&P500 hasn't grown at all in the last 5 years. However, S&P500 correlates strongly with the growth in M1 and M2 money supply. This indicates that the growth in nominal price of stocks in the past 5 years is entirely artificial.

Young tech workers cannot compete with corporations because the playing field is not even. If your competitor is getting free money from someone, how can you possibly compete with them in any market?

This is why all young people in tech these days are eventually absorbed into corporations. Whether through employment or phony acqui-hire. It's also why big corporations like Google used to buy up startups and then kill the project immediately afterwards. It's mostly phony money transfer with hidden motives and it's not related to value creation.

Intriguing.

Could you elaborate on your statements about tech market caps being dependent on reserve bank printing money?

Also, what does it mean that tech companies are not subject to the same market forces as everyone else? They are in direct competition with the next software firm - they seem to want to overcome this by building a pervasive tech ecosystem that forces users to be dependent on their software.

>> Could you elaborate on your statements about tech market caps being dependent on reserve bank printing money?

All currencies of the world are free-floating and not backed by anything and reserve banks keep constantly printing new currency and injecting it into the economy either via 'loans' through regular banks or through government contracts (since the Fed gives the government free money to pay for employees and big corporate contracts like the $10 billion one they gave to Microsoft recently).

For the past 10 years, we've had a situation such that interest rates have been at 0% and reserve requirements by banks have kept getting lower (since COVID19, they're 0%). This allows regular banks to print as much money as they like; whenever a bank makes a loan, they just type new currency into existence into someone's account. Also, the Fed has been buying toxic assets (such as bad corporate and mortgage debt) from the market (again using money that they just 'printed' into existence and backed by nothing).

This has created an economic situation with a lot of hidden inflation; most of it ends up inflating stock prices because corporations and their shareholders use bank loans to buyback their shares from the market; this causes artificial high demand for the stock and drives up the price (this is why corporations today have such low P/E ratios and pay low dividends relative to share price).

A lot of the buy orders on the market today are backed by debt (either which the corporation took out themselves to do buybacks or that of insiders or third-parties who have an interest in seeing the stock price go up).

Insiders understand that if interest rates can stay at 0% forever (which is what MMT advocates are promoting), then they will always be able to keep borrowing more money later to pay off their old debts because the stock price will always go up... And if the next generation comes along and starts doing the same thing (buying corporate stocks using debt), then each new generation ends up paying off the debts of the previous generation.

Note that this scheme works even if the financial instrument has nothing of economic value behind it. It's also why cryptocurrencies have been able to hold up such good valuations in spite of people paying for electricity to mine Bitcoin. They just restrict the supply, borrow money from banks, buy the asset, then in the future, someone else will take a loan to buy it and further drive up the price (and you'll be able to pay off your debt).

Banks do require collateral to give loans, but the problem is that a lot of the collateral these days is intangible and so people can just claim that the market price is the true value of the collateral... Which creates a vicious cycle and allows people to take bigger and bigger loans.

And the reason why corporations are not on an even playing field is because their executives and employees become wealthy from constant stock appreciation (fueled by collective debt) and then they invest in each other's businesses and award each other big contracts which keeps the currency circulating between themselves.

Echo chambers created by social media today help to prevent money from flowing between different classes of people. The big money tends to stay within the corporate sphere and is secured by a large network of venture capitalists and investors who only invest in people within that corporate sphere.

Any flow of money out of the corporate sphere can pose a major threat because it could pop the bubble when people realize how much more value they can get on the outside for the same money.

don't know why people are down-voting you. but a simple case would be if people look at weWork's founder. adam simply borrowed money from the bank using weWork shares as collateral. then he used the borrowed money to buy more buildings, lease the buildings back to weWork. weWork valuation goes up. then borrows more money from the bank. that's the modern economy these days. and yeah if you ain't moneyed you can't compete. selling widgets ain't enough.

I don't know enough to comment one way or another and so would love a critique of this comment from a downvoter's perspective so I can learn more.

MY ISA and Pension Funds are still down from where they where pre covid.

25 % of people in the uk have < 1k in savings

US stocks are up because the federal government is buying stocks (illegally) for the first time in history

Curious, in what way is the Fed’s bond purchasing program illegal?

> "Young people own nothing"

I wouldn't say that. I am 24 and I have some pretty incredible tools in my pocket right now that someone in 1991 couldn't have even dreamed of. The problem is, instead of owning a good car or having an apartment to live in, I have the pinnacle-of-technology swiss-army knife of information processors (smart phone, macbook pro, desktop computer) within reach. That is where I think the value of things have changed over time. It went from the opportunity to _have_ to the opportunity to _learn_

You could still learn stuff in 1991 jfyi

Finding the information was harder. There were libraries, my town library was in the basement of the city hall building, and my local mechanic has a larger building.

If the library didn’t have it, you could hit a small book store, whose specialty was romance novels for local farm wives.

Basically, anything you would actually want would be special order, hoping the book dealer knew what you were talking about in the first place.

Oh yes of course but its way way way easier today with magnitudes more subjects covered in depth

The rewards for finding the information needed to learn were geometrically higher relative to the difficulty. It's easier to learn today; the (monetary) value of that learning is lower.

Great! Now as soon as that Swiss army knife can also provide food, shelter, and medical care you're good to go.

(Ironically, an actual Swiss army knife can provide the first 2 better)

Yeah thats the problem. I'm definitely not happy with this trade-off. I'd rather have an apartment than a smartphone. But growing up I unfortunately spent too much on technology. Video games, laptops, cell phones that I didn't take care of and broke too quickly, the list goes on. I wish that I didn't value these things so much growing up and kept the money for other uses.

I am also 24, and I would say that tool in your pocket is also an extremely pernicious drug.

In more marxist terms, we have traded variation of consumer goods for precarity in our ability to live our lives. You can play video games, but your boss can fire you at a whim and your landlord can kick you on the street. You can't become class mobile without taking on huge debts and possibly not making it.

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