Comment by kache_ | Hacker News Reader

Comment by kache_ | Hacker News Reader

People pay software engineers higher wages because of the risk of them leaving and taking all of their domain knowledge with them. Not because of their "cost of living", and not because of what's "fair". It's purely competitive & demand driven. What's happening in Ontario is that salaries have pretty much doubled for skilled software engineers due to remote demand. I work remotely for an American company, but they pay lower bands based on my Canadian location. I know this, because I keep a close eye on the market and speak to others.

Now, I'm currently interviewing for other American companies, who will not know how much my American employer is paying me, and therefore has no choice but to offer me an American-tier salary or risk not hiring me. In Canada, skilled negotiators will be able to increase their salaries to be more in line with their american counterparts. And as skilled negotiators double, triple their salaries, their peers will realize that it is quite possible.

Companies that hire remotely will either learn a hard lesson (losing the people with domain knowledge which makes their money printer spin), or increase the salaries of their employees to swim along the same band. Attrition due to competitive recruitment right now in Ontario is crazy. As the competition increases (due to more people hiring remotely), salaries will increase. And local companies will get squashed (I don't interview with Canadian companies anymore).

Furthermore, most skilled software developer resources have been already been exhausted in Canada, primarily due to brain drain. The only skilled devs left here are the ones who need to be here to stay close to family. The rest are in the States.

>People pay software engineers higher wages because of the risk of them leaving and taking all of their domain knowledge with them

Why is it that software engineers tend to get substantial raises by changing companies while receiving only small raises when they stay at the same company?

Two main reasons, IMO:

1. Because companies are often run by financial types who have a hard time imagining that one SWE could be a multiple more valuable than another (either inherently or because of company-specific domain experience). Why pay this current, good SWE 1.5x what they were making, when the salary study that I have in my inbox says...?

2. An employee seeking a raise at their current company is negotiating with one company. An employee seeking a raise at all possible companies has more flexibility.

They don't need all companies (or one specific company) to be willing to pay them more, just one out of all of them.

Great response. . . I have some friends (let's call them A and B) who worked together years ago, both solid engineers. One of them (A) is perhaps not a 10x engineer (I kind of have a problem with that term and the way it's tossed around) but pretty damn close.

B told me one day that when A left, the company foolishly failed to offer him a counter offer to stay. The way B put it was "they literally could have paid A one million dollars per year and dumped the rest of the team but they couldn't wrap their heads around that and of course didn't. When A left, the team went right down the toilet and they closed that whole branch of their product line"

A bit of an extreme example, but yes as you pointed out, not one that "the suits" can really grok, or HR for that matter.

It's not uncommon, for people who know their value, to screw a poorly paying employer.

I had an experience where I refused to extend a contract because one engineer left the project.... The whole team left within three days of that engineer announcing his departure.

I wonder whats the source of this kind of perspective.

My current hypothesis is that the technology industry hasn't been around for as long as other industries, so people that go to business school, for instance, don't understand the value that SWE's offer to businesses.

When the tech industry was small, this was probably ok. But today, those assumptions no longer hold.

Nah... They just still think that engineers are exactly like mechanics.

Because in construction industry structural engineers and architects are paid way better. (Structural engineers and architects are the closest professions to software engineers/programmers/etc)

Changing companies often comes with changing industry sectors.

I worked in a small SaaS company that had only a few million in revenue. The amount of value that I brought that company in terms of its revenue wasn't that great compared to other companies.

And while I didn't switch to tech (I joined the public sector instead), if I had gone back to a big tech company, the revenue per employee would have likely been an order of magnitude or more... and they could pay more too.

While working at a company, the additional value that is brought to the company after a year or two or ten isn't as much as bringing value to a company that is able to translate technical skills to even more value because it is in a different sector.

This contrasts with other careers where a given job won't change significantly from company to company.

The difference between software developer and those other careers is the flexibility and demand for the skills across a wide range of companies.

The raise is to overcome laziness and inherent risk (new boss and coworkers might be incompetent and unfriendly).

As long as the wage gap is less than the required "risk/laziness incentive", rational employees will not leave (=> small raises are presumably enough to achieve that).

(personal perspective)

It’s more fundamental than that, it’s just simple economics.

If a companies didn’t pay more than people are currently making at their current job, they wouldn’t be able to hire experienced talent in meaningful numbers. So virtually all companies are forced to pony up a premium to obtain talent.

If a company wants to lure a software engineer away from their current company they need to provide enough of an incentive for them to leave their current work place. I would wager most people probably wouldn't change their job (assuming they are content) for anything less than a 20% bump (all else being equal) but I would say people probably would want a higher bump than that.

20%: @ 100k --> 120k. @ 200k --> 240k. @ 300k --> 360k. 30%: @ 100k --> 130k. @ 200k --> 260k. @ 300k --> 390k

I know people who changed jobs for a salary lower than their current one. Sometimes people just don't enjoy what they are doing and they would rather work at a place they love.

That can be the case. But the basic point is that jobs are usually at least somewhat sticky, if only because there's always a risk moving somewhere new. (The devil you know and all that.)

Also, while some people will move to a good new opportunity for less money, I imagine it isn't super-common until you get into money is mostly about keeping score level. Many/most people have a lifestyle that's somewhat aligned with their salary do dropping it by 20% is probably fairly significant.

That's nonsense.

It's not always about the money. However, most people would leave if made aware of a relatively large gap in their salary vs the market.

I left for a $2k annual raise, but that wasn't because I wanted a raise.

I’m saying all else equal. Totally agree there are a million reasons to change jobs.

The reason I was told was that if you give a raise to a current employee, you'll be expected to give raises to all employees and that's expensive, especially when people are looking for, say, 20% raises.

On getting a new hire, the 20% raise to get them to join is much easier because that extra cost is only going to a few people, one time (and they don't necessarily know it's a 20% increase in the person's previous pay).

> if you give a raise to a current employee, you'll be expected to give raises to all employees

I don’t get this - how would the other employees know about the raise ?

I got a raise bitches!

By talking to each other.

Tons of people who could get more money else where wont leave their employer anyway. Laziness, inertia, dont know how valuable their skillset is now, fear of change, fear of asking for money, locked to specific area by kids school or spouses job, whatever.

Company doesn't know which of their employees fall in to that group. So they could either regularly offer everyone raises that are competitive with job switching to keep the few people who would otherwise leave; or offer everyone token try not to piss them off too much raises and accept that they're going to lose some people who they otherwise would have been willing to pay more money to keep.

Those with very ambitious workforces that are largely made up of people who will job hop tend to go with the first option. Plenty of people at FANG are getting 30%+ raises in their earlier years, you see it whenever people discuss salary.

Other companies go with the latter.

People stay at a job for all kinds of reasons, money is only one of them. If you have stayed at a job a while it is strong evidence that you are happy with those other factors. You like the company, or you like your boss, or you like what you do.

Another employer knows they have to offer you a strong incentive to switch jobs. You are taking the risk that will go form a job you like to one you don't. Or they won't like you, which is a still a risk to the employee switching jobs.

I don't think it is so much that employers don't appreciate existing employees, or that they worry raises beget future raises. It's mostly that if you have been a job for awhile they think you are somewhat happy.

One problem I have with this hypothesis is that employers often carelessly destroy the things that make their employees happy.

For example, a company decides to move to the opposite part of the city, despite the fact that many employees chose it because it was conveniently close to their homes. Or, there is a team where the colleagues have great synergy (their personalities are compatible, their strenghts balance each other's weaknesses), and when they finish a project, instead of giving a new project to the same team, they are randomly assigned to different teams.

If the company is aware that they are paying the below market rate and their employees are staying there for non-financial reasons, why would they destroy those reasons?

Therefore, it seems to me more likely that the employers mostly just don't have a clue... either about market rates, or the things that make their employees happy. They pay existing employees less, because they can; and they pay new employees more, because they must; but there is no grand strategy like "make them happy and then they will be willing to stay here for less", only short-sighted paying everyone as little as possible.

I'm not so certain about that. Government of Canada is aiming at increasing immigration to around 400,000 to 420,000 new immigrants per year, most of whom are going to skilled workers.

**************************

October 30, 2020—Ottawa—The Honourable Marco Mendicino, Minister of Immigration, Refugees and Citizenship, tabled the 2021‒2023 Immigration Levels Plan today, which sets out a path for responsible increases to immigration targets to help the Canadian economy recover from COVID-19, drive future growth and create jobs for middle class Canadians.

The pandemic has highlighted the contribution of immigrants to the well-being of our communities and across all sectors of the economy. Our health-care system relies on immigrants to keep Canadians safe and healthy. Other industries, such as information technology companies and our farmers and producers, also rely on the talent of newcomers to maintain supply chains, expand their businesses and, in turn, create more jobs for Canadians.

[...] [T]he global travel restrictions and capacity constraints led to a shortfall in admissions over the last several months. To compensate for the shortfall and ensure Canada has the workers it needs to fill crucial labour market gaps and remain competitive on the world stage, the 2021 to 2023 levels plan aims to continue welcoming immigrants at a rate of about 1% of the population of Canada, including 401,000 permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023. The previous plan set targets of 351,000 in 2021 and 361,000 in 2022.

**************************

https://www.canada.ca/en/immigration-refugees-citizenship/ne...

I love it when people point to skilled immigration as somehow being bad for wages.

Whats more likely to happen in that Canada may finally get a robust and dynamic technology labor market. With its sensible immigration laws, I know that a lot of my international peers are seriously considering moving to Canada. New immigrants will favor Canada over the immigrant hostile, gun-obsessed and anti-science US.

> New immigrants will favor Canada over the immigrant hostile, gun-obsessed and anti-science US.

I've been hearing that for a long time, especially during the last 4 years. Yet it has not materialized.

Often, for international workers, attorneys will file twice: one in Canada and one in the US. If the US one gets slapped with RFEs or isn't strong enough to qualify, the Canadian one is used and is systematically approved.

> Whats more likely to happen in that Canada may finally get a robust and dynamic technology labor market.

Negotiating easier free trade with the US as well as matching US law would be more productive, as it would dramatically expand the customer base. But what's crucially lacking is a strong investment culture of venture capitalism and risk taking.

Yes, our government policies actively work against Canadian citizens. Hopefully by then I'll have brain drained out of here into America, like most of my peers.

Well... You're clearly xenophobic.

Voting for your own and your family's interest is being racist. Okay, hnewslet. I guess I'm just one of those minorities that is in fact a racist white person in disguise.

Voting to restrict other people's freedoms based on their ethnic/national origin is - indeed - xenophobic.

Being a minority doesn't excuse you from being racist and xenophobic.

There will be some interesting equilibrium. If people hire and pay remote workers exactly the same, they are saying that, for their particular type of work, there is absolutely no value of seeing people in person.

I can imagine this being true in programming, but not being true for R&D where equipment and experiments with materials and prototypes are done.

Believing that everything will shift to remote work and borders will disappear is in my opinion naive.

Borders and nationalism are pretty recent developments on the timeline of human civilization, I don't see why both ideas couldn't fade over time.

Coming from a nation whose borders shifted all the time I definitely dont see it like that.

It would require a sea change in thinking, or get people comfortable with the idea of not belonging to nations.

As you point out Nationalism has been a pretty recent development. It has mostly been enforced by indoctrination in the education systems and culture. While it has had many many issues, we have seen it reduce the number of conflicts and wars by a lot, and thus it appears to be a reasonable solution.

Whatever solution aims to replace it would have to not only overcome all of these barriers, but provide better results as well.

Working for a fully distributed company it definitely feels like it's not naive. Certainly everything won't go this way but it's a lot easier than most people think. Apart from at setup time and with public holiday schedules those borders are not very apparent.

And does your company employ hundreds of people or is it a small biz < 99 ppl?

Companies with 1000s of people have been remote forever. I worked at Autodesk in a team across two multinational companies which on our side were through Toronto to us in Iceland and on to Shanghai. If you think big teams aren’t distributed you’ve not worked in a big team.

At the risk of doxxing myself, (who am I kidding), I have experience working with a global, fully remote team. My experience is that, when you select for talent in a larger pool (globally) you get people who are incredibly skilled and driven, so much so that that the effective reduction in productive capacity is eclipsed by talent of the team that you can form. However, this is anecdotal & I may be biased due to luck with landing with an exceptionally talented team.

Remote work actually is a drawback for the employee rather than the employer. Human contact is something that is quite important for relationships to form. Some people adapt well to it because they grew up on computers & grew up making friends on the internet, but for others in person communication is quite important.

> Remote work actually is a drawback for the employee rather than the employer.

I'd say it's a drawback for SOME employees, yes, but some others (Maybe the majority of the prepandemic remote force?) it's not, at all. It's awesome, and there are many of who never want to work in an office and deal with the commute every day again. We (somehow I'm speaking for all of us now) get enough human contact through our online relationships with our coworkers, and seeing them once or twice a year IRL.

> luck with landing with an exceptionally talented team.

For sure! I do consider it pretty lucky when you're able to do that. We seem to have done the same thing where I work, we just had someone leave for the first time in about 6 years!

I'm in this boat one hundred percent. Guess what happens when two hours a day isn't commuting. You spend more time with real friends rather than passing work acquaintances.

>My experience is that, when you select for talent in a larger pool (globally) you get people who are incredibly skilled and driven, so much so that that the effective reduction in productive capacity is eclipsed by talent of the team that you can form

I would think that you would also increase the risk of bad hires if you had any sort of inefficiency in your hiring process because then you would be less able to actually know the quality of who you were hiring by local reference.

Having overpaid underperforming workers is almost entirely a function of not letting them go. FANG companies onboard plenty of incompetent people, but they don’t last that long.

However, to get away with that requires high levels of compensation otherwise people will take the safer option.

Really? Have you worked at a FAANG company? Have you hired at one? I don't mean to be rude, but your comment sounds like it is coming from a parallel universe. My experience is the reverse. It's super hard to get hired at a FAANG company (strong initial screening for incompetence), it's also super hard to get fired. (weak ongoing screening for low performers). At google they're so firing averse that they have manager training on "managing out" where you work with a poor performer to convince them to quit rather than just outright firing them. Just curious if you have personal experience that runs counter to mine.

Which sounds pretty normal for mid- to large tech companies (and I daresay many others). Outside of layoffs or significant teams being dismantled, you're probably going to be on a performance improvement plan before being fired--and that typically has a pretty high bar.

I know multiple people let go from Google. While Amazon seems the most willing to cut their losses at any point, their all perfectly willing to let someone go after a few months.

Also, “managing out” is one way of coddling a team but it’s not a choice. At best it convinces team members these people quit, but that’s hardly the reality of what’s going on.

> Remote work actually is a drawback for the employee rather than the employer. Human contact is something that is quite important for relationships to form. Some people adapt well to it because they grew up on computers & grew up making friends on the internet, but for others in person communication is quite important.

I'm not so sure about it. Sure, if you compare work-related human contact to no human contact, the latter option is obviously worse.

But when you move to remote work, you get a lot of extra time and energy, which often creates more opportunity for socialisation. And this socialisation is, in my opinion, much healthier than with your colleagues. Want it or not, you're constantly "selling" yourself to your work peers: their opinion about you will greatly affect your career, and therefore income, and therefore a lot about your life. We all create a better, public version of ourselves, even if we do it semi-consciously. I don't even mean being dishonest (you should never do that), but just building a facade and toning down everything "negative".

Spending less time and energy doing that, and more time with people with whom you can be honest and open was one of the best things I've got out of switching to remote work.

I worked at a company with branches in multiple cities. My team consisted of people living in different cities, so we only communicated with each other by Skype... and it worked okay. Yet somehow the idea of working from home was unpopular with management (this was before COVID-19), because "it is important for employees to interact with each other in person".

I think it is all just rationalizations and prejudices. Sometimes teams work better, sometimes they work worse, and the distance is just one of many possible factors.

This is only true if you believe there’s no productivity benefits to remote.

Commutes to the office mean that employees start the day sleep deprived and stressed out. Spending the day surrounded by one’s spouses, children and pets improves emotional resilience. People working from home have access to healthier meal options and avoid the afternoon brain fog that comes with catered lunches. Remote workers probably have a big, beautiful house in a sunny LCOL that is more pleasant to work in than an office in a typical overcast, drizzly tech metro.

So there might still be downsides from less efficient collaboration, but that’s outweighed by improved environment leading to better individual productivity.

I would’ve been skeptical of this two years ago thinking it’s just chatter from people who can’t suck it up and be productive at work.

But after being forced to work remotely for 1+ years I’ve found everything in your post to ring true for me personally. In addition, productivity is better because there are so many less interruptions (maybe only relevant to certain jobs requiring a lot of focus and a home environment without distractions)

I think there's already a clue about this: Hardware engineers and scientists get paid less than programmers, meaning that we are of lower value.

Amusingly, when the lockdown began, I was fortunate to have space in my house to move my entire lab home. My colleagues and I have been making good use of rapid prototyping services and the FedEx truck to move stuff around. Hardware keeps getting "softer," and truth be told, 90% of what I do is coding anyway, because hardware runs on code. We are also learning to manage hardware remotely, so we don't always have to be co-located with it. We also use software contractors, though it's been a huge learning curve for us.

A side benefit is that, being un-located, there's no reason for me to be tied to a particular work site within a global business, or to be dependent on only the skill sets available at that site.

>there is absolutely no value of seeing people in person

It's not binary. Companies with remote workers can still fly them to HQ or off-sites on a semi-regular basis (in normal times).

This is very optimistic, and not taking into account the out of control immigration quotas currently in place. About 10x per capita as compared to the United States.

Hey, I'm also from Ontario and looking to change jobs for the right price. Any suggestions for where I should start? Should I be looking mostly at American companies with USD pay? Should I be using a Canadian recruiter? My current title is Sr. QA Automation engineer. I think I could easily be lead or even QA Manager.

Just apply :) and don't forget to read https://www.kalzumeus.com/2012/01/23/salary-negotiation/

You've misunderstood Supply and Demand a little bit and by not adjusting your price, you're probably hurting yourself.

In 'Supply and Demand' - developers in high cost of living areas will have a different 'supply curve'.

So the 'market clearing price' for developers in 'high cost of living' areas will be higher.

"In Canada, skilled negotiators will be able to increase their salaries to be more in line with their american counterparts."

No, actually, 'skilled negotiators' who understand 'Supply and Demand' will realize that their position to demand salary is systematically weakened by the fact their costs are lower.

Their price will be 'higher' than that for local jobs, but lower than their American counterparts, and definitely lower than Bay Area prices.

Finally - your comment is missing the Giant Elephant in the room.

There are 50x more developers out there in much lower cost of living centres than Canada.

You literally cannot afford to accept a job for <$40K a year - but developers in Poland can.

If we are going with the premise that 'Talent is Now Global' (And BTW I don't agree with this mostly, but for the purposes of this comment, assume it is true) - then the 'lower cost of developers' in other countries will affect those in 2cnd tier (i.e. relatively wealthy but not NYC/SF) cities.

I'm based in Canada and just hired a bunch of E. European developers for 1/3 the cost of local devs. and they are great - at least for the work I'm having them do.

Try to take a more nuanced approach.

Edit: imagine if you were selling widgets. Same widget. The price in USA is $1 per widget, by manufacturers made in USA. Their cost is probably 90 cents to make.

You live in Ukraine and your cost of making widgets is 50 cents. There are a bunch of other widget makers in Ukraine with the same cost.

When you and your competitive peers in Ukraine take your widgets to market, do you think you're going to be able to sell for the same $1 as the US sellers? No.

Because some of your 'peers' will lower their price a little bit in order to generate sales and that will bring the price down to where operating margins are tolerable. Probably 57 cents or something like that.

So this notion that a 'Foreign Dev' is going to earn the same salary as those living in SF/NYC - all other things being equal - just is not true. It's not a 'lesson that companies need to learn' - the market already has that built in.

Conversely, you begin to compete even more with individuals in India etc willing to work for much less.

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