Tech CEO Says Workers Get Too Much Pay and Benefits

That is now how a market economy works! I mean, you can't usually sell for less than cost or pay more than productivity over the long term, but sometimes you do (loss leaders, R&D investments), and you can definitely do the reverse.

Neither I or the company secretary I worked with to ever got a word of thanks.

Example.

Let's say someone in accounting is responsible for combing through invoices, extrapolating data from them, and entering those extrapolations into a spreadsheet, perhaps with some calculations.

That someone is earning $75,000/year (not including benefits and other costs) to do this job. $75,000/year is the market rate for someone experienced enough to do this correctly, and since this is accounting, outsourcing this would be difficult because of US tax law.

This task consumes approx. 10 of their 40 hours/week. There are 261 working days in the 2021 fiscal year. This means that this $75,000/year person costs the company $288/day. Of that $288, it costs $231/day to do this particular task. $231/day * 261 days = $60,291.

You come along. You discover this madness and write a script to do it. You are paid $150,000/year (not fully loaded). Since you're subject to capital-A Agile, you do this in the very little downtime you get between playing stories.

You write the script (with no tests, because you ain't getting time for that) in six hours, or about 3/4 of a day. Since you cost $575/day ($150,000/261 days), this work "cost" the company $431.

However, the script does what the person in accounting did in 30 seconds and does so completely automatically.

In essence, the company "paid" $431 to automate what cost them $60,291 to get done.

_Per person_.

That's where the real savings comes from. Tech can scale so much more efficiently than people can. If this task needed 10 people worth $75,000/year to accomplish, it would have still "cost" the company $431 to automate what is now a $600,000 annual job!

If you were an entrepreneur selling this as a solution, you would probably sell this to the company at, say, $100/month. ($9.99/mo would be too low, and you do have to charge a "throat to choke" premium). That's $1,200/year of super sticky recurring revenue that you can sell to multiple companies with minor refactoring (because big companies generally don't abandon things, especially not things this cheap). Not a bad return on something that took six hours to write!

If you were working for this CEO, you would get scolded by a PM for working on an item that didn't have a story, which would percolate up to a negative mark on your yearly review that shunts your chance at a raise. Sure, you'll still get your 5% bonus of $7,500...but your six hour BS project literally saved the company over $59,000! PER PERSON!

See why what this CEO said is incredibly insulting?

Let's use an arbitrary 1m saving.

If you saved a company (me) a million dollars, you just made 10% (aka 100K). That's a pretty good commission. If you got health care, retirement contributions and anything else on top of that, you have made an exceptional commission.

Because I gather you mention saving you mean on sunk costs. The second year you earn 100K, and if you don't save me money you have now made 20% commission and only saved me 800K (1m - 100K - 100k). And so on and so on, or you need to keep saving me 1m a year and there is a point where my costs will reach $0 and your salary will outpace that, increasing my costs.

This obviously is a very linear representation where you're not adding extra value, nor am I incurring any additional cost/losses by employing you. Cost savings are reflected once in my bottom line but your salary is reflected every year in my in operating costs.

However if you made me an extra 1m a year revenue (and my costs stayed the same), I would make 900K from you every year, and you make 10%. But if my costs increased then that 900K revenue is much smaller, let's say my revenue increased 900K but my costs increased 100K, you make around 12%. Now we are talking about profit.

But yes, I can see what you are saying that employers drive the demand which puts the value on developers. Kind of like my wife and multiple other people in the world putting a price on a LV handbag, without the demand the LV is probably not worth more than a few hundred dollars.

"We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, "How can you sell this for such a low price?", I say, "because it's total crap."

Basically destroyed the company.

Still, it's weird to think about it. I live in a state where my First Senior role in 2015 paid less than the Cali mandated wage for a basic 'Software Engineer' at the time.

That's if you believe it to be a crime. The law isn't always right. Communication is an unalienable right. The flow of information is not something that should be regulated.

Giving unreasonably low wages should be the crime, not conspiring.

The value you create just puts a ceiling on the equilibrium pay.

Simple thought experiment. I have a button that creates a million dollars anytime it's pressed. How much should/do I need to pay for somebody to sit there and press it all day? In fact you can probably pay minimum wage because low skill work and easy to find people.

That being said, as an employee you can leverage the unique value you provide into higher pay, assuming you're able to persuade your employer. E.g. imagine you could press the button twice as fast as anybody else... Suddenly you're in a strong position to negotiate for a million dollars per press.

But the value you provide has to be unique relative to the labor market. Looking at unique value, and ability to convince others of that unique value, is more relevant than the absolute value you create.

Consider that the US Dept. of Housing and Urban Development considers residents of San Francisco to be "low income" if they make under $82,200 as an individual or $117,400 as a family of four as of 2018[0]. Those numbers are 80% of median income, which means in SF for an individual the median income was about $103k. You said, "if you can earn 100k in your first year you're upper middle at minimum", but, alas, no: if you made $100k in 2018 in San Francisco, you were barely even middle-middle class.

Also consider that making the median wage in your area may still not allow you financial security. We're defining "middle class" here in relation to median wage, which may not be a universal definition. I would expect it has more to do with the median resident's purchasing power.

[0] https://sfgov.org/scorecards/safety-net/poverty-san-francisc...

So, sure, the parent could make a different choice, and move to a lower cost of living area, but then they'd be making significantly less, and might still not feel particularly financially secure.

Even now, with many companies realizing that remote work is ok, and planning to allow some form of it permanently, many also plan to change (lower) people's salaries based on where they end up deciding to live, even if they do the exact same work.

And this is why I went the way that I did. Unfortunately, I'm from what's practically extreme poverty in the U.S., I'm sure a large amount of Mech and Elec EE's (or engineers in general) aren't exactly from upper class wealth...

And, guess what. I'm young, the planet is on fire and only getting worse, and it's beyond obvious that nothing is going to change that within my lifetime. That's a singular of many issues. The only way to insulate yourself from a lifetime of suffering from this is by money, and lots of it. Definitely not with what even senior ME's or EE's make.

To imagine a young student would choose to go one route because it's fun or their passion instead of a route that will somewhat secure their future at this point is asinine, and it's going to completely fuck industry over (as if it's not already) when there's a lack of capable engineers in other disciplines than SWE

The issue is that 99% of senior other engineering professions top out at like, $160-$175k at most.

You can be fresh out of college, go to an absolutely entry level junior SWE job, and make $250k.

There lies the issue.

I would also argue EE is more difficult at the highest than SWE. There's some deeply rooted knowledge, logic, and physics required, whereas in SWE... at the highest levels, you can almost pave your own damn path however you choose to and make things work.

But instead you can get a good job doing things the machine could certainly do, and do better, but doesn't yet because nobody yet taught a machine how. It's unclear how long that will last, but it may well be enough that everybody reading HN has retired before it's over. At the beginning of my career printf("This %p is %d a %s bad %n idea\n") didn't produce a compile error. In 2020 the C++ Standard Library specification still didn't say that the equivalent mistake was a compile error (but in 2021 they retrospectively fixed the 2020 standard to say it is), and I'd say this is now the middle of my career.

Progress has been slow is what I'm suggesting.

The EE/ME equivalent of what you're talking about for SWEs is not "work on button for a car cockpit or something" -- it's hardware/software/enclosures for things like space-hardened applications and payloads, industrial and commercial applications, or medical devices. Some of these are hellishly complex systems, others are just hellishly out of date, over-budget, poorly documented, and "shitty third-party [i.e. lowest-bidding contractor] services".

If you want to tell an EE or ME to just go work on buttons for a car cockpit, you might as well go tell an SWE that they can just go write AJAX calls to update HTML elements on a page, or update Wordpress plugins for businesses.

The electrical and mechanical engineering fields have far advanced past "button for a car cockpit" into much more complex domains, just like SWE has advanced far past writing vanilla JS to update HTML elements into things like JS frameworks, containers, (P/I/S)aaS.

OK I'm getting downvoted. If you downvote me find me a town outside of Alpine/Rumsford that you can't buy a house <$500k.

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