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Comment by pid-1 | Hacker News Reader

> Tech salaries are going to be on a decline for a while with the Fed rate hike

Isn't that true for the whole economy?

In fact, were seeing the largest increases in pay over the past two years (and i think in real pay too), and they're forecasting that will continue this year as well. This is much more prominent in the lower paying jobs than in professional ones.

> In fact, were seeing the largest increases in pay over the past two years (and i think in real pay too), and they're forecasting that will continue this year as well.

Last two years I agree, and fueled by a acceleration of business for tech companies. But continue this year? Who is forecasting that?

The Federal Reserve, among others.

https://www.washingtonpost.com/business/2021/12/08/wages-202...

Wage spirals are an untested economic theory and economists are split about the effectiveness of what the fed is doing.

The fed is assuming that inflation is being driven by wage increases.

Thus they raise rates to force employers to cut back on compensation and job openings.

How they do this with a clear conscience is beyond me.

Wage growth has lagged behind inflation, let alone productivity for 40+ years!

Inflation is caused by a lot of different factors, but wage growth doesn’t appear to be one of them.

Thanks for the link; I can’t read the article because I’m not a WaPo subscriber (I’ll see if I can find a copy somehow).

Do you know whether the Fed forecasts that for software engineering jobs? I think that is what’s most relevant for a large number of folks in this thread.

This was in response to the comment about wages decreasing for the whole economy.

I don't know of any specific forecasts. It's possible the actual report by the Fed does break down by industry, but I'm not sure.

without paywall: https://archive.ph/qqQMw (article is 9 months old, though)

A little mentioned dynamic is that tech salaries can't be too much out-of-sync with non-tech salaries, because overpriced housing bought up by SWEs making 300K+ eventually leads to non-SWEs demanding wage increases to keep up with rent payments and/or remain able to save for a downpayment on newly priced homes. In turn, the lower disposable income from workers being squeezed by housing costs is lowering growth and tech growth in particular, which puts pressure on tech wages, stock valuations, and headcount.

In other words, free market mechanisms are slowly starting to redistribute wealth from high-earning SWEs and other high earners to middle class workers and lower.

In other words, it is not possible for too many people to be making 5x+ the median household income regardless of the value they may create.

In other words, expect non-tech wages to rise faster than tech wages for the foreseeable future.

Ah so you still believe in the trickle down economy. The problem with that is that anyone making 500k is not going to be able to spend fast enough to keep people around them equally wealthy and it gets worse the higher you go - you physically can’t spend 10M+ on groceries and haircuts near you so the higher proportion goes to financial instruments and assets which does not trickle down to neighbours

They're not talking about trickle down. They're talking about market pricing (COL) affecting pay. This is clearly evident looking at non-tech jobs in someplace like SV vs Philly.

I think trickle down would actually go against GP's point. Their point seems to be that even as richer SWEs make more money, they price out middle class workers on housing -- then as workers pay more for housing, they have less money to buy things from the companies that pay the SWEs, with a result of putting downward pressure on SWE salaries.

Believing in trickle down would actually undermine GP's point. If trickle down was true, SWEs' spending would offset the housing cost increases caused by SWEs, so middle class workers would have more disposable income to buy things from companies that pay the SWEs -- and that would be the opposite of what GP is describing.

Sounds like you are focusing on exceptions like SF Bay Area and to a lesser extent Seattle. There aren’t that many SWEs in the world and there are always professions that make exceptionally high income vs rest. The problem you are describing is most acute in the peninsula because of concentration, lack of new development, unwillingness to densify to meet demands, lack of rapid interconnected public transit and some geographic restrictions (once you leave the peninsula, commute becomes very bad because you either have to cross a bridge or go all the way around the bay).

The WFH/remote is actually good for this problem as it reduced concentration and enables wealth to be a bit more spread out where it’s less impactful to the local communities. Of course, in resort areas we got concentration again (because of shallow supply) and many of the ills came back. Hopefully things stabilize a bit more on that front and a semblance of affordability is achieved.

It seems like this only affects areas where tech workers make up a lot of the population, like the bay area.

Also, it assumes that non-tech workers won't just move to cheaper areas.

> Also, it assumes that non-tech workers won't just move to cheaper areas

Which creates non-tech labor shortages in the original HCOL area and puts upward pressure on non-tech wages and downward pressure on tech wages, as non-tech wages are ultimately paid by the spending of everybody, including tech workers, who consume more than non-tech workers by virtue of simply earning more.

No. Another hard truth is that some jobs are more essential than others.

Sanitation. Childcare. Primary education. Fire departments. Groceries.

If your city doesn't have those, it stops being a livable place pretty quickly.

Cost of housing goes down quite a bit too.

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