Silicon Valley’s engineering salaries are finally getting fair. Thank Facebook
pandodaily.com
pandodaily.com
And I know for a fact that Facebook is not the only reason programmers' salaries are rising. There are a huge number of new startups all competing for the best people.
Ive seen plenty more spun for SEO linkbait on here which are gaming the system to post articles with tons of affiliate links for hosting companies
Come to think of it, there was at least one effect: at least 1 person was fired because he didn't respect the cartel rule.
That is exactly my point.
HEdge funds routinely pay $200+. With a fair market I think we should have seen similar numbers here in the valley.
There are many times more engineers in New York than in SV.
Hedge funds regularly give $250K or more for an engineer with experience.
do you mean software engineers? That would surprise me.
I had a team of coders and optimisers working for me whose salaries topped off at 150 all in, 200 for the one who could turn out assembly that ran in milliseconds.
I always saw my job as being finding in-efficiencies and irrationalities; they saw it as coding. I happened to code (and not all that brilliantly, hence the support). But the argument that pure developers should be compensated richly doesn't gel with the argument that programming is the new literacy.
I'm trying to find an analogous system which could help us figure out what would have happened to developer salaries in SV given what tech companies pay in NYC.
The basic financial literacy these guys are desired to have is higher than naught. Further, there are different technologies, paradigms, and cultures involved (though at a hedge fund the last part converges).
A test for this would be tech dev salaries in NYC versus SV.
At the very least the guy that got fired needs to sue someones ass off.
(And I'm assuming by SOX you mean Sarbanes-Oxley.)
This sort of argument is often made in Economics, and is logically sound. Ceteris Paribus aka everything else being the same.
I agree the article smells of link-bait. I don't understand why Facebook's IPO is different from every other IPO that has happened in the past. Why does the author feel that this IPO will raise wages of developers in the valley?
Do you believe this to be the case? If so, do you really mean to say that engineering salaries should not be set by market forces?
However lets take the case of NEw York where you can get program trading jobs for $300K and I have friends who got these kind of jobs. Hedge funds routinely pay $250K plus.
I think this is what would have happened in the valley.
Collusion for these firms was price-based collusion for products, not collusion to suppress the input costs of highly skilled labor. Manufacturers are said to have engaged in establishing minimum or fixed prices for their products.
Consumers will tend to absorb this form of market inefficiency. After the cartel agreements were broken, consumers reaped the benefits in the form of the "intensification of price competition" (lower prices).
It suggests that only in one case was there collusion in R&D, which might be a relevant example.
Additionally, the article cites outside competition from the USA as a factor. Competition from foreign sources on engineer wages such as India is still nascent. US manufacturing during this period was mature and robust.
its important because FB is the biggest social network on the internet. Believe it or not, many people still dont understand or get what "social web" means. Having FB stock publicly traded (company more transparent) and strong earnings would prove to the masses that web and social net is sustainable AND profitable AND here to stay. And it already works! look what happened with Zynga stock after FB IPO papers hit the daylight.
I think companies should do something really crazy. They should go and develop a new area which would eventually beat silicon valley. Where engineers can find very affordable rents, and very affordable modern deco houses. Where the weather is sunny, driving engineers who sit all day in offices to go outside and get some vitamin D. Where the gender ratio is balanced. Where your neighbors are good at other stuff and are willing to share there knowledge, like a real world quota.com.
A engineer, earning 120k from year 0 - 4, should very easily be able to save 250k and live comfortably in a 5 year timespan and not have to cut corners.
PG, there is a real problem here with silicon valley. I don't think the salaries are too low but I think the cost of living is too high.
If you truly want to be innovative and crazy, broaden your world beyond the web.
Austin also has that potential I hear too and it's a sunny place. Texas also doesn't have state income tax.
I was trying to formulate an ideal living area, not just for engineers but for anyone who loves knowledge(think Quora).
I feel modern cities have so many problems, why not just start from scratch or from the ground up.
If they do that and it succeeds at all, here is what will quickly happen.
1. The area will be full of smart well paid people, and will be a place where those people want to live. House prices and rents will go up.
2. Since it was aimed at engineers, and prices are (now) expensive, it will tend to be occupied largely by engineers and other highly-paid people. Which, society being what it presently is, will lead to the same sort of sex ratio as you see in Silicon Valley.
End result: just one more SV-like area. And that's if it works, which it probably won't. (It's very easy to say that "companies should" develop an area with sunny weather and a balanced gender ratio and neighbours who are good at other stuff and willing to share their knowledge -- but not so easy to do it.)
That alone disproves your implied statement: That these agreements did nothing to anyone. It definitely did something, and just the fact that those companies amount to tons of employees and tons of salaries is enough to show it had an effect.
You however are pulling the oldest trick in the book. You want conclusive proof that these completely illegal actions by corporations had a measurable effect before you'll admit that they were wrong. But, it was a conspiracy. You're not going to get exact numbers. It's not like these guys are keeping a ledger of money saved by not-poaching. You are basically demanding the impossible.
But, you are also demanding more than you give yourself. Where's your proof this did nothing? I know, you didn't explicitly say it did nothing, but that's your clever trick. You just imply your counter argument and then run around dumping links to logical fallacies on Wikipedia rather than give real numbers.
So, Paul, stop being a hypocrite and give us your bet on what impact this really had. If you demand exact socio-economic evaluations before you'll believe this did anything, then I demand that you give the same evidence it did nothing.
And your first task will be to disprove what's already been proven in court: That these agreements did impact all the employees at these companies, that it did reduce salaries or they wouldn't have bothered, that reducing salaries was their goal, and that they did fire employees over it.
Until then, your demand for exact evidence violates the standard in philosophical argument that your own argument can't be used against itself.
I'm not saying the no poaching agreement had no effect. I'm saying he offers no evidence for his claim that it had a big effect. Complaining that someone has offered no evidence for a claim is not an "implied statement" that it's false. Do you understand that distinction?
Hedge funds pay $250k consistently.
Wouldn't SV look something similar?
Your argument is technically right but It sounds like an excuse to punt on a practice that most of us find f$cking despicable.
I'll take that. If I have to choose between saying something true but unpopular or false but popular, I hope I'd always choose the former.
Unless those participants had absolutely no idea what they were doing, salaries did at least not rise as much as was warranted.
This is not some far fetched theory this is economics 101 applied to the real world. Asking for evidence for this claim is the real embarrasment here.
Libertarian views assume that free markets regulate themselves basically due to perfect competition. (Trying to keep this short and simple.)
Realistically, you do not always have perfect competition and you have problems with monopoly, oligopoly, etc. Firms are potent enough that their collective decisions can manipulate markets, and in this it would be labor markets. (Perfect competition assumes that firms cannot manipulate markets.)
Libertarians oppose a government presence in markets because they believe the result is inefficiently functioning markets, and we are all worse off.
In this case, the firms collude and are manipulating labor markets so that they behave inefficiently to the advantage of the manipulative firms and disadvantage of labor. (This is usually where people try to justify labor unions as a counter to the influence of firms.)
These agreements haven't gotten in the way that most engineers in the valley know there are a ton of other places they can work, including the "no poach" companies. Valley engineers switch jobs with an ease and frequency uncommon for the tech business in general.
Facebook alone certainly doesn't hire enough engineers for it to matter THAT much.
As a coder working on a startup, I can tell you one thing I've learned: coding (at least for me) is not the hard part. If your dream is to be an entrepreneur, here's my advice: learn to code and learn to sell, or find a great cofounder who knows how to sell.
But as an aside, I definitely agree about selling. There seems to be this disdain for MBA/business types that don't build. As an engineer I can tell you that I have the utmost respect for skilled salespeople and I would definitely want one on my side when starting out.
A start-up that outsources its core competency is doomed. If you have an idea, and can't find a technical co-founder, learn to program yourself. PHP aint that hard.
Aren't startup people supposed to be all focused on getting results? If it takes paying someone else to hack up v1, rather than you spending time on it when you should be out selling or interviewing potential customers, etc, do that.
We never hear the stories from people who self-taught PHP or Rails for 6 months hacking on an idea only to then try to give it to users and have it rejected for multiple reasons. But they happen. Probably more than anyone realizes.
The expense of Silicon Valley is largely down to growth policy, which is to say, they can’t build housing concomitant with demand. Similarly here in NYC.
Making very good money in an very expensive place is not a struggle, it’s a privilege of very few.
So why is selling your services any different?
Your employer would probably pay you more if you had true freedom to take your labour to another company. Your employer seems to have agreed to a cartel to limit your ability to sell your labour.
If its a very expensive place then your not making "good" money everything is relative -) and ok we re probably all better of than some black single mom in some decaying Rustbelt city it doesn't make it right for your employer to beak the law.
Its effectively changing the distribution of salaries positive skew in statistics speak
I can't tell you how much this infuriates me. I actually heard a Mountain View city council member say, "Maybe we should tell Google that they can't hire any more people." Meanwhile, the city is full of termite-ridden rotting apartment buildings just waiting for the next earthquake to pulverize them.
Here's the zoning map for mountain view: http://www.mountainview.gov/civica/filebank/blobdload.asp?Bl... There's only a single block of high density residential on the entire map.
However, the primary land subdivision pattern of many small lots (and consequently many owners) makes assembling parcels suitable for redevelopment at higher densities not just expensive, but difficult.
Furthermore, existing high rents mean that the value of the land based on existing cashflows may make redevelopment infeasible once the cost of new construction and land acquisition is amortized and the higher returns associated with the risk of development must be paid.
Obsolescent housing (and other structures) remain because they are profitable and can be valued on an existing income basis and thus traded with known risk.
Higher density projects may be possible, but the market may not be able to absorb the units if the rents are significantly higher - and of course, higher rents are also likely to be untenable for voters as well.
Right. Okay. I think you don't quite understand why Dropbox is Dropbox.
Here is a little snippet from Quora on the subject, sorry I couldn't find anything more: http://www.quora.com/How-does-Dropbox-integrate-with-OS-X-fi...
A singular devotion to UX is not something that can be duplicated given "the right amount of engineering resources". (jrockway's thinking is totally emblematic of Google and Microsoft.) It requires the right, most product-focused people in charge.
Compare that to Facebook where you can't switch because your friends won't switch, and you only use Facebook to interact with your friends. Even if there is a better social networking site than Facebook, it won't matter because nobody will use it.
So my theory is, "why bother?" If one of those companies needed a few more million, there are easier ways of making the money.
The cynic in me, would say that people who own stock now don't think it would last and are getting out when it's at it's top.
It's things like Facebook putting 'the hacker way' into their DNA and being able to retain top talent that makes the company worth anything. If you took the facebook source code and all their customers away they'd probably have a pretty good chance of making something else that's quite good. Today anyway, but if tomorrow they can't it'll be because they somehow lost their way and let the MBA's in. Kodak had a great place in the market but they just couldn't successfully adapt
I haven't looked at the price but if I was in the USA I'd probably buy some shares, the google float of $100 seemed outrageous at the time, and unless they get further involved with Microsoft I'm pretty bullish that they'll keep going up
Big IPOs that year: Google, DreamWorks Animation, InPhonic, Shopping.com, SalesForce.com, Atheros, PortalPlayer, Shanda.
Of those, Google, DreamWorks Animation, SalesForce.com, and Shanda continue to be successful. Shopping.com was acquired by eBay within a year at a modest premium over the IPO price (15%), and Atheros was acquired by Qualcomm after 7 years, for about 3x the IPO price (also around 15% annual return). PortalPlayer was acquired by Nvidia after 3 years for 20% below the IPO price (and 45% below the first-day closing price). InPhonic went bankrupt after 3 years.
If your goal is to get rich via investment opportunities I would not recommend trying to win the stock option lottery via the employee option pool as the best strategy to achieve that goal.
It's not anyone else's fault you choose to live amidst a hyperinflated housing bubble, so quit bitching that it's so expensive. The rest of us don't whine about not being able to afford Manhattan penthouses.
This type of sob story only reinforces the external prejudice that the Valley is a phenomenally insular echo chamber, wholly disconnected from all semblance of national or global reality.
(Yes, I'm a coder, not a business guy.)
The only question is when. I think the process has already begun. Some might predict another year or two. Nobody sane would expect the ride to last longer than that before supply and demand reassert themselves over mere fashion.