European startups battle labor laws for best talent
slashdot.org
slashdot.org
2. Due to the low central bank's rates there has been a divulge of money, a lot of which has ended up on startups/seed investing. Most will go no where, but they need engineers, yet they can't afford them as they are not profitable, or really just speculations.
So, more engineers are needed, yet a lot of these companies can't afford to go to bidding wars for them as they don't have solid financial footing, hence you see so many of these "there are not enough engineers" articles, yet salaries are only increasing few percent a year at best.
So, this extra engineering demand is created by companies (i.e. startups) that have a great chance of failure, and will just go away as soon as money starts becoming tight again.
Which means, one the longer term the larger companies (the ones that actually make money) will dictate the salaries of engineers. Since they tend to move slowly, compensation of engineers will do so, only few percentage a year, probably a bit over the inflation, reflecting the long term Macro trends on more software being used everywhere.
I haven't heard any of the crazy 1999-2001 stories yet, so I'd say this feels a lot like 2006-2007 (the Web 2.0 boom), which ended up with a soft 2008-2009 period.
I don't mean to nit-pick, but did you mean "deluge"?
I live in freaking Portugal with low wages and high taxes. Taking most of the offers that were presented would mean losing a lot of purchasing power at the end of the month. How can you expect to bring people to one of the most expensive places in the world, and try to pay them just a bit above average the UK salary?
So as in the US, there is only a shortage because employers don't want to pay what the market is expecting. (note about the article, the fact companies are paying individuals off the books, actually means the companies are actually saving between 20 to 50% (depending on jurisdiction) over the gross salary, again, more related to money than 'visa' issues)
Here are average US regional tech wages in 2012 according to the TechAmerica Foundation:
California: $123,900
Massachusetts: $116,000
Washington: $110,200
And I know at many companies the average is more like $150,000 and still have a very difficult time hiring software engineers. I doubt most of the public will be sympathetic to claims that the only reason these positions go unfilled is that companies are unwilling to pay an appropriate wage.
My guess? Expensive real-estate all over the world just makes it harder and harder to pay for anything, especially employees you have to relocate. And severe socioeconomic and infrastructural inequality makes it a lot tougher to get out of the "center and periphery" problem.
Likewise, in places where wages are higher it appears to be mostly about cost of living. The last time I calculated it out making 50k in the armpit of nowhere USA turned out pretty close overall to making 75 or 80k in SF or NY with taxes, commute time, and cost of living factored in.
Quite a bit above $100K too, and I don't even consider myself a guru/ninja/pirate/whatever programmer either.
I'm not alone either - literally every programmer I keep in regular touch with, and literally every programmer at the shop I work at is making well into the $100s. In fact, a good friend of mine the same age as me (mid-20s) just accepted an offer in the $180s.
The cost of living argument is also mostly bull. I've lived and worked in 7 different cities, ranging from cheap $300 rooms on the wrong side of the tracks to $2000+ luxury high-rises. Nowadays I live in Manhattan, and I've done the math multiple times - it costs me about $20K more per year (with fairly generous numbers) to live here than in, say, Seattle WA where I once worked. Of course, the pay difference between NYC and elsewhere is a lot higher than $20K. Even accounting for taxes, food, and everything you're still coming out well ahead.
I know some of the best developers in my college class have ended up getting paid 45k to 65k a year in places like Phoenix because that's what was available job wise.
I've done the same math from almost everywhere I've ever lived, and both SF and NYC still come out on top. The market salaries in those cities do make up for the cost of living, and then some. The whole "SF and NYC are bullshit because you end up losing money after cost of living adjustment" argument is bull, specifically because the market salaries between it and other cities in the US doesn't bear this out.
> "I know some of the best developers in my college class have ended up getting paid 45k to 65k a year in places like Phoenix because that's what was available job wise."
Sadly, the availability of jobs is not very highly correlated with programming ability. And I say this in a non-snarky way. The top end of the software industry is very much an exercise in pedigreed degrees, networking acumen, and fake-it-till-you-make-it.
We're really not that much better than the business majors we like to make fun of.
e.g. some companies in Berlin are trying to find developers that work for below 50€/hr (you have to pay ~600€/month for mandatory health insurance, 600€+ for a room, 100€ for public transporn, 100€ mobile phone, retirement provision / buffer for bad times — and ~35-40% taxes before that). Usually there is no participation in the company (stock options) because there are no going public-exits.
It's mainly a bubble to attract cheap developers from other parts of Europe, female developers and junior developers willing and eager to get work even if payment is bad.
This is great but it's still a lie to tell everyone that there is a shortage. If you pay low, it's hard to find people. Simple as that.
Established and successful companies that pay well still can't get people. The shortage is real.
Same for freelancers.
Sometimes I see very large teams of mediocre developers. Why didn't they hire 2-3 (more expensive) experts instead of 10 juniors? Maybe because they doing this because of an aqui-hire exits or some ridiculous "hire 10 people" todo that their VC dictate.
An architect usually can't build a house.
As my postings are focussed on the German market, I rarely see real Lean Startups that. It's still very common to build one thing big and to hope that it succeeds. So actually you don't start from scratch more than 1 time except some low profile developers messed it up.
Not only are the salaries junk, but your fucked up taxes take it all. Might as well go to Hong Kong or Singapore.
Talented people are scared that all but elite firms will fuck up their careers and therefore are only interested in a few companies at any given time. (Interesting enough, those companies are often places like Google that, except for the validation that getting hired by one indicates, aren't great for career progress.)
Firms end up having to buy talent at a panic price (acq-hiring, which usually involves purchase of mediocre talent) because they've lost faith in their own people or, at least, the middle-management filter that has occluded any visibility for talent at the bottom.
There is no shortage of talent or capital. Both are abundant in comparison to the actual limiting factor, which is trust.
Now I know most people live outside London to save money, but you can't complain there is a shortage of talent if the senior guys aren't earning a wage that allows them to live in the same city they work in.
This seems surprisingly high, I'm more used to a base cost of +-110€ (in the Netherlands).
(1) There is a shortage of top-grade developers / other top-grade IT people - there are only that few and there is a very strong global demand for them - those established in this group can almost always choose from multiple offers at a time with salaries in the region of 200k+ or even much more (if they also have proper business skills).
Start-ups can't attract those via a salary base - those guys normally do start-ups themselves. Better to go for some mentoring / consultancy sessions with these guys and by that create incentives / improvements with your in-house developers. The rule one of them is as good as up to 20 mediocre developers generally applies.
(2) There is a shortage of 25-28 year old senior developers with 10+ years of uninterrupted work experience, having all plus the most exotic skills (each at least 5 years), being in a job with another company and willing to stop there tomorrow and work for 50K or less p.a. gross (that's about 2'300 per month net see cost of living above) - at least double the salary and suddenly people might become interested in job offerings - ask yourself if that marketing guy who's that great in selling himself is really worth 400k p.a. or 200k would also do and you might actually be able to deliver a product after paying your developers an appropriate salary.
(3) There is no shortage in mediocre / average developers with high frustration levels and often outdated skills. Some of them might have been outstanding developers before, but got so frustrated by the silly low monies paid to them in an industry juggling with dozens of billions at a time. Treat those fair and spend some time and you might re-surface their outstanding skills. It's a gamble and might also backfire.
(4) There is no shortage of lobbyists / politicians / industry guys that trumpet around that there is a shortage in developers - we know at least for the EU and the U.S. this is to lower the wages of developers by bringing in developers from low income countries that are completely dependent on having their visas renewed all the time.
Overall with developers you most of the time get what you pay for and how you treat them.
Your stats are a farce. I've never met a programmer/software developer in my life who makes more than 100k if they aren't essentially management. Median US salary for a software developer is $69,564. The 90% percentile is 100k. Please come back to planet Earth.
Likewise, in places where wages are higher it appears to be mostly about cost of living. The last time I calculated it out making 50k in the armpit of nowhere USA turned out pretty close overall to making 75 or 80k in SF or NY with taxes, commute time, and cost of living factored in.
update: I'd meant to reply to a specific comment. Oops. I'll also caveat that different sources seem to use software developer to mean different things. I'd consider a web developer a software developer, but they supposedly get paid on average significantly less, probably because it draws in a lot of self-described people who do websites but don't really program.
There is a significant shortage of developers and ardit23 explained, with rapid growth of young companies fighting to hire developers but not able to pay Google-sized salaries, the vast majority of the job salaries are constrained by limited budgets of entrepreneurs. Until this industry stabilizes, it's going to be hard to get accurate price signals.
And despite your contention, I know of plenty of devs who make >100K. I speak at conferences all over Europe and the US and I meet these people face-to-face all the time. Just because you don't know them doesn't mean they don't exist. That being said, part of the reason I know roughly what they make is because they work for big names like Google, or they are in-demand freelancers (we can charge buckets of money in the right situation). Hell, I know one guy who made €30K for a week of training! (search for top-notch training, note the cost per student, multiply that by a decent class size and five days. You don't turn that trick very often, but when you do, it's a lot of money).
And $75 to $80k in New York? No way in hell I'd take pay that low to work there.
If they were the rule the average salary would be 100k but it isn't, and all the 100k + devs you supposedly know aren't enough to move it.
I wouldn't take 80k to work in New York either, hence why so many startups whine about not being able to find 'talent.'
The 'shortage' is mostly a symptom of companies only wanting to hire these celebrity developers who already make a lot of money (and Stanford grads).
Likewise, the hoops you have to jump through in job interviews would be shrinking if people were really desperate to hire, but instead they're growing. Have a giant github. Do two 4 hour technical interviews. Only apply after solving 2 to 5 programming problems. Etc.
For the sake of example, let's say you make £500 per day. At 220 days per annum, that's £110 000. I know at least 10 people making more than that.
If you don't want to hire talent you can get them to consult with you, but that will shift the social charges on them and will make them less secure, so they'll ask for more by the hour.
Hey, the world is so much wider than this. How do you see them diametrically oppsed?
(Which makes me think about how to sort political systems anyway.. even if you give me a manifold to work with, so diametrically opposed makes sense in a geometrical sense.. high-dimensional delirium)
Maybe it's also a result of my living in the western US after having grown up in Germany. Vastly oversimplifying I would say that here we start with the question "What is good for the individual and for business?" whereas in Germany it seemed more like "What's good for society and country as a whole?" Either way you end up with a lot of compromises but I think the basic starting point is really quite different.
(I'm german, btw. I have never been to the US (apart from NY which apparently doesn't count); and it's hard to judge differences from just media.)
An American with a job offer can easily get a work permit in the Netherlands, no quota and nice tax rebate to boot.
The shortage is the same for the same simple reason: qualified people simply aren't there. We can hire from the US, Canada and all of the EU, that still doesn't solve our problem.
But other than that I've never had or heard of any such issues here in Amsterdam. Locals are getting outnumbered in the tech-scene. The majority of my team is now non-Dutch, and not because it's cheap, because we pay well.
This royally sucks for Romanian developers that want to work here, because despite being EU members they still need a work permit. The government basically assumes that the odds of Romanians coming here with good intentions are pretty low.
My background: I went to uni to be an economist, but I'm now a freelance software consultant/trainer. Also, for years I've written a blog about how to be an expat and on top of that, my wife and I run a company and she handles international IT recruiting. In short: I know a ridiculously large amount about this topic (except for the black-market work).
> Schools and universities are failing to equip young people with the skills that twenty-first century digital businesses need, these people say.
That's not true at the university level. At least here in Europe, increasing amounts of people aren't taking degrees in STEM technologies. If people won't seek the degrees, there's not much the universities can do. At a younger age, public education could be doing more to help here, but aside from interesting ideas like Estonia teaching children to program (http://www.forbes.com/sites/parmyolson/2012/09/06/why-estoni...), you're going to have to have government support around a wide-spread approach of schools trying to interest students in IT.
> The time and expense that Navarro says is necessary to import a European national to work in the U.K. is not insignificant. The paperwork alone costs $1,000.
That's misleading. It's sort of true if you're a medium or large employer hiring tier 2 workers (http://www.overseas-exile.com/2012/08/we-dont-sponsor-work-p...), but ... that's a one-shot cost for becoming a licensed sponsor. After that it's making a job offer and issuing candidates a sponsorship number (which costs £184 for a tier 2 or £14 for a tier 5). Yes, there are still costs in bringing them over, but not
No, the real issue with the UK is that they currently limit non-EU skilled workers to 20,700 per year (unless you earn over 150K). As a result, you want to import your workers early in the year. Need a specialist in October? Ha! Good 'un, guvnah!
Of course, like the US, UK university graduation rates are dropping as tuitions rise, causing them long-term issues that they can't offset with importing enough skilled labor because both countries are limited said import!
Also, it's disappointing to see the article failing to mention the European Blue Card. That's one of the most exciting opportunities that Europe now has. Designed to fight against the US Green Card, it's a way to allow European countries (minus the UK, Ireland and Denmark) to import skilled workers with very little paperwork or hassle. Stay in your first country for a few years and you have the entire EEA labor market (minus caveats above) open to you! In Germany, for example, it's almost as simple as getting a job offer and moving. It's paying off well for Germany and it's going to be a long-term game changer for the EU if they can overcome their Euro troubles.