On Immigration, Engineers Simply Don’t Trust VCs

> anyone who cries foul about a shortage of workers

Those people generally use the phrase to mean "a shortage of workers willing to accept below-market wages and invest all of their time and energy in a company while bearing the downside risk of a entrepreneur but none of the upside."

What seems to be happening is that Silicon Valley wages are flat or down (relative to 1998) but the rest of the country is improving. There actually is good news here, though it might seem otherwise if one takes a Valley-centric approach.

In 1998, software engineers in the Midwest generally didn't make six figures. $70,000 was a strong salary for a mid-career (5-10 years) engineer. The $100-140k figures were limited to the Bay Area and New York (around Wall Street) and possibly Chicago (also finance).

In 2014, engineers in the Bay Area have lost ground relative to the housing market, and have lost social position relative to well-connected "serial founders" and investors... but on the other hand, you can now work in any of the top ~20 hubs and make 80-95% of what you'd make in the Bay Area.

By Paul Graham's description in that "Let in the 95%" article, companies are standing around with their dicks in their hands hoping that they find "the best" engineers, but on the cheap. If a company wants to hire 30 more "great" engineers, but isn't bumping up their pay to get at least 15 at a higher rate instead... there's something really off happening.

It's standard economic theory that wages are sticky. I think for a while, at least the past three years, junior developers (especially in web dev) have been overvalued and seniors undervalued. From my recent job search, I think this is starting to change, which is why the whole "not enough engineers" is reaching a fever pitch (ie, we can't find seniors at the traditionally understood market rate, as everyone realizes seniors are a better buy right now).

As it stands, career programmers in the US who are good but not celebrities generally try to move into management/consulting/whatever because their career stalls otherwise. Solve that problem (PAY MORE) and we've got our programmers.

This is something I realized just a few days ago, looking back.

11 years ago I left a Silicon Valley software company's IT department, where I was making $85,000. Doing standard IT work. 11 years ago.

A lot has happened since then, but no I don't think wages have been going up at all.

Absolutely; the programmer's wages even today are lower than the were in 2000. Of course 2000 was a peak.

Rather than just looking at general price inflation, you should look at cost-of-living at the tech hotspots (the big cities, silicon valley). That of course makes things even more dire.

Luckily you too can make the next big thing, sell your startup and then live happily as a venture capitalist / philanthropist.

In principle, I agree with most commentators on HN that if there were actually a shortage we'd expect to see salaries rising.

Yet, in practice, it does seem that there's simply an absolute shortage of experienced developers. I've been hiring developers at my job for most of the past year, yet we have never had an offer turned down. Rather, we see only a trickle of applicants, very few of whom are event remotely qualified. If we actually saw a great developer, I'm sure we could put together a fantastic compensation package (despite being an early-stage startup, we pay above market for NYC). Yet all we see are mediocre developers, and few of those. It's hard not to call this a labor shortage when my colleagues hiring for other positions (marketing, writing, etc.) see 100x the number of applicants with 1/10 as much outreach/advertising.

Given that it's impossible to produce more senior developers in a 1-2 year timeframe, what alternatives do people suggest to immigration?

>He said that programmer salaries from pre-bubble days was six-figures, and that we're still in that range, and not higher is proof that salaries have been kept low.

The pre bubble days had plenty of immigration, not to mention NAFTA was in full swing as well. The job and salary situation seems to be poorly correlated with salaries and job availability.

As much as it may sometimes seem like it is, the H1-B isn't a programming or IT visa. It's applicable to a wide range of specialty occupations, across the entire nation. The suggested change would block out virtually all applicants from many other professions.

The abovementioned comment: https://news.ycombinator.com/item?id=8801046

I'd make one other big change. Move the distribution of visas to a monthly basis instead of annual. Currently the visas for the whole year go very quickly. If they were distributed monthly, and based on pay, you'd have a good idea of what you needed to pay to be competitive and bring in the workers you want and wouldn't need to wait a year if there is someone you really need now.

I believe we have plenty of tools that do a great job of facilitating communication, project management and work activities for remote workers. What is missing is the willingness from companies to accept these workers, not the tools.

Deficient management skills.

And worse, management that won't acknowledge it's deficient.

Managing a remote team is a skill, or more accurately a set of skills. No, you probably can't do it well right out of the gate. Yes, you'll probably have to work harder at it than you would having a team in one open plan office. Yes, it will take you time to learn.

But if you're really being held back by a lack of engineering talent, if that's genuinely keeping you from being more successful, you'd be much better off if you put the time and effort into learning it.

Tele-presence has a long way to go, and the network infrastructure too, but it will obviously, eventually, get to the point where it's indistinguishable from being in the same room, minus the physical contact. But to your point, it's not even a given that would help much.

Even with that, you still suffer mostly from time zones. You're just not going to collaborate the same ways with someone on the other side of the planet. That just means barriers to entry and more opportunity for those brave enough to try and ultimately get a system that works for them.

I think there's a remote-work bias which isn't fully born out from the evidence. It helps if you can somehow start with perfectly trustworthy peers, because I think a large part of hiring local is keeping tabs and keeping control. If you already know people who happen to be remote, versus trying to hire someone you've never met before remotely, the former can work perfectly fine, the later is [currently] nearly impossible.

There's probably legal and tax issues to deal with too, but I'm going to hand wave assume they do not negate the potential benefits and could just as easily work out in favor of the foreign independent contractor vs. local salaried employee.

"Why the accent on physical presence?"

Big money over there will prevent big money in the US from hiring smart people over there because big money over there would rather sell those smart people (or their product) at a 400% markup. For example, this quote in an article about Google moving engineers out of Russia: "The changes in the political situation make it less viable, less feasible to maintain engineers here" http://www.theguardian.com/world/2014/dec/12/google-closes-e.... It's simply about money and has nothing to do about fulfilling immigrant's dreams or "being in the epicenter of tech" or any of that. Tech workers are money generators and people are simply trying to capture that money.

Physical presence means the host nation also collects the tax revenue. It also means that those workers consume products in that nation. An immigrant will go to movies, buy food, go shopping, and pay taxes in the nation he immigrated to instead of the one he came from.

A big part of it is timezones and language barriers. Unfortunately in tech, the big hiring pools of engineers are:

1. USA

2. Eastern Europe

3. India

4. China

5. Western Europe (Much smaller than the above)

And in this situation, usually the main office is in the USA, and sometimes the main office is in Europe. And then you have to synchronize with teams across very separate timezones. 5 minutes becomes 1 day and it become very frustrating.

Then on top of that, you have to deal with the culture and language differences that can make communications very difficult. You quickly start noticing people will organize into native-language social cliques very quickly and that can be a hard problem to manage. You can get to the point that you say you will fire them if they don't start communicating with other people in the company other than people in their native language.

Eventually with these remote workers, because of all of this separation, you'll want to eventually bring them into the main office. Then you have entire other suite of problems to deal with, since immigration authorities usually require you to go through a visa song and dance bring these guys temporarily into the main office that is pretty close to just importing them permanently into the main office anyway.

So to deal with this entire problem, they say screw it and try to import them into one time zone / black hole called the main office. Immigrating into one country starts creating a melting pot effect where their language skills improve, they integrate with the local culture and language of the main office better and you don't have timezone differences to deal with.

So you say, why not say remote workers but they have to be in the USA only? And there are many that do say that! Unfortunately, latin america just doesn't make a lot of software engineers, and you get laws like 'hire 10 mexicans for every foreign worker in your company' that prevent you from establishing an office in the same timezone at a place with freeform immigration policies, because it probably doesn't exist.

There's also 50,000 annual "diversity visa" immigrants from countries with low immigration rates to the US.

I favor much-more-open borders for people who want to immigrate and become citizens. Any kind of guest-worker program, including the H1B system, I'm more skeptical about. It's understandable for capital to work to carve out selected holes in the fence to benefit themselves the most -- changing the laws isn't easy or cheap -- but that's not the change I'm excited to get behind. (I don't know what specific changes are being pushed right now, if any.)

I always have fun telling executives "how much are you spending each week?" "oh, so you aren't paying your employees even half that, and that is before taxes, rent, etc" "you have a labor shortage why, again?"

I'm curious about the town you are talking about. I've seen the finances of people who rely on state benefits, and in the Bay Area--unless you have a bunch of kids(afdc) and were lucky enough to find section 8 housing; the state benefits are not enough to keep a room--you can eat though. I know too many homeless people who tried to get state benefits, and the help they recieved was tiny, and had a time limit. My best friend who passed away was on SSDI. He knew he was lucky he qualified for SSDI, but he was always broke. I saw his checks and it was just enough to get through the month. People used to rib him about buying a cup of coffee at Starbucks, at the expense of The Federal Government, but they had no idea just how little money he was receiving.

> Why don't tech companies (or any company really) invest in their workers and help them attain new skills and career advancement?

Because they don't actually want the "skill shortage" solved. There actually is no skill shortage.

Companies create the "skill shortage" by making the job requirements so impossible that no one applies:

"speaks Mandarin, programs in Java 7.1 and .Net 6.5, is able to travel 80% of the time, is a Backbone.js guru...."

Just look at the laundry list of "must-haves" in a job posting now a days to really get the true picture.

If companies really wanted to solve their "skill shortage" they would look for talent that could be trained to the exact technology rather than demanding that every possible candidate already know the tech stack.

Its pretty much the same reason why most people buy houses that are already built and renovated vs. building it themselves from a single empty plot of land.

It's far more of a sure thing that you can move into immediately vs. possibly not move into at all. You can choose an potential employee to train who may not 'just get it' for a cost far higher than hiring the experienced guy would cost. It's like building a house with cost overruns that your construction loan won't cover anymore and you cant get any more money. You end with a huge useless debt that YOU have to pay now and a useless half-finished house that most people don't want to buy.

Also when you train employees, you get these retention contracts that can create a perverse incentive for and employee to take advantage of or a deal as an employee that you wouldn't want to take, because you'd have to pay for a training cost subject to the whims of an employer firing you.

I don't know how you can realistically expect startups to invest in employee training.

  >> would that necessarily result in higher wages for everyone else?

Unless companies like Google relocate ( to where? ) then yes, wages would absolutely rise, because they don't allow WFH [1], ergo the only engineers available would be those in the Bay Area, NYC, etc. No, they wouldn't outsource critical infrastructure to places like India or China, who hacked them. I also don't see them picking up and leaving and going to e.g. Vancouver.

I think the only way to address this "great engineer" thing without American engineers crying foul is to gasp introduce standardized testing that all the American tech companies -- who can't get the amazing talent -- agree upon and then select the 99th percentile of the candidates that pass it and pay them in the 99th percentile of wages for the bay area. This would be an objective measure and Americans wouldn't be suspicious of whatever criteria VCs/founders use to measure "great programming ability". Make the interviews and the criteria public, bring it to the light, then people would be more inclined to believe them. Right now I simply hear a bunch of hand-wavey math and see a bunch of rich people whining about how they don't have engineers to build their things. Yes, I know there are flaws with standardized tests, but it's the best of bad things.

[1] Most companies. Yahoo notoriously, but most companies aren't in favor of allowing WFH.

> the really good ones are hard to come by

Perhaps "hard to accurately identify through an inefficient market"? Pretty much everybody has some horror stories about interviews and rejections unless they founded the company or got in through some side-channel relationship.

Enough do. For example, the line for people from India with a master's degree (separate lines for bachelors or phd) to get a green card is more than 11 years long. That's the time from when they qualify to get a greencard to when they actually receive it and not counting the years it takes to qualify for a greencard. During that time they have to stay on h1b visas, which can apparently be renewed indefinitely if the holdup is the backlog in the line for greencards.

Better be a hell of a big compensation. US laws and treatment of foreigners by law enforcement is quite crazy. Spying on my email and all cloud assets, no problem since I'm not US citizen. Even Obama said we have no rights to privacy. And nobody in US bat an eyelash when they hear that kind of xenophobic explanation.

It's usually better to not go TC et al. I just wanted to see how to write an article from an HN threads a few hours earlier.

" but that's what it's supposed to be! Engineering talent is in high demand and salaries are supposed to go up!"

And this is the other half of the labor/capital equation, doing its damnedest to keep expenses low and profits high. It's supposed to work like this. :/

Agreed, it is brutal how awful the zucks and pgs of the world argue about this. What I find bizarre is aren't they aware of how dishonest / douchey they come off when they fail to mention the impact on wages?

There is a way to solve the immigration problem. Create a system where the companies can hire people if they poney up 50k. That way there will be minimal impact on salaries and companies can get all the super stars they can afford.

Would be nice if someone extrapolated how the wages would look like today if the H1-B program wasn't put into place. Would programmers be making WallStreet salaries? How would that have impacted the start-up ecosystem? Also, numerous H1-Bs are the core of companies like Google, Microsoft, Facebook etc. How would things have looked without any of them?

For a variety of economic and historical reasons, many software companies are only likely to succeed in the US.

Without an influx of new people at a faster rate than education, increased salaries from demand will just shuffle existing engineers around. Instead of working at company A, they'll work at company B, earning a few percent extra; and company A, not being able to afford engineers, will either find something else to do, or close up shop. Higher salaries aren't enough to increase the supply of labour very quickly.

Which one of company A vs company B is more likely to be a startup?

What you are actually arguing for, is for software engineers to seek rent on the creation of new companies. You want to slow down growth in the economy and decrease the rate at which software gets applied to new problems, in order to make more salary (for Americans, in particular, as opposed to people less geographically well off).

It's self-interested, and thus understandable. I don't really fault you for arguing your corner. But you should be aware that it's not necessarily in the interest of your fellow Americans, never mind VCs. Other Americans also benefit from the application of software to all sorts of problems. Increased salaries for engineers mean that software is more expensive (however it's paid for), and there's less of it.

PS: the parasites feeding on nexus of finance are a separate issue. It doesn't make your argument more convincing, because they are a special case, recently in particular. Those parasites need dealing with, but the regulatory system has largely been captured, especially in the US. My problem with working in finance is ethics, rather than salary. Much of those earnings have been against latent risks that the taxpayer is underpinning.

> If tech wants the best workers, there are plenty of willing and capable Americans ready to pick up the work.

Are the people currently available really the best?

I can't get behind this because it's not workers versus management, or at least not only that. It's also workers versus other workers. Don't you have any friends who have had immigration issues? Screwing with them (or rather, supporting the politicians who do it) to get an even higher salary when we're already paid very well is pretty callous.

The reputation of tech employees is bad enough without this infighting over getting an even better seat at the table.

>"So for those of you with inflated senses of self-worth complaining about people like me, why don't you go cry to your mommy about how you should have taken a Wall Street job instead, so that you could have earned a lot more money while fucking over the world economy. Because fuck the rest of the world, right?"

You're more than welcome to cut your upcoming now-1st-world salary that you boast about and give most of it to a third-world charity or something. Because otherwise, you're also saying "fuck the rest of the world". When you understand why you won't do that, then you'll understand why others won't as well. No, seriously, you can't just ask others to do good, you have to do good yourself as well. Until then, all you're saying is that you expect others to take a hit in their advantage so that your opinions on what matters are satisfied. Without even considering that maybe they're doing what they think matters already, and all you're really complaining about is that it's not the same as yours.

Edit. I'd like to add something about your "birth-lottery" comment.

>"I lost the lottery of birth, and was born to lower middle class parents in a third world country."

I don't agree at all. If anything, you WON the "lottery" over probably billions of other people, ones that are born into families that do not support their offspring as much as it sounds like yours did to you. You may not be lucky enough to be born in a fancy 1st world country, but that's just entirely besides the point because you're succeeding, despite your claim that you lost some imaginary lottery.

Although I am the son of an immigrant, am married to an immigrant and am a hiring manager who regularly hires migrant workers, I have no problem understanding anti-immigration sentiments when it comes to people with your attitude.

You won the birth lottery by having the IQ to do this kind of work.

Software professionals would not be against immigration if VCs and their portfolio companies were not illegally suppressing wages using anti-competitive tactics.

Employers are suppressing wages using both hard and soft collusion. If they stopped doing that no one would have an issue with letting more workers in.

Still--the argument applies--why not just create software companies in your place of origin?

How are you giving back to your country of origin by participating in a brain drain, where all the talents of your high IQ are awarded to the imperialists that keep your home country in a state of economic subordination in the first place?

There is a very strong argument to be made that the best way to help "3rd world countries" is to refrain from draining their best and brightest brains. Paul Graham is arguing that America should fuck the rest of the world by stealing their best people, leaving the dregs to wallow in a ghetto of human misery.

There are 339 points and 636 (!) comments on that story. How anyone can call that "censored" is beyond me.

No moderator touched that post at all.

You really shouldn't use any opportunity to bring on your usual thesis - VCs collude to fund only startups created by "connected" founders - when it is so out of topic.

"Why, specifically, is training not an option?"

That would take too much time! Better to spend years lobbying to expand incoming worker numbers vs spending less time training people in the skills you need (short term). Longer term look to invest in education programs here too, but hey, that costs money. Better to keep billions overseas, then complain about the state of the country's education system, than pay taxes on the money and have those taxes help better the very country you're complaining about.

Training is seen as competitive suicide, because while you bear the costs of training, your competitors can then poach your trained employees by offering a salary that is less than your total cost for that employee but more than the salary you pay that employee.

X = cost to train employee

Y = salary of employee

Competitor pays Z such that Y < Z < Y+X and puts you out of business.

The second factor is that if you raise wages for one person, then the rest of your workforce expects those wages. So a 10% salary increase for one person quickly becomes an across the board 10% bump on your personnel costs.

Bribing, lobbying, paying PR firms, pulling the wool over people's eyes is all judged to be a smaller expense and a worthwhile cost-saving measure.

The economically viable solution is to have schools do the training, but universities are likely not the best model for getting good tech workers.

Here's ways to demonstrate there really is a talent shortage.

- wages rising, in real terms, faster than inflation. And not some bullshit fed measure of price inflation (ex the things that inflated), but bay-area inflation that counts the 10% annual increases in rent / home prices.

- getting serious about remote employees

- if location is really so critical, paying enough that talent from the midwest / west moves to the bay / nyc. And not fresh grads, but engineers 10 years into their careers. I currently see experienced engineers leaving sfbay.

- companies, particularly big ones like oracle, google, linkedin, yahoo, fb, salesforce, and even vc coalitions getting serious about addressing local cost drivers, ie housing and transport.

I see zero of those.