Why salaries don’t rise | Hacker News Reader

Why salaries don’t rise

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Software development is supposedly a high-demand skill. And, I hear that companies can't seem to hire anyone qualified. I still get dozens of recruiters contacting me, each week. Yet, with all of that, my salary has remained stagnant for the past few years.

My guess is that people have no idea what they're worth, so they don't ask for anything more. I see way too many developers who are getting paid pennies to the dollar. I see upper-end developers working for 70-80k.

Look, people. If you have skills, you should be getting paid 150k+ a year. Please, stop taking menial salaries. You're hurting all of us.

Or perhaps, those $150K jobs are few and far between, and in reality there is no labor shortage. If supply gets low, price (wages) will go up. Price is not going up. Therefore supply is not getting low.

So all those recruiters he mentioned are just prank calling or they all have the same single job and tons of applicants? I don't get it.

Or, all those recruiters are spamming him with jobs that pay below market, because since (as I postulate) there is no actual shortage of labor, there are likely many people out there willing to work for at-or-below-market wages.

I thought this too. Then I entered a job and interviewed 100~ candidates. There is absolutely such a shortage, and this isn't even for anything complex, this was just for a frontend position. I genuinely had to ask a few candidates if they've ever programmed in JS or HTML before this interview, can't even imagine the type of bullshit at higher levels. You can staff your entire company in under a day, sure, but they're going to be utterly useless. Most are, mainly because they don't delve into it beyond school work / work so they never blossom into someone who is very good.

Almost all (inhouse/exclusive excluded) recruiters that claim to be "working on filling a position" don't have a specific position at all. They are simply finding candidates.

Once they have a candidate they will ring around their client base and see if they can find a place for you to go.

They will chase any potential candidate they can see getting a 20-40k payout (20%~ first year salaray)

This gives senior devs with solid linked in profiles quite a warped view about the state of things.

When companies go out actively looking they don't get exposed to these types of candidates because most of these possible candidates are not actively looking. Hence the "shortage of talent".

In other words, there is a talent shortage, but most talented people (i.e. anyone reading this) won't see it because they're all too busy being traded around the block.

This is why Hired.com is interesting. I tried it after a couple rounds of interviewing where it either seemed like salary was a sticking point or the interviewees were unprepared. With Hired.com, I was able to explain my value in a context that those who I would like to work for would understand. I received a number of solid offers, interviewed with a handful and accepted one. Every person that contacted me was direct from the company that I would work for and these were real positions.

Agreed, solid product.

Its a good idea but its a huge time waster if they don't ban the multiple companies that ran bait-and-switch games on me. Also their fee is very high, which employers claim not to care about but definitely do.

Is your experience based on being a potential employee or a potential employer? I spoke with them about fees and learned that their fees are lower than the average outside recruiter. Nobody likes to pay to hire but everyone does -- you either pay an outside recruiter or an inside (employee) recruiter. Now you have the option of paying Hired.com instead and the terms aren't bad -- you can spread the repayment over time.

Recruiters call anyone who's made an effort to find a software job in the last ten years, seriously. I get calls and email from ten year old resumes. The less they know about someone, the more they promise.

The recruiter world is really weird, a lot of them are pretty marginal and just looking to pad interviews (or something, it's hard to tell). Calls are absolutely not a gauge of the job market. Sometimes it is literally true that every recruiter is calling about the same job.

I think in our industry it is a combination of the two. Our colleagues are quite happy to take pats on the back and ego stroking in lieu of compensation.

Why don't I strap on my job helmet, and squeeze down into a job cannon, and fire off into job land where $150k salaries are just ripe for the picking.

I'm trying to find a kick ass salary, I'm great at what I do, but the only place I can find such high salaries are contracts in Switzerland. $180k - $225k.

What kind of frontend/uiux jobs are out there for $150k~?

High end at Google for UI designer is ~160k according to Glassdoor. That's in line with what I've heard from friends as well. UI design does have lower salaries than other types of software development, in some cases much lower, so I doubt you're going to be getting 150k+ unless you're pretty senior.

The thing is I'm not just frontend. I build product from A-Z. I can ideate it, build a strategy, a business plan, mock it, design it, code it, deploy it, market it. What role should I be looking for? I'm great at stepping back and looking at it from the bigger picture instead of hammering out details. Should I be looking for project management roles? Product designer? Art director? I have no idea.

Front end devs are a dime a dozen. I'm not saying that they're all very good at what they do, far from it, but you also have to consider that a company's bottom line is not necessarily negatively impacted by hiring an average performer in that area. It helps to have skills which are more rare and, as such, demand more compensation.

Yeah, is not easy.

Also, elsewhere is far different. In my country (Colombia) US 15.000/year is the media. If I could get US 80.000/year? I will very happy...

> Please, stop taking menial salaries.

You live in such a huge bubble if you think that's a reasonable thing to say.

Yes, us techies enjoy very nice perks and big salaries, due to us working in a hot sector of the economy and whatnot. But the vast masses out there are not so lucky.

And it makes you wonder how much higher those salaries could be if we could somehow organize in some collective kinda way, and demand a bigger piece of the pie for our side of the management/worker equation...

TBH, I'm not so much worried about those in our line of work. We're doing comparatively fine. But there are a lot of folks out there who are hurting.

If I wasn't a nerdy kid who toyed with computers in school, I'd be in a very different place right now. Once that's much less nice.

(But yes, you're right in principle.)

> TBH, I'm not so much worried about those in our line of work. We're doing comparatively fine.

That's not really what it's about though. The upper middle class is what drives the economy. The super rich are not the job creators, the almost rich are.

You give an extra $25K/year to a multi-millionaire and it changes nothing for them, but to someone making $150K/year they're not making so much that it doesn't affect their spending. And the almost-rich buy services. They pay people to do the jobs you can't outsource and you don't need a degree to do.

So if you want to help the poor, go ask your boss for a raise and then spend the money.

Jobs are not an externality. If you want to help the poor, give money to charity.

I would rather my salary be proportional to my skill instead of my tenure.

Of course, any workplace union is free to negotiate the terms for how its workers are compensated on its own.

Connecting salary to length of employment is just one way.

A hypothetical new software-themed union could define another scheme for a pay scale.

(And as a side note, for my part, I would rather my salary be defined as simply as "as much as I can get" rather than my skill or my tenure.)

And those masses have failed to vote in such a way as to address the long-term issues facing them.

At this point, we pretty much have to do whatever we can to get out ahead--so, let's all try to get higher salaries...least of all because whatever work we do is pretty much directly what enables the shafting and monetization of those masses, and once we too hit the bread lines they aren't going to be trying to help us one bit.

EDIT:

I'm not saying let's go smoke cigars and blare "Kill the Poor" out of our Teslas--I'm saying that, at this point, we need to optimize for our sector of the working class. Denying ourselves the chance at higher wages because other people are getting screwed only means we're going to get caught up in the machine too.

Location seems to be a huge factor in the salary range for Software Engineers. $150,000 is a bit on the high side, but $120,000 for a JavaScript Engineer is pretty common in New York, San Francisco, and even Seattle. Smaller towns tend to offer salaries that are a lot lower.

I think it is mostly a matter of scale. Companies with big technical problems have harder problems to solve, and thus are willing to pay a premium for the best talent. They're also more motivated to be located in tech hubs, where it's easier to find talent.

On the other hand, a company in Lincoln Nebraska is obviously not planning to grow that much, and will have much simpler needs. Because of this, great skills and mediocre skills command the same economic value, and there is a limit to how much engineers can make.

Right out of university: you generally don't command a $100k+ salary. By the time you hit 30 though you should definitely be there unless you are working somewhere with really cheap living. $200k+ is possible even in your mid to late twenties and even outside of Cali and New York.

If you're living in the Bay Area and are competent enough to be hired by a big tech company you can absolutely command a 100k+ salary pretty much regardless of seniority. There are Google interns getting paid almost 90k (~7500 monthly.)

Well, the parent said "generally", and if you're living in the bay area, that 100k is what you need to get a decent place to live.

> If you're living in the Bay Area and are competent enough...

Most people are not competent enough at 24 to be hired by a big tech company. Furthermore, big tech companies pay a "we're no longer cool" tax of about $25k higher than going market rates. The vast majority of graduates are not earning $100k.

Look, people. If you have skills, you should be getting paid 150k+ a year. Please, stop taking menial salaries. You're hurting all of us

Not everyone is the same. In my experience, employers are quite discerning when it comes to individual's talents, and pay accordingly. I think your statement is a kind of false egalitarianism. You pretend that skill level is fairly flat, and that lots of people should be earning a lot more. And yet the market doesn't reflect that, so you make up a story where the market doesn't really function, and people are willfully taking below market salaries.

70-80k is a menial salary? What fantasy are you living in?

> If you have skills, you should be getting paid 150k+ a year.

and you are an oil-seikh with solid gold bathtube... Come on, most of the developers do not live in Bay Area or in the US. The easy access to millions of $$$ for projects that has no chance to break even in the foreseeable future end up in a distorted expectation and self-esteem.

Salary is basically your share the leadership granted you based on the generated value. How much value do you create in a company that has never made any profit?

Wages are not stagnant, they have begun to rise.

And this is simultaneously at a time when Americans just received one of the greatest purchasing power increases in modern history, as the USD has skyrocketed in the last nine months (so far that the USD and Euro are near parity).

November

"Wages and salaries climbed last quarter by the most since 2008 as a dwindling number of unemployed per job opening approached a tipping point."

http://www.bloomberg.com/news/articles/2014-11-19/wages-pois...

December

"An important measure of household income rose in December by the largest amount in nearly 8 years, signaling a long-overdue rebound in family earning power."

http://finance.yahoo.com/news/families-are-finally-earning-m...

January

"Average hourly wages, meanwhile, jumped 12 cents to $24.75, the biggest gain since September 2008"

http://www.kansascity.com/news/business/article9388535.html

Wages aren't rising as quickly as expected, because the labor force is not tight enough yet. The U3 is only partially accurate.

The labor force participation rate is sitting near a 40 year low and the U6 unemployment rate is still significantly elevated.

The U6 was about 9% in 2004 (8% by 2006). It's 11.4% as of February.

This, right here. This is what matters. It's not just that U3 and U6 mean something entirely different but that even the "employed" are people working 20hr jobs, i.e. what anyone else would consider part-time work.

Yeah... no. The reason salaries aren't going up is in the piece but casually dismissed as if it doesn't matter. Instead of "following the money" to people who own companies, why don't we follow the smell of bullshit to the BLS. Unemployment numbers are laughably phony. Of course workers don't have bargaining power - there are millions of people who've been out of work for half a decade desperate for a job and yet not counted as "unemployed".

Also, add in health care cost increases that employers have to pay but that don't show up in salary surveys.

That's part of it, sure. The other part of it in America is the successful suppression of any sort of labor movement and the success of efforts by the very rich to drive a wedge between the merely affluent and the middle and lower classes.

America has a real strong strain of the "I'm not poor, I'm merely a temporarily embarrassed millionaire" sentiment.

Organized labor getting everything they wanted is what led to basically all US auto companies going bankrupt.

There are lots of situations where letting either side have free reign is bad, and the best is for both sides to be in healthy competition.

American unions were always pussycats compared to German and Japanese unions, which didn't suffer near the same fate.

You ought to read this:

http://mediamatters.org/research/2014/03/05/myths-and-facts-...

They quote EPI and Brookings. EPI is 29% funded by unions, so not exactly neutral. The Brookings report concludes that price was one of the factors causing an erosion of market share, and presumably employee wages are a factor in that.

Mediamatters? Seriously? Well, okay. Let me find an equally credible source:

http://www.aei.org/publication/maybe-patriarchal-labor-union...

If you can find factual errors in the source I linked, or errors in interpretation of those facts, I would be keen to hear them.

Oh, I'll accept your link uncritically if you do the same for mine.

Of course I didn't tell you to accept it uncritically.

Thanks for illustrating my point.

Old article [2003] but I bet still relevant today: 39% of Americans believed they are (19%), or will one day be (20%), among the top one percent. Until this "Don't squeeze the rich because, hey, I'll be rich one day" attitude changes, labor and equality movements will always be uphill battles.

http://www.nytimes.com/2003/01/12/opinion/the-triumph-of-hop...

If you relax the constraint a bit and replace top 1% with top 5%, then almost 40% of Americans will make it at some point. And 12% of them will hit the top 1%.

Source: http://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-t...

Cool follow up link, however it distinguishes between the difficulty of reaching the 1%/5%/etc. for a single year vs. sustaining this state. I'd argue the concept of "being one of the 1%" implies being able to sustain this level for longer than a year.

Unemployment numbers are laughably phony

That's simply untrue.

In the spirit of neither party citing anything, it is true. I don't understand how people think otherwise. If I had to guess, part of it is the majority of readers here live in a bubble and don't see the forest for the trees.

Please read the rest of the discussion that happened parallel to this.

At the time I posted, there was no such thing. I'm going to assume you're smart enough to be cognizant of that, and as such, your comment seems at best troll-ish.

No.. it was meant to call your attention to the other discussion as opposed to rehashing the whole thing here. I know I don't always go back and check these threads if I don't get a reply.

Did you know that if you can't find a job for a year the government can count you as part of the "discouraged" labor force and not count you as unemployed any more?

See https://en.wikipedia.org/wiki/Discouraged_worker#United_Stat...

False -- the BLS reports 6 different metrics of Unemployment with every jobs report, more than half of which include "discouraged workers"

Here's a graph of a few of them over time: http://www.macrotrends.net/chart/1377/u6-unemployment-rate

Even your link lists the 6% as "official". 6% against 12% is pretty huge.

It's the old "large print for the rubes, small print so we say we're aren't lying" trick.

alright, let's look at the U-6 over time then:

http://www.economicpopulist.org/content/u3-and-u6-unemployme...

http://www.scribd.com/doc/82908801/Unemployment-and-Underemp...

http://portalseven.com/employment/unemployment_rate_u6.jsp?f...

As is now hopefully obvious: 11% is a pretty normal number for U-6 (especially given the current U-3), and the only reason you think that's high is because you're used to hearing U-3. Which, of course, is why economists chose to focus on one number over time in the first place. Keep your conspiracy theories out of this, please.

How do you explain the discrepancy between U-6 and the labor force participation rate?

Discouraged workers are those not currently looking. Look at the definition of U4 in the "United States" section.

The fact that the number that are "not looking" perfectly tracks the number that are and can't find jobs suggests that either there are many individuals who have given up after not finding work or the method for measuring "not looking" is flawed.

If it were simply people who were not looking by choice you wouldn't expect it to track the official number so closely.

Regardless of what math you happen to use to count unemployment, I think it's pretty clear we're witnessing a massive (unprecedented?), deliberate transfer of wealth from the many (labor) to the few (shareholders).

EDIT: "Few" refers to the fact that less than half of Americans own stock of any kind (including through retirement accounts) [1]. And more US families own cats (30%) than individual stocks (13.8%) [2].

1: http://www.cnbc.com/id/101980294 2: http://money.cnn.com/2014/09/09/investing/stock-market-inves...

No, the real reason is that money possesses a "gravity" of its own. It tends to start forming clumps; once that gets started, the clumps tend to grow, absorbing the smaller clumps zooming by. Just like gravity.

Any theory of society and economics that doesn't take this fundamental tendency into account is hopelessly unrealistic.

You must have mechanisms, at the level of the whole society and economy, actively fighting this "clumping" force. Otherwise you end up with a handful of giant black holes and a whole lot of empty space in between.

Hmm,

I agree but your point doesn't really contradict the parent.

The unemployed, in fact, would count as the empty space between the black holes you describe.

In what way are unemployment numbers "laughably phony"? You know about [all the different reported metrics](http://www.bls.gov/news.release/empsit.t15.htm), right?

So let's look at that most inclusive number, the U-6 (which, of course, would be a crazy number to actually measure unemployment by, which is why everyone talks about U3): http://portalseven.com/employment/unemployment_rate_u6.jsp?f... 11%, vs the late 90's "boom" of 8.5%. Early 90's, of course, were also in the low teens.

All of this, of course, is ignoring the fact that _wages have been stagnant since the late 70's_ -- even through times of crazy low unemployment (U-6 below 7%).

I prefer looking at the "employment level" (number of persons employed) and the number not in the labor force. I couldn't find a way to link directly to these statistics but they're available at: http://data.bls.gov/cgi-bin/surveymost?ln

The estimated number of persons employed today is less than 2% higher than in 2008. The estimated number not in the labor force is 15% higher.

About 2 million more people are working now than in 2008, while 13 million more are not working or looking for work.

(Disclaimer: These are statistically estimated and seasonally adjusted numbers from the same month.)

My own theory:

For most employers, there's something almost inconceivable about rising salaries. It's been routine for so long to have layoffs, to tighten belts, to pull together in these tough times and sacrifice, that market power over labor has been internalized into the entire way they do business.

If you read any HR industry literature you'll see a lot about the costs of a bad hire and missing out on candidates because they were out of a company's budget. You will not see concern about the opportunity cost of leaving a position vacant. If a company spends six months hobbling along understaffed, waiting for the sure thing to walk in the door for $5k less, that will seriously harm their business. It isn't considered.

There are a lot of things like that, aspects of employment that the employer won't change because it simply isn't done. This sort of creates an informal price ceiling, which has exactly the effects you'd expect: lower supply (discouraged workers, low labor force participation), "shortages", and more or less frozen wages.

I love that a nation and an industry that is bent over backwards against unions (both in policy and in stereotypes) gets surprised when wages don't go up.

What do you think pushes companies to increase wages, rainbow ponies? Benevolent investors? Gee.

Organized labor.

Tight labor markets also force companies to increase wages.

See 1993 -> 1999, 2003 -> 2007

You can watch while simultaneously organized labor lost nearly all influence over the labor market throughout eg the 1990s, and wages increased as the labor markets got tighter during prolonged economic expansion.

For the most part, companies increase wages when they have no choice. The lack of labor supply combined with even low level growth forces wages higher. This is an almost universally agreed upon fundamental of economic theory and practice for the last 200 years, with vast data available as proof.

If organized labor were required to boost wages, tech companies in Silicon Valley wouldn't pay such high wages compared to your average UAW member.

A company like Microsoft would be able to pay its programmers peanuts, because they are not organized. Instead, Microsoft pays its programmers extraordinarily well.

Unionizing works for micro-optimization but rarely works at macro level, when entire division, company or industry can be outsourced.

To quote from http://www.nytimes.com/2012/01/22/business/apple-america-and...

"Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day."

Cant we just fire all these finance guys out of a cannon into space?

Yeah, right; where are you going to get the money to finance the cannon?

Out of next year's budget, just as we learned by watching the finance guys. Or maybe by selling some debt to another corporation to be used as a valuable tax reduction device.

...and just like that, we have become the finance guys.

But cool finance guys who know how to code and correctly recognize Tom Baker as the best Dr. Who.

When you gaze into the balance sheet, so too does the balance sheet gaze into you.

It's important to see what the average age of these newly employees are, age of those unemployed, and also who is exiting the job market.

If the newly employed are young (and therefore making lower wages), and those unemployed (or leaving the job market, or just not looking) - are older, and therefore commanding higher salaries - that alone could account for why salaries not increasing on average.

It would be useful to get a breakout of salaries biased by tenure, so as to accommodate for the confounding impact of average age of employed/unemployed/left-the-job-market.

Maybe the article refers more towards the assembly line worker, but GM IT receives an annual merit increase (a.k.a. raise) across the board.

YMMV based on performance, but if you worked the year you get something.

But I do agree that 'returning value back to investors' is sucky. I'm of the opinion rewarding your employees, and hence retaining your employees and their knowledge brings value to the company, and in the end, the investor.

Big difference from the IT industry and other Industry is IT is still evolving and defining itself. This not only means that those in the feild have to learn far more than other trades to do the same job as it changes. But also this lack of stabilisation has not allowed standard certification and qualifications that stand the test of time. Compare that with accountants and lawyers. Yes they have new thinsg to learn, but controlled and lesser in volume. They also have qualifications that are as current today as the day they got them.

There is no standard body that has recognition globaly or the history and in a market in which things change so much, it is hard without seperate area's.

Other industries have governing bodies and they in part act like Unions and protect workers and standards for the fiarness for all. Actors guild and book and music rights another area of contrast to software.

Lets face it software has developed a culture of free and open which is great, imagine if music and books were more towards that model.

So I can see why many feel the industry is and the people working in it are overly taken advantage of. Let us not ignore all that learning and long hours has a burn factor and people burn out quicker than some other profesions. Those prefessions factor in pay to compensate or have standard pension deals.

But IT is and will be a while until itself has a good standard and until then it is down to individual companies and it is not since the Googles and the like came about that a level of appreciation for what is involved has come into play.

But IT is if you compare to the book industry, still defining the format and types of size teh book should be and ink colour and paper thickness and other details. There is a lot of abstraction from creative aspects and the implementing of those.

Also the trade has been easy picking for TAX and with that UK introduced a rule IR35 just some may say to hit IT contractors. Yet in contrast the building industry, they can get a CIS that in effect means you pay less National Insurance than normaly would. Like say in other not so old industries like IT.

So IT is still as a trade young and with that has less protection and measure of worth than other trades.

Also let us not forget the move from companies to focus more onto share dividends than not and experdited trading that makes it mroe trigger happy. If they can get away with paying 50k a year and say the job is only worth that and use that to class people as over qualified, when the job is actualy underpaid perhaps. Well easy to cry for more fodder into the labour market and one persons poor wage is another persons gold. Just makes it more a case that not skill level and what they are paid are not the greatest of metrics .

Still, startups allow you to cut out the wage aspects and many other ways get you into tapping directly instead of more often, feeding into the companies pocket from your own quality of life.

Still there are many things in life that have not resolved, I can purchase fair trade chocolate and know the farmer got paid fairly and yet read about local dairy farmers being underpaid for milk at a loss and no fairtrade logo on milk ever.

So many unfair things propagate in life. Way to view it, if dairy farming as a industry gets treated badly and is more established than IT then, we take what we can get.

Least for a while yet and things are more standard. C today is not C when invented and things change more often than fashion wardrobes at times. At the very least enjoy the ride.

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