"Santa Clara County, in the heart of Silicon Valley, has the highest average wage in the country, ... It would be a mistake to think of these plaintiffs as an oppressed set of victims."
I think this is a pretty narrow minded view. If the economy needs a particular skill set to grow then the wages for that skill set need to rise with demand so that market actors (Students) can choose the correct profession and supply the economy with the skill set it needs so it can properly grow and create the products everyone wants.
If the largest employers in the tech industry manipulated the market to keep salaries artificially low, it hurts not only the employees directly involved but also other people employed in the same industry who use average salaries to make employment decisions, students who are trying to decide what career to pursue in school and the economy as a whole which is unable to get the required labor it needs.
The passage you quoted is pretty much the same argument that gets thrown around whenever professional athletes go on strike. Yes, they are already very highly paid, but in the end they have essentially "earned" it by any reasonable definition of the word.
As with the professional athlete situation, sometimes the only way to stop salaries from being artificially suppressed is to band together to stop it. This is what the recent class-action lawsuit against Apple, Google, and other big companies is about. If things get really bad, programmers may have to form a union or a guild to continue getting paid anything close to what they are worth. Forming such an organization will no doubt be very difficult due to the fact that many programmers exhibit a strong (and in many cases, misguided) belief in their own rugged individualism and in Silicon Valley's meritocracy. This belief wrongly leads some programmers to conclude that they don't need to protect themselves, thus leaving them open to collusion from their employers.
For a cautionary tale about what happens when people miss out on the chance to organize when they really should, look no further than the Hollywood visual effects industry. They are the only major aspect of feature film production without organized labor, and consequently their work is routinely underpriced to the point of VFX studios going out of business as a matter of course during a film's production. The same thing could easily happen to typical Silicon Valley programming work. (In fact, it's already quite close to that situation when it comes to programming in the games industry.)
"Santa Clara County, in the heart of Silicon Valley, has the highest average wage in the country, ... It would be a mistake to think of these plaintiffs as an oppressed set of victims."
In addition, I very much doubt Silicon Valley has the cost-of-living-adjusted highest average wage.
Your point stands, but your quoted passage isn't saying that these people shouldn't get the pay they deserve. It's simply saying that the optics aren't great, so sympathy will be hard to find, whatever reality and justice and so on may actually be.
In addition, if engineers are actually earning high salaries through high productivity, an undersupply of engineers caused by wage suppression also suppresses technological progress and overall economic productivity, as well as suppressing aggregate demand by directing revenue away from labor towards capital gains.
Everyone is taking an economic hit so that a few executives, VCs, and landlords can exploit (what the free market says is) one of the most highly productive fields around today.
doesn't it hurt all the ancillary people and industries and businesses that those people would have patronized with those higher salaries as well? isn't that the heart of conservative trickledown econ? or is it fine if your employer breaks laws to keep the money from ever entering your pocket, but it's evil if the government taxes it?
All completely valid, to add to this, paying the correct supply/demand wage would result in ridiculously high salaries, this would then attract more graduates to study engineering, which in turn results in more engineers, which results in lower salaries eventually.
Ultimately it would be a short term (<10 years?) profit for the people in short supply until the graduate engineers caught up to the demand.
I wonder though if this would cause a huge brain drain on other parts of America.
If this did cause a brain drain then this would likely force other industries to raise salaries in order to compete; and so continues the circle of life.
> Apple has held the mantle for the highest profit per employee for several years - coming in 2013 @ $500k/per.
That number doesn't mean anything though. Employees' salaries aren't based on profit unless they are paid entirely in company equity. You can't have it both ways where you get income when the company isn't making money and you get the extra profit when it is.
It looks like they're playing the iterated prisoner's dilemma. They have to compete in the same employee market over the long term. You snipe my engineer, I snipe your engineer, same net engineer count, but loss of experience. We both refrain, same net engineer count, no loss of experience. I wouldn't be shocked if this colluding policy hasn't indeed benefited the participating companies. And I could even see it primarily not being to keep salaries down, but to keep productivity up.
But it sucks for the tech workers. Not going to call me at my desk and try to get me to switch companies? Fine. But if I went to work for Google, it would suck if that put me on some kind of blacklist at all the other companies. It seems like they've crossed an ethical line here.
Perhaps engineers' actual value is far in excess of their salaries? It seems like if it wasn't, there'd be no reason to collude. Does anyone collude to prevent bakers from switching bakeries?
Of course the value exceeds the salaries. If you look at a company like Apple right now, they basically have unlimited money to pay salaries based off of proceeds from products that are built by their engineering team. Any budget that a department has at Apple is made up by some executive based on some crazy formula of expected returns. It has nothing to do with what they can afford. That means they could literally double every engineer's salary tomorrow and it wouldn't really change much for their bottom line.
In an environment like that where money is not scarce but engineering skills are, how can the salaries not climb and how can small companies even DREAM of competing? Or course the big players don't want to get into a bidding war because they know both sides can afford to pay a lot more.
One of my recent jobs was VP of Tech for a small startup. They offered me what they could afford plus equity. The product they were working on was not going to be Facebook size. I think realistically they could have had a 100 million dollar buyout in 5ish years if everything went well. OR they could have gone broke. They gave me 1% of the company in my package which is huge, but that means I'm gambling on the success of this startup for a hopeful payout of 1 million dollars in 5 or so years. At the same time this was happening a few of my friends took jobs at Apple and guess what? They were offered packages that basically meant they would make as much as I did in 5 years if I were to get the million. So, where was my upside? I'm taking on all this risk just to break even with what I could make working at Apple best case.
The job market is crazy right now and it stands to get a lot crazier.
All companies expect to get more value from the employee than what they are paying the employee. Knowledge workers tend to have high -- sometimes very high -- switching costs. I have no bakery experience, but I bet I can hire a replacement baker with less disruption than a replacement tech worker.
If you're going to ask a rhetorical question with that tone, at least provide some information. I don't know, is the "local artisan bakery" market hot enough to actually collude to prevent bakers from switching? I know nothing about bakeries, but I thought smaller ones usually were run by the owners.
From what I do know about food creation, there is a huge surplus of candidates and people with jobs are happy to not be washing dishes. (My sister was considering a $60K degree in baking and that was the summary that graduates gave her.)
So the GP comment seems to be making a valid point. If you have some insight into the "local artisan bakery" world, share it with us instead of providing an slightly insulting, information free, apparently offended comment.
Artisan bakery with 30,000 employees is a complete strawman. If you knew anything about the industry of baking, this would be obvious. Or are you a believer in the industrial production of "artisan" goods?
Who the hell says "nah, $100,000 to $150,000 isn't nearly enough money, but I'd get into software development for $200,000"? Once you reach 200k you might run into a backwards-bending supply curve: you pay engineers so much they just retire early and you have fewer engineers in the long run. So while I would never complain about a pay raise, I also don't think it has much to do with the shortage of engineers.
And don't even talk to me about "$100,000 isn't that much in the Bay Area". Even in the Bay Area software engineers easily make double the median household income.
>And don't even talk to me about "$100,000 isn't that much in the Bay Area". Even in the Bay Area software engineers easily make double the median household income.
I've never earned $100k in the Bay Area, but I can tell you that I had to pay $1100 to rent a single room in a shared house for a month, and that was getting a good deal compared to what I saw on Craigslist and Padmapper.
Yes, that level of real-estate cost does discourage my taking a job in the Bay Area.
At $100k you can spend 30% of your monthly gross income to pay a rent of $2500/month, which will just about get you a one or two bedroom apartment depending on how fashionable a neighborhood you want to live in or what distance to work you're willing to commute. That is lunacy. Consider that most people don't even make that much, not even in the Bay Area, and that the people who are capable of making $100k could get a much nicer life for it elsewhere.
For instance, if I could live in a decently cheap area while earning $100k/year, I would be able to save up enough to retire early after a while.
This is quite true, which is why we now have to optimize the rather obnoxious measure of ratio between average salary and average house cost. That is, the tradeoff isn't perfectly linear, but going towards either the cheapest land or the highest salaries doesn't reach the optimal point on the map. It ends up being counterintuitive, data-intensive, and bizarre to figure out what really works.
It's not that wages would necessarily go up without collusion, it's that the companies would become significantly less productive.
If you can keep your top people from being poached by your peers, you reduce the number of opportunities for them to leave (even if they would leave for much the same salary) and reduce your team churn, increasing productivity.
Increased productivity => MOAR PROFITZ, or so I've been told ...
marginal productivity would set the market wage. Reverse negative productivity is absolute value positive increase in productivity. So, yes...wage would go up absent the collusion...because people will pay out the nose to avoid the loss in productivity. This is why all of those CEOs get paid stupid money...because they can destroy value...not just because the "add it".
Oh would you look at that. Might just be the reason why minimum wage laws and unions have been adopted by every single developed country on the planet. Collusion is always cheaper than innovation.
Because it indirectly affected the salaries of everyone who works in tech in Silicon Valley, San Francisco, and possibly a larger portion of the U.S. tech industry.
It's standard practice in HR to calibrate salaries based on what other companies are doing. Some large companies end up being benchmarks for entire categories or regions.
If top engineer salaries at one company are suppressed, then so are junior engineer salaries. If that company's salaries are artificially low, then any company that uses that as a benchmark will duplicate those low salaries.
I don't believe you. Top engineers are in a completely different bargaining category than regular, and especially junior engineers.
A junior engineer adopting "Steve Jobs is keeping me down" as his personal narrative probably has problems other than the games Silicon Valley billionaires play with each other.
Junior engineers are more likely to be affected precisely because of this reason; they have far less bargaining power than a top engineer and are subject to the standard “This is the salary band based on our research on our competitors' salaries”
I think there are current court battles playing out over the employers who didn't settle. That being said, everyone is acting like this didn't happen and ostensibly stop five years ago.
I think this is a pretty narrow minded view. If the economy needs a particular skill set to grow then the wages for that skill set need to rise with demand so that market actors (Students) can choose the correct profession and supply the economy with the skill set it needs so it can properly grow and create the products everyone wants.
If the largest employers in the tech industry manipulated the market to keep salaries artificially low, it hurts not only the employees directly involved but also other people employed in the same industry who use average salaries to make employment decisions, students who are trying to decide what career to pursue in school and the economy as a whole which is unable to get the required labor it needs.