Which is why it pains me to see that so many engineers get stuck with such ridiculous salaries (relative to the value and wealth they provide and create). Problem is that some salaries are seemingly high compared to what the average worker does in the country but ridiculously to what they would look like if engineers were allowed to capture a greater (that is a >0.01%) percentage of the added value they CREATE.
Most, from the freshly out-of-school to the senior engineer with glowing reviews are getting scammed because they get paid just enough to live a comfortable life but not nearly enough to what they are worth and what they would need to consolidate their place in the upper middle class.
I had one company acquired by a large tech co. Probably going to start another one soon, I won't commit the same mistake twice... engineers need their fair share. They are the one creating things, they are the one on the front line and we should not get satiated by the crumbles we are left with.
What about the road workers who make it possible for you to get to work?
What about the African miners who dig up the rare earths for your components to run your computer?
What about the guys soldering all this crap together?
I bet you'd say the road worker creates hardly any value, but in reality the economy just ceases to function without roads. Or sewage. Or power lines. Or gas stations powered by truck drivers. Or a million other things.
Developers create a portion of a valuable system, they're not water-walking god-kings. I know, I'm one of them--and my code is probably faster and more reliable than a very large proportion of that created in the rest of the industry, but I don't kid myself thinking I'm doing it all by myself or creating something that has a stand-alone value and operates outside of a larger system; we're all cogs and together we make an amazing machine.
I'm glad I can watch Silicon Valley on TV instead of having to live around those characters. Delusions are detrimental.
You're right about the value of teams being greater than an individual contributor, but the ability to work within a team is a valuable skill just like any other.
The best road workers in the world, they do what? The best miner? Now, the best coder? Some coders should be paid like the best road worker. Few road workers should be paid like the best coders, because there's just too many ready replacements who would do the work for less.
Coding is becoming that way, but far from it currently. Our best invention is the one that puts us totally out of work.
Or pay the house painter what you pay a software engineer, and see how many people paint their house themselves, or with less frequency. House painters would be priced out of the market, and more homeowners would fall, and/or have crappier paint jobs.
That is supply and demand in a nutshell, and how markets value a skill or talent you have to offer with obvious exceptions.
The wealth that the GP is talking about is the incremental wealth created by the engineers under consideration. They're taking publicly available things and putting them together in a new way to create something more valuable than the cost of parts and labour.
Aside from that, I think one key point you failed to observe is that the engineers are often the biggest producer of innovation and invention in the production process. Software engineering is not manual labor, instead a heightened level of mental focus and ingenuity is required to perform the job.
I think I might have a prejudice against manual labor.
It's also important to distinguish between day-day coders who write CRUD apps (trainable skill), and developers who develop platforms that others build on.
Another way of looking at this - by providing significant rewards to top-end developers (and top end developers should be starting around $500K, and be making north of $1mm with 5-6 years of experience in their chosen vertical), you encourage outstanding individuals who might chose another field where they might be more richly rewarded (Law, Finance, ...) to put their skills to good use in programming.
And that's the crux of the matter - I don't believe we should provide outsized rewards to developers with exceptional talent because they deserve the extra money - I think everyone who works a 40-hour week deserves a comfortable, stress free life. I believe we should provide outsized rewards to developers with exceptional talent so as to ensure efficient allocation of capital and labor, resulting in economies with increased productivity, and greater rewards for everyone interlinked in that economy.
From that perspective - I guess I agree with you, we are all cogs working together to make this amazing machine -I just want to make sure the right cogs are allocated to the right machine.
(1) Stop shaming each other for being "greedy" when they actually ask for what they merit. I can't tell you how many times on HN and elsewhere I've run into extremely defeatist attitude about this implying that we should be happy just to have jobs in the field. As long as these folks are around shaming fellow engineers for asking for more money they will drag everyone else down and other folks will laugh their way to the bank at engineers' expense. It needs to end.
Edit: See other replies to this post for great examples of this. Just because you get paid more than a lot of other folks, does that mean you're getting paid commensurate to the value you actually create?
(2) To justify these asks programmers must shift from doing things like chasing the latest JavaScript trend to focusing on delivering business value first and foremost. Every programmer hire is a gamble that might pay off big time or might end your business with crushing technical debt and poor decisions. Until programmers as a whole demand that each other focus on delivering business value first and foremost the shiny new tech chasers will, just like the shamers above, drag the salaries available for everyone down due to their own poor decision making.
Getting paid more than other folks mostly means you are better at interviewing and negotiations. (Or, if you are a lifer, that you are good at your company's promotion process. If your company is sane, that might even imply something about how well you work.)
I don't think shaming or not makes a difference. It's just irrelevant. (Or are people really going to ask for less in their next negotiations because someone on the Internet 'shamed' them? Really?)
ShinyNewTech bites people when they aren't intentional about introducing it and haven't done an accurate cost/benefit analysis. If you've done that analysis, and it really is a big difference in cost to market & cost of operation, then you're leaving money on the table by not taking that route. This happens all the time.
The cost of rejecting new stuff because the status quo seems to be working well enough is massive, especially because the status quo at most software shops is room-on-fire-this-is-fine.jpg
Also bearing in mind where you stand on the skills ladder as part of that factoring.
You're off by like dead minimum two orders of magnitude, and probably more than three.
At a guess most engineers are getting paid >10% of their value created, and some jobs (a crappy CEO, perhaps?) are getting paid >100% of that value. In fact, I'm not even sure that >100% of value means anything is wrong if someone is undertaking a high-risk job.
Risk and comfort are tradeoffs. If you want to live without risk, you'll have to be satisfied with whatever salary you can negotiate as a commodity.
As many people have said, you don't have to do your own startup to make a lot of money at the big companies. In Seattle, your average 10 year experience google employee is making $200k salary + bonus, and then at least $100k in stock. Amazon, Msft, Facebook pay comparably.
Anyway the point I am trying to make is that as an engineer you either have the choice of working for an employer and living an albeit comfortable life (without any risk) or going it alone or starting your own venture with all its associated risk/reward profile.
You have already indicated that you believe in this adage and took the necessary steps to increasing your worth and would continue to take the same approach in future.
What somebody is worth is what the market is willing to pay for them either in salary or by investing in their venture.
I don't feel like I do. I cannot afford to battle patent trolls when something I produce somehow infringes on their "intellectual properties." There has been some progress, given the Alice vs CLS Bank decision, but there's still lots of patents flying around out there like this one (https://www.google.com/patents/EP2973038A1) where Google attempts to patent "Classifying resources using a deep network." Given that there's a very real threat of bankruptcy for even trying to start my own venture, I plod along at my position which is automating thousands out of their jobs while I make a minuscule fraction of what those people were once paid.
- So you are talking about how much value we create and that we should receive more of it.
- Then someone else mentions a lot of other professions that do that too: create a lot of value.
- Now the discussion does a 180, forgetting completely the first topic: value. Now it's about supply and demand.
Pick your measuring stick people.
You either trust that markets work best and then you are paid exactly what you deserve, because you are free to change jobs and ask for more.
Or you don't and think that a better system should be in place, but then it should apply to everybody, not just software developers, right?
I don't really see why singling out engineers is really terribly helpful in saying how much they're worth. An engineer can create great value, but if no one is selling it, is it worth much? A company without a direction can have great engineers but crater without good leaders. Without accountants, the money would be in shambles. Without IT, nothing would get done in a larger company. Without designers, user experience would likely suck so bad as to get in the way of the product.
It's hard to say that engineers necessarily deserve a larger slice of the pie. As it stands, we/they're paid quite handsomely. But I think to try to make it out to be something almost mythical seems unfair to everyone else.
Look at Apple, for instance. Without Steve Jobs, it almost certainly wouldn't be what it is today. Steve Wozniak is by all accounts an excellent engineer, but without Jobs' vision and drive, Apple wouldn't ever have taken off. Of the two of them, Jobs was the much more "valuable" by that measure.
The reality, though, is that businesses themselves enable substantially all of the value they create through engineering. Google can't drive billions in revenue without engineers, that's true. But the Mets can't play in Shea Stadium without the janitors cleaning up after games, too.
Of all the social goals that we have (curing cancer, hunger, war, etc.), it amazes me that we haven't added 'work' to that list. Maybe like 5% of people that I know enjoy work more than 50% of the time (and it's probably not 'work' at that point).
Work sucks - we should eradicate it and let people spend their short time on Earth doing what they enjoy. Many of our ancestors worked hard so that we could have better. I hope that I can work so that my descendents (and your descendents) won't have to.
I sincerely doubt many software developers here spend any sleepless nights wondering what it would have been like had they been in another field or profession, which are just as much victims of wage theft as supposedly these engineers are.
I wish everyone could make a million dollars a year, but as of yet the only fair way to set value for labor is a free market.
I am actually quite surprised at the devotion of some people here for their masters. It does provide a beautiful illustration of La Boetie's speech on "Voluntary servitude".
I mean, c'mon, this isn't the McCarthy era anymore... people should not get thrown off because you pronounce the word unions. Ordoliberalism like applied in Germany where I worked a couple years provides a quite elegant framework to allow a local form of union so the workers' right can be defended while not impending innovation and regular market dynamics.
If you create $1M of value, that's fine, but the check for that value may not arrive for a year -- or ever. But you still get paid. Engineers always talk about the money they save or value they create, but most of the savings are fixing mistakes and the value usually cannot be attributed to specific people.
If you want to get paid what you're "worth", you need to be at risk. Either work for yourself or work a gig where you get paid directly for outcomes like a salesman.
Now, if an employee (engineer or not) participates with similar exposure they definitely deserve more than a salary.
Maybe you haven't had a solid failure yet. I have. I lost everything once. And by that I mean everything: home, cars, furniture, even the last penny in my bank account. Everything.
My employees got laid off and found new jobs. Their lives continued (something I was happy to see, BTW). For me it was a nightmare that lasted a few years until I was able to get back on my feet (through entrepreneurship, again).
Everything in business in business isn't rosy. Businesses like Facebook that go from dorm to rocketship with hardly any struggle are pink unicorns. Most ventures have to slog it out and struggle, sometimes for years, before they succeed (and most fail). In this context, paying market rates --which means "only as much as you have to"-- is the fiduciary responsibility of the entrepreneur/CEO. Over-paying because of some unconventional criteria of fairness (that happens to be false) is simply irresponsible.
Because of this and other experiences I am very sensitive to this idea that everyone is equal (in terms of salaries, responsibility, exposure, risk, etc.). That's not the case at all.
This, 10x and especially for programmers coming for 2nd/3rd world countries, whom are even more unaware of the value they're creating and settle with way less. Obviously, it's easy to say this and it often doesn't help you get your foot in the door when you ask for 3x the average dev salary around you at an interview. Key is to keep re-negotiating after you've proven your value, then iterate until you get the slice you deserve. For a company it's really painful to lose an employee who is already performing well, they'll likely give up on the margin to keep you on.
If there exist jobs that produce $1MM in value but that have a going rate of 200k, then there should be more of those jobs: either the company doing the work should expand, or it should have competitors. This will lead to increased competition to hire, which means higher wages. The increased number of jobs might generate downward pressure on the value produced by those jobs (since the output is now less scarce), and the increase in salary should increase the number of people who want to work in the field (which would dampen the salary increase), but we should ultimately reach some sort of equilibrium. The fact that tech companies bemoan how hard it is to find employees suggests that we aren't at this equilibrium.
To give an analogy, your explanation is akin to when people observe that the price of a good is based on the competitive market, and that the cost to produce merely provides (in most cases) a floor to that price. However, that's only part of the story: in a well functioning market large spreads between cost to produce and price encourages competitors to enter the space, which leads to lower prices. There may be delays, and there may be exceptions, but generally the function of competition is to reduce these spreads. Likewise, we should expect competition to reduce the spreads between job value and job salary, generally by increasing salaries and lowering values.
Nobody is stopping engineers from saying "I'm going to contribute $1.5m to your bottom line this next year, I want you to pay me $1.4m", but they'll be shown the door because there's a guy that's willing to contribute the same $1.5m in exchange for $100k in compensation.
We keep hearing from large tech companies that there's a crisis -- a massive shortage of qualified software engineers, to such a degree that they won't be able to operate at all if they can't raise the H1-B quotas and import more people to fill all the jobs currently going unfilled.
If that truly is the case, then supply and demand would tell us that currently engineers are underpaid; if there are companies so desperate to hire engineers that they're turning to immigration law to try to increase the supply, why aren't they simply offering large enough compensation packages to attract the existing pool?
Pondering the answer to that may enlighten you.
Any employees that really create much more value than their salary can and will just leave and start their own company, where they get to set their own salary. By doing so, they'll also be leaving the pool of employees, and potentially hiring others too (reducing supply, increasing supply, driving salaries up).
Of course, every employee creates more value than their salary, to cover overheads, some profit for shareholders, etc. Employees that claim to be creating far more value than their salary, but not leaving to start a company, are probably deluding themselves, and vastly underestimating the value of the capital employed in their company, goodwill with customers, the sales and management functions, etc.
Labor's price is set in a competitive factor market, just like land or capital. It gets bid up and down by supply and demand. Let's call this "the labor market force".
How much value a person can provide in a given setting depends on a whole range of things including what the employer does (scaled product company vs. body shop), overall management effectiveness, how motivated they are (both themselves and by their employer), their skill level, etc. Let's call this "the company force"
The reason people aren't paid as much as California devs elsewhere has a lot more to do with the "company force" than the "market force". The fact is, most companies who employ developer just don't need great devs. They need people who can develop websites of moderate complexity, keep things going, write line-of-business software, etc., not people who can do original, innovate algorithmic work.
Related, there is no "Developer shortage". There is only a technical talent shortage insofar as dev salaries are getting bid up and the buyers who are getting outbid (mostly smaller startups) are complaining. The good companies are getting exactly who they want.
(As a side-note, that's why I always smile and engage with the staff whenever I can: it's a thankless job, despite being one of the most important.)
If we lived in a just meritocracy, people who created millions of dollars in value with their code would be compensated with millions of dollars, but this is rarely, if ever, the case. It's this fact which makes libertarian arguments about the unfairness of tax and social welfare programs offensive.
The work is hard, and demands a lot of training/skill, but there are a lot of people who will do almost anything to stay in the field. One of the things they can do is accept a lower-than-tech-market salary.
That is not my experience at all. I see big skill differences in my coworkers.
But as an employer, it's real hard to know which candidate is 200% of the average and who is 50% (or -10%), so you end up having to offer everyone an average salary with small variations.
The main difference is that executives have leverage (and they have friends in high places) while average employees have almost no leverage.
It's the government's job to make sure that employees have some sort of leverage over their employers.
In many fields what prevents this is startup capital. It's expensive to get a supply chain for physical goods up and running. But if you have the business acumen and connections there is not nearly as much of a barrier to entry in the software world.
If we lived in a just meritocracy, people who created millions of dollars in value with their code would be compensated with millions of dollars, but this is rarely, if ever, the case.
And what you neglected to mention is that there is currently a massive developer shortage of supply, and lots of developers are being suckered into low salaries when they could be making much more somewhere else.
This under-values domain knowledge and especially company-specific knowledge. Yes, someone can ramp up on a code base over time, but I don't know if you've seen how ugly the limiting case is where they utterly replace all the devs with a new set who know nothing about the codebase and drop all the organizational knowledge. The rate at which things get done suddenly becomes a fraction of what it was before and the defects multiply quickly.
As an engineer, I'd certainly like to make more, and I plan to negotiate more aggressively at my next position; but I'm honestly more concerned about how little most of the rest of the nation gets paid compared to the value they create. I don't like seeing my friends who work harder than I do--and contribute at least as much to society--getting paid 1/3 of what I make, just because they don't happen to have natural aptitudes for a currently fashionable skillset.
If I could fix just one of those two problems, it would be the second one. I make enough to live comfortably. Too many people don't.
The other thing to note is that most athletes in America's sports industry are unionised.
I happily produce code that does a job. But doubling my skills with nested loops, debuggers etc will not produce double profits. This is because in most cases competent coding produces good enough code.
Increasing my skills with architectural design, improving my processes mgmt (releases, testing) will likely increase profits because those are often left unfixed in many companies.
Then improving my ability to understand what the ultimate paying user needs will have much much more impact because I will build the right thing
And finally improving my ability to co-ordinate with others (a market?) will magnify my efforts again.
I suspect that the creation of a business that allows and encourages all the above (call it marketing ?) is the key to extracting wealth.
Not sure where that goes but it meant something as I types
Of course not! Value-creation may drive demand but it does not (itself) set prices - supply is in there too. There are enough programmers willing to work at current salaries, or they would rise.
If you want a cushy secure job writing hr applications for a Fortune 100 company, or some code for facebook when it reached 1B users, then its crazy to expect a large share of 'the profits' as the company's profits are spoken for by the owners who bought its shares and they are happy to get rid of expensive engineers as the engineering prowess you are bringing is not required as much now.
If you're creating $1M in value, but there are only 100 jobs and 1000 people applying for them, you'll never capture the $1M.
(Value of course is subjective, but here it refers to things that can be measured in dollar amounts).
Let me clarify.
The world does not reward those who work the hardest. More pain /= more value. The people working might feel like they are bringing more value; a construction worker probably does more "work" than a white-collar executive. The worker may even be more stressed, physically and mentally.
But does that mean he is bringing more value? Unlikely. This is because how effective you are has no correlation with how hard you work.
I could dig holes all day, and I would be "working hard," but at the end of the day, I haven't done shit.
Saying "I am getting underpaid" is admitting "I made a wrong strategic choice." Don't complain about the state of the world, but instead compose the right strategy moving forward according to the state of the world.
The Dough of Idealism must go through the Sieve of Reality to create a product that realizes the idealism for as many individuals as possible. Have just the former, you are a lone idealist. Have just the latter, you are a lame realist. Idealism and Reality are both necessary to bring the most value to the world.
Western economies largely operate by attempting to establish monopolies and by not passing on value created by employees. This is essentially the foundation of profits, otherwise they would be cooperatives.
If you want to get into the true middle class (who should not have to work as they do not need the money, not the faux middle class we have now who have a reasonable car and a holiday for 2 weeks), you need to stop creating wealth and capture wealth creation by:
1. land monopoly to capture wages (like money moustache man who as 3 properties and write blogs about grain being cheap)
2. run a business that does not pass on as much as possible of the value your employees create, ideally by choosing an industry without organised labour
This is not to dismiss all companies as terrible capitalists, of course!
It is my greatest goal and wish in life to have as much money as you and to be able to give myself more money whenever I want it.
Do you have any advice for someone who hopes to have the same kind of success as you?
@markonthewall, in the companies you start do _you_ pay your engineers based on their value or based on market rates?
Basically you're saying that a developer's worth is tied to the worth of the company; that the same developer who works at a multimillion dollar company is worth millions, but if they then move to a startup that is struggling and then fails, they are only worth tens of thousands (or even zero).
If developers were paid relative to what the company was earning, there wouldn't even be a 'startup scene'.
It can be pretty demoralizing when you look at it from that perspective. We really need to have a conversation that even though passion is important and great for quality of life, it can hide real systemic problems and inequities
Let's say there are 10 programmers on the team and the company makes $10m in sales that year. How much money should each programmer receive? You might naively think $1m a piece is fair. But there are other people in the company and other costs involved. It is quite common to run companies with a 5% profit. R&D expenditures are usually around 10% of total expenditures. So $10m sales is $500k profit and $9.5 million expenses. $950k of that is spent on R&D, or about $95k per developer. The rest goes to paying other employees, real estate, cost of sales, etc, etc. If you find a way to reduce these other costs in your company, you will almost certainly be able to negotiate a wonderful bonus, but otherwise you really can't complain. It's just hubris to think that your contribution should account for more than everybody else's. Go ahead and fire those sales people. What could possibly go wrong.
But you may not be thinking about sales. Because, hey, we're in "dotcom version 2" these days. Who cares about sales? It's company valuation that really defines "the added value they CREATE", right? Well, please forgive the sarcasm from an old programmer. Moving money from your investor's pockets to your own is an age old and proven business plan. If you feel you deserve a slice of the action, then by all means go for it. My moral outrage does not quite extend to your plight, unfortunately.
You might be thinking, "I'm not talking about those scammy startups that are just pumping their valuation to score a big exit. I'm talking about the true unicorns that are wildly successful. Where's our cut?" Well, if you look at a wide cross section of startups and look at return on investment over a 10-20 year period, it is true that there is some growth. Let me be really clear, though -- you don't deserve that money.
Let's face it. Are you going to take responsibility for the failed projects? Are you going to refund the investors when it turns out that your awesome architecture suddenly implodes and causes the company to miss its window of opportunity? Are you going to pay for those days when you were arguing with your coworker about whether to indent 2 space or 4 spaces instead of getting the damn product out the door? Am I going to pay my employer for wasting their time writing this ridiculous reply instead of fixing their sales system? OF COURSE NOT!
The attitude that "All the success is due to me and all the failure is due to someone else" really bothers me. If you really think you're worth millions, then go ahead and stick that giant price tag on your head. I wouldn't hold my breath about landing that "no downsides, all upsides and BTW make me rich" job, though.
I know so many women who are constantly bit by this and negotiating in general. Here's an idea: compensation agents who negotiate the compensation package on your behalf. Athletes and actors have them, why not everyone else?
Point being you are right it is asymmetric information warfare and they will use it against you, even if you offer them a poison pill like I did.
You should be paid what the company believes you are worth, not as little as they can trick you into accepting.
I wrote the article in response to the incentives for recruiters being typically seen as driven by the client (hiring firm). The main issue is that recruiters are paid by hiring firms, and agents would be paid by the employee/new hire.
Job seekers seem less likely to pay for a service like this (negotiation). I've provided coaching to many, which usually includes mostly job search and resume advice, and may end with negotiation advice, but I'm typically not approached just for the sake of negotiation help.
Maybe I should advertise that as a separate service.
In my peer group, there are some developers who treat their employment like a business and negotiate aggressively. They read up on tactics and practice them. I'm not sure agents would actually be that helpful to such people.
Another whole group basically acts like they're paid "enough" and don't negotiate at all. They're unlikely to see the utility in professional negotiators since they're not even willing to read up on tactics themselves.
Having a trusted third party between myself and the prospective employer would help shift the power dynamic significantly.
Also having a trained negotiator would take a lot of stress off of me.
Any thoughts on a rough price range you would look for to provide this sort of service?
Preventing employers from asking about previous salary does not prevent them from discriminating against women, which is the intention of the MA law. I can definitely see how this law might hasten a transition away from an era where salary was unfairly pegged to gender - but only to the degree that employers aren't still just blatantly discriminating by gender.
Because most other workers aren't, even with an agent, going to get paid enough more to make it worthwhile to pay a competent agent to negotiate on their behalf.
EDIT: I should point out that that's what they do in regards to full-time W2 work, not contract.
Recruiters are much more likely to cut bait and leave an extra 5% on the table to:
1. Keep a good relationship with the employer
2. Keep their turnover high, making money on negotiating many "OK" salaries instead of maximizing each individual salary (including yours).
I'd definitely be willing to pay for something like this. Make it commission based (pay as a percentage of additional salary negotiated) and the incentives between the negotiator and client will be perfectly aligned.
I'm not sure that this is the case when talking about such low amounts.
Taking hints from a similar "agent with percentage", think real estate agents. Unless an agent is working with pretty high level homes, the 3% they are getting is not significantly effected by a something like 20k up or down on a $300k house. It's an extra $600, but often their time is better spent getting the deal closed as quickly as possible for as many people as possible. If that $20k for the client takes an extra few days the haggle, the agent could have been working with another client on another $300k house deal.
In both cases, the thing that throws the agent and client out of alignment is the fact that the deals come through very infrequently, thus from the agent's perspective, they need to keep clients hustled through the door in order to be able to keep their own cash flow going, and working extra hard for a minimal gain isn't going to generally effect future gains. Most engineers would just use the same agent regardless unless the agent was spectacularly bad.
(and there are way more rules for real estate agents than there would be for a hypothetical engineer's agent)
So many things wrong with this. Agents typically negotiate fixed-term contracts for athletes and entertainers. Agents take 10% of the entire pot, not "additional salary negotiated" whatever that means. You don't know what you would have been able to negotiate so there is no "additional" amount, only what they got you. Are you willing to give 10% of every paycheck to your agent?
Largely because the compensation changes are both rare enough and small enough that hiring someone to negotiate on your behalf isn't really worth the money for either side. Paying enough that the negotiator would be able to pocket a decent amount of money would probably not be viable.
Having to? It's not a requirement. I used to get asked this all the time. They want to know how much I made last gig? I tell them the rate I want, not the rate I got.
That's right, if they ask me a question they have no business asking and can never confirm, I reserve the right to tell them what I want them to believe.
I also think it's sexist to frame this as equal pay for women. That implies that women are predisposed to be bad negotiators.
It's a simple matter of supply and demand: https://medium.freecodecamp.com/why-talent-agents-for-engine...
because you haven't built a startup to do it yet, and Gayle McDowell hasn't figured out how do it yet.
Because in your typical job you're trying to negotiate over a few thousand dollars in your annual salary. If you actually paid an agent enough for it to be worth it to them, you may as well have not negotiated at all because the money they won for you is just going in their pocket.
Athletes and actors are haggling over several millions of dollars. They've got plenty of fuck you money in there to pay an agent.
Then again, in a different form, those compensation agents were simply known as unions.
It was really intrusive. Pay should equate to value, not some silly ladder climb
A while ago, I was in the middle of the job interview process for a company. Having read some rudimentary background on salary negotiation, I was somewhat prepared for how to deflect the "how much are you making?" question.
The next interview was a technical interview, so I wasn't too focused on this aspect of the interview process since I hadn't received a verbal offer. The technical interview went well, but suddenly the interviewer asked "what are you making right now?". Completely clueless, I started talking about the projects I was working on and various technical aspects. The interviewer nodded, and then replied "No, what I meant was what is your current salary?"
I was completely unprepared, fumbled and after some resistance gave up my salary after being told, "this process cannot continue until you tell us your salary". (They also subsequently asked for W2s as proof) I handled this extremely poorly and basically backed myself into that corner. Basically, they negotiated much better than I did, even if it meant resorting to heavy-handed tactics like that. Later on, HR explained this line of questioning to me by saying, "we ask for this information... not to draw a box around you, or anything like that, but so that we can give you an offer that matches everyone's needs".
Long story short, the offer came in at almost exactly $PREVIOUS_SALARY * 1.05. I politely declined.
While this process was painful, I learned a lot from it - always be ready to handle the salary question, even if the interview is supposedly a technical one. If you willingly give up your previous salary, in most cases, you're looking at an offer 5-10% higher at most. (Unless you're an outlier making several standard deviations above the mean) Don't let people box you in.
Yuck. I'm always amazed at how willing they are to waste your time by playing "gotcha" over things they should have worked out before you ever came in. Very unprofessional to spring all that on you.
If they refuse to comment on that I assume it's low and head on elsewhere.
I almost managed to write that with a straight face.
Is this common? I've worked for small companies so haven't run into anything like this elsewhere. Except for one asshole that wanted to do a reference check two weeks after I started work (!!!) (he offered me a job at the end of the interview with a 24 hour time limit and had me start 3 days later; I had already left the previous employer so it suited me well enough at the time), and was unhappy when I told him what he could do with himself.
They were satisfied. (That's just a datapoint, N=1)
I agree with this statement, but that's a tough thing to get large companies to agree with
I think it's in the interest of the industry-at-large to not ask this question, because it incentivizes hopping jobs every 1-2 years.
But, that's all fine and good and everybody might agree with what I said, but individual companies still profit by 'defecting' (asking how much you made before and offering you that * 1.05).
Imagine how painful it is to be an entrepreneur with a very weak signal about how much you can pay people to remain happy to work with you without going broke and still retaining good enough talent.
To dodge this question I say the following: "I'm looking for compensation in the range of xxxx to XXXX. This obviously depends on the benefits packages, for an awesome benefits package you may be closer to xxxx, if your benefits are bad then you'll need to be closer to XXXX."
If they persist I follow up with, "I gave you my range if that isn't enough for you then I'm sorry but I'll have to pass, I don't disclose my current salary to any recruiters."
This has worked really well for me in the past.
This makes absolutely no sense to me. "Oh, we can't use previous compensation to effectively lowball this candidate we like, so we'll ineffectively lowball them instead."
Quick story. Before I took this advice, I made the mistake of telling a recruiter my salary, and then the recruiter said, yeah I'm not going to give you a 20K raise. The guys on that team were great and the compensation was actually viable, but it was not a good fit overall.
I think any negotiation where you want to walk away with the best deal you have to be willing to let a job go. It's when you want something so bad that you start to loose perspective and take a really bad deal. I say this from personal experience. When I have wanted something really bad I negotiate poorly, but when I come at it from a take it or leave it position I am almost always more happy with the result. It's really hard advice to follow when you really need/want a job especially if it's a big name like Uber.
This advice is also VERY dependent on you being able to negotiate. If the market is down and you can't find a job, you may end up in the 5th interview you don't get because you refused to disclose and guess what? This tactic isn't working. Adapt to the market, but use any leverage you have to secure the best position you can for yourself at a place you will be happy.
I've gone through 4 employers in 4.5 years and I have loved 2 of the last 4. Those were the ones I took because I had time to decide and really vetted them out. I had the power in the negotiations and I stacked the deck in my favor. They were also the biggest pay bumps I'd received.
"OK, you can do that. But I have a policy of always turning down offers that are too low for the role and benefits involved. I just want the best for me."
What does "lowest possible offer" even mean? Lowest wage that you can live off? Lowest wage that anybody else in the company makes? Lowest wage that you'll accept?
I am now at a stage in my career/life where if anyone tried to force me to give me a number, I'd say no. If they pushed the issue, yes I'd walk away.
That wasn't always the case, there were times where I needed to be the one to fall into line. In those cases I universally got screwed as the company would always quite obviously base my offer on my current salary, even when they claimed otherwise.
"Am I supposed to tell you my salary before even hearing your initial offer?" "Some employees choose to offer salary information, and we encourage that"
But what do we get instead? Identity politics pandering.
Generally you don't want to work for the companies that demand it either.
Example:
Assuming your current salary is X. "So I currently make (X * 1.20), but in order to make the jump I need at least (X * 1.40)."
That way they get to feel out immediately whether they can afford you, you get the salary that would motivate you, and no one is wasting time in the hiring process.
Keep in mind many employers wont want to pay you more than 8-10% more than what you "currently make" unless they are incredibly motivated to hire you and you alone.
Regardless of whether or not the employer actually does due diligence, why put yourself at risk by lying? The second half of that statement is the only part that matters. If you simply say "I need (X * 1.40) to make the jump", you'll accomplish your goal without putting yourself at risk by being dishonest.
Due diligence or not, dishonesty during a job interview can only come back to hurt you.
Non-competes are extremely anti-innovation, anti-worker, anti-business and really anti-American. Workers that are skilled cannot be owned. Good knowledgable workers should be compensated to keep them around, not fear of legal threat of using skills they developed.
Non-competes need to go away everywhere.
[1] http://fortune.com/2016/06/30/massachusetts-non-compete-pass...
https://www.bostonglobe.com/business/2016/07/31/noncompete-c...
These reform attempts have been going on for years in MA and never make it into law.
This way, if there was an employee for whom it was worth it for you business to bench, you could do it, but it would be expensive enough to only apply to truly key employees.
>"And the law will require equal pay not just for workers whose jobs are alike, but also for those whose work is of “comparable character” or who work in “comparable operations.” Workers with more seniority will still be permitted to earn higher pay, but the law effectively broadens the definition of what is equal work."
I suspect the result will be to flatten wages everywhere except the most easily quantifiable, thus legally defensible, cases. Sales people will still make a commission on what they sell and have a huge gap in their earnings, but it will become much harder to reward rare engineering talents or even people who work on their craft recreationally.
Comparable Worth is another incarnation of the Labor Theory of Value, which has long been discredited.
I assume this law won't apply to questions like "how much are you expecting to make?".
On the ground it only makes things worse for both employees and employers.
Something of this nature would lead to the 'bait and switch' by companies with shady interview practices. Interview a candidate for a position with a $150k posted salary, then make an offer for a different position that is $100k and the company has deemed a better fit for the skill set.
Yes the person still needs to do their research to figure out what the job should actually pay.
Also is it really necessary for a state to dictate such things? Is it too much pressure for someone to respectfully decline to answer such a question and practice some negotiation skills? What exactly is the state's interest in this sort of thing precisely?
That is actually how I've avoided all those annoying salary negotiations. Lie about how much I make, let them offer me slightly above that and gladly accept.
Companies are not allowed to do that now. That's Federal labor law, and it's been prohibited since 1935.[1] This only applies to employees, not contractors.
There was a time when I was just hopping from job to job to increase my salary. If there wasn't this convention of paying someone the same I wouldn't have switched so many jobs. There are plenty of places I wanted to stick around but got a much higher offer somewhere else so I pretty much had to switch.
My salary is more than 400% what it was 10 years ago. I feel that I have finally reached market value and have a salary I am happy with. It would have been nice if it was based on supply / demand and how well I interviewed.
That being said, I'm not sure I agree with this law. I like the outcome but not the implementation.
Having a law that says you can't ask someone something seems to violate Freedom of Speech and it sets a dangerous precedent.
Like your age, religion, sexual orientation, or if you're planning on getting pregnant?
Those who offer at most 10% increase when a person's value is 50% higher will find themselves missing the good employees and ultimately, failing.
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An example:
How much do I offer for this house? I have have no friggin' clue. But I can look at previous sale prices to get an rough idea. Naturally, I if trust my decision to that 100%, I'll risk making a poor decision. But the previous sales are a piece of information about the market that I ought not ignore.
If it's really a deal-breaker (maybe standard red tape or other BS), I say "My previous/current salary is $W, but I'm looking for $X."
After all, there is a reason you're leaving your current employer, right?
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2795795
This happens because many employers assume blacks have a criminal record, and asking the question tends to exonerate those who do not, rather than penalize those who do. The default assumption means that things can't get worse if the question is asked, but they can get better.
This law only banned asking the question, not running a background check. But employers don't even get that far, because they presumably do not want to pay for a background check on an applicant they assume has a criminal record.
Of course, this law was intended to have the opposite of its actual effect.
Is there any legal risk in lying about your current/past salary? I'm not talking ethically. That's a different discussion.
Because it would be a great way to shut down anyone asking about your salary.
If it's not then they're going know you're just trying to avoid answering the question.
But if feminism can be abused to improve workers' rights in the US, that's good enough, isn't it?
It's unfortunate that I must've told them my base salary when applying online and that I didn't do a proper negotiation afterwards. My new company doesn't give out stocks of any kind, so overall I'm making less.
If a potential employer asks about my previous salary, I refuse to answer. Similarly, it never even occured to me to hide my salary from my coworkers regardless of what my employer asked me to do.
Needless to say, if any employer has a problem with that, I definitely don't want to spend 8+ hours of my day with them.
What happens if that is no longer the situation?
http://www.forbes.com/sites/karinagness/2016/04/12/dont-buy-...
And AFAIK a lot of people don't have any credit history, so this does not sound useful anyway.
Over here in Russia asking how much you make is often considered a taboo, or a bad tone. I've never been or heard about this being asked at the interviews.
Salary is very taboo w friends and family. But when interviewing it nearly always comes up.
Oh, wait, presidential candidates' promises aren't worth anything.
If your plan is not to achieve fame and fortune via stardom, then pursue it through more accessible means like being a doctor or lawyer or banker or businessperson. Being an engineer or scientist can be a stepping-stone, but if you stay on that stone then there is a slim chance of achieving star power.
Employer: We are willing to make an offer to you. We will offer a base pay of $125k.
Employee: what? I am already making $150k with my current employer.
Employer: Oh..we can't ask your current salary..so we just threw a number at the lower end to see if you would accept.
Salary negotiations based on previous salaries are just plain idiocracy. I have co-workers who are excellent in terms of the skillset and the value they create but they come from either smaller cities where the pay was not great or from startups which didn't pay very well in the early days. These people suffer a lot even though they know that their counterparts who come from large companies and had good salaries get paid almost 1.5-2X.
Technically less information can lead imperfect human reasoners to more rational allocation of resources, but you'd have to do a lot more work to prove that to me than some policymaker's "feeling".
You'd have to pay me more to do janitorial work than cafeteria work. Cleaning bathrooms is dangerous, dirty work.
I'd like to take it a step further and some day see a service where people can submit verified wage data to and access this wage data when they are negotiating employment terms.
My employer uses wage data from a survey they buy for several thousands of dollars when it comes negotiation time. The wage data is reported by other employers and includes wage data from companies across the country. I think it would help level the playing field when it comes to negotiations for anyone that is in that position because as it is now, even with this piece of legislation, employers have the upper hand.
My first job change gave me 2X the salary.
I'm a big advocate for salary transparency, but I share that author's struggle - what's the best way to ethically disclose my salary to my coworkers, or publicly?
Personally I've always had a strict salary/comp band in place for each position, but having never had a company with > 25 people, I wonder at what point that breaks down.
I see a loophole forming before my eyes.
What if the company has an office just over the MA border where they hire then later relocate the employee to MA?
