Top jobs are still and will continue to be where the money is. And most money is in the US, London, Amsterdam, Dublin, etc. The devs who earn salaries at the those levels but working in lower CoL cities are a drop in the ocean among the total worldwide dev population.
Most devs earn wages relative to their local market/CoL. The few that earn way above are the exception that proves the rule.
Sure, offshoring has had an impact, but the best jobs stay close to home where the money and the C-suite is.
I was being relative. Of course you're not gonna make US salaries but tech salaries in Dublin are super high compared to Austrian ones for example due to the huge number of available tech companies you have there, especially from the US.
I'm in Ireland as well. I've heard a couple of examples of employees getting €120+k base plus €XX+ in equity. But salaries look low in various ads and otherwise quite opaque (who wants to tell you they earn 6 figures?). I think it is to do with local vs overseas capital. There was a useful European salary distribution explanation posted by Gergely Orosz (ex Uber) [1] recently.
People pay software engineers higher wages because of the risk of them leaving and taking all of their domain knowledge with them. Not because of their "cost of living", and not because of what's "fair". It's purely competitive & demand driven. What's happening in Ontario is that salaries have pretty much doubled for skilled software engineers due to remote demand. I work remotely for an American company, but they pay lower bands based on my Canadian location. I know this, because I keep a close eye on the market and speak to others.
Now, I'm currently interviewing for other American companies, who will not know how much my American employer is paying me, and therefore has no choice but to offer me an American-tier salary or risk not hiring me. In Canada, skilled negotiators will be able to increase their salaries to be more in line with their american counterparts. And as skilled negotiators double, triple their salaries, their peers will realize that it is quite possible.
Companies that hire remotely will either learn a hard lesson (losing the people with domain knowledge which makes their money printer spin), or increase the salaries of their employees to swim along the same band. Attrition due to competitive recruitment right now in Ontario is crazy. As the competition increases (due to more people hiring remotely), salaries will increase. And local companies will get squashed (I don't interview with Canadian companies anymore).
Furthermore, most skilled software developer resources have been already been exhausted in Canada, primarily due to brain drain. The only skilled devs left here are the ones who need to be here to stay close to family. The rest are in the States.
There will be some interesting equilibrium. If people hire and pay remote workers exactly the same, they are saying that, for their particular type of work, there is absolutely no value of seeing people in person.
I can imagine this being true in programming, but not being true for R&D where equipment and experiments with materials and prototypes are done.
It would require a sea change in thinking, or get people comfortable with the idea of not belonging to nations.
As you point out Nationalism has been a pretty recent development. It has mostly been enforced by indoctrination in the education systems and culture. While it has had many many issues, we have seen it reduce the number of conflicts and wars by a lot, and thus it appears to be a reasonable solution.
Whatever solution aims to replace it would have to not only overcome all of these barriers, but provide better results as well.
Working for a fully distributed company it definitely feels like it's not naive. Certainly everything won't go this way but it's a lot easier than most people think. Apart from at setup time and with public holiday schedules those borders are not very apparent.
Companies with 1000s of people have been remote forever. I worked at Autodesk in a team across two multinational companies which on our side were through Toronto to us in Iceland and on to Shanghai. If you think big teams aren’t distributed you’ve not worked in a big team.
At the risk of doxxing myself, (who am I kidding), I have experience working with a global, fully remote team. My experience is that, when you select for talent in a larger pool (globally) you get people who are incredibly skilled and driven, so much so that that the effective reduction in productive capacity is eclipsed by talent of the team that you can form. However, this is anecdotal & I may be biased due to luck with landing with an exceptionally talented team.
Remote work actually is a drawback for the employee rather than the employer. Human contact is something that is quite important for relationships to form. Some people adapt well to it because they grew up on computers & grew up making friends on the internet, but for others in person communication is quite important.
> Remote work actually is a drawback for the employee rather than the employer.
I'd say it's a drawback for SOME employees, yes, but some others (Maybe the majority of the prepandemic remote force?) it's not, at all. It's awesome, and there are many of who never want to work in an office and deal with the commute every day again. We (somehow I'm speaking for all of us now) get enough human contact through our online relationships with our coworkers, and seeing them once or twice a year IRL.
> luck with landing with an exceptionally talented team.
For sure! I do consider it pretty lucky when you're able to do that. We seem to have done the same thing where I work, we just had someone leave for the first time in about 6 years!
I'm in this boat one hundred percent. Guess what happens when two hours a day isn't commuting. You spend more time with real friends rather than passing work acquaintances.
>My experience is that, when you select for talent in a larger pool (globally) you get people who are incredibly skilled and driven, so much so that that the effective reduction in productive capacity is eclipsed by talent of the team that you can form
I would think that you would also increase the risk of bad hires if you had any sort of inefficiency in your hiring process because then you would be less able to actually know the quality of who you were hiring by local reference.
Having overpaid underperforming workers is almost entirely a function of not letting them go. FANG companies onboard plenty of incompetent people, but they don’t last that long.
However, to get away with that requires high levels of compensation otherwise people will take the safer option.
Really? Have you worked at a FAANG company? Have you hired at one? I don't mean to be rude, but your comment sounds like it is coming from a parallel universe. My experience is the reverse. It's super hard to get hired at a FAANG company (strong initial screening for incompetence), it's also super hard to get fired. (weak ongoing screening for low performers). At google they're so firing averse that they have manager training on "managing out" where you work with a poor performer to convince them to quit rather than just outright firing them. Just curious if you have personal experience that runs counter to mine.
Which sounds pretty normal for mid- to large tech companies (and I daresay many others). Outside of layoffs or significant teams being dismantled, you're probably going to be on a performance improvement plan before being fired--and that typically has a pretty high bar.
I know multiple people let go from Google. While Amazon seems the most willing to cut their losses at any point, their all perfectly willing to let someone go after a few months.
Also, “managing out” is one way of coddling a team but it’s not a choice. At best it convinces team members these people quit, but that’s hardly the reality of what’s going on.
> Remote work actually is a drawback for the employee rather than the employer. Human contact is something that is quite important for relationships to form. Some people adapt well to it because they grew up on computers & grew up making friends on the internet, but for others in person communication is quite important.
I'm not so sure about it. Sure, if you compare work-related human contact to no human contact, the latter option is obviously worse.
But when you move to remote work, you get a lot of extra time and energy, which often creates more opportunity for socialisation. And this socialisation is, in my opinion, much healthier than with your colleagues. Want it or not, you're constantly "selling" yourself to your work peers: their opinion about you will greatly affect your career, and therefore income, and therefore a lot about your life. We all create a better, public version of ourselves, even if we do it semi-consciously. I don't even mean being dishonest (you should never do that), but just building a facade and toning down everything "negative".
Spending less time and energy doing that, and more time with people with whom you can be honest and open was one of the best things I've got out of switching to remote work.
I worked at a company with branches in multiple cities. My team consisted of people living in different cities, so we only communicated with each other by Skype... and it worked okay. Yet somehow the idea of working from home was unpopular with management (this was before COVID-19), because "it is important for employees to interact with each other in person".
I think it is all just rationalizations and prejudices. Sometimes teams work better, sometimes they work worse, and the distance is just one of many possible factors.
This is only true if you believe there’s no productivity benefits to remote.
Commutes to the office mean that employees start the day sleep deprived and stressed out. Spending the day surrounded by one’s spouses, children and pets improves emotional resilience. People working from home have access to healthier meal options and avoid the afternoon brain fog that comes with catered lunches. Remote workers probably have a big, beautiful house in a sunny LCOL that is more pleasant to work in than an office in a typical overcast, drizzly tech metro.
So there might still be downsides from less efficient collaboration, but that’s outweighed by improved environment leading to better individual productivity.
I would’ve been skeptical of this two years ago thinking it’s just chatter from people who can’t suck it up and be productive at work.
But after being forced to work remotely for 1+ years I’ve found everything in your post to ring true for me personally. In addition, productivity is better because there are so many less interruptions (maybe only relevant to certain jobs requiring a lot of focus and a home environment without distractions)
I think there's already a clue about this: Hardware engineers and scientists get paid less than programmers, meaning that we are of lower value.
Amusingly, when the lockdown began, I was fortunate to have space in my house to move my entire lab home. My colleagues and I have been making good use of rapid prototyping services and the FedEx truck to move stuff around. Hardware keeps getting "softer," and truth be told, 90% of what I do is coding anyway, because hardware runs on code. We are also learning to manage hardware remotely, so we don't always have to be co-located with it. We also use software contractors, though it's been a huge learning curve for us.
A side benefit is that, being un-located, there's no reason for me to be tied to a particular work site within a global business, or to be dependent on only the skill sets available at that site.
>People pay software engineers higher wages because of the risk of them leaving and taking all of their domain knowledge with them
Why is it that software engineers tend to get substantial raises by changing companies while receiving only small raises when they stay at the same company?
1. Because companies are often run by financial types who have a hard time imagining that one SWE could be a multiple more valuable than another (either inherently or because of company-specific domain experience). Why pay this current, good SWE 1.5x what they were making, when the salary study that I have in my inbox says...?
2. An employee seeking a raise at their current company is negotiating with one company. An employee seeking a raise at all possible companies has more flexibility.
They don't need all companies (or one specific company) to be willing to pay them more, just one out of all of them.
Great response. . . I have some friends (let's call them A and B) who worked together years ago, both solid engineers. One of them (A) is perhaps not a 10x engineer (I kind of have a problem with that term and the way it's tossed around) but pretty damn close.
B told me one day that when A left, the company foolishly failed to offer him a counter offer to stay. The way B put it was "they literally could have paid A one million dollars per year and dumped the rest of the team but they couldn't wrap their heads around that and of course didn't. When A left, the team went right down the toilet and they closed that whole branch of their product line"
A bit of an extreme example, but yes as you pointed out, not one that "the suits" can really grok, or HR for that matter.
It's not uncommon, for people who know their value, to screw a poorly paying employer.
I had an experience where I refused to extend a contract because one engineer left the project.... The whole team left within three days of that engineer announcing his departure.
I wonder whats the source of this kind of perspective.
My current hypothesis is that the technology industry hasn't been around for as long as other industries, so people that go to business school, for instance, don't understand the value that SWE's offer to businesses.
When the tech industry was small, this was probably ok. But today, those assumptions no longer hold.
Nah... They just still think that engineers are exactly like mechanics.
Because in construction industry structural engineers and architects are paid way better. (Structural engineers and architects are the closest professions to software engineers/programmers/etc)
Changing companies often comes with changing industry sectors.
I worked in a small SaaS company that had only a few million in revenue. The amount of value that I brought that company in terms of its revenue wasn't that great compared to other companies.
And while I didn't switch to tech (I joined the public sector instead), if I had gone back to a big tech company, the revenue per employee would have likely been an order of magnitude or more... and they could pay more too.
While working at a company, the additional value that is brought to the company after a year or two or ten isn't as much as bringing value to a company that is able to translate technical skills to even more value because it is in a different sector.
This contrasts with other careers where a given job won't change significantly from company to company.
The difference between software developer and those other careers is the flexibility and demand for the skills across a wide range of companies.
The raise is to overcome laziness and inherent risk (new boss and coworkers might be incompetent and unfriendly).
As long as the wage gap is less than the required "risk/laziness incentive", rational employees will not leave (=> small raises are presumably enough to achieve that).
It’s more fundamental than that, it’s just simple economics.
If a companies didn’t pay more than people are currently making at their current job, they wouldn’t be able to hire experienced talent in meaningful numbers. So virtually all companies are forced to pony up a premium to obtain talent.
If a company wants to lure a software engineer away from their current company they need to provide enough of an incentive for them to leave their current work place. I would wager most people probably wouldn't change their job (assuming they are content) for anything less than a 20% bump (all else being equal) but I would say people probably would want a higher bump than that.
I know people who changed jobs for a salary lower than their current one. Sometimes people just don't enjoy what they are doing and they would rather work at a place they love.
That can be the case. But the basic point is that jobs are usually at least somewhat sticky, if only because there's always a risk moving somewhere new. (The devil you know and all that.)
Also, while some people will move to a good new opportunity for less money, I imagine it isn't super-common until you get into money is mostly about keeping score level. Many/most people have a lifestyle that's somewhat aligned with their salary do dropping it by 20% is probably fairly significant.
The reason I was told was that if you give a raise to a current employee, you'll be expected to give raises to all employees and that's expensive, especially when people are looking for, say, 20% raises.
On getting a new hire, the 20% raise to get them to join is much easier because that extra cost is only going to a few people, one time (and they don't necessarily know it's a 20% increase in the person's previous pay).
Tons of people who could get more money else where wont leave their employer anyway. Laziness, inertia, dont know how valuable their skillset is now, fear of change, fear of asking for money, locked to specific area by kids school or spouses job, whatever.
Company doesn't know which of their employees fall in to that group. So they could either regularly offer everyone raises that are competitive with job switching to keep the few people who would otherwise leave; or offer everyone token try not to piss them off too much raises and accept that they're going to lose some people who they otherwise would have been willing to pay more money to keep.
Those with very ambitious workforces that are largely made up of people who will job hop tend to go with the first option. Plenty of people at FANG are getting 30%+ raises in their earlier years, you see it whenever people discuss salary.
People stay at a job for all kinds of reasons, money is only one of them. If you have stayed at a job a while it is strong evidence that you are happy with those other factors. You like the company, or you like your boss, or you like what you do.
Another employer knows they have to offer you a strong incentive to switch jobs. You are taking the risk that will go form a job you like to one you don't. Or they won't like you, which is a still a risk to the employee switching jobs.
I don't think it is so much that employers don't appreciate existing employees, or that they worry raises beget future raises. It's mostly that if you have been a job for awhile they think you are somewhat happy.
One problem I have with this hypothesis is that employers often carelessly destroy the things that make their employees happy.
For example, a company decides to move to the opposite part of the city, despite the fact that many employees chose it because it was conveniently close to their homes. Or, there is a team where the colleagues have great synergy (their personalities are compatible, their strenghts balance each other's weaknesses), and when they finish a project, instead of giving a new project to the same team, they are randomly assigned to different teams.
If the company is aware that they are paying the below market rate and their employees are staying there for non-financial reasons, why would they destroy those reasons?
Therefore, it seems to me more likely that the employers mostly just don't have a clue... either about market rates, or the things that make their employees happy. They pay existing employees less, because they can; and they pay new employees more, because they must; but there is no grand strategy like "make them happy and then they will be willing to stay here for less", only short-sighted paying everyone as little as possible.
Hey, I'm also from Ontario and looking to change jobs for the right price. Any suggestions for where I should start? Should I be looking mostly at American companies with USD pay? Should I be using a Canadian recruiter? My current title is Sr. QA Automation engineer. I think I could easily be lead or even QA Manager.
You've misunderstood Supply and Demand a little bit and by not adjusting your price, you're probably hurting yourself.
In 'Supply and Demand' - developers in high cost of living areas will have a different 'supply curve'.
So the 'market clearing price' for developers in 'high cost of living' areas will be higher.
"In Canada, skilled negotiators will be able to increase their salaries to be more in line with their american counterparts."
No, actually, 'skilled negotiators' who understand 'Supply and Demand' will realize that their position to demand salary is systematically weakened by the fact their costs are lower.
Their price will be 'higher' than that for local jobs, but lower than their American counterparts, and definitely lower than Bay Area prices.
Finally - your comment is missing the Giant Elephant in the room.
There are 50x more developers out there in much lower cost of living centres than Canada.
You literally cannot afford to accept a job for <$40K a year - but developers in Poland can.
If we are going with the premise that 'Talent is Now Global' (And BTW I don't agree with this mostly, but for the purposes of this comment, assume it is true) - then the 'lower cost of developers' in other countries will affect those in 2cnd tier (i.e. relatively wealthy but not NYC/SF) cities.
I'm based in Canada and just hired a bunch of E. European developers for 1/3 the cost of local devs. and they are great - at least for the work I'm having them do.
Try to take a more nuanced approach.
Edit: imagine if you were selling widgets. Same widget. The price in USA is $1 per widget, by manufacturers made in USA. Their cost is probably 90 cents to make.
You live in Ukraine and your cost of making widgets is 50 cents. There are a bunch of other widget makers in Ukraine with the same cost.
When you and your competitive peers in Ukraine take your widgets to market, do you think you're going to be able to sell for the same $1 as the US sellers? No.
Because some of your 'peers' will lower their price a little bit in order to generate sales and that will bring the price down to where operating margins are tolerable. Probably 57 cents or something like that.
So this notion that a 'Foreign Dev' is going to earn the same salary as those living in SF/NYC - all other things being equal - just is not true. It's not a 'lesson that companies need to learn' - the market already has that built in.
I'm not so certain about that. Government of Canada is aiming at increasing immigration to around 400,000 to 420,000 new immigrants per year, most of whom are going to skilled workers.
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October 30, 2020—Ottawa—The Honourable Marco Mendicino, Minister of Immigration, Refugees and Citizenship, tabled the 2021‒2023 Immigration Levels Plan today, which sets out a path for responsible increases to immigration targets to help the Canadian economy recover from COVID-19, drive future growth and create jobs for middle class Canadians.
The pandemic has highlighted the contribution of immigrants to the well-being of our communities and across all sectors of the economy. Our health-care system relies on immigrants to keep Canadians safe and healthy. Other industries, such as information technology companies and our farmers and producers, also rely on the talent of newcomers to maintain supply chains, expand their businesses and, in turn, create more jobs for Canadians.
[...] [T]he global travel restrictions and capacity constraints led to a shortfall in admissions over the last several months. To compensate for the shortfall and ensure Canada has the workers it needs to fill crucial labour market gaps and remain competitive on the world stage, the 2021 to 2023 levels plan aims to continue welcoming immigrants at a rate of about 1% of the population of Canada, including 401,000 permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023. The previous plan set targets of 351,000 in 2021 and 361,000 in 2022.
I love it when people point to skilled immigration as somehow being bad for wages.
Whats more likely to happen in that Canada may finally get a robust and dynamic technology labor market. With its sensible immigration laws, I know that a lot of my international peers are seriously considering moving to Canada. New immigrants will favor Canada over the immigrant hostile, gun-obsessed and anti-science US.
> New immigrants will favor Canada over the immigrant hostile, gun-obsessed and anti-science US.
I've been hearing that for a long time, especially during the last 4 years. Yet it has not materialized.
Often, for international workers, attorneys will file twice: one in Canada and one in the US. If the US one gets slapped with RFEs or isn't strong enough to qualify, the Canadian one is used and is systematically approved.
> Whats more likely to happen in that Canada may finally get a robust and dynamic technology labor market.
Negotiating easier free trade with the US as well as matching US law would be more productive, as it would dramatically expand the customer base. But what's crucially lacking is a strong investment culture of venture capitalism and risk taking.
Yes, our government policies actively work against Canadian citizens. Hopefully by then I'll have brain drained out of here into America, like most of my peers.
Voting for your own and your family's interest is being racist. Okay, hnewslet. I guess I'm just one of those minorities that is in fact a racist white person in disguise.
This is very optimistic, and not taking into account the out of control immigration quotas currently in place. About 10x per capita as compared to the United States.
Silicon Valley had issues before the pandemic with many companies diversifying their locations across the US. Longer term I think we’ll see more diversification in where tech talent is concentrated, but I don’t think we’ll see this “global remote” model the article is suggesting. Humans thrive on in personal social interaction. There are exceptions of course, but by and large that’s key to our existence. The pandemic has shown remote work is feasible, but there are few in tech not itching to get back into in-person gatherings at least part time.
I think the future will be more of a distributed hub model. People will often work remotely but will need to be able to be in person a few days a week in selected tech hubs. To avoid being left out one will need to be near a “hub” so you can be easily in person on those days when it makes sense to be in person.
Some will say “but I can be fully productive 100% remote.” That may be somewhat true, but the practicalities of that fall apart real quick when your on zoom and the rest of your team is going to grab lunch together.
I don't dispute the assertion that humans thrive on personal social interaction, but why do we seem to have this baked in assumption that that personal social interaction needs to be with our co-workers ?
If we have a remote workforce, why wouldn't I want to move somewhere where I can find people of like mind and spirit and feed that need for social interaction with them rather than with my company ?
The central problem with this model is that any metro that graduates to "tech hub" becomes unlivable in short order. The Bay Area is the original example. But then it happened to Seattle, Portland, and NoVa. Most recently it happened to Denver and Austin, where housing prices have tripled in five years. It's starting to happen in Nashville, Atlanta, SLC, and Columbus.
It's a combination of the immense wealth generated by the tech industry and the rigid supply inelasticity of America's NIMBY housing policies. Anywhere this unstoppable force meets this unmoveable rock, prices explode. The entire area quickly becomes unlivable for anyone who didn't get in on the property ladder early. Then the tech industry is forced to go out and find a new tech hub for all the junior engineers who are bid out of a house by the senior engineers who cashed out their RSUs.
Full remote is the one opportunity the industry has to actually break this cycle. After all it's not just a problem for tech recruiters, it's also having all kinds of disastrous spillovers for the regular non-tech folk, who happen to be unlucky enough to live in the next metro targeted by the tech industry.
There’s gotta be some limit to how many cities can maintain insane rents. High salaries spread across 10 cities instead of 1 should be a much saner equilibrium unless the tech workforce and salaries multiples in number too
I guess one issue is that most of the new tech hubs tend to be mid-sized cities that don't really have the capacity. Austin metro is 2.2 million. Denver is 2.9 million. Nashville is 1.9 million. In contrast the Bay Area has 10 million people, and even that struggles to absorb tech wealth.
I think dissipation would happen if tech was actually expanding into a few large metros. Houston, Chicago, and Miami all have reasonable COL, but more importantly have way more population to absorb an influx of high wage earners. It's an interesting question, and one I don't really know the answer to. Why does the tech industry seem to consistently prefer mid-size metros like Austin to large metros like Miami.
> think the future will be more of a distributed hub model.
What good does coming into an office do if most of the people you actually work with are in a different office. In normal times, I could come into an office, but relatively few of the people I interact with are actually in that office. So I'd be doing video calls from the desk in the office rather than my desk at home. Maybe I'd bump into one or two people I knew in the cafeteria.
Isn’t this just the age old myth that all our jobs will be outsourced to cheaper countries? Except managing a completely different culture 12 hours away is basically impossible/very hard at the same quality. A company is the workers. Why not just start the whole company in India then?
I'm not saying that all the development jobs should be $250K no matter the location, but some leveling is long overdue. I live in London and while the tech salaries aren't very high here, it's even worse in the rest of the country. Maybe it's just the usual suspects trying to find some naive developers, but when you see job ads for 5+ experience offering just a little bit more than a national average, it makes you wonder what's going on.
I think the problem with the UK is on the whole we never really got past seeing software as an administrative / back-office concern, which leads to naturally wanting to place developers etc into "low-paid, low-leverage" positions (think mindlessly running a few SQL queries or adding a few fields to an internal tool) vs having them radically improve the business proposition.
This really presages trouble with industries being upended on the basis of technological innovations. The light at the end of the tunnel is that long-term, companies that value and can utilise technical talent to innovate rather than sustain will win out and heat up the talent market.
I think you've got a point here. Not sure why, but many businesses I've seen here don't seem to be bothered at all about pushing themselves onto the next level. The competition doesn't seem to be too intense either,as I can't see how companies could stay alive with what often looks like they've been stuck in early 90s. There are literally sector after sector, where a decent injection of capital could wipe out any competition.
software jobs in the UK are insane. They are illogical.
I work in finance in London, which is about the only place (in Europe, perhaps) that's even comparable to US/California rates. I make a six figure base (GBP) and a hefty bonus on top.
But my real passion is audio and signal processing. I look at job postings around the country for embedded developers and DSP specialists; fields that require much more specialist skills than the CRUD web apps and PDF reports I generally produce for my employers, but those jobs are offering a fifth of my current income! I've seen jobs saying "master's degree in computer science and 5 years of experience required" offering 30k.
We pay our grad students more than that.
Edit: obviously, it's not really a mystery as to why; you get paid money when you work in an industry that has lots of it. But the discrepancy is still shocking.
I have a friend who bootcamped for 6 months and landed a $130k/yr job at a buzzword start-up doing app development. No previous coding knowledge or really even tech interest. He did accounting previously.
He makes 3/4 of what the president of my small defense contractor company makes, a guy who has been an RF engineer for 35 years prior to taking on the leadership role.
The two fresh grad EE's we have are both spinning software in their free time to nab software dev jobs over EE jobs, because the pay is often double.
Something I never see mentioned in these discussions is the surprisingly high hurdles to actually operating a distributed company. You'd think in 2021 it wouldn't be difficult to have employees doing knowledge work in multiple US states without running face-first into laws governing conducting actual business in multiple states, but that's not at all the case. International is even worse. The additional complexity and costs of having non-local employees can absolutely be prohibitive, leading some companies to just abuse 1099 status.
This obviously isn't a problem if you're FAANG or Salesforce, but for a company of 20 it is.
so as a 1099 the employee has to pay all of the standard taxes a business would pay and they’re entitled to far less of the employment social safety net.
when you 1099 an employee you force them to bear your tax and benefit burden. people who take the 1099 job do so because they don’t have a w2 offer or don’t understand. a 1099 has far less net profit at the same salary as w2. this is how contractors maker more money but have less real income
Even with passing on the tax savings, there's also things like health insurance and some form of retirement matching.
An employer paying a group rate for health insurance will pay less per person than an individual paying an individual rate.
Even if the employer were to pass on the savings of not having the person in the group health insurance, the 1099 contractor would need to pay more to get the same coverage.
And beyond that there are things like a 401k matching or a pension that a full time employee has that a contractor doesn't have access to.
Health insurance is a big one and a lot of people just aren't going to take a job that doesn't come with a good health insurance plan. Many companies also offer things like dental insurance, short term disability, and long term disability. Individuals (may) be able to obtain some of those things on their own but, as you say, the cost may be prohibitive.
You can at least get health insurance with pre-existing conditions now but it can be very expensive. You may not be able to get disability insurance.
Being a 1099 contractor is mostly not a good deal for someone who actually wants a stable long-term full-time job.
I used to do contracting all over EU.... and it was pure bliss. Even with VAT "complexities", it's still about a million times easier to do taxes as a contractor in EU/UK, than it is to do your own taxes in US.
The final thing about contracting in US is that average employer cost of health insurance is over $20k per employee. If you don't fall under someone else's employer sponsored healthcare plan, your self employment income will be greatly diminished. (In US freelancers don't get huge bumps in hourly rates, just because they're not full time benefited employees)
So to be specific there’s a very negligible tax arbitrage which actually favors the employee not the employer but conceptually in the compliance case described above the employer would actually be net neutral to paying the tax adjusted rate (aka their outflow) to the employee and it’s not set out to be some great scam.
There are rules around who's allowed to be classified as a 1099. If you're employed full time and told how to perform your job, the government is likely going to determine you're a W2. This is likely what OP meant by "abusing" the 1099 status.
The vast, overwhelming majority of "independent" contractors on 1099s do not actually qualify for that status as defined by the law. Most of them should be W2 employees per the law.
The only reason most companies get away with this arrangement is because the government has refused to enforce it except in egregious cases, and ignorance on the part of the employee.
But it's a pretty tenuous situation. See Uber in CA.
I can attest to this. There was a delay in my hiring process because the company that hired me needed to set up some kind of entity for tax purposes in my state - they had nobody else operating out of there at the time.
I've worked in a ~50 person distributed company - the practical contracting steps weren't a big issue.
You pay everybody outside your local jurisdiction as contractors, and you pass on the significant savings to them as salary, so they can approximate the normal employee benefits purchased directly for themselves. I understand this is a bit more complicated in the US as health insurance is a key benefit, but not impossible, and that's not a problem in most of the rest of the world.
Employees do need to register locally as freelancers, file invoices & do taxes, but that's a relatively simple process for such cases everywhere I'm aware of, and any costs can be included in the salary bump. We made it work with no big problems or complaints for anybody in the 2 years I was there.
I don't know all the details but even having distributed employees as W-2 workers with full benefits can't be that hard. I worked for a 10 person company with employees in a few different states plus the UK and they were able to make it work.
Wishful thinking, pure and simple. Outsourcing jobs has always been the dream of tech companies, and it consistently fails to produce the desired results. Shockingly, software development is not just typing.
All of the pieces that have to come together to make a technology company work limit the development of the software to certain locations.
Sounds like you're just bitter about jobs moving overseas. The global talent pool is much bigger than the SV talent pool, and no, they are not just "typists" (that was unbelievably arrogant btw and reflects ignorance). And this global talent pool is only getting bigger, thanks to the internet. It makes sense that it should be possible to hire a more skilled global workforce of engineers at a lesser cost. Companies just need to keep their hiring standards high and pay good salaries (so that skilled people choose to stay in their home countries instead of moving to SV/NY/London et al) instead of hiring bad developers and paying them peanuts for menial work.
In my experience, when it comes to overseas talent, while they might be less talented per capita, you've expanded your candidate pool from the great lakes to the pacific ocean. Even if only half as many folks are 'good' there are a lot more off them than us citizens. Quantity has a quality all its own.
'But when asked about this, Mr Libin has a surprising answer: "What if I paid the person in India the same as I pay someone in the US? Well, why not? Right? Like, why do I care where you live? I just care about how productive you are."'
BS, you can have 2x more skilled engineers for half the price and same quality, logic demands that you do not pay an Indian dev (which will still have greater salary than average in India) the same as US one.
I've had some experience in this and what I've realized is that the really good remote developers in India already know their value and they can demand US level salaries for their time.
Yes, it's still not as many and you can still find a lot of good developers for relatively (relative to US) low pay, but the trend is clearly changing.
There's truth to that, a lot of it depends on that developer's language skills and business network.
If you're a developer in the Ukraine with great English and reasonable business skills, you should be able to land a pretty good dev job with a global company.
Another, just as good dev in the Ukraine that only knows Russian/Ukrainian, will have much harder time and will likely be limited to working with just local companies, significantly limited with options.
It's also about leverage and options. I'm familiar with the software dev world and the circus world and am a professional in both - and I've been on circus contracts where I do practically the same exact job as someone from the Philippines (on the same exact show) and yet get paid 2-3x as much. It's price discrimination based solely on nationality and your alternative options, and I've seen it in person. In fact - I am a dual citizen, native to both cultures (moved at a very young age); if I applied for a contract using my U.S. passport and my foreign passport, I would get two very different offers in terms of compensation, for doing the exact same job.
The people spouting "it's all about how much value you produce" are so naïve and ignorant of their privileges / market realities that it hurts.
With devs the compensations will match only when the good foreign developers have just as many alternatives as the good U.S. developers (or at least close to parity - exact parity will never happen due to jobs that simply can't be offshored - contracts with government agencies, for example)
This is totally on point, it's true when you get people in as contractors or outsource the work.
But, if you onboard people into your startup I don't think most people would consider it a wise strategy to underpay certain team members that are part of a distributed team based on where they live..
Sure, but it's also a major reason companies offshore. Take away that incentive and suddenly there's no real reason to offshore (you could easily argue this would be a good thing from the perspective of onshore workers though).
Whilst I do not love the salary disparity between onshore and offshore workers, the issue is complex. For example, one has to wonder what would happen to local economies in Indian regions, and elsewhere, that are dependent on revenue from offshoring were Western companies to simply stop the practice[0]. Also, bear in mind that many offshoring outfits are set up by locals who see an opportunity to offer a service to companies in the US and Europe at substantially lower cost than they'd have to pay in their own regions whilst benefitting both themselves and their employees: i.e., there's some complicity there and it's fundamentally very different from, say, colonial exploitation.
I still don't love it, but I can see the benefits for both sides.
[0] One can take this argument too far of course: viz., child labour in the fashion industry. But the situations of a child stitching trainers and a software developer working for an offshoring provider are so different as to render the argument ad absurdum and disrespectful to both of them.
Say someone runs a business - they have a senior guy(s) working in country 'x' that's part of their team... he has access to all their code and company's systems...
How much perverse pleasure do you think is a reasonable amount when they save a few thousand dollars a month, while at the same time publicly raising millions and paying developers junior than him more money... and doing everything in their power to burn more money to get ahead of the competition...
Depends - are you "saving a few thousand dollars a month" or are you halving your payroll costs, which in a software business are your only cost of any significance?
You're framing this in emotional terms, and oversimplifying.
Businesses of all kinds offshore labour: small, medium, large, public, private, sole trader, partnerships, VC funded[0], bootstrapped, profitable, loss making, you name it. They all do it for what, for them, are rational reasons. Often very boring reasons. Offshoring can be the difference between profit and loss, the difference between a business that is sustainable and one that is not. A failed business can't employ anyone, whether onshore or offshore.
Now you can argue about whether a business that isn't sustainable without offshoring should exist at all, but that is straying further off topic than I care to go, and frankly is also another rabbit hole likely to lead to unhelpful oversimplification.
You might like to imagine gleeful scheming and maniacal laughter in the boardroom, but I'd confidently bet that that's almost never what's going on in the vast majority of businesses.
[0] You talk about "publicly raising millions": raising funding is not what the vast majority of businesses spend much time doing, and it's not what most businesses who use offshoring spend much time doing.
Agree, it depends on how it's executed. Say you have a business entity in the said country and you operate as a subsidiary or you contract to another company, now you pay local wages as per the market.
This is different from hiring a remote employee to your company where you've advertised a salary range as part of the job description.
> Say you have a business entity in the said country and you operate as a subsidiary or you contract to another company, now you pay local wages as per the market.
In my experience that's almost always how it works because you have to employ people in such a way that you abide by all local laws. I have seen people employed as independent contractors but, and again this varies by country, there are often restrictions around criteria like how long you can do that for. It's also kind of a PITA for the "employee" because it means they might have to do things like sort out their own taxes and healthcare. If you have a legal entity in place you can do that for them. That means you either set up a subsidiary, or you using a local offshoring firm. And this applies regardless of the country.
Not sure how long that will last tho. If labor supply stays tight, you’re eventually going to have to pay more - unless you form an industry cartel that agrees to geographic pay scales
I'm watching very closely how "digital nomad" Visas are popping up around the world.
Things were going very quickly from 1 to 20+ countries in like 4 years.
But... very few locations are really desirable.
Most digital nomad countries themselves are countries on demographic decline, or otherwise quite poor.
In EU it's either extreme bureaucracy of obtaining it, or some other very odd requirement that quietly sinks the whole appeal.
Dubai is one shining exception, except it's a rather expensive place. $5k month take-home on the bank statement pre-requisite is very sensible. You will be spending more than a half of that every month, and easily more than $5k if you want to live fancy.
I'm seriously thinking of Dubai now to live there for at least a year. Covid has totally busted the rental market there, it makes sense to exploit. You can get a minimally furnished villa for a year for AED 40000-50000, which is mindblowingly low for Dubai.
P.S. Don't EVER go to work in Dubai on a regular work visa without expressed guarantee that the employer will not put any bond, or lien on you, or your papers.
> In EU it's either extreme bureaucracy of obtaining it, or some other very odd requirement that quietly sinks the whole appeal.
It’s called Croatia, which is part of the European Union. It is better than the Estonian Digital Nomad visa because you do not need a “sponsor”, also known as formal local connections to get the visa.
You can also get Croatian national health insurance (obavezno) and supplementary insurance (dopunsko) without issue. As an American, I would get the tertiary insurance (dodatno), which has medical underwriting. It allows you to see private providers with virtually no wait. Anyways, I am extremely unhealthy and somehow I was able to get tertiary insurance.
With an American salary, you get to live as a king or a queen. Quality of life is very similar to the US. I am a dual US|Croatian citizen working remote part time for a US company, but of course I can do that without a visa due to my status anywhere in the European Union because I am a dual citizen.
By no means is Zagreb tiny. The metro area is 1.15 million people. If you are going to be that picky, then you are not going to find a digital nomad visa that meets your criteria.
There are only a handful of western countries with high quality of living that will let you have such visas on the premise of “willing to pay the taxes”. There is a reason why.
Zagreb has more population than Portland and almost as much as Austin. Not sure what size city you're looking for, but a lot of people specifically don't want a Los Angeles size sprawl.
> Way too many human rights and labor abuse issues to be worth the risk IMHO.
I worked in Doha short term once, and frequent Dubai.
There is so many expats there other than people who effectively sold themselves into indentured slavery because of they can't read the employment contract, that I would say it worth the consideration.
The occasional horror stories of Western C-level exec getting on the bad side of their employers, and getting stuck in the country are very much real, but again most of them wouldn't be examples of good deliberation, and they very much knew what they are going for.
You don't have any moral qualms against supporting that kind of government? Homosexuality is illegal and punishable by death, women are charged with extramarital sex after being raped, and foreign workers are treated as slaves.
There are other things in life than cheap rental and fancy living, even if you don't happen to be personally directly affected.
I have. And the biggest moral compromise you will have to take will be living in a city ruled by a man who raises hand on his own family, which in my eyes disqualifies a man being called a man.
On other hand life in Dubai can be by far more liberal than in most parts of the world. Anything other than fornicating on the beach probably goes there.
Far more people complain about Dubai being a Sodom with hipsters, rather than it being a "puritan Arab kingdom"
For whom I have the most pity are by far the Emirati natives. Forced to live in this Disneyland for foreigners under a gunpoint.
That's for their legal citizens. It was even a bigger shock for me to know how Emiratis can torment, and keep in destitution their own Arabs just for some "wrong surname" because of some century old matter: https://en.wikipedia.org/wiki/Bedoon_(stateless)
> On other hand life in Dubai can be by far more liberal than in most parts of the world.
Unless you're poor, gay, a woman, a foreign worker or whoever else the entirely lawless society of SA wishes to execute this week.
You're OK with living in a place where there is no actual law and people can be imprisoned or executed with minimal trial. That seems very risky to me.
The US and most of the world does have its own set of issues, though. Many countries also have freedoms on paper but in real life it's another story.
If you go by that logic, you can only leave in a select few countries. It's an unfortunate world, but remember that by bringing your culture and ideals, you are actually helping changing the place.
This is also a family issue, how the hell am I putting my children to live in a society with a culture like that? What kinda of things will he learn or fear? What he will live at school? How it will find a wife or build a family?
It's hard to pass on the things that happen in the middle west culture, it's so different and against a lot of philosophies that I cultivated my whole life. Maybe I'm not prepared enough, but I would hardly bring my family to that situation
Like a lot of these discussions, there are some strong opinions but clearly the answer is, "it depends".
Only need 1 or 2 devs? You are more likely to find them locally and this makes it easier for you with tax/legal etc. Local people are more likely to be culturally closer to you which makes both recruitment and performance management easier. There are no time-zones etc.
The truth is, after you grow just a little bit bigger, in most countries, there are simply not enough local devs to meet the demand, you have to go remote, probably nationally and ultimately globally. This brings many challenges and in some cases costs a lot in legal/tax/hr costs, depending on whether you are sub-contracting to another EU country or somebody in China. Culturally hard, timezone inefficiency and many other well-know issues.
Another big issue is the type of work. If you have a job where you can easily package up tasks and they don't need much management input, you can much more easily farm it out to a managed firm in e.g. the Phillipines. One of my previous companies only went remote because they couldn't find enough people to recruit, it cost them the same amount after expenses per-person in Vietnam as it did in the UK.
As to whether it works, if you are naiive and think it is just about money, it is very likely to fail but plenty of companies have global teams and it works just great thanks.
The biggest problem with the whole global workforce thing is timezones. Having worked with some remote, global teams, it is a real PITA to schedule meetings with someone 14 hours out of sync with you. Either they're working late into the evening to do meetings or you're waking up super early to talk with them. Then add the unreliability of telecoms across the globe and it's just a total fiasco. For some teams it works, but if you want a tight knit group it won't work.
Also, people like the social aspect of work. That's why I think everyone is pretty much going back to the office as soon as this is over.
I am in the Japanese timezone. I am working with people in central Europe, East Canada and Silicon Valley. Have worked in such a way for years.
The secret is just: no meetings. Meetings should be exceptional. If you have discussions in a timezone, record it for those who can't attend. Prefer async, prefer written communication.
Have lots of one-on-one communication.
90% of the meetings I have ever attended were counter-productive anyway and were just there because a middle manager wanted to feel useful by wasting devs time. If you are having a meeting where one person is doing most of the talking it can be done async. Feedback can be given async. Demos can be done async.
Some conversations need realtime, but most of these can happen one-on-one, recorded for people who are in a different TZ.
Yes, that's a different way of working, but it is not too hard, we have the tools and it makes sense. The only obstacle is a culture of the useless meeting. Kill it, embrace the async world. Keep realtime communication for meaningful 1-on-1.
This is very accurate. I'm in the US eastern time zone but working with teams in the Pacific time zone, IST, and CEST constantly. My employer cancelled all of our leases when everyone went home so we're now all remote 100%, but that doesn't really change anything about having to work remote.
Embracing async communications is the key. If I send you a message at 3am just reply when you are ready. If I need a real time meeting I can schedule it, but that's rare for developer communication.
Having worked with all kinds of timezone differences, I'd say the toughest one is when it is just a couple hours, like pacific to eastern.
With a small difference it feels as if it is basically the same timezone so people schedule meetings with that assumption, but clearly it isn't. By the time I'm awake in California it's basically noon in EST.
When most of my team was in India with a 12.5hr time difference it was actually easier because it was obvious to everyone that we're on opposite cycles so meetings were an exception and nobody expected real-time communication and acted accordingly.
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[ 2.0 ms ] story [ 167 ms ] threadMost devs earn wages relative to their local market/CoL. The few that earn way above are the exception that proves the rule.
Sure, offshoring has had an impact, but the best jobs stay close to home where the money and the C-suite is.
[1] https://blog.pragmaticengineer.com/software-engineering-sala...
I think now "where" is less about geographical location and more about social network and other intangible things like this.
Now, I'm currently interviewing for other American companies, who will not know how much my American employer is paying me, and therefore has no choice but to offer me an American-tier salary or risk not hiring me. In Canada, skilled negotiators will be able to increase their salaries to be more in line with their american counterparts. And as skilled negotiators double, triple their salaries, their peers will realize that it is quite possible.
Companies that hire remotely will either learn a hard lesson (losing the people with domain knowledge which makes their money printer spin), or increase the salaries of their employees to swim along the same band. Attrition due to competitive recruitment right now in Ontario is crazy. As the competition increases (due to more people hiring remotely), salaries will increase. And local companies will get squashed (I don't interview with Canadian companies anymore).
Furthermore, most skilled software developer resources have been already been exhausted in Canada, primarily due to brain drain. The only skilled devs left here are the ones who need to be here to stay close to family. The rest are in the States.
I can imagine this being true in programming, but not being true for R&D where equipment and experiments with materials and prototypes are done.
As you point out Nationalism has been a pretty recent development. It has mostly been enforced by indoctrination in the education systems and culture. While it has had many many issues, we have seen it reduce the number of conflicts and wars by a lot, and thus it appears to be a reasonable solution.
Whatever solution aims to replace it would have to not only overcome all of these barriers, but provide better results as well.
Remote work actually is a drawback for the employee rather than the employer. Human contact is something that is quite important for relationships to form. Some people adapt well to it because they grew up on computers & grew up making friends on the internet, but for others in person communication is quite important.
I'd say it's a drawback for SOME employees, yes, but some others (Maybe the majority of the prepandemic remote force?) it's not, at all. It's awesome, and there are many of who never want to work in an office and deal with the commute every day again. We (somehow I'm speaking for all of us now) get enough human contact through our online relationships with our coworkers, and seeing them once or twice a year IRL.
> luck with landing with an exceptionally talented team.
For sure! I do consider it pretty lucky when you're able to do that. We seem to have done the same thing where I work, we just had someone leave for the first time in about 6 years!
I would think that you would also increase the risk of bad hires if you had any sort of inefficiency in your hiring process because then you would be less able to actually know the quality of who you were hiring by local reference.
However, to get away with that requires high levels of compensation otherwise people will take the safer option.
Also, “managing out” is one way of coddling a team but it’s not a choice. At best it convinces team members these people quit, but that’s hardly the reality of what’s going on.
I'm not so sure about it. Sure, if you compare work-related human contact to no human contact, the latter option is obviously worse.
But when you move to remote work, you get a lot of extra time and energy, which often creates more opportunity for socialisation. And this socialisation is, in my opinion, much healthier than with your colleagues. Want it or not, you're constantly "selling" yourself to your work peers: their opinion about you will greatly affect your career, and therefore income, and therefore a lot about your life. We all create a better, public version of ourselves, even if we do it semi-consciously. I don't even mean being dishonest (you should never do that), but just building a facade and toning down everything "negative".
Spending less time and energy doing that, and more time with people with whom you can be honest and open was one of the best things I've got out of switching to remote work.
I think it is all just rationalizations and prejudices. Sometimes teams work better, sometimes they work worse, and the distance is just one of many possible factors.
Commutes to the office mean that employees start the day sleep deprived and stressed out. Spending the day surrounded by one’s spouses, children and pets improves emotional resilience. People working from home have access to healthier meal options and avoid the afternoon brain fog that comes with catered lunches. Remote workers probably have a big, beautiful house in a sunny LCOL that is more pleasant to work in than an office in a typical overcast, drizzly tech metro.
So there might still be downsides from less efficient collaboration, but that’s outweighed by improved environment leading to better individual productivity.
But after being forced to work remotely for 1+ years I’ve found everything in your post to ring true for me personally. In addition, productivity is better because there are so many less interruptions (maybe only relevant to certain jobs requiring a lot of focus and a home environment without distractions)
Amusingly, when the lockdown began, I was fortunate to have space in my house to move my entire lab home. My colleagues and I have been making good use of rapid prototyping services and the FedEx truck to move stuff around. Hardware keeps getting "softer," and truth be told, 90% of what I do is coding anyway, because hardware runs on code. We are also learning to manage hardware remotely, so we don't always have to be co-located with it. We also use software contractors, though it's been a huge learning curve for us.
A side benefit is that, being un-located, there's no reason for me to be tied to a particular work site within a global business, or to be dependent on only the skill sets available at that site.
It's not binary. Companies with remote workers can still fly them to HQ or off-sites on a semi-regular basis (in normal times).
Why is it that software engineers tend to get substantial raises by changing companies while receiving only small raises when they stay at the same company?
1. Because companies are often run by financial types who have a hard time imagining that one SWE could be a multiple more valuable than another (either inherently or because of company-specific domain experience). Why pay this current, good SWE 1.5x what they were making, when the salary study that I have in my inbox says...?
2. An employee seeking a raise at their current company is negotiating with one company. An employee seeking a raise at all possible companies has more flexibility.
They don't need all companies (or one specific company) to be willing to pay them more, just one out of all of them.
B told me one day that when A left, the company foolishly failed to offer him a counter offer to stay. The way B put it was "they literally could have paid A one million dollars per year and dumped the rest of the team but they couldn't wrap their heads around that and of course didn't. When A left, the team went right down the toilet and they closed that whole branch of their product line"
A bit of an extreme example, but yes as you pointed out, not one that "the suits" can really grok, or HR for that matter.
I had an experience where I refused to extend a contract because one engineer left the project.... The whole team left within three days of that engineer announcing his departure.
My current hypothesis is that the technology industry hasn't been around for as long as other industries, so people that go to business school, for instance, don't understand the value that SWE's offer to businesses.
When the tech industry was small, this was probably ok. But today, those assumptions no longer hold.
Because in construction industry structural engineers and architects are paid way better. (Structural engineers and architects are the closest professions to software engineers/programmers/etc)
I worked in a small SaaS company that had only a few million in revenue. The amount of value that I brought that company in terms of its revenue wasn't that great compared to other companies.
And while I didn't switch to tech (I joined the public sector instead), if I had gone back to a big tech company, the revenue per employee would have likely been an order of magnitude or more... and they could pay more too.
While working at a company, the additional value that is brought to the company after a year or two or ten isn't as much as bringing value to a company that is able to translate technical skills to even more value because it is in a different sector.
This contrasts with other careers where a given job won't change significantly from company to company.
The difference between software developer and those other careers is the flexibility and demand for the skills across a wide range of companies.
As long as the wage gap is less than the required "risk/laziness incentive", rational employees will not leave (=> small raises are presumably enough to achieve that).
(personal perspective)
If a companies didn’t pay more than people are currently making at their current job, they wouldn’t be able to hire experienced talent in meaningful numbers. So virtually all companies are forced to pony up a premium to obtain talent.
20%: @ 100k --> 120k. @ 200k --> 240k. @ 300k --> 360k. 30%: @ 100k --> 130k. @ 200k --> 260k. @ 300k --> 390k
Also, while some people will move to a good new opportunity for less money, I imagine it isn't super-common until you get into money is mostly about keeping score level. Many/most people have a lifestyle that's somewhat aligned with their salary do dropping it by 20% is probably fairly significant.
It's not always about the money. However, most people would leave if made aware of a relatively large gap in their salary vs the market.
I left for a $2k annual raise, but that wasn't because I wanted a raise.
On getting a new hire, the 20% raise to get them to join is much easier because that extra cost is only going to a few people, one time (and they don't necessarily know it's a 20% increase in the person's previous pay).
I don’t get this - how would the other employees know about the raise ?
Company doesn't know which of their employees fall in to that group. So they could either regularly offer everyone raises that are competitive with job switching to keep the few people who would otherwise leave; or offer everyone token try not to piss them off too much raises and accept that they're going to lose some people who they otherwise would have been willing to pay more money to keep.
Those with very ambitious workforces that are largely made up of people who will job hop tend to go with the first option. Plenty of people at FANG are getting 30%+ raises in their earlier years, you see it whenever people discuss salary.
Other companies go with the latter.
Another employer knows they have to offer you a strong incentive to switch jobs. You are taking the risk that will go form a job you like to one you don't. Or they won't like you, which is a still a risk to the employee switching jobs.
I don't think it is so much that employers don't appreciate existing employees, or that they worry raises beget future raises. It's mostly that if you have been a job for awhile they think you are somewhat happy.
For example, a company decides to move to the opposite part of the city, despite the fact that many employees chose it because it was conveniently close to their homes. Or, there is a team where the colleagues have great synergy (their personalities are compatible, their strenghts balance each other's weaknesses), and when they finish a project, instead of giving a new project to the same team, they are randomly assigned to different teams.
If the company is aware that they are paying the below market rate and their employees are staying there for non-financial reasons, why would they destroy those reasons?
Therefore, it seems to me more likely that the employers mostly just don't have a clue... either about market rates, or the things that make their employees happy. They pay existing employees less, because they can; and they pay new employees more, because they must; but there is no grand strategy like "make them happy and then they will be willing to stay here for less", only short-sighted paying everyone as little as possible.
In 'Supply and Demand' - developers in high cost of living areas will have a different 'supply curve'.
So the 'market clearing price' for developers in 'high cost of living' areas will be higher.
"In Canada, skilled negotiators will be able to increase their salaries to be more in line with their american counterparts."
No, actually, 'skilled negotiators' who understand 'Supply and Demand' will realize that their position to demand salary is systematically weakened by the fact their costs are lower.
Their price will be 'higher' than that for local jobs, but lower than their American counterparts, and definitely lower than Bay Area prices.
Finally - your comment is missing the Giant Elephant in the room.
There are 50x more developers out there in much lower cost of living centres than Canada.
You literally cannot afford to accept a job for <$40K a year - but developers in Poland can.
If we are going with the premise that 'Talent is Now Global' (And BTW I don't agree with this mostly, but for the purposes of this comment, assume it is true) - then the 'lower cost of developers' in other countries will affect those in 2cnd tier (i.e. relatively wealthy but not NYC/SF) cities.
I'm based in Canada and just hired a bunch of E. European developers for 1/3 the cost of local devs. and they are great - at least for the work I'm having them do.
Try to take a more nuanced approach.
Edit: imagine if you were selling widgets. Same widget. The price in USA is $1 per widget, by manufacturers made in USA. Their cost is probably 90 cents to make.
You live in Ukraine and your cost of making widgets is 50 cents. There are a bunch of other widget makers in Ukraine with the same cost.
When you and your competitive peers in Ukraine take your widgets to market, do you think you're going to be able to sell for the same $1 as the US sellers? No.
Because some of your 'peers' will lower their price a little bit in order to generate sales and that will bring the price down to where operating margins are tolerable. Probably 57 cents or something like that.
So this notion that a 'Foreign Dev' is going to earn the same salary as those living in SF/NYC - all other things being equal - just is not true. It's not a 'lesson that companies need to learn' - the market already has that built in.
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October 30, 2020—Ottawa—The Honourable Marco Mendicino, Minister of Immigration, Refugees and Citizenship, tabled the 2021‒2023 Immigration Levels Plan today, which sets out a path for responsible increases to immigration targets to help the Canadian economy recover from COVID-19, drive future growth and create jobs for middle class Canadians.
The pandemic has highlighted the contribution of immigrants to the well-being of our communities and across all sectors of the economy. Our health-care system relies on immigrants to keep Canadians safe and healthy. Other industries, such as information technology companies and our farmers and producers, also rely on the talent of newcomers to maintain supply chains, expand their businesses and, in turn, create more jobs for Canadians.
[...] [T]he global travel restrictions and capacity constraints led to a shortfall in admissions over the last several months. To compensate for the shortfall and ensure Canada has the workers it needs to fill crucial labour market gaps and remain competitive on the world stage, the 2021 to 2023 levels plan aims to continue welcoming immigrants at a rate of about 1% of the population of Canada, including 401,000 permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023. The previous plan set targets of 351,000 in 2021 and 361,000 in 2022.
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https://www.canada.ca/en/immigration-refugees-citizenship/ne...
Whats more likely to happen in that Canada may finally get a robust and dynamic technology labor market. With its sensible immigration laws, I know that a lot of my international peers are seriously considering moving to Canada. New immigrants will favor Canada over the immigrant hostile, gun-obsessed and anti-science US.
I've been hearing that for a long time, especially during the last 4 years. Yet it has not materialized.
Often, for international workers, attorneys will file twice: one in Canada and one in the US. If the US one gets slapped with RFEs or isn't strong enough to qualify, the Canadian one is used and is systematically approved.
> Whats more likely to happen in that Canada may finally get a robust and dynamic technology labor market.
Negotiating easier free trade with the US as well as matching US law would be more productive, as it would dramatically expand the customer base. But what's crucially lacking is a strong investment culture of venture capitalism and risk taking.
Being a minority doesn't excuse you from being racist and xenophobic.
I think the future will be more of a distributed hub model. People will often work remotely but will need to be able to be in person a few days a week in selected tech hubs. To avoid being left out one will need to be near a “hub” so you can be easily in person on those days when it makes sense to be in person.
Some will say “but I can be fully productive 100% remote.” That may be somewhat true, but the practicalities of that fall apart real quick when your on zoom and the rest of your team is going to grab lunch together.
If we have a remote workforce, why wouldn't I want to move somewhere where I can find people of like mind and spirit and feed that need for social interaction with them rather than with my company ?
It's a combination of the immense wealth generated by the tech industry and the rigid supply inelasticity of America's NIMBY housing policies. Anywhere this unstoppable force meets this unmoveable rock, prices explode. The entire area quickly becomes unlivable for anyone who didn't get in on the property ladder early. Then the tech industry is forced to go out and find a new tech hub for all the junior engineers who are bid out of a house by the senior engineers who cashed out their RSUs.
Full remote is the one opportunity the industry has to actually break this cycle. After all it's not just a problem for tech recruiters, it's also having all kinds of disastrous spillovers for the regular non-tech folk, who happen to be unlucky enough to live in the next metro targeted by the tech industry.
I think dissipation would happen if tech was actually expanding into a few large metros. Houston, Chicago, and Miami all have reasonable COL, but more importantly have way more population to absorb an influx of high wage earners. It's an interesting question, and one I don't really know the answer to. Why does the tech industry seem to consistently prefer mid-size metros like Austin to large metros like Miami.
What good does coming into an office do if most of the people you actually work with are in a different office. In normal times, I could come into an office, but relatively few of the people I interact with are actually in that office. So I'd be doing video calls from the desk in the office rather than my desk at home. Maybe I'd bump into one or two people I knew in the cafeteria.
Prices in London are probably similar to those in NY or even Bay Area.
This really presages trouble with industries being upended on the basis of technological innovations. The light at the end of the tunnel is that long-term, companies that value and can utilise technical talent to innovate rather than sustain will win out and heat up the talent market.
But my real passion is audio and signal processing. I look at job postings around the country for embedded developers and DSP specialists; fields that require much more specialist skills than the CRUD web apps and PDF reports I generally produce for my employers, but those jobs are offering a fifth of my current income! I've seen jobs saying "master's degree in computer science and 5 years of experience required" offering 30k.
We pay our grad students more than that.
Edit: obviously, it's not really a mystery as to why; you get paid money when you work in an industry that has lots of it. But the discrepancy is still shocking.
He makes 3/4 of what the president of my small defense contractor company makes, a guy who has been an RF engineer for 35 years prior to taking on the leadership role.
The two fresh grad EE's we have are both spinning software in their free time to nab software dev jobs over EE jobs, because the pay is often double.
This obviously isn't a problem if you're FAANG or Salesforce, but for a company of 20 it is.
when you 1099 an employee you force them to bear your tax and benefit burden. people who take the 1099 job do so because they don’t have a w2 offer or don’t understand. a 1099 has far less net profit at the same salary as w2. this is how contractors maker more money but have less real income
I looked up 1099 calculator. For Arizona total self employed tax is about 20%. That seems quite fair.
In EU I prefer self-employment. I can put car, home office and even babysitting into expenses and save on taxes.
An employer paying a group rate for health insurance will pay less per person than an individual paying an individual rate.
Even if the employer were to pass on the savings of not having the person in the group health insurance, the 1099 contractor would need to pay more to get the same coverage.
And beyond that there are things like a 401k matching or a pension that a full time employee has that a contractor doesn't have access to.
You can at least get health insurance with pre-existing conditions now but it can be very expensive. You may not be able to get disability insurance.
Being a 1099 contractor is mostly not a good deal for someone who actually wants a stable long-term full-time job.
I used to do contracting all over EU.... and it was pure bliss. Even with VAT "complexities", it's still about a million times easier to do taxes as a contractor in EU/UK, than it is to do your own taxes in US.
The final thing about contracting in US is that average employer cost of health insurance is over $20k per employee. If you don't fall under someone else's employer sponsored healthcare plan, your self employment income will be greatly diminished. (In US freelancers don't get huge bumps in hourly rates, just because they're not full time benefited employees)
The only reason most companies get away with this arrangement is because the government has refused to enforce it except in egregious cases, and ignorance on the part of the employee.
But it's a pretty tenuous situation. See Uber in CA.
You pay everybody outside your local jurisdiction as contractors, and you pass on the significant savings to them as salary, so they can approximate the normal employee benefits purchased directly for themselves. I understand this is a bit more complicated in the US as health insurance is a key benefit, but not impossible, and that's not a problem in most of the rest of the world.
Employees do need to register locally as freelancers, file invoices & do taxes, but that's a relatively simple process for such cases everywhere I'm aware of, and any costs can be included in the salary bump. We made it work with no big problems or complaints for anybody in the 2 years I was there.
https://gosmallbiz.com/the-independent-contractor-checklist/
BS, you can have 2x more skilled engineers for half the price and same quality, logic demands that you do not pay an Indian dev (which will still have greater salary than average in India) the same as US one.
I've had some experience in this and what I've realized is that the really good remote developers in India already know their value and they can demand US level salaries for their time.
Yes, it's still not as many and you can still find a lot of good developers for relatively (relative to US) low pay, but the trend is clearly changing.
If you're a developer in the Ukraine with great English and reasonable business skills, you should be able to land a pretty good dev job with a global company.
Another, just as good dev in the Ukraine that only knows Russian/Ukrainian, will have much harder time and will likely be limited to working with just local companies, significantly limited with options.
The people spouting "it's all about how much value you produce" are so naïve and ignorant of their privileges / market realities that it hurts.
With devs the compensations will match only when the good foreign developers have just as many alternatives as the good U.S. developers (or at least close to parity - exact parity will never happen due to jobs that simply can't be offshored - contracts with government agencies, for example)
But, if you onboard people into your startup I don't think most people would consider it a wise strategy to underpay certain team members that are part of a distributed team based on where they live..
Whilst I do not love the salary disparity between onshore and offshore workers, the issue is complex. For example, one has to wonder what would happen to local economies in Indian regions, and elsewhere, that are dependent on revenue from offshoring were Western companies to simply stop the practice[0]. Also, bear in mind that many offshoring outfits are set up by locals who see an opportunity to offer a service to companies in the US and Europe at substantially lower cost than they'd have to pay in their own regions whilst benefitting both themselves and their employees: i.e., there's some complicity there and it's fundamentally very different from, say, colonial exploitation.
I still don't love it, but I can see the benefits for both sides.
[0] One can take this argument too far of course: viz., child labour in the fashion industry. But the situations of a child stitching trainers and a software developer working for an offshoring provider are so different as to render the argument ad absurdum and disrespectful to both of them.
How much perverse pleasure do you think is a reasonable amount when they save a few thousand dollars a month, while at the same time publicly raising millions and paying developers junior than him more money... and doing everything in their power to burn more money to get ahead of the competition...
Fo you want to wait for the whole world to change or just have that senior dev make better decisions for himself
People that run business know that they need to keep a coherent symmetry on some level in how the team is structured and how they're compensated.
Save money by paying some people on your team less based on where they live.. yea, for those that think it's a good idea, good luck with that..
Businesses of all kinds offshore labour: small, medium, large, public, private, sole trader, partnerships, VC funded[0], bootstrapped, profitable, loss making, you name it. They all do it for what, for them, are rational reasons. Often very boring reasons. Offshoring can be the difference between profit and loss, the difference between a business that is sustainable and one that is not. A failed business can't employ anyone, whether onshore or offshore.
Now you can argue about whether a business that isn't sustainable without offshoring should exist at all, but that is straying further off topic than I care to go, and frankly is also another rabbit hole likely to lead to unhelpful oversimplification.
You might like to imagine gleeful scheming and maniacal laughter in the boardroom, but I'd confidently bet that that's almost never what's going on in the vast majority of businesses.
[0] You talk about "publicly raising millions": raising funding is not what the vast majority of businesses spend much time doing, and it's not what most businesses who use offshoring spend much time doing.
This is different from hiring a remote employee to your company where you've advertised a salary range as part of the job description.
In my experience that's almost always how it works because you have to employ people in such a way that you abide by all local laws. I have seen people employed as independent contractors but, and again this varies by country, there are often restrictions around criteria like how long you can do that for. It's also kind of a PITA for the "employee" because it means they might have to do things like sort out their own taxes and healthcare. If you have a legal entity in place you can do that for them. That means you either set up a subsidiary, or you using a local offshoring firm. And this applies regardless of the country.
Things were going very quickly from 1 to 20+ countries in like 4 years.
But... very few locations are really desirable.
Most digital nomad countries themselves are countries on demographic decline, or otherwise quite poor.
In EU it's either extreme bureaucracy of obtaining it, or some other very odd requirement that quietly sinks the whole appeal.
Dubai is one shining exception, except it's a rather expensive place. $5k month take-home on the bank statement pre-requisite is very sensible. You will be spending more than a half of that every month, and easily more than $5k if you want to live fancy.
I'm seriously thinking of Dubai now to live there for at least a year. Covid has totally busted the rental market there, it makes sense to exploit. You can get a minimally furnished villa for a year for AED 40000-50000, which is mindblowingly low for Dubai.
P.S. Don't EVER go to work in Dubai on a regular work visa without expressed guarantee that the employer will not put any bond, or lien on you, or your papers.
P.P.S. Yes, you can even buy pork there as of late: https://cdn-0.dubaiofw.com/wp-content/uploads/2017/01/where-...
It’s called Croatia, which is part of the European Union. It is better than the Estonian Digital Nomad visa because you do not need a “sponsor”, also known as formal local connections to get the visa.
You can also get Croatian national health insurance (obavezno) and supplementary insurance (dopunsko) without issue. As an American, I would get the tertiary insurance (dodatno), which has medical underwriting. It allows you to see private providers with virtually no wait. Anyways, I am extremely unhealthy and somehow I was able to get tertiary insurance.
More here on the visa: https://www.expatincroatia.com/digital-nomad-visa-croatia/
With an American salary, you get to live as a king or a queen. Quality of life is very similar to the US. I am a dual US|Croatian citizen working remote part time for a US company, but of course I can do that without a visa due to my status anywhere in the European Union because I am a dual citizen.
There are only a handful of western countries with high quality of living that will let you have such visas on the premise of “willing to pay the taxes”. There is a reason why.
NYC is half the size of Tokyo, but has more going for it.
Dublin is just about a million. Amsterdam is about a million.
FTFY
Way too many human rights and labor abuse issues to be worth the risk IMHO.
I worked in Doha short term once, and frequent Dubai.
There is so many expats there other than people who effectively sold themselves into indentured slavery because of they can't read the employment contract, that I would say it worth the consideration.
The occasional horror stories of Western C-level exec getting on the bad side of their employers, and getting stuck in the country are very much real, but again most of them wouldn't be examples of good deliberation, and they very much knew what they are going for.
There are other things in life than cheap rental and fancy living, even if you don't happen to be personally directly affected.
https://www.amnesty.org/en/countries/middle-east-and-north-a...
https://www.hrw.org/middle-east/n-africa/united-arab-emirate...
On other hand life in Dubai can be by far more liberal than in most parts of the world. Anything other than fornicating on the beach probably goes there.
Far more people complain about Dubai being a Sodom with hipsters, rather than it being a "puritan Arab kingdom"
For whom I have the most pity are by far the Emirati natives. Forced to live in this Disneyland for foreigners under a gunpoint.
That's for their legal citizens. It was even a bigger shock for me to know how Emiratis can torment, and keep in destitution their own Arabs just for some "wrong surname" because of some century old matter: https://en.wikipedia.org/wiki/Bedoon_(stateless)
Unless you're poor, gay, a woman, a foreign worker or whoever else the entirely lawless society of SA wishes to execute this week.
You're OK with living in a place where there is no actual law and people can be imprisoned or executed with minimal trial. That seems very risky to me.
If you go by that logic, you can only leave in a select few countries. It's an unfortunate world, but remember that by bringing your culture and ideals, you are actually helping changing the place.
It's hard to pass on the things that happen in the middle west culture, it's so different and against a lot of philosophies that I cultivated my whole life. Maybe I'm not prepared enough, but I would hardly bring my family to that situation
Only need 1 or 2 devs? You are more likely to find them locally and this makes it easier for you with tax/legal etc. Local people are more likely to be culturally closer to you which makes both recruitment and performance management easier. There are no time-zones etc.
The truth is, after you grow just a little bit bigger, in most countries, there are simply not enough local devs to meet the demand, you have to go remote, probably nationally and ultimately globally. This brings many challenges and in some cases costs a lot in legal/tax/hr costs, depending on whether you are sub-contracting to another EU country or somebody in China. Culturally hard, timezone inefficiency and many other well-know issues.
Another big issue is the type of work. If you have a job where you can easily package up tasks and they don't need much management input, you can much more easily farm it out to a managed firm in e.g. the Phillipines. One of my previous companies only went remote because they couldn't find enough people to recruit, it cost them the same amount after expenses per-person in Vietnam as it did in the UK.
As to whether it works, if you are naiive and think it is just about money, it is very likely to fail but plenty of companies have global teams and it works just great thanks.
Also, people like the social aspect of work. That's why I think everyone is pretty much going back to the office as soon as this is over.
The secret is just: no meetings. Meetings should be exceptional. If you have discussions in a timezone, record it for those who can't attend. Prefer async, prefer written communication.
Have lots of one-on-one communication.
90% of the meetings I have ever attended were counter-productive anyway and were just there because a middle manager wanted to feel useful by wasting devs time. If you are having a meeting where one person is doing most of the talking it can be done async. Feedback can be given async. Demos can be done async.
Some conversations need realtime, but most of these can happen one-on-one, recorded for people who are in a different TZ.
Yes, that's a different way of working, but it is not too hard, we have the tools and it makes sense. The only obstacle is a culture of the useless meeting. Kill it, embrace the async world. Keep realtime communication for meaningful 1-on-1.
Embracing async communications is the key. If I send you a message at 3am just reply when you are ready. If I need a real time meeting I can schedule it, but that's rare for developer communication.
With a small difference it feels as if it is basically the same timezone so people schedule meetings with that assumption, but clearly it isn't. By the time I'm awake in California it's basically noon in EST.
When most of my team was in India with a 12.5hr time difference it was actually easier because it was obvious to everyone that we're on opposite cycles so meetings were an exception and nobody expected real-time communication and acted accordingly.