First time I have ever been called "anti capitalist" and I've been called many things:} Believe it or not there are employees of M$ that do not receive stock as compensation. Those of us (I include myself) that do live in the capitalist/libertarian bubble and get such things tend to forget that. These non-shareholders are also the ones most impacted by inflation and tend to work hourly.
I was not trying to imply there is some grand conspiracy. I was however trying to point out how the incentives of large companies are structured and are often skewed. God forbid any of those non-shareholders try to form a union.
Maybe it would be good if more people in the bubble walked a mile in some one else's shoes.
I own 1,000,000 stock and are paid 1$ and 150,000 stock - CEO
- CEO: "I am freezing wages"
- Stock goes up 10% Year to Year (say 100->110$)
- inflation was 10%
coder: salary is effectively 135k, ($15k loss), stock went up 1k
CEO: salary is down to 90 cents (10 cent loss), stock went up $10,000,000)
HN commenter who apparently things they are some great economist but quite obviously can't do basic math:
"But everyone gets to own stock!!!"
So to the meat, does the employee have the option to be 100% compensated in stock? NO. The CEO is effectively compensated that way, and LOVES IT because the effective tax rate on long term capital gains is 15%. You know, I would have LOVED to have been compensated in 50% stock or some equivalent with stock options (backdate me pleeeze like the CEO of UHG got to!)
So maybe I'd take your dumb comment at face value if everyone got to participate in the great executive tax fraud, but... we don't.
It’s actually not that pedantic, it’s like calling JavaScript “Java”. For stock options to be profitable the stock has go up. Stock grants are simply cash in a currency that may be more or less valuable than originally granted.
Employees get both options and grants, depending on their position and so on. And stock does go up. It's Microsoft. Otherwise you can... just not use the option. The purpose is to encourage employees to help the company and raise the stock. In theory at least.
Thanks for explaining it but I know how it works better than most here, hence the comment.
If you get $100K in stock options at a certain price and the price doubles, you make $100K. If it stays the same, you make nothing. If you leave, you have a certain period of time to exercise or you lose your options.
If you get $100K in stock and the prices doubles you make $200K. If it stays the same, you make $100K. If you leave the day it vests, you keep it.
They’re not at all similar except in the fact that they’re securities. Using them interchangeably is a great sign to ignore any financial commentary from that person. I’m only here because I see this mistake in every single thread that has anything to do with compensation. Engineers need to get financial education.
You understand other people can read and learn, right?
>And stock does go up. It's Microsoft. Otherwise you can... just not use the option.
And lose the equity portion of your compensation, unlike stock grants. You don’t seem to get the nuance but you are so desperately trying to dismiss my point.
What nuance do I not get, buddy, you're literally quoting me saying it. Yes, if the stock doesn't go up, you get nothing. I said this myself. This is an incentive for employees to work for increasing the value of the company.
What is it you think I'm missing here at all? You're pissed employees get nothing if stock doesn't go up? You think I'm missing that? No, THAT'S THE WHOLE POINT OF OPTIONS.
I know almost nothing about this, so as far as I understand stock options are like stock except they start from "0" and you can only cash out the positive difference?
Like you can only earn from the company's future growth.
A (call) stock option is the option to buy X shares at Y price by Z date (a put option is the same thing but to sell instead). You can go on any brokerage and buy a call option on Apple, for example, which would be the option (but not the obligation) to buy 100 shares of Apple at some strike price, say $200, by some date, let's say August 31, 2023. This privilege of having this option will cost you: let's say $2,000 (the real price is calculated via complex formulas). When August 31 comes around, you can either buy or not buy, but your $2,000 is gone either way. If Apple goes up to $300 on August 31, that option will now be worth $8,000 (($300 spot price - $200 strike price) * 100 shares - the original $2,000 it cost you to buy this option). If Apple went to anything below $220 ($220 - $200 * 100 - original $2,000), it wouldn't make sense to exercise your option since you would lose money. This is the basics of it.
It's generally not interesting for an employee to receive options because if the company doesn't perform well by the time your exercise date comes around or you leave the company then you get little or nothing. You would rather get stock grants which are shares that have value. If you get some shares when Apple is $200 and it goes to $100, you still have half the value of your shares.
Generally, in public companies (with extreme exceptions), options are issued to executives whose compensation is dependent on how much they can increase the company's share price. If they fail, they get little to nothing. If they succeed, they make a lot.
Thanks for asking. Let me know if you have any questions, I'd be happy to explain more.
As a percentage of the SP500, it's never been higher.
This is important because (a) economic performance is relative (b) the most likely thing (or at least the most advisable thing) for anyone who receives MSFT RSUs is to immediately sell them and use the proceeds to buy more diversified investments.
IKR? A stagnating wage means you're actually taking a yearly pay cut, and inflation adjustments actually mean a stagnating wage.
It was less noticeable before the pandemic because only assets were growing faster than inflation while food and goods seemed to stagnate, but now everything is booming.
Consider that other professions have less bargaining power than SW devs.
I'm thinking about moving to Belgium where I hear salaries are automatically indexed by inflation.
The deflation has begun, if you look at M2 money supply. But food is not going to decrease in price, and housing will lag. So it'll still feel like inflation, but consumer goods are already going down.
2nd derivative being negative doesn't mean inflation is becoming deflation though, it just means that the rate of change of inflation is decreasing, but the inflation(and rate of change of inflation)itself will still be positive(unless I'm misunderstanding something, which is entirely possible).
You're not wrong, it's one of those "HN traps": we're smart, and we can apply that other places, and even find other people who will back up our findings and agree. But colloquially, in the actual field, people expect something different.
Makes it hard to converse because _nobody_ is wrong here: i half-assed my way through an economics degree and know just enough to know OP is making a relevant comment, then confirm their comment: M2 money supply, is in fact, decreasing.
The reported number is backward looking year-over-year. A 4.9% rate says the price of their basket of goods is that much more expensive than it was a year ago. Last month the inflation rate was 5% when compared to March of 2022. So, in a sense, goods are becoming cheaper.
In absolute terms, groceries, airline fares, new cars, hotels and household energy (such as electricity, fuel oil and utility gas service) are actually cheaper than they were a month ago[1].
(1) It doesn't matter if the economy will be subject to deflation in future, right now it is not, and while later in this thread you talk about 2nd derivatives being negative that just means the rate growth of inflation is dropping, not inflation itself, so excusing below inflation compensation changes is BS.
(2) If/when deflation does occur, we know from prior instances the reduction in worker compensation is much higher than the rate of deflation.
I don't get this attempt to represent below inflation compensation changes as ok because one day in future some economic change will make this years actions "reasonable", because that is assuming that this year is a one off, rather than recurring. It also presumes that wages won't be cut even more when deflation occurs (generally by mass layoffs and then rehiring the now unemployed when their choices have been reduced to "homeless vs lowered pay").
We also know that businesses don't actually foresee a problem with deflation as they're still happily giving mass payouts and wage increases to their executive management, performing stock buy backs, and issuing large dividends. If companies were actually legitimately concerned about the potential for a deflationary event they would be hoarding cash.
>If companies were actually legitimately concerned about the potential for a deflationary event they would be hoarding cash.
Or freezing salaries. Just like in the article. I don't really have an answer for you with regards to any stock buybacks or large dividends.
I'm not talking about anything as reasonable or mentioning the 2nd derivative myself. M2 money supply is a specific thing that is responsible for money creation, it's going down now for the first time ever. We are in uncharted territory.
Microsoft has been bleeding talent for the last 5-6 years due to low compensation. It's why the SLT authorized a "correction" in pay last year that saw many people get a significant pay bump. Lots of new college hires have even stated that Microsoft's offer was the lowest offer they received. Levels.fyi tells basically the same story as well if you compare Microsoft to many other tech companies.
One thing to note is that the bonus and stock award budget have been reduced from last year where it was inflated. So, it's back to normal. What is frustrating is that it's also likely "back to normal" for the executives when it should be minimal to non-existent. The pessimist in me says that this is nothing more than juicing the quarterly stats so that Satya and his directs hit their targets for their "normal" bonuses.
Honestly, this is the closest I've seen the company to unionization and I'm willing to bet that efforts are going to start soon. Especially if the Q4/annual results exceed expectations.
Every time a company is one day telling the employees that they need to take a pay cut to keep the company "competitive" (and this pay freeze is actually a pay cut), and the next day they're doing a stock buyback and the C-Suite is giving themselves enormous performance bonuses they need to worry about unionization.
Not to sound too much like a libertarian, and I'm not against unions, but isn't this something that can be more or less corrected by a lot of engineers finding work elsewhere? It's not like Microsoft has anywhere near a monopoly on the software engineering space anymore, and most of the engineers there can probably adjust to remote work without too much of an issue.
Then we get the cycle of Microsoft complaining that they can't hire enough people, and then they bump salaries up again to be competitive.
> but isn't this something that can be more or less corrected by a lot of engineers finding work elsewhere?
In this market? I'm skeptical. I'm sure some fraction of them can do so at equivalent or higher pay, but the tech market at the moment is quite soft and I wouldn't be surprised this was taken into account and served as another motivation for this move from MS.
That's fair, I was a victim of the layoffs of 2022 (well, sort of), and it took months to find a job paying well enough to cover my mortgage. I did find one, and I really like it, but it took a lot of time and effort to find...certainly harder than it was early last year.
Dividends should be a sign that a company has excess cash and can't find a good place to invest it. Paying a dividend while asking workers to take a pay freeze signals they don't believe the workers are returning enough value to justify paying them more.
Because I have to sell the shares and I get a bunch of cash. Dividends could happen yearly and for significant amounts, considering how cash rich these companies are.
For the whales, sure, they're great, since they do the whole "borrow against the share price and extend forever".
Buybacks are actually better for employees with unvested grants. If you have 100k in unvested stock and a dividend is issued, you get nothing. But an equivalent buyback raises the price and now you vest a higher amount.
> Microsoft has been bleeding talent for the last 5-6 years due to low compensation.
I have been hearing this for awhile now. When I compare MS pay and benefits to what is on offer at other companies, almost the only jobs I see with better TC are at Meta and Google. And that will likely not be a thing of Meta's future.
Things have probably changed in the last year or so since the pandemic, but due to a combination of stock appreciation and much smaller company size pretty much everyone was paying more than MSFT : Uber, lyft, airbnb, snowflakes etc... and a bunch of pre-ipo company depends on how much one believed their valuation.
The only company paying worst than MSFT were the hardware company such as AMD,Qualcomm and intel. But hardware companies are known for low wages
For most people I think work is just work. The kinds of people who were into computers in the early days were arguably different than average; it was a fringe thing once upon a time. Today, it's just work. People need jobs, large corporations offer jobs.
I've eschewed these companies myself, but... I'm not sure it has been so wise all the time. I could have worked at a FAANG at one point, and the offer was astronomical compared to what I typically earn. The weird part is, I don't like social media because I have kids and I don't like what it's doing to kids. Yet I have kids to take care of, and that money would have made a meaningful difference to their security. So what's the right call to make?
It reminds me of Cato the Younger. He was steadfast to his virtues and principles with unwavering integrity, but it appears to have lead his life to ruin. Was it worth it? Do compromises make sense here and there?
I don't blame people for wanting to work for these companies. It isn't for me, I think, but I totally get it. No one deserves mass layoffs and tanking equity because they don't have retro-hacker cred.
I never understood the idea that salaries should be expected to always be corrected for inflation, and that not doing so is somehow secretly a "salary cut". Salaries are driven by supply and demand, and individual companies (maybe not Microsoft though) can generally only afford to raise them by a given amount. If that amount is less than inflation then that's that, right? Most companies (again, maybe not Microsoft though) can't just conjure up more money out of thin air, that's not how businesses work.
Presumably the business is not just leaving the prices they charge for their good/services static and saying "welp, a dollar is worth less now than it was, I guess we'll target less revenue!"
Cost-of-living salary adjustments should reasonably be expected in the same way a company is reasonably expected to adjust pricing according to economic conditions.
Because it is a cut. Your spending power is less. It's a real terms cut. There's a good chance they've increased their product prices by inflation as well.
I mean they don't have to raise salaries, but if someone is offering me a higher rate I'm going to go.
You have no responsibility to your company.
Now if the entire market is telling me to take a cut, either it's collusion or software developers are simply worth less now.
If the business can't afford to raise salaries to match the prices of goods, then that is a pay cut in terms of the goods I can afford. It doesn't matter why.
If I earned $5/hour last year and a gallon of milk was $5, then milk going to $6 means that my milk/hour rate has gone down unless I now earn $6/hour. That is a pay cut.
It's not secretly a salary cut, it's an explicit salary cut relative to the cost of living and everything else. After all, your money is worth less now than it was a year ago if there's no cost of living increase? I'm sure the initial circumstances of salary negotiations for a position took into account current economic factors. I'm much less likely to want to stick around at a company that cannot compete with living expenses with a general 2% increase YoY. That screams stiff/cheap or that the company is on the cusp of folding.
But the company itself faces all those challenges too. Customers are cutting back because inflation is forcing them to reallocate their own spending. Supplies cost more. Raising prices isn't always possible in the face of competition, at least not enough to offset inflation.
Inflation is basically a correction for a previous period where money was too cheap. It hurts everyone (at least everyone who didn't prepare for it).
An inflation measure is defined by a particular basket of goods, and sometimes their prices move for good reasons. We shouldn’t expect it to always cancel out in such a way that our salaries end up with exactly the same buying power for those particular goods.
But my cost of living is factored into whether or not I’m making enough money to, uh, live. My code output is not very good while I am dead.
It is a salary cut because the dollar is worth less every year. It's already lost well over 99% of it's value in the last 200 years (a time when the average house cost 800$). So, if inflation goes up by 10%, your salary is being cut by almost 10%.
Yet CEO's bonus in 2022 was 20x bigger than his salary. I don't think it will be less this year either; with all-time high stock price and these "cost cuts", he will be wholesomely rewarded.
This kind of comment woups not have been here like 3 years ago.
It was an amazing journey to watch HN denisens adjust their opinions as they went from creme de la creme and 'anyone can create a unicorn tonorrow' to, you know, being basically like a plumber but for JSON.
The secret is, we've always been plumbers. It's not a terrible comparison in some ways - plumbers are highly-skilled, scarce, and command high prices for their services.
Nobody mistakes them for Capital, especially not plumbers themselves. Engineers seem to have gotten the wrong idea about themselves lately.
Gosh I like this comment so much. This is exactly how I felt and saw ourselves whilst sitting in hipster startup offices getting way too much money compared to the rest of society. That said, tech people in general publicly don't get enough respect or disrespect for their work.
I mean, not really. Every house has a main water shutoff valve. You can watch a 5 minute YouTube video on how to snake a toilet yourself. Or spend an hour installing a new toilet.
I’m familiar with the work you’ve done, I respect you, and I know you know that this is a ridiculous and argument. You can walk into any hardware store and buy a new toilet, and the installation instructions are included. Its dead simple. IKEA furniture is often more difficult.
I don’t think it’s ridiculous, but perhaps I haven’t fully explained my position? I have never installed a toilet but I’m confident that I could go into a store and buy one, and the instructions are probably straightforward. That said, I would probably still call a plumber because the risk of me doing it wrong seems uncomfortably high, and I could end up with a smelly mess or thousands of dollars in water damage.
And my position is that teaching you to install a toilet without causing water damage by turning the shutoff valve 90 degrees is in no way comparable to teaching c-suites to code.
The water damage would occur over months and years, eventually requiring an expensive remodel and repair of the floor underneath. Not a personal story because I don’t own a home but, you know, it happens.
That number is entirely dependent on their leverage.
It works like this. If I could hire bob for $10, but he produces $100 worth of value, hell yes I'm going to hire Bob. But Evil Corp sees that and thinks "damn, I want Bob to contribute $100 to my bottom line, so I'll hire him away from Bright Corp by enticing him with $20 pay.
Then, BadAss Corp thinks the same thing, and hires Bob away for $30. This process repeats until Bob's pay + opportunity cost == $100.
However, there is a point of diminishing value being added. If lots of Bobs are available, the incremental value (leverage) each one adds becomes less. There are only so many redesigns of one's database that improve productivity much.
As you can see, the more Bobs, the less they'll get paid. Until Frank comes along with a new idea for adding value, and starts the process over again.
Consider also that although an engineer has the potential to engineer large amounts of value, that doesn't mean he will. Hence, the value of him to the company is discounted by the risk that he won't deliver.
I.e. an engineer who has a track record of delivering value can command a much higher salary. I know one who got a million dollar salary.
This is also why CEOs get paid so much. Leverage. Nadella is a prime example. As an MSFT shareholder, I'd say he was darn well worth it.
> This process repeats until Bob's pay + opportunity cost == $100.
I usually find that this typically stops at something like $10 for most people. Despite people being “valuable for millions” offers for that much don’t magically seem to spring up. The people I know making a million a year typically make the company tens of millions…
>getting way too much money compared to the rest of society
Personally I feel that the "rest of society" is getting way too little money vs. us getting way too much (opinion based on the fact that profits/productivity have outgrown salaries for too long).
Yeah, man, I've been trying to tell people this for a while. Programming isn't overpaid; it's just the one field where market forces actually work to provide a livable wage that grows with inflation.
When I was working at a non-FAANG for normal pay, I was basically living the exact same lifestyle as my dockworker grandfather. I could afford a house and car, wife didn't have to work, one vacation per year, moderate savings.
There's a guy in a massive yacht who won't let anyone on board. You're in a one-man lifeboat. But you say you're simply too well off compared to the people swimming in the water.
GPT isn't going to steal anyones jobs. It's just the new outsourcing where the big thing in the 2000s was to try and outsource your work as much as possible. Except that problem came to roost quickly due to poor code quality and the cost to fix it was more than the cost to make it good in the first place.
Same issue with GPT. It's generating low quality, poor performing, poorly designed code. Any company using it as a basis will be in trouble.
Plenty of companies make bank using low-quality, buggy code. Not the kind of places most here work at though, because they weren't hiring dedicated developers to begin with.
Well, although he put a lot of work into it (they didn't call him the Little Beaver in college for no reason) he wasn't Penske material, so he shouldn't have been there. But that still doesn't answer the question.
There's a small remote island community in New England that I visited once. I was told that the person with the most political sway on the island is the plumber. It was explained to me succinctly: You don't need a plumber often, but when you need a plumber, you need a plumber!.
HN has been talking about the disparity in CEO vs worker pay for quite a while. Here's a highly-upvoted post from a little over 3 years ago about exactly this topic: https://news.ycombinator.com/item?id=20707473. Almost all the top comments are clearly on one side of the debate.
I wrote an article about this as far back as 2010. It didn't go over well then. ;)
That said, this phenomenon should not be used to justify exorbitant executive compensation that is very out of line with what the positions lower on the totem pole are capable of getting. We do not need that kind of society.
Anyone can buy MSFT and get their share. As for the employees, they have stock options and are getting a piece of the all-time high stock price.
Although MSFT's all time high stock price was in 2021.
This goes for all public corporations. Anyone can get a piece of the action by buying some stock in them.
As for the size of Nadella's compensation package, speaking as a long term MSFT shareholder Nadella has earned it. You might want to check out a graph of MSFT's stock price before and after Nadella became CEO.
"Of this total $2,500,000 was received as a salary, $10,066,500 was received as a bonus, $0 was received in stock options, $42,269,560 was awarded as stock and $110,250 came from other types of compensation."
Set this against the several hundreds of billions added to the MSFT value during his reign, and his compensation is the bargain of the century.
As a longtime MSFT shareholder, Nadella's compensation is coming out of my pocket. I don't begrudge him a penny of it.
Microsoft has minted more millionaires among its employees than probably any other company.
I'll let you in on a secret. Regardless of what the official policy is for a company, if you feel you're undervalued, and you're right, you can negotiate the pay you feel you're worth. And if you cannot reach an agreement, there are plenty of other tech companies. In the Seattle area, there's Amazon and Google, for example. You wouldn't even have to move.
I don't get the obsession with CEO salaries. Envy is not a productive way of thinking about economics. In a huge company, distribute the CEO compensation to employees and it will be peanuts (in microsoft's case, it is something like $200 per employee - not per month or anything, that is the total). I don't get it. If all the CEOs in the world were forced to make $0, it will not meaningfully change the amount of money in workers' pockets. It is the wrong tree to bark at.
It sets the tone and it's unlikely that just the CEO gets bonuses like that. If the exec salaries/bonuses were tied to all the other salary adjustments, the incentives to care about workers would be better too.
>> If all the CEOs in the world were forced to make $0, it will not meaningfully change the amount of money in workers' pockets.
> That's just not true.
But its not far from wrong -- cutting a ten million dollar a year expense and putting it to worker pay will not make workers rich in the colloquial sense.
Is the CEO some sacred object that should be treated differently than any other part of the org? Just because there are a handful of C-level execs, they deserve 20,000% bonuses while the rest of the org skimps?
It’s about equality, attributing it to ‘envy’ reeks of entitlement.
In the 90's the Seattle Times estimated that 10,000 millionaires (excluding the value of their homes) live in Seattle that made their fortunes from merely being an employee of Microsoft.
Wondering how long it’ll take for other tech companies to copy this move and pretend that they independently arrived at these conclusions after their meticulous macroeconomic analysis.
It doesn’t take illegal back channel coordination to play follow the leader.
All it takes is one major company to pull the trigger, then the rest will follow.
The hiring market during covid was wonky in a way that favored applicants, and a lot of folks who got hired were under-qualified, overpaid, or both. This is just a natural reversion to a more balanced state across the industry.
It created playground for people secretly working multiple jobs for sure.
Before it was unheard of.
Now had to let go some for doing it, cancelled numerous applications and interviews once investigation revealed their scam (applying through fake names, creating multiple deceiving profiles with fake activity etc).
It's frankly starts to be quite difficult to hire honest full-time remote programmers now.
Come on. If Google broke ranks and started aggressively poaching people for GCP and going after market share, Amazon would realize in about 5 seconds that it hadn't "overhired" for absurdly-profitable AWS after all.
These firms have colluded to drive down wages before (the "Techtopus" case), a fact that we know because they were stupid enough to put it in writing. This time there's no proof and may be no explicit agreement, but a tiger doesn't change their stripes.
The way most of these companies are colluding now is by using third party firms that "aggregate industry salary information". So basically company X provides their data, pays some dollars, and get access to what other companies in their "peer set" are paying for different types of levels/experience. Reminds me a lot of the schemes companies will sometimes use to do bribes in other countries -- paying a third party consultancy who they had "no possible way of knowing that they were actually just bribing people".
How exactly is it a 'natural reversion' when even high performing employees are now effectively taking a massive pay cut due to the salary freeze and inflation?
> high performing employees are now effectively taking a massive pay cut due to the salary freeze and inflation?
If any “high-performing employee” feels like they are taking a “massive pay cut” merely due to inflation, then something is wrong.
Either they were grossly underpaid to begin with (change jobs, it can be done if you’re that good and that low paid), they aren’t actually that good (so total comp package, including RSUs and refreshers, is relatively weak), or they have a warped perception of the value of money.
If a dev is pulling in 300k+ (standard, especially the +, at places like MS), and the cost of eggs, rent, or restaurant food is something they actually notice and impacts their day-to-day life, then I wish them the best of luck — they will need it.
A paycut is a paycut no matter how you try to spin it. If someone's earning 150k a year with 5% inflation and doesn't get a raise the next year matching inflation, they are quite literally taking a 5% pay cut in comparison to changing jobs which likely offers salaries starting at the post-inflation level.
In this case it's worse because not only are their salaries not going up, but the things nominally used to get around raising salaries (bonuses, stock) is also not going up. You trying to spin it by saying 'well they're earning 300k+ a year anyways' is not helping your point when there are plenty of junior and mid-level engineers earning far below that which are going to be most impacted.
My thesis is that many of them, especially at places that grew a lot during covid like MS, were/are overpaid relative to their skill set / ability to add value.
Cutting positions was one way to correct this.
Freezing salaries is another.
If any devs hired during covid think that their salary was totally justified and shouldn’t be cut directly or indirectly, then they are more likely than not delusional. It was a frothy hiring market, and the upward pressure on salaries across the board was not healthy for the overall tech ecology, imho (the smaller companies couldn’t afford competent devs).
Note that I am actually an advocate of tech corps sharing more of the spoils with their employees, but not in the way that it happened during the pandemic. Reward competence selectively rather than randomly rewarding just being a warm butt in a seat during a hiring boom.
I have no doubt that during this “pay freeze” at MS, the star performers will still be rewarded somehow.
Okay, but there's a core flaw in your argument: Microsoft has already cut jobs, and now they're freezing salaries for everyone. You're effectively trying to say that everyone at Microsoft deserves a pay cut and that their salary is unjustified, which seems a fair bit more delusional.
It seems to me you're working backwards from the position of 'Microsoft is justified in what they're doing' and then continuing to adjust your position in order to make that statement true. Given that Microsoft is still extremely valued according to their stock prices and that their earnings are higher than ever, citing market conditions as a reason to cut salaries when your market condition is positive reeks of bullshit.
> You're effectively trying to say that everyone at Microsoft deserves a pay cut and that their salary is unjustified
Key employees and high performers will be rewarded at MS and elsewhere. It just won’t be announced in a press release.
If you want to disagree with me or think that what I say is bullshit, that’s fine. The market will have the final say. I’m just a pundit on a message board.
Imho, this move by MS, which will probably be followed by others, is just them exercising their options on their side of the labor market.
If folks don’t like it, they can leave and/or change careers.
There will almost certainly be a little bit of collateral damage, but I imagine that most of the high value-add people will be happy with their pay packages while keeping their mouths shut.
I wish I could short MSFT, but it still seems like a bad move. The whole company is built around being just barely good enough and hard enough to remove that they stick around forever from inertia
The products are all going to keep getting worse as they lose the talent to maintain or upgrade them meaningfully, but it'll take a long time for the company to fade away
The natural conclusion is that jobs (at least in the US) are a type of labor market. There is push and pull on both sides.
During the pandemic, the market heavily favored employees. The market now favors employers.
The direction of the price of labor seems to have been more or less appropriate during each of these periods.
On a personal level, I don’t have much sympathy for folks whose worst experience in a labor downturn is simply not getting an inflation adjustment — it’s about the mildest correction in defined labor costs/benefits that can happen to them. I don’t think these folks realize how close to having no job they and/or their current peers actually are — that would really suck.
To the issue of whether MS should make this move or not (esp. given their financials), that’s a different issue. As I have mentioned elsewhere, I think that there will be quite a bit of quiet total comp boosts to favored folks — RSUs, retention bonuses, spot bonuses, promotions, “promotions” (e.g., different title, same job), etc.
Salary curves are rarely smooth and unidirectional over the course of a career. Most folks, in fact, will have a very spiky salary curve. I think many folks who came into tech after 2009 or so just haven’t seen or experienced this spiky curve, and their limiter range of expectations is showing.
Right. Wealth and power are concentrated and do not need to be coordinated. Their individual actions and self-interests organically merge to maintain the state of affairs that keeps them wealthy and in power.
They kind of do. If Facebook and Google suppress their wages and some other company poaches their best people the buying cartel could easily fall apart.
OPEC suffered from exactly this problem quite early on. It only takes a few defectors of sufficient size.
Apple and Google settled an antitrust lawsuit a few years ago for colluding to suppress wages (by agreeing not to recruit employees from each other)[0].
The settlement was a tiny fraction of the amount of money they saved by entering the illegal agreement in the first place.
If history is any guide, probably more than zero, and surprisingly blatant and poorly-concealed.
And I don't think anyone's even tried to suss out illegal market-manipulation schemes that are surely hatched at various seems-like-something-out-of-a-comic-book-but-is-actually-a-real-thing rich people secret societies and "retreats" and shit. It's wholly unbelievable that there's not a ton of that going on there, better-hidden than the ones that amount to one CEO emailing another with "let's illegally collude, LOL" (which, incredible as it seems, also happens, but at least sometimes gets caught).
Just like us engineering workers have groups and forums where we share ideas so do ceo workers. They want to keep their bosses, the shareholders, happy and so they share ideas. Right now layoffs are so hot, and as ceos dont innovate much that’s the trend they follow. No need for illegal backchannels. Just a cool trend. I just hope that those layer off workers that are lucky and smart enough are working on replacements for the googles and microsoft out there because to be fair they are well past their expiry date.
Is it not better/preferable to freeze salaries than to cut more staff? From a morale PoV, from a human PoV, except maybe not from an individual PoV, overall.
Hiring gives someone experience they sought and presumably would not have had (else they might have kept put). So overhiring in some light does look bad, on the other hand it gives some people the necessary experience for their next step in their carrers.
> So overhiring in some light does look bad, on the other hand it gives some people the necessary experience for their next step in their carrers.
Not if they were let go before their first year, which has been the case at a lot of tech companies recently.
New hires, juniors especially, need a lot of time to onboard. Lessons in the first weeks and months of a new job will be more about company-specific tooling and minutiae, not engineering in the broader scope. Portable lessons come later, usually after you've found your legs.
Yes a lot of companies hired a lot more. A lot of money also got distributed in this process which otherwise wouldn't have. Laid off employees got some work experience out of it. Better than nothing.
I don't get this stuck up argument again and again Why did they hire before? As if there is some really great answer that can reveal itself by repeatedly asking this question.
> Cutting would be better than freezing salaries.
Many would like same or lower salary than being laid off. Those who looking for higher salaries can move on just like they always have.
i thought the answer was Jack welch philosophy of management: always overhire and then prune 10% of your workforce every year. the theorey goes that way, you keep the best and loose the rest. But, that assumes that employees are interchangable like cogs which isn't true. plus, most companies aren't necessarily able to determine who's best and worst and may even end up laying off those who are better.
Large tech companies don't exist to serve as employment programs for software engineers.
If they believe it will increase profits without longterm harm then layoffs/salary freezes are the right thing for them to do as a company even if they are wildly successful.
Layoffs are frequently done when a company is struggling, so people seem to think it's incongruous for a company to do layoffs if they are doing well.
> If they believe it will increase profits without longterm harm then layoffs/salary freezes are the right thing for them to do as a company even if they are wildly successful.
And that doesn't need to be the case. Many of these multi-national big tech companies have failed to move forward with layoffs in some countries because of laws that protect workers.
For example, in some countries, companies need to prove that they're struggling in order to lay people off.
Surely though if it’s in the companies interest to not keep certain staff on the payroll now (I.e.), that’s because they believe reducing headcount will make them a healthier company.
A healthier company has more longevity, and a company with more longevity will hire more people in the long term than an inefficient or bloated company. I feel like your perspective does not take time horizons into account.
Do not have mercy for a faceless corporation continually posting profits that grow quarter over quarter. They are rolling in money and could cut executive comp or something else, but choose not to.
If, say, Sundar was only offered a $100M package instead of a $226M package, where would he go that would pay him more than $100M? There's no other person out there who would do the job for $100M?
An issue would be that Sundar is plugged into Google and knows all the ins and outs and has the relationships that an outsider would take some time to learn/form, but on the same hand, Sundar going out into the wide world is then lacking those same things at his new company, meaning new companies might be as hesitant to hire him as Google would be to hire a new outsider CEO.
> There's no other person out there who would do the job for $100M?
I'd be willing to do a terrible job at it for only $10M/yr. That's not what the shareholders want; they want Sundar to keep doing what is, from the shareholders' point of view, a quite respectable job, seeing the shares grow from $34 when he become CEO to $112 now for a CAGR of around 17%.
Sure, I don't mean anyone willing to take the job, I mean anyone the board might reasonably select who has a good chance of success. Surely those people are out there.
In that same time frame that Sundar was CEO and GOOG stock is up 240%, META is up 160%, NFLX is up 220%, AMZN is up 325%, AAPL is up 500%, and MSFT is up 600%. Surely these giant tech companies didn't all get lucky and get the only 5 people who could get great growth numbers from the stock market.
Shareholders want to avoid CEOs who will give them the returns of IBM, Cisco, VMWare, HP, or Groupon. It's not about the idea that only these specific 5 people could have generated those returns. But when they are generating those returns, there's ample support from the board and shareholders to pay them handsomely to generate returns like the list of companies you gave and not the list that I gave here.
A zero-raise policy, if its reasonably long-term, is likely to leave you stuck with the type of employees at IBM and the others. Maybe not the CEO but the rest.
This is worse from a corporate greed perspective because it is effectively saying that Microsoft can't afford to give out a pay raise to anyone. Meanwhile, they had a net income of $17.6 billion last quarter[1].
A layoff can at least be due to a change in direction or some departments, teams, or employees not delivering the necessary value to justify their continued employment. This is saying no one at Microsoft is delivering enough value to deserve a raise despite the company still being profitable. That is objectively not true. There are certainly people at Microsoft that deserve raises and the company can clearly pay for those raises with their billions in profit.
There is no reason to do this other than Microsoft feels it can get away with it.
The company and its income is for the benefit of the shareholders, not the employees. Maybe the argument can be made that they should pay more money to certain people to improve their future income, but that has nothing to do with how much money they make.
Freezing salaries for all employees doesn't seem like a sustainable way to save money in the long run and the second order effects would probably destroy shareholder value not create it
Capitalism really breaks people's brains sometimes. It isn't about who owns the profit. An employer/employee relationship is a business agreement. That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance. This decision severs that connection. Now there is no level of employee performance which can yield better compensation. There is also no reason to believe this will change in the future because this decision is not motivated by a lack of money. It is motivated by the desire to increase profits. That desire isn't going to go away in the future.
And if we must truly take the perspective of the shareholders, this is a stupid move because that link between performance and compensation is the primary motiving factor for many employees to put actual effort into their job. Why should any Microsoft employee put in anything but the minimal effort at this point? Is personal pride the best remaining reason?
> That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance.
It ain't a 2 variable equation, like all resources it is also driven by market. If Meta/Goog/industry is hiring at 20% higher the salaries have to go up to match or you'll see huge attrition.
Is there some sort of bizarre political campaign on HN to try and redefine why companies exist?
Companies are legal constructs that were created to provide investors in business activities limited liability with respect to their investment in a mutual business activity. And that's it.
For their first several hundred years, companies were expected to provide benefits to their employees and the localities in which they operated in exchange for that limited liability. (And see what happened to Lloyd's of London's shareholders to understand why that is a more than fair exchange.)
If companies want to be all about "benefit for the shareholders" and to hell with everyone else, then its about time we take away the limited liability.
Fiduciary duty was not always the end-all-be-all of corporate decision making. This has been a see-saw battle between employee wellness, customer satisfaction, and shareholder returns, and we are at the apex of shareholder dominance currently. But that does not mean this is set in stone. General Electric explicitly put employee wellness and customer satisfaction above shareholders in the their business documents as late as the 70s.
We’ve broken our society to think this. Shareholders should be third, after customers and employees. Or at the very least we need to ban the phrase “job creators” for the rest of time if employers are just supposed to stomp on their employees whenever possible.
I think everyone agrees with that value statement, the problem seems to be that no one else is interpreting this announcement that way. You would need to expect that the companies future was at risk, whereas I think most people are expecting that this is nakedly squeezing and anticipate collusion from competitors. As I understand it there is a documented history of that already.
Why would you think it's a "one of" situation? In my experiences the company lays off X% AND cuts salaries YY%. This is quite effective because the subtext is "if you still have a job you're lucky". I suspect you actually get less attrition from both at the same time vs. just a pay cut or freeze.
It will likely be both. Why not have your cake and eat it too? Zuckerberg already set the precedent for an additional large round of layoffs after the first, so I'd be extremely surprised if Microsoft, Google, etc didn't follow suit.
I know people with that rating who saw a much larger (10-20%) raise. I know others who got a raise in line with what you’ve said too. I don’t know the exact distribution but it’s definitely not “you get 0.5% if you’re SI”.
I'd need to know the full distribution of MRP% for that. All I'm saying is that merit lines were not such that it was possible for the mean raise to be 1%. It requires way less data to see this.
I have enough data to know that the mean raise is above 1% but to not know the specific value of the mean raise. This is not especially complicated.
"Mean raise for SI" is also not what the original post said. It just said "raises for most employees was between 0% and 1%". We can't exclude the higher performers.
Zero people on my team had raises below 1% (one was close). Nearly my entire team, including me, received SI for 2022. The merit lines make it clear what %MRP you'd need to be at to get a 1% raise and it is well above the norm.
I mean, this is just MS copying everyone else. There is no "real" recession. It's basically a loosely coordinated capital strike to counteract post-pandemic wage growth. Jay will keep raising rates until those wages stop climbing, and companies are taking the hint.
If anything MS is smarter for waiting for all of their competitors to cut first. As others pointed out, they have tons of cash and really don't have to cut at all, so they get a leg up on their competitors by waiting.
The funky thing is... it's not a recession for them. All of their incomes are growing and their profits are reasonably steady, except for "I take full responsibility for the Metaverse" Meta.
I wonder if this could be fallout from the ABK deal being blocked? If I understand correctly, they "owe" ABK $2.5-3B in the event that the deal doesn't close?
I don't necessarily disagree, but fundamentally I think this will lead to "anyone who can find a higher-paying job will find a higher paying job."
Part of what's enticing about these "blue-chip" megatech corporations like Microsoft or Apple is that they pay good salaries. Most work at these companies is not interesting (at least it wasn't at Apple), but you stay because the pay is good.
If the pay is shit, I'll take interesting work at a startup, or I'll find a place that does pay well (like Wall Street).
A lot comes down to what life stage employees are in. Someone with fixed monthly costs and kids in school is not going to want to a) move and b) deal with the anxiety of working at a start up.
Yeah, that's fair, though I still think that's going to selection-bias towards employees who can't really find work elsewhere.
I don't know about Microsoft but certainly at Apple there were plenty of people who were pretty mediocre engineers...I certainly was the last 6-8 months I was there because I hated it so much and realized they probably wouldn't fire me.
My cynical hot-take is that big companies don't need great engineers, they need engineers who are good enough to complete the tickets their given and move on to the next one. The great engineers I've known came up with innovative ideas that were briefly admired and then quickly squashed. A few good architects can make a difference, but the army of SWEs are just there to keep the roads rolling.
Would you take a pay cut to save someone else's from being laid off in your company? It's a serious question, just curious, there is no right answer - I wouldn't, nor would I accept even a $1 cut in my pay - the day that happens is the day I give my notice. Not an option for everyone I know.
Do I get to choose who does and doesn't get laid off?
I'm being facetious but I honestly don't know. I've become a softy in my old age. I can imagine how deeply awful it would be for a breadwinner with a home and kids. Even for people I work with that I don't particularly like, I wouldn't want to put them in that situation.
Like a lot of Americans I've been experiencing a lot of envy for the more socialist European companies where maybe people have less to gain, but they also have less to lose. All I really want is a comfortable life for me and my family. I'd like the same for everyone else.
As someone who has lived in Europe and since returned. I can tell you people there are way way more happy and I’m also more frequently seeing the “saltiness” towards Europeans on here because of it.
I remember working in Europe, and going to the park during a week day and seeing all these parents, both Mum and Dad playing with their children in the sun with this kind of carelessness about them. I vividly remember being shocked at that scene. I’d never seen it before.
People would just go home from work and not “grind” away at their jobs.
I think given a few more years of “automation” and most Americans might think differently about free market capitalism. Maybe at that stage it’ll be too late to change to something better?
Europe is a kind or project too, it’s a work in progress. I think their systems will just improve over time.
So you wouldn't take a $1 pay cut per year so that a person might have enough to take care of his family? Is this who you really are? $1 that could save someone from starving and you wouldn't give it? It says a lot about you to make such a statement, I am not sure you realise this.
you really think a tech worker with any skills at all is going to starve? If their skills are so bad they can't get another job, then they don't deserve to be protected in the job they are currently in -
However, would I give someone a $1? sure and probably a lot more - but that is different than accepting a pay-cut for any reason from my employer who is booking billions of dollars a year in profits while letting people go.
From a purely financial and management perspective, this is an EXCELLENT decision. It really is a _lazy_ method to handle layoffs with excellent perception from stock holders' viewpoint. We all know how bad it looks when management executes on a situation similar to Gavin Belson firing the Nucleus team. Perception is all that most management and financiers care about anyways as long as the money keeps flowing. The people do not matter, only the money does. It is acceptable to sacrifice your people, as well as the welfare and good will of your employees, in favor of shareholder primacy anyways. So instead of doing layoffs, instead you can make business decisions that negatively impact employees to _make them want to quit on their own_. Hell... that saves a lot of money in the long run as well as a lot of time on management's end ( time = money ). Then when top or even mid talent is lost, it still doesn't matter because the "left overs" that remain still keep the business running at a "good enough" level.
And that, my friends, is the key phrase on what is prioritized in all business right now ... "good enough". All that matters nowadays is the answer to the question of "good enough". For example:
- Are the quality/quantity of FT employees we currently have on payroll good enough to keep the business running?
- Does our invoicing/contracts/income look good enough?
- Are we doing good enough to keep our competitors at bay?
- Is there anything we can cut to stay good enough?
- Are there good enough incentives for our employees to stay with us?
- Are there good enough incentives for our CUSTOMERS to keep doing business with us?
It is my opinion that the days of "expecting excellence" or striving to "be the best" is totally over for the current generation. For the most part in the tech business environment, management and market forces are only interested in keeping money flowing at a "good enough" level. On top of that, western culture seems to have forgotten what "the best" even means right now. And without even having a definition of "the best", how is it possible to be "excellent"?
We are in the middle of an extremely boring time in our lives. There is a massive drop off of real talent and creativity. Top and mid talent are deciding to hold back because the incentives are few, if any exist at all. Honest improvements and true innovation will be stagnant for at least 5 more years. Boredom will be the norm for a while. Until something actually _exciting_ happens or something incredible is discovered (I have NO idea what that could be), this will be the norm for a long time.
> this is an EXCELLENT decision. It really is a _lazy_ method to handle layoffs
That's one way to see it. You could also see it as a tremendous blunder. The people who will "self-layoff" are not the low producing team memebers. These are the people who know their value and have competitive even better offers elsewhere. You just took anyone with a modicum of ambition, skill or talent who was already contemplating a move and gave them a big ol' nudge to do it. People who are low producing will put up with what they have to. They may complain but they won't self select out.
You know, nearly anyone qualified to work at Microsoft (at least as an engineer) is qualified to work for some yuppie Wall Street job paying obscene salaries and bonuses; I think this is going to have the selection bias effect of the people remaining are people who cannot find work elsewhere.
If their goal is indirectly lay people off, I really think that they have not thought this through.
Having friends and former colleagues who work in the "yuppie Wall Street job", it doesn't pay the obscene salaries you think it does, even at the major hedge funds and investment banks, even in NYC and Chicago. The number of super-high NFT development jobs is vanishingly tiny. Most jobs at trading and investing firms for developers pay the same or even less than elsewhere. Sure, if you're a Calypso or Endur or Murex specialist you can command the $300+/hr rates, but then you may be out of work for six months or more when the project finishes. There's no easy move from FAANG while keeping the high salaries, there's 1+ orders of magnitude more jobs in FAANG (or at least there were) than in high paying non-FAANG development jobs. Most development jobs pay not much more than an experienced public school science teacher, and without the job security.
Fair enough, I was thinking about companies like Jane Street, paying starting wages of about $200,000/year for engineers [1], and I've seen a few other trading places offering similar wages. When I was at Apple, my base pay was $175,000 when I left, with about $60,000/year of stock. I've never worked for Microsoft but I assume that the pay is comparable to Apple
Entirely possible that the quantity of trading jobs available isn't nearly as high as something like MS though.
Post 2008, tech companies on the west coast easily beat out financial firms in NYC/Chicago on pay to quality of life ratio, and especially on pay per hour measures.
And as you said, the number of high paying jobs (in the multiple hundred thousand dollar range) in finance is much less than the number of high paying jobs in tech. It makes sense given the heavily subpar performance of financial companies relative to tech companies in the last 15 years.
> Entirely possible that the quantity of trading jobs available isn't nearly as high as something like MS though.
Yes, exactly. Other companies like Jane Street definitely exist in the finance space and pay really well but collectively hire far fewer engineers than FAANG + FAANG-like companies do. The thing I like about them though is that most of the time their comp is all cash (salary + bonus) so you don't have to wait around for anything to vest before you can move on, if you so desire.
Yeah, that's what people tell me, though the Jane Street interview is pretty tough; I've interviewed with them three times, and also been declined three times...so maybe I'm disproving my own point here.
I mean, they were honestly fairly typical interviews, just a few pretty tough CS problems.
In one I remember one problem asked me to implement a hashmap, which wasn’t too hard, and then the second one had to do with some sort of latency prediction thing, where cleanups had to be done after certain numbers of milliseconds. I am afraid I cannot remember the details, but I remember that the second problem was quite difficult.
I suspect I could do much better now (or at least I hope I would), but I have not interviewed for them in like five years.
When was its height? Even with stock packages at Apple I was getting closer to $250-$300k/year total comp. This would have been September 2018 until March 2021...
Height was probably something like mid-2021 to early 2022. But note that Apple (broadly, handwaving, obviously subject to stock price fluctuations, offer negotiation, time-in-role, etc.) pays their software engineers less than the other FAANGs. Substantially less than a few of them.
I don't know, I worked at a trading desk of a major bank. All the smartest PhD quant analysts worked from some Siberian village for like $20k/year. Those who really got the dough were the traders in NYC.
The total number of PropTrading engineers in the US is most definitely in the low to mid thousands at most. Most PropTrading firms are tiny from a headcount perspective
For example, Citadel has around 600-700 engineers globally and Jane Street only has around 400-500 globally. Both of these firms are actual behemoths headcount wise, and most other trading firms tend to be way smaller (total headcount in the high double digits or low 100s if lucky).
Meanwhile, Microsoft alone has around 70-75,000 engineers. PropTrading gets a lot of mindshare among TC chasers but is a very small industry.
Also, salaries are definetly comparable when factoring in hours worked, exit opportunities (PM/SE/EM/Entrepreneurship while working in Trading you deal with forced garden leave/potential litigation when job switching within Trading), and even the base salary itself. I remember IMC was offering around 100k base in Chicago in the early/mid-2010s when you could earn 90k-110k base at Groupon or JPMC as a SWE while working 30-40 hour weeks.
FWIW I switched from FAANG to trading last year and got a pretty big comp increase. I was entertaining an offer from another FAANG at the same time and it was still nothing compared to my offers in trading.
Won't give my current salary because this isn't anonymous, but my 2021 TC was ~150. Another FAANG offered ~200, and trading firms all offered numbers way higher.
That makes sense! I was giving early career ranges in Chicago in the mid-2010s (without factoring in bonus). NYC PropTrading salaries are (unsurprisingly) higher.
That said, mid-career (5-7 YoE) tech in the Bay Area at least reaches around $170-250k base with an additional $100-400k in stock+bonus over the 4 year vest.
Factoring in hours worked it seemed more competitive than around $200-300k TC for SWEs at the larger PropTrading firms in Chicago at least.
Sure, but there is a clear disparity between how much you make on the amount of stock you can reasonably have versus how much executives make on the amount of stock they have. The parent comment implies there is some kind of level playing field here, which there really isn't.
No, you wouldn’t because the stock price would keep going up so you would sell less and less each time and when the price got too high, the stock would do a split. Every time a dividend is paid out, the stock price drops by an identical amount. It’s the same thing as selling. This wouldn’t be a problem unless you have BRK.A, for the other 99.99999% of stocks it’s fine. Do the math yourself and see.
Developers increasingly see those factions as being opposed to them, so you're seeing that in aggregate sentiment. You can view this dispassionately as a kind of empirical signal.
Squeezing people doesn't make them like you. Who knew.
Bingo. After about a decade of tech workers thinking we were part of some global aristocracy just because we could afford payments on a Tesla and could (briefly) get multiple job offers from companies... The minute we get into a bear market, suddenly we're all César Chávez, fighting for the working class. How the turn tables!
How can you count yourself as working class? Even outside top US salaries most of us could probably take several years off the job without any huge issues due to savings/investments.
I mean of course we are providing labor for money, but this is very different than a blue-collar worker living paycheck to paycheck doing hard manual work.
We have far more in common with blue-collar workers living paycheck to paycheck than we have with an socialite whose inheritance grows faster than his or her ability to spend it.
Fundamentally, almost all of us are N missed paychecks away from bankruptcy. For a lot of people, that N is 1, for some, it's 2 or 3, or even higher if you managed to save wisely. But we all have some number N. And the fact that we have that number should unite us against the few people on the far side of the derivative curve whose N is infinite. Tech workers had their relatively brief moment in the sun where their N was maybe 10-20, it got to our heads a little, and we started thinking we were "very different than a blue-collar worker".
I agree, of course, that tech people are closer to the worker class than the capitalist class and there are many common interests.
On the other hand, as long as you manage your finances sanely, even in Europe you can reach a FIRE state (maybe not 100% retirement, but very close to it) in your 40s without too many issues.
If someone in tech is close to bankruptcy, due to missing a couple of paychecks, I really have a hard time to understand how they accomplished that. Of course, that may be different, if you just started your career.
Nevertheless, I know exactly 0 blue-collar workers (and I know quite a few) that could do FIRE in their 40s, and with sane financial management decouple themselves from the whole runmill in like 2-3 decades.
Nationalized companies care about the hierarchy that ends in the parliament or political system of the country they're in, which can be a mixed bag and doesn't really involve caring about their employees beyond the basic decency of their overseers.
That sounds exactly like anti-nationalization propaganda, I wonder why, and doesn't actually make sense if you understand what nationalization actually is.
Freezes salaries, but also dials back on stock grants and bonuses. So depending on how one views "total compensation", Microsoft is handing out pay cuts.
Hmm, still doing stock buybacks and paying dividends -- so exec comp remains buoyant.
Back in the early 1980s it was hard to get software companies financed: "Why invest in a company whose primary input walks out the door each evening" (i.e. has no capital assets). Obviously that was eventually sorted out, but the underlying concern was not totally bogus.
If you like a company like Microsoft you can tolerate no buybacks and even a dividend cut if it means the company continues to invest in its people.
I predict 'big tech' employees will start to unionize to fight the collusion of tech firms laying off and cutting pay (and if you don't think they're doing this, remember they already have).
Yet they're making huge stock buybacks and profits each quarter... something is fishy.
This is going to royally backfire as soon as the first big tech company blinks and starts hiring and poaching frustrated engineers. The exact same thing happened in the aftermath of '08 where companies that cut and held salaries flat were scrambling in '09 to retain and keep engineers--I distinctly remember Microsoft doing an across the board increase in salary to try to stem the bleeding and attrition.
Yea I think they already gave up on trying to compete for talent. I mean look, they basically cancelled the Edge team and kept a skeleton crew around to customize Chromium. They can just throw money at new tech or businesses rather than growing it at home. Still, this has got to be a gut punch for employees who see $MSFT outperforming the rest of the market by a record margin.
Nah, Microsoft has been underpaying engineers in the US for almost a decade now. Their solution is just to replace one frustrated engineer leaving with three in India and that seems to be working great.
It's happening at other Big Tech firms as well tbh.
Also, plenty of Indian Nationals working at these firms who are stuck in the immigration purgatory have started returning to India to work at the same employer's office there (albeit with a TC adjustment that is still competitive). Heck, even Big Tech and target startup salaries in India have begun reaching the $30-50k range (take a look at YC startups hiring in India for example).
At this point, a lot of fresh Indian H1-B talent coming to the US are those who were stuck working at shitty outsourcing companies (talent which Indian companies won't touch), saved up money to do a random STEM masters to get the F-1, get a couple years of American work experience plus save dollars, and then return to India.
Same thing happened with the Electronics industry in the 1990s-early 2000s with Taiwanese nationals leaving Silicon Valley to return to Taiwan or moving to HK/mainland China (live in HK, commute to Shenzhen/Dongguan/Guangzhou), Korean nationals returning to work for Korean companies in the 2000s-early 2010s, and Chinese nationals in the 2010s-Present returning to Mainland China.
So they are freezing after the doubling? This behavior seems skittish and an overreaction, especially given their continued profitability and high margins. Corporate executive behavior reminds me of interacting with ChatGPT:
Exec: "What should I do to retain people?"
GPT: "One possibility is to double your salary budget and expand stock compensation."
Exec: "All my golf buddies' are cutting compensation at their companies, what should I do?"
GPT: "In this situation, try freezing salaries and reducing stock compensation."
They didn't double the salary budget, that was such a well played PR bs by MS. They doubled the "salary increase" budget for lower levels (so instead of getting a 1% increase per year, they'd give out 2% - to the lower levels).
I talked with a friend at MS and they said not only are they not getting any increase at all this year, the stock and bonus are going down to (or even lower than) last year's levels (before this supposed "expansion").
It's a shit deal. Microsoft's compensation is already well below competitors unless you're at the partner level or higher. They absolutely haemorrhage talent at lower levels, but hang on to low performances who just can't get a job elsewhere.
Last year's increases were explicitly intended to bring Microsoft's pay closer to industry standards. By now saying, "Whoops, we accidentally gave you too much," it's clear that Microsoft has no interest in paying at industry-standard levels.
And to be clear: Microsoft is already laying people off. This isn't an either-or. In fact, their layoffs are probably the worst-handled in the industry, as they've been smeared across months, meaning Microsoft engineers have spent months in a state of anxiety, worried they might be included in the next batch, as each batch is only a few weeks apart. The best reason to work at Microsoft was the stability, but now they pay less and offer less stability than many competitors -- at least at Google or Amazon, you knew immediately if you were in the group being laid off.
(Sources for all of this: Former Microsoft SRE. I have friends and former colleagues at Microsoft who span from junior engineers to upper-level principal, i.e. 67. Personally, I nearly doubled my income two years after leaving Microsoft for another tech company.)
I'm talking about the basic math, absent all other factors. Given a choice between an N% raise two years in a row or a 2N% raise on the first year, the latter is more money.
You choose, base salary is 100k and target raise is 10% two years in a row or 20% in the first year only. Do you want $120k + $120k or do you want $110k + $121k?
This involves the assumption that the "no raise" year is a one-off event to offset the double raises the previous year. It's a good deal.
More than that there's a whole strain of performative cost cutting due to the recession that's always seemed just over the horizon for the last year. Part of the goal is just to signal to investors you're ready for this continuously hypothetical event by pre tightening your belt as a company so they don't "price in" the recession into your stock. It's another negative outcome of basing so much of our evaluation of companies off of stock price which is partially to completely decoupled from the actual performance of companies.
> More than that there's a whole strain of performative cost cutting due to the recession that's always seemed just over the horizon for the last year.
You can say that again. I've spent last 3 months dealing with the effects of some pretty severe cost-cutting on my team. Now I recently learned my employers is going to spend billions on stock buy-backs.
That's just great news after the most recent push to increase our in-office time to increase "collaboration" ... when all of our teams are globally distributed so everything has to be Zoom meetings regardless of which chair your butt happens to be sitting in.
The juxtaposition of record profits, stock buybacks, and "we're not just raising prices because we can it's inflation for us too" is pretty telling. I often find myself wishing courts/government could just cut through the posturing on stuff like this and call bullshit, like the ever present promises of lower consumer prices during mergers because that's the magic test and courts are seemingly required to swallow whatever thin veneer companies promise. You don't need tax breaks you spent the last 3 on stock buybacks!
Anyways need to stop before this becomes more of a rambling rant. My work is also doing the occasional required week for "collaboration" but they've paused at 1 week a month for now. Have to justify this campus somehow... I like to think every manager bubbling up complaints actually got someone to listen but I'm betting they haven't changed their mind on the long term push even though we've shuttered 2 other locations in my area to consolidate people.
hard to make that call to strike when there are many recently unemployed tech workers looking for work. sure you might get what you want or you might get fired and replaced by someone willing to work for lower compensation
for anyone reading: its VERY illegal in the US for a company to retaliate for your interest in unionizing. You will probably win a large lawsuit if this happens.
Realistically, I doubt a SWE union is around the corner, but Alphabet does have a union that employees can join - so could your company! It seems most people think that unionizing would go poorly and result in job-loss, but it might not. It's easy for fast food companies or retail companies to close a location to lay-off anyone near a union, but if you're in the HQ as a corporate employee, you have to consider the behavior of professional unions (eg. the film writers union, currently on strike).
to shareholders : "WE LOVE YOU". we will do whatever it takes, fire employees, cut corners, kill raises, other nasty things before we let our numbers slip. We know, you are the most hedged, least impacted in market downturns. we love you. No really.
to management : "we love you. you did the right thing. Here's more money"
to employees: We love you. macro economic uncertainties .. market conditions .. platform shift .. AI AI .. labor market .. no raises this year. We love you.
The alternative of lay-offs is a false one, IMO. This is an independent action because the current environment and tech skills situation says they can probably get away with it. Collusion will spread across other major employers, in parallel to lay-offs.
At this point all tech employees, especially those who work at large tech firms are one big union - you're definitely getting treated like one big heard, whether you like it or not.
Share your salaries, train each other, give each other confidence, and get your worth!
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[ 0.21 ms ] story [ 317 ms ] threadCapitalism has carried more people out of poverty in the past 30 years than any other form of progress. With it freedom has been brought
I was not trying to imply there is some grand conspiracy. I was however trying to point out how the incentives of large companies are structured and are often skewed. God forbid any of those non-shareholders try to form a union.
Maybe it would be good if more people in the bubble walked a mile in some one else's shoes.
I own 100 stock and are paid 150,000 - coder
I own 1,000,000 stock and are paid 1$ and 150,000 stock - CEO
- CEO: "I am freezing wages"
- Stock goes up 10% Year to Year (say 100->110$)
- inflation was 10%
coder: salary is effectively 135k, ($15k loss), stock went up 1k
CEO: salary is down to 90 cents (10 cent loss), stock went up $10,000,000)
HN commenter who apparently things they are some great economist but quite obviously can't do basic math:
"But everyone gets to own stock!!!"
So to the meat, does the employee have the option to be 100% compensated in stock? NO. The CEO is effectively compensated that way, and LOVES IT because the effective tax rate on long term capital gains is 15%. You know, I would have LOVED to have been compensated in 50% stock or some equivalent with stock options (backdate me pleeeze like the CEO of UHG got to!)
So maybe I'd take your dumb comment at face value if everyone got to participate in the great executive tax fraud, but... we don't.
If you get $100K in stock options at a certain price and the price doubles, you make $100K. If it stays the same, you make nothing. If you leave, you have a certain period of time to exercise or you lose your options.
If you get $100K in stock and the prices doubles you make $200K. If it stays the same, you make $100K. If you leave the day it vests, you keep it.
They’re not at all similar except in the fact that they’re securities. Using them interchangeably is a great sign to ignore any financial commentary from that person. I’m only here because I see this mistake in every single thread that has anything to do with compensation. Engineers need to get financial education.
And it's also a fact BOTH options and grants are given to employees, depending.
I didn't use one instead of the other, and frankly the existence of this entire thread is a bizarre amusement to me at this point.
>And stock does go up. It's Microsoft. Otherwise you can... just not use the option.
And lose the equity portion of your compensation, unlike stock grants. You don’t seem to get the nuance but you are so desperately trying to dismiss my point.
What is it you think I'm missing here at all? You're pissed employees get nothing if stock doesn't go up? You think I'm missing that? No, THAT'S THE WHOLE POINT OF OPTIONS.
Like you can only earn from the company's future growth.
It's generally not interesting for an employee to receive options because if the company doesn't perform well by the time your exercise date comes around or you leave the company then you get little or nothing. You would rather get stock grants which are shares that have value. If you get some shares when Apple is $200 and it goes to $100, you still have half the value of your shares.
Generally, in public companies (with extreme exceptions), options are issued to executives whose compensation is dependent on how much they can increase the company's share price. If they fail, they get little to nothing. If they succeed, they make a lot.
Thanks for asking. Let me know if you have any questions, I'd be happy to explain more.
This is important because (a) economic performance is relative (b) the most likely thing (or at least the most advisable thing) for anyone who receives MSFT RSUs is to immediately sell them and use the proceeds to buy more diversified investments.
It was less noticeable before the pandemic because only assets were growing faster than inflation while food and goods seemed to stagnate, but now everything is booming.
Consider that other professions have less bargaining power than SW devs.
I'm thinking about moving to Belgium where I hear salaries are automatically indexed by inflation.
Makes it hard to converse because _nobody_ is wrong here: i half-assed my way through an economics degree and know just enough to know OP is making a relevant comment, then confirm their comment: M2 money supply, is in fact, decreasing.
In absolute terms, groceries, airline fares, new cars, hotels and household energy (such as electricity, fuel oil and utility gas service) are actually cheaper than they were a month ago[1].
[1] https://www.cnbc.com/2023/05/10/april-2023-cpi-inflation-rep...
(2) If/when deflation does occur, we know from prior instances the reduction in worker compensation is much higher than the rate of deflation.
I don't get this attempt to represent below inflation compensation changes as ok because one day in future some economic change will make this years actions "reasonable", because that is assuming that this year is a one off, rather than recurring. It also presumes that wages won't be cut even more when deflation occurs (generally by mass layoffs and then rehiring the now unemployed when their choices have been reduced to "homeless vs lowered pay").
We also know that businesses don't actually foresee a problem with deflation as they're still happily giving mass payouts and wage increases to their executive management, performing stock buy backs, and issuing large dividends. If companies were actually legitimately concerned about the potential for a deflationary event they would be hoarding cash.
Or freezing salaries. Just like in the article. I don't really have an answer for you with regards to any stock buybacks or large dividends.
I'm not talking about anything as reasonable or mentioning the 2nd derivative myself. M2 money supply is a specific thing that is responsible for money creation, it's going down now for the first time ever. We are in uncharted territory.
Microsoft has been bleeding talent for the last 5-6 years due to low compensation. It's why the SLT authorized a "correction" in pay last year that saw many people get a significant pay bump. Lots of new college hires have even stated that Microsoft's offer was the lowest offer they received. Levels.fyi tells basically the same story as well if you compare Microsoft to many other tech companies.
One thing to note is that the bonus and stock award budget have been reduced from last year where it was inflated. So, it's back to normal. What is frustrating is that it's also likely "back to normal" for the executives when it should be minimal to non-existent. The pessimist in me says that this is nothing more than juicing the quarterly stats so that Satya and his directs hit their targets for their "normal" bonuses.
Honestly, this is the closest I've seen the company to unionization and I'm willing to bet that efforts are going to start soon. Especially if the Q4/annual results exceed expectations.
[1] https://old.reddit.com/r/technology/comments/13dveyv/microso...
Then we get the cycle of Microsoft complaining that they can't hire enough people, and then they bump salaries up again to be competitive.
In the long run sure. But in the short run, employment is sticky. Especially in the professional world.
In this market? I'm skeptical. I'm sure some fraction of them can do so at equivalent or higher pay, but the tech market at the moment is quite soft and I wouldn't be surprised this was taken into account and served as another motivation for this move from MS.
Why are buybacks more employee hostile than dividends?
For the whales, sure, they're great, since they do the whole "borrow against the share price and extend forever".
oh Zebra.. never change.
https://chainstoreage.com/zebra-acquires-reflexis-575-millio...
I have been hearing this for awhile now. When I compare MS pay and benefits to what is on offer at other companies, almost the only jobs I see with better TC are at Meta and Google. And that will likely not be a thing of Meta's future.
The only company paying worst than MSFT were the hardware company such as AMD,Qualcomm and intel. But hardware companies are known for low wages
I've eschewed these companies myself, but... I'm not sure it has been so wise all the time. I could have worked at a FAANG at one point, and the offer was astronomical compared to what I typically earn. The weird part is, I don't like social media because I have kids and I don't like what it's doing to kids. Yet I have kids to take care of, and that money would have made a meaningful difference to their security. So what's the right call to make?
It reminds me of Cato the Younger. He was steadfast to his virtues and principles with unwavering integrity, but it appears to have lead his life to ruin. Was it worth it? Do compromises make sense here and there?
I don't blame people for wanting to work for these companies. It isn't for me, I think, but I totally get it. No one deserves mass layoffs and tanking equity because they don't have retro-hacker cred.
Even in a good economy inflation and cost of living increases are a thing.
I get where you're coming from, but the headline is clear in my opinion.
Cost-of-living salary adjustments should reasonably be expected in the same way a company is reasonably expected to adjust pricing according to economic conditions.
I mean they don't have to raise salaries, but if someone is offering me a higher rate I'm going to go.
You have no responsibility to your company.
Now if the entire market is telling me to take a cut, either it's collusion or software developers are simply worth less now.
Relative worth is constantly changing.
There are professions that are paid more than ever
If I earned $5/hour last year and a gallon of milk was $5, then milk going to $6 means that my milk/hour rate has gone down unless I now earn $6/hour. That is a pay cut.
Inflation is basically a correction for a previous period where money was too cheap. It hurts everyone (at least everyone who didn't prepare for it).
There's no non-greed-related reason they can't share that profit with their employees, rather than stiffing them just when they need help.
An inflation measure is defined by a particular basket of goods, and sometimes their prices move for good reasons. We shouldn’t expect it to always cancel out in such a way that our salaries end up with exactly the same buying power for those particular goods.
But my cost of living is factored into whether or not I’m making enough money to, uh, live. My code output is not very good while I am dead.
It was an amazing journey to watch HN denisens adjust their opinions as they went from creme de la creme and 'anyone can create a unicorn tonorrow' to, you know, being basically like a plumber but for JSON.
Nobody mistakes them for Capital, especially not plumbers themselves. Engineers seem to have gotten the wrong idea about themselves lately.
A good engineer can make a great deal of money for the company, far more than a plumber ever could.
I.e. an engineer has leverage.
Installing a toilet is more like wroting a bash/shell script that is 99% googleable - most people can figure it out in a weekend
Writing a whole applocation is more like doing plumbing for an industrial installation. that handles hangerous chemicals
It works like this. If I could hire bob for $10, but he produces $100 worth of value, hell yes I'm going to hire Bob. But Evil Corp sees that and thinks "damn, I want Bob to contribute $100 to my bottom line, so I'll hire him away from Bright Corp by enticing him with $20 pay.
Then, BadAss Corp thinks the same thing, and hires Bob away for $30. This process repeats until Bob's pay + opportunity cost == $100.
However, there is a point of diminishing value being added. If lots of Bobs are available, the incremental value (leverage) each one adds becomes less. There are only so many redesigns of one's database that improve productivity much.
As you can see, the more Bobs, the less they'll get paid. Until Frank comes along with a new idea for adding value, and starts the process over again.
I.e. an engineer who has a track record of delivering value can command a much higher salary. I know one who got a million dollar salary.
This is also why CEOs get paid so much. Leverage. Nadella is a prime example. As an MSFT shareholder, I'd say he was darn well worth it.
I usually find that this typically stops at something like $10 for most people. Despite people being “valuable for millions” offers for that much don’t magically seem to spring up. The people I know making a million a year typically make the company tens of millions…
Personally I feel that the "rest of society" is getting way too little money vs. us getting way too much (opinion based on the fact that profits/productivity have outgrown salaries for too long).
There is another name for it - getting shafted
When I was working at a non-FAANG for normal pay, I was basically living the exact same lifestyle as my dockworker grandfather. I could afford a house and car, wife didn't have to work, one vacation per year, moderate savings.
Same issue with GPT. It's generating low quality, poor performing, poorly designed code. Any company using it as a basis will be in trouble.
That said, this phenomenon should not be used to justify exorbitant executive compensation that is very out of line with what the positions lower on the totem pole are capable of getting. We do not need that kind of society.
Although MSFT's all time high stock price was in 2021.
This goes for all public corporations. Anyone can get a piece of the action by buying some stock in them.
As for the size of Nadella's compensation package, speaking as a long term MSFT shareholder Nadella has earned it. You might want to check out a graph of MSFT's stock price before and after Nadella became CEO.
You know, the people who actually built and sold the products?
Microsoft has historically had low salaries - because the money was made from the stock options.
"Of this total $2,500,000 was received as a salary, $10,066,500 was received as a bonus, $0 was received in stock options, $42,269,560 was awarded as stock and $110,250 came from other types of compensation."
Set this against the several hundreds of billions added to the MSFT value during his reign, and his compensation is the bargain of the century.
As a longtime MSFT shareholder, Nadella's compensation is coming out of my pocket. I don't begrudge him a penny of it.
I'll let you in on a secret. Regardless of what the official policy is for a company, if you feel you're undervalued, and you're right, you can negotiate the pay you feel you're worth. And if you cannot reach an agreement, there are plenty of other tech companies. In the Seattle area, there's Amazon and Google, for example. You wouldn't even have to move.
Why are you treating him differently than the rest of the employees?
So, y'know. Not the 58% of Americans who are living paycheck-to-paycheck.
And, um...you know what you call people who buy a stock at its all-time high?
Suckers.
You can buy fractional shares from robinhood.com.
> Not the 58% of Americans who are living paycheck-to-paycheck.
I've known many of them, with a McMansion and his&her new cars in the driveway.
> you know what you call people who buy a stock at its all-time high? Suckers.
You're in luck, MSFT is 20% below its all time high.
This is an incredibly uncharitable way to frame the parent comment.
> If all the CEOs in the world were forced to make $0, it will not meaningfully change the amount of money in workers' pockets.
That's just not true.
> That's just not true.
But its not far from wrong -- cutting a ten million dollar a year expense and putting it to worker pay will not make workers rich in the colloquial sense.
I wonder if people read what they type before they hit "reply"?
It’s about equality, attributing it to ‘envy’ reeks of entitlement.
All it takes is one major company to pull the trigger, then the rest will follow.
The hiring market during covid was wonky in a way that favored applicants, and a lot of folks who got hired were under-qualified, overpaid, or both. This is just a natural reversion to a more balanced state across the industry.
Before it was unheard of.
Now had to let go some for doing it, cancelled numerous applications and interviews once investigation revealed their scam (applying through fake names, creating multiple deceiving profiles with fake activity etc).
It's frankly starts to be quite difficult to hire honest full-time remote programmers now.
These firms have colluded to drive down wages before (the "Techtopus" case), a fact that we know because they were stupid enough to put it in writing. This time there's no proof and may be no explicit agreement, but a tiger doesn't change their stripes.
Except for Failed Metaverse Inc, everyone else has grown revenue proportionally and profits decent enough.
And while last year was potentially quite good, that isn't the projection.
https://i.imgur.com/gUz6AlW.png
Employees went up significantly: https://www.wolframalpha.com/input?i=%28Microsoft+employee+c...
Revenue leveled off: https://www.wolframalpha.com/input?i=%28Microsoft+revenue%29
Profits are on a downward slope now: https://www.wolframalpha.com/input?i=%28Microsoft+profits%29
Yes, they're 50% greater than they were in 2019. The staffing is at about 1.5x what it was in 2019 too.
So, crystal ball time - what will revenue be a year from now? Will the profit per employee be lower than it was in 2019?
https://imgur.com/6QykALS
And if the answer is no, should Microsoft lay people off or hold off on salary increases?
The tragedy!
Their revenue and profit per employee will be at their highest points for every year until at least 2020! Who could ever bear that???
At least, thats what the illegal agreement was about last time this happened (between Apple and Google).
If any “high-performing employee” feels like they are taking a “massive pay cut” merely due to inflation, then something is wrong.
Either they were grossly underpaid to begin with (change jobs, it can be done if you’re that good and that low paid), they aren’t actually that good (so total comp package, including RSUs and refreshers, is relatively weak), or they have a warped perception of the value of money.
If a dev is pulling in 300k+ (standard, especially the +, at places like MS), and the cost of eggs, rent, or restaurant food is something they actually notice and impacts their day-to-day life, then I wish them the best of luck — they will need it.
In this case it's worse because not only are their salaries not going up, but the things nominally used to get around raising salaries (bonuses, stock) is also not going up. You trying to spin it by saying 'well they're earning 300k+ a year anyways' is not helping your point when there are plenty of junior and mid-level engineers earning far below that which are going to be most impacted.
Cutting positions was one way to correct this.
Freezing salaries is another.
If any devs hired during covid think that their salary was totally justified and shouldn’t be cut directly or indirectly, then they are more likely than not delusional. It was a frothy hiring market, and the upward pressure on salaries across the board was not healthy for the overall tech ecology, imho (the smaller companies couldn’t afford competent devs).
Note that I am actually an advocate of tech corps sharing more of the spoils with their employees, but not in the way that it happened during the pandemic. Reward competence selectively rather than randomly rewarding just being a warm butt in a seat during a hiring boom.
I have no doubt that during this “pay freeze” at MS, the star performers will still be rewarded somehow.
It seems to me you're working backwards from the position of 'Microsoft is justified in what they're doing' and then continuing to adjust your position in order to make that statement true. Given that Microsoft is still extremely valued according to their stock prices and that their earnings are higher than ever, citing market conditions as a reason to cut salaries when your market condition is positive reeks of bullshit.
Key employees and high performers will be rewarded at MS and elsewhere. It just won’t be announced in a press release.
If you want to disagree with me or think that what I say is bullshit, that’s fine. The market will have the final say. I’m just a pundit on a message board.
Imho, this move by MS, which will probably be followed by others, is just them exercising their options on their side of the labor market.
If folks don’t like it, they can leave and/or change careers.
There will almost certainly be a little bit of collateral damage, but I imagine that most of the high value-add people will be happy with their pay packages while keeping their mouths shut.
The products are all going to keep getting worse as they lose the talent to maintain or upgrade them meaningfully, but it'll take a long time for the company to fade away
During the pandemic, the market heavily favored employees. The market now favors employers.
The direction of the price of labor seems to have been more or less appropriate during each of these periods.
On a personal level, I don’t have much sympathy for folks whose worst experience in a labor downturn is simply not getting an inflation adjustment — it’s about the mildest correction in defined labor costs/benefits that can happen to them. I don’t think these folks realize how close to having no job they and/or their current peers actually are — that would really suck.
To the issue of whether MS should make this move or not (esp. given their financials), that’s a different issue. As I have mentioned elsewhere, I think that there will be quite a bit of quiet total comp boosts to favored folks — RSUs, retention bonuses, spot bonuses, promotions, “promotions” (e.g., different title, same job), etc.
Salary curves are rarely smooth and unidirectional over the course of a career. Most folks, in fact, will have a very spiky salary curve. I think many folks who came into tech after 2009 or so just haven’t seen or experienced this spiky curve, and their limiter range of expectations is showing.
OPEC suffered from exactly this problem quite early on. It only takes a few defectors of sufficient size.
The settlement was a tiny fraction of the amount of money they saved by entering the illegal agreement in the first place.
[0] https://www.theguardian.com/technology/2014/apr/24/apple-goo...
https://www.youtube.com/watch?v=VAFd4FdbJxs
And I don't think anyone's even tried to suss out illegal market-manipulation schemes that are surely hatched at various seems-like-something-out-of-a-comic-book-but-is-actually-a-real-thing rich people secret societies and "retreats" and shit. It's wholly unbelievable that there's not a ton of that going on there, better-hidden than the ones that amount to one CEO emailing another with "let's illegally collude, LOL" (which, incredible as it seems, also happens, but at least sometimes gets caught).
Executive management aren’t workers.
It being illegal doesn't mean it doesn't happen. Or even it doesn't happen a ton.
I can't speak for MSFT. But a lot of tech companies definitely hired to banana town.
Cutting would be better than freezing salaries.
Not if they were let go before their first year, which has been the case at a lot of tech companies recently.
New hires, juniors especially, need a lot of time to onboard. Lessons in the first weeks and months of a new job will be more about company-specific tooling and minutiae, not engineering in the broader scope. Portable lessons come later, usually after you've found your legs.
Surely that depends on whether you're one of those getting cut or not.
I don't get this stuck up argument again and again Why did they hire before? As if there is some really great answer that can reveal itself by repeatedly asking this question.
> Cutting would be better than freezing salaries.
Many would like same or lower salary than being laid off. Those who looking for higher salaries can move on just like they always have.
Hint: Neither is needed for most of these big tech companies.
If they believe it will increase profits without longterm harm then layoffs/salary freezes are the right thing for them to do as a company even if they are wildly successful.
Layoffs are frequently done when a company is struggling, so people seem to think it's incongruous for a company to do layoffs if they are doing well.
And that doesn't need to be the case. Many of these multi-national big tech companies have failed to move forward with layoffs in some countries because of laws that protect workers.
For example, in some countries, companies need to prove that they're struggling in order to lay people off.
A healthier company has more longevity, and a company with more longevity will hire more people in the long term than an inefficient or bloated company. I feel like your perspective does not take time horizons into account.
An issue would be that Sundar is plugged into Google and knows all the ins and outs and has the relationships that an outsider would take some time to learn/form, but on the same hand, Sundar going out into the wide world is then lacking those same things at his new company, meaning new companies might be as hesitant to hire him as Google would be to hire a new outsider CEO.
I'd be willing to do a terrible job at it for only $10M/yr. That's not what the shareholders want; they want Sundar to keep doing what is, from the shareholders' point of view, a quite respectable job, seeing the shares grow from $34 when he become CEO to $112 now for a CAGR of around 17%.
In that same time frame that Sundar was CEO and GOOG stock is up 240%, META is up 160%, NFLX is up 220%, AMZN is up 325%, AAPL is up 500%, and MSFT is up 600%. Surely these giant tech companies didn't all get lucky and get the only 5 people who could get great growth numbers from the stock market.
A layoff can at least be due to a change in direction or some departments, teams, or employees not delivering the necessary value to justify their continued employment. This is saying no one at Microsoft is delivering enough value to deserve a raise despite the company still being profitable. That is objectively not true. There are certainly people at Microsoft that deserve raises and the company can clearly pay for those raises with their billions in profit.
There is no reason to do this other than Microsoft feels it can get away with it.
[1] - https://www.microsoft.com/en-us/investor/earnings/fy-2023-q1...
Having said that, the decision probably involved more than the shareholders point of view.
And if we must truly take the perspective of the shareholders, this is a stupid move because that link between performance and compensation is the primary motiving factor for many employees to put actual effort into their job. Why should any Microsoft employee put in anything but the minimal effort at this point? Is personal pride the best remaining reason?
This is only true if Microsoft is also freezing promotions. I doubt that is happening.
It ain't a 2 variable equation, like all resources it is also driven by market. If Meta/Goog/industry is hiring at 20% higher the salaries have to go up to match or you'll see huge attrition.
Companies are legal constructs that were created to provide investors in business activities limited liability with respect to their investment in a mutual business activity. And that's it.
For their first several hundred years, companies were expected to provide benefits to their employees and the localities in which they operated in exchange for that limited liability. (And see what happened to Lloyd's of London's shareholders to understand why that is a more than fair exchange.)
If companies want to be all about "benefit for the shareholders" and to hell with everyone else, then its about time we take away the limited liability.
Good and happy employees make for repeat customers.
Shareholders come third because they will drop you for minor swings and stock price.
However if your sample is only people who are on Blind complaining, I can see how your data might be skewed in that direction.
"Mean raise for SI" is also not what the original post said. It just said "raises for most employees was between 0% and 1%". We can't exclude the higher performers.
Zero people on my team had raises below 1% (one was close). Nearly my entire team, including me, received SI for 2022. The merit lines make it clear what %MRP you'd need to be at to get a 1% raise and it is well above the norm.
If anything MS is smarter for waiting for all of their competitors to cut first. As others pointed out, they have tons of cash and really don't have to cut at all, so they get a leg up on their competitors by waiting.
They don't really need to do this, they want to.
Part of what's enticing about these "blue-chip" megatech corporations like Microsoft or Apple is that they pay good salaries. Most work at these companies is not interesting (at least it wasn't at Apple), but you stay because the pay is good.
If the pay is shit, I'll take interesting work at a startup, or I'll find a place that does pay well (like Wall Street).
Probably companies are banking on that.
I don't know about Microsoft but certainly at Apple there were plenty of people who were pretty mediocre engineers...I certainly was the last 6-8 months I was there because I hated it so much and realized they probably wouldn't fire me.
I'm being facetious but I honestly don't know. I've become a softy in my old age. I can imagine how deeply awful it would be for a breadwinner with a home and kids. Even for people I work with that I don't particularly like, I wouldn't want to put them in that situation.
Like a lot of Americans I've been experiencing a lot of envy for the more socialist European companies where maybe people have less to gain, but they also have less to lose. All I really want is a comfortable life for me and my family. I'd like the same for everyone else.
I remember working in Europe, and going to the park during a week day and seeing all these parents, both Mum and Dad playing with their children in the sun with this kind of carelessness about them. I vividly remember being shocked at that scene. I’d never seen it before.
People would just go home from work and not “grind” away at their jobs.
I think given a few more years of “automation” and most Americans might think differently about free market capitalism. Maybe at that stage it’ll be too late to change to something better?
Europe is a kind or project too, it’s a work in progress. I think their systems will just improve over time.
However, would I give someone a $1? sure and probably a lot more - but that is different than accepting a pay-cut for any reason from my employer who is booking billions of dollars a year in profits while letting people go.
And that, my friends, is the key phrase on what is prioritized in all business right now ... "good enough". All that matters nowadays is the answer to the question of "good enough". For example:
- Are the quality/quantity of FT employees we currently have on payroll good enough to keep the business running? - Does our invoicing/contracts/income look good enough? - Are we doing good enough to keep our competitors at bay? - Is there anything we can cut to stay good enough? - Are there good enough incentives for our employees to stay with us? - Are there good enough incentives for our CUSTOMERS to keep doing business with us?
It is my opinion that the days of "expecting excellence" or striving to "be the best" is totally over for the current generation. For the most part in the tech business environment, management and market forces are only interested in keeping money flowing at a "good enough" level. On top of that, western culture seems to have forgotten what "the best" even means right now. And without even having a definition of "the best", how is it possible to be "excellent"?
We are in the middle of an extremely boring time in our lives. There is a massive drop off of real talent and creativity. Top and mid talent are deciding to hold back because the incentives are few, if any exist at all. Honest improvements and true innovation will be stagnant for at least 5 more years. Boredom will be the norm for a while. Until something actually _exciting_ happens or something incredible is discovered (I have NO idea what that could be), this will be the norm for a long time.
That's one way to see it. You could also see it as a tremendous blunder. The people who will "self-layoff" are not the low producing team memebers. These are the people who know their value and have competitive even better offers elsewhere. You just took anyone with a modicum of ambition, skill or talent who was already contemplating a move and gave them a big ol' nudge to do it. People who are low producing will put up with what they have to. They may complain but they won't self select out.
If their goal is indirectly lay people off, I really think that they have not thought this through.
Entirely possible that the quantity of trading jobs available isn't nearly as high as something like MS though.
[1] https://www.janestreet.com/join-jane-street/position/4274288...
And as you said, the number of high paying jobs (in the multiple hundred thousand dollar range) in finance is much less than the number of high paying jobs in tech. It makes sense given the heavily subpar performance of financial companies relative to tech companies in the last 15 years.
Yes, exactly. Other companies like Jane Street definitely exist in the finance space and pay really well but collectively hire far fewer engineers than FAANG + FAANG-like companies do. The thing I like about them though is that most of the time their comp is all cash (salary + bonus) so you don't have to wait around for anything to vest before you can move on, if you so desire.
In one I remember one problem asked me to implement a hashmap, which wasn’t too hard, and then the second one had to do with some sort of latency prediction thing, where cleanups had to be done after certain numbers of milliseconds. I am afraid I cannot remember the details, but I remember that the second problem was quite difficult.
I suspect I could do much better now (or at least I hope I would), but I have not interviewed for them in like five years.
You would have to be quant analysts themselves to beat that number.
For example, Citadel has around 600-700 engineers globally and Jane Street only has around 400-500 globally. Both of these firms are actual behemoths headcount wise, and most other trading firms tend to be way smaller (total headcount in the high double digits or low 100s if lucky).
Meanwhile, Microsoft alone has around 70-75,000 engineers. PropTrading gets a lot of mindshare among TC chasers but is a very small industry.
Also, salaries are definetly comparable when factoring in hours worked, exit opportunities (PM/SE/EM/Entrepreneurship while working in Trading you deal with forced garden leave/potential litigation when job switching within Trading), and even the base salary itself. I remember IMC was offering around 100k base in Chicago in the early/mid-2010s when you could earn 90k-110k base at Groupon or JPMC as a SWE while working 30-40 hour weeks.
That said, mid-career (5-7 YoE) tech in the Bay Area at least reaches around $170-250k base with an additional $100-400k in stock+bonus over the 4 year vest.
Factoring in hours worked it seemed more competitive than around $200-300k TC for SWEs at the larger PropTrading firms in Chicago at least.
Profiters of stocks are evil, and take advantage of the poor developers!!
Why don't you own stock then, it's public?
ANGER
Dividends could be paid out indefinitely as long as the company is profitable.
Squeezing people doesn't make them like you. Who knew.
I mean of course we are providing labor for money, but this is very different than a blue-collar worker living paycheck to paycheck doing hard manual work.
Fundamentally, almost all of us are N missed paychecks away from bankruptcy. For a lot of people, that N is 1, for some, it's 2 or 3, or even higher if you managed to save wisely. But we all have some number N. And the fact that we have that number should unite us against the few people on the far side of the derivative curve whose N is infinite. Tech workers had their relatively brief moment in the sun where their N was maybe 10-20, it got to our heads a little, and we started thinking we were "very different than a blue-collar worker".
On the other hand, as long as you manage your finances sanely, even in Europe you can reach a FIRE state (maybe not 100% retirement, but very close to it) in your 40s without too many issues.
If someone in tech is close to bankruptcy, due to missing a couple of paychecks, I really have a hard time to understand how they accomplished that. Of course, that may be different, if you just started your career.
Nevertheless, I know exactly 0 blue-collar workers (and I know quite a few) that could do FIRE in their 40s, and with sane financial management decouple themselves from the whole runmill in like 2-3 decades.
Back in the early 1980s it was hard to get software companies financed: "Why invest in a company whose primary input walks out the door each evening" (i.e. has no capital assets). Obviously that was eventually sorted out, but the underlying concern was not totally bogus.
If you like a company like Microsoft you can tolerate no buybacks and even a dividend cut if it means the company continues to invest in its people.
This is going to royally backfire as soon as the first big tech company blinks and starts hiring and poaching frustrated engineers. The exact same thing happened in the aftermath of '08 where companies that cut and held salaries flat were scrambling in '09 to retain and keep engineers--I distinctly remember Microsoft doing an across the board increase in salary to try to stem the bleeding and attrition.
Also, plenty of Indian Nationals working at these firms who are stuck in the immigration purgatory have started returning to India to work at the same employer's office there (albeit with a TC adjustment that is still competitive). Heck, even Big Tech and target startup salaries in India have begun reaching the $30-50k range (take a look at YC startups hiring in India for example).
At this point, a lot of fresh Indian H1-B talent coming to the US are those who were stuck working at shitty outsourcing companies (talent which Indian companies won't touch), saved up money to do a random STEM masters to get the F-1, get a couple years of American work experience plus save dollars, and then return to India.
Same thing happened with the Electronics industry in the 1990s-early 2000s with Taiwanese nationals leaving Silicon Valley to return to Taiwan or moving to HK/mainland China (live in HK, commute to Shenzhen/Dongguan/Guangzhou), Korean nationals returning to work for Korean companies in the 2000s-early 2010s, and Chinese nationals in the 2010s-Present returning to Mainland China.
"Microsoft to Nearly Double Salary Budgets, Expand Stock Compensation"
https://www.shrm.org/resourcesandtools/hr-topics/compensatio...
So they are freezing after the doubling? This behavior seems skittish and an overreaction, especially given their continued profitability and high margins. Corporate executive behavior reminds me of interacting with ChatGPT:
Exec: "What should I do to retain people?"
GPT: "One possibility is to double your salary budget and expand stock compensation."
Exec: "All my golf buddies' are cutting compensation at their companies, what should I do?"
GPT: "In this situation, try freezing salaries and reducing stock compensation."
I talked with a friend at MS and they said not only are they not getting any increase at all this year, the stock and bonus are going down to (or even lower than) last year's levels (before this supposed "expansion").
Kinda sucks...
Last year's increases were explicitly intended to bring Microsoft's pay closer to industry standards. By now saying, "Whoops, we accidentally gave you too much," it's clear that Microsoft has no interest in paying at industry-standard levels.
And to be clear: Microsoft is already laying people off. This isn't an either-or. In fact, their layoffs are probably the worst-handled in the industry, as they've been smeared across months, meaning Microsoft engineers have spent months in a state of anxiety, worried they might be included in the next batch, as each batch is only a few weeks apart. The best reason to work at Microsoft was the stability, but now they pay less and offer less stability than many competitors -- at least at Google or Amazon, you knew immediately if you were in the group being laid off.
(Sources for all of this: Former Microsoft SRE. I have friends and former colleagues at Microsoft who span from junior engineers to upper-level principal, i.e. 67. Personally, I nearly doubled my income two years after leaving Microsoft for another tech company.)
You choose, base salary is 100k and target raise is 10% two years in a row or 20% in the first year only. Do you want $120k + $120k or do you want $110k + $121k?
This involves the assumption that the "no raise" year is a one-off event to offset the double raises the previous year. It's a good deal.
Its more like
UPTO N% raise two years in a row or UPTO 2N% raise. In reality turned out to be N% raise + 0% raise.
like those ads in strip mall shops " upto 80% off"
* on select products
* conditions apply
You can say that again. I've spent last 3 months dealing with the effects of some pretty severe cost-cutting on my team. Now I recently learned my employers is going to spend billions on stock buy-backs.
That's just great news after the most recent push to increase our in-office time to increase "collaboration" ... when all of our teams are globally distributed so everything has to be Zoom meetings regardless of which chair your butt happens to be sitting in.
Anyways need to stop before this becomes more of a rambling rant. My work is also doing the occasional required week for "collaboration" but they've paused at 1 week a month for now. Have to justify this campus somehow... I like to think every manager bubbling up complaints actually got someone to listen but I'm betting they haven't changed their mind on the long term push even though we've shuttered 2 other locations in my area to consolidate people.
WSJ (article): https://news.ycombinator.com/item?id=35795299
WSJ journalist (interview): https://youtu.be/gaO4rAJEnBc
US Rep. Katie Porter (congress hearing): https://youtu.be/hIuA5MNs87A
Realistically, I doubt a SWE union is around the corner, but Alphabet does have a union that employees can join - so could your company! It seems most people think that unionizing would go poorly and result in job-loss, but it might not. It's easy for fast food companies or retail companies to close a location to lay-off anyone near a union, but if you're in the HQ as a corporate employee, you have to consider the behavior of professional unions (eg. the film writers union, currently on strike).
to shareholders : "WE LOVE YOU". we will do whatever it takes, fire employees, cut corners, kill raises, other nasty things before we let our numbers slip. We know, you are the most hedged, least impacted in market downturns. we love you. No really.
to management : "we love you. you did the right thing. Here's more money"
to employees: We love you. macro economic uncertainties .. market conditions .. platform shift .. AI AI .. labor market .. no raises this year. We love you.
Share your salaries, train each other, give each other confidence, and get your worth!
Wait until the market leans towards talent again. Everyone will be accepting the highest bids.
They may have erased a 5% raise this year, but lose it (and more) in new hires in a year or two.