I used to work at Gravity. Dan (owner of Gravity) is sincere and frankly the real deal.
Dan Price really is like what is presented in this article. He actually cares about his employees and is being genuine here. He's a good person, making a private business decision to increase the pay of frankly his lowest paid workers.
In a city where the average tech worker earns $275k a year, he believes its the right thing to do to make sure everyone that works for him at Gravity can earn enough to afford rent, food, and some fun.
Say what you will about the merits of decision, but it takes real leadership to make it and stand by it. I happen to think he's doing the right thing and I hope other companies choose to follow suit.
Saw a video of Price saying that his minimum salary may have indirectly raised housing costs in his city and that is not a problem he can solve but something that the city must. I don't know the figures but I would guess that any effect that he had caused was minimal.
He really does come across as great guy. If I was more local I would probably look to work for him.
Sadly, there's a strange knock-on effect of all the professional landlords: Instead of aspiring to own a family home, a lot of millennials aspire to become landlords, either by buying big and renting part of the space, or by buying small and using it as a springboard to buy bigger and rent the original place. It's a vicious cycle, especially since they often don't have the capital to easily absorb damage or maintenance costs, leading to the properties deteriorating rapidly.
Genuinely curious, not judgemental here. How did the usually-much-better-paid people feel about this? Did they complain that their salaries were now closer to the lesser paid people?
Like, I could see somebody not feeling like that's fair so I'm wondering how the morale was impacted by that.
I'm curious where this poster got that figure. I haven't found anything like it, in fact a pretty consistent 145k average salary. I would also be wary of average vs. median, as there's some real crazy outliers out there.
Outlier employees is probably an exaggeration. Sure, they may be making above average at those companies but no way those Google/FB salaries are true outliers.
I have a sister-in-law that I recently learned is making $275k in a tech job in Seattle. She has no college degree or formal training. She has just learned things on the job over the years. I was frankly astonished. That is more than double what I make as a senior software engineer 3 hours away in Portland.
When last did you change jobs? A year ago I did and set a hard minimum at 120, and managed 2 offers as high as 160 and took a lower one due to more interesting work and great environment. And had to cancel 3 more on site interviews that knew my range was 130-140.
My previous job had a 2% raise over 3 years, with a salary out of touch with the current ranges.
It seems the only way to get a raise much of the time is new work (and practice negotiating!)
Just a few months ago. What's your specific discipline and exp? It's good to hear that there's a lot of room to grow. I'm well aware of when/how the biggest gains are made, but I appreciate the insight nonetheless. I consider 110k at the moment to be pretty ok, just considering my extremely spotty track record atm. I'll stick around for now to rebuild my savings and get some current exp, but won't sit on it for too long especially if the compensation doesn't seem right.
I am a software engineer in Vancouver as well, feels bad. My partner doesn't want to move so I am taking the pay cut. I have noticed that Vancouver dev salaries have been increasing the last few years, but no where close to +200K USD.
My end goal is to move to the Okanagan and get a remote job where I could get similar pay to Vancouver with much lower living costs.
That's not a bad idea, I love the Okanagan, though it might be a bit isolating. Salary is certainly one thing, but I wouldn't move for salary alone or that of my partner (I don't think). There just isnt enough personal value to be gained in salary increases enough to sacrifice being with or where you love to be.
I don't know why there is always this nitpick. I just take it for granted that when someone talks about tech "salaries" they mean "total comp". Virtually everyone in my peer group makes more than half of their total comp from non-salary compensation. Sure that portion varies somewhat due to market forces, but there seems little point in discussing base salaries.
There's a huge difference from getting stock grants from FAANGM and getting options from startups, which may easily turn into funny money. The recent underwhelming tech IPOs from Uber, and perhaps worrying upcoming IPOs from AirBnB, indicate that even options from unicorns might be of debatable worth. It's just not money in the bank in the same way those from the tech giants are.
Did you read the article you're responding to? It's historical data, which is as literal money in the bank as you can get. What's the point of saying "oh sure, but this is skewed by Amazon/Microsoft TC, base salaries are actually much lower" in this context?
I think a lot of people, myself included, don't know the nominal value of their total compensation. If their employer pays the full costs of their health insurance plans, I don't think many people know what those costs are.
Also, as others have pointed out, certain components of total compensation, like various forms of 'equity' in the employer company, are not reasonably equivalent to cash, and no one could feasibly evaluate the cash value at any particular moment in time given all of the relevant variables needed to even estimate those cash values.
I'm guessing OP did in fact mean median, since the point is that outliers at the top can really skew the mean. Median gives a more realistic idea of what people are typically earning.
$145k for Bay Area salaries? I’m assuming this doesn’t include the wild bonuses and options I keep hearing about, because given how living expenses are, that seems like a negative ROI
Data scientist here. “Average” tech comp (the study used the mean in this case) is so misleading as to be useless and was probably chosen to promote an agenda. The distribution of tech comp is extremely skewed by the top earners. Median would have been much more representative. (Although I will add that $275k is about the median at FANG companies).
I think I remember reading that Americans, on average, have $700k saved up for retirement. When I dug further into the data, the median was many multiples less than that.
That really seems like a high average, even for the Bay Area. I suspect median total comp is lower, even for FAANG. Also, the company in the article is in the Seattle area. Lastly, even at the extraordinary level of income of $275k, cost of living means that while you’ll be comfortable, you won’t feel especially kingly.
I’d add Portland, Austin, Minneapolis, etc. to your consideration. Comp is 25% lower, but cost of living is even lower than that.
There is a lot of good intentions here but we did run a very large scale experiment for 69 years on about 300M people. It was called the Soviet Union and the results weren't pretty economically for the people. So the concern remains how long this can last, how brittle is this and how much can it scale.
"There is one rule for the industrialist and that is: make the best quality goods possible at the lowest cost possible, paying the highest wages possible."
Chiming in, absolutely not. My grandfather, excellent engineer, who was learning all his life (and still is) was getting a salary merely twice the level of low-skilled manual labourer (and not a high-skilled factory worker even). The only way to get a decent living was to climb social hierarchy of different government structures (government or the party, probably latter). This kind of system is nothing but broken.
Raising minimum wage is not same as paying equal wages to all (which is what this article describes). No one is trolling and comparison to Soviet experiment is close, if not exactly the same. Please read the article.
You obviously missed the core of the story. The title itself is "The boss who put everyone on 70K". The CEO took cut from $1M to $70K. At least two people resigned because of pay cuts to $70K.
You cant generalize things that far. But for sake of argument: you are saying that they failed the challange at aliexpress/amazon level distribution - using pen and paper.
I chat with 2 russian chaps working on the technicalities of that challange (coding the model in sofware) they had an interesting thing in common. They both had parents who tried to work the paper administration in soviet days. They told their kids countless horror stories about misplacing a bit of paper excluding entire regions from goods, like no shots. The parents were extreamely entugiastic about computers when they came onto stage. That! That is what we needeed!
Just to clarify - the article mentions that he put everyone in the company on a minimum salary of $70K. I would think that high level technical staff on $100K+ would have been more than a little upset to have their salary slashed. Junior staff members are the winners here!
I mean, sure. He cut his salary - but he still owns the company, and I'm sure his equity stake in the company is worth a loooooot more as a result of all this. Let's not paint this as some huge, noble sacrifice.
Was this an obvious consequence at the time? I think he took a big risk and it paid off. Props to him! It could have just as easily tanked his company as a result of an economic downturn.
sure but don't you have to first sell it for it to be worth anything? if on a weekly basis he's making much much less, (if you had read the article), he would need to be doing other things to afford his life, which seems to be the case. he was airbnb'ing his apartment for side cash.
If you own a company, you keep whatever profit remains after expenses. Your salary can be $70k but your monthly or quarterly owner distribution can be much, much more.
And according to the comment above, he was salaried at over $1 million/year before that. Two years of that alone allows someone to retire 20 years early or easily have 5+ years of solo runway for another startup idea.
I can't find any mention of technical staff having their salary slashed. The only mention of pay cuts is the one the CEO took. Would you mind sharing a source where this is stated?
I think they mean that if the headline is taken as written it implies everyone in the company being moved onto 70k - even if their salary was originally higher, not that the article actually states that this happened.
> Would you mind sharing a source where this is stated?
It’s in the title. ‘Everyone on 70k’ is a pay cut if you were in more than 70k, as any professional would be. It’s clearly wrong as it doesn’t make any sense, but that’s the source they were referring to.
Would call center staff, receptionists etc not be professionals (I.e. is there a use of the term I'm not aware of?). Is it people doing work requiring degrees?
> Would call center staff, receptionists etc not be professionals
Are you just asking what a 'professional' is? As in you're not a native speaker?
The etymology is from 'someone who has professed vows' and traditionally means someone who's part of some kind of learned society. In the past it was classes like doctors, lawyers, religious ministers. Over the industrial revolution it began to include engineers. Engineers used to be part of learned societies (I am, as a software engineer), but now it's more relaxed in many places, with software engineering being at the extreme end of relaxed.
So not call centre staff, because that's not part of any learned society and are not part of a career that would traditionally have been so but has become more relaxed.
> Are you just asking what a 'professional' is? As in you're not a native speaker?
Indeed.
> Are you confusing the term with just 'anyone who works for a living'? That's not what 'professional' means.
That's how it's commonly used in sports, perhaps that's where I got it from.
I'd call any athlete who performs their sport for a living "professional", not because they are e.g. part of a specific league, but exactly because they can do it for a living.
But regardless: which people in a typical company would be the professionals? People with protected titles (Lawyers, etc)? How do e.g. Engineers fit in?
I think the amateur/professional use is a bit different, because nobody is an amateur call centre worker.
> But regardless: which people in a typical company would be the professionals? People with protected titles (Lawyers, etc)? How do e.g. Engineers fit in?
People who's careers would traditionally have been part of learned societies that you had to profess vows to get into, and then careers that have grown up around that.
Lawyers, engineers, HR, marketing (there are learned societies for HR and marketing), etc.
Additionally, the other dichotomy (for this use of 'professional') is vocational/professional.
A barber is probably even qualified (which the call centre worker may not be), but it's a vocational qualification; cutting hair is their vocation; it isn't a profession.
>The etymology is from 'someone who has professed vows'
To a certain extent, I think you are guilty of relaxing the definition just as you accuse the OP of doing.
Strictly defined “professional engineers” are licensed and do take those vows of ethical behavior. However, the vast majority of people claiming an engineer title do not meet this criteria. While somewhat pedantic, it does carry legal meaning. Some states have even brought lawsuits in this regard, although I think they were ruled against.
I think I covered that when I said it was relaxing over time and professions which used to require membership I’d learned societies don’t and that software engineering was at the extreme of this.
You did, my point was more along the lines of it’s subjective use and how it blurs the lines, so I suppose we’re saying the same thing. To a certain extent, the perverting of the terminology seems to be used to garner prestige or status rather than any of the original purpose. If subjectivity extends far enough, it’s hard for me to say the OP was using the term “professional” incorrectly. In that case, it’s hard to make the case that your subjective definition is right and theirs is wrong or vice versa
"Professional" is sometimes used as a kind of class or sub-class division among labor in (at least) the US. Lawyers and doctors are definitely in it. Various other groups may be in depending on who's making the distinction, and others like to imagine they are in. They tend to be the sorts who have vacation homes somewhere nice, and have some specific skill usually requiring significant education, rather than broadly "business stuff" as a well-off manager with similar wealth might. So, well paid highly skilled labor.
Imagine the stereotypical Asian immigrant middle-class parents and if there's a profession they'd be absolutely thrilled for their kid to go into, that's likely professional class. The happier these imaginary people are, the more solidly professional class it is.
How's that? It can be true that everyone is on at least 70k, and some people are on more. It can't be true that everyone is on 70k, and some people are on more. If you're on 80k then you aren't on 70k are you?
If you're 5 and asking "how many months have 28 days?" and insisting the answer is "all of them", you are technically correct. In that extremely limited sense, this headline could also be correct.
today i learned that a lot of people on HN don't have kids. you learn to be very direct in communication to avoid misunderstanding like this (which is very common!)
> "When money is not at the forefront of your mind when you're doing your job, it allows you to be more passionate about what motivates you," she says.
I spent the first several years of my career working in academia for a poverty level wage.
I can confirm from my own experience that when you worry about not being able to pay rent and all the bills, it's very difficult to be productive, much less in a job that requires any kind of focus or creative thinking.
I live in Berlin, which has a history of being both poor and having an extremely creative subculture.
It's interesting but sad watching that creativity vanish as the rents rise. There's more money here now, but less creativity.
I think this apparent contradiction is resolved by asking "who had the time to be creative?". When rents were low, artists could make ends meet and still have time to create. As rents are rising, the artists are pushed out, or forced to spend more time making money. The new tenants are people earning decent money, who again are either working too hard to create, or are not "artistic" in that sense (me included).
The old squats and communal housing are being redeveloped, the graffiti-covered walls are being repainted so the houses they cover keep their value. The focus moves from "poor but sexy" to "let's make lots of money". Everyone is richer, except the culture.
(Canada's lost sweetheart PM hopeful is interviewed in one of the videos when he was a Toronto city councilor. Such a loss. He really had his finger on the pulse)
The artist scene is constantly moving taking advantage of unsafe areas making them safe so they can be pushed out once word gets out this is an artist area.
That’s my observation too. When it’s protected, it rots as it yields elites and keeps outsiders out. It becomes a reference point to pseudo intellectuals so they can judge anybody who diverge from this mecca, up until some other place replaces it and becomes a museum.
Hong Kong and Tokyo somehow manage to stay creative and interesting despite being more expensive per square foot than the new Toronto.
The difference, in my uneducated opinion: commercial and retail space in those cities goes up. It is not strictly at street level, as in Toronto. Look up and you will see signs for bunny cafes, stationery, restaurants, all kinds of small/odd fashion stores...
All the condo districts in Toronto look the same: a small sliver of retail on the ground floor, invariably Rexall, Rabba's, or Aromas. And that's pretty much it.
Would love to hear from someone more familiar with urban planning on this topic.
Toronto is fairly encouraging of building as well. It's just that it's the fastest growing city in the western world so demand is growing faster than supply.
Most cities have problems with staying creative in the face of high rents because most artist jobs pay very poorly (unless you're one of the few who makes it big). It's pretty terrible that musicians, writers, painters and sculptors tend to be in salary brackets where they can never retire and never own a home unless they become huge.
The art and culture of a city will suffer greatly if the next generation of artists is entirely forced into corporate jobs with part time on art. This is even more true if those jobs require creativity reducing the creative energy available for art.
I came in TO in the middle oughts and there were patches of the city still having that artsy, edgy and unkempt vibe, and even the commercial Yonge strip from Bloor down to Queen was atmospheric. All got lost to the glass condo towers, and the faux hipster hoods are souless and uninteresting. I feel Toronto became a victim of its own success, great economic progress does not equal vibrant and livable city!
As a resident of Toronto I feel less bad about the visual display of the city and worse about the outflux of artistic talent. So many artists I knew a decade ago are living far out in the burbs, where it is harder to find events and develop talent. There are new artists but the artistic communities are becoming a mix of young people and people with corporate jobs. Very few people pursuing their craft full time are making a viable wage in Toronto and this bodes ill for future generations of art in the city.
Case in point, close to where my humble abode is, there is a newly built artscape center, a supposed hub of a condo tower with spaces for installations and happenings. Well, since it is a newly built unit, it falls outside of rental control bylaws, thanks to the boneheaded legislature introduced by the wrecking ball that is Doug Ford, and the rents there promptly went up 20% or so at the end of the initial one year leases, so all the struggling artists that this artscape hub was supposed to provide home to, started leaving in droves.
Absolutely. I came here in 2006 for a few years and there were still plenty of spaces, though the old ones were lost. Came back in 2010 and things had moved a little further west again. Found a bit of a haven in and around Bloor/Dufferin to Lansdowne and up to Dupont, but all of my old spots there have nearly shut down and further extraordinarily large developments are planned. Used to play semi-regularly at The Silver Dollar (RIP). Grimey, but fun.
Parkdale still has its moments but even it is being hit now and Little Tibet is feeling that sting.
There's constant [sad/angry] joking about every block consisting of Shopper's Drug Mart, Rexall, Starbucks, and bubble tea. It's not at all that bad yet, but it's also not as much of a satire as it sounds, sadly.
These days my partner and I have been strongly considering a move to Hamilton if we can sort it out with our work.
Sometimes they don't just move. Sometimes the arts scene and communities are just dissolved and they "suck it up" and get a "real job" like... [from personal experience] get a real estate license so they can pay the bills and end up settling down.
The savvy ones scrounged up enough to buy property and either hold out their with less of a community, or they sell and move and just do their own thing.
In Ontario, there isn't a cheaper place for quite an expanse. Hamilton or other smaller cities are a bit of the last holdouts. But because of some of the exodus from Toronto (and like cities) they are being bought up and redeveloped as well.
Some escape to small towns, but those usually stay small and grow sleepy even though they're interesting places.
I've always worked a day job, even at my most active, so I've kind of had one foot in both worlds.
Cities were attractive because people were close together—there was variety, word could get around. They were vivacious. It would be terrible to see that completely snuffed out.
funny enough though, as oil and gas declines in importance (and loud, oxygen-sucking volume) some new and preexisting voices are getting an opportunity to emerge. We're young, educated and ambitious so despite poor economic fundamentals I'm bullish ...
“I must study Politicks and War that my sons may have liberty to study Mathematicks and Philosophy. My sons ought to study mathematicks and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture, in order to give their children a right to study painting, poetry, musick, architecture, statuary, tapestry, and porcelaine.” - John Adams
Seems like we are regressing from artists back to "mathematicks". Hopefully we don't regress further into "Politicks and War".
“Intellectual freedom depends upon material things. (...) Women have had less intellectual freedom than the sons of Athenian slaves. Women, then, have not had a dog's chance of writing poetry. That is why I have laid so much stress on money and a room of one's own”
What upper class tripe. The only freedom sons of Athenian slaves had was to die in the Athenian silver mines.
>Shafts were driven down into the ground and galleries opened where slaves, chained, naked, and branded, worked the seams illuminated only by guttering oil lamps. An unrecorded number were children. It was a miserable, dangerous, and brief life. [0]
It is always the most comfortable that consume the most vivid persecution porn. Feminists seem to have been doing this for a century longer than the The Handmaid's Tale, which was my introduction to that brand of mental illness.
[0] The Rise of Athens: The Story of the World’s Greatest Civilisation
South Africa has this problem in academia and to a order of magnitude worse.
Not only do you worry about your own small income; but grants, scholarships, registration fees and a myriad of other things have in recent times become volatile and can be taken away from year to year.
Most of the issues is due to 1) our government being corrupt and 2) promises the government made about free education.
I am not against free education, but I am against impoverished professors.
This is why I decided to side-step academia. It is delaying my PhD by probably 3–7 years (I am at year 2's start now) but it's better than having in theory 100% time spent on a PhD but actually worrying about the University and your peers, your own future, etc. in reality.
I believe that the story is similar a lot of places in the world. At least in Denmark, stories of researchers spending more time seeking grant money than doing research are not uncommon.
As part of a lecture, I have had a lab tour with a semi-famous professor in Germany. He said that he sometimes gives ideas, but is most of the time just organizing and looking for money for his group. And he said that that is normal in his situation (successful academic career with a sizable group).
That is a consequence of procrastination, which is the consequence of anxiety, which is the consequence of barely meeting ends.
Basically in order to be productive under those circumstances you have to ignore reality, which can be problematic for the people around you.
But at the same time everything is relative on your perception of reality. We spend today 50-100 times more energy per person that people 100 years ago, and most of those people were happy.
We upgraded our expectations, specially because of mass media and advertisements and feel always dissatisfied because they will compare us with people that have more than we have.
It is often argued that people are far richer today than before. But you still can loose everything within a few months, so the pressure for economic success hasn't receded that much. And that is the security that is relevant to economic anxieties.
It is possible to be more materially poorer and happier than a US citizen by changing the deal society makes for them from one of high consumption and high precarity (meaning uncertain job, high cost of housing, expensive transportation, roll of the dice hospital bills) to one of lower consumption and higher social solidarity (meaning less gas, less fancy stuff, less packaging, possibly fewer exotic foods, but secure food, jobs, housing, medical care, and a society that isn't socially alienating).
Obviously, the more materially rich your society is, the better the latter deal is, but happiness comes from feelings of safety, not being overworked, and solid social ties.
>people 100 years ago, and most of those people were happy.
I’m asking out of general curiosity and not snark, but is there a reliable source to this?
A cursory search on my end didn’t return anything. I often wonder if the obsession with “happiness” is a relatively recent phenomenon borne of our own privilege.
This is a relatively recent area of study for the fields of international development and development economics. The UN has a World Happiness Report and there are a number of institutions that are now trying to directly measure happiness as well as the usual well-being indicators (like health, education, freedom, wealth).
The data seems to show that improving those indicators seems to increase happiness up to a certain level, after which they have much more marginal effects. One theory is that once basic needs are met, happiness becomes "relative" to the people around you, so rich countries/societies getting richer doesn't further improve happiness.
I can't speak to what was going on 100 years ago but based on the above I'd imagine they were a lot less happy than we are now - as a lot of people were not having their basic needs met.
Fair point, but that document was written by, and largely for, the privileged class of its day. I’m more curious if there are any metrics that actually show people were more happy in the past.
my mum has not been financially stable for over a decade. in this time she has been starting to "reset" what she finds acceptable. just recently she had to downsize her house and she has already focused on only what I can describe are ways to spend money to avoid reality. she recently listed a train of things she wants to do to her new house that sounds like she wants to stay there for the rest of her life. when asked about the conflict between staying and her next year goals is met with internal strife. she couldn't accept the fact that she needed to use what little money she had to lift herself out of her situation. instead she put priority on installing a dishwasher in her 600sqft apt to help the next person.
> We spend today 50-100 times more energy per person that people 100 years ago, and most of those people were happy.
100 years ago was 1920. That is two years after WWI. That is destroyed countries moving from crisis to crisis, veterans struggling to become part of society ...
1930 - great depression - pretty bad. It also made all race problems worst quickly. 3 years before nazi gets power - Germany solidly on the path there. 6 years before stalin purge in Russia - solidly hellos country at that point.
So I guess it depends which part of world you talk about, tho none of it sounds perfect.
I don't think I ever feel dissatisfied because of Ads. I'm pretty cool with what I have.
I am scared of losing my job though, because of a lapse in mental health or whatever. Not because my expectations are high, but because I'm afraid of having to sell my house in a hurry and move into a small apartment with my wife and my 3 children, as well as the feelings of failure and shame.
If anything, one of the biggest benefits of earning more is exactly to not have to think so much about money - more and more things start falling into the "cheap enough that I don't have to care what it costs" bucket.
To me that's the main benefit of earning more. Sure, it's nice to be able to buy more expensive things overall, and e.g. be able to travel more, but I find more value in the many tiny day to day improvements that individually sound trivial, such as not having to budget when at the grocery store. It's a few minutes here and a few minutes there extra where my mind is free to relax or focus on more interesting things, and it really adds up.
There was a year in my youth when I had a big economic setback, and suddenly had to budget my day to day expenses again, and frankly, the time I lost that I had to spend thinking about money, from the small things like how much I could afford to spend for lunch to how to cover rent, was exhausting, and a very stark reminder of how easy my life had become prior to that. And I've never experienced true poverty - I always had multiple safety nets; I'd never have starved, for example.
I think the mental exhaustion from dealing with a strained economy is one of those things people who haven't experienced it tend to don't get when trying to imagine what life is like for people who have little money.
I worked sub-minimum wage for a decade or so; I don't think poverty is an impediment to creativity. It is an impediment to using that creativity (particularly to generate value and/or income), however.
Not disagreeing, just trying to add some complexion.
> I don't think poverty is an impediment to creativity.
Poverty may even trigger creativity at times. But stress is the major impediment, and therefore living in long-term poverty does not favor sustained creativity.
Some creativity is "cheap entertainment" in the sense that much of it requires little material wealth to engage in, and that might sometimes spur creativity simply out of lack of alternatives. When I lived on next to nothing when I was younger, it was easy to focus on writing because I didn't have money to e.g. go out on the town. Reading back what I wrote, though, a lot of it seemed to be extremely introspective of my situation to the extent that I'd be embarrassed to let anyone read it even if it had been any good.
I grew up in Norway; incidentally, one of the most famous Norwegian novels is the semi-autobiographical "Sult" (literally "Hunger") by Knut Hamsun, describing a young writers descent into madness as the hunger grips him as he wanders around in what is now Oslo.
But I've also seen the flip side, where you spend so much time worrying about money or acquiring a semblance of security that everything else gets pushed aside.
Hunger, by Knut Hamsun, is an excellent read, it describes with dry humor what starvation does to the author's psyche and creativity. He goes from creative bursts of enthusiasm to the darkest moments of depression, from eviction to high hopes of getting published. Never at peace, but always hoping and trying. Recommended reading.
Humans are creative, and they apply that creativity to their present circumstances. I'm reminded of John Adams here:
"I must study politics and war, that our sons may have liberty to study mathematics and philosophy. Our sons ought to study mathematics and philosophy, geography, natural history and naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.”
I see a distinction between a basic creativity, i.e. how do i finagle the best existence out of this set of circumstances, cleverness, I suppose, and a fundamental creativity, the more artistic, unfettered by everyday concerns.
Like Maslow's hierarchy of needs... generally people have to expend their creative thought on how to provide for themselves before they have the opportunity to use that thought in more expansive ways.
Do a Dan Price and you jump start people's ability to settle the lower levels of needs and be able to make more choices.
You are right. JK Rowling of harry potter comes to my mind when I read your comment ... In one of her commencement speeches she will draw attention to this exact same point ...
Isn't it important to look for trends rather than standouts? Just because JK Rowling, who is an extraordinary success story, made it doesn't mean others will, because otherwise JK Rowling wouldn't be extraordinary.
Actually I was agreeing with the point that being poor does not impede creative thinking. I agree with your point too that JK Rowling has an extraordinary sucess story.
But then again, we will never know about extremely creative yet poor people who are struggling to make ends meet and wasting their precious mental energy on things others take for granted.
But that does not discredit the original point (to which I was agreeing), that being poor is not an impediment to creativity.
water / food / electricity doesn't total high for my needs, rent on the other hand
I guess that's why artists lives in old buildings sometimes..
ps: also, call me crazy, but I think in a hunter settings you'd have more time to wander and create than todays city life. As long as there's enough rabbits around to grab ..
The independent wealth was what allowed them to do science in the first place, nobody else had time or equipment (at least, that's the normal rationalisation).
> I can confirm from my own experience that when you worry about not being able to pay rent and all the bills, it's very difficult to be productive, much less in a job that requires any kind of focus or creative thinking.
Who was paying you and could you not go do something else for money?
In some ways, that mindset comes from a place of privilege. In true poverty-esque situations, you often couldn't get the time off of work to find another job, or even afford the transition between one job and another. It can be a pretty vicious cycle.
It does sound like you're the one making an assumption. Many people in this country feel trapped by what they can do for work.
On top of that being broke and exhausted makes it difficult for people to change what they are doing. If you can't go two weeks without a paycheck, how are you going to switch jobs, etc..
On the other hand, having money makes me less productive, since I spend more time caring about the stock market. Like yesterday alone my long ETF lost 2000€ worth, and I bought a short ETF for balance, which went up 200€. Should have bought the short ETF earlier, but I was at work. Here I am actually losing money by going to work
I don't mean this as a jab, but have you ever compared your overall gains with the s&p over the same period? unless you're really smart/lucky, it's probably not worth the stress.
I also "lost" a lot of money this week, but I'm not leveraged and I have positive monthly cashflow, so it's no big deal. I just bought a little more of my favorite broad market etf than usual and went back to my life.
People trying to pay me has become a problem. I stopped answering unknown numbers as a result. Buy your titanium hash pipe on the after market. I’m bored of making them. I’m doing indycar molds right now. I’m at my day job coding c++ and it’s very stressful being chased after. I don’t even know what’s going on with my portfolio. The market is down like a billion points...
are you me? Although my stock market outing has been very successful. i made my entire yearly salary this week and that is very demotivating to work right now..
Although we are the exception not the rule. My last job had me running around exhausted and I thought being super productive would increase my bonus (narrator: it didn't)
you know what else is a bad idea? Putting $80k into Virgin Galactic or Tesla calls at strategic moments in time. But I did both and now I'm sitting on more money in my toy account than my actively managed investment account. so maybe YMMV?
and no i don't recommend anyone doing what i did, but basic technical analysis said to sell [or buy puts] last week and with enough time watching markets you will know when an oversold relief rally is due [including mini rallies within overall downtrends]
I think it's important to mention some other sides of this story, namely that the raise came right around the time his brother filed a lawsuit for him overpaying himself and domestic abuse allegations. I don't remember the articles exactly but there were some rumors that this change was a PR stunt and shield for him
“Gravity’s 2014 profit was $2.2 million, Price adds. At private companies with sales like Gravity’s total revenue, salary and bonus for the top quartile of CEOs is $710,000, according to Chief Executive magazine’s annual compensation survey. At companies with sales like Gravity’s net revenue, the top quartile pay falls to about $373,000. At companies with a similar number of employees as Gravity, the top quartile of CEOs makes $470,000 in salary and bonus. The CEO of JetPay, a publicly traded competitor that processes a similar volume as Gravity, received $355,000 in 2014.“
Yet his comp was $1.1MM?
“Price signed with the talent agency William Morris Endeavor Entertainment and now charges as much as $20,000 per speech, Pirkle says.”
Or his obvious avoidance to answering the direct questions. It’s cool what he did, but I don’t trust the guy. Or at least I doubt his motives are so honorable. Perhaps I’m too cynical.
The bad news is from his brother/shareholder who claims he was deprived of his share of profit by CEO diverting funds to his own wage, and from his ex wife who approves extensive physical abuse.
Even if he dropped his salary to $70k, he makes money elsewhere (like speaking fees, apparently), and has a huge equity stake in the company that has grown enormously.
Btw, I think Google could already either pay 70k+ to every employee or is pretty close. They just need to make sure that all the janitors and baristas are employed by subcontractors.
what would a barista or janitor get paid at Google today? I always thought that they did use subcontractors for these roles? I must misunderstand, are you implying that employment via a subcontractor would increase their salary?
They are using subcontractors for at least some of these positions. But I don't know whether for all, hence my suggestion to ensure they outsource all the lowly paid position, if they wanted to hit this arbitrary metric.
It's all a bit tongue in cheek and silly.
It does have some real world consequences because of some regulation that requires companies to publish some information about the ratio between CEO pay to lowest paid employee.
But as we noted here, who is officially an employee and who ain't is flexible.
Uber and eBay and Amazon are an even more extreme example: Uber drivers and eBay sellers are at the heart of what makes those companies tick. But they are not employees.
He's saying that if Google wanted another way to present themselves as a progressive company, they could fire everyone who works for them doing a marginal job and replace them with contractors. This would allow them to set a higher minimum salary and pretend that they are very generous. In reality, they would have fired a lot of people and the contractors would be worse off than they were as employees and this would all have been a cynical ploy to appear good while really being evil. In other words, OP is being cynical about whether this company policy is really as progressive as it's made out to be, or might represent a dirtier trend.
I wonder how long it will take for the salaries to normalise comparing with market rate.
The salaries increased to 70k minimum, so they’re paying above market rate for a few roles.
The hiring quality will also increased. For example, with a 40k salary, the company could hire someone with 5 years of experience, with 70k, they can find someone with 10 years of experience.
So in a few years the company will get rid of low performance and hired more skilled workers and the salary vs skill will match the market rate again. (with a few exceptions)
>I wonder how long it will take for the salaries to normalise comparing with market rate.
When they stop growing and increased competition will cut into their margins, and especially if they start losing money. At that point, they'll be looking at efficiencies everywhere - and those expensive employees will probably be laid off.
> Two senior Gravity employees also resigned in protest. They weren't happy that the salaries of junior staff had jumped overnight, and argued that it would make them lazy, and the company uncompetitive.
From the article it doesn’t sound like he was forcing them to take the base salary but rather making that the minimum salary for everyone at the company.
I've had this raise in 2 years at my current employer.
If anything, I'm not putting in as many 60+ hour weeks as I was 2 years ago.
What's the incentive? "We'll pay you more, so you can work more and deal with more stress and, one day, you can have a heart attack at you desk. "
There have been several CEOS who historically have paid themselves 1usd or very low salaries. They end up making up the difference in other parts of their comp packages. I suppose this boss is also the main shareholder so he benefits from productivity increase.
While I admittedly do not know any of the inside details, but if you read up on some of the "Glass Door" reviews on Gravity Payments, you'll see a trend of reviews commenting on the cult-like behaviour of the company. I'd suggest doing your own research on companies you apply to before you get mesmerized by their media publicity.
Indeed. There are roughly three ways to convince people to keep the discipline needed for the collaborative work: force them, interest them economically, or have them believing the cause. Slavery, capitalism, and monastery.
Real systems usually are mixes. E.g. Soviet system is largely slavery plus some bits of capitalism and a lot of propaganda to cover the monastery aspect. Or a capitalist company with a visionary leader may be quite a monastery too.
Now, the most pleasant way to work is indeed a monastery, but the one that scales well is capitalism :) Slavery is inferior on both counts, but may work when there's no way to add economic interest.
My point is that the monastery (or clan) represents roughly the maximum facile size of a voluntary (internally motivated) organization.
Scaling above that starts to require some external management structure (your corporation).
Then there is the military (retired Navy here) where there is an explicit hierarchy and a Uniform Code of Military Justice to as an external driver.
Hence the authoritarian fascination with military terms. If that's your thing, then organizing society like some vast bipedal ant colony seems attractive.
Or tenured professors in fields where they could get paid a lot better if they went private, yet they don't?
That's basically a position that makes money go away as an immediate problem, and then the rest of the appeal is having one's hobby as one's job. Scientific freedom and intrinsic value.
Since it's working for Dan and his company, great!
> in Seattle that wasn't enough to afford a decent home.
Because the population in Seattle has grown by leaps and bounds, if everyone could afford one of the supply of homes, the prices would go up until demand equals supply.
Alternatively, we could push to make housing not a commodity. Build more public housing, upzone and regulate what gets rebuilt to ensure more units, put laws in place to advantage renters, make building affordable units a higher roi than building luxury units, etc.
> Every luxury unit that is built lessens the pressure on housing demand.
That's true. We need to build more units. But for the price of one luxury unit we could have 1.N affordable units.
Also, building luxury units often displaces existing residents and replaces them. Yes that might be necessary, but it also should be humane -- it's not acceptable to just evict everyone on a block and shrug. We need to be aware of the impact of evicting families in the name of progress.
Citation on this? Seattle has added tens of thousands of units and upzoned many neighborhoods. At one point I could look out my window and see 21 cranes building high rises, both mixed use and office buildings. The population influx has been massive.
These are typically luxury units, which are not affordable to most people outside the tech sector. Meanwhile, despite high salaries many people in the tech sector (rightly) don't want to pay luxury prices, and so they are also competing for lower priced housing.
Oh, 100%. We need to incentivize affordable housing. It should be in the developers interest to house as many as possible rather than as lushly as possible (until we're all comfortably housed.)
How? Why would a developer want to lose money housing as many people as possible? At the end of the day your looking to sell or rent for the highest $ per SQ FT possible in your market, with the least amount of risk. If your rent to 50 @ $500, your gross monthly rent income is 25,000. If you rent to 10 @ 2,500 you have the same totals. You are much less profitable with 50 units @ $500 because of maintenance/repairs, tenant issues & labor. It takes a whole lot more to keep 50 units operating than 10.
Glad you asked. The problem is partly because housing is a commodity. Everyone from the developers to the banks have the incentive to build the most luxury unit they can sell -- developer gets more rents/sales, bank considers units less risky, etc.
There is a pressing and urgent need for more housing, but there is also a huge eviction crisis in those same cities.
So what can we do?
Public housing/Public funding for housing -- fund both capital and operations publicly, paying developers more to incentivize building non-luxury units.
Tax empty units -- Taxing units that are empty reduces speculation in homes. It should not be financially possible to buy housing and leave it empty as a way to store value.
Rent Control -- Limiting rent increases tenant control over a neighborhood, limiting the amount of speculation and acting like a bit of a brake on market rate.
Build More -- Upzoning, especially with regulations that require more units per lot and require moving tenants to equivalent units while construction is ongoing. It's no good to tear down a bunch of townhouses and put in an apartment building with the same number of units.
Eliminate minimum parking -- Parking takes a massive amount of space. Especially in an urban core. Use that space for housing people not cars.
Decommodify Housing -- Make it less profitable to be a landlord. Give tenants right of first refusal in the sale of their buildings, form housing coops, guarantee tenants representation in legal battles, create stricter laws around evictions. If it's less appealing to treat housing like a commodity, it's easier to push for housing as a right. All of these things are about making small chips away from the power of landlords to extract rents.
Affordable Foreclosure Insurance -- Insurance helps ensure people can stay in their homes, upkeep their homes, and continue to contribute to the neighborhood. Reduces the amount of home flipping pushing prices upwards.
Community Land Trusts -- There are groups that buy land/houses and sell/rent them at below market rates (with the rider that the property must be sold later at below market rates.) In Seattle, for example: http://www.homesteadclt.org/ By putting downward pressure on market rates, you further decommodify housing and make it easier to push for reforms that make the ROI better for housing more people rather than more luxuriously.
Stiffer Penalties for failing to upkeep apartments -- When apartments fall into disrepair, whole buildings need to be taken offline or people refuse to live there. Requiring high standards in maintaining apartments ensures that the housing we do have doesn't get taken out of circulation too early.
Edit: I'm assuming you asked in good faith. I don't think we need to do all of the above. I don't think we can do all of the above right away. But combinations of the above I think are achievable and could lead to better communities. Happy to discuss any of them more, provide more resources, etc.
I think you're going to see this everywhere. Many of these homeowners saw the value of their home go from $100k to $500k. Do we honestly expect them to support a plan which will drop the value back to $150k? You're asking the homeowners to give up literally hundreds of thousands of dollars in equity to help people they don't know. I agree that it needs to happen, but it shouldn't surprise anyone that there is a significant push back against it. This is especially true for those who bought their house at the upper end of the market, and now aren't just losing equity but actual money that they put into the property.
You always needed those. So why is it that you could build the first homes and roads and sewers and power plants and hospitals and schools, but not more of the same?
Do you imagine that the size of sewers, hospitals, schools, and power plants to serve 100K people are the same size as those to serve 500K people?
If you've got existing, working infrastructure built out for population X, you have a lot more building to do to support 5X. Often that requires tearing down existing, functional infrastructure and replacing with larger.
When the sewer and water service is under existing streets and needs to be dug up to support higher density housing, that project is enormously more expensive and disruptive to the locals.
It's funny that city living is described as economical, ecological, and scalable compared to suburban & rural living because of infrastructure & transport costs. And here you're arguing the exact opposite.
So how is it? Dig up the street and build taller flats (oh no, digging up streets is expensive!), or commit to suburban sprawl (oh no, spreading infrastructure wide is expensive!). Pick your poison; either way people are going to have the infrastructure they need in one place or another, unless you kill them off.
Nevermind the the third and obvious alternative of expanding the city with high density buildings and new infrastructure to support it. You don't have to interconnect every sewer pipe in town just because.
In addition to what clarry said: do it piecemeal, and upgrade the sewers when you would be doing maintenance on them anyway.
Also: if necessary, do charge the developers, and use that to finance the upgrading work and perhaps some modest handouts to existing residents to compensate them for the trouble. (Perhaps have different parts of the city compete in an auction on who would accept the smallest handout to be upgraded first. Allow negative bids as well, in case some parts of the city positively want the upgrade.)
I’m very impressed by the generosity of this business owner- I don’t know if I would have that kind of moral compass in his position.
However- it still needs to be said that we really ought to fight to create an economic system in which everyone has the means to have a comfortable life, even if individuals that make it up are not virtuous. Because this kind of story is a rarity, and the market will certainly punish him for his generosity.
> in which everyone has the means to have a comfortable life,
Why do you think everyone should have the means to have a "comfortable" life? Perhaps you mean means to meet necessities? If not, what does "comfortable" mean to you? Additionally, why do you think that the means are not there today?
It seems like a good initiative, but two thoughts immediately come to my mind:
1) Him making $1million salary at a small-medium company is quite a bit, but that may be because ...
2) ... the company is clearly making a lot of money (as in a lot of profit) and/or growing quickly. When you're growing and making huge profits at a software company, you can afford to pay above the market rate because you have spare cash. At some point that will change. The growth rate will plateau and they will cut salaries (maybe not for existing employees, but for new hires), or layoff expensive staff.
But props to Dan to get this done when he had the chance to.
As far as I know, there was an Argentine tango orchestra (one of five great tango orchestras) led by Osvaldo Pugliese that used a similar approach. Pugliese was indeed a communist, a member of Communist Party of Argentina, I believe, and in his orchestra they divided all the earnings equally among members. Was one of the most stable tango collectives.
"His company, Gravity Payments, which he set up in his teens"... I'd LOVE to see how a TEENAGER was able to go through the PCI-DSS certification process and PASS the D-level.
Here is v1.0 of PCI-DSS from December 2004, same year this company was founded. Doesn't seem very difficult to comply with, it is essentially 'Use a firewall and antivirus and don't use the default password'
http://ftp.freenet.at/mar/PCI_data_security_standard.pdf
most likely true. these days you have to be a well funded company that has enough cash to jump through the hoops. the cost of entry these days is astronomical. hence very few players on the market.
Note that this story has been told and retold for years. Whatever difference in pay he paid has more than paid for itself in press attention and marketing.
Oh, that story. I remember it. A lot of the high-performers left shortly after that. It was all triggered by some lawsuit in the first place anyway. The "give everyone the same salary" was like a compromise to weaken the lawsuit while at the same time to make a positive impact on media.
Alfred Nobel started the prize because his obituary was accidentally published, putting him in a bad light and he wanted to be remembered differently - we benefit from this prize today, in spite of his destructive business activities. I think it's fair to mention the fact that it was due to Price being accused of overpaying himself that the situation got turned around to be something valuable for his company and staff. However, I don't think it's fair to vilify him in the present day and discredit the results.
With respect to preparing one's own obituary in advance the following quote came to mind:
"In journalism, we recognize a kind of hierarchy of fame among the famous. We measure it in two ways: by the length of an obituary and by how far in advance it is prepared. Presidents, former presidents, and certain heads of state are at the top of the chain."
- Walter Cronkite Quotes
American - Journalist November 4, 1916 - July 17, 2009
> However, I don't think it's fair to vilify him in the present day and discredit the results.
I'm with you for the second part, I think the results can be looked at independently. However, I don't think one good deed should excuse past bad behavior and one should be careful about glorifying someone to the extent that we ignore their misdeeds.
> However, I don't think one good deed should excuse past bad behavior and one should be careful about glorifying someone to the extent that we ignore their misdeeds.
I disagree. What you say is true in a lot of cases [1], but you're devaluing personal growth way too much. This guy's "one good deed" was a drastic and radical break with his misdeed of overpaying himself. He deserves all the glory he can get for that.
[1] For instance: a businessman who spent his life exploiting thousands to make himself rich, who then engages in some half-ass charity at the end of his life.
> A lot of the high-performers left shortly after that
The article specified that "two senior Gravity employees also resigned in protest". Do you have a source for "a lot of the high performers" outside of those two?
It sounds to me like it worked out for the company, regardless of the CEO's personal goings-on. It's a win for the idea that if you pay all your employees reasonably, they won't just fall back and let the company crumble. I think it's really important to point and show that this initiative, which so many people derided as ridiculous and guaranteed to fail, actually worked.
But is it actually interesting why this started? As a purely economic experiment it's surely at least not a total failure as the company is still standing.
I'm not sure what value the "high performer" qualification has in this instance. They were the highest paid, but I don't think we have any guarantees to their actual output. If the CEO is an untrustworthy agent (as some of the stories make him out to be) how can we trust any of the valuations of his employees?
Yeah, I'm really surprised more people aren't bringing up the lawsuit aspect of it (and the accusations of domestic abuse) while saying he's a 'nice guy.'
> Lucas Price served the suit on his brother prior to the $70,000 announcement, and the core allegations related to the preceding years. The suit alleged that Dan Price used his majority control of the company to pay himself excessive compensation, manipulate valuations of the company to his financial benefit, and charge hundreds of thousands of dollars in personal expenses to the company.
FWIW, Dan Price (owner of Gravity) is the real deal.
While I no longer work there, I am proud of what he is doing. He is a capitalist, making a decision as a private business owner to help improve the lives of his employees earning < $70k (in the expensive Seattle area mind you) by reducing his own compensation.
Nothing wrong with that-as long as it’s really free. It’s the paid article that’s wrong.
Journalism shouldn’t give coverage intended to benefit a company. But it’s just as important they don’t forgo telling a story they consider interesting just because it might incidentally benefit the subject.
Anyone who was worked a job where low wages are paid (either as a worker receiving low wages or in a managerial position) knows that there is an extremely tangible effect on work quality and productivity.
Workers who feel they aren't being fairly compensated for their labor don't work as hard. They don't show as much attention to detail. They don't have any loyalty to their employers, who they perceive as exploiting them. They are much more likely to quit or leave at the first opportunity for any job that seems better. They aren't invested in good customer service. They grow to resent their employers when they work full time and still don't make enough to afford basic necessities.
Its no surprise to me that paying workers a living wage (or even something close) results in measurable benefits for a business, in a variety of ways (not to mention immeasurably improving the lives of employees).
Further (since this seems like such an alien concept to most high-wage, HN members) getting paid a decent wage also allows massive benefits to the economy and society at large. We're currently looking at a global pandemic with the coronavirus. Given the apparent virility, it seems inevitable that this virus will spread to every country in short order. Most low wage workers don't get sick leave. Many get fired even for taking unpaid sick days. These are your cashiers, your grocery store workers, the people who make your coffee - the service industry workers who make up the bulk of American labor. Even those workers who won't get fired for taking sick days, often can't afford it. We've all seen the stats about the huge number of Americans who cannot afford an emergency expense of a few hundred dollars. Staying home sick qualifies. The containment efforts we've seen in South Korea and Italy have (so far) largely failed - and these are countries with universal healthcare and worker protections that we don't have. Right now it costs $3,200 to get tested for the coronavirus in the United States. Not treated - just tested! Working people cannot afford this and will not get tested, or treated - which will make the crisis worse. How much will this crisis end up "costing" us in the long run? If not this one, how much will the next, inevitable one cost us, because working people don't have the income or benefits to take care of themselves?
Massive kudos to this guy for paying his workers a fair wage. Hopefully other employers are enlightened enough to follow his lead and do the same, with the understanding that paying adequate wages benefits not only their business, but society and the economy at large.
> Its no surprise to me that paying workers a living wage (or even something close) results in measurable benefits for a business, in a variety of ways (not to mention immeasurably improving the lives of employees).
Not if their work doesn’t really differentiate the product. I have all the research I need about products from the internet, so I don’t need a store employee to sell me anything. Same with many other low paying positions. They are low paying because customers aren’t valuing the extra benefits of a non plug and play staff.
Spoken like someone who has never worked in a low-wage job, owned a business, or managed low-wage workers.
There are low-paying jobs for a variety of reasons, including in large part, corporate welfare for the largest employers, like Wal-Mart, which the government subsidies at taxpayer expense to facilitate the payment of starvation wages.
As far having everything you need for your products due your internet research, I hope you will enjoy the coronavirus (or whatever other communicable disease you acquire) as an added bonus from low-wage workers who are unable to call in sick. The people who brew your coffee, make your sandwich, park your car or do a million other things that allow our society to function. Perhaps when your mother, your aunt or child dies because they were needlessly infected by a low-wage worker who couldn't afford to seek treatment or call in sick to work you will factor that "worth" into their perceived value.
I do own businesses that employ low wage workers, and have managed them myself. The claim I was responding, and am disputing, was that paying workers above market rate will result in benefits for the business.
There are very few businesses who target the upper middle class or those with a little bit of disposable income that can afford to go above and beyond for their workers, like Nordstroms, Costco, Apple, Trader Joes, etc. If you notice, these businesses are all located on the rich side of town, and usually there's only 1 or 2 for medium size cities.
You simply won't survive as a business if you pay workers more hoping to get something out of them when the customers don't value it, and reality shows this. If you want to increase the standard of living for low wage workers, one needs to support politicians who will pass legislation mandating paid time off, de-coupling health insurance from employers, parental leave, increasing minimum and overtime wages, reducing # of hours before overtime kicks in, etc.
This isn't a problem a single business can solve, it's a society wide issue that needs a society wide solution.
Except the staff at a store also ensure the store is well maintained, stocked, the register is operated quickly, theft is minimal, and provide customer service to those customers who do need it.
As someone who worked retail in a music store, there's a whole lot of people who have no idea how to even begin finding what they like. Efficient customers like you are a minority.
While I like good-feel news such as this, there is more to the story than meets the eye. Buried in the comments are links to news sources which go into further legal details.
You can not even buy a house built on the 1950s on 70k a year. And while most quality claims (which usually lack actual numbers) certainly look subjective, the quality of a dirt lot or vial of insulin has obviously not changed while their adjusted inflation price has sky rocketed.
At any rate, the claim that "stuff" is more expensive because it is better implies that decades of technical improvements have resulted in no efficiency gains. At best, it implies the value per man hour has essentially remained flat. And since the option of buying lower priced versions of items has dispersed, we can never know if the higher quality item is fairly priced.
Dirt has become enormously more expensive. The more dignified term to use here is 'land prices have increased.' One could argue that the quality of the dirt has improved a lot; or at least the quality of its location. The US in 2020 is a much richer place than the US in 1950; so we'd expect land to cost more.
(But in addition, there are those restrictions on housing supply that I already mentioned.)
You are right about insulin probably not having gotten much better. There's a few other goods like that as well. Some of those problems are self-inflicted. Eg education is much more costly these days, too.
Who claimed that stuff is more expensive because it's better?
Taking hedonic adjustments into account when producing inflation numbers is the proper thing to do. Productivity improvements would then show up by decreases in the price level measured like that. We can see that for eg computers. A good enough desktop computer today costs less in nominal dollars than in the early 90s, despite being enormously more powerful.
Yes, you are right that we can not buy many of the crappier things any more. That's partially down to regulation, but also down to there just not being enough demand for lots of crappy stuff to keep production at scale running.
So that makes calculating the price level harder. The usual work-around is to only look at adjustments from one year to the next, and chain them.
Another workaround is to go with the Big Mac index. (https://en.wikipedia.org/wiki/Big_Mac_Index) That index is a bit of a joke, since it just measure the price of a Big Mac. But it's surprisingly useful for what it is.
Not sure where you’re going with the can’t buy crappy stuff anymore argument, from another perspective, most things built today are crappy Chinese junk compared to things built 70 years ago, if they existed 70 years ago. Mending and the art of repair has been forgotten by most - if your TV has an issue, you’re more likely to buy a new one than fix it, even if it’s possibly repairable for less than a couple hundred bucks by someone who knows there way around electronics. Same goes for clothing, small appliances like blenders or table fans, and a lot of other things. OTOH, something like a fridge today is much more efficient than it was 50 years ago, but it may not be as easily repairable or simple - look at cars nowadays versus the cars before 90/00s - no computers easy to fix. Now you buy a Tesla that is put together like an iPhone.
When you can buy a 50" LED 4K TV for under $300, why would you attempt a repair of any older tech TV that is "probably repairable" for a couple hundred bucks? Take it off the wall; find a repair place; make an appointment; schlep it over there; wait for the results; pick it up; put it back on the wall vs drive to BestBuy and buy a newer, better TV and put the old one on the curb and be done with certainty tomorrow.
Any commodity TV is immediately beyond-economic-repair, IMO.
It makes sense if you can repair it with a few $0.15 capacitors and an hour of your time. I repair my electronics when they fail, and it saves me a lot of money. Somehow, it's become cool just to throw perfectly serviceable stuff in a landfill rather than watch a YouTube video and learn a little soldering.
Yes, I'm also personally very likely to tear it apart and see if I can replace any failed electrolytics, but that's only applicable to 0.5% of the population or less. I'm doing that as the least hassle way to get a working TV again (less research, less driving, no changing the TV mount, etc).
99.5+% of people are better off economically and time-wise to throw away any out-of-warranty TV undiagnosed and buy new.
> [...] built today are crappy Chinese junk compared to things built 70 years ago, if they existed 70 years ago [...]
Ignoring the big 'if': most goods today are better than what we had in 1950. Especially if you compare the quality of goods that required the median worker to work the same amount of hours.
The 'junk' you talk about takes minutes of work to earn enough to buy. And most of the time, that's good enough. The stuff that you spend a few hours of pay on, is mostly so much better.
Another commenter already pointed out that the example of repairability don't really hold up. It's mostly because wages have increased that repairing those things doesn't make much sense any more.
Just think how much time even well-to-do middle class women used to spent on darning socks and mending clothing. Basic clothing is too cheap to measure these days.
Cars need much less maintenance these days.
It's easy to view the past with rose tinted lenses. But most things were really crappy.
> clothing has become almost “too cheap to meter”; the idea of, say, darning socks is completely alien3, clothing companies routinely burn millions of pounds of clothes because it’s cheaper than the cost of selling them, and Africa is flooded by discards.
> materials science has produced constant visible-yet-invisible improvements in textiles yielding, among other things, far better insulated (and cheaper) winter jackets: instead of choosing between winter coats which make you look like the Stay Puft Marshmallow Man or freezing (and if you get wet, freezing anyway) or exotic ultra-expensive garments aimed at mountain climbers, you can now buy ordinary (and much cheaper) winter coats which are amazingly thin and work even better to keep you warm—so much so that you have to be careful to not buy too well-insulated a coat, lest you swelter at the slightest exertion and be placed between the Scylla of overheating & the Charybdis of opening your coat to the freezing air to cool.
And, especially if you lived somewhere with snow and salt on the roads, they mostly lasted about 50K miles before they rusted out. Growing up, it was an unusual car that made it to 100K.
That said, minor repairs of otherwise functional gear can make sense. I'm generally in agreement on electronics. But I fairly commonly repair or have repaired hiking or camping gear for example that just needs some stitching to get back in working condition.
I suspect it's declined pretty significantly--in fact, because people wear fewer shoes that can be repaired and wear less tailored clothing. But of course there are still tailors and cobblers (who are often a good place to get backpacks and the like repaired) are still around. Many laundry places will do minor repairs as well.
In the anecdata department, the last time I took something into REI to be repaired they told me they didn't do that any longer and to send it to Rainy Pass in Seattle.
The quality of insulin went up a great deal ~1980 when human insulin produced in bacteria came to market. That's the stuff you can get at Walmart for $25 a vial. Prior to that, the source of insulin had been the bovines.
The more expensive insulins that are on the market have different effect profiles that (somewhat) simplify managing blood sugar.
By the other interpretation of $6500 dollars in 1950 (roughly equivalent to 70k today), it would be much higher than the average family income of 1950 of $3,300 and put you in the top 10-20% of earners, which is probably not as far as 70k gets you today.
GP's point wasn't about inflation but about growth. So for a rough estimate you should be looking at the rate of GDP growth rather than the rate of inflation. Since GDP per capita grew 30x since 1950, you should be comparing the 70k wage to a family income of approx 100k.
If you look at inflation only, that is equivalent to saying that workers should have gained absolutely nothing from technology and efficiency gains made in the past 70 years. But obviously we know that workers are far more productive today than they were in the 50s, and the extra productivity per worker is reflected in GDP.
Comparing family income 1950 with a single income in 2020 though. Have two incomes of that size in a family, and you'll be at 140k, which will put you in in that range.
I'd agree with you, but. In 1950 the average family was very likely to live on a single income, the husband would be the earner and the wife a housewife.
I'd be curious to see the numbers for my assumption, though.
Yeah, from what I understand, inflation-adjusted family income has remained largely stable for the lower 80% despite significantly more families having more than one income, which sounds plausible, given that more supply should decrease the price of labor.
In any case, I agree that inflation (or more precisely, the price level) is a finicky statistic to agree on. So if you are making an argument, it's better if you can avoid inflation.
Eg people like to argue whether median real income has stagnated or not. And that crucially hinges on inflation. But what they actually want to talk about seems to be whether workers get 'exploited' more. So we can instead look at the labour share of GDP over time. No inflation adjustment necessary.
The article you linked to is somewhat hilarious. It suggests eg China is cooperating with the US in massaging American inflation numbers. (See point 2 in their list.)
I think you'd need to do the opposite: take 70k today, and figure out what the inflation calculator suggests about it's value in 1950 dollars. Just using your numbers, that would be about 6.5k.
Now compare with median annual incomes in 1950. Asking Google about '1950 median american income' gives 'Average family income in 1950 was $3,300.' Not quite what I wanted to know, but close enough. (We are looking at per worker income, and would probably be more interested in median than average.)
This is measuring household income, not individual income. Real household income isn't increasing because wages are rising, it's increasing because more people in a household are working.
On the other hand, household sizes have decreased.
(Though not sure about workers per household.)
> [...] it's increasing because more people in a household are working.
More people are working outside the house and participating in the market economy. Women worked before, domestic chores don't show up in these statistics.
Presumably they produce a lot more working outside the house: to estimate a monetary value of what they did before compare with the prevailing wages for nannies and housekeepers.
This is very nice of the owner, but extremely inefficient economically. Which means most companies can't afford to do something like that. Only if your profit margins are huge.
Ineffficient? It would depend on the total value add of each employee. As stated, the performance of the company increased. The capability of individual employees increased.
Now, without exact numbers, I can't say economically this or that.
But effectively this was not a zero sum game. The company was not paying more for the same outcome, they were paying more for more output.
The output of the company increased. This is how investments are usually supposed to work, you put money in, and reap profits.
What makes this a bit more difficult to gauge that it's likely the increased performance does not come from individual output, but from a better cohesion of the team which generally makes things always easier and efficient.
What people often get wrong is that they think about wages atomically - I pay this guy this much and he delivers this. Whereas when you are having a team of workers (whose job is not to be a mindless drone) and whose output depends on the co-operationnof the individuals, often the second order effects are more important.
For example: rewards. You give a huge reward to the single top performer in your company. What happens? Everybody becomes jealous of him, and some will feel cheated since they contributed heavily to the projects the individual participated in. Future collaboration will likely suffer.
In fields were output is purely of individual performance (some sales jobs, logging, etc) this calculus is of course different. In these situations the atomic cost analysis probably works.
Even sales benefits immensely from cooperation over competition. Imagine e.g. holding on to more leads than you have time to follow up because you don't want to risk giving them away to "the top performer" of the sales team.
I think your reasoning is too atomic. Think about the call center worker who was stressed out. How well will he respond to out of script situations when he's stressed? When he's in top shape, fully emotionally invested in his work? What about his colleagues? In out of script situations he likely needs the selfless assistance of other employees. How well will this interaction go if the persons are co-operating in a friendly manner, fully invested in the customers problem, whereas if they are both stressed and unable in any high level thinking?
I would guess customer satisfaction is greater if the call center interaction in exceptuonal situation is handled by a better performing team.
This same analogue applies to most functions in a company who's output depends on the co-operation of it's employees and is not trivially automated.
This is not cargo cult reasoning. Self guided teams are recognized to be a highly effective form of organizing a workforce. If you make everybody motivated and emotionally able to reach out as well as respond, you effectively create a situation where the team self organizes dynamically around incoming problems.
Like I stated, this depends on the nature of a company. A lone logger has somewhat of a constant output. You can't increase the output of loggers suddenly by paying them more.
“This is how investments are usually supposed to work” is absolutely cargo cult reasoning and doesn’t make any sense.
Cool list of reasons to pay people more - I guarantee you that every HR department in the universe has thought of them, as well as a countervailing list of reasons not to.
If you see that everyone with money on the line is doing something different from what you propose, your response should not be “wow those people are dumb”, but “my model is probably not accurate because I’ve only been thinking about this for the duration of a low-effort HN post”.
"If you see that everyone with money on the line is doing something different from what you propose,"
But that's precisely what I don't see. There are lots of examples of small high performing teams with way above 'market rate' salaries. I know several in my smallish home town (Helsinki area, 1.5M population). Some of these are in consulting, others in gaming. Sure, they are all in programming, but still their compensations are way higher than the local market would dictate for the "positions".
For non-programming examples, there are manufacturing companies who pay an excellent rate for their employees if you compare with the global market (... china ...) but their quality and output is so good it makes total financial sense due to smart automation.
You can't pay your employees more than you earn, and you need to get a certain interest on the invested capital. But other than that... I don't really understand why there would be any hard constraints on how much you can pay your employees if the numbers add up.
Once again, you've inverted the causal relationship. The people who get paid more tend to be able to command higher fees because their economic output is higher. You can't take a random person, pay them 10% more, and expect to get 10+% more productivity out of them, ceteris paribus.
It's not about "hard constraints"; it's about economic optimization, which involves getting the highest possible return on your capital. If paying everyone $70k were a reliable way to do that, everyone would be doing it.
You’re ignoring how teams actually work in this analysis. You’re not giving one guy a raise, you’re giving everyone a raise. And they all know it. So your call center workers can quit their second jobs, and get to solutions much faster because they can think more clearly. Your admin people now want to do professional level work out of appreciation. Your sales team has enough money to live that they can focus on big clients rather than taking a bunch of tent accounts to get commissions every month. So the entire company starts to perform better, and because everyone is in a better mood they work together more too. This is all missed by a strictly Taylorist analysis treating each employee individually and assuming their output are independent. Humans are social and they need to sleep to operate well. Paying them more makes them more social and lets them rest more instead of working for someone else. By paying a living wage you’re effectively buying the highest productivity you can get from your team which happens to be a lot.
"If paying everyone $70k were a reliable way to do that, everyone would be doing it."
Um, would they? That, indeed is the interesting question as capital has accumulated, worker wealth growth has stopped and notoriously - productivity really does not grow as it should when we have all these nifty new IT tools to expedite various boring things.
I could be as bold and say that there is a hint of extractive economical thinking in keeping some people in low pay grades. Generally, what you see in extractive economies historically is that the overall wealth is lower than would be if the system was more inclusive, but on the same time there is a bunch of people who are doing the extracting and are satisfied that their coffers are full and are not really concerned about systems level effects.
I understand the logical thinking here - a person suddenly does not become a genious if you pay him more. But if more pay gives him more mental resources during the day as he does not need to be stressed and worried about basic substinence level things - you are actually increasing his performance by paying him more.
> You are using cargo-cult reversed-causality reasoning. Just because you put money into something doesn’t mean you should expect to get more money back out. If I dig a big hole in the ground and throw wads of cash into it, I don’t expect market returns.
You should just read the article again. It does actually mention the changes that were observed after the 70k minimum.
Talent retention and employee satisfaction goes a long way productivity-wise.
Can you elaborate a bit about what you mean by inefficient? People mean a lot of different things when they use the word “efficient” in a financial/economic context.
There is a difference between a team of people, and the set of people working individually.
An extreme example - there is a reason a SEAL team is called a team.
This is the problem with wage discussions. People equate a measurable commodity like gasoline to the number of hours worked at a specific job.
Sometimes this is a sufficient analogue, but often times reward mechanisms are more complex than that. There is a good reason rewards mechanisms in jobs are a lively field of academic study. People just forget this does not only apply to top managers.
I am a contractor and I would expect to be paid the market rate for my skillset. The market rate for a .NET developer in the UK is about £350-400 a day (outside of London) in the UK. An Angular JS developer gets between £450 and £500. Thus at the moment (despite not being fond of it) I am (re-)learning Angular JS in my spare time so I can go for these higher paid roles. The same is generally true for the salaried market.
I appreciate there is a bit of a difference with a team of people. But generally how else are you going to gauge the compensation of any individual reliably other than market rate?
I’m a (sort-of) contractor. My rates and selection of projects strongly takes the team dynamic at the clients place into account. Sure, I do have a rate that I aim for, but as long as a certain minimum is met, I’m likely to choose a place with a sane team and healthy social interactions over a dysfunctional hell hole. And places that pay everyone a reasonable wage at least tend to have that more often than other places.
This approach has shown to substantially improve my quality of life.
> And places that pay everyone a reasonable wage at least tend to have that more often than other places.
I've seen almost no evidence of this other than at the real extremes. Maybe it is differences in the UK market vs elsewhere but typically you won't find a big difference in rate between one contract and another in roughly the same locale with everything else being equal.
"But generally how else are you going to gauge the compensation of any individual reliably other than market rate?"
If you were a business owner, what would be the correct referral market rate if the people whose compensation you are gauging is a tight knit team with years of experience on your specific business and customer needs?
Another thing that often gets forgotten is the cost of (long term) employees leaving. They take so much institutional knowledge with them. I'm currently watching a case unfold at a client where all people with intimate knowledge of a crucial component left - the cost of training up new people on that component will eclipse any reasonable increase in wage that they could have given to the team, not even accounting for the increase in bug-rate while the new folks figure out all the pitfalls that software tends to accumulate over time.
Documentation helps, but people knowing their way around the code is better.
I think us developer overstate how important we think this is. Unless time to market is a consideration then they will probably just accept throwing people at it and then get some poor souls to clean up afterwards.
Software engineering is mainly knowledge work. This means the majority of work consists not of building stuff, but acquiring and organising knowledge. I've read somewhere that about 50% of the job is gathering information.
When a person leaves after having spent two years at a company, it might look like you get to keep everything they've been working on, but this is far from true. If the 50% assumption is correct, a person leaving after two years means you throw a full year of work into the dump. This is a huge cost, but it's hidden.
This is exactly what I am talking about. You are overestimating how important it is.
The code is there and (presumably) in source control. It really isn't that difficult for someone to get the source, compile it and fire up the debugger and carry on where the previous person left off.
And I'm saying that if you have only, or mainly, worked at projects where all information (including about failed historical approaches and why they failed) is encoded in the source code, you have been very lucky to the point where I have a hard time imagining that to be true.
There is so much implicit knowledge that goes into the finals source artifact that is not spelled out.
Sure Domain Knowledge is important. But again this can all be discovered as you go along.
I had an interview at a this week for my next contract where they made redundant most of their employees as the business decided to just go with turnkey applications.
They will get someone like me in for 3 to 6 months to do application maintenance on anything they can't replace. This will be stuff like implementing stuff from penetration-testing, upgrading the applications and documenting missing bits and pieces and letting the business know what needs doing and where.
I don't need a pension being paid, no HR overhead (they can just ask me to leave whenever pretty much). I will be able to gleen enough from the business and their IT to piece the bits together. This is literally my bread and butter.
"But again this can all be discovered as you go along."
How are you going to discover that from just the sources without any institutional knowledge? It sounds to me this applies only to a specific niche you've managed to find. I.e. you get only those gigs where institutional knowledge is not paramount as the employers who need deep domain knowledge are not even trying to hire you. I don't mean this in a deragoratory sense - it sounds to me you provide great value to your employers - but just in that you work in a specific market segment and what is true in your segment might not hold in others.
The business stake holders are going to be there. Sure at some point it might be just too much work but typically there is somewhere in between where you can piece it together.
> I don't mean this in a deragoratory sense - it sounds to me you provide great value to your employers - but just in that you work in a specific market segment and what is true in your segment might not hold in others.
I've worked in many different sectors. Normally fintech though.
I’ve seen very few projects of more than moderate complexity where “check out code and compile it” is the complex part.
Who’s consuming the code? Who are the stakeholders? How does this component integrate into the full picture of the application? How do I need to talk to that person that I really need to change something?
I'm sure there are lots of production codebases like that. But there are lots of codebases that actually require the institutional knowledge to use and modify - for example a decades old CAD application. So your example is not a universal rule.
I find it incredibly frustrating and tbh it saddens me when I say a generality in this case being "developers overestimate their worth to the business" and people chime in with all the exceptions that they think disproves it. Obviously there are exceptions to the rule.
However unless building the tech is the business you are seen just as a cost to the business in most circumstances.
Market rate for .NET contractors here in Stockholm is ~£570 a day (~£71/h). I wonder why market rates are higher here, despite standing still for many years.
Interesting that is above London pay rates even though having a look at the price of living it is only 20% more expensive. Probably just less .NET devs over there. Might have to apply for roles in Stockholm :)
They are paying more than they have to for the low skilled workers. Which means that extra money is not going towards hiring better high skilled workers or just more workers in general.
Everything else being equal, an average business would be outcompeted if they did something like that.
If you still think what they are doing is efficient, take it further and further. Start increasing the salaries more and more. Very soon you will be able to afford one worker. A very expensive janitor maybe?
> They are paying more than they have to for the low skilled workers. Which means that extra money is not going towards hiring better high skilled workers or just more workers in general.
> Everything else being equal, an average business would be outcompeted if they did something like that.
You're operating using an oversimple mental model. For instance: you appear to believe a person will make a fixed contribution in a role, regardless of their wage. That's obviously false when you consider things like the demotivating effects of being underpaid or under-appreciated.
Amazon has huge profit margins because they don't do this. If they paid their warehouse staff, drivers etc a minimum of $70k a year, their retail margins would look very different.
For Facebook, Google, Apple and Microsoft, not much would change, they don't employ that many people below the threshold, I think, unless you count the outsourced contractors that do moderation, annotation etc. This company's policy doesn't extend to the company they outsource the cleaning of their office to either, so that wouldn't be a fair comparison.
I did before I posted my comment. It says "After crunching the numbers, he arrived at the figure of $70,000."
"Crunching the numbers" does not give details as to how he arrived to 70K. The article made a reference to report by Daniel Kahneman and Angus Deaton, but it is not clear.
Amazon is low margin, Bezos could give up more wealth. Grocery stores are low margin, but I'm sure you could reduce the pay of Kroger's ceo. I'm trying to think of a company whose ceo makes millions that couldn't take similar steps to increase worker pay at the ceos expense and coming up with nothing.
And what about that one employee that tend to work more than the others(every company have one of those, maybe it's you), do you find it fair for him to get the same salary as everybody ? why would you better yourself and be more productive only to get paid the same as everybody.
Yes. Working more isn't what we should evaluate people on. It sets up perverse incentives that create long term damage by encouraging everyone to overwork.
What this guy did is a thing that most people wouldn't even consider. Looking outside of him and caring for other people more than himself, sacrificing himself for others. I won't say that he was right or wrong but that state of consciousness of seeing beyond your own ego and empathize with others like he did is a thing that we as humanity must nurture within ourselves if we want to survive and prosper in the long run. Prosperity and progress is not about power and money, it's about social communion and caring about others as much as we care about ourselves.
He raised everyone’s pay in response to a lawsuit that claimed he was paying himself too much. Also it gives the company less profit so if he has to buy out his partner (as a result of the lawsuit), he can do so for less.
https://news.ycombinator.com/item?id=9371854
https://news.ycombinator.com/item?id=10450541
https://news.ycombinator.com/item?id=10448113
https://news.ycombinator.com/item?id=10657913
Related from 2016: https://news.ycombinator.com/item?id=12071667