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High-Frequency Programmers Revolt Over Pay
An anonymous reader writes "Programmers who design and code algorithms for investment banking are unhappy with their salaries. Many of them receive a low 6-figure salary whereas their bosses — who manipulate these algorithms and execute the trades — often earn millions. One such anonymous programmer points out that he was paid $150,000 per year, whereas the software he wrote was generating $100,000 per day."
It isn't that the programmers earn too little it's that their bosses earn too much.
History is so yesterday!
I mean, correct me if I'm wrong here, but the programmer in question agreed to the terms BEFORE he wrote the first line of code.
Shouldn't gripes like these come up before you begin working? Maybe this is part of the problem, non?
Mod me down with all of your hatred and your journey towards the dark side will be complete!
I write software that sells for millions and make $80k/yr. Where is my commission?!
I'm god, but it's a bit of a drag really...
If he's being given the algorithm and codifying it, he deserves a small part of the profits. Put another way, if he said screw it and left, how much would he be able to make? Does he know how to interact with a trading API, or how to actually make good trades?
dancingmilk has it right...the folks earning the big bucks put more at risk than a little time in front of a computer.
RTFA. They are quitting and going somewhere else. The finance sector is going have to deal with this if they don't want to be massively outcompeted by their own ex-programmers.
NEVER enough, for some people...
FTFA:
"Now some programmers feel used and are instigating a revolt.
They are doing so by striking out on their own or forming profit-sharing arrangements."
That's hardly "whining," in fact it's precisely what they ought to do.
The outstanding part is that Forbes is recognizing this. We all know that folks in IT are underpaid in many professions, but the proof is when people actually say "fuck you" and go work elsewhere. That will *force* salaries up to the real market rate. And when publications like Forbes notice this, it's harder for managers to pretend it's not happening.
Thank you, to the ladies and gentlemen who struck out on their own, and thank you to Forbes for noticing. Both of these will make life a little better for the rest of us.
I think that something really important to remember in all this is they live in NY. You pretty much have to divide their salary by half to get an equivalent salary anywhere else in the US.
Even with that in mind, I think the real problem isn't that the programmers should make more, it is that the traders should make LESS. Whining about not being able to take advantage of rigging the game to funnel money to yourself like your superiors do shouldn't get you any sympathy.
"Many of them receive a low 6-figure salary whereas their bosses — who manipulate these algorithms and execute the trades — often earn millions."
A Nascar Driver's pit crew recieve a low 5-figure salary while their bosses - who use the cars to win races - often earn millions.
I get why the programmers are disgruntled, the code they write makes a lot of money and they aren't getting a huge cut, but it seems like the algorithm the program is based on would be the most important aspect. Besides, $100,000 a year doesn't seem that bad to me.
Sent from my iPhone 5
they point out that they get paid only $60,000 a year, whereas the coal
Fixed it for ya.
--fatboy
Everyone is paid less than their worth. That's why people would form unions before they were stupefied by tv and the false hope that they would rise to the exploitative class. The fact that people are now paid less than 1/100th their worth isn't surprising but it is pathetic.
Democracy Now! - your daily, uncensored, corporate-free
Algorithmic trading is not effective if you have to pay commission on your trades. Their software only works if it's used by a corporation with
1) network connections to stock exchanges
2) seats on those exchanges, which allows stock to be traded directly instead of through a broker
It doesn't matter, because the feds will just bail them out. Can't have poor innocent institutional traders going out of business, we'll just stiff all the mom & pops with a bigger tax bill.
just because someone has found a novel way to make a lot of money without a lot of work does not entitle everyone in the production chain an even share.
The intended theory is that people earn money based on the worth of the goods or services they produce multiplied by the rarity of the skills required. The (relatively) small amount of work being done to earn that $100k/day does not mean the work is worth $100k/day, it just means that there is something to be taken advantage of causing a disproportionally high return.
If I write code for two days, of relatively equal quality and complexity, and sell each day's code to two different people, and one of them uses it to make $1000 and one of them uses it to make $100,000, it doesn't necessarily mean I should get paid 100x as much for the second job. It means the second guy has found a much more lucrative way to use my code to produce a profit. Now this does usually mean I'll get paid more, but to expect 100x the pay is just unreasonable. That excess money isn't for my brilliance on day 2, it's for the guy that found a way to sell my sand for its weight in gold.
These people that are crying about their "low pay" would be dancing in the streets if their bosses were actually making less than they were, doing the same thing. It all comes back to basic Greed... "He's getting more money than I am, so I must be entitled to some of it." No, not really.
Maybe instead of complaining about they pay, you should try to do your employer's job, since that's obviously where the profit margin you're looking for is at? Oh that's right, you can't DO that, can you? So they obviously have a skill you do not. Maybe that's why they're taking home more money than you? See, that's how life works.
I work for the Department of Redundancy Department.
It annoys me like hell that people use this kind of arguments.
Maybe they are excellent programmers, but bad business men. It doesn't mean they deserve to have their blood sucked from them.
If you shift all the income from the workers to the managers, everybody will want to make business, and there'll be nobody left to do some work.
Yes, and I am the IT Manager who makes sure that the bankers and analysts have the hardware, software and comms tools to do their jobs. Right down the corridor is Michael's room - he's our maintenance guy - if he didn't empty my bin, keep the area tidy and make sure the lights stay on...
AT&ROFLMAO
Those programmers and those brokers are doing nothing of worth to society. They are just playing games with currency. If our government wasn't in complete collusion with Wall Street, millisecond trading would be illegal. The issue isn't that the programmers aren't making enough money, it's that their jobs and the jobs of their bosses should not even exist.
Ceci n'est pas une sig.
Let's see: financial giants, capable of spending hundreds of millions of dollars a year on the servers, all the coders, access to the markets, and not to mention *the assets they trade at a profit*... Vs the guys who made 150k a year and just quit to form a startup. Somehow I doubt they are too worried.
The only chance these guys stand is to basically create a "better" program they can then sell back to the banks. The problem is, the programs themselves are very simple (the simpler the better, speed is all-important) so it comes down to the equipment they use that dictates the revenue. Unless they come up with a more profitable model than "buy low, sell high" they are probably going to have to beg for their old jobs back before too long.
Wow! It's amazing what you learn when you actually read the article. I should do it more often.
These guys are not whining about the situation, they are actively taking measures to fix it.
If he's in New York City - which is very likely - 150k a year isn't exactly champagne wishes and caviar dreams.
In a perfect world the programmers could just quit and start their own trading firm. The reality is that there is an unreasonbly high barrier to entry which is more about keeping new players out then about the true cost of entry.
And you really think the colleagues using the software were footing the bill? Bullshit. It's about time developers stood up and demanded compensation for their inventions instead of letting idiot stock traders reap the rewards by pushing a few buttons.
Camping on quad since 1996.
Of course one may want to make sure they have another job before quitting...or "not as much money as I want" could easily turn into "no money at all."
I think the real problem isn't that the programmers should make more, it is that the traders should make LESS
I don't know that I agree. I think this is a very subjective issue. The reality is, the amount of revenue derived partially from these programmers has absolutely nothing to do with what their compensation is or should be. By their rationale, every teller at a bank should have salaries commensurate with that bank's revenue, since they're an element in processing deposits/checks/payments/etc. Hell, the data center I run makes millions every hour, but I don't expect that I should make 7 or 8 figures because of it.
The lesson here is: negotiate well on the way in. Do your homework, find out what the job entails and what responsibilities/liabilities you will have and determine for yourself if the compensation being offered is worth it. Once you cut the deal, that's it. If you don't like it, you can do as the programmers in the article are doing, go somewhere else and try to negotiate a better deal. It ain't personal, it's business.
And you really think the colleagues using the software were footing the bill? Bullshit. It's about time developers stood up and demanded compensation for their inventions instead of letting idiot stock traders reap the rewards by pushing a few buttons.
The stock traders make what they do because they know what buttons to push and when. If they push the wrong button at the wrong time, they stand to lose millions for their clients and themselves. These programs have no idea as to when to buy, sell or hold. All they do is retrieve data and analyze it into reports. It's up to the trader to know what to do with it.
If being an "idiot stock trader" who makes millions is so easy, why aren't you doing it? You can push a few buttons, right?
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
Exactly right. The value doesn't actually come from the algorithms, it comes from the position of the bank which gives it access to information before the rest of the market, allowing the big banks to (illegally? certainly unethically) skim money while essentially creating no new value for the marketplace. There are plenty of people who could write those programs, but only a few people in strategic positions can make sure the banks get the inside track to screw everyone else on earth. Hooray for deregulation!
Although the moon is smaller than the earth, it is farther away.
Hi, you must be new to America. Here, money is more important than life, ethics, or anything else.
Palm trees and 8
You seem to be mistaking a little bit of coding with the work that is actually being done.
The programmers in this article are not dumb fuck meth addicts building a website and writing a little bit of Flash or C++ or even guys with EE or CS majors, but rather tend to be Economic or Statistic PhDs from Northwestern, UC, and other major programs. From the article, Sergey Aleynikov, according to his LinkedIn pagelike, has at least a masters from Rutgers and likely a PhD.
The programmers are working with SAS and other powerful statistical software that on their own is easy enough to learn. But these programmers are applying what the learned in their PhD studies to create trading and marketing strategies and then create proof of the trading and marketing strategies. They are making their companies millions and get paid very little because "they are only programmers".
They have every right to not be particularly happy. The programmers, these economics PhDs, know their worth and it isn't 125k a year.
Also, there is an increasing tendency in American business culture to undervalue the PhD as a foreigner or nerd degree and require anyone who makes real money to have an MBA.
Hoist Number One and Number Six.
Only on Slashdot can a $100,000-$150,000 salary be described as "[having] their blood sucked from them." Wow.
Many years ago I created fancy condenser units. I could easily create four or five a day and they sold for 5K each. I was payed about $10. per hour and creating $25,000 in product each day.
My point being that our economic system is slanted in such a way that those that actually create are often not paid much at all whereas those that create nothing often are very well paid. That attitude is beginning to trigger some real negatives. The car mechanic or tradesman now often has little conscience and is likely to cheat and do poor work to whatever degree he can get away with it while charging huge rates for his efforts.
Where I live, I make the equivalent of USD 29.000 a year. It looks low, but it's really not bad around here. I have no idea how it is in New York, though. Maybe for a NY standard I'm below the poverty line.
But if the programmer makes N and his boss makes 10 times that by adding very little value, yes, the programmer is being blood-sucked.
the real problem isn't that the programmers should make more, it is that the traders should make LESS.
Wow. I'm a total stranger, but can I decide what you make? On a whim? Seems you don't have a problem doing it for others.
I had a sucky sig.
What your comment says to me is that you're a moron.
You know, those "programmers" all do exactly the same thing, at the same level of expertise, using the same tools, and have the same education.
But I know alot with the same sentiments and effectively migrating to management hoping they'll make their big bucks, often resulting in incompetent management.
Yeah, I know this perfectly. In my country, if you're not a manager by 30, you're a loser. That results in a lot of people moving into management that shouldn't be there, and would be useful doing other things.
Also, companies treat engineers like shit and then complain they can't employ good engineers. There aren't any. They're all too busy being bad managers.
Unfortunately, employers use the "bad economy" argument to try and justify the rampant abuse. A perceived bad economy is an employer's best friend.
bluHatter
The stock traders make what they do because they know what buttons to push and when.
No, they make so much money because they control money. People who control lots of money always make lots of money. They can make sure of that.
What exactly are the big risks? If you fail, you turn to your buddies doing well for an "angel investment" and start all over again. If you get caught lying/stealing/cheating, you have to give up about 10% of your hundreds of millions in profit to make the SEC go away.
The people who are investing their money are the only ones taking a risk. If the boss gets greedy and makes a few bad trades, they can kiss a nice chunk of their 401k goodbye. If he does a good job, he'll take 20% of the earnings for himself because he managed to find a couple of sucker programmers willing to write something to do all the work for him.
Don’t be absurd. Most model slashdotters just fly off half-cocked. Sometimes it seems like it’s asking too much that they even read the headlines correctly.
Alexander Peter Kristopeit bought his basement from his mommy for one dollar.
Frequency trading could be fixed quickly. The NASDAQ , the NYSE, and the other exchanges could simply say that if you buy a stock you have to hold it for 24 hours. If you think that's too long, I might agree, but I think we can all agree that no value is added by buying/selling a stock in under a second to make a profit. That money is coming from folks who are long-term investors trying to have some sort of retirement.
And if said software screws up and costs a few hundred million, or otherwise causes other "bad things" to happen, what's the accountability of the programmer or the manager?
Nothing. CEO's wreck companies/cause damages all the time, and all that happens to them, personally/financially is NOTHING. Maybe they get fired and then receive a nice golden parachute. Why should it be any different for the programmers who are the architects of the entire groundwork allowing the company to exist in the first place?
Authority questions you. Return the favor.
well, there. i think you've found at least one line of distinction yourself.
"lower upper class" is NOT N missed paychecks away from financial ruin
"upper middle class" IS N missed paychecks away from financial ruin.
Good start?
Regards
Adding insult to injury, the industry big bosses, TV pundits and politicians are always screaming bloody murder about our labour laws, claiming they're the most restrictive in Europe (which is a lie).
Interestingly the same lies can be heard here in Sweden as well as in Denmark, Norway and France (don't know about other countries but I suspect the same is true there). It's always the same crap as well "our restrictive socialist labour laws are the worst in Europe and are making us fall behind by punishing business owners" and "Our companies being taxed much worse than businesses in any other European country"...
Greylisting is to SMTP as NAT is to IPv4
Dude, you are clueless. When these expert traders f up they still get their money. It might take months or years for their bad choices to surface but in the meantime they get their commissions and bonuses. Do you think they pay that money back????
OK, let's say you have an extra $20 million to invest in the market. Are you going to invest via the broker that f'ed up months or years ago (now that their bad choices have surfaced), or are you going to invest in the guy(s) that have a good track record? Of course, you're not going to go with the guy that has made bad choices. Your $20 million, plus the thousands of other investors with extra cash laying around that will make the same decision you do, mean millions in lost commission from the guy that screwed up, even if he was paid for the original screw up.
Next, you are a manager at a major financial trading firm. You got a guy in the trenches making decisions that have cost your clients millions or even billions. When your clients lose money, they don't have extra cash to invest in the future, meaning your company loses money and YOU lose money. How long are you going to keep this guy around? Is he going to be one of the guys you give bonuses to, promote and invite to that dinner party your wife holds to keep busy?
In other words, even if traders make money on bad trades, they will lose money, possibly all of it, in the long run if they make bad trades. It takes several "attaboys" to make up for each "Oh sh*t".
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
That's the only way to get the superstars... I ALWAYS am the guy looking for the next job. Why? because asshole executives dont promote high skill tech people... they want to keep them where they are at. So I jump ship every 3-5 years to get my own promotion and pay raise. It is the way most sucessful people climb the ladder.
Honestly only a complete fool is loyal to the company. Because the company is never EVER loyal to you.
Do not look at laser with remaining good eye.
Also, there is an increasing tendency in American business culture to undervalue the PhD as a foreigner or nerd degree and require anyone who makes real money to have an MBA.
I don't think that's an "increasing tendency", I think that's a solid fact. Without doing much real research (since we all know facts hold far less weight than our own opinions and gut feelings, right?), I'm willing to bet that of the top, say, 500 richest people in the country (who have a degree at all), you'll be lucky to find more than a handful of PhD's, but plenty of MBAs. I've never heard anyone mention Dr. Bill Gates, Dr. Sam Walton, Dr. Warren Buffet, or Dr. Larry Ellison...
Honorary degrees aside.
ad astra per alia porci
We have people at our office like that.. Come bonus time.. "But I bring in $X every year! and my salary is small % of $X"..
They kindly forget things like Secretaries, Marketing, office facilities, power, IT, Lower level people actually doing the work, etc...
I hate people that work in roles that involve Sales....
You know.. the actual work they are selling has a cost...
What are we going to do tonight Brain?
The programmer who writes the algorithm is, in many of these firms, the main driver of profits
Incorrect, and this is the reason you (and several others) are missing the point. You are assuming (with no evidence to back up your claim) that these algorithms are essentially the "machine" that makes the money. You're completely overlooking the various infrastructure and investment that it takes to make these things happen. I don't have the energy to list the many, many components that must exist to have a successful brokerage firm, but suffice to say, it's far more than just algorithms, otherwise any programmer worth his/her salt would be making a killing on Wall Street.
Your logic is like telling Edison he doesn't deserve the bulk of profits from the light bulb
That's right! Edison wouldn't have inherently deserved the lion's share of any/all revenues derived from various companies making/selling/using his invention "the lightbulb". If he invented it, but Sylvania makes millions of them in their factories, then sells them via Sears, where they are bought by customers who install them in their homes in fixtures made by various light fixture manufacturers, and power then from various electrical utility providers, Edison should not be entitled to a piece of each part of the chain's profits.
This really isn't that difficult. As others have pointed out, it's a combination of how difficult it would be to replace a person combined with their measurable/demonstrative monetary contributions to a company that determine the salary. The issue with these programmers is that the profits seem high because this is a game of scale, not profit margin. The big brokerage firms are making big bucks on millions and millions of very tiny profit margins. However, they're also taking on all the risk, putting up all the money, and providing all of the other parts of the working machine (employees, facilities, communication, etc).
And so it says that they did the right thing: they left their crappy, thieving jobs and started their own firms. They're still only making about their old salaries, but they're calling the shots and the sky's the limit. This is why ethical capitalism RULES.
Gamingmuseum.com: Give your 3D accelerator a rest.
This is supported by a significant amount of labor economics research. (At least the pay part). The majority of increase in income comes nearer to the start of the career than the end and from changes in jobs/companies rather than promotion in place.
As for the behavior of the companies: If something is promised get it in writing. If they don't want to give it to you in writing you were never going to get it in the first place. Corporations are not people and don't have memories outside of what is written down and can be discussed in a courtroom. Any individual who promises you anything can get hit by a truck or replaced with a moron and then promise is gone.
Your Econ-101 course would have been improved by including a copy of Animal Farm. In the lost epilogue, the pigs mint coinage to invest German efficiency into everything they were doing already.
The principle you seem to be ranting on here is that voluntary transactions create wealth, no matter how the transaction is instrumented (coins, jars of pebbles, jiggling twins).
Monopoly is the word we use to describe the situation where voluntary rubs noses with indentured servitude. If there's only one place to purchase food, well, no-one is forcing you to chose survival.
In high speed computing one tends to compute bisection bandwidth: given any way of partitioning the system, what is the maximum bandwidth across the partition boundaries.
The concept of monopoly is similarly fungible. The banking industry has sliced up the economic system so that one partition (the high velocity insiders) have access to first-mover advantage, and everyone else doesn't. One term in what constitutes voluntary trade has been supremely tilted in favour of a group that isn't working nearly as hard as they ought to relative to the resources they command, even if it does, as you point out, greatly enrich Columbian farmers who would otherwise have to grow vegetables.
If the glorious concentration of wealth directed equated to aggregate productivity, Russia would be a model economy.
I will say your recitation of why money in and of itself can't be blamed was superbly rendered.
On the other hand, somehow you didn't manage to notice that typing the query "apple suicide" into Google no longer brings up a fairy tale: it brings up Foxccon in the "I feel lucky" position.