Slashdot Mirror
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!
"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."
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?
He can have mine, where he'll write code that helps save lives everyday, for less than six figures.
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.
Did you read the article? No, of course you didn't. That's what they're doing.
I don't need a million points of light, just two points of multi-mode fiber and a 10 Gig-E router.
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.
A counter-point to all of the hate.
a. The American Dream (tm) says that if you work hard, you will benefit in the end. High risk / effort jobs should pay well
b. I bet these guys signed some sort of non-compete contract. Let's say that you and your buddies are the golden boys of financial trading algorithms. I think that you should get pay increases if your company is doing well. A 20% pay increase would probably shut them up.
c. After actually scanning the article,
Computer jockeys setting up own shops in bids to make millions.
[...]
They are doing so by striking out on their own or forming profit-sharing arrangements. Jeffrey Gomberg, 32, worked for a trading firm that paid him a low-six-figure income after four years on the job. His trader colleagues, by contrast, made millions manipulating the algorithms he'd written.
[...]
The programmer's bosses offered him an office and a $45,000 raise, but he left instead. He found a partner, and together they began trading on their own. The programmer now pockets more than half of any profits his software generates. The programmer says he's making about the same money he did at the job he left. But at his old job he'd topped out in pay while now he says the sky's the limit.
“I'm on my way to making a ton,” he says
It seems that they did the right thing. Why are all of you complaining? They didn't like their job, they grew a pair of balls and went out on their own.
It's amazing what reading TFA can let you know.
"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
I agree here. Does the algorithm do everything on its own and the programmer's bosses have no input? I'll bet the software is a very small piece of the money-making picture. Was the programmer provided with any resources to write that algorithm? Could the programmer write the algorithm on his own, freelance style, and sell it to the company? I doubt it. Maybe these programmers deserve a raise, and the bosses probably get paid too much, but this is a one-sided story.
There are more things in heaven and earth than are dreamt of in your philosophy.
Like most model slashdotters, I fly off half-cocked then RTFA.
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 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.
Erm.... my options are quit or quit?
What about quietly undermining the organization while biding your time looking for opportunities?
THL phish sticks
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
Strangely enough, that's what the article is about. A whole bunch of programmers asking for more money, being told they can't have it, then quitting and setting up competing businesses that are outperforming the first set.
"I Know You Are But What Am I?"
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.
Option Three:
Write a subroutine that takes the fractions of cents usually rounded off and tallied up later, and deposit them into an account of your own. Then sit back as the money trickles into your account. What could possibly go wrong?
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.
$60000??
My brother in law drives a coal truck and is on $140000 a year for four days a week work (12 hour shifts).
His meals and accommodation are paid for and he's flown there and home once a fortnight.
Not bad for someone who would be regarded as white trash by most (uneducated, four kids didn't, finish high school and yet earns more then most college graduates)...
I'm starting to think in my old age that Uni / College is for the most part the 21st century version of indentured servitude.
Excuse me, I believe you have my stapler.
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 was a programmer for one of the companies mentioned in TFA; you've heard of them. The algorithms they're talking about are not really developed by the programmers, they're typically invented by the phalanx of PhD mathematicians the company also employs; the programmer's job is to implement it in the most efficient way possible.
Day one I was handed a paper on Eigen-related trading, straight out of TeX and was told to implement it. I admit that I had to go to the bookstore at lunch just to figure out what some of the symbols were. What I had two weeks later was a working version in C++ that did the job; over the course of a few months I refactored and refactored it to run faster; no object copying (everything using references), bit shifting, you name it, I used it. The code was tight and ran fast; as far as I know it's still being used.
I see it more as being a waiter; you may be the "face" of the restaurant, delivering the meal, but your tips also go back to the cooks, busboys, etc. I helped out on another project where, to this day, I *still* don't get how it works, yet the code too runs fast and correctly, as far as I know.
It should also be noted that the pay might be good, but the life is horrible; if you're young and single it's definitely something to go for, but save your money because there will come a time when you just can't do 100 hour weeks, week after week after week for years and years.
The only memory I really have of my 20s and early 30s is the glow of a screen.
+1 - Honesty?
Happy people make bad consumers.
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.
The REAL Option Three: Understand that the managers are capital and you are labor, and start a union, and force a wage scale onto them.
It says everything I need to know about Slashdot that nobody has said this yet.
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.
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.
I used to write stockmarket software for a global supplier. Nice stuff, through this software ran billions a day, direct feed to the stockmarket-floor.
Now I work as a consultant for a consultancy firm, to get this contract they had a "fixed entermediate consultancy firm", who took 10% profit on my price just to put me into the company. (under their labels and what not)
So I filled in timesheets for my employers, the intermediate party and for the client. It wasn't very clear why I was filling in timesheets for the client as well, but it turned out my work was billed to their clients billing my work per hour with a factor of 2.5 on my price because they could.
This effectively resulted in me working hard, virtually for free, and generating profit for 4 companies (employer, intermediator, client, clients' client) while my pay was insulting for the work I've put out (under 8% of the cash my work generated).
If you want to keep your devs productive and happy, you should spoil them a bit and they'll put out. 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.
I think we can keep recursing like this until someone returns 1
And it ain't exactly the poor house either. People have this idea that things are so expensive in the big cities (New York, Chicago, San Francisco, etc.) but that really only applies to housing. $150k in New York is probably matched by $80-100k elsewhere in the states.
"Educate the mind but never at the expense of the soul."~Blessed Basil Moreau
Your post should have had a spoiler warning, now I feel unmotivated to read the article.
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.
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
Here we have a bunch of jerks whining about the 6-figure salaries they earn. I wish I were earning what these guys earn. If they have a problem they can go find a job elsewhere. Or do what everyone else has to do, rise through the ranks of the company and get promoted to the point where you're earning the kind of salary you want to see.
While I agree it's quite insane what some in management are earning they also have the responsibility of the entire company on their shoulders. I have a friend who's a programmer at a billion dollar firm that does business related with the stock market and the upper management is comprised of middle aged guys who's entire life is work. The majority are single or divorced and don't even have time for a girlfriend. But anyway, my point is that pay isn't based on what management is earning. It's based on your perceived value to the company. There are probably countless other programmers lined up behind these guys hoping to take their jobs. Not all are qualified but some are.
The whole point of having employees is so that they generate more income, directly or indirectly, than is expended on them. Otherwise, what's the point of keeping them employed? Again, it's rare that you're going to earn a lot more than you do now at the same job you're doing now. So the two best avenues to seeing your income increase is to get promoted or to start your own business.
Well, for starters, consider the knowledge such programmers need to have in order to write this software:
* financial systems
* frequency trading
* surpassing existing frequency trading
* high speed interconnects and the understanding of both mathematical programming and SMP utilization
* intimate knowledge of "intelligent systems" and how to improve them using predictive math.
* the ability to solve complex problems and adapt to the changing landscape, quickly, due to the rate of change in the ecosystem
In short, we're not talking about bread and butter programming - this kind of stuff is likely much more difficult than any game programming out there, likely on par with game engine development in many ways. It's not easy, and slouches won't cut it.
Not only that, but they're living in New York. I can live relatively comfortably on less than a third of what it'd take for me to "scrape by" in NY (note, I'm married with children, so I'm not your stereotypical geek): if it's not the high cost of living, it's the taxes on "not welfare receivers" and the constant fees for things like parking, vehicle registration, utilities, etc. A construction worker in NYC makes as much as $80k a year, for crying out loud (slightly over twice what I'm making).
Even if renting a 2-bedroom "Economy" apartment in NYC, I'd likely end up spending more than my entire current salary - just on rent. That place is expensive. Similarly, I'm sure there's someone in Sudan or Somolia or wherever is pissed that those wingers in the US make $7.25/hour (or whatever minimum wage is now) to do food service. What extravagance! That must be why they hate us.
That said, everything about frequency trading makes me ill. I'd be really happy if the so-called traders just fired them all, and the so-called "industry" went tits up. They are using the rough equivalent of ad-clicking bots.
~/ssh slashdot.org ssh: connect to host slashdot.org port 22: too many beers
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.
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.
If the Bank Tellers got some percentage of the money they made the bank by working on the counter that would be similar to the rationale proposed/suggested by the programmers. I suspect the the Bank Tellers often get paid more than they personally make for the bank. Also, if a teller decides to leave, the bank won't find it hard to find someone to replace them.
The programmers, on the other hand, are directly increasing the bank's profits by their actions, and if they all left it would be more difficult to replace them (though obviously not impossible!).
These programmers have done exactly the right thing by going it alone. Now they can make the big bucks off the back of their endeavours, but similarly risk making no bucks if it doesn't work. ...
This is just as it should be, and well done to them for making the first leap
Eclectic beats from Leeds, UK
handmadehands.co.uk
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.
My brother worked in an industry that used a similar tactic; he along with about five other people were paid $40K per year to do a bunch of manual work which resulted in well over $2M in profit for the company. When they were promised a percentage of the earnings and never received it after two years, they all left and did the same thing on their own.
Now their only downside is that they didn't have the capital that their previous employer did, and therefore couldn't scale their operation immediately to make $2M profit, however they still did quite well for themselves and things kept growing.
In the case of the HFT programmers, what's to stop them from pulling off a malicious "Office Space" tactic (as mentioned below)?
Mind you, I met a couple of Swedish software development managers who weren't even 25. Needless to say, they were complete morons at either management or software engineering. One sad, sad trend in Europe is thinking that if you go to college (after which you get your obligatory master's degree or even a doctorate) you'll be guaranteed to fit a manager role. I've had kids coming to interviews for software development positions, with no previous experienge, saying they expected to become managers in 6 months. Why? Because, they said, they went to the right university. It's not even funny. Most rich kids, who can afford turning 28-30 and still be in school, become managers only because they're unfit at anything else, since they totally lack the real world experience. I'm Romanian. I used to have a Croatian girlfriend who told me the same about her country. I now live in France. Guess what, it's the same.
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.
Devil's Advocate:
;)
The $25k pays for mining the ore, extracting the metals, drilling kilometres under the sea for the oil, polymerising it, designing the units, injection moulding and, yes, your job putting it all together. I'm guessing you didn't do all of that...but if you did, then yes, you should get a pay rise, or at least a funkier job title
Please consider this account deleted, I just can't be bothered with the spam anymore.
did you design those condensers? do research on improvements? market them? package/ship them? oversee the entire operation to ensure that they were being sold at approx. the same rate at which they were built, and that you always were supplied with the raw materials / tools necessary to build them? own the building you produced them in? generate all the energy needed to create them?
but no, you just shit out those $5000 condensers on your own right? no costs to the company but your working wage.
http://www.npr.org/templates/story/story.php?storyId=127747626
JOFFE-WALT: This is Steve Rubinow with the New York Stock Exchange, and he says if you want to sell something, you want to buy something, those high-frequency computer are there to sell and buy from you.
Mr. RUBINOW: Which makes for a fairer market for all participants, both the people that are up to their necks in it, and people like you and me as retail customers. Those prices are about as fair as they can be.
JOFFE-WALT: No way, says Kevin Cronin. He works for Invesco. And Cronin is more like what you think of as a regular investor - manages big pension funds and mutual funds. And he says high-frequency computers watch what he does. When he starts to buy, the computers swoop in and start to buy as well, and then sell at a higher price minutes, sometimes even seconds later.
Mr. KEVIN CRONIN (Director, Invesco Global Equity Trading): They dont care about the stocks. All they care about is jumping in front of us and making a penny or two, and doing that millions of times a day.
JOFFE-WALT: That seems annoying to you. But why is that...
Mr. CRONIN: Of course it's annoying.
JOFFE-WALT: Oh, but why is that wrong?
Mr. CRONIN: What are they doing to provide anything in the marketplace other than trying to take the information that our orders give and try to profit themselves?
JOFFE-WALT: Now, high-frequency traders counter that anyone can pay to get access to that information and that speed.
This is the same old story, and it is a very old story indeed. I've been reading a lot of Civil War history lately, especially about the political and economic factors leading up to the war. As the north was industrializing, many craftsmen and factory workers were making the exact same complaints about the factory owners and bankers who were making all the money but had no "skills" to actually create the textiles, weapons, furniture, etc. Things haven't changed that much in the last 160 years.
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.