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How European Startups Are Battling Labor Laws For Developers and Programmers
Nerval's Lobster writes "The United States with its H-1B controversy isn't the only country going through that sort of immigration upheaval. As the cult of entrepreneurship spirals upward in Europe, the intricate vagaries of immigration policy on the continent are being newly scrutinized by our company-building classes. Freshly venture-backed European Internet companies want talent, and they are going to remarkable lengths to get it — but not always legally. Milo Yiannopoulos talked to whole bunch of entrepreneurs and investors in Europe about the fudges, shortcuts, workarounds and, in some cases, 'strategic decision-making' are — just about — getting their companies the talent they need. For example, one well-known Parisian venture capitalist told Milo that he knows of 'at least nine' startups in France employing developers illegally, keeping them off the books not only to avoid France's notoriously onerous labor laws but also because it would have been impossible, or simply too expensive, to import them officially."
Typical employer whining about not being willing to pay prevailing wages. From the article:
As usual, it's employers whining that they can't find wage slaves.
Yeah, right.
It's more like: "We don't want to pay proper wages for good techies, so we are breaking/bending every rules to exploit cheap illegal labor and keeping more of the venture capitalist money for ourselves".
Seriously, I have seen this in many a start-up, in France and elsewhere: pay people low - even though their knowledge is what makes your bloody start-up possible - and fire them as soon as they start demanding correct wages and reasonable working hours. Meanwhile, the CEO is looking for the nearest Porsche dealership. It's simply disgusting, and it has nothing to do with France laws and regulations (which can be a pain in the neck, I admit).
The right to offend is far more important than the right not to be offended. (Rowan Atkinson)
1. Because it is a race to the bottom: if you're getting companies in there because of your 'near zero' corporate tax, don't be surprised if they move to another country with 'nearer zero' corporate tax, and lower payroll tax as well, and maybe poorer working conditions.
2. Because if a company isn't paying corporate tax, then it is much harder for it to be worth having them in the country (the cost of servicing their existence may exceed their return to society/government)
What is insane is how little paid time off people get in the US. I am sure most americans would love to have a decent break every now and then without having to fear that the job is gone when they are back.
In fact, without having to fear.
not only to avoid France's notoriously onerous labor laws but also because it would have been impossible, or simply too expensive, to import them officially.
I took the same approach when I opened a bar that offered drinks for half the price of the competition. I couldn't afford to buy my booze officially, so instead I was knocking over liquor stores. It's the only way I could make my business model work, which completely justifies it.
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That whole article sums up what is wrong with these venture capitalist funded start-ups; they want to compete on a different playing field than established companies. They want to be able to import cheap labour from other countries as they aren't willing to pay the going rate for local engineers. They don't want to register their employees properly as they will be liable for more taxes and to give their employees the rights they are entitled to.
As a European, I'm glad these guys are finding it difficult to ride roughshod over the laws has to protect workers. If you can't afford to do things the proper way then your business is not viable. Complaining that you can't find exploitative loopholes that depress wages for the rest of us is laughable.
The company wants to "avoid France's notoriously onerous labor laws", but it still operates in France, rather than India or China. There must be some reason for that choice. Perhaps some reason paid by taxes, or even guaranteed by labor laws...
That's what economic theory teaches. Reality is more complicated.
Here's reality: Suppose I'm a contractor with a bunch of construction workers digging trenches. Now trench collapses are a major cause of workplace deaths. You prevent trench collapses by shoring up the sides of the trenches if they get too deep or the soil is too damp. It takes longer to shore up the sides, so it takes longer and costs more to do the job safely. If the trench collapses, and kills a few workers, it doesn't cost the contractor anything, because it's a worker's compensation case, which means the state pays (and doesn't pay much), and these businesses are run as corporations, so the contractor simply goes bankrupt and starts a new corporation.
Most contractors don't shore up the sides of the trenches. They can bid low for these jobs. If a contractor were to shore up the sides of the trenches, it would cost him more, he'd have to bid more, and he wouldn't get the job.
So the result of competition in the free market is for contractors to run their businesses in a way that kills their employees. Because unemployment is so high, they can always get more employees, who are desperate for work and willing to face the risk of death.
And that's the race to the bottom.
(OSHA can't stop it because they they don't have enough inspectors. They'd need a thousand times as many inspectors to visit all these small sites.)
This is the classical mistake where people like you assume that labor is a resource like steel, or oil. Humans are not a resource, for they are unpredictable, and stochastic. Meaning if I drop steel I have certain physical properties. Where as if I drop a person I will have a multitude of reactions.
"For example, in the classic case of the original Luddites, when it became cheaper to make clothing due to technological advance, people had more money to spend elsewhere, and that elsewhere is where the new jobs go, and you invariably see more jobs created than had existed before that "job costing" technology was invented. It happens every single time, without fail"
Silicon Valley; In fact jobs have left and have not been created. Sure there are success stories, but the influence of Silicon Valley as a job creator has waned. Take for example Apple, or Oracle, who have jobs there, but have created a huge number of jobs outside of that region. Facebook is a bit of the old culture of creating jobs in silicon valley. New jobs have not replaced the old jobs. I can bring in many other examples of where more jobs are not created.
"As for minimum wage...If your wage was below what you're willing to work for, then you'd simply not take the job. This is a fact. Most people do in fact work at above minimum wage. Minimum wage has the following effect: For the low end workers who really aren't worth a shit (there are many out there - this nobody can deny) they simply have no job at all. Whereas they could have at least had SOMETHING, they now have nothing. This has two effects: Increased unemployment, and higher prices. Because prices now go up to match that minimum wage increase, your purchasing power hasn't really gone anywhere. Most people tend to equate money with wealth, and that relationship isn't one to one."
Wrong, another example, Germany. Germany has no minimum wage and in fact there is this concept of hunger wages. This means a person is working full time, and does not even come close to making enough money to support their family. I am talking wages of about 1 euro per hour. The government kicks in social help to make ends meet. Germany has shown that to survive you will take work below your pay because you need to do something.
"A classic example I look at is this: Back in 2001, I paid $3800 for a 50" tv. The thing was pretty massive not just in diagonal length, but it was pretty fat too - it was rear projection. A really big and obnoxious TV by today's standard. Last year I "upgraded" my whole living room: Bought a new leather couch, ($1,200) built a 5.1 surround system from the ground up (none of the HTIB crap, a truly good sound system, $1,000ish with 8 channel lossless audio) and a new samsung 50" tv that has a MUCH better picture quality than the one from 11 years ago, consumes a lot less power and is light enough for one person to carry. Total spent was $3,200. Basically by spending less I have more "wealth" than I did 10 years ago - and that's even ignoring inflation."
Oh yes just because I can pay for cheaper consumer crap things are ok. I am going to ask how old are you? For life also includes health care, education, etc. These costs have become prohibitive for the poor. Sure they are given loans and then get jobs where they can barely pay back these things. But hey as long as I can get get cheap consumer crap all is ok, right?
"When somebody tells you that the poor are poorer and the wealthy are wealthier because - adjusted for inflation - the poor are making fewer dollars today than they were in the 90's, they have no idea what they are talking about. "
Again you don't know what you are talking about. Cheaper consumer crap yes. Cheaper food? NO, but I guess you don't buy food do you? Again the question of age. The poor are poorer than the average poor of say 40 years ago. When economists measure poverty and such they don't measure it in absolute values like how much currency you have. The measure it in terms of what you can afford for the monies you make. Again, g
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
Look, I get it, you're unemployed, you're bitter, and you're looking for blame, but you've been going on like this for weeks now and it's tiresome.
I'll admit I'm not American, and I don't know the vagaries of the H1-B system, maybe that means I don't know what I'm on about, but maybe alternatively it allows me to be objective.
You see here's the thing, I hear a lot whining about how H1-B has decimated the US technical industry, and the people I hear it from all seem to have one thing in common - they're unemployed or they seem to believe they're underpaid, and it's all the fault of immigrants. So I decided I'd look at the fact.
I figured I'd see exactly what these low paid immigrant workers are getting paid and so forth, and I found this site which seems to have a pretty good database:
http://www.h1bwage.com/
For 2012 a search of programmer came up with 10k records, developer another 10k, whether any of these crossover I'm not sure, but hey let's call it 20k anyway. Estimates are shaky but currently the amount of developers in the US seems to be anything from about 1 million to 4 million depending on who you ask, but again let's given the benefit of the doubt and pretend there are only 1 million, so H1-B visas account for 2% of developer jobs each year based on these figures, that's a small amount but it's certainly not negligible so it's a fair criticism that H1-B immigrants are taking at least a non-negligible amount of jobs each year. Note that the number of developers has grown each year, and so has the visa cap, roughly linearly so the figure will be reasonable for past years also.
But I also found figures for average salaries for developers, they seem to have remained fairly stagnant for a few years (if the economy isn't growing much, neither will wages grow much) at roughly $73k per year as the average and the top 10% earning an average of $110k. So the next issue is that immigrants are being employed because they accept less money and are bringing salaries down, again though looking at http://www.h1bwage.com/ I can't really see how that's true - the majority are getting paid more than the average so if anything H1-B immigrants must be raising the average.
In fact, many of the companies that I see chided here for wanting to increase the H1-B quota "to bring down developer wages" are doing quite the opposite. Facebook in 2012 was paying an average of $115k per developer, Google $125k, Microsoft $104k, Apple $119k. Given this, all these major companies are paying well above the average developer salary to immigrants, and all except Microsoft are paying above the average paid to the top 10% of developer salaries in the US.
So here's what frankly I think the facts say the reality of the situation is, that in practice, across the globe it's not ever going to be the case that every American programmer is better than every other programmer in the world, in fact, there will be a sizeable segment where the opposite is true, that is for example, that perhaps the bottom 50% of American programmers are statistically going to be nowhere near as talented as the top 10% of developers in almost every other country in the world. That's bound to be a lot of developers, and awful lot. What this means is that technology companies who want to populate their company with the best talent available no matter where in the world that comes from are going to have to use the H1-B visa program.
I'm not saying there aren't companies taking the piss, one company at least stood out on my peruse through and that was Wipro, they clearly seem to pay a little below average on average, and lot in some cases whilst also taking up more than their fair share of the quota, but by and large the H1-B visa program seems to be being used for what it's intended to be used for, on average does not appear to decrease average developer salaries but in fact increases them and that companies such as Facebook, Microsoft etc. want to