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Ask Slashdot: Why Are American Tech Workers Paid So Well?
Slashdot reader davidwr is "an American-born, American-educated mid-career IT professional." But he's still curious about why American geeks earn more than their IT counterparts overseas:
If I'm a mid-career programmer looking for a job, why should I expect to be paid a whole lot more than my peer in India when applying for a job that could easily be outsourced to India? If I do get the job, why should I expect to keep it more than a year or two instead of being told "your job is being outsourced" before 2020? Is my American education and 5-25 years of experience in the American workplace really worth it to an employer?
Should we, as an industry, lower our salary expectations -- and that of students entering the field -- to make us more competitive with our peers in India and similar "much cheaper labor than first world" economies? If not, what should we be doing to make ourselves competitive in ways that our peers overseas cannot duplicate?
What's the secret ingredient that justifies those higher salaries? Leave your answers in the comments. Why are American tech workers paid so well?
Should we, as an industry, lower our salary expectations -- and that of students entering the field -- to make us more competitive with our peers in India and similar "much cheaper labor than first world" economies? If not, what should we be doing to make ourselves competitive in ways that our peers overseas cannot duplicate?
What's the secret ingredient that justifies those higher salaries? Leave your answers in the comments. Why are American tech workers paid so well?
As a guy that owns a small IT security startup and has some developers on contract in India and as many full time North Americans as we can afford right now I would say this:
Creativity. Understanding the why as well as the what (aka seeing the big picture), and a general drive to see the company succeed.
None of my contractors give a shit if my company succeeds beyond their next invoice. None of them really seem to care to understand why we are doing what we are doing, they are only focused on their silo of work. And OMG if you don't give them EXACT to the letter specs, the work wont get done. Likely because of the other two things I mentioned, but also I think it might be a culture thing where they are taught both at home and in school to never question, and just memorize and regurgitate to succeed. Yeah they are kinda like human robots in some cases.
I will always pay more for an innovative self-starter that's in my time zone.
I used to work as a DW analyst in a british bank who off-shored the ETL development to Chennai, India. The manager of the ETL team was earning 1/3 of what I was and I wasn't even a senior member of the Analyst team, there is no way to compete with that unless you yourself live in India.
This is my sig, there are many like it but this one is mine
I swear, half my career has been fixing outsourced code.
The US total cost of living is also higher, just because the salary is high and you get more in your hands don't mean that you actually earn more since a lot of that money is used to pay for your living like property taxes and various fees.
The US citizens pays property tax and a lot of fees, Europeans pays income tax - so the overall tax pressure isn't that different. The main difference is that cost of consumer products is relatively viewed lower in the US compared to Europe so a TV is cheaper.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
Only in the last fifteen years or so have the American cars caught up.
In your dreams only....
The difference in cost of living between my country's capital and New York is not that big.
Consumer prices are 1.5 times higher in New York; restaurant prices are 1.7 times higher in NY; Groceries prices are 2 times higher in NY.
Indeed, rent is much higher in NY (7 times higher) but that's an average and can vary greatly (Central Park view apartments cost a LOT more than periphery places).
In order to keep the same standard of life from my city (considering my current salary here), I need to make 4500 dollars a month as a specialist in NY. The average salary for my specialization in NY is a little bit over 7K dollars a month and could go as high as 11K dollars a month.
Here in my city I make 7.5 dollars an hour, working late shift (because most my customers are from the States). In NY I would make an average of 43.75 dollars an hour (accounting for salary ranges), that's almost 6 times higher than here, and in order to maintain the same living standard I would only have to earn 3.75 times as much.
The difference, mathematically speaking, is overhead. by moving to NY, with average salary, my standard of life would greatly improve. So there's your cost calculation right there.
Source: https://www.numbeo.com/cost-of...
Feel free to compare any USA city with Bucharest and you'll see that the cost of living difference isn't that great.
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
That's why you're getting outsourced to India.
> Value sets the cap. If the person doing the job creates $1M in value for the company, then that position is worth $1M
That's called "demand".
> But if 1M people could do that job
That's called "supply".
So paraphrasing your post:
It's not supply and demand, it's demand and supply.
> there are billions of people that would work as a CEO for $20M a year
There's about one person available who has experience as CEO of a large car marker and did so succesfully. The supply side is people who are willing and able (ie qualified and available), not people who are willing but unable (unqualified).
I think you misunderstand supply. There isn't a supply of billions of CEOs that will work for a $1. There is a supply of a several thousand (or so), the others are more-or-less "unqualified" (not that they can't do a similar job, but they are unhireable because the boards of directors don't want to get in trouble for hiring outside the expected hiring pool). Similarly there isn't a supply of billions of IT folks, and similarly hiring managers generaly don't want to get in trouble by going outside the "standard" hiring pool. This used to be called nobody got fired for buying IBM (but that probably goes the other way these days)...
The problem is that there is probably no good way to evaluate employees (including CEOs) before hiring, so most people simply pay the going rate, and hope for the best. The going rate is set by the limited supply and how desperate companies are (e.g., the demand side). The outsourcing comes in when the demand at the lower price point exceeds the supply and gets supplanted by a demand at a lower price point (and potentially larger quality variance) which matches the supply.
This used to be called the resistor tolerance dilemma. 1% tolerance resistors are much more expensive than 20% tolerance resistors. You might think if you bought enough 20% resistors you could cherry pick the ones that had lower tolerance, but in reality, the vendor pre-sorted for this, so if you bought the cheaper resistors you could almost guarantee they were crap. However, it was reasoned that by sophisticated design choices you could theoretically reduce the problem of high variance resistors so people started doing that. So you could solve your circuit design problem with a simpler scheme, but pay more for resistors, or have a more complicated circuit (with more things to manage that could go wrong) but get it done with cheaper resistors.
As expected, managers in 2nd rate companies didn't grasp this inherent tradeoff and wanted both cheaper resistors and the simpler circuits designed by novice designers. They bought loads of cheap resistors and put them in these simple circuits as a cost cutting move expecting the distribution of resistors to have normal statistical characteristics. Lo-and-behold they would eventually get a batch of resistors that were all low by 15% resulting in a 100% escape rate from their production line.