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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?
Obviously this is not applicable to all tech workers, but...
In many cases, there's a fairly substantial difference in expectation of work product, both in terms of quality of work produced, and in ability to execute anything more than rote work. While it's true that those qualities may not matter for those organizations who choose to outsource tech labor, there can be a very quantifiable increase in product quality from workers who are more vested in and capable of producing a higher quality product, which can be translated into demand for higher compensation.
It's kinda the same as the difference between a certified general contractor, and a guy you pick up at Home Depot to do some work for you. You don't expect to pay the general contractor a small amount of cash under the table, and he doesn't have any need to make his rate "competitive", because he'll be able to find people willing to pay for a higher quality of skill, knowledge, and ultimately work product. There's a reason that most tech companies who outsource their high-skill labor to inexpensive countries don't stay competitive long...
That's my experience, anyway.
Sometimes outsourcing to lower cost countries might work, but often it just doesn't work as expected. My employer tried India outsourcing 10 years ago and it was a failure. First, while the direct employment costs are cheaper, there is overhead that is complicated and expensive: protecting intellectual property, management from 12 hours away, project planning, code culture and standards.
IT and software engineering pay well especially in Silicon Valley and other major areas because it's worth it to pay that. Proximity has its own intrinsic value. I work with 50% Indian workers, but they are here in SV and paid well, most 100k+ because that's what the work is worth.
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.
Wages are not proportional to profit you generate. The profitability question is binary. If you generate profit above your cost, you may be employed. How much you are paid depends only on supply of labor and the demand for that labor.
For my dollars, I'd much rather work directly with people who are a committed part of a team. It's tough enough to achieve that with direct hires; I don't think you can do it with outsourcing.
I think part of this relates to the nature of software. People always talk about writing software - but that's the easy part. The hard part is *expanding* and *maintaining* software. And generally speaking people who have a history with the code are going to do a better job of it: faster, and more precise. You can also have a much tighter development loop between developers, testers, and users if you have them all in-house. I used to have my developers spend some time using the tools they built with the people who actually used them for the job (I did this myself as well). You learn practical details that are hard to communicate any other way. And speaking of communication: I had a few outsourced workers (forced on me by upper management) and communication was always inferior.
I'm not saying that there's no use for outsourcing, or that it's always the wrong choice. But my experience is that proximity matters. And history matters. And personal familiarity matters. So one needs to factor all that in when making the choice. And yeah, I think I got about 4x the quality and productivity out of my in-house people as my outsourced people.
North American companies are absolutely idiotic about this. They will happily employ remote employees from India who (obviously) never come into the office, ever for a discount. Typically the quality of work output is low as is the knowledge level. At least that's been my experience.
Yet those jobs aren't offered to Americans, and I don't get why not. If you have low skill with computers, but an aptitude to learn, you could do the same quality of work that's being outsourced for $20 - 30k a year. So why not offer the job over here with the same standards? (100% work from home, no expectations that you'll work any standard hours, ever. And if you get the project done early, enjoy the vacation time.) You would be surprised at how many people would take such a job and find it is enough to keep them going and give them the experience they need to enter the field. Sure, if you live in NYC $20k means you'll be dead inside of 12 weeks, but move to Mississippi and it's enough for a single guy to live frugally for the year while he ups his skills.
In fact, honestly, I don't get why companies don't offer work from home for most tech jobs. You get to pay lower salaries for the same work because people don't have to live in extremely expensive cities and you get to save further on not having to have an office.
The United States is known for the hard work of its people. The rest of the world has criticized the US's lack of work/life balance (many say the US spends too much time working, more than anywhere else.) Assuming this is true, it would be a reason that US workers are worth more - in general harder working people are more productive. I would say this is especially true in Information Technology, particularly software development where the amount of time required to stay current and keep up with changing technology is enormous.
As others have posted, the ultimate answer that the marketplace dictates the value, and the labor market place currently values American tech workers highly.
There is simply a completely different type of employment culture in India than in the US. In the US we are used to interacting with a self-selecting group of immigrants who work really hard and often put up with a lot of stuff under H1 or other visa programs that American citizens wouldn't tolerate from employers.
Back in India though, there is a culture of treating employees like shit, and consequently a culture among employees of working as little as possible. Employers also don't screen candidates well for off-shore call centers and the like because if they are working on a large contract, all the accountability is based on metrics that can be manipulated and the US based business that contracted them probably only cares about reducing their costs.
My Indian and other immigrant coworkers work their asses off. The support teams I deal with in India can't even be bothered to show up to a phone call and are usually incapable of anything more than opening up a ticket with the software/hardware vendor directly.
To live in cook county in the suburbs of chicago, a two bedroom home of less than 1000 square feet costs around 3500 a year in taxes. Add to that 4,800 a year to pay the mortgage for the home, retirement planning, gas, electric, water and food.
That's before you can get internet - which has been driven up to over 600 bucks a year.
Then there's mandatory car insurance and health insurance - also adding up.
So when you need to be able to pay 20 grand after taxes to live near where you work just for the basics, you start to get annoyed that someone living in a cesspool thousands of miles away for pennies on the dollar is arrogant about stealing your job.
_ _ _ Go for the eyes Boo! GO FOR THE EYES!
I currently supervise a team in Bangalorre, along with a couple of junior developers here in the US. The US developers, though only a year or two out of college, easily outperform even the "mid-level" developers from India. The price our company pays for Indian developers is about 1/3 the cost of US developers, but so far, we have not been able to make the math work. Even 3 Indian devs cannot produce the same quantity and quality of output as a single junior US developer. This is a pattern I've observed numerous times at different companies.
This disparity has not been missed by accounting departments. Bringing offshore tech jobs back to the US has become so commonplace that it has come to be called "reshoring." I don't think US tech salaries are in any kind of jeopardy.
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.
Forty to fifty years ago, Japan was known for making crappy products. Then they (among other things) revolutionized how cars were built and anything made in Detroit after 1980 or so looked like absolute crap compared to Japanese cars. Only in the last fifteen years or so have the American cars caught up.
India and China has been used largely as "hired hands" for crap work in dev/IT until recently so they didn't "own" the problem. As they become owners of the concept, solution, and problem, they will adapt and learn. As more of their devs have spent 36 hours straight getting a customer around a problem that someone in their organization created, they will push quality in to their work more and more or just go out of business.
Don't be too smug. The US is tiny in population compared to China and India and there is no indication that the random melting pot in the US is genetically better suited for producing quality products. Hence, the center of international development will move to China and India -- it's inevitable just by the numbers. Additionally, many Chinese and Indians kids are striving (at their parent's insistence) to excel and learn to work hard at a very early age to get good grades etc. just as American kids are increasingly being praised for being "special snowflakes" and "the best you you can be" and getting "participation awards" just for showing up. It won't end well for Americans in HW/SW dev or IT unless we wake up (I don't think we will).
And it isn't surprising. You can outsource product development, sure. But most tech workers aren't just prepping files for a factory. Most of the work is in constant customization, and understanding the needs of the client/user is just as critical to success as the actual programming skills.
It is highly unlikely that some random programmer in India with a masters degree is going to have a better understanding than I do of the business needs in my community. Just like, as a foreigner I wouldn't be able to offer as good a service to somebody in India, because I don't understand the business needs in their community.
I've had good experiences with development teams from China, actually, but that's just one data point. India, however...
It's like the developers out of India simply don't care. Code quality, functionality, deadlines, figuring anything out on their own, the amount of hand-holding I've had to do is extremely frustrating. So, I spent some time one night searching the 'net and looking for information on how the schools work over there.
Turns out that many of the schools in India don't actually teach you much. Their courses are geared towards rote memorization and following instructions. If you want them to do A, and only A, with no changes, they can do A very, very well. Once you deviate from A, even just a bit, they won't know what to do.
They call it "mugging" over in India (and no, not mugging as in attacking someone and stealing their cash - I have no idea how the term came to be). You memorize. You don't deviate. You do not think for yourself. You do not understand a concept and come up with a solution; you only follow the solution that's been provided.
It really does seem to explain all of the issues I've ever had with IT workers out of India. There's limited capability for problem solving because they're not taught how to solve problems in a general sense, they're simply taught the solution to a specific set of problems. Give them a step by step set of instructions and it will be done - but then why not just automate?
In contrast, American schools push students to understand concepts first and then apply them to find a solution. We're trained to solve problems and to think. That seems to be the core difference.
Love sees no species.
Here it goes: "An old man is lying on a bed in his room. It's year 1917, the Socialist revolution is in full swing. His grandson runs excitedly into the room and proclaims: "The Bolsheviks are winning, there won't be any rich people anymore!" To which his grandfather replies: "Weird, back in our day we revolted so that there wouldn't be any poor people, not to get rid of the rich".
Which is a long way of suggesting: maybe a better question to ask is why the non-US programmers are paid so poorly. TBH I don't think US programmers are that well paid, outside of relatively few outliers. They tend to live in the areas with some of the highest cost of living in the world. That's out of necessity: all the high paying jobs are there. I'd say a good fraction of US high tech professionals is what real middle class is supposed to look like. Not rich, but with a roof over their head and non-zero savings. I don't consider that a privilege. I consider that a bare minimum.
A. I can rig your entire building for gigabit wired and wireless transfer speeds. T568B all day.
B. I can configure your stuff from MPLS to ASA to software-defined stacks.
C. I can get on-site when your remote access inevitably fails, assuming you're not stupid enough to rely upon cloud-only solutions.
D. I actually speak and understand English.
E. I have other skills that your company might want, and I am asked about quite often (Doorbell job after wiring up their patch panels? $40/hr.)
F. I possess got over two decades of experience.
G. My warranties and guarantees on my work actually mean something.
H. I don't read off a fucking script, nor do I ever need to.
I. And the list goes on.....
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
How many great software products have you seen being invented and created in India ? Is the number around null ? Or is it a large NULL ?
There are many reasons why Indians are not really a threat, and it is not only the language problem. It is their culture. Been in a startup in Bangledesh for 3 months, most employees from Indian universities. They work very hierachical, and not independent. It is almost impossible to make an employee choose between a blue and a red ball, we want hios managers approval first. I could not get my employees to to code things using stuff not part of their curriculum. I had to train them in those chapters in their book from university that was not part of their university education. Their attitude is, that it is better do make nothing than to make a mistake. They don't know the word no. They can't say they can't do it, but would rather delay forever.
Now I am in a large company, and the code quality we get out of India, no matter what huge front company we use, is nowhere as good as an average local person with a bachelor in CS can deliver. Their missing ability to think and read documentation, and explore is a killer.
The big threat comes from christian countries, countries with our culture. The threat comes from eastern europe and south america. They think more or less the same way. They can work independent. If they don't get an answer, they will decide on a direction to go. Even if they go the wrong direction, it is stillbetter than looking out the windows until the boss comes around.
And one important fact that you forget is, that brain workers, including IT developers, has a salary way above average salary in whatever country they are from. Personally, I would say it takes 3-5 average indians to be as efficient as an average westerner. that is $10.000-$15.000/month. So there is not good economi in using indian developers if they are available locally.
Outsourcing of jobs is mostly operations, where it is accepted that the level will be much worse at half the cost. And partly development because you can't get the skills locally. Operations today is waiting for the server to burn and then piss on it. Nothing proactively, except from scheduled reboots. So whatever is outsourced to india is not the same thing as the comanies used to get. They get less $ for $. They could save more money by deciding on the same service level with inhouse staff, and fire 90% of IT operations staff, and use external consultant when things are bad. They would even get a better service from that solution. Outsourcing to india is the new black. Everybody does it, nobody is happy, but because everybody does it, it must be the best.
Wow, just wow. You haven't been down a darker nastier hole than dealing with an Indian IT company. Employees rotate like there are revolving doors installed in every cubical. No matter how good their English, there is a communication's barrier. Contracts are pretty much brought out on a daily basis. Procedure overwhelms any project; yet the procedure simply protects them while providing no value, but then they bill the shit out of you for that time.
Then there is this strange touchiness about any perceived insult. You say something doesn't work and they will either pretend they didn't hear you, or they will list off the resumes of all those involved. "Mamdoop, graduated top of his class, in a program that only accepts 100 students from over 1 million applicants. Are you saying that you know C++ better than he?" To which I reply, the program is crashing, it is crashing because he didn't do any tests at all and any client ID over 100 will crash the software.
Boom contract time: "Your sample set of clients only had 100 clients." This ignores the fact that the contract also stipulated that there will be 100,000-500,000 clients.
And it just goes on and on and on. Then after you finish successfully managing to sue them in an American court, you see that they are using your company name for a positive reference.
Then there is the endless changing of the contract. Somehow the monthly billing of $40,000 goes up to $45,000 and the extra is for "administrative excesses" and you say no, but it takes months for them to remove it, and as the end comes closer it goes up and up and up with subtle threats about the software ever being delivered if it doesn't get paid.
The best is when one of your own employees turns out to be related to the company in India that got the contract in the first place. You are never able to prove that something scummy happened but your employee gets wildly upset when the contract is canceled with extreme prejudice. Like holy shit losing his mind upset.
Somehow they have created a facade of competence without actually creating the competence. A simple test is how many companies in India are actually making viable software products for themselves. Not the government, not for others, but an Indian Facebook. I don't think that it is possible. I suspect that there are all kinds of Vapourware companies, as they would have that nailed down cold; but a company that does something cool, has lots of customers, makes lots of real money, and doesn't have a government department firehosing money into it.
Without that excellence, why would we go there again? This is why Western Programmers make the big bucks; they deliver what was wanted.
Another problem is with Indian management. Any problem they will claim they can solve it. Get the business first, then yell at the employees to get the impossible task done. If it fails blame the workers. It feels somewhat adversarial between management and worker, rather than being parts of the same team.
As for Indian workers who know how to do stuff, most of them are already in America and other countries.
I do foresee a problem for India in the future as it seems they've put too much emphasis on a single things - basic IT. Manufacturing and design is lagging.
but then why not just automate?
There's an intermediate step, and companies have learned to do it reasonably well in IT: do what McDonalds did. Reorganize the work so that it can be done by an army of cheap, replacable labour instead of a handful of ace professionals. The works isn't quite ready for robots or AI, but using strict processes to dumb down and compartimentalize the work means that you now can get away by having much cheaper workers. You do need more of them... at first I was surprised how much more, and how companies thought that this was a good and cost effective solution. But since then I've learned that offshoring has other benefits. For one: if you have only cheap workers with a narrow, well defined skill set, then you can get away with managing them as resources instead of people. Need 5 more of X or 3 less of Y? Need to temporarily replace a sick Z? That can be painlessly arranged if you have 100s of these to go around. If you have only 10 who do the same work, that problem becomes much harder and you quickly find yourself having to deal with individuals, with individual skill sets.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
The thing that you're missing about Japan's rise is that, as quality increased, so did price. The same thing is happening in India and China and this is a big part of why quality usually sucks when you outsource to India. If you're someone competent in India, then you quickly learn that many of the companies that are paying you 10% of what they're paying an American will happily pay you 50% of a US salary, which works out as a lot more than the US salary in terms of local purchasing power and quality of living. If you're not competent, then you stay with the outsourcing firms.
The only companies that are doing well out of moving development to India are the ones that establish a big local presence, focus on retention, and pay well relative to the local market. Companies that aren't willing to do this are slowly learning that offshoring isn't worth the extra costs. The end result of this is more inflation in India, which will push up wages (this has already happened a lot and is a big driver for Indian companies moving work to China).
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You do know there are other jobs in IT besides being a help desk phoneslap, right? I know this might be a shock for you, but not every business can run on Quickbooks. Sometimes a company will have a very complex billing structure, based around many factors that make it unique to that business, requiring custom software development in order to make it work. This software isn't written by "IT help desk flunkies" but by real software engineers, working in IT.
People who build data centers, and networks are in IT. People who keep servers running, secure, and performing as best as they can to deliver the information and services that the business needs are in IT.
The help desk job used to be the foot in the door - something you do that helps hone troubleshooting skills and gets people familiar with systems and how they operate, and how they can fail, and what to do about it. But there's other people that put those systems together to begin with - people who looked at systems from different vendors and providers, tested them and discussed the merits of each, and then chose and implemented them. Or, even built and coded the thing from the bare metal on up. All of that is IT's job, and it didn't just magically genesis itself.
Sure, you can say that some of that could be done on contract, or outsourced as well - but the results are usually far poorer than the often terrible results of even outsourcing the help desk.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
You made a good point.
> but it hardly explains the idea of American exceptionalism in the 20th century.
American Exceptionalism does NOT mean "America is better." Somewhat the opposite, in fact. If the US government and the govetnment Spain both spy on their citizens, the US has failed to live up to it's responsibilities, while Spain has not necessarily failed, according to American Exceptionalism. AE says that due to certain historical facts, the US has responsibilities that other nations don't have.
Most states are also nations, the borders of France (the state) define the area controlled by the French people, the ( ~ ethnic) nation. American Exceptionalism is the historical fact that the US is a state (country) founded not based on a nation (ethnic group), but rather on a set of ideals; and that fact creates different responsibilities. Japan (the state) is basically the area controlled by ethnic Japanese, so they would be expected to preserve and defend Japanese culture. Germany is the area controlled by Germans, so they would be expected to preserve and protect German culture. The US is not a state, not an ethnic group; it was explicitly founded on the ideals that each person is endowed by their creator with certain inalienable rights, etc. The US claims to be "the brightest beacon of freedom", therefore the US should be expected to defend and preserve freedom and liberty. Spain wasn't founded as a bold experiment in individual freedom, so they have no special responsibility to do that- Spain is supposed to be Spanish, that's all. The US government, being founded for a particular purpose, has a special responsibility to honor that purpose. When we fail to preserve and protect freedom, we fail at our national identity, at our national purpose. That's American Exceptionalism.