Inflation… what inflation?

[barnaby33]

I don’t see any reason to believe this. If all jobs could be done remotely wages would go down in some areas and up in others. Not sure why you would think wages would go down simply because they could be done remotely.

Because remote work generally increases supply of labor. In the short term the bottleneck is managerial resistance to building a culture of remote work. In the medium term when companies see that groups are successful they will search for talent at the lowest cost, duh! There is no magic that says rich western countries will win that competition. Increased global supply of software engineers and other knowledge workers will generally lower salaries unless there is enough demand to hoover all of them up.

Now the counter is that as far as innovation is concerned competition for the best will go up as companies do rely on less, but higher quality employees to get shit done. Those employees do generally (at least for now) come from rich countries, but that too will change. It will change because high quality people will realize they no longer have to emigrate for opportunity.
Josh

[Coronita]

[quote=barnaby33]

I don’t see any reason to believe this. If all jobs could be done remotely wages would go down in some areas and up in others. Not sure why you would think wages would go down simply because they could be done remotely.

Because remote work generally increases supply of labor. In the short term the bottleneck is managerial resistance to building a culture of remote work. In the medium term when companies see that groups are successful they will search for talent at the lowest cost, duh! There is no magic that says rich western countries will win that competition. Increased global supply of software engineers and other knowledge workers will generally lower salaries unless there is enough demand to hoover all of them up.

Now the counter is that as far as innovation is concerned competition for the best will go up as companies do rely on less, but higher quality employees to get shit done. Those employees do generally (at least for now) come from rich countries, but that too will change. It will change because high quality people will realize they no longer have to emigrate for opportunity.
Josh[/quote]

That’s not true. That’s the standard MBA answer that might look good as a theoretical research paper, but is not reflection the practical realities of the software industry…

There are plenty of outsource mobile engineering teams offshore right now that are offering services for 1/2 the cost…But yet many companies (us included) are still hiring domestic talent and paying significant higher wages than foreign software engineers.

Why is that?

Well, because if you ever built a product from ground up, the practical experience is that, yes you can do a complete offshore development project with cheap labor from a remote country IF all your product specification/requirements are fully documented with all your I’s and T’s crossed and all they need to do is implement exactly how the spec is written..In other words, if software ends up being more like factory assembly.

This might work in highly strict industries like defense, and medical devices..

But for the rest of the real world, software doesn’t work that way. Most of these cutting edge companies never have a fully speced/requirements gathered product feature of what they want to build. There is a lot of ambiguity from a product perspective of what needs to get built and a certain level of flexiblity, creativity, and tolerance for shitty product requirements….

The shitty product requirements that happens a lot can be managed by a inshore/inhouse team that is paid more to tolerate that shitty requirements, and just-in-time requirements development needed to make a product release. Bluntly put, your inhouse team is an exempt employee and you can make them work to get shit done even if the spec isn’t perfect.

If you try that with an outsourced third party software shop that is cheap overseas, what you will end up is a shitty end product because it only does exactly what the shitty product requirements specified, leaving out the rest of the missing requirements….And in the end, you’ll end up spending even more money design/implementation/qa to address all those missing things after the fact, because like any software…It’s much more expensive to make fixes/changes after things have been released. They are paid by the hour, and couldn’t give a shit their product requirements suck…Because they get paid by what you tell them to do, regardless of how the end product turns out.

That leaves the last option which is hiring directly someone overseas and pay them 1/2 the cost. Again, you can do this too, but there’s a bunch of legal/coordination tasks for this to happen. And there are language and cultural barriers that again makes it challenging for those teams to deal with a half baked product requirement spec.

That’s why you CAN farm out boring, fully speced out shit…But it’s really difficult to farm out work/design that won’t ever have a full product spec on what needs to be built, which ends up tending to be the cutting edge things…

Yes, many companies like mine have also gone through this exercise and learned the hard way too and burned dollars with cheaper “labor”. That’s why we we are now going the opposite direction, since the previous direction didn’t work and turned into a dumpster fire.

You won’t understand this if you work in one those strict, to the T industries that have thick process, that use heavyweight things like TSP/PSP software process or anything heinous like that. Because in those industries (like defense and medical), you do need a heavyweight process and move much slower, because if you fuck up, people will die.

But for the rest of the world, the rest of the world doesn’t use this painfully strict software process because if it did, nothing would get done…I would shoot myself if I had to work that way…

[The-Shoveler]

At a company I was at many moons ago, we offshored the development and later the manufacturing of one of our products, first year or so after release our sales dropped to zero in that region. We found out later they were making and selling the product on the black market.

[XBoxBoy]

[quote=barnaby33]Because remote work generally increases supply of labor. [/quote]

Nope, don’t agree. Remote work can increase the size of the labor pool available to a company, but that does not change the overall number of workers in the global work force. Overall the total number of people in the global workforce does not decrease simply due to remote work. If you want to look at it only from the point of view of US companies, then that’s a different thing. This discussion sprung up because of this comment:
[quote=deadzone]If all jobs could be done remotely, then clearly wages would go way down in the long run. [/quote]

If all jobs could be done remotely then the only work force would be the global workforce. There would be no increase (or decrease) in the supply of labor. (And thus you wouldn’t expect a change in the cost of labor)

You could argue, (and I would agree) that with the globalization that started in the 60’s the size of the workforce available to US companies grew significantly over the next few decades as they moved manufacturing and other operations overseas. But at this point in time, I think that expansion has pretty much run its course.

On a more local scale, as more companies adjust to remote work, companies in areas that have very high wages (silicon valley for example) may find the supply of people they are willing to consider will increase thus allowing them to decrease wages. But conversely in areas that have lower wages (think Raleigh NC) the number of available workers will decrease because some of the workers in that area will now be working for Silicon Valley companies and companies in Raleigh will need to increase wages to compete. All in all it should balance itself out, not cause a universal drop in wages.

[Coronita]

[quote=XBoxBoy][quote=barnaby33]Because remote work generally increases supply of labor. [/quote]

Nope, don’t agree. Remote work can increase the size of the labor pool available to a company, but that does not change the overall number of workers in the global work force. Overall the total number of people in the global workforce does not decrease simply due to remote work. If you want to look at it only from the point of view of US companies, then that’s a different thing. This discussion sprung up because of this comment:
[quote=deadzone]If all jobs could be done remotely, then clearly wages would go way down in the long run. [/quote]

If all jobs could be done remotely then the only work force would be the global workforce. There would be no increase (or decrease) in the supply of labor. (And thus you wouldn’t expect a change in the cost of labor)

You could argue, (and I would agree) that with the globalization that started in the 60’s the size of the workforce available to US companies grew significantly over the next few decades as they moved manufacturing and other operations overseas. But at this point in time, I think that expansion has pretty much run its course.

On a more local scale, as more companies adjust to remote work, companies in areas that have very high wages (silicon valley for example) may find the supply of people they are willing to consider will increase thus allowing them to decrease wages. But conversely in areas that have lower wages (think Raleigh NC) the number of available workers will decrease because some of the workers in that area will now be working for Silicon Valley companies and companies in Raleigh will need to increase wages to compete. All in all it should balance itself out, not cause a universal drop in wages.[/quote]

// What you said more tersely.

I’d say, the only place where we would see a wage drop is in the extreme high cost area. Bay Area in particular. Since Bay Area probably has the highest compensated tech jobs and the highest number of jobs that can be offered remotely, I’d say there would be some pressure for lower wages in the Bay Area since there really isn’t much direction it can further go.

BUT, I think most of the rest of the US would see a tech wage increase, because most everywhere wages are lower (and in some cases much lower) than the bay area jobs that are now being offered remotely.. And if anyone is going to pick a remote job, they might as well pick the one that pays the most. So other companies that want to do remote job, will also need to compete in the remote job wage market.

[Coronita]

Just got out of a compensation/merit increase meeting today.

Standard merit increase will be moved up to Jan this year.
Standard merit increase will be 5% minimum and 15-20% bonus + TBD stock grants. I have some discretion for some to jack it up to 8% for those considered flight risk, which is basically my entire senior staff.

From a cheap company like mine, that says a lot. Employee retention is a big concern=> wage inflation.

[Anonymous]

[quote=Coronita]Just got out of a compensation/merit increase meeting today.

Standard merit increase will be moved up to Jan this year.
Standard merit increase will be 5% minimum and 15-20% bonus + TBD stock grants. I have some discretion for some to jack it up to 8% for those considered flight risk, which is basically my entire senior staff.

From a cheap company like mine, that says a lot. Employee retention is a big concern=> wage inflation.[/quote]

Regarding flight risk for your senior people, why is this all of a sudden an issue? Are there really less people in the labor force for your industry than before Covid? Or alternately is there really that much more work? Did Covid create significantly more demand for smart phone apps?

[an]

[quote=deadzone][quote=Coronita]Just got out of a compensation/merit increase meeting today.

Standard merit increase will be moved up to Jan this year.
Standard merit increase will be 5% minimum and 15-20% bonus + TBD stock grants. I have some discretion for some to jack it up to 8% for those considered flight risk, which is basically my entire senior staff.

From a cheap company like mine, that says a lot. Employee retention is a big concern=> wage inflation.[/quote]

Regarding flight risk for your senior people, why is this all of a sudden an issue? Are there really less people in the labor force for your industry than before Covid? Or alternately is there really that much more work? Did Covid create significantly more demand for smart phone apps?[/quote]Econ 101,simple supply vs demand.

[XBoxBoy]

[quote=deadzone]
Regarding flight risk for your senior people, why is this all of a sudden an issue? Are there really less people in the labor force for your industry than before Covid? [/quote]
I can’t really speak for Coronita, but in my industry (video games) there seems to be a big increase in demand. During the pandemic people stayed home and played games and this boosted sales and now the industry is awash in profits so is trying to create lots of new games. Thus a much higher demand for people who have the experience creating games.

[Coronita]

https://finance.yahoo.com/news/consumer-price-index-posts-biggest-year-over-year-jump-since-1982-in-november-134529314.html

6.8%

So if the average raise at my company is 5%. Most people are getting a pay cut. lol..

Reason #12834 to never just count on your salaried paycheck. Paychecks never keep up with inflation….

[sdrealtor]

Sadly most learn the only way to really get your current market value is to change jobs. If you don’t you get stuck in a dead zone

[teaboy]

yawn.
somebody change the record.

tb
#midlifeennui

[Coronita]

So this is an interesting data point.

My previous tenant moved in 12/2019.
My current tenant moved in 12/2021, exactly 2 years and rent is 16.45% more. Or roughly 8.22% increase each year.

That beats the 6.8% price inflation.

[Author]

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