Pay is a function of value. If you produce a lot of value, you get paid a lot. This is true for all jobs unless the business has figured out a way to get away with keeping most of the value for itself.
When a dev is producing code that generates $x millions either they're going to end up getting paid a lot or the business is going to end up making more profit. To suggest that a dev is 'overpaid' is just saying that you think tech companies should keep more profit from the value they create instead.
It's important to remember that despite all the layoffs, talk of recessions, and 'bad news' around at the moment, company profits and revenues are still way up. Meta's revenue went up $30bn in 2021 ($85.96bn in 2020, $117.92bn in 2021). It fell to $116.6bn in 2022. Maybe the revenue will plunge back down to 2020 levels again this year which would justify slashing the headcount, but I doubt it. I think it's a lot more likely that Meta will announce record profits at the end of the year.
A very free-market take. Do you believe that a fresh graduate at FAANG is really generating 6 figures in value? Do you believe that US employees on average generate 3x the value of their European counterparts?
I don't believe US employees generate 3x the value of their European counterparts, but the justification is right there -- they're paid 3x (or whatever multiple) more.
The actual problem is how you measure "value". We're used to valuing technical work on technical merits, but the market just thinks in money, dollar/euro amounts. And of course it's no fault of European employees that their "value" is significantly lower than their US counterparts -- it's probably due to company leadership, differences in regulatory environment, geopolitical and macro-economical factors, and history (the fact that modern computing started in Silicon Valley is significant).
I agree with the OP that US devs are producing more value - pound for pound - than European based devs, if what we mean by value is money, and I'm 30 something year old European.
The reasons are that the European dev is probably working for a business that's addressing a much smaller market, and that the smaller market probably has a much lower GDP per capita than the US.
It doesn't mean the American dev is better at what they do, or smarter.
> from which they can afford to pay the devs 3x more doesn't actually mean they create 3x more value.
If these two companies are of equal sizings, or if we can find a ratio/cost per engineer/etc that we can say is "equal enough", and we say that Company A makes 3x what Company B makes using this metric, wouldn't it be right to say that Company A's employees produce 3x the profit of Company B?
Given, Company A has a stronghold on the market, government handouts, etc, that are _causing the 3x profit increase_. I for sure agree with that. But, at the end of the day, isn't the employee, the ones producing the output, generating output worth more than Company B?
European work culture is extremely weak. Where are all the European tech giants? The only reason American companies hire Europeans is because 1/3rd of the cost justifies the low productivity.
> Nope, he says this because Americans have a thing called the Protestant work ethic, whereas many Europeans have exactly the opposite of this.
This divergence is greatly exaggerated. Where do you think those hard working Protestants came from?
The main reason European countries are not as wealthy as the US is that they are all much smaller, and linguistic, cultural, and bureaucratic differences make pan European business much harder. You generally have very few large companies that operate in multiple European countries, in comparison to the US.
I'd argue that the free-market take would be that pay is a function of supply and demand, not value. As an example, musicians provide a ton of value, but the free market dictates that they aren't paid a lot, because people who would like to make music for a living are a dime a dozen.
Given that US and EU wages have about a 3-5x disparity, then you might think a) the US worker is worth that premium, and will fulfil 3-5x of your demand for work as the EU worker, b) you have a need towards hiring in the US (certainly understand this in some cases). Or... c) there is a disparity between supply / demand and salaries - why hire in the US if there is so much cheap supply elsewhere?
Monopoly of US firms in the tech industry, their (possibly irrational) reluctance to go remote (until COVID at least), and US work-visa (H1B) quota restrictions.
Now that chasing growth has gone out of fashion and cutting costs is on the table, I suspect companies might lean more towards hiring cheaper, non-US workforce after the layoffs have settled down.
I couldn't afford my lifestyle if pay was a function of value; it'd cost too much. Pay is a function of how hard management believes it is to replace someone.
The value you produce is merely an upper limit on your salary. Your salary is more based on offer and demand, meaning how much your management believes it would cost to replace you.
This is way, way too simplistic and implies that you somehow can know what the value is... The whole discipline of ethics within philosophy for thousands of years had been grappling with this... because it's hard!
Now, just to give you a counter-example, where it would be very hard to argue that the job compensation was based on value: there was an article about a year ago about some government bureaucrat in either Spain or France who's been dead for seven years, and the government forgot to notice, so it was sending him a paycheck month after month. -- How's that for generating value?
Now, of course, there's also a debate on universality of value. Some believe that the value is universal, but the reality is s.t. it's hard to justify this belief. For example, the value provided to a dictator of a fascist state by his bodyguards doesn't seem to align well with the value those bodyguards provide for the rest of the state (and especially for the neighbors of that state). So, how can you argue that the bodyguard's pay is justified? Why do you have to take the perspective of the dictator rather than the people being under their thumb?
And of course, there is a debate about how to measure the magnitude of value: is it absolute or, again, proportional to the subject of it. Those who believe in universal value also tend to believe in absolute value, but they don't have to. So, again, a thousand dollars might be a difference between being able to make good on rent and becoming homeless for a poor person while for a rich person a thousand dollars might be so insignificant that they don't even notice spending it. And then again, you need to work hard to convince others that the value is absolute (i.e. that dollars don't capture the value and so on).
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Independently of the above:
> When a dev is producing code
I worked for my previous employer for three years. It was before they had any paying customers (a start-up). After I quit, for various reasons, they decided to get rid of my code, and replaced it with something else. In other words, while I worked for my former employer, none of my code generated any value, but I still got paid. They still aren't even breaking even (they have something like five customers), and none of my code is in use anymore. How do you explain my salary then?
And I'm definitely not the only example. Large companies are known for throwing money on something that ends up being a flop, speculatively. So, it looks like there's more to it than simply writing code for the product that generates profits. Don't you think?
Pay is a function of value. If you produce a lot of value, you get paid a lot. This is true for all jobs unless the business has figured out a way to get away with keeping most of the value for itself.
When a dev is producing code that generates $x millions either they're going to end up getting paid a lot or the business is going to end up making more profit. To suggest that a dev is 'overpaid' is just saying that you think tech companies should keep more profit from the value they create instead.
It's important to remember that despite all the layoffs, talk of recessions, and 'bad news' around at the moment, company profits and revenues are still way up. Meta's revenue went up $30bn in 2021 ($85.96bn in 2020, $117.92bn in 2021). It fell to $116.6bn in 2022. Maybe the revenue will plunge back down to 2020 levels again this year which would justify slashing the headcount, but I doubt it. I think it's a lot more likely that Meta will announce record profits at the end of the year.