I think we should all be less confident in this idea that software engineers have tons of bargaining power. The salary is relatively high compared to the US average, but it's not obscene compared to say, product managers, high performing salespeople, etc.

On occasion I've tried to pick up side jobs for 10-20 hours per week for a second company, and I've always been refused, not because I wasn't technically qualified but because they just weren't interested in considering non-standard work arrangements. If there were TRULY such a huge gulf in supply/demand, I would've been able to get a side job at 60-70% of my normal hourly-equivalent rate, for 10-20 hours per week, is my thinking.

I've also observed a lot of stubbornness in salary bands and so on.

By the way, I speak as a person who has previously made in excess of $200,000 per year in non-stock compensation.

Exactly. We should also keep in mind that developers have already seen their wages depressed by collusion between the big tech firms (which was punished with a slap on the wrist). And that's just the case we found out about.

Sure. I mentioned we have decent salary negotiating power because for many other industries that's the #1 reason to unionize, but I don't think many tech workers would find it compelling.

Also, I'm not entirely sure your case is proof that there isn't a big supply/demand difference. I would be very unlikely to hire a developer 10 hours per week because software is collaborative intellectual work, and I'd have a hard time using somebody who wasn't around for much of the thinking and constantly needed to be brought up to date. Their efficiency (in terms of hours of actual coding versus hours of communication and keeping up with codebase changes) would be low, but their cost in terms of time spent by other workers would be at least the same.

Occasionally I'll see small units of work that could safely be done by part-time contractors working on something solo. I definitely looked for this at my last startup, as my cofounder was correctly eager to accelerate things. But it was pretty rare that I found things where the cost/benefit ratio was at all decent.

Is there economic theory supporting unions? Asymmetric negotiating leverage is not generally recognized as something that undermines market outcomes.

To the extent that it's difficult or impossible for the workers to get another job, the employer has buyer's market power (in the extreme, a monopsony). It's a well-recognized phenomenon in economics literature.

https://www.investopedia.com/terms/m/monopsony.asp https://en.wikipedia.org/wiki/Monopsony

Like a monopolistic market, a monopsonistic market is inefficient compared to a competitive one. Employers gain "utility" at the expense of workers, but less than the workers lose compared to a competitive market.

Unions can remedy this by becoming a monopolistic (or near monopolistic) supplier of labour, by negotiating a higher wage (price floor), bringing the wage closer to it would be in a competitive market.

Long story short: if you're pro competitive markets, you need to recognize the benefits of unions. They're not an ideal solution, but the alternative is not a competitive market outcome.

Edit: this seems like a pretty good explanation: http://www.economicsonline.co.uk/Business_economics/Monopson...

But you don't care about market outcomes, but about your own personal outcome (and I assume the economic theory alluded to wasn't macroeconomic but micro). The market can converge to fair non-union wages, or it can converge to fair union wages, which would be higher. Capitalists claim that unions reduce overall profit and harm the market, but workers shouldn't care about that (i.e. lower stock performance and higher wages are better for workers, at least in practice, given actual wealth distribution).

You are forgetting about customers. I own no companies and work for one company, but I am a customer of many. A personal cost/benefit analysis like the one you're describing would have to take that into account.

The way it works is that management involves the union in its decisions, and they reach compromises. After all, it is also in the union's interest that the company stays viable. If all the increase in wages gets is paid for by an increase in prices, and management isn't willing to cut profits, then that's unlikely to be acceptable to the union. The goal is to keep the company performing well, but to even the playing field when negotiating the distribution of profit among management, shareholders and employees. This is called co-determination: https://en.wikipedia.org/wiki/Co-determination

Individuals might prioritize personal outcomes over market outcomes, but societies and governments should prioritize the latter.

> but societies and governments should prioritize the latter

Societies should prioritize according to their values. I don't think that maximizing GDP is a universal value.

Yeah. The consumer optimum is heavily exploited workers, as that drives labor costs down as much as possible. We're looking for a reasonable balance, so the value created by labor is shared between consumer, producer, and the many other people in the value chain.

I'm not an economist, but, free market theory favors lots of competitors, fully informed customers, and low barriers of entry which can be thought of as trying to keep consumer and supplier with a balanced amount of leverage (too much leverage on the supplier's side creates monopolies, for example).

Also, it's not really about positive market outcome in general (optimized market), but about positive outcomes for the employees.

> I'm not an economist, but, free market theory favors lots of competitors, fully informed customers, and low barriers of entry which can be thought of as trying to keep consumer and supplier with a balanced amount of leverage (too much leverage on the supplier's side creates monopolies, for example).

That's a pretty strong argument against unions in the US, then, since (unlike in other countries) there's no competition between unions at an employer, there's almost no ability to deauthorize a union in practice (ie, choose a different union), and very high barriers to entry (very difficult to authorize a different union for representation in place of an existing one).

But the problem is that employers also have high barriers of entry (it's not easy to switch jobs, especially if you have to relocate), and there's usually low competition for blue collar work, since there's higher demand, which makes employers have overwhelming leverage. There are industries where that doesn't apply as much, and you can see that workers can get better compensation and benefits in those. Unions can equalize that leverage.

I do think that unions could also have too much leverage, but I think that finding a happy medium is a worthy legislative goal.

Asymmetric negotiating leverage is a key element of Marx's theory with regard to profit.

The power of unions is not just negotiating on behalf of a large group of employees. Imagine if instead of forming a union, the employees formed a worker's cooperative to contract out their labour. The two companies could then negotiate as equals. However, that cooperative would still not have nearly as much power as unions can have, because it would not be guaranteed an exclusive contract.

> One way to think about it is in terms of economic theory. Negotiations are fairest when both sides have equal power. But you have approximately one job, and a company typically has way more employees. It's more painful to lose a job than to have 1 employee quit. So the negotiation is fundamentally unfair.

This is not correct. The company competes with all other companies for the same job. Not only that, but companies go bankrupt more often than people do. Businesses are the frail side of the equation, if you make any.

> o when it comes time to negotiate your annual raise, it's not you alone dueling with your boss (and the whole corporate hierarchy backing him up). Instead it's you and all your colleagues getting together, sending in some representatives, and saying, "Profits are way up this year, so we all deserve decent raises. Let's talk numbers."

Now let me answer with actual economic theory: microeconomics. The fundamental way to make something get a higher price is to increase its utility or to decrease its supply. Unions can increase salaries if they increase productivity (which they dont, in fact they do the exact opposite in the majority of cases, worker health being the best exception to this rule) and decrease supply (not allowing to hire other workers).

Suggesting businesses are the frail side of the equation is absurd. If you ever talk to anyone stressed out by being unemployed, by applying for jobs, by worrying about leaving a terrible job but staying because of risk and transaction costs, this would be quite obvious. So strong is the business side, that business in many industries can afford to be quite terrible to their workers for a long long time.

Regarding your other point, unions can also increase salaries by getting workers a larger piece of the pie. Not sure why you left out this obvious aspect of any negotiation?

Thats because you are looking at the businesses that survive, not the ones that die off. 8/10 businesses fail in 5~10 year range.

The fact that you havent seen people stressed out for their business running into the ground is entirely due to not talking to people that have businesses that can be run into the ground.

> Regarding your other point, unions can also increase salaries by getting workers a larger piece of the pie. Not sure why you left out this obvious aspect of any negotiation?

Because that is a labor theory of value proposition. The pie does not work that way: the moment a businesses loses its competitive returns due to higher demands, it will stop investing capital unto itself and remain stagnant, while the capital goes to areas where it does not have such restrictions.

Companies compete with each other fiercely, and a company that has workers that cant unionize will very much welcome such problems on their competitors!

Competition among companies is not so tough, because many employees can't easily move cities or countries to find another job, but companies can (and do) always import workers from all over the world, or outsource projects.

When it is tough, companies collude so that they can keep salaries down (see Google & co).

Negotiating as part of a group is not about supply and demand, it's about reaching a fair agreement between a specific company and a specific group of workers. Nobody cares about supply and demand on the market, most people would rather have a stable place to work and get decent raises if the company is doing well, instead of all the profits going to the management and shareholders.

I'll have to ask for a more objective criteria to say competition is not tough. Businsses are very hard to bring about to profitability and sustainability. And they are vulnerable to market wages and capital returns just like any worker.

I agree that there is a different flexibility of labor and capital, but unions do not make labor and capital more flexible or inflexible. If anything, it makes labor inflexible and affects capital in the short term.

> Negotiating as part of a group is not about supply and demand, it's about reaching a fair agreement between a specific company and a specific group of workers. Nobody cares about supply and demand on the market, most people would rather have a stable place to work and get decent raises if the company is doing well, instead of all the profits going to the management and shareholders.

That sounds all good and well, but the union's interests are not its worker's interest. Its another organization that can feed of workers. Unless they make the pie bigger, they eat a generous slice, and if the company goes bust they will not eat at all. Unions have strong incentives to work in tandem with the company than with the worker.

Start-ups are very hard to bring to profitability and sustainability. An existing business, once off the ground can usually live for a long time unless the management team really screws up or their market gets disrupted. Even in these cases they can drastically reduce their costs by firing personnel and limp along to better times.

There are also huge conglomerates which gobble up smaller brands, e.g. Kraft Heinz, Time Warner, Alphabet, 3M, etc. They couldn't give a fuck about fragility.

Established businesses are in no way fragile. It's so ridiculous having to read this type of defensive argument.

Employees are a bunch of peons for the big corps, but they shouldn't try to organise because it will be somehow worse for them, right. Any type of group dynamic will not perfectly represent the interests of the group, and yet there are very successful unions out there even in the US, where capital had an long and bloody history trying to suppress them.

There are more employees in small businesses than in big ones..

Also management and corporate are employees as well.

You are conflating startups vs small businesses. And small businesses are mostly irrelevant in unionization discussions. Employees rarely bother to unionize at a small business because the more equal balance of power and the closer human relationships between employee and employer yield more reasonable outcomes.

You're conflating two different things. It's obvious in the case of a monopsony, like a company town. Employees can raise productivity all they want, but they will not see a bigger paycheck, because if employees don't have negotiating power, the employer will capture all the cash from that.

Your "pity the poor companies bit" is just bizarre to me. It's true that companies compete for workers, which is why employees have any negotiating power at all. But it doesn't change the fact that employers still have more negotiating power because of relative size. The same is true when companies negotiate with one another: Walmart, for example, is famous for jerking suppliers around because of the relative need.

>Businesses are the frail side of the equation, if you make any

If this were true, real salaries would have increased as the GDP increased. Instead they've been stagnant for over 30 years. You're argument is incredible and would need some sort of evidence to back it up against what is being observed in real life

Salaries and Profits do account for GDP, but that doesnt meant that all salaries and all profits are divided equally.

There is concentration on both sides of that equation. Small businesses do not have the profits and margins big companies have.

You weren't specifying small businesses and even then I'd say you have to get super small, <20 employees for that effect to start making them equivalent.

I will concede that if every business was a small business, then unions likely would be unnecessary as the negotiating power is more equal

I didnt, i mean all business which includes small business.

Unions are a super-business organization, they affect both big and small business, and unions dont represent all workers.

If all workers were unionized, there would also be little point for unions.