Here's the concrete suggestions they make:

>To improve workers’ wages across the board, the report calls for local and state government to support workers’ rights to organize, adopt better labor standards for subcontracted workers, increase taxes on corporate headquarters and provide affordable housing.

All of this seems reasonable and structural to me, ie it maintains a level playing field for businesses.

More taxes. That's the answer. How has the government spent our taxes so far?

Less taxes. That's the answer. How have the corporations spent their windfalls so far?

On workers. Record unemployment, including for underserved minorities.

It's their windfall ... They can spend it any damn well they want.

I believe that's exactly what's under contention, some people think corporations should not have as large windfalls in the name of spreading that wealth more generally.

Then people should simply stop buying their products.

Or they could just have their charters revoked and their assets seized. Corporations have no rights, not even the right to exist.

Corporations are owned by citizens. Those citizens have constitutional rights. Siezing the assets of a corporation = siezing the assets of a citizen.

To not have such an elementary understanding of how things work is just baffling to me.

Yes. People have rights, and those rights come with responsibilities.

And again, yes, corporations, individuals, criminal gangs, they can all have their assets seized at various times and under various conditions.

I'm not sure which part of that you think is news to me.

Those corporations operate under license.

Said license comes with terms.

Said citizen has a voice in those terms same as everyone else.

What are you talking about? Everyone knows corporations are owned by tiny white men wearing tuxedos and monocles.

Simply huh? Or a good majority of people share a belief in a mixed-market economy that includes sensible regulation on enterprise.

They used them to research, develop and build every piece of technology you used to post this snarky comment ... ??

Really? I'm pretty sure the internet wasn't researched and developed by corporations.

Yea, Bell Labs had nothing to do with the internet.

> Yea, Bell Labs had nothing to do with the internet.

Bell Labs existed in large part because AT&T was trying to justify its monopoly to fend off antitrust regulators.

Also, I think it had more to do with building the switched telephone network than it did with building the internet.

It was a pretty unique organization in time and space, and not at all typical of "corporations."

They’ve also used taxpayer giveaways to fund stock buybacks which really don’t have any effect on products they’re pushing to market. I don’t think anyone is really arguing that corporations don’t provide value, but there is a very valid to what effects tax policy have had (especially when govt makes these deals with certain envisioned effects, and without retrospecting to see if they did, we are bound to get into a place where money is poorly spent)

Not really, they used them to buy back shares while simultaneously expanding equity compensation plans for executives. There is very little corporate investment going on anymore despite many companies being awash in new cash.

I expected a more thought out answer from THE Jonathan Blow. There's 2 sides to every story and your reply only comes from one side.

Nah, all this R&D and CapEx is pretax.

That was actually the DoD, but no surprise you don't know that.

It‘s always really surprising and also really interesting how debates about „free“ markets and corporate taxes seem to get snarky and somewhat personal/emotional pretty quickly. For example, instead of having an open mind about possible solutions some ideas are dismissed outright under the premise that they haven‘t worked before, while it is pretty clear that such perceived bad outcomes (if they even exist objectively) have not been tied to anything fundamental wrong with the idea but with less than stellar execution.

To make a long story short, I would be interested in a constructive fact/evidence based position how we should tackle things like disappearing jobs due to automation, decreasing wages for unskilled labor, etc. in the future? Do you really have evidence and reason to believe that something like a government doesn‘t have to play a role in this? Really curious to understand your perspective and how you come to it :)

That logic should also work in reverse: If high-skill talent is rare their wages should rise. I do not see that happening. Well, at least not here in Germany. Industry is crying about a skill shortage but the corresponding wages are stagnant.

My theory is that wages are not that much about demand and supply of skill or labor. More evidence is that wages differ so much regionally. A Silicon Valley software engineer is paid more than a Montana software engineer even if skills are equal. The companies are willing to pay the premium so their engineers are close to the headquarter. The startups need to be close to the venture capital, but I still wonder why the big companies stay there. Why don't Google and Apple move away?

So in the bay area they found out that the largest employers actually conspired to not hire each other's senior employees. Which serves to decrease mobility for people and makes it so their wages become lower. When I worked in Canada it seemed like companies were very desperate for talent but weren't really willing to pay beyond a certain amount. It's hard to say if there is just a natural ceiling for pay or if it's actually some sort of setup to keep the compensation at that level.

Steve Jobs was the central figure in influencing the anti-poaching policies from what I've come across.

https://money.cnn.com/2014/08/11/technology/silicon-valley-p...

This is why market demand works for the benefit of the employee.

> "Only when Facebook declined did Google consider how to retain its employees, the judge said. It boosted "the base salary of all of its salaried employees by 10% and provided an immediate cash bonus of $1,000 to all employees,""

This is a fascinating question. My guess is that all industries have different levels of collusion/wage-fixing. If something as big as THE TECH INDUSTRY can get away with colluding to keep a ceiling on wages, then surely every single other smaller industry can as well.

There are many ways to suppress wages besides wage-fixing collusion. About 25% of American workers have non-compete clauses in their work agreements, for instance.

True, but non competes are mostly unenforceable in California, so that doesn’t account for the situation in the Bay Area.

Only when people decide to fight them. Sadly, many people un-aware of their dubious legality honor them even if they are in fact unenforceable.

The wage gap exists outside of California, and California also happens to be the only state in which non-competes are strictly voided by the courts.

Outside the Californian bubble, they're a big problem.

> Industry is crying about a skill shortage

Perhaps they are crying because a skill shortage means they would have to pay more, but instead they would rather the government encourage more people to train as software developers, increasing the supply so that salaries could be lowered.

This. Also, money doesn't grow on trees if you're a normal business. Rising wages means many businesses would have to close. It wouldn't matter to employees, because by corollary they'd have better opportunities, but if you were the owner of such a business, you'd be crying too.

Rising wages could also mean shareholders just accept lower profit margins. Still profits, just less.

The simplest mechanism to offset higher wages is stock options. If a company needs to attract talent they can use that.

isn't that just how a market works?

Yes, but new markets have high network effects and winner-takes-all outcomes. There is a non-zero risk of having a couple of trillionaires and billionaires living isolated from a pariah sociality. That would cause a enormous instability, violence and crime.

> That logic should also work in reverse: If high-skill talent is rare their wages should rise.

Which is precisely why the top 10% in the Silicon Valley are earning more money. Some of what would otherwise be localized gains are offset by globalization and offshoring, but income is definitely going up for those people in the Valley.

I don’t know about Germany- that’s not where the article was about so it’s not terribly relevant here.

I work on HR software that provides sourcing. We have a feature that allows you to skip candidates from certain companies.

We need a law that would make wage fixing a crime with harsh sanctions and better data from IRS about wages.

Here is a free statup idea. Create a better version of Unions that would maximise people's earning potentials and improve working conditions.

I don’t know what country you work in it might be worth doing an anonymous tip-off to your local competition authority if you’re in Europe. A software product providing affordances for tacit collusion would have a high bar to clear. It might be worth it if it’s even sold in the EU somewhere.

> If high-skill talent is rare their wages should rise. I do not see that happening. Well, at least not here in Germany. Industry is crying about a skill shortage but the corresponding wages are stagnant.

Businesses resist increasing pay, because that eats into their margins.

Even in capitalist America, SWE pay stagnated until fairly recently. Employers actively fought against increasing SWE pay, even as their shortage was getting worse. They kept wages artificially low, and successfully lobbied the government to fill their openings with cheap H-1B employees - the H-1B quota back then was over twice its current level.

That was a short-term victory, and long-term loss for the industry. If more engineers made $150,000 in SV back in 2005, there wouldn't be such a shortage today.

Eventually this flimsy dam broke, and now we're seeing pay more in line with where it should be according to the supply/demand curve. Arguably it's still not quite there, even in SV, where engineers with their "outrageous" pay still can't afford a home.

So in Germany, apparently employers are still in the "resist and whine to the government" phase. I bet they're begging for the government (i.e. taxpayer) to fund skill-building programs, import more high-skilled workers from 3rd-world countries... the usual stack of solutions.

I'd also suspect higher taxes have something to do with it. Why should I stretch myself paying $120k to an engineer, if he's only going to get $65k out of it? I don't know too much about the taxes in Germany, but I've seen this problem in other foreign locations where we were recruiting: increasing pay did not result in more or better candidates, and all the best candidates were just trying to get to the US any way they can.

There will never be enough pay for swes to buy homes, because there aren't enough homes for everyone - and so if you pay them more the prices will go up, but in most of SV there isn't that much room for more houses. Don't get me wrong, I'm in favor of more money for swes (I'm a swe!) but I disagree with that point.

Sure, it was never my main point to begin with. I agree about the real solution, as I stated elsewhere in this comment thread: build more housing, especially efficient housing.

Still, I find it amusing when people complain about "filthy rich engineers" who can only afford to live in shared apartments with roommates in SF...

Build up. Thirty story apartment buildings are not cutting edge technology. Neither are eight story ones and they don’t even require steel beam construction.

There is an enormous amount of room for new housing in Silicon Valley! The obstacles are entirely legal and regulatory.

If you want to help fight this: https://yimbyaction.org/

I agree with you that there could be denser housing, but that zoning laws prevent people from building more dense housing. So in practice there's no more room.

Zoning laws can be changed, and you can help:

https://yimbyaction.org/

Don't forget that more engineers can increase wages too. You seem to be stuck in a bit of a simplistic lump of labour idea about supply, demand and salaries.

More engineers means there are more companies that can grow, which increases opportunities for integration and building on top of. Think of engineers as more like fuel for a fire: the world isn't sufficiently automated, and the way we automate it is by applying engineers to the problem. The more we throw at it, the hotter it can burn; and the rewards depend on the value of the thing being automated, not mere supply and demand.

If we only had one engineer, they would not be worth the billions of amappgoosoft put together. It's very far from a zero sum game.

Because good engineers won't move away, because they like being paid well.

That’s not necessarily true. There’s a lot of high-profile executives that have left top tech companies because of family reasons. And even for ordinary engineers, if family on the opposite coast or in a different country becomes ill, they may move to take care of them, despite the lost income.

> If high-skill talent is rare their wages should rise

Not if wages already are high.

Not only is it terrible, but misleading too.

Google has 88k employees and had a $32B revenue last quarter. Let's assume 25% of employees are R&D, each paid $250k/y: Google would spend $5.5B a year on R&D, or 4.2% of revenues ; not quite a "large portion of their capital".

Comparing to revenue doesn't make much sense. If you look at profit margins they could easily be spending more than all of their profit on R&D.

Also, that's a rather low estimate for average compensation for devs at Google. If, as you mentioned elsewhere, the 25% number is a purposeful overestimate, then combining it with an underestimate of compensation means that your total number is murky; it could easily be a drastic over- or under-estimate.

That said, 25% is also an underestimate - in 2016 Google reported that ~38% of full-time employees were in R&D. So it sounds like you think you're overestimating how much they spend on R&D, but in fact you're way underestimating it.

Comparing costs with revenues is right. Profit already accounts for costs, and can be razor thin in very large companies with lots of costs - a comparison of costs with profit in such a company would be highly misleading.

I think you're right that comparing to profit isn't right, but I still contend that comparing to revenue isn't either. What I meant is looking at per-unit profit margins (i.e. excluding things like R&D) - if just producing whatever they're selling costs 99% of revenue generated from it, then 5% of revenue on R&D looks pretty high - they're drawing on capital to do so. If, on the other hand, those costs are only 5%, then they're stashing away an enormous portion of revenue despite R&D and thus they're R&D spend looks pretty low.

It's arguably Machiavellian: "Hey you, minimum-wage security guard, you know all these engineers you greet at the gate? Each one of them is making x5 your salary! Capitalistic pigs, eh?"

(But let's not talk about the executives you never see, coming in through private entrances straight from their private landing strips and making x1,000 your salary.)

> Let's assume 25% of employees are R&D

25% of people are researchers at Google? Are you saying that's what you think it is at the moment or hypothetically? Research is a tiny tiny proportion of Google's work.

"R&D" is what SWEs do. If you're developing anything new, such as a new software system, then you are doing R&D by definition.

"Production" is something like building the same factory that was built thousands of times before, to fabricate the same widgets that were fully designed by an R&D team.

The actual top researchers at a place like Google would be making way more than $250k.

I cast a super wide net to show how ridiculous the original statement was.

> Why waste 4 expensive years in college, if I can get the same pay as a janitor, straight out of highschool and without the student debt?

Because I’m smart and would be bored cleaning toilets.

From what people relate to me, many smart, intelligent people in the USSR would become something like the quintessential DMV worker. Yeah, they become scientists and mathematicians but the also learned to slack off massively.

To be honest, I haven't seen any article about wages on HN, where the highest-rated comment wasn't some variation of "this article is terrible".

If low skilled jobs paid the same as engineering jobs, I’d still prefer to invest my time into learning to become an engineer as the work is more interesting. I assume this would be the case with enough others too.

With that being said, the gap in pay betweeen low and high skilled jobs is unlikely to ever be 0, but that doesn’t mean it couldn’t be reduced in a way that would benefit all of us.

And who decided that reducing the pay gap "would benefit all of us"?

Different people put vastly different levels of effort into their careers. Who decides that they should now benefit equally?

Labour supply is not elastic like your naive market argument assumes. The lag is too long and people are simply not responsive enough to the incentives to change how they think to make themselves good engineers, which requires a particular mindset not easily taught, far more often discovered.

Nonsense. Look at the trends for enrollment in CS and engineering programs. They clearly follow monetary incentives.

> To improve workers’ wages across the board, the report calls for local and state government to support workers’ rights to organize, adopt better labor standards for subcontracted workers, increase taxes on corporate headquarters and provide affordable housing.

Nobody claims the solution is CEO-mandated "artificial" wage inflation, the report emphasizes the need for strong workers unions that can demand more equitable pay.

The problem is that the unionizing workforce needs to have some basic level of skill or expertise with machinery or the business process that isn't easily replaceable. That and they need to be legal citizens, which isn't always a given in agriculture/food services/landscaping jobs. And provide something that a team in India/Ukraine can't.

We are "here" (large and growing inequality) because our educational system is failing to emphasize and produce the necessary amount of high skilled workers that can replenish the middle class through the value of their skilled labor.

But more fundamentally we are here because the pace of innovation in technology is slowing to a crawl, there are hardly any new machines being invented in silicon valley that take new skills to operate and generate real returns to raise the average American's standard of living. Most of what I observe from startups is either garbage powered by the ad economy, solutions looking for a problem, or get-rich blockchain/AI/ML get-rich-quick schemes looking for an easy VC buck.

> Nobody claims the solution is CEO-mandated "artificial" wage inflation, the report emphasizes the need for strong workers unions that can demand more equitable pay.

The report suggested multiple policies to attain "wage equality", including increased taxation and forcing companies to increase pay for subcontractors. The result of such policies would be downwards redistribution: less pay for high-skilled workers, more pay for low-skilled workers.

I'm sure you don't think that "wage equality" means that janitors in SV start making $250+ like senior engineers. That is not sustainable. Any realistic solution would bring engineers way down, while lifting the bottom a little bit higher.

I'm not sure when "equitable pay" became a goal. In a healthy free market, people are rewarded for their effort in developing rare and valuable skills. As far as I know, a market in which the government actively intervenes to keep all wages equal is called communism.

If the government wants to take action, perhaps they should work to make SV more affordable for everyone, for example, by lifting ridiculous NIMBY restrictions that keep housing expensive.

All those "high paid engineers" still can't afford a home anywhere near SF. Somehow I doubt the solution is to cut further into their pay.

There are reasons to believe that the free market isn't healthy at all when it comes to labor. Low salaries for low-skilled labor enable companies to delay modernization, automation and other increases in efficiency. High salaries for high-skilled labor creates inflationary spirals for things like housing.

There is absolutely reasons to believe that equalizing pay, across companies rather than occupations, could be part of the solution. Less efficient companies underpaying their employees would fold. More efficient companies would get more money to hire even more people. Prices would stabilize, careers would likely be more predictable.

This was part of economic policy in Sweden in the ~1960s and as far as I can tell generally considered successful. Though it will, and did, also created large wealth inequality without other measures.

> Low salaries for low-skilled labor enable companies to delay modernization, automation and other increases in efficiency.

I don't see that modernization or automation have been kept back in the US due to unequal wages.

They are "kept back" until the exact moment they become cheaper than human labor, then they effectively take over.

> High salaries for high-skilled labor creates inflationary spirals for things like housing.

High salaries for anyone create inflationary pressures. In fact, high salaries for a relatively small group would do this far less than paying everyone more, as the article suggests.

I'm wary of government intervention in the market because every case I've examined deeply enough turned out to be a failure.

would you call federal and state-mandated minimum wages, which generally allow service and low-skilled workers access to a decent home somewhat near their place of employment, a failure?

high salaries create inflation at different rates for different groups of people depending on their marginal propensity to consume. if you give $5k to someone living on $20k vs $200k annual income, the $20k person is much more likely to spend most or all of that $5k on food, housing, etc. - variables that directly affect inflation. the $200k person may invest it or save it in a bank account, removing it from M0 and M1 so it doesn't show up in the inflation statistics, or in the price you pay for staple goods. this is a large part of the reason we're not seeing any inflation today even though unemployment is historically low - there are no wage gains going to the lower earners who have a high propensity to consume and spend.

there always has to be a balance between those who own the capital and those who work the capital for society to function. otherwise the free market functioning without any ethical or moral underpinnings would return us to slavery - ownership of other human beings as just another form of capital

> if you give $5k to someone living on $20k vs $200k annual income, the $20k person is much more likely to spend most or all of that $5k on food, housing, etc.

That would normally be the case, but I would argue that salary and housing has a strong connection in places like SV. People need to get a certain salary to be able to stay (and start a family) in the Bay Area. Which means that people have a high incentive to increase their salary and that some of those who don't have to leave. As overall the people who stay have more and more money the cost of housing increase, in turn giving people even more need to increase their salary.

That would all normally stop at some point, but since so many wealth companies centralize in the Bay Area the spiral continues.

sure, housing costs are extremely inflated in SV, definitely a reality

i'm talking about inflation and marginal propensity to consume at the national level. not sure what inflation looks like in SV - how much does your average fast food meal run you in mountain view?

i think it's also worth noting the effect of the internet on who owns property and where they are able to own and effectively maintain it. as well as the rate of return on real estate vs. market interest rates of "safe" investments and why the two have diverged so drastically

Fundamental economics are missing from our education system.

Supply and demand is a foreign concept to many.

> Why waste 4 expensive years in college, if I can get the same pay as a janitor, straight out of highschool and without the student debt?

I partially agree with the sentiment. However, I'd rather be intellectually challenged in a low paying role than bored out of my mind in a high paying role. Money isn't the only factor that goes through my mind as I look for a job.

The world simply doesn't work the way of naive economic theories.

One solution, that was common until neoliberalism became the defacto in the western world, was high taxes for the rich.

Neoliberalism has been an obvious bust, growth is anemic, wealth distribution is becoming civil-war causing bad, political corruption rampant, but because no-one else has a meaningful alternative we're all still stuck in this 'the rich getting richer means we all will' fallacy.

You have a nice story, but it's simply not true.

I don't understand the uncommented downvotes here. OP is provocant to make his point which is a valid one.

It IS pretty obvious that the raw, uncontrolled market is not increasing the quality of life for a majority of the population and arguably your luck (your family bought some hectars of land in SV in the 80s? Or even simpler: you were able to go to a good college?) is way more important for your economic situation than your own hard work. This is not healthy for society in the long term and if you are not closing your eyes you see more than enough alarming signs for wrong developments. Better to share some wealth with everyone than being constrained to gated communities and let everyone else fight for meager rest in my opinion.

This assumes that salary is all that motivates people. In fact people like to work on challenging and prestigious tasks, and not only for money. Salary aside, given the choice, would you rather be an engineer or a janitor?

> This assumes that salary is all that motivates people.

First of all, much of my argument is about the effects of one company paying more for the same work than its competitors.

The company in my example pays its engineers better.

So there's no assumption that these engineers would rather become janitors if it paid the same. There's a much more reasonable assumption that given equivalent work, they'd rather be paid more for it.

As for people flocking to professions with the best pay prospects: that is not only logical, but has been proven many times over, including in our specific profession. I can link you some curves if you haven't seen them already.

Of course, there will always be exceptions. But even then, it's not a reliable way to recruit thousands of hard-working employees.

If engineering paid exactly the same as being a janitor, some of the most brilliant candidates will take a part-time job as a night guards, and spend all their time reading calculus books or playing chess.

P.S. even brilliant people won't willingly go into $200k in debt to attend an elite school for engineering just to be saddled with that debt for the rest of their lives. They'll become night guards and spend their time reading physics textbook for fun.

P.P.S. anecdotal evidence: some of the most brilliant people I know studied physics or pure math in top schools, then switched to tech because it pays.

Being a corporate lawyer pays more. Watch now through amazing exodus of developers suddenly going into law...

Ah yes, that old argument.

Even Walt Disney was apparently shocked to hear that people were actually working for him to make a living and not just out of reverence for his projects.

(update) I misunderstood that comment. My apologies.

i like coding a lot more than i like sweeping floors, and i like sweeping a lot more than most people do. this doesn't imply that i would prefer to code "useful things" to sweeping floors. when i code in my free time i usually make weird 3D simulations to watch for my own pleasure. afaik, no one is lining up to pay me well for the things i actually want to do.

It could happen if those people unionized. I don't think the company would do it because its heart is so big.

Amazon's biggest R&D team of AI / facial recognition engineers is based in Ukraine. They make less than minimum wage in San Francisco. The point is capitalism focuses on keeping costs down over paying people what they are worth, regardless of their country or zip code.

Who should determine the metric of "what they're worth" if not the market? The engineers in Ukraine agreeing to work for the wages that Amazon promises them seems to me like a mutually beneficial relationship to me.

Yup, exactly. If the person in Ukraine didn't like their wage then they could always go back to the market and get a better wage.

Ukraine is a war zone - like Syria in 2011. there are 1.5 million refugees in Ukraine with no place to go - EU will not take them in and Russia is attacking them.

Ukraine is the poorest country in Europe - their economy was shattered after the revolution. Why is it so crippling?

Cyber attacks - low wages on the tech sector. How do you expect them to negotiate higher wages if they can't even leave the country safely?

> Ukraine is a war zone - like Syria in 2011

Um, no, not at all. The actual conflict is confined to fairly small parts of two provinces in the east of Ukraine, and even there it's mostly "frozen" at this point. If you're on the separatist-controlled parts, things are complicated, partly because of ongoing hostilities, and partly because of being governed by an administration that is not officially recognized by anyone, and that isn't really good at governing. So that's where the refugees come, mostly. But most of the rest of the country is not affected by the war in a way people were in 2011 in Syria. As in, no worries of enemy troops marching in and kicking you out of your apartment, no shellings, no bombings etc.

https://interactive.aljazeera.com/aje/ukrainemap/ukrainemap....

>> there are 1.5 million refugees in Ukraine with no place to go - EU will not take them

Fortunately, Poland is issuing 200k job permits for Ukrainians per year, which helps a little. Not to mention that there're twice as many Ukrainians coming to Poland illegaly.

> They make less than minimum wage in San Francisco.

Minimum wage in SF would be $30k. I very much doubt a strong AI researcher would be making less than that, even in the Ukraine.

Capitalism is just taking advantage of Globalization here. So if you're in favor of free trade and open borders, you're also gonna get low paid Ukrainian engineers.

Thanks I hadn't laughed hard enough today.