Dropping the threshold from 180k to 100k would cause everyone who has maxed out their salary at Amazon to have enforceable non-competes.
I'd be curious what types of jobs at Amazon were immediately under the 100k threshold, and what percent of the total Washington state Amazon workforce has a salary of 100k+?
For example, in our state, teachers and government employees receive a full pension after 20 years of service. That pension pays out 1/2 of some average of their previous few year's salary. Even if you retire making a relatively modest $60K/yr, that pension is still worth north of $50K/yr over those 20 years.
Salaries that don't include pensions aren't nearly as generous as they sound. $100K/yr without a pension is comparable to $40K/yr with a pension.
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1. Including absolutely incredible housing price inflation in major cities like Seattle which typical measures of inflation don't properly capture).
I don’t know the specifics of the examples you are thinking of, but pricing the pension value/cost at $50k a year probably posits some extreme assumptions (e.g., start and retire at lowest age, end with a very high salary, take pension with full value immediately, and live a very long time).
I think you would be shocked how much an annuity costs that pays out starting at <50 years (like police or other workers with very strong unions get). One million dollars saved up might get an annuity of $30,000 per year.
The post my original reply was to was for teachers and “general government workers”. I gave a typical retirement age for those folks.
Military, police, firefighters, and (iirc) prison employees are a completely different cup of tea. Unions are a part of it, but the element of danger is also supposed to be factored into their pensions (rightly or wrongly). They also can start getting paid as soon as they retire without regard for age (unlike many/most other pensions).
All that said, the reality is actually worse. Structurally those positions tend to give members of those groups a relatively-easy-to-get disability component to their retirement (which can often be huge). They also have functionally similar jobs with higher pay that are designed to goose up their salaries for the last x years that is used to determine their pension.
These pensions are completely out of control, imho. That said, the politics and optics around those jobs make them tough to change to a more reasonable level.
These types of pensions are completely different than that of a typical government worker that doesn’t work in these types of jobs — a complete apples and oranges comparison, imho.
The crazy benefits that people nag about are for uniformed folks only, as they tend to get overtime based on seniority, and don’t have aggressive caps. Most civilian employees like teachers don’t get anything like that.
The caveat to that is as of today you contribute 4.4% of your salary / year into the pension fund, in addition to 401K savings + social security. The Obama administration raised it from 0.8%.
Even then, sure, it's above median. My point is that it's still "normal middle-class average joe" money, not "basically an executive so there should be different special non-compete rules" money.
It may not "feel like it" but to be alleviated of financial burden and put away meaningful savings puts you above half the country outright.
Non-conpetes should be reserved for select few in the firm that know the secret sauce, and are paid well enough that a year on the beach will hardly affect their cash flow. Basically executive level compensation and responsibility. This clearly does not qualify.
https://www.immediateannuities.com/information/annuity-rates...
I’ll leave it as an exercise for the reader to calculate how much you would have to save in a 401K over 20 years to have that much at retirement.
When making these calculations, remember:
- lifetime annuity
- include death protection (at least in my state, surviving spouses continue receiving pension payments).
- Everything above $19,500 is fully taxed (...and, in fact, not including tax on that $19.5K isn't even an apples-to-apples comparison).
Anyways, you can add or subtract many tens of thousands to the annual salary equivalent and the point remains the same: without a pension, $100K is not "special person who doesn't need non-compete" money.
I don't know how to square this with 12 percent of salary I was contributing towards the state pension. Care to share your math? I agree that pensions are worth something, but not 150% of salary.
There is a big difference between money taxed and money saved, and calling money collected from Social Security “savings” is misleading.
The drawback of a capital-only pension system is that ever more and more "dumb money" gets locked into things like ETFs - and more and more shares of "safe" companies get owned by entities which have ... questionable interest in exercising their voting rights.
For example, take big oil or coal companies. Their time to live is limited, last but not least because the demand is going to dry up sooner or later. Normally, investors would shed off these shares or at least push the company to sustainable goals - think car companies here: the long term goal that's most beneficial to society is to shift to electric / hydrogen, while the short-term goal that's most beneficial to next quarter's benefit is to cut r&d and sell high-margin SUVs instead.
The other problem that locking huge amounts of money into ETFs presents is a bit more complex: as more and more marker volume is held by ETFs which have to track the base stock get into a precarious position. Assume a stock drops in value because of a large sell-off, bad news, a Presidential Tweet or whatever, the ETFs the funds have to follow... and sell off, creating a race to the bottom due to oversupply (and the other way around). That means that, as more and more percentage of wealth is gobbled up by "dumb money", the remaining traders gain undue influence since they can essentially force the hands of the dumb money.
And then there is the final drawback: a government backed pension scheme like the German one where current employees pay the pensions of current pensioners in exchange for the in-kind promise ("Rentenpunkte") will weather any economic crash as long as the government keeps existing. A capital-based system is in for a nasty surprise in a total collapse event. The 'rona was a warning sign in that case.
You're undercomplicating the story of Social Security.
1. The program was instituted with an eye towards applying to everyone immediately, not 30 years from now. You cannot hand out retirement benefits to people using savings that were never set aside; so the program was always pay as you go. Not necessarily a bad thing but considering the government has low borrowing costs, perhaps it should issue some low cost, long term debt to fund the program. On the other hand, investing on the margin like this is fraught, so /shrug
2. There actually was some investment made when the boomer population came around. They were putting in more money than their predecessors took out and thus we have a surplus. Those boomers are now retiring and drawing down social security surpluses has begun, leading to the '75 cents on the dollar' estimates we've seen
3. The actuarial estimate of the cost of running social security relies on predicting variables far into the future, many of which are affected by the rules of social security itself. Longevity in particular has gone up with time.
4. People on average are not great at investing. They buy high and sell low, they buy the dividend, they don't read the prospectus. They're not even great at saving; it's why we had to institute the SS program as mandatory. Folks pointing to their 401k strategy on HN ignores how the HN crowd is a highly biased sample of the population.
Anyways, even if it were equivalent to $30K, as others have suggested, I think that still speaks to my original point. That doesn't exactly hit my threshold for "wow you're definitely super duper well-paid so we should exempt you from non-compete rules because you're making so much damn money".
Or the employer stiffed the pension fund in the past.
https://www.immediateannuities.com/information/annuity-rates...
I think with 1.2mn you can get a better annuity than 20k/year
It’s probably more like a 100k job with no pension is comparable to 60-70k with a final salary pension
Sure, there might be an employer match, and your money will maybe grow over those 20 years, but unless there's a generous match and your portfolio grows, a lot of that gets eaten up by the 20%-30% taxes you're paying on that extra $40K you need to save. I mean, market returns were good between 2009 and 2019, but beating that tax burden of 20%-30% a year is pretty damn hard.
Also, your money might now grow over those 20 years. Especially the next 20 years. I don't think anyone has high hopes. "Past performance is no guarantee of future results". C.f. public sector pensions, which receive extraordinary protections and pay out the same whether the market is up 5% or down 30%.
The other not talked-about benefit is that a public pension is doing the investing and maintaining the financial discipline for you. Most people in the United States are not capable of this, as the savings rate has only been approximately 7%[https://fred.stlouisfed.org/series/PSAVERT], and 5 years down the road Once the Covid vaccine is developed and the economy has recovered it will probably return to those levels. Which brings me to the point that it is almost impossible for 99% of people in the United States to save 40k/yr. At a 10% savings rate this is someone making 400k/yr which is way above average even for FAANG companies. So government work might not be so bad afterall.
That $5055 is not much, under the Roth IRA limit and not nearly enough to pay the median rent for a 1br apartment in the United States At $1025/mo per month https://www.abodo.com/blog/2018-annual-rent-report/amp/. IMO it’s time to go full ubi and Soviet housing blocks as we are keeping way too much artificial scarcity in housing. This will only get worse and causes more social unrest as we are currently seeing the beginnings of.
Why? I’d rather pay government employees in cash rather than with future tax money from my kids as the politicians and government employee unions will undoubtably understated benefit costs and underfund it.
well 2 factors..
1. Most people care about TODAY not tomorrow, this is reflective in all kinds of metrics related to personal fiance
2. Many people do not have kids, including myself, so I am not sure if I care they paying with things with YOUR kids tax money instead of my tax money
You seem to instead mean something like "prompts the question" or "brings to mind the question"
Language is a lot more nuanced than a freshman philosophy major’s Logic 101 textbook.
"literally"'s conversion to meaning its opposite represents a loss of meaning in the language; expressiveness dulling into useless ambiguity.
"begs the question" isn't a term that expresses the underlying idea effectively, it merely indicates a failing attempt to sound educated.
In either case, I prefer to educate people on how to use language less dismally. This does make me a pedant.
I prefer this discussion of the meaning of the term: https://languagelog.ldc.upenn.edu/nll/?p=2290
Further where compound interest limits the impact of savings very close to retirement, pensions are more closely linked to your final salary.
Early on compound interest often wins, but at 40 getting a government job can be a very good financial decision.
Also, medicare doesn’t have a cap and is also ignores your 401k.
Is this a tax? Is it materially different from the universe today?
Social security is an investment, you should consider it as such when budgeting for retirement.
The spouse of a young worker can also receive benefits assuming they have children. But, that’s very much a social program effectively independent of how much money the worker had paid into SS though not their income.
Supplemental Security Income (SSI).
The SSI program pays benefits based on financial need and is intended for low income individuals and families.
If SS taxes where not paying for that money then it would need to come from the general fund. Similarly, with SS doubling your income from 50k to 100k doesn’t double they payout at retirement age. Instead, money is being shifted to support the less fortunate. Further, a married couple with one worker get’s a 50% larger payment than if that same worker never married.
In the end social security doesn’t act like a self funded retirement program.
No, I they can be much higher than 50%. I think the NFL does a 200% match.
There is a $56,000 total limit though of employee + employer contributions. So assuming that an employer wants to do the max match that still has the employee contribute 19500, then that employer should have a (56000-19500)/19500 = 187% match.
I'm sorry, but what? Rent or Rent equivalent is absolutely a part of US regional inflation measures.
edit: The BLS publishes a Consumer Price Index published by for Seattle metro area^1. The breakdown^2 quite literally includes housing as part of the basket of goods, listing about a 3 percent increase for that section yoy, and I believe the weighting is typically 1/3 of the total index. Seems like it's capturing it just fine?
^1 https://www.bls.gov/regions/west/news-release/consumerpricei... ^2 https://www.bls.gov/regions/west/news-release/consumerpricei...
EDIT: And rent is part of the national CPI as well. It just doesn't reflect narrow regional trends because why would it? Those are outliers, and not particularly relevant national news media, and even those news stories that do cover it would use the more specific Case-Shiller indecies to tell the story.
I don't understand - are you saying that Amazon pays nobody in Seattle more than $160k? I can't believe that's true. How are they employing competent senior people for so little? Are they paying their corporate lawyers that low?
I'd guess they have some leeway make exceptions to the cap, and I have no idea if it applies to management track positions.
It's still kind of amazing that so many people go there, I guess it's that great big top line number when you add in stock. I know so many people who left there before 2 years, cause they hated it so much. What are the places that don't suck there?
There is no clawback - I checked my paperwork. I think one of my friends told me that he did get part of his bonus when he was first hired. In that case there would probably be a clawback.
A friend hired as an SDE II at the same time had a higher sign on bonus, not paid as a lump sum, so no clawback.
If your total compensation is something like a quarter of a million as an Amazon engineer does that mean you have to live much more frugally for your first year until you get your bonus and shares?
5% in year 1, 15% in year 2, 40% in year 3, 40% in year 4.
This is unfavorable compared to other top-paying tech companies, however Amazon may offer a sign-on bonus for years 1 and 2 to help even out the total annual comp.
Aaah, I see how it all works together then.
On the other hand, AMZN stock has done much better than Facebook, Google, Apple over the last five years, so at least they have that.
Yes, but you don't have to work at AMZN to buy their stock. And RSUs are just another name for 'cash compensation, that was immediately spent on buying company stock'.
I think I heard that Amazon bases future grants on the assumption that the stock price will increase 15%. But I can tell you that my salary+bonus+RSU when they made an offer was based on the stock price not changing.
The same goes for the sign on bonus, they ignore the bonus portion of comp unless there is two years of history and an expectation that it will continue.
Source: I have been at Amazon for 2.5 years and checked with a LOT of banks.
They look at what they can verify on your taxes. So let’s say you made $350k at Amazon last year, that’s all they really worry about. Doesn’t matter if only half of that was salary. They’d still consider your income as $350k and use that to approve whatever amount you’re looking to borrow.
If you just started at Amazon they wouldn’t be using your income to verify anyway. They’d want your previous work history going back, in some cases, 5 years.
Year one comp was about $520k (160 base, 320 bonus, 40 RSU)
Year two comp was around $580k (160 base, 280 bonus, 140 RSU)
This year I’m on pace to gross near $700k (160 base, no bonus, 500+ RSUs)
Stock comp wouldn’t be excluded in any kind of limit anyways.
In what world is that "just ok"?
2. People who are there previous five years are quoting their TC w/ current stock prices, people who recently onboarded do not have the same strike price and will be less.
3. Golden handcuffs, and apparently non-compete.
It sounds nice on paper, but spend some time in Downtown and go to a few Amazonian bars and you'll figure out alot of the downsides. Especially if you're at any of Amazon projects that aren't really..working e.g. Blue Origin.
Lobbying is legal in most (all?) of Europe too. It's a slippery activity to pin down, not amenable to banning because it consists of nominally innocuous activities. You can put degrees of limitation on activities that reduce what you'd call lobbying, but I don't see how you could make it fully illegal.
The bad, and frankly unbelievable part, is the whole "money is speech" and the fact that it's OK for lobbyists to just transfer money in many different forms to politicians as a firm of persuasion to vote for/against certain pieces of legislation.
The first term is that it is unenforceable:
• Unless the employer discloses the terms of the covenant in writing to the prospective employee no later than the time of the acceptance of the offer of employment and, if the agreement becomes enforceable only at a later date due to changes in the employee's compensation, the employer specifically discloses that the agreement may be enforceable against the employee in the future
or
• If the covenant is entered into after the commencement of employment, unless the employer provides independent consideration for the covenant.
The second term is that it is unenforceable:
• Unless the employee's earnings from the party seeking enforcement, when annualized, exceed one hundred thousand dollars per year.
The third term is that it is unenforceable:
• If the employee is terminated as the result of a layoff, unless enforcement of the noncompetition covenant includes compensation equivalent to the employee's base salary at the time of termination for the period of enforcement minus compensation earned through subsequent employment during the period of enforcement.
So...if you earn more than $100k, and you were properly notified of it when hired (or paid to accept it if it was added on later), and you are not leaving due to a layoff or they aren't willing to keep paying you while the noncompete runs out, then it might be enforceable.
Adding some context: as I understood, L1B is a "transfer" visa for "existing" employees, which under "existing" often mean record of employment being outright forged, or being put on very low key position with explicit intent of later L1B transfer. L1B is supposed to be of lesser value than L1A, which opens much more options for an employee/corporate serf to away.
I believe the change is due to the later being a much easier door to US for a lot of people from low income countries where Amazon runs captive outsourcing centres. They didn't want people to scout for another, better jobs around the moment they stepped into US, even if that mean the next hiring company had to do its own L1 for them.
All L1 visas are internal transfers; they require extensive documentation of the role being performed outside the US for an extended period, and tie you to a specific set of responsibilities in the US; and they are not transferable once in the US - you can’t move to an L1 at another company, because you haven’t worked for that company outside the US. THe difference between a and b is just the kinds of roles that are eligible for transfer.
If you are on an L1 and you quit or are dismissed, you lose your immigration status and have to leave the US.
Since it’s much easier to get hired and potentially get sponsorship from within the US, So I’m guessing this is why Amazon added the non-compete.
Green card application takes forever and is never certain. It will take years, all while you have to stay with the same employer (unlike with H1B visa). And if you are an Indian national, then it goes from "multiple years" to "closer to a decade or longer".
As for "through sponsorship", this has nothing to do with L1. "Sponsorship" means finding an employer that would be willing to file for an H1B visa for you. Whether you have an existing L1 visa or not has no bearing on that process. It is no easier for another employer to file for H1B visa if you already have an L1 visa. Finding a company willing to sponsor your H1B is the exact same process and difficulty with L1 visa as it is without one.
Overall if you come as an executive or managerial staff or are promoted to one within your employment you have a fairly easy green card to attain that H1B and many other visa holders don’t.
As for the rest don’t underestimate the value of local networking and recruitment.
https://www.upcounsel.com/non-compete-california
I remember Apple and Google getting into trouble over non-compete several years back.
Plus we're really talking about processes on different scales. Individuals moving elsewhere doesn't say much about the pace of creating companies to pursue novel innovations.
I'll also note that CA not having non-competes makes it easy for people to leave and start companies elsewhere. The real question is whether those new companies will create dynamic local scenes of their own, in the same way the Fairchildren did here. If they don't, and if Silicon Valley keeps being a hub of innovation, that's a great sign that banning noncompetes still matters.
1: https://en.wikipedia.org/wiki/San_Francisco_housing_shortage