[captain_perl]

"The reason people are quitting today is because the labor market is so competitive that the only way they can get a significant increase in income is by quitting and going to another job."

Well, no, the opposite is true. Employees have to quit because companies stubbornly refuse to be competitive on salary.

The reason for that is mismanagement - managers and HR would be personally criticized for "being soft" if they offered raises, regardless of the benefits to the company of doing so.

[kraftman]

I've seen this so much now that I feel like I must be missing a piece of the puzzle.

You work for a company for X amount of time, and you gain domain knowledge of the company, and general industry experience. Some other company looks at your CV, and without knowing you, and probably without caring about your specific company domain knowledge, decides you are worth say 20% more than you are earning. You then go to your current company, and say 'my general skills are worth 20% more on the market, you know how well I work, and you know I have extra domain knowledge specific to this role, I would like more money' - and the company refuses.

They then spend time and money finding someone with similar skills to what you have, but without your domain knowledge, and probably at a similar amount you asked for since that's the market rate.

How is it not in the companies best interests to just keep you on and give you a raise? How do they justify all that wasted time and money every time? Do they just not measure it?

[gjm11]

Suppose salaries are going up, and the average person at FooCorp could get 10% more by changing jobs. You are more underpaid than most; you establish that you could get 20% more by moving, and say to your manager at FooCorp that you'd like a 20% pay rise.

Suppose they say yes. What happens next: other people hear about it and go to their managers saying "I think I'm underpaid; give me a 20% pay rise". If the answer is yes, then FooCorp is paying 20% more in salaries for the same work as before. If the answer is no, then those people have a concrete motivation to go and interview elsewhere, and probably a bunch of them will then leave even if they get counteroffers at FooCorp once they've demonstrated that they could earn more elsewhere.

Suppose they say no. What happens next: most likely you leave for that better-paid job; others at FooCorp hear about this and understand that they aren't going to get paid more at FooCorp even with a job offer in hand. Some of them will decide to move, but maybe fewer than in the first scenario (because they haven't had the specific motivating experience of asking for more money and getting turned down, and because they don't feel like they have the lower-risk option of interviewing elsewhere, getting a counteroffer, and thus being paid more without having to move jobs). And the ones who don't move can go on being paid less.

It's not obvious to me that the first of those scenarios is better for FooCorp than the second, if all they care about is maximizing their profits.

[kraftman]

In the first case, if you think the person deserves the extra money and give it to them, you keep your best people. If other staff ask for the same, you can either give it to them if you think they deserve it, or risk losing them to elsewhere. The end result is you always keep your best staff, and potentially lose your worst staff.

The second scenario, you always keep your worst staff and you potentially lose your best staff.

[tomp]

Maybe from company perspective, there’s no such thing as “10x engineers”, but only “1.02x engineers” at most.

[noonespecial]

You're granting them way too much introspection. In reality its goes more like:

"Company policy is that raises are no more than 2.5% per year with a perfect yearly review. You got your 2.5%. You can't have a raise." Umm I'm about to leave and get 30% more from your competitor! I know you don't want that and I don't want it either. Surely... "Company policy is that raises are no more than 2.5% per year..."

[gjm11]

Of course! But the question is why there would be a policy of no raises above 2.5%, and I think the reason is the sort of thing I describe.

In response to others who said "this is a good recipe for losing your best people": yeah, it might be. But if you don't believe your best people are dramatically better than the rest, or if you think that actually your best people aren't the same as the people who will go shopping around for higher pay elsewhere, maybe the calculation works out differently.

Also, for the avoidance of doubt, I'm not saying that this is good on balance. Only that it's not so hard to understand how a company might arrive at that sort of policy while trying to maximize its performance.

[Latteland]

the answer is that company policies like only small raises are dumb ass, and are clearly bad for the company. We all know if someone knowledgeable leaves, it will take time for the new hire to ramp up, and replace an existing good person. For that reason we should try harder to keep them. But higher up the ladder, people look at stats like average pay - it's much harder to measure productivity than average pay, that's why pay is used in stupid ways, in negative incentive ways.

[pnathan]

Managers need to evaluate the strength of the claim of the experienced person - are they really underpaid? Has the person done their homework?

I've had those conversations and they've worked out positively for me, but I've spent time building rappour with management, along with very carefully gathering data sources, cost of living shifts, and current income.

If I just rolled up and asked for money, I expect I'd be shot down, and laughed at after I left the room...

[Pfhreak]

As a software manager who has both approved and turned down raises, pnathan pretty much nails it -- you need to bring data to the table. Are you underpaid? What's your target? Why now (what work have you completed that helps me sell this upwards?)

Expect it to be a conversation, but it's a healthy conversation to have with a good manager -- we can't help meet your expectations if you do not communicate them to us!

[patagonia]

Companies rarely hesitate to pile on more work or responsibility often with zero conversion. If I can provide data and examples of work I’ve recently finished to support my request for a raise, the flip side of that is the company is already getting that value, and is happy to continue receiving that value without paying for it. It’s absurd that companies try to justify not giving out raises because the employee is not making their case. If a company gives me more work and responsibility, they have already made my case for me.

Plain and simple. It’s the asymmetry of power in the relationship that is causing all this. The power dynamic is in the employers favor and the employer exploits that. Historically. Currently. Systematically.

[Pfhreak]

> It’s absurd that companies try to justify not giving out raises because the employee is not making their case.

There's a subtle difference between this argument and what I said. I said, "If you want to make your case, then you need to bring data." not "If you want a raise, then you need to make your case."

[sjg007]

I think the typically way they address this is by promoting people. This is why you have subroles in a job. e.g. soft. eng. I, soft eng II ... You can have yearly and even mid term promotions as well. The promotion aspect of it saves face for everyone. So you go to your boss or you talk about promotion opportunities, you may even talk about the market. This is especially relevant when your company is hiring. Then you see how it goes. Eventually if you don't get the raise or promotion you leave.

But a really good reason to switch jobs is to increase the size of your network.

[christophilus]

That logic is a good formula for losing your most employable employees. Those that can hop will. You’ll be left with the bottom of the barrel. Doesn’t seem reasonable to me.

[gaius]

and you know I have extra domain knowledge specific to this role

Funny story, at a previous employer people who had been there 10+ years, would always say, it takes 3 years to really hit your stride in this company. They meant the time taken to have made the contacts and established the reputation that you could really be effective, be trusted with important decisions, and so on. It was a vast company and operated on multi-year cycles was a large part of the reason.

But the average tenure of an engineer at this company was 2.5 years...

[usrusr]

One missing puzzle piece perhaps: the importance of HR departments grows with a rising number of open positions.

[gaius]

Another missing piece: HR people don’t get big raises for moving jobs and they don’t see why anyone else should either

[xauronx]

And the older middle managers get salty because they had to work for 20 years to make $120k so why should you get it “so young”?

[nil_pointer]

I don't think this is true

[pmiller2]

Is this actually true?

[Alex3917]

> How is it not in the companies best interests to just keep you on and give you a raise?

Better to be less profitable than bankrupt due to lack of cashflow. Mark Zuckerberg would have been a great hire for any company even at a salary of a billion dollars a year, but any startup that hired him for that salary would immediately go bankrupt.

[kraftman]

This is assuming that they hire someone else to replace you, which is usually the case, so they're only saving a couple of months of salary, but now they have less staff developing the product, the staff they have are busy doing interviews, and they then have to pay a recruiter fee.

[swagasaurus-rex]

This is the real answer. Companies have been stubbornly refusing to grant raises in line with market rates.

It makes sense on the balance sheet. A large fraction of employees (33% if we take the article at face value) are unwilling to exercises their market options, and will stay at a company that underpays them.

The rest leave for greener pastures, and are replaced with new hires that are paid as much as a promoted position would be paid. But this way, companies can hold on to those 33% that never see a raise that exceeds inflation.

Large companies don't factor in things like loss of domain expertise, retraining, or loss of productivity due to hiring in their spreadsheets. So they will continue to do this and the only way to negotiate a true raise will be to leave; or threaten to leave.

They hope you'll just be passive.

[0x445442]

Domain knowledge? Heck, at most of the places I've worked they don't even do a cost benefit analysis on whether or not the dev costs will produce a positive ROI.