[j05ev1f3]

The whole article rests on this false economic claim, that traditional industries don’t overhire based on expectations. They absolutely do, ALL THE TIME. Manufacturing, automotive, airlines, energy etc. all of them make demand bets and lay people off when those bets fail.

Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work.

It’s incredible how some engineers assume they understand economics, then proceed to fail on some of its most basic premises. This tends to happen when engineering-style certainty is applied to systems that are driven by incentives and uncertainty.

[Bayramovanar]

I will avoid getting into a “who understands economics better” debate.

But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning.

By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations and unwind just as aggressively when those expectations change.

[brk]

Factory overhiring can happen easily by adding speculative 2nd and 3rd shifts. No need for extra equipment, tooling, or physical capacity.

Lines with specialty equipment and tooling can also often be sped up. That can allow for other jobs to be added to all the functions that support the processes involved before and after the specialty equipment.

New employees also often require training and some apprenticeship time, meaning they can get hired ahead of actual demand.

[Bayramovanar]

I am really not debating whether over hiring is possible in factories.

in tech cost of hiring is lower which makes headcount a much easier speculative bet and layoffs a much easier reset when the bet fails.

[rpdillon]

The 90th percentile of factory workers makes $45,000. The 90th percentile of software engineers makes $230,000. Hiring in tech is insanely expensive; I'm not familiar with hiring in factories, but it can't possibly have the supply problems that tech workers have. I do on average 115 interviews for every person I hire in tech.

[paulnpace]

That $45,000 factory worker is often operating a $1.5 million piece of equipment with $10-50,000/hr of materials going through it.

It's an entirely different cost structure.

[paulnpace]

There exists greater issues in hiring for manufacturing when it is for new shifts. Master level technicians and foremen willing to work those hours can be exceptionally difficult to find, and everything flows out of these people. While similar issues likely exist relating to discovering talent for software development, I speculate that the factory will, in practice, have a harder time finding people (for new shifts).

My experience with seeing new shifts added is initially with only specific processes, and even with those it is with journeyman level technicians running a small crew to support relieving a bottleneck in production.

Alternatively, manufacturers can outsource until they have enough volume to add a shift, but across the economy the net is just transferring production from one facility to another.

[blenderob]

> By contrast, engineers mostly require a laptop and company hoodie.

Alas, gone are the days when engineers too required specialized equipment like a desktop computer on the desk that you couldn't move with you. Every evening, you left it at office and went home to live a 100% home life. Alas, gone are those days.

[bitwize]

I was a contractor for a FAANG. My immediate cubicle neighbor liked to work out on lunch break, and to hang his sweaty, smelly gym things on the framework of his desk to air dry when he returned. I would've KILLED for a laptop I could take to the complimentary office café so I could get something done without holding my nose. If I were a full employee, I could just ask for one. Alas, as a mere contractor I was something less than a person, so I had to remain tethered to my desktop per company policy.

[steve1977]

I mean, if killing was an option, getting rid of the cubicle neighbor would have solved the problem as well.

[zrail]

Maybe for some. I've worked from home for 15 years and a huge thing that I've learned is that I have to have a hard physical boundary. My work laptop stays at my desk unless I'm on call and actively fighting a fire. When I want to use my desk for non-work things the work laptop gets put away.

[QuiEgo]

Crunch time in those days sucked. I remember mandatory nights and weekends and the managers ordering in pizza for everyone.

[aleph_minus_one]

> But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning.

> By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations and unwind just as aggressively when those expectations change.

Software engineers also need

- specialized machinery (at least when they have to upload to some computation cluster or cloud), think for example of the costs for GPU/TPU clusters for AIs at the moment

- tooling: depending on the sector, the license costs for the sector-specific business software can be similar as expensive as specialized machinery

- mental capacity (instead of physical capacity)

[re-thc]

> By contrast, engineers mostly require a laptop and company hoodie...

> That low marginal cost

Not true. That's how everything falls apart. Scaling software teams isn't simple. There's lots to account for. Do you just assume everyone commit to the same file and let it crash?

The more people, the more work is required to standardize, organize, document and fix gaps. You can say you're already at scale and things "should" be done but they never are. You hire a team into a specific area to find it was a giant hack supported by a part-timer and as you try to fix it the problems keep escalating.

[AnimalMuppet]

What's the cost of a programmer-quality laptop, with two large monitors, plus licenses for all the software that they need? That's 2-3K.

Does anyone know what the typical tool cost is for a factory worker?

(And the tool cost for a factory worker can be zero if you're hiring for a second shift - they would use the same tools as the first shift, just at different times. In contrast, I don't think there are very many places that ask programmers to use the same laptop in shifts.)

[arter45]

>Does anyone know what the typical tool cost is for a factory worker?

It's probably lower. Apart from safety gear like helmets and gloves, everything else is most likely reused across shifts or shared across workers simultaneously (think industrial machines).

[Bayramovanar]

they even cut costs by leasing the computers...

[gdmka]

I'd add that companies write off their equipment investment over a 3-5 year depreciation period. After that, when the laptops reach EOL, employees can often buy them through the company's EPP (employee purchase program) usually for just the fair market value, which might be a couple hundred € or sometimes even less.

So, eventually they recoup the equipment costs, wouldn't get surprised if they even make a profit out of it sometimes.

First thing they do, they write off VAT (20-23% of laptop price). Then at the EOL, they just set the EPP price to the higher market value. And return the cost.

[BobaFloutist]

VAT doesn't exist in the US (and sales tax, which we do have, is more like 5-10% of sale cost), so are you talking about something specific to tech companies in Germany or the UK or something?

Not that everything has to be about the US, but it's weird to make a claim about the tech market as a whole that doesn't apply to its biggest single region.

[gdmka]

Yep, I've used the € sign for a reason, to make sure people won't get confused.

The article goes into considerable detail about the EU tech industry. My comment relates to that context.

I also want to note, that EPP isn't the correct term here. For US, EPP would mean Manufacturer Employee Purchase Programs for New Products with a discount. Like, if you work for HP, you can purchase a product it manufactures at a discount price for your personal use.

The EU practice that I was mentioning is called IT Asset Disposition through employer to employee disposal program[0]. I don't believe big companies in the US get involved in employer to employee ITAD for lots of reasons. But in EU, it's a thing, much to my surprise.

[0]: https://www.mddp.pl/disposal-of-used-equipment-by-an-employe...

[ThrowawayR2]

Is that common? I've never worked at a corporation that had an EPP for EoL computer equipment. It always all went to a specialist recycling/refurbishing business.

[AnimalMuppet]

I don't know about "common", but at one place, when they were retiring my machine, I asked if I could buy it, and they agreed. (Of course, for that to work, you have to be there long enough that they replace your machine...)

[gdmka]

Throughout my career I’ve run into this approach a couple of times. All in all, it’s a fairly unusual practice—I was surprised myself.

[_m_p]

The low marginal cost also means that the job market is easier for software engineers in times when expectations are optimistic.

[thunky]

This, and I would also assume it's easier to spot idle factory employees, where idle devs (especially remote ones) can be easier to miss.

And, (assumption again) the factory boss doesn't have an incentive to increase idle worker numbers, where a dev manager often benefits from being in charge of a larger number of hardly working people.

[silvestrov]

It is a lot easier for a software engineer to overcomplicate things.

All of a sudden it is no longer enough with a few shell scripts. No, we need a full kubernetes cluster to run a service used by 10 secretaries.

No, we can't just use PostgreSQL as a queue, we definitely need Apache Kafka for 1 msg per second.

[Propelloni]

This only holds for companies that do not have to comply with some regulation or standard, e.g. ISO 27001, to do business. Especially infrastructure, banking, and defense tech have high compliance requirements that also, and sometimes esp. cover software development.

[lumost]

Tech companies also benefit from over hiring. It gives them slack to absorb crises, and Fast Fuel to move quickly on new growth. Eliminating the fear of layoffs allows employees to take more risks and explore.

The current crop of tech companies cutting staff is going to lead to a large number of dead giants. The staff who services the layoffs will be risk averse, and defensible in a job cut situation. You see this in legacy firms where it takes 10 people to make a change because each person has a small slice of permissions required to effect the change. This pattern is by design as laying of any of the ten people on different teams would kill dozens of critical business processes.

This is not how you make high growth firms.

[palmotea]

> It’s incredible how some engineers assume they understand economics, then proceed to fail on some of its most basic premises. This tends to happen when engineering-style certainty is applied to systems that are driven by incentives and uncertainty.

Software engineers are stupid, often because they think they are very smart (which breeds arrogance). And on top of that, they often have many biases that they often fail to account for (e.g. a preference for neat-and tidy-systems, leading them to get seduced by oversimple neat-and-tidy explanations, e.g. Econ 101).

[rcxdude]

There's also this tech exceptionalism/grass-is-greener bias where software engineers especially tend to romanticize other industries and professions.

[JKCalhoun]

My take is that the traditional industries you mentioned (manufacturing, automotive, etc.) are making expectations on the market for what it is they're selling. With tech though, it makes expectations on markets that are brand new, or don't exist, and/or have no proven track record whatsoever.

And with that, VR would like to take the microphone and have a few words…

[fuzzfactor]

The title could be re-stated:

The economy is screwed, tech is just the scapegoat.

People who already had plenty absorbed the cheap money, until there was basically not enough value left to go around for consumers to be able to carry on the way that was expected.

>this isn’t a tech specific "failure",

Nope, looks like every "market" has become more nonideal, and the more "financialized" they are could be what's making certain markets worse.

Not every job is actually on a "market", some are deep in and others not so much.

In the old days people held on to their jobs for so much longer that it's a really big difference when the actual "job market" in so many areas was virtually insignificant compared to 21st century rambling as the norm.

Regardless of pay, the more your job is part of a market, the more you would be subject to market forces beyond your control.

Markets are "always" irrational except for those times when they are neither in your favor nor against you. If a neutral situation holds for a period of time, that can be negotiated with a more "straightforward" approach than when volatility is the dominating factor. People might think with almost "engineering-style certainty". Once there are wild swings, it can be like a sine wave where half the curve is positive and the lower halves are negative. It still balances out to neutral but you may not know where you are at any one time. Every positive excursion will not last very long and be followed sooner rather than later by a negative equivalent in some way.

With a significant cycle occurring, then the only truly rational, neutral times are those brief zero-crossing events when the market reverses from favorable to unfavorable or back again.

If your only real opportunities occur when the market is in your favor, then you are dependent on the market being irrational which you need, but is about as uncertain as it gets. Opportunities like this can reverse more easily than the mainstream where they more often merely fade.

[WalterBright]

> It’s incredible how some engineers assume they understand economics

I would say most engineers. The reason is simple - basic economics is not taught in the public schools, and economics/business is not a required course for an engineering degree.

One of the best classes I ever took was a summer class in accounting.

[Imustaskforhelp]

> It’s incredible how some engineers assume they understand economics, then proceed to fail on some of its most basic premises. This tends to happen when engineering-style certainty is applied to systems that are driven by incentives and uncertainty.

Dunning Kruger effect, am I right?

We consider we are smart because we can make computers go beep boop so we know about the economy too. I mean, I am part of this too even though I (or we all) know the effect but I guess my point is that there should be an humility if we are wrong.

I can be wrong, I usually am. If someone corrects me, I would try to hopefully learn from that. But let's see how the author of this post responds to the GP's (valid, from what I can tell) critique.

Edit: Looks like they have already responded (before I wrote it but I forgot to see their comment where they said that its not at the scale or frequency we see in tech)

[boh144]

The scary part is when people who can make beep boop, and because the market has rewarded them for it, think they can skip the entire corpus of the humanities yet put forth opinions on how to shape society.

[thunky]

> We consider we are smart because we can make computers go beep boop so we know about the economy too

Funny, the person you are agreeing with made the strongest "I know more than you" flex than anyone.

[cyberge99]

They typically have an elastic workforce padded with several contractors or temp workers that can expand or contract based on market conditions.

[queenkjuul]

It's incredible how engineers of all stripes assume they know all sorts of things they don't actually understand

[dang]

That's a property of human beings in general. It's also a nice example of how sometimes a conundrum goes away when you make it more general.

That is, it seems incredible (going back to the GP) that engineers assume they understand economics when they don't. It's somewhat less incredible (applying your formulation) that engineers assume they understand things they don't. While it may still be incredible that engineers are so assumey, at least we no longer need to marvel at their assuminess about economics.

If we go one more step and state it as everyone assuming they understand things they don't, it's no longer incredible at all. What would be incredible is if anyone didn't.

[lenerdenator]

> Cheap money amplified this cycle,

This is more-or-less the rub.

Fortunately we had a kinda-sorta sane monetary policy under the Biden administration once the pandemic started to ebb, but now we've got Mr. Appearances trying to push Jerry Powell to make stupid mistakes.