[lukeify]

> A senior engineer says “I want a 40% raise or I’m leaving,” and the company’s ability to respond depends entirely on what their alternatives look like.

Except where I live there's a glut of people wanting any job they can find—for a variety of reasons ranging from high levels of immigration to layoffs in the last two years—and willing to accept discount rates because the alternative is being unemployed for another 3 months (New Zealand).

Both the employer and employee know this. So the employee is either foolish or risky enough for asking and gets turned down, or they do actually leave and the employer can hire a new senior engineer at below market rates to accommodate the specific learning they have to do for their new role.

End of story.

[SR2Z]

> and the employer can hire a new senior engineer at below market rates to accommodate the specific learning they have to do

It sounds like what you're saying is actually that the last engineer was being paid above-market, because the price that employers are paying new employees is literally the market rate, seeing as it's the rate in the literal market.

[jjmarr]

> the price that employers are paying new employees is literally the market rate, seeing as it's the rate in the literal market.

I want to drill this into anyone that throws the word "below market" or "above market" around.

If a company pays below-market, it won't be able to hire anyone. Either the role will remain unfilled, or the employer will have to compromise on experience.

If someone is claiming to be paid below-market but the company can hire their replacement, then they're not being truthful.

[piskov]

Hiring the replacement ≠ finding the same or better replacement.

Will you be able to find someone in this economy? Sure

Could you fill the shoes? Much harder. Especially in the age of bootcamps, AI to complete exercises, and what have you where people went into IT for the money and not for the love of the craft, tinkering and learning.

So this is not an oxymoron: you can have 200 applicants and not a single good one to replace someone with them.

[jltsiren]

Only in a market with perfect information. With imperfect information, the market rate is an estimate of the expected or typical rate for a similar good. Because everyone has access to a different subset of the information, everyone's estimate is different, and companies often end up paying above or below the consensus rate.

[SR2Z]

Yes, this is how markets work. You don't need perfect information to have a market. The price of risk is factored in.

[pseudohadamard]

That depends on the country. In the US where everything is tied to stock options and employees will jump ship if they get 50 cents an hour more next door, that may be the case. In Aus/NZ you don't have that kill-yourself-for-your-stock-options-and-then-leave culture, if you're not on a barely-subsistence wage where you don't have any choice then people will look at job satisfaction, ease of travel to/from work, and so on alongside what they get paid. I know several guys who have turned down jobs that paid five-figure amounts (this may be a two-figure amount in the US) more than they were currently earning because they were quite happy with their current work environment. Good work environment, laid-back management, the company looked after you (rec room, pool table, beer fridge, after-work gaming, being able to tell the mgt that something wouldn't work and they'd listen to you, etc), not because they saw it as a leash but because they believed in looking after their employees. Some of those guys, and their coworkers, have been at the same company for 20-30 years.

[SR2Z]

In AUS/NZ you're not going to earn even close to the same amount as you would in the US. Every time I've changed jobs, it was for an extra 100k+ per year. The rec room/pool table can't compete with that.

My current manager has been with the company for almost 20 years. He doesn't feel the need to leave because his stock options have made him a multimillionaire. The company doesn't care about him or me, but we're both happy to stay because we don't need them to. We just need them to pay us.

[Ferdinandpferd]

No, we are not talking about a commodity market with a clear exchange. If an employee is bad at a negotiation or doesn't look around then they may accept a lower salary than another market participant would have offered and if neither side looks around, and is willing to pay some costs of a change then they are making a salary that is different than the current market rate.

[dublinstats]

I'm not an economist but that implies the market maintains some kind of optimal equilibrium price. The reality probably is very noisy like with everything else. Plus there's asymmetric information on both sides meaning people don't get what they think they do.

[cjbgkagh]

Poeple are not fungible, who’s to say that the individual replacing them is of equal value.

[jjmarr]

People are not fungible but the role frequently is.

You could be an AI infra genius, but if you're in a cookie-cutter consultancy role, that's the salary you're getting.

[cjbgkagh]

The role is only ostensively fungible because the org acts like it is, to its detriment. Staff turnover is crazy expensive.

It’s a lemon market with a power play dynamic, one of the main reasons I’m self employed.

[Obscurity4340]

> If a company pays below-market, it won't be able to hire anyone. Either the role will remain unfilled, or the employer will have to compromise on experience.

Or they lobby the government for slaves

[lukeify]

This is pretty much what's occurring in New Zealand right now, yes. 2020–2023 had pretty much zero international movement due to closed borders with COVID-19, with a low official cash rate which caused business to be in desperate need of development resource; so salaries were high.

Market rate for developers has either stagnated generally or depending on the role dropped as hundreds of applicants are willing to undercut each other on what constitutes an acceptable pay check.

But most employers don't go around reducing previously-hired people's salaries for a variety of reasons.

[Negitivefrags]

> But most employers don't go around reducing previously-hired people's salaries for a variety of reasons.

The main reason being that it's illegal in NZ. The employee would have to agree.

[SR2Z]

The main reason is that employees will quit. It's not illegal in the US, but it still almost never happens. Companies would rather lay off than risk alienating employees like that.

[Quarrelsome]

> the employer can hire a new senior engineer at below market rates to accommodate the specific learning they have to do for their new role.

Money doesn't cleanly convert into time.

Having juniors and mid-levels is about being able to promote an existing mid-level that knows the team and the system, with zero downtime. It's much easier to replace a junior than a senior because of the lower expectations and risk.

Furthermore, a lot of companies are struggling to hire right now because the market conditions creates a flood of applications and its quite hard to discern who's a waste of time or not which leads to hiring processes taking longer.

[carlosjobim]

> Furthermore, a lot of companies are struggling to hire right now because the market conditions creates a flood of applications and its quite hard to discern who's a waste of time or not which leads to hiring processes taking longer.

Hiring is the most important function in any company, full stop.

If they aren't good at hiring, well then they shouldn't be running a company. There are no excuses. If HR aren't up to the task, then they should be replaced, and so on up to the level of the CEO, until whatever incompetence has been flushed out. Shareholders have to demand this.

A company not being able to hire is just as ridiculous as a restaurant not being able to serve food.

If they are receiving a flood of applications which is hard to sift through, they are already doing everything wrong. Shareholders have to nuke these kind of people.

[iszomer]

> If they are receiving a flood of applications which is hard to sift through, they are already doing everything wrong. Shareholders have to nuke these kind of people.

That's why some companies will contract with temp agencies for relief.

[lukeify]

> Having juniors and mid-levels is about being able to promote an existing mid-level that knows the team and the system, with zero downtime. It's much easier to replace a junior than a senior.

Yeah but the point of this post is that it makes an assumption that your company doesn't have mid-levels or juniors.

[Quarrelsome]

Aye, its assuming the org tossed them away when LLMs turned up or stopped recruiting at that level.

[avereveard]

as knowledge is commoditized the bar for junior raises, what was advanced math research a century ago is now undergrads' homework. I don't see why code is so special in that regard that cannot progress beyond artisanship.

[awakeasleep]

Seems like you’re only imagining interchangeable people who dont have bargaining power?

[lukeify]

That's probably the bulk of senior developers. We're not all inverting custom proprietary binary trees.

[iugtmkbdfil834]

By the same logic, most CEOs are interchangeable. After all, not all of them are creating new markets, shepherding new and exciting business ventures or changing the way we do X.

[ajmurmann]

Knowledge and tacit knowledge of the system and company around it makes a huge difference.