So they are freezing after the doubling? This behavior seems skittish and an overreaction, especially given their continued profitability and high margins. Corporate executive behavior reminds me of interacting with ChatGPT:
Exec: "What should I do to retain people?"
GPT: "One possibility is to double your salary budget and expand stock compensation."
Exec: "All my golf buddies' are cutting compensation at their companies, what should I do?"
GPT: "In this situation, try freezing salaries and reducing stock compensation."
They didn't double the salary budget, that was such a well played PR bs by MS. They doubled the "salary increase" budget for lower levels (so instead of getting a 1% increase per year, they'd give out 2% - to the lower levels).
I talked with a friend at MS and they said not only are they not getting any increase at all this year, the stock and bonus are going down to (or even lower than) last year's levels (before this supposed "expansion").
It's a shit deal. Microsoft's compensation is already well below competitors unless you're at the partner level or higher. They absolutely haemorrhage talent at lower levels, but hang on to low performances who just can't get a job elsewhere.
Last year's increases were explicitly intended to bring Microsoft's pay closer to industry standards. By now saying, "Whoops, we accidentally gave you too much," it's clear that Microsoft has no interest in paying at industry-standard levels.
And to be clear: Microsoft is already laying people off. This isn't an either-or. In fact, their layoffs are probably the worst-handled in the industry, as they've been smeared across months, meaning Microsoft engineers have spent months in a state of anxiety, worried they might be included in the next batch, as each batch is only a few weeks apart. The best reason to work at Microsoft was the stability, but now they pay less and offer less stability than many competitors -- at least at Google or Amazon, you knew immediately if you were in the group being laid off.
(Sources for all of this: Former Microsoft SRE. I have friends and former colleagues at Microsoft who span from junior engineers to upper-level principal, i.e. 67. Personally, I nearly doubled my income two years after leaving Microsoft for another tech company.)
I'm talking about the basic math, absent all other factors. Given a choice between an N% raise two years in a row or a 2N% raise on the first year, the latter is more money.
You choose, base salary is 100k and target raise is 10% two years in a row or 20% in the first year only. Do you want $120k + $120k or do you want $110k + $121k?
This involves the assumption that the "no raise" year is a one-off event to offset the double raises the previous year. It's a good deal.
More than that there's a whole strain of performative cost cutting due to the recession that's always seemed just over the horizon for the last year. Part of the goal is just to signal to investors you're ready for this continuously hypothetical event by pre tightening your belt as a company so they don't "price in" the recession into your stock. It's another negative outcome of basing so much of our evaluation of companies off of stock price which is partially to completely decoupled from the actual performance of companies.
> More than that there's a whole strain of performative cost cutting due to the recession that's always seemed just over the horizon for the last year.
You can say that again. I've spent last 3 months dealing with the effects of some pretty severe cost-cutting on my team. Now I recently learned my employers is going to spend billions on stock buy-backs.
That's just great news after the most recent push to increase our in-office time to increase "collaboration" ... when all of our teams are globally distributed so everything has to be Zoom meetings regardless of which chair your butt happens to be sitting in.
The juxtaposition of record profits, stock buybacks, and "we're not just raising prices because we can it's inflation for us too" is pretty telling. I often find myself wishing courts/government could just cut through the posturing on stuff like this and call bullshit, like the ever present promises of lower consumer prices during mergers because that's the magic test and courts are seemingly required to swallow whatever thin veneer companies promise. You don't need tax breaks you spent the last 3 on stock buybacks!
Anyways need to stop before this becomes more of a rambling rant. My work is also doing the occasional required week for "collaboration" but they've paused at 1 week a month for now. Have to justify this campus somehow... I like to think every manager bubbling up complaints actually got someone to listen but I'm betting they haven't changed their mind on the long term push even though we've shuttered 2 other locations in my area to consolidate people.
to shareholders : "WE LOVE YOU". we will do whatever it takes, fire employees, cut corners, kill raises, other nasty things before we let our numbers slip. We know, you are the most hedged, least impacted in market downturns. we love you. No really.
to management : "we love you. you did the right thing. Here's more money"
to employees: We love you. macro economic uncertainties .. market conditions .. platform shift .. AI AI .. labor market .. no raises this year. We love you.
hard to make that call to strike when there are many recently unemployed tech workers looking for work. sure you might get what you want or you might get fired and replaced by someone willing to work for lower compensation
for anyone reading: its VERY illegal in the US for a company to retaliate for your interest in unionizing. You will probably win a large lawsuit if this happens.
Realistically, I doubt a SWE union is around the corner, but Alphabet does have a union that employees can join - so could your company! It seems most people think that unionizing would go poorly and result in job-loss, but it might not. It's easy for fast food companies or retail companies to close a location to lay-off anyone near a union, but if you're in the HQ as a corporate employee, you have to consider the behavior of professional unions (eg. the film writers union, currently on strike).
With the rate of inflation and interest rates going up, salaried workers need a cost of living adjustment at the very least, even if we forget about a bonus or a big pay hike. This decision is unethical to full-time employees seeing the tidy profit they made. It's a clear signal to the employees not to expect any practical reward for hard work, what a great way to motivate people.
This is yet another large and powerful company acting to appease the market so their stock price goes up a bit and the shareholders are rubbing their palms in glee.
Wages are not downstream of profits - they are a price in a market for labor. If companies could pay 0 they would pay 0, and if employees could charge infinite they would charge infinite.
It's better this way - otherwise employees at companies that make no money would have to take no salary.
Many small businesses seek to treat their employees well. It's not out of some ulterior 5D chess profit seeking scheme, nor is it out of naivete of the fact that they could earn more. But simply out of having some degree of social values and ethics. Wanting to make a profit or to become rich, isn't the same as being willing to screw everybody (or anybody) over in pursuit of such.
In America today only 57% [1] of people have a positive view of capitalism. And that percent is only that "high" thanks to much older individuals who are probably envisioning our capitalism as it was in the past, before MBAology became the default corporate worldview. Take only 18-29 year olds, and 40% have a positive view. What do you think's going to happen as the older generation dies off?
Capitalism is not sustainable without more of society pushing back against sociopathy. Normalizing it because 'this is how big companies act' isn't going to normalize it, but simply turn people against capitalism - and ultimately bring us closer to swapping over to ["this time it'll be different"]ism iteration #73 or whatever.
It's not related to capitalism or labor organization. It's that the relationship between profits and wages is misunderstood. If you want your income to be completely tied to the business results, you want to be a business owner.
There is no sociopathy, it is a simple enterprise where someone absorbs the risk and others don't - it is collaboration.
That's the status quo - a distinction between owner and employee. And it's good for the owners, who get to maximize profits - but is it good for employees? I'd say there's less risk, but they get impacted when business is down, and may not reap the profits when business is good.
Some companies are experimenting with other models - there's no law or force of nature saying an employee can't be a partial owner of a business.
This is happening everywhere. The place where I work a very large, rich University gave out two 3% raises since COVID started and at one point temporarily cut everyone's salary by 5%. The only way to make more was to get a promotion or apply for a role on another team.
This hurts junior employees the most. Tenured employees have equity as a large part of their comp, they are invested in the stock price, not the few % annual bump.
Not really true for Microsoft. At Microsoft we generally do not get significant new stock grants or refresh grants, even on promotion no new stock is granted often. This may be different for principal engineers or certainly partner level folks - but senior engineers with more than 4 years of tenure will have essentially no significant stock to vest.
I'm still new at the company, but it seems like promotions are basically (at best) the accumulated COLA adjustments one ought to have been given, but they make it seem like some performance-based thing.
Indeed, I have a RSU vesting schedule 4 years from hire. It is financially unwise to stay beyond that on-hire grant vesting period, it seems.
Examples of Redundant Acronym Syndrome (RAS) [1] or PIN Number Syndrome (PNS), which linguists don't fret over since it apparently serves a modest disambiguation and/or emphasis function in human language. It would be fascinating to find out the comparative prevalence in between different languages, but my Google-fu failed me.
Everyone is hired in at a somewhat market rate, but it's the older employees who have become complacent and don't want to leave that are being underpaid. I know Blind is basically programmer 4chan, but if any TC postings on there are correct, I'm making more as a developer than some people who claimed to have worked their way up from junior dev and and are now manager :/
Microsoft does pay bonuses and stock refreshers, but outside of one-time “Special stock awards” (which I’ve heard is mainly reserved for retention of people likely to jump ship), the refreshers aren’t very significant until you reach level 65 (principal). At least compared to refreshers at other major tech companies.
It depends on the exact level and how well the employee negotiated their sign-on RSUs, but most employees are going to face a compensation cliff of some sort at the 4 year mark.
Level 65 is not Principal across the orgs (I’m an IC6 and reached Principal below that). My experience is different (or else I got retention every year…)
Are you sure this is typical and you're not just getting the shaft? It sounds way off to me. I've been out of MSFT for a while, but refreshes and cliff-fills are pretty standard for their competitors and I'd be very surprised if they weren't doing it for their above-average performers too.
My partner gets at least like 17% of comp as new RSU a year, and on top of that has gotten large special one time grants. The ratio of RSU is maybe lower than other companies (mine is 1/3 my comp.) but that’s kinda a good thing, especially with the large performance cash bonuses. I rather have cash than stock.
Inertia, laziness, crappy equity to begin with so the cliff isn't that big, concerns RE resetting immigration process progress. Source: I was at Microsoft for ~6 years and those are some of the reasons why I stuck with them for longer than I had to.
This is a very "techy" viewpoint. There are only a very small number of companies globally, (a percentage that can be rounded to 0), that give equity as part of the employee compensation.
> It's a clear signal to the employees not to expect any practical reward for hard work, what a great way to motivate people.
Do companies care? This signal has been the same for about a decade now. It seemingly does not matter if employees are motivated or not. There is profit anyway.
Winning strategy as an employee is to be a mediocre employee at multiple full time remote jobs.
> salaried workers need a cost of living adjustment at the very least
Software engineers are some of the most priviledged workers in the west when it comes to compensation and perks. We need to stop talking about them like they are road construction workers here on HN. it is really out of touch
Doesn't it actually help with inflationary spending? The Fed making a play at depressing wages and increasing unemployment is what's keeping inflation in check.
God knows the rich won't ever pay their fair share.
> Somehow in the UK, someone needs to accept that they're worse off and stop trying to maintain their real spending power [...]
You're both totally right that giving people enough money to live might increase the inflation. But that's not an option people are (rightly so) going to be happy with. "Just be miserable" is not a plan.
In addition there also is no skin in the game here, over-hiring or other blunders on core leadership competencies don't matter at all as long as "shareholder value" isn't negatively affected in the short term.
I'm not for crushing the American people to curb inflation either, but that's the play J Pow is making. From an economics perspective, it does help the construction worker if higher wage earners spend less money.
I've been one of the people hurt most by this, and I'm not happy about it either. Software Developers doing mental gymnastics to align themselves with the investor elite instead of their fellow working class Americans is some shit.
Maybe it's different in other places, but have you seen the paychecks of some construction workers? Sure they are working in potentially hazardous conditions, but the pay can be about the same for similarly tenured workers.
It's important to remember that if you're working for a living, you're still working class.
Lol tell that to the actively working doctors, lawyers and c-suite execs living in the fanciest neighborhoods of their respective cities that own moderate to significant controlling portions of companies
Lol these personas work ALL OF THE TIME. Doctors have the weirdest shift hours out there, for example. You have a few that rake in serious cash while working like 20 hours a week, but that's not the norm in these professions.
> Most SE's wouldn't survive a week in hard labor work.
Respectfully, speak for yourself. This isn't as rare, or as difficult imo, as you think it is. I'm speaking from a lot of disadvantage. It is what it is.
> require limited skill
Isn't this site usually full of people whining about smooth talkers with no skill? I know I've whined a lot about that. Also is what it is. The world is only unforgiving to those with narrow perspectives.
Generally, what you do for a living isn't as significant as what you learn and do with the experience gained. It's your choice to commit to what you do, or you can keep growing. Up to you.
> The working class is classically defined as that class which must sell its labour-power in order to survive.[0]
It does go on to define working class as essentially blue collar workers, even highly skilled ones. Which would exclude software engineering.
Though I think it should include anyone for which they aren't earning enough to eventually become financially independent through their labour. This would then include quite a number of white collar workers. Certainly there are software engineers outside the silicon valley bubble for which this is true, especially in parts of Asia and India.
A good litmus test is if you feel you should join a union then you're probably working class and if you feel secure negotiating your own pay then you're probably not any more. Though I doubt this fits a traditional definition of working class.
This is like the old "athletes are too greedy!" as if the alternative is the team owners (well known for being non-greedy?) should keep that money instead.
Wages are a function of the supply and demand for labor. If the business loses money the employees don't have to chip in money to make up the loss, but on the flip side they don't share in profits.
>> This decision is unethical to full-time employees
It's easy to mark any decision as "unethical" depending on your viewpoint. Indeed ethics are, to a large degree, highly subjective.
I might suggest that eating meat is unethical, or I might think whaling is unethical but beef farming is ok, or I might be completely ok consuming any meat since we're omnivores and meat is part of our diet. None of this is material though, and all points are equally valid, since ethics are subjective and personal.
So I've no problem with you considering this unethical, or even mentioning that you consider this to be unethical. An employee, who didn't negotiate an appropriate contract, would likely feel bad about this, and would thus maybe fall back on "unethical".
However from a business point of view it's completely ethical. The contract between an employer and employee is a simple business relationship. Their responsibilities and powers are clearly laid out. Setting increases and bonus's is clearly (for most of us) a mandate given to employers. In some cases (where unions are involved) the mandate falls over both the employer and the union.
Of course employers care about employees (in most companies anyway.) If only because a mass departure would be bad. They also have other considerations though, customers, shareholders, sustainability, future profitability and so on. They are constantly balancing many levers to try and keep "everyone happy". Usually this means the love has to be spread around a bit, not everyone is going to get everything they want.
Does this mean it's always in balance? no of course not. Currently (in the US) there's probably too much of a lean towards shareholders - both in artificially increasing stock prices, and also in prioritizing returns. In other places labor is stronger and the balance is away from shareholders. In another time, and another place, there's reasonable balance for a while.
For me personally, it's hard to feel sorry for FAANG employees, who've been living large for years and now (shock, horror) aren't going to get increases. Oh no, that 100K you're getting isn't enough? My heart bleeds for you. Said no Uber-driver ever...
It's a very strange thing to claim that profit is unethical. In tech companies, profit is an indication that the whole is greater than the sum of its parts — i.e. so much wealth has been created that there's an excess of it.
The question is more about who gets to capture the created wealth:
- people who gave money to enable the activity leading to profit (aka capital)
- people who organize the activity leading to profit (aka management)
- people who actually do the work
Obviously, each of these groups has some legitimate claim to the added value, but it's also pretty obvious that over the last 50 years or so, the balance in the economy as a whole has tilted towards capital and upper management in a way that can't really be justified on an ethical basis. (Just look at how the correlation between wages and productivity disappeared in the 1970s.)
> Just look at how the correlation between wages and productivity disappeared in the 1970s.
Isn't this explained by computerization?
The '70s? That's when Stallman was mucking around at MIT, right? Computers were happening!
Say 30 workers' productivity can now be reached by 1 worker at a computer. The company lays off 25, leaving only 5 workers. Those 5 workers are generating 150 workers' productivity for the company. But they're only getting 5 workers' salary (there has been no salary increase). Boom -- wages:productivity used to be 1:1, and now it's 1:30.
Consider how it also makes no sense FOR those 5 workers' salary TO increase significantly. Why should you pay them 30 times more than their pre-computerized peers? Their jobs may actually be easier than before, hours of indexing and searching replaced by filesystems and `grep`.
Is that unethical?
This also attacks the "we thought computers would mean we would get 2 hour workdays" meme. Equivalently to inflating their wages, why would you decrease their work hours?
These are things that, in the name of "ethics", can only be forced by unions or the government, depending on your level of adventurousness toward economic policy. (And your level of confidence in being able to arbitrate ethics. The communists were very hubristic about that one.)
Perhaps. But it was also still relatively early days for computers, and it was a time of union busting, macroeconomic upheaval, and a shift in dominant politics. There were certainly multiple causal factors at play.
You say that there are things that can only be forced by unions and governments. I agree!
We just need to keep in mind that at least some of the things detrimental to workers that happened 40 to 50 years ago were also forced by lobbyists and governments.
I can't say I did not fall for the bait, but I believe its a leftist troll attention seeking. Other comments left both immediately recently and over the past few days at least are all roughly the same on topics where the concern is at best minutely related
Wondering how long it’ll take for other tech companies to copy this move and pretend that they independently arrived at these conclusions after their meticulous macroeconomic analysis.
I mean, this is just MS copying everyone else. There is no "real" recession. It's basically a loosely coordinated capital strike to counteract post-pandemic wage growth. Jay will keep raising rates until those wages stop climbing, and companies are taking the hint.
If anything MS is smarter for waiting for all of their competitors to cut first. As others pointed out, they have tons of cash and really don't have to cut at all, so they get a leg up on their competitors by waiting.
The funky thing is... it's not a recession for them. All of their incomes are growing and their profits are reasonably steady, except for "I take full responsibility for the Metaverse" Meta.
If history is any guide, probably more than zero, and surprisingly blatant and poorly-concealed.
And I don't think anyone's even tried to suss out illegal market-manipulation schemes that are surely hatched at various seems-like-something-out-of-a-comic-book-but-is-actually-a-real-thing rich people secret societies and "retreats" and shit. It's wholly unbelievable that there's not a ton of that going on there, better-hidden than the ones that amount to one CEO emailing another with "let's illegally collude, LOL" (which, incredible as it seems, also happens, but at least sometimes gets caught).
It doesn’t take illegal back channel coordination to play follow the leader.
All it takes is one major company to pull the trigger, then the rest will follow.
The hiring market during covid was wonky in a way that favored applicants, and a lot of folks who got hired were under-qualified, overpaid, or both. This is just a natural reversion to a more balanced state across the industry.
Come on. If Google broke ranks and started aggressively poaching people for GCP and going after market share, Amazon would realize in about 5 seconds that it hadn't "overhired" for absurdly-profitable AWS after all.
These firms have colluded to drive down wages before (the "Techtopus" case), a fact that we know because they were stupid enough to put it in writing. This time there's no proof and may be no explicit agreement, but a tiger doesn't change their stripes.
The way most of these companies are colluding now is by using third party firms that "aggregate industry salary information". So basically company X provides their data, pays some dollars, and get access to what other companies in their "peer set" are paying for different types of levels/experience. Reminds me a lot of the schemes companies will sometimes use to do bribes in other countries -- paying a third party consultancy who they had "no possible way of knowing that they were actually just bribing people".
How exactly is it a 'natural reversion' when even high performing employees are now effectively taking a massive pay cut due to the salary freeze and inflation?
> high performing employees are now effectively taking a massive pay cut due to the salary freeze and inflation?
If any “high-performing employee” feels like they are taking a “massive pay cut” merely due to inflation, then something is wrong.
Either they were grossly underpaid to begin with (change jobs, it can be done if you’re that good and that low paid), they aren’t actually that good (so total comp package, including RSUs and refreshers, is relatively weak), or they have a warped perception of the value of money.
If a dev is pulling in 300k+ (standard, especially the +, at places like MS), and the cost of eggs, rent, or restaurant food is something they actually notice and impacts their day-to-day life, then I wish them the best of luck — they will need it.
A paycut is a paycut no matter how you try to spin it. If someone's earning 150k a year with 5% inflation and doesn't get a raise the next year matching inflation, they are quite literally taking a 5% pay cut in comparison to changing jobs which likely offers salaries starting at the post-inflation level.
In this case it's worse because not only are their salaries not going up, but the things nominally used to get around raising salaries (bonuses, stock) is also not going up. You trying to spin it by saying 'well they're earning 300k+ a year anyways' is not helping your point when there are plenty of junior and mid-level engineers earning far below that which are going to be most impacted.
My thesis is that many of them, especially at places that grew a lot during covid like MS, were/are overpaid relative to their skill set / ability to add value.
Cutting positions was one way to correct this.
Freezing salaries is another.
If any devs hired during covid think that their salary was totally justified and shouldn’t be cut directly or indirectly, then they are more likely than not delusional. It was a frothy hiring market, and the upward pressure on salaries across the board was not healthy for the overall tech ecology, imho (the smaller companies couldn’t afford competent devs).
Note that I am actually an advocate of tech corps sharing more of the spoils with their employees, but not in the way that it happened during the pandemic. Reward competence selectively rather than randomly rewarding just being a warm butt in a seat during a hiring boom.
I have no doubt that during this “pay freeze” at MS, the star performers will still be rewarded somehow.
Okay, but there's a core flaw in your argument: Microsoft has already cut jobs, and now they're freezing salaries for everyone. You're effectively trying to say that everyone at Microsoft deserves a pay cut and that their salary is unjustified, which seems a fair bit more delusional.
It seems to me you're working backwards from the position of 'Microsoft is justified in what they're doing' and then continuing to adjust your position in order to make that statement true. Given that Microsoft is still extremely valued according to their stock prices and that their earnings are higher than ever, citing market conditions as a reason to cut salaries when your market condition is positive reeks of bullshit.
> You're effectively trying to say that everyone at Microsoft deserves a pay cut and that their salary is unjustified
Key employees and high performers will be rewarded at MS and elsewhere. It just won’t be announced in a press release.
If you want to disagree with me or think that what I say is bullshit, that’s fine. The market will have the final say. I’m just a pundit on a message board.
Imho, this move by MS, which will probably be followed by others, is just them exercising their options on their side of the labor market.
If folks don’t like it, they can leave and/or change careers.
There will almost certainly be a little bit of collateral damage, but I imagine that most of the high value-add people will be happy with their pay packages while keeping their mouths shut.
I wish I could short MSFT, but it still seems like a bad move. The whole company is built around being just barely good enough and hard enough to remove that they stick around forever from inertia
The products are all going to keep getting worse as they lose the talent to maintain or upgrade them meaningfully, but it'll take a long time for the company to fade away
The natural conclusion is that jobs (at least in the US) are a type of labor market. There is push and pull on both sides.
During the pandemic, the market heavily favored employees. The market now favors employers.
The direction of the price of labor seems to have been more or less appropriate during each of these periods.
On a personal level, I don’t have much sympathy for folks whose worst experience in a labor downturn is simply not getting an inflation adjustment — it’s about the mildest correction in defined labor costs/benefits that can happen to them. I don’t think these folks realize how close to having no job they and/or their current peers actually are — that would really suck.
To the issue of whether MS should make this move or not (esp. given their financials), that’s a different issue. As I have mentioned elsewhere, I think that there will be quite a bit of quiet total comp boosts to favored folks — RSUs, retention bonuses, spot bonuses, promotions, “promotions” (e.g., different title, same job), etc.
Salary curves are rarely smooth and unidirectional over the course of a career. Most folks, in fact, will have a very spiky salary curve. I think many folks who came into tech after 2009 or so just haven’t seen or experienced this spiky curve, and their limiter range of expectations is showing.
Right. Wealth and power are concentrated and do not need to be coordinated. Their individual actions and self-interests organically merge to maintain the state of affairs that keeps them wealthy and in power.
They kind of do. If Facebook and Google suppress their wages and some other company poaches their best people the buying cartel could easily fall apart.
OPEC suffered from exactly this problem quite early on. It only takes a few defectors of sufficient size.
It created playground for people secretly working multiple jobs for sure.
Before it was unheard of.
Now had to let go some for doing it, cancelled numerous applications and interviews once investigation revealed their scam (applying through fake names, creating multiple deceiving profiles with fake activity etc).
It's frankly starts to be quite difficult to hire honest full-time remote programmers now.
Apple and Google settled an antitrust lawsuit a few years ago for colluding to suppress wages (by agreeing not to recruit employees from each other)[0].
The settlement was a tiny fraction of the amount of money they saved by entering the illegal agreement in the first place.
Just like us engineering workers have groups and forums where we share ideas so do ceo workers. They want to keep their bosses, the shareholders, happy and so they share ideas. Right now layoffs are so hot, and as ceos dont innovate much that’s the trend they follow. No need for illegal backchannels. Just a cool trend. I just hope that those layer off workers that are lucky and smart enough are working on replacements for the googles and microsoft out there because to be fair they are well past their expiry date.
I know people with that rating who saw a much larger (10-20%) raise. I know others who got a raise in line with what you’ve said too. I don’t know the exact distribution but it’s definitely not “you get 0.5% if you’re SI”.
I'd need to know the full distribution of MRP% for that. All I'm saying is that merit lines were not such that it was possible for the mean raise to be 1%. It requires way less data to see this.
I have enough data to know that the mean raise is above 1% but to not know the specific value of the mean raise. This is not especially complicated.
"Mean raise for SI" is also not what the original post said. It just said "raises for most employees was between 0% and 1%". We can't exclude the higher performers.
Zero people on my team had raises below 1% (one was close). Nearly my entire team, including me, received SI for 2022. The merit lines make it clear what %MRP you'd need to be at to get a 1% raise and it is well above the norm.
Is it not better/preferable to freeze salaries than to cut more staff? From a morale PoV, from a human PoV, except maybe not from an individual PoV, overall.
This is worse from a corporate greed perspective because it is effectively saying that Microsoft can't afford to give out a pay raise to anyone. Meanwhile, they had a net income of $17.6 billion last quarter[1].
A layoff can at least be due to a change in direction or some departments, teams, or employees not delivering the necessary value to justify their continued employment. This is saying no one at Microsoft is delivering enough value to deserve a raise despite the company still being profitable. That is objectively not true. There are certainly people at Microsoft that deserve raises and the company can clearly pay for those raises with their billions in profit.
There is no reason to do this other than Microsoft feels it can get away with it.
The company and its income is for the benefit of the shareholders, not the employees. Maybe the argument can be made that they should pay more money to certain people to improve their future income, but that has nothing to do with how much money they make.
Is there some sort of bizarre political campaign on HN to try and redefine why companies exist?
Companies are legal constructs that were created to provide investors in business activities limited liability with respect to their investment in a mutual business activity. And that's it.
For their first several hundred years, companies were expected to provide benefits to their employees and the localities in which they operated in exchange for that limited liability. (And see what happened to Lloyd's of London's shareholders to understand why that is a more than fair exchange.)
If companies want to be all about "benefit for the shareholders" and to hell with everyone else, then its about time we take away the limited liability.
We’ve broken our society to think this. Shareholders should be third, after customers and employees. Or at the very least we need to ban the phrase “job creators” for the rest of time if employers are just supposed to stomp on their employees whenever possible.
Capitalism really breaks people's brains sometimes. It isn't about who owns the profit. An employer/employee relationship is a business agreement. That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance. This decision severs that connection. Now there is no level of employee performance which can yield better compensation. There is also no reason to believe this will change in the future because this decision is not motivated by a lack of money. It is motivated by the desire to increase profits. That desire isn't going to go away in the future.
And if we must truly take the perspective of the shareholders, this is a stupid move because that link between performance and compensation is the primary motiving factor for many employees to put actual effort into their job. Why should any Microsoft employee put in anything but the minimal effort at this point? Is personal pride the best remaining reason?
> That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance.
It ain't a 2 variable equation, like all resources it is also driven by market. If Meta/Goog/industry is hiring at 20% higher the salaries have to go up to match or you'll see huge attrition.
Freezing salaries for all employees doesn't seem like a sustainable way to save money in the long run and the second order effects would probably destroy shareholder value not create it
Fiduciary duty was not always the end-all-be-all of corporate decision making. This has been a see-saw battle between employee wellness, customer satisfaction, and shareholder returns, and we are at the apex of shareholder dominance currently. But that does not mean this is set in stone. General Electric explicitly put employee wellness and customer satisfaction above shareholders in the their business documents as late as the 70s.
Yes a lot of companies hired a lot more. A lot of money also got distributed in this process which otherwise wouldn't have. Laid off employees got some work experience out of it. Better than nothing.
I don't get this stuck up argument again and again Why did they hire before? As if there is some really great answer that can reveal itself by repeatedly asking this question.
> Cutting would be better than freezing salaries.
Many would like same or lower salary than being laid off. Those who looking for higher salaries can move on just like they always have.
i thought the answer was Jack welch philosophy of management: always overhire and then prune 10% of your workforce every year. the theorey goes that way, you keep the best and loose the rest. But, that assumes that employees are interchangable like cogs which isn't true. plus, most companies aren't necessarily able to determine who's best and worst and may even end up laying off those who are better.
Hiring gives someone experience they sought and presumably would not have had (else they might have kept put). So overhiring in some light does look bad, on the other hand it gives some people the necessary experience for their next step in their carrers.
> So overhiring in some light does look bad, on the other hand it gives some people the necessary experience for their next step in their carrers.
Not if they were let go before their first year, which has been the case at a lot of tech companies recently.
New hires, juniors especially, need a lot of time to onboard. Lessons in the first weeks and months of a new job will be more about company-specific tooling and minutiae, not engineering in the broader scope. Portable lessons come later, usually after you've found your legs.
Why would you think it's a "one of" situation? In my experiences the company lays off X% AND cuts salaries YY%. This is quite effective because the subtext is "if you still have a job you're lucky". I suspect you actually get less attrition from both at the same time vs. just a pay cut or freeze.
Large tech companies don't exist to serve as employment programs for software engineers.
If they believe it will increase profits without longterm harm then layoffs/salary freezes are the right thing for them to do as a company even if they are wildly successful.
Layoffs are frequently done when a company is struggling, so people seem to think it's incongruous for a company to do layoffs if they are doing well.
> If they believe it will increase profits without longterm harm then layoffs/salary freezes are the right thing for them to do as a company even if they are wildly successful.
And that doesn't need to be the case. Many of these multi-national big tech companies have failed to move forward with layoffs in some countries because of laws that protect workers.
For example, in some countries, companies need to prove that they're struggling in order to lay people off.
Surely though if it’s in the companies interest to not keep certain staff on the payroll now (I.e.), that’s because they believe reducing headcount will make them a healthier company.
A healthier company has more longevity, and a company with more longevity will hire more people in the long term than an inefficient or bloated company. I feel like your perspective does not take time horizons into account.
It will likely be both. Why not have your cake and eat it too? Zuckerberg already set the precedent for an additional large round of layoffs after the first, so I'd be extremely surprised if Microsoft, Google, etc didn't follow suit.
I think everyone agrees with that value statement, the problem seems to be that no one else is interpreting this announcement that way. You would need to expect that the companies future was at risk, whereas I think most people are expecting that this is nakedly squeezing and anticipate collusion from competitors. As I understand it there is a documented history of that already.
Do not have mercy for a faceless corporation continually posting profits that grow quarter over quarter. They are rolling in money and could cut executive comp or something else, but choose not to.
If, say, Sundar was only offered a $100M package instead of a $226M package, where would he go that would pay him more than $100M? There's no other person out there who would do the job for $100M?
An issue would be that Sundar is plugged into Google and knows all the ins and outs and has the relationships that an outsider would take some time to learn/form, but on the same hand, Sundar going out into the wide world is then lacking those same things at his new company, meaning new companies might be as hesitant to hire him as Google would be to hire a new outsider CEO.
> There's no other person out there who would do the job for $100M?
I'd be willing to do a terrible job at it for only $10M/yr. That's not what the shareholders want; they want Sundar to keep doing what is, from the shareholders' point of view, a quite respectable job, seeing the shares grow from $34 when he become CEO to $112 now for a CAGR of around 17%.
Sure, I don't mean anyone willing to take the job, I mean anyone the board might reasonably select who has a good chance of success. Surely those people are out there.
In that same time frame that Sundar was CEO and GOOG stock is up 240%, META is up 160%, NFLX is up 220%, AMZN is up 325%, AAPL is up 500%, and MSFT is up 600%. Surely these giant tech companies didn't all get lucky and get the only 5 people who could get great growth numbers from the stock market.
Shareholders want to avoid CEOs who will give them the returns of IBM, Cisco, VMWare, HP, or Groupon. It's not about the idea that only these specific 5 people could have generated those returns. But when they are generating those returns, there's ample support from the board and shareholders to pay them handsomely to generate returns like the list of companies you gave and not the list that I gave here.
A zero-raise policy, if its reasonably long-term, is likely to leave you stuck with the type of employees at IBM and the others. Maybe not the CEO but the rest.
Yet CEO's bonus in 2022 was 20x bigger than his salary. I don't think it will be less this year either; with all-time high stock price and these "cost cuts", he will be wholesomely rewarded.
This kind of comment woups not have been here like 3 years ago.
It was an amazing journey to watch HN denisens adjust their opinions as they went from creme de la creme and 'anyone can create a unicorn tonorrow' to, you know, being basically like a plumber but for JSON.
The secret is, we've always been plumbers. It's not a terrible comparison in some ways - plumbers are highly-skilled, scarce, and command high prices for their services.
Nobody mistakes them for Capital, especially not plumbers themselves. Engineers seem to have gotten the wrong idea about themselves lately.
Gosh I like this comment so much. This is exactly how I felt and saw ourselves whilst sitting in hipster startup offices getting way too much money compared to the rest of society. That said, tech people in general publicly don't get enough respect or disrespect for their work.
>getting way too much money compared to the rest of society
Personally I feel that the "rest of society" is getting way too little money vs. us getting way too much (opinion based on the fact that profits/productivity have outgrown salaries for too long).
Yeah, man, I've been trying to tell people this for a while. Programming isn't overpaid; it's just the one field where market forces actually work to provide a livable wage that grows with inflation.
When I was working at a non-FAANG for normal pay, I was basically living the exact same lifestyle as my dockworker grandfather. I could afford a house and car, wife didn't have to work, one vacation per year, moderate savings.
There's a guy in a massive yacht who won't let anyone on board. You're in a one-man lifeboat. But you say you're simply too well off compared to the people swimming in the water.
I mean, not really. Every house has a main water shutoff valve. You can watch a 5 minute YouTube video on how to snake a toilet yourself. Or spend an hour installing a new toilet.
I’m familiar with the work you’ve done, I respect you, and I know you know that this is a ridiculous and argument. You can walk into any hardware store and buy a new toilet, and the installation instructions are included. Its dead simple. IKEA furniture is often more difficult.
I don’t think it’s ridiculous, but perhaps I haven’t fully explained my position? I have never installed a toilet but I’m confident that I could go into a store and buy one, and the instructions are probably straightforward. That said, I would probably still call a plumber because the risk of me doing it wrong seems uncomfortably high, and I could end up with a smelly mess or thousands of dollars in water damage.
And my position is that teaching you to install a toilet without causing water damage by turning the shutoff valve 90 degrees is in no way comparable to teaching c-suites to code.
The water damage would occur over months and years, eventually requiring an expensive remodel and repair of the floor underneath. Not a personal story because I don’t own a home but, you know, it happens.
That number is entirely dependent on their leverage.
It works like this. If I could hire bob for $10, but he produces $100 worth of value, hell yes I'm going to hire Bob. But Evil Corp sees that and thinks "damn, I want Bob to contribute $100 to my bottom line, so I'll hire him away from Bright Corp by enticing him with $20 pay.
Then, BadAss Corp thinks the same thing, and hires Bob away for $30. This process repeats until Bob's pay + opportunity cost == $100.
However, there is a point of diminishing value being added. If lots of Bobs are available, the incremental value (leverage) each one adds becomes less. There are only so many redesigns of one's database that improve productivity much.
As you can see, the more Bobs, the less they'll get paid. Until Frank comes along with a new idea for adding value, and starts the process over again.
Consider also that although an engineer has the potential to engineer large amounts of value, that doesn't mean he will. Hence, the value of him to the company is discounted by the risk that he won't deliver.
I.e. an engineer who has a track record of delivering value can command a much higher salary. I know one who got a million dollar salary.
This is also why CEOs get paid so much. Leverage. Nadella is a prime example. As an MSFT shareholder, I'd say he was darn well worth it.
> This process repeats until Bob's pay + opportunity cost == $100.
I usually find that this typically stops at something like $10 for most people. Despite people being “valuable for millions” offers for that much don’t magically seem to spring up. The people I know making a million a year typically make the company tens of millions…
There's a small remote island community in New England that I visited once. I was told that the person with the most political sway on the island is the plumber. It was explained to me succinctly: You don't need a plumber often, but when you need a plumber, you need a plumber!.
GPT isn't going to steal anyones jobs. It's just the new outsourcing where the big thing in the 2000s was to try and outsource your work as much as possible. Except that problem came to roost quickly due to poor code quality and the cost to fix it was more than the cost to make it good in the first place.
Same issue with GPT. It's generating low quality, poor performing, poorly designed code. Any company using it as a basis will be in trouble.
Plenty of companies make bank using low-quality, buggy code. Not the kind of places most here work at though, because they weren't hiring dedicated developers to begin with.
Well, although he put a lot of work into it (they didn't call him the Little Beaver in college for no reason) he wasn't Penske material, so he shouldn't have been there. But that still doesn't answer the question.
HN has been talking about the disparity in CEO vs worker pay for quite a while. Here's a highly-upvoted post from a little over 3 years ago about exactly this topic: https://news.ycombinator.com/item?id=20707473. Almost all the top comments are clearly on one side of the debate.
I wrote an article about this as far back as 2010. It didn't go over well then. ;)
That said, this phenomenon should not be used to justify exorbitant executive compensation that is very out of line with what the positions lower on the totem pole are capable of getting. We do not need that kind of society.
I don't get the obsession with CEO salaries. Envy is not a productive way of thinking about economics. In a huge company, distribute the CEO compensation to employees and it will be peanuts (in microsoft's case, it is something like $200 per employee - not per month or anything, that is the total). I don't get it. If all the CEOs in the world were forced to make $0, it will not meaningfully change the amount of money in workers' pockets. It is the wrong tree to bark at.
>> If all the CEOs in the world were forced to make $0, it will not meaningfully change the amount of money in workers' pockets.
> That's just not true.
But its not far from wrong -- cutting a ten million dollar a year expense and putting it to worker pay will not make workers rich in the colloquial sense.
Is the CEO some sacred object that should be treated differently than any other part of the org? Just because there are a handful of C-level execs, they deserve 20,000% bonuses while the rest of the org skimps?
It’s about equality, attributing it to ‘envy’ reeks of entitlement.
It sets the tone and it's unlikely that just the CEO gets bonuses like that. If the exec salaries/bonuses were tied to all the other salary adjustments, the incentives to care about workers would be better too.
Anyone can buy MSFT and get their share. As for the employees, they have stock options and are getting a piece of the all-time high stock price.
Although MSFT's all time high stock price was in 2021.
This goes for all public corporations. Anyone can get a piece of the action by buying some stock in them.
As for the size of Nadella's compensation package, speaking as a long term MSFT shareholder Nadella has earned it. You might want to check out a graph of MSFT's stock price before and after Nadella became CEO.
"Of this total $2,500,000 was received as a salary, $10,066,500 was received as a bonus, $0 was received in stock options, $42,269,560 was awarded as stock and $110,250 came from other types of compensation."
Set this against the several hundreds of billions added to the MSFT value during his reign, and his compensation is the bargain of the century.
As a longtime MSFT shareholder, Nadella's compensation is coming out of my pocket. I don't begrudge him a penny of it.
Microsoft has minted more millionaires among its employees than probably any other company.
I'll let you in on a secret. Regardless of what the official policy is for a company, if you feel you're undervalued, and you're right, you can negotiate the pay you feel you're worth. And if you cannot reach an agreement, there are plenty of other tech companies. In the Seattle area, there's Amazon and Google, for example. You wouldn't even have to move.
Man oh man. Microsoft really just has no interest in keeping motivated and talented people around. The brain drain is going to ramp up even more from here
If you're still at MSFT: do yourself a favor and jump ship. It's a good job, but there are even better jobs out there. Just tell the recruiter when you get your new job offer that you've been drinking $5,000 a year's worth of free soda, and you'll need them to match that with a cash bump.
There have been so many layoffs that there is a glut of software engineers looking for jobs. The company's leadership knows that now, with labor supply up, they don't need to pay people the compensation they're currently paying. This is a way of reducing pay in real terms while not taking the more dramatic step of cutting wages.
If things turn around again hopefully people remember this. This wasn't a shared hardship between leadership and the line engineers.
> The company's leadership knows that now, with labor supply up, they don't need to pay people the compensation they're currently paying.
This isn't accurate and hasn't been for some time. Microsoft's engineers are lower-quality than their peers, because Microsoft has been offering lower compensation than their peers -- by a substantial amount -- for over a decade now.
Maybe lower-level engineers don't really matter. I don't know. But unless you're at the partner level, you're getting paid a lot less at Microsoft than you would be elsewhere, and in light in recent events, you're not even benefiting from the stability you'd get elsewhere. I suspect this will have long-term impacts on Microsoft as they continue to lose talented engineers at the lower levels, but no longer have talented old-timers around at the higher levels. Once people at the 67+ level start retiring en masse, I'm not sure Microsoft actually has the talent to replace them.
> you're getting paid a lot less at Microsoft than you would be elsewhere
The one year (2016) I worked at Microsoft after an acquisition was more than any startup has paid me, even if you factor in "(stock options exit / years worked at start) + startup salary"
I was blown away and felt stupid for all the years I've been chasing startup lottery tickets.
Any of the big tech companies, including Microsoft, pay WAY more than your average programming gig. OH and they don't have career ceilings for individual contributors.
I'd happily work there again someday, and really wish someone would have told me how high the pay is at these big tech companies 20 years ago. Would have skipped the startup route.
It's not as bad as you'd think, especially for someone with a big name like Microsoft on their resume
Satya and his pals in the C-suite are relying on naïveté, since they know most of their employees are busy working diligently instead of weaseling up job offers all the time
It doesn't matter either way, people have long enough memories, there will be an exodus when the job market picks up too. MS did the same thing twice while I was there (99–13)
It's a good thing. It helps remind people that the company is not a person, it doesn't repay loyalty with loyalty. Your income is the bottom line of how you are valued, they've chosen to send a message to remind you of this
In my 20 years (not MS) we've had 2-3 temporary pay cuts during downturns to avoid layoffs -a 5% pay cut sucks but the job you save may be your own. In 20 years I've seen somewhere around 200,000 of my co-workers RIF'ed, 10,000 on the day I was hired. The company has always made it's numbers, the CXOs have always been paid more than my life's total income and yet they always ask us to do more for less. I'd like to finish out my career here but it does appear that the grass is greener and despite what I think and how I feel the company won't care and will be fine without me. Everyone should remember that.
It's certainly rough for juniors but, anecdotally, a solid MSFT senior or above should not have any trouble in the current market. Demand for good talent is high at many companies paying more (liquid) than MSFT e.g. Block.
Any large company has people in a lot of different economic, lifestyle, and points in their career. But perhaps especially at Microsoft, you have a lot of people who have been there for ages, may well have paid-off houses, have probably made loads of money on Microsoft stock and are pretty comfortable where they are. Of course, they'd rather get a few percent added to their salary. But many people in this category will <shrug> and stay put unless they're actively unhappy. That's a pretty sensible strategy in a lot of circumstances.
I was at amazon and left because the work there sucks. They’re not interested in making and shipping things; it’s just become a giant cesspool of middle managers creating process and justifying their existence.
Big companies suck. Take your brains to a smaller outfit and disrupt.
Yes and go where? Google, Facebook and Amazon are laying off people and it would be crazy to work for one of the many non profitable private or public tech compabies.
Microsoft often pays less than half what the other big tech companies pay, so it's actually not that hard to beat
Or you could take a tiny pay cut but go 100% remote and move wherever you want in the world
Another thing to consider is that most companies are working on much easier stuff than the type of problems you face at a company like Microsoft. My first tech job, we had an ex-Microsoftie there. The dude basically just sat around surfing the web all day, worked maybe 4 hours total between Monday and Friday. He was still the most productive person at the whole company, and he taught us all a lot in the process.
And even less than half…paying over $200K is still more than your average senior CRUD/Enterprise developer makes in most major cities in the US.
That’s not meant to be an insult. I spent over 2 decades as your average CRUD developer and only fell into BigTech in 2020 because I added cloud to my toolbelt
Now I wouldn’t have move from my big house in the Atlanta burbs where I was making $160K for the mid 200s. And the only reason I was even interested in my current job was that it was permanently remote.
I don’t wanna dox myself but I work for a public company who’s stock didn’t crash and who hasn’t laid anyone off and we pay similar to MS (or more if you ignore all the random perks MS gives)
This is pretty terrible advice when the job market, even for extremely well qualified and experienced engineers, is less than ideal. If you’re a highly paid engineer I’d suggest holding on to that job for at least another 24 months.
From what I’m seeing, it’s almost guaranteed you take a pay cut, and at minimum you’re going to be looking for 3-6 months, more likely 12. Unless you’re a truly genius 160 IQ engineer. Most are not. Most will be much better off staying put at their cushy big tech job despite not getting a raise. We’re on the cusp of entering what is to be the worst financial recession since the 1920s.
I never understood the idea that salaries should be expected to always be corrected for inflation, and that not doing so is somehow secretly a "salary cut". Salaries are driven by supply and demand, and individual companies (maybe not Microsoft though) can generally only afford to raise them by a given amount. If that amount is less than inflation then that's that, right? Most companies (again, maybe not Microsoft though) can't just conjure up more money out of thin air, that's not how businesses work.
It's not secretly a salary cut, it's an explicit salary cut relative to the cost of living and everything else. After all, your money is worth less now than it was a year ago if there's no cost of living increase? I'm sure the initial circumstances of salary negotiations for a position took into account current economic factors. I'm much less likely to want to stick around at a company that cannot compete with living expenses with a general 2% increase YoY. That screams stiff/cheap or that the company is on the cusp of folding.
But the company itself faces all those challenges too. Customers are cutting back because inflation is forcing them to reallocate their own spending. Supplies cost more. Raising prices isn't always possible in the face of competition, at least not enough to offset inflation.
Inflation is basically a correction for a previous period where money was too cheap. It hurts everyone (at least everyone who didn't prepare for it).
Because it is a cut. Your spending power is less. It's a real terms cut. There's a good chance they've increased their product prices by inflation as well.
I mean they don't have to raise salaries, but if someone is offering me a higher rate I'm going to go.
You have no responsibility to your company.
Now if the entire market is telling me to take a cut, either it's collusion or software developers are simply worth less now.
If the business can't afford to raise salaries to match the prices of goods, then that is a pay cut in terms of the goods I can afford. It doesn't matter why.
If I earned $5/hour last year and a gallon of milk was $5, then milk going to $6 means that my milk/hour rate has gone down unless I now earn $6/hour. That is a pay cut.
It is a salary cut because the dollar is worth less every year. It's already lost well over 99% of it's value in the last 200 years (a time when the average house cost 800$). So, if inflation goes up by 10%, your salary is being cut by almost 10%.
Presumably the business is not just leaving the prices they charge for their good/services static and saying "welp, a dollar is worth less now than it was, I guess we'll target less revenue!"
Cost-of-living salary adjustments should reasonably be expected in the same way a company is reasonably expected to adjust pricing according to economic conditions.
An inflation measure is defined by a particular basket of goods, and sometimes their prices move for good reasons. We shouldn’t expect it to always cancel out in such a way that our salaries end up with exactly the same buying power for those particular goods.
But my cost of living is factored into whether or not I’m making enough money to, uh, live. My code output is not very good while I am dead.
Employees have a mistaken belief that if profits are high they get to share in the spoils, they won't. Shareholders are who get those rewards. Either via increased valuation, dividends, buybacks, or all of the above. The only exception to that would be employees at an exec level who get richly rewarded on the basis of doing well for the shareholders.
Employees also seem to think they're entitled to receive payrises every year based on their performance, indexed/adjusted to account for CPI increases too. That's not what happens either.
Your employer isn't maximising for the socially and morally optimum outcome for their employees no matter how much they tell you you're family. The maximising for return on investment. When it comes to what to pay people, or how much to increase it, it's just a huge bunch of faceless and nameless people. Some finance people will look at the numbers, look at the market, look at the company forecasts, and make a decision on how much they're willing to spend to reach their objectives. And I guess this year they've taken a look and come to the conclusion that "there's been so many lay offs, the job market it so competitive for candidates, we're already doing enough. We can maintain the status quo, any negative impact will be imperceptible, we're still expected to reach our targets. So why pay more?".
It's worth learning how to advocate for yourself more strongly. If you're surprised by changes like this and having to negotiate strongly for your own salary it's because you've been the beneficiary or a hot market for a long time where external forces were driving that negotiation on your behalf. Times have changed.
I'm fine that but let's cut the bullshit. Quit trying to create a "culture", we are not family, we are not friends, we owe each other nothing aside from a paycheck and 40h of work a week, we don't need to help each other, we don't need to innovate, we don't need to show up early or leave late, we are strictly transactional. Don't be surprised when I leave for $1 an hour raise, don't be surprised when I don't go the extra mile. I am nothing to you but a resource to be expended just like coal or plastic and you are nothing to me but a paycheck. At least that would be honest.
I’ve experienced both. The best job I ever had was with a small, excited, inspiring team of people at a place that over-indexed on the culture stuff. Truly a wonderful experience. But it just can’t scale. It’s also super expensive (at least the way it was implemented in that place). But suddenly you’re 1000 people, pretending you’re all “family”, when in reality you don’t even know the names of half the people around you, the people calling you family certainly don’t know yours, and it’s too expensive to actually do anything a family would do together so it never happens.
Your point is 100% accurate though. We all deserve no bullshit. Just be honest with what we owe and will give each other. I know there’s been a couple of former SV darlings that have fallen out of favour because of leadership mandates about what is or isn’t appropriate at work, what they value, what your expectations should be to work there. I might not agree with them but that’s not the point. I love the blunt honesty. Huge signal on whether I want to spend 40hrs a week with these people or not. And so much more valuable than empty and aspirational values statements (or worse, recruitment marketing masquerading as values).
>Employees also seem to think they're entitled to receive payrises every year based on their performance, indexed/adjusted to account for CPI increases too
In some EU countries, companies are mandated to provide CPI increases. This has the effect of a natural greed-flation brake.
Curse of knowledge applies here unfortunately, in that it was so long ago I can’t be a reliable source on how to learn now. I recall being recommended “never split the difference” at some point and reading it and finding it useful (again, so long ago I can’t remember what’s actually in the book now).
I’d also try to hunt down a peer or someone just slightly more senior than you who you suspect is better at this than you and ask them for advice. Consider treating it a little bit like a behavioural job interview though. Questions like “so for your last promotion cycle, when did you start the conversation with your boss? What did you present to them? What format/medium? How often? What was the result? What did you expect? Did you have a Plan B? How often are you exploring other options just in case?” not so much “what would you do in this situation?”. If they’re successful you’ve more to learn from what is actually working from them rather than their hypothetical ideal.
Yet they're making huge stock buybacks and profits each quarter... something is fishy.
This is going to royally backfire as soon as the first big tech company blinks and starts hiring and poaching frustrated engineers. The exact same thing happened in the aftermath of '08 where companies that cut and held salaries flat were scrambling in '09 to retain and keep engineers--I distinctly remember Microsoft doing an across the board increase in salary to try to stem the bleeding and attrition.
Nah, Microsoft has been underpaying engineers in the US for almost a decade now. Their solution is just to replace one frustrated engineer leaving with three in India and that seems to be working great.
It's happening at other Big Tech firms as well tbh.
Also, plenty of Indian Nationals working at these firms who are stuck in the immigration purgatory have started returning to India to work at the same employer's office there (albeit with a TC adjustment that is still competitive). Heck, even Big Tech and target startup salaries in India have begun reaching the $30-50k range (take a look at YC startups hiring in India for example).
At this point, a lot of fresh Indian H1-B talent coming to the US are those who were stuck working at shitty outsourcing companies (talent which Indian companies won't touch), saved up money to do a random STEM masters to get the F-1, get a couple years of American work experience plus save dollars, and then return to India.
Same thing happened with the Electronics industry in the 1990s-early 2000s with Taiwanese nationals leaving Silicon Valley to return to Taiwan or moving to HK/mainland China (live in HK, commute to Shenzhen/Dongguan/Guangzhou), Korean nationals returning to work for Korean companies in the 2000s-early 2010s, and Chinese nationals in the 2010s-Present returning to Mainland China.
Yea I think they already gave up on trying to compete for talent. I mean look, they basically cancelled the Edge team and kept a skeleton crew around to customize Chromium. They can just throw money at new tech or businesses rather than growing it at home. Still, this has got to be a gut punch for employees who see $MSFT outperforming the rest of the market by a record margin.
First time I have ever been called "anti capitalist" and I've been called many things:} Believe it or not there are employees of M$ that do not receive stock as compensation. Those of us (I include myself) that do live in the capitalist/libertarian bubble and get such things tend to forget that. These non-shareholders are also the ones most impacted by inflation and tend to work hourly.
I was not trying to imply there is some grand conspiracy. I was however trying to point out how the incentives of large companies are structured and are often skewed. God forbid any of those non-shareholders try to form a union.
Maybe it would be good if more people in the bubble walked a mile in some one else's shoes.
I own 1,000,000 stock and are paid 1$ and 150,000 stock - CEO
- CEO: "I am freezing wages"
- Stock goes up 10% Year to Year (say 100->110$)
- inflation was 10%
coder: salary is effectively 135k, ($15k loss), stock went up 1k
CEO: salary is down to 90 cents (10 cent loss), stock went up $10,000,000)
HN commenter who apparently things they are some great economist but quite obviously can't do basic math:
"But everyone gets to own stock!!!"
So to the meat, does the employee have the option to be 100% compensated in stock? NO. The CEO is effectively compensated that way, and LOVES IT because the effective tax rate on long term capital gains is 15%. You know, I would have LOVED to have been compensated in 50% stock or some equivalent with stock options (backdate me pleeeze like the CEO of UHG got to!)
So maybe I'd take your dumb comment at face value if everyone got to participate in the great executive tax fraud, but... we don't.
It’s actually not that pedantic, it’s like calling JavaScript “Java”. For stock options to be profitable the stock has go up. Stock grants are simply cash in a currency that may be more or less valuable than originally granted.
Employees get both options and grants, depending on their position and so on. And stock does go up. It's Microsoft. Otherwise you can... just not use the option. The purpose is to encourage employees to help the company and raise the stock. In theory at least.
Thanks for explaining it but I know how it works better than most here, hence the comment.
If you get $100K in stock options at a certain price and the price doubles, you make $100K. If it stays the same, you make nothing. If you leave, you have a certain period of time to exercise or you lose your options.
If you get $100K in stock and the prices doubles you make $200K. If it stays the same, you make $100K. If you leave the day it vests, you keep it.
They’re not at all similar except in the fact that they’re securities. Using them interchangeably is a great sign to ignore any financial commentary from that person. I’m only here because I see this mistake in every single thread that has anything to do with compensation. Engineers need to get financial education.
You understand other people can read and learn, right?
>And stock does go up. It's Microsoft. Otherwise you can... just not use the option.
And lose the equity portion of your compensation, unlike stock grants. You don’t seem to get the nuance but you are so desperately trying to dismiss my point.
What nuance do I not get, buddy, you're literally quoting me saying it. Yes, if the stock doesn't go up, you get nothing. I said this myself. This is an incentive for employees to work for increasing the value of the company.
What is it you think I'm missing here at all? You're pissed employees get nothing if stock doesn't go up? You think I'm missing that? No, THAT'S THE WHOLE POINT OF OPTIONS.
I know almost nothing about this, so as far as I understand stock options are like stock except they start from "0" and you can only cash out the positive difference?
Like you can only earn from the company's future growth.
A (call) stock option is the option to buy X shares at Y price by Z date (a put option is the same thing but to sell instead). You can go on any brokerage and buy a call option on Apple, for example, which would be the option (but not the obligation) to buy 100 shares of Apple at some strike price, say $200, by some date, let's say August 31, 2023. This privilege of having this option will cost you: let's say $2,000 (the real price is calculated via complex formulas). When August 31 comes around, you can either buy or not buy, but your $2,000 is gone either way. If Apple goes up to $300 on August 31, that option will now be worth $8,000 (($300 spot price - $200 strike price) * 100 shares - the original $2,000 it cost you to buy this option). If Apple went to anything below $220 ($220 - $200 * 100 - original $2,000), it wouldn't make sense to exercise your option since you would lose money. This is the basics of it.
It's generally not interesting for an employee to receive options because if the company doesn't perform well by the time your exercise date comes around or you leave the company then you get little or nothing. You would rather get stock grants which are shares that have value. If you get some shares when Apple is $200 and it goes to $100, you still have half the value of your shares.
Generally, in public companies (with extreme exceptions), options are issued to executives whose compensation is dependent on how much they can increase the company's share price. If they fail, they get little to nothing. If they succeed, they make a lot.
Thanks for asking. Let me know if you have any questions, I'd be happy to explain more.
As a percentage of the SP500, it's never been higher.
This is important because (a) economic performance is relative (b) the most likely thing (or at least the most advisable thing) for anyone who receives MSFT RSUs is to immediately sell them and use the proceeds to buy more diversified investments.
Freezes salaries, but also dials back on stock grants and bonuses. So depending on how one views "total compensation", Microsoft is handing out pay cuts.
You know, nearly anyone qualified to work at Microsoft (at least as an engineer) is qualified to work for some yuppie Wall Street job paying obscene salaries and bonuses; I think this is going to have the selection bias effect of the people remaining are people who cannot find work elsewhere.
If their goal is indirectly lay people off, I really think that they have not thought this through.
Having friends and former colleagues who work in the "yuppie Wall Street job", it doesn't pay the obscene salaries you think it does, even at the major hedge funds and investment banks, even in NYC and Chicago. The number of super-high NFT development jobs is vanishingly tiny. Most jobs at trading and investing firms for developers pay the same or even less than elsewhere. Sure, if you're a Calypso or Endur or Murex specialist you can command the $300+/hr rates, but then you may be out of work for six months or more when the project finishes. There's no easy move from FAANG while keeping the high salaries, there's 1+ orders of magnitude more jobs in FAANG (or at least there were) than in high paying non-FAANG development jobs. Most development jobs pay not much more than an experienced public school science teacher, and without the job security.
Fair enough, I was thinking about companies like Jane Street, paying starting wages of about $200,000/year for engineers [1], and I've seen a few other trading places offering similar wages. When I was at Apple, my base pay was $175,000 when I left, with about $60,000/year of stock. I've never worked for Microsoft but I assume that the pay is comparable to Apple
Entirely possible that the quantity of trading jobs available isn't nearly as high as something like MS though.
The total number of PropTrading engineers in the US is most definitely in the low to mid thousands at most. Most PropTrading firms are tiny from a headcount perspective
For example, Citadel has around 600-700 engineers globally and Jane Street only has around 400-500 globally. Both of these firms are actual behemoths headcount wise, and most other trading firms tend to be way smaller (total headcount in the high double digits or low 100s if lucky).
Meanwhile, Microsoft alone has around 70-75,000 engineers. PropTrading gets a lot of mindshare among TC chasers but is a very small industry.
Also, salaries are definetly comparable when factoring in hours worked, exit opportunities (PM/SE/EM/Entrepreneurship while working in Trading you deal with forced garden leave/potential litigation when job switching within Trading), and even the base salary itself. I remember IMC was offering around 100k base in Chicago in the early/mid-2010s when you could earn 90k-110k base at Groupon or JPMC as a SWE while working 30-40 hour weeks.
FWIW I switched from FAANG to trading last year and got a pretty big comp increase. I was entertaining an offer from another FAANG at the same time and it was still nothing compared to my offers in trading.
Won't give my current salary because this isn't anonymous, but my 2021 TC was ~150. Another FAANG offered ~200, and trading firms all offered numbers way higher.
That makes sense! I was giving early career ranges in Chicago in the mid-2010s (without factoring in bonus). NYC PropTrading salaries are (unsurprisingly) higher.
That said, mid-career (5-7 YoE) tech in the Bay Area at least reaches around $170-250k base with an additional $100-400k in stock+bonus over the 4 year vest.
Factoring in hours worked it seemed more competitive than around $200-300k TC for SWEs at the larger PropTrading firms in Chicago at least.
Post 2008, tech companies on the west coast easily beat out financial firms in NYC/Chicago on pay to quality of life ratio, and especially on pay per hour measures.
And as you said, the number of high paying jobs (in the multiple hundred thousand dollar range) in finance is much less than the number of high paying jobs in tech. It makes sense given the heavily subpar performance of financial companies relative to tech companies in the last 15 years.
> Entirely possible that the quantity of trading jobs available isn't nearly as high as something like MS though.
Yes, exactly. Other companies like Jane Street definitely exist in the finance space and pay really well but collectively hire far fewer engineers than FAANG + FAANG-like companies do. The thing I like about them though is that most of the time their comp is all cash (salary + bonus) so you don't have to wait around for anything to vest before you can move on, if you so desire.
Yeah, that's what people tell me, though the Jane Street interview is pretty tough; I've interviewed with them three times, and also been declined three times...so maybe I'm disproving my own point here.
I mean, they were honestly fairly typical interviews, just a few pretty tough CS problems.
In one I remember one problem asked me to implement a hashmap, which wasn’t too hard, and then the second one had to do with some sort of latency prediction thing, where cleanups had to be done after certain numbers of milliseconds. I am afraid I cannot remember the details, but I remember that the second problem was quite difficult.
I suspect I could do much better now (or at least I hope I would), but I have not interviewed for them in like five years.
When was its height? Even with stock packages at Apple I was getting closer to $250-$300k/year total comp. This would have been September 2018 until March 2021...
Height was probably something like mid-2021 to early 2022. But note that Apple (broadly, handwaving, obviously subject to stock price fluctuations, offer negotiation, time-in-role, etc.) pays their software engineers less than the other FAANGs. Substantially less than a few of them.
I don't know, I worked at a trading desk of a major bank. All the smartest PhD quant analysts worked from some Siberian village for like $20k/year. Those who really got the dough were the traders in NYC.
I don't necessarily disagree, but fundamentally I think this will lead to "anyone who can find a higher-paying job will find a higher paying job."
Part of what's enticing about these "blue-chip" megatech corporations like Microsoft or Apple is that they pay good salaries. Most work at these companies is not interesting (at least it wasn't at Apple), but you stay because the pay is good.
If the pay is shit, I'll take interesting work at a startup, or I'll find a place that does pay well (like Wall Street).
A lot comes down to what life stage employees are in. Someone with fixed monthly costs and kids in school is not going to want to a) move and b) deal with the anxiety of working at a start up.
Yeah, that's fair, though I still think that's going to selection-bias towards employees who can't really find work elsewhere.
I don't know about Microsoft but certainly at Apple there were plenty of people who were pretty mediocre engineers...I certainly was the last 6-8 months I was there because I hated it so much and realized they probably wouldn't fire me.
My cynical hot-take is that big companies don't need great engineers, they need engineers who are good enough to complete the tickets their given and move on to the next one. The great engineers I've known came up with innovative ideas that were briefly admired and then quickly squashed. A few good architects can make a difference, but the army of SWEs are just there to keep the roads rolling.
Would you take a pay cut to save someone else's from being laid off in your company? It's a serious question, just curious, there is no right answer - I wouldn't, nor would I accept even a $1 cut in my pay - the day that happens is the day I give my notice. Not an option for everyone I know.
Do I get to choose who does and doesn't get laid off?
I'm being facetious but I honestly don't know. I've become a softy in my old age. I can imagine how deeply awful it would be for a breadwinner with a home and kids. Even for people I work with that I don't particularly like, I wouldn't want to put them in that situation.
Like a lot of Americans I've been experiencing a lot of envy for the more socialist European companies where maybe people have less to gain, but they also have less to lose. All I really want is a comfortable life for me and my family. I'd like the same for everyone else.
As someone who has lived in Europe and since returned. I can tell you people there are way way more happy and I’m also more frequently seeing the “saltiness” towards Europeans on here because of it.
I remember working in Europe, and going to the park during a week day and seeing all these parents, both Mum and Dad playing with their children in the sun with this kind of carelessness about them. I vividly remember being shocked at that scene. I’d never seen it before.
People would just go home from work and not “grind” away at their jobs.
I think given a few more years of “automation” and most Americans might think differently about free market capitalism. Maybe at that stage it’ll be too late to change to something better?
Europe is a kind or project too, it’s a work in progress. I think their systems will just improve over time.
So you wouldn't take a $1 pay cut per year so that a person might have enough to take care of his family? Is this who you really are? $1 that could save someone from starving and you wouldn't give it? It says a lot about you to make such a statement, I am not sure you realise this.
you really think a tech worker with any skills at all is going to starve? If their skills are so bad they can't get another job, then they don't deserve to be protected in the job they are currently in -
However, would I give someone a $1? sure and probably a lot more - but that is different than accepting a pay-cut for any reason from my employer who is booking billions of dollars a year in profits while letting people go.
Hmm, still doing stock buybacks and paying dividends -- so exec comp remains buoyant.
Back in the early 1980s it was hard to get software companies financed: "Why invest in a company whose primary input walks out the door each evening" (i.e. has no capital assets). Obviously that was eventually sorted out, but the underlying concern was not totally bogus.
If you like a company like Microsoft you can tolerate no buybacks and even a dividend cut if it means the company continues to invest in its people.
I don't understand the framing here; isn't salary dependent on job competition in the market (one which is currently full of layoffs) and has little to do with company profts?
Bonuses are what are usually tied to company performance.
I'm simplifying, of course, but trying to understand the issue.
There is nothing to understand. There are two classes: Shareholders and Employees. Always been. One take the risk and reward and one take a fixed salary. Some people want to have their cake and eat it too (ie: take a fixed/stable salary while also a slice of the profit).
I don't know that's a fair characterization of risk profiles.
As an employee you're still taking a risk at the company. It falls over you are out 100% of your pay + your health benefits. As an employee I absolutely take this risk into account when evaluating an employer.
Shareholders sometimes take a similar risk, but are often reasonably insulated from major downside via financial mechanisms of varying complexity, from index funds to complex options contracts.
An investment that’s insulated from risk generally has a negative real return (at least as long as the risk-free rate is negative). Insurance via options is very expensive.
The idea I'm trying to convey is not no risk it's risk capped at tolerable levels for plausible outcomes (index funds can go to zero in principle). The latter is often an option that is available to capital holders.
Employment conversely, is almost always placing all your eggs in your employer's basket. If the basket tumbles many employees will lose their shirt in a big way.
Ah ok. Software engineers typically make enough relative to cost of living to sock away quite a bit of savings, though? So losing their job and having to find a new one isn’t usually enough to lose their shirt.
And I feel like the recent bull run has made people forget that stock as a class can be extremely risky. Like the entire market going to 1/10 its former value risky (peak to trough in the Great Depression, the indices lost 90% of their value).
Happy engineers do better work. Half the reason Google is really falling on its face right now is that management has made it clear to eng that we're not respected the way we were 10 years ago. So we no longer go above and beyond for our employer because they no longer go above and beyond for us.
Doing less work is a classic and reasonable negotiating tactic for employees.
Employees are counter parties to any negotiation and they're not as powerless as big companies like to make them feel.
The saying is simply the idea that someone can have a mental impression of something, and it defines how they see that something, regardless of the truth.
It doesn’t seem that controversial to me and certainly isn’t literal.
Yes, it is. You’re right. That’s how bean counters and HR and sr management see it: what’s the absolute minimum we can pay our people.
Wiser outfits stay above that fray and compensate commensurate with employee expectations too. If you’re not getting a CoL or inflationary increase, you’re getting a pay cut. Plain and simple.
AI writing all the code for companies isn’t here yet, so I think for now they’d be wiser to keep devs happy. Especially if they’re flush with cash.
Expectations are surely based on what the market will bear. So if tech companies are all trying to cut costs and hence limit pay rises, it would be irrational for an employee to expect more.
Prices are a function of supply and demand, including how much buyers can afford to pay. How much buyers can afford to pay is a function of profits.
A business with higher profits per employer can afford to pay employees more, but that does not mean it will, since prices are still subject to supply and demand.
Whether or not it is a salary or bonus does not matter, it is all part of the price the business pays for the labor.
Bingo. After about a decade of tech workers thinking we were part of some global aristocracy just because we could afford payments on a Tesla and could (briefly) get multiple job offers from companies... The minute we get into a bear market, suddenly we're all César Chávez, fighting for the working class. How the turn tables!
How can you count yourself as working class? Even outside top US salaries most of us could probably take several years off the job without any huge issues due to savings/investments.
I mean of course we are providing labor for money, but this is very different than a blue-collar worker living paycheck to paycheck doing hard manual work.
We have far more in common with blue-collar workers living paycheck to paycheck than we have with an socialite whose inheritance grows faster than his or her ability to spend it.
Fundamentally, almost all of us are N missed paychecks away from bankruptcy. For a lot of people, that N is 1, for some, it's 2 or 3, or even higher if you managed to save wisely. But we all have some number N. And the fact that we have that number should unite us against the few people on the far side of the derivative curve whose N is infinite. Tech workers had their relatively brief moment in the sun where their N was maybe 10-20, it got to our heads a little, and we started thinking we were "very different than a blue-collar worker".
I agree, of course, that tech people are closer to the worker class than the capitalist class and there are many common interests.
On the other hand, as long as you manage your finances sanely, even in Europe you can reach a FIRE state (maybe not 100% retirement, but very close to it) in your 40s without too many issues.
If someone in tech is close to bankruptcy, due to missing a couple of paychecks, I really have a hard time to understand how they accomplished that. Of course, that may be different, if you just started your career.
Nevertheless, I know exactly 0 blue-collar workers (and I know quite a few) that could do FIRE in their 40s, and with sane financial management decouple themselves from the whole runmill in like 2-3 decades.
Developers increasingly see those factions as being opposed to them, so you're seeing that in aggregate sentiment. You can view this dispassionately as a kind of empirical signal.
Squeezing people doesn't make them like you. Who knew.
Nationalized companies care about the hierarchy that ends in the parliament or political system of the country they're in, which can be a mixed bag and doesn't really involve caring about their employees beyond the basic decency of their overseers.
That sounds exactly like anti-nationalization propaganda, I wonder why, and doesn't actually make sense if you understand what nationalization actually is.
Sure, but there is a clear disparity between how much you make on the amount of stock you can reasonably have versus how much executives make on the amount of stock they have. The parent comment implies there is some kind of level playing field here, which there really isn't.
No, you wouldn’t because the stock price would keep going up so you would sell less and less each time and when the price got too high, the stock would do a split. Every time a dividend is paid out, the stock price drops by an identical amount. It’s the same thing as selling. This wouldn’t be a problem unless you have BRK.A, for the other 99.99999% of stocks it’s fine. Do the math yourself and see.
From a purely financial and management perspective, this is an EXCELLENT decision. It really is a _lazy_ method to handle layoffs with excellent perception from stock holders' viewpoint. We all know how bad it looks when management executes on a situation similar to Gavin Belson firing the Nucleus team. Perception is all that most management and financiers care about anyways as long as the money keeps flowing. The people do not matter, only the money does. It is acceptable to sacrifice your people, as well as the welfare and good will of your employees, in favor of shareholder primacy anyways. So instead of doing layoffs, instead you can make business decisions that negatively impact employees to _make them want to quit on their own_. Hell... that saves a lot of money in the long run as well as a lot of time on management's end ( time = money ). Then when top or even mid talent is lost, it still doesn't matter because the "left overs" that remain still keep the business running at a "good enough" level.
And that, my friends, is the key phrase on what is prioritized in all business right now ... "good enough". All that matters nowadays is the answer to the question of "good enough". For example:
- Are the quality/quantity of FT employees we currently have on payroll good enough to keep the business running?
- Does our invoicing/contracts/income look good enough?
- Are we doing good enough to keep our competitors at bay?
- Is there anything we can cut to stay good enough?
- Are there good enough incentives for our employees to stay with us?
- Are there good enough incentives for our CUSTOMERS to keep doing business with us?
It is my opinion that the days of "expecting excellence" or striving to "be the best" is totally over for the current generation. For the most part in the tech business environment, management and market forces are only interested in keeping money flowing at a "good enough" level. On top of that, western culture seems to have forgotten what "the best" even means right now. And without even having a definition of "the best", how is it possible to be "excellent"?
We are in the middle of an extremely boring time in our lives. There is a massive drop off of real talent and creativity. Top and mid talent are deciding to hold back because the incentives are few, if any exist at all. Honest improvements and true innovation will be stagnant for at least 5 more years. Boredom will be the norm for a while. Until something actually _exciting_ happens or something incredible is discovered (I have NO idea what that could be), this will be the norm for a long time.
> this is an EXCELLENT decision. It really is a _lazy_ method to handle layoffs
That's one way to see it. You could also see it as a tremendous blunder. The people who will "self-layoff" are not the low producing team memebers. These are the people who know their value and have competitive even better offers elsewhere. You just took anyone with a modicum of ambition, skill or talent who was already contemplating a move and gave them a big ol' nudge to do it. People who are low producing will put up with what they have to. They may complain but they won't self select out.
At this point all tech employees, especially those who work at large tech firms are one big union - you're definitely getting treated like one big heard, whether you like it or not.
Share your salaries, train each other, give each other confidence, and get your worth!
In the 90's the Seattle Times estimated that 10,000 millionaires (excluding the value of their homes) live in Seattle that made their fortunes from merely being an employee of Microsoft.
Microsoft has been bleeding talent for the last 5-6 years due to low compensation. It's why the SLT authorized a "correction" in pay last year that saw many people get a significant pay bump. Lots of new college hires have even stated that Microsoft's offer was the lowest offer they received. Levels.fyi tells basically the same story as well if you compare Microsoft to many other tech companies.
One thing to note is that the bonus and stock award budget have been reduced from last year where it was inflated. So, it's back to normal. What is frustrating is that it's also likely "back to normal" for the executives when it should be minimal to non-existent. The pessimist in me says that this is nothing more than juicing the quarterly stats so that Satya and his directs hit their targets for their "normal" bonuses.
Honestly, this is the closest I've seen the company to unionization and I'm willing to bet that efforts are going to start soon. Especially if the Q4/annual results exceed expectations.
Every time a company is one day telling the employees that they need to take a pay cut to keep the company "competitive" (and this pay freeze is actually a pay cut), and the next day they're doing a stock buyback and the C-Suite is giving themselves enormous performance bonuses they need to worry about unionization.
Dividends should be a sign that a company has excess cash and can't find a good place to invest it. Paying a dividend while asking workers to take a pay freeze signals they don't believe the workers are returning enough value to justify paying them more.
Buybacks are actually better for employees with unvested grants. If you have 100k in unvested stock and a dividend is issued, you get nothing. But an equivalent buyback raises the price and now you vest a higher amount.
Because I have to sell the shares and I get a bunch of cash. Dividends could happen yearly and for significant amounts, considering how cash rich these companies are.
For the whales, sure, they're great, since they do the whole "borrow against the share price and extend forever".
Not to sound too much like a libertarian, and I'm not against unions, but isn't this something that can be more or less corrected by a lot of engineers finding work elsewhere? It's not like Microsoft has anywhere near a monopoly on the software engineering space anymore, and most of the engineers there can probably adjust to remote work without too much of an issue.
Then we get the cycle of Microsoft complaining that they can't hire enough people, and then they bump salaries up again to be competitive.
> but isn't this something that can be more or less corrected by a lot of engineers finding work elsewhere?
In this market? I'm skeptical. I'm sure some fraction of them can do so at equivalent or higher pay, but the tech market at the moment is quite soft and I wouldn't be surprised this was taken into account and served as another motivation for this move from MS.
That's fair, I was a victim of the layoffs of 2022 (well, sort of), and it took months to find a job paying well enough to cover my mortgage. I did find one, and I really like it, but it took a lot of time and effort to find...certainly harder than it was early last year.
> Microsoft has been bleeding talent for the last 5-6 years due to low compensation.
I have been hearing this for awhile now. When I compare MS pay and benefits to what is on offer at other companies, almost the only jobs I see with better TC are at Meta and Google. And that will likely not be a thing of Meta's future.
Things have probably changed in the last year or so since the pandemic, but due to a combination of stock appreciation and much smaller company size pretty much everyone was paying more than MSFT : Uber, lyft, airbnb, snowflakes etc... and a bunch of pre-ipo company depends on how much one believed their valuation.
The only company paying worst than MSFT were the hardware company such as AMD,Qualcomm and intel. But hardware companies are known for low wages
Just yesterday an HN post stated "Employers have the upper hand" and every comment called it out as being wrong, bullshit, incorrect, whatever. I guess it is possible that a ton of Microsoft employees will leave the company based upon this declaration, but I doubt it. I think yesterday's article was way more accurate than people want to admit.
For the quarter that ended on March 31, Microsoft posted revenue of $52.9 billion (up 7%) and a profit of $18.3 billion (up 9%). Microsoft had $26.5 billion in cash and equivalents as of March 31. Despite the rosy results, Microsoft employees are not getting pay increases. Nadella's own pay increased 10% from 2021 to 2022, rising to $55 million.
This comes off as shortsighted. If I wanted to optimize value, I would offer more incentives for employees to perform better. It's not even a political issue. Just a matter of decency and fairness.
People clearly play the Iterated Prisoners Dilemma even in contexts where they’ve been intentionally isolated and freed from context (eg, psychology experiments) because we’ve evolved a group mentality — one that encodes game theory optima as a primal impulse.
Corporate leaders who forget that tend to blow their own company up, when humans instinctually repay defection with defection — as cold, hard math dictates they should.
We’ve seen many examples, in different context - from pay withholding to marketing campaigns that denigrate customers.
The economy is unstable, meaning we may only make 5% more profit next year. Layoffs and pay freezes will continue.
There are two ways this pans out. Either big tech is bloated, and wages will fall over time - or current big-techs will flounder as smaller firms out compete them. This happened to HP/IBM and others, why would Google or Microsoft be immune?
Yes, but your investment from the home made up some of the difference possibly depending on when you bought. That’s a different source of wealth and one not everyone has.
Not an investment - more of an inflation hedge. Yes I realize that a primary home can be considered an investment. But that’s an often argued rabbit hole that I really don’t want to go down.
Right. But paying people and keeping your best talent there is a business concern I thought they’d be about. Guess not. Folks will vest shares and just leave me thinks. It shows they don’t care about their people. It’s unlikely that doing even the normal raises would jeopardize the company financially. Not in the least. So… and yet Nadella gets a big raise. Why? If he’s meeting his goals it’s only because his employees helped get the company there.
So where are these smaller firms and where will they get funding in the current market?
In the case of MS, is a smaller firm going to overtake Windows? Azure? Office? Are the smaller firms going to win over the risk averse enterprise companies with long term contracts with Microsoft?
In the case of Google, is some smaller firm going to take over Search? The massive amount of resources to run YouTube? GCP? Google Suite? ChromeOS in schools?
> It's not even a political issue. Just a matter of decency and fairness.
That's precisely what they want you to keep believing.
The truth is every single aspect of every employee/employer relationship is political, and always has been. If you don't accept it, your children won't have a choice to.
> Employees are hired in order to create value for the company. Employees get jobs in order to get paid in exchange for that contributed value.
Lots of tech employees get hired to grow their director's/VP's little fiefdom within a company. Higher interest rates hopefully will reduce this, but it's still prevalent at large tech companies.
> It's not political. It's the Law of Supply & Demand.
I wonder what Adam Smith had to say about market inefficiencies caused by regulatory capture, rent-seeking, and collusion. I'm sure the market will magically fix these inefficiencies without outside regulation.
> Employer and employee cooperate for mutual benefit.
Really? Employers sure do cooperate with each other against employees [1]. I don't want to cooperate with an entity that views me as an adversary.
IKR? A stagnating wage means you're actually taking a yearly pay cut, and inflation adjustments actually mean a stagnating wage.
It was less noticeable before the pandemic because only assets were growing faster than inflation while food and goods seemed to stagnate, but now everything is booming.
Consider that other professions have less bargaining power than SW devs.
I'm thinking about moving to Belgium where I hear salaries are automatically indexed by inflation.
The deflation has begun, if you look at M2 money supply. But food is not going to decrease in price, and housing will lag. So it'll still feel like inflation, but consumer goods are already going down.
(1) It doesn't matter if the economy will be subject to deflation in future, right now it is not, and while later in this thread you talk about 2nd derivatives being negative that just means the rate growth of inflation is dropping, not inflation itself, so excusing below inflation compensation changes is BS.
(2) If/when deflation does occur, we know from prior instances the reduction in worker compensation is much higher than the rate of deflation.
I don't get this attempt to represent below inflation compensation changes as ok because one day in future some economic change will make this years actions "reasonable", because that is assuming that this year is a one off, rather than recurring. It also presumes that wages won't be cut even more when deflation occurs (generally by mass layoffs and then rehiring the now unemployed when their choices have been reduced to "homeless vs lowered pay").
We also know that businesses don't actually foresee a problem with deflation as they're still happily giving mass payouts and wage increases to their executive management, performing stock buy backs, and issuing large dividends. If companies were actually legitimately concerned about the potential for a deflationary event they would be hoarding cash.
>If companies were actually legitimately concerned about the potential for a deflationary event they would be hoarding cash.
Or freezing salaries. Just like in the article. I don't really have an answer for you with regards to any stock buybacks or large dividends.
I'm not talking about anything as reasonable or mentioning the 2nd derivative myself. M2 money supply is a specific thing that is responsible for money creation, it's going down now for the first time ever. We are in uncharted territory.
2nd derivative being negative doesn't mean inflation is becoming deflation though, it just means that the rate of change of inflation is decreasing, but the inflation(and rate of change of inflation)itself will still be positive(unless I'm misunderstanding something, which is entirely possible).
The reported number is backward looking year-over-year. A 4.9% rate says the price of their basket of goods is that much more expensive than it was a year ago. Last month the inflation rate was 5% when compared to March of 2022. So, in a sense, goods are becoming cheaper.
In absolute terms, groceries, airline fares, new cars, hotels and household energy (such as electricity, fuel oil and utility gas service) are actually cheaper than they were a month ago[1].
You're not wrong, it's one of those "HN traps": we're smart, and we can apply that other places, and even find other people who will back up our findings and agree. But colloquially, in the actual field, people expect something different.
Makes it hard to converse because _nobody_ is wrong here: i half-assed my way through an economics degree and know just enough to know OP is making a relevant comment, then confirm their comment: M2 money supply, is in fact, decreasing.
The alternative of lay-offs is a false one, IMO. This is an independent action because the current environment and tech skills situation says they can probably get away with it. Collusion will spread across other major employers, in parallel to lay-offs.
I predict 'big tech' employees will start to unionize to fight the collusion of tech firms laying off and cutting pay (and if you don't think they're doing this, remember they already have).
Does anyone still actually have much respect for executive levels of big corporations?
All I ever see is more and more naked greed and talking down to employees as if we are idiots that cannot see through their BS.
Like all of the return to office stuff. We all know it's not about "in-person collaboration", but that's the line they think we're most likely to swallow.
I've always thought they were greedy, but one thing that these recent layoffs have really illuminated for me was how utterly stupid these executives are. I guess I had just assumed that Satya Nadella and Sundar Pichai were smart guys...why else would they be in charge of these huge corporations?
But then the layoffs happened, and they both gave a big song and dance about how they're "taking responsibility" (whatever the hell that actually means), and that these were "tough decisions" to fire tens of thousands of people.
It shouldn't require a 10,000 IQ to think that maybe hiring thousands of more people than you actually need is a bad idea, and if they couldn't see shit like this coming, then what value are they actually bringing to company? Vague truisms and platitudes about how they regret having to uproot peoples' lives?
ETA:
Some of the responses might have proven me wrong. These executives might not actually be idiots, just sociopaths. My bad.
Satya Nadella has made it abundantly clear that he's a moron, or at the very least a gambling addict. Does it really make sense for him to be in charge of a company that is worth almost as much as the nominal GDP of Africa [1] [2]?
Microsoft overhired like crazy in 2021 and 2022, many of which they had to fire later.
This is a bad allocation of funds, but presumably this was done because of the off chance that the market would keep growing and the work for these people would follow.
When you do high-risk things with the express purpose of short-term gains, that's basically just gambling.
> It shouldn't require a 10,000 IQ to think that maybe hiring thousands of more people than you actually need is a bad idea, and if they couldn't see shit like this coming, then what value are they actually bringing to company? Vague truisms and platitudes about how they regret having to uproot peoples' lives?
In what world was it a bad idea for them to hire thousands of people and then fire them? Laying someone off saves tons of costs, and in the meantime, you prevent your competition from utilising those resources. Literally a win-win for them. I say this as someone laid off. I don't understand how this whole trope of 'lay offs are bad for the company that did the laying off' has taken over.
It makes 100% of sense to hire and fire if your competitors are doing it, and you have the money. Microsoft is not suddenly going out of business here.
That's why, as an employee, it's smart to work towards financial independence and just not quite give a whole lot of you know whats. Like when my former boss told me layoffs were expected, that was just a signal that I was going to have way more time to go skiing, which we did.
The main reason so many employees feel like suckers is because they are not as ruthless as their ceos. I changed jobs during the pandemic with the express purpose of maximizing compensation. I made way too much for those years, and when I got laid off, I got free unemployment, free medical, and a free sabbatical. The only ones who were suckers were those who gave their companies loyalty and got laid off anyway. Stop doing that.
I mean, it feels almost self-evident that you shouldn't hire more people than you need; if you don't need them then that's not an efficient use of resources.
Now, it's possible they hired all these people in anticipation of future needs, which is fair, but it doesn't take a hyper-genius to know that markets fluctuate, particularly after a global pandemic.
So at this point, either Satya Nadella is so stupid that he didn't know that markets tend to fluctuate, or he's gambling with human lives.
> I mean, it feels almost self-evident that you shouldn't hire more people than you need; if you don't need them then that's not an efficient use of resources.
The entire point of a low interest rate economy is that, if you have a bunch of cash, you need to put it into something other than a savings account in order to make anything of it. From that perspective, simply paying engineers to sit and twiddle their thumbs all day has the business advantage of preventing your competitors from moving any faster or to prevent your employees from forming future competitors. It's a complete win win for the companies.
hind sight is 20/20. I'm not saying tech CEOs are psychopaths or anything. IMHO they are just incompetent and not worth the salary they receive which is often 500X the average employee.
In fact they remind me of financial advisors who charge you regardless of whether they make you or lose you money and are all consistently worse than passive investment in the long run.
That's how I feel about these overpaid CEOs. They are worth orders of magnitude less than they are paid
The promo system I have seen in a FAANG company consistently selected for those who were 1.5X the average employee in terms of competency and 10X the average in terms of greed and shameless-ness.
Put this next to the fact that high level executives are paid upwards of 100X the average employee.
This is unfortunately Misjournalism. The article states that the CEO took a 10% raise last year. The article further states that that employees up and down the whole company were getting huge raises last year in an effort to increase the company's approval rating with its own employees. He got a huge raise last year because lots of people got a huge raise last year.
Presumably then he won't get a raise this year along with the other employees as well.
Not really. If the CEO was in charge of the direction of the company, and that direction was so bad that they have to make major layoffs and cuts, then they shouldn't be rewarded for this.
This isn't a fucking game. These are human lives. Microsoft laid off 10,000 humans [1] because their idiotic CEO decided it would be a really good idea to overhire like crazy in 2021 and 2022. This was the wrong decision and now they have to do massive layoffs and paycuts.
Compulsively making high-risk decisions in the hope of short term rewards is such a common thing that we actually have a word for it: gambling. This gambling addict has uprooted 10,000 human beings' lives, and yet he still gets a $10,000,000 bonus. Get off your high horse.
It’s kind of odd to think it’s NEVER correct for a company to do layoffs. The CEOs job is to run the company - if the company is more efficient why shouldn’t the CEO be rewarded? Their job is to run the company not never fire anyone.
A company like MS should have systems in place to make employees more productive than they would be at other organizations. (After spending nearly a decade there, that is somewhat true, but it could of course be a lot better[1].)
If a large corporation that has the power to do damn nearly anything can't figure out what to do with ten thousand highly talented software engineers, then some people in leadership need to discover some new sources of bright ideas.
[1] There are things MS is really good at operationally, getting contracts signed, getting marketing efforts in place, localizing software for true world wide releases, security reviews, etc. Sadly they got rid of their engineering excellence org years ago. I once spent over a year looking around for someone who knew SQL who was available to spend half a day helping me optimize a database. Then there is the time my group couldn't find anyone who knew how to write software for Windows...
If Microsoft limits changes to Windows and Office to security patches and bug fixes only for 2023, it could pay huge productivity dividends to the entire world.
it is a dangerous simple view and it is why communisum brought so much sufferings because in the real world, it is not that simple though.
let's go along with your view. EVERY CEO from EVERY COMPANY must optimize for not hiring more than they think they need. The result would be that there would be much fewer jobs available in the market. Some of the 10000 humans would never get a good paying job in 2021 and 2022. Isn't it a worse outcome for these 10000 human beings?
I really have no idea what communism has to do with anything so I'll ignore that part.
I'm sure a good percentage of these people quit jobs specifically to work at Microsoft. When they quit those jobs, their employer probably filled that position. Then Microsoft fired those people, and it's likely that a lot of people were unable to go back to their previous positions.
This isn't even taking to account people who moved to Washington or California to work at Microsoft, who sold their homes to move to a place with a substantially higher cost of living.
Okay. So to go along with your assummptions. Their old employer filled their old positions. It means another group of people who filled their positions benefited (lets call them group B). group B moved up the career chain. It is annoying that group A needs to find jobs again. But we can assume that group A can find better jobs compared to group B. Overall, it is actually better for society that group B has an oppourtunity to move up their career ladder to fill up the previous job of group A. And then group C will be able to fill the previous jobs of group B. It brings down our society wealth gap.
Microsoft has traditionally been a very safe employer, who typically does a very good job of maintaining revenue per employee.
Of course Microsoft also historically benefitted from housing in the surrounding area being 1/2 to 1/3rd what it was in the bay area, so they could pay a lot less. Now that good family housing around MS campus starts at 1.5m, MS has been forced to increase salaries dramatically.
> Selling your house and moving for a job in a clearly ridiculous job market is going all in on a gamble.
Tech hiring had been crazy for years before the pandemic, IMHO pandemic hiring in tech didn't stand out as being particularly odd. Of course looking at the numbers afterwards, we can see how much companies grew, but no one applying for a job in Jan 2021 knew that Microsoft intended to hire 40K people that year.
Most of these people are not lauded as business geniuses and are not in charge of 2 trillion dollar companies.
ETA:
I would like to point out that I feel like your point would be more valid if Microsoft were a startup or something. However, I think a lot of people joining assumed that it was a stable company and as such their job would likely be more stable than where they were coming from.
What I really love is the bonuses that say that if you leave in less than 3 years, you have to pay them back, plus the taxes the company paid on them. If you leave early you're actually paying the company to leave.
Translation: we fired a bunch of people, so did everybody. Talent’s no longer scare, and there is a large supply of jobless people that would get your position on a whim. Get fucked.
$18.3B in profit is pretty amazing by anyone’s standard. Especially with no pay bumps following.
20-30 years from now this will be used as a reference in history as an indication of how completely fucked up the world’s economy was at this time in history. It’s a signal. It’s a warning. It’s a sign of where we are heading. Only time will allow it to unfold. The typical naysayers can only be proven wrong with time and then they will look foolish. They just don’t know it yet.
This is literally what everyone else has been living outside of silicon valley for decades. Shitty raises, no raises, pay cuts or raises that don't keep up with inflation. This has literally always been the reply reality of the average American worker.
Give it 10 years and we'll have actual walkouts for a company that slashes worker pay in the face of huge inflation, unaffordable housing, and record profits. The older generations that still drink the company koolaid are holding back the most pro union generations ever. Its sites like this which contain illogical hero worship of the investor class that keep workers from knowing their value.
In year of fairly high inflation this is a big deal and I don't suggest it will go down well.
To be a bit cynically Machiavellian ... 'any' kind of raise would have allowed them to at least avoid the 'no raise' kind of language.
This feels like a short sighted tactic - the economy is doing 'well enough' and MS is definitely forward looking at this point, this is going to be a bit of subtle 'sand in the gears'.
A decade of interest-free money firehosing + demand explosion from COVID is over. The "normal" you cling to with double digit growth, insanely high salaries and benefits, and budgets of billions to work on stupid stuff that will never ship was never normal, it's an outlier.
The overspending needs to be corrected. Markets are stagnant and their auto-growth has stopped. Now that money is expensive and inflation yet still high, it means that whatever you work on needs to have a sky high return on investment, otherwise it's simply setting money on fire. Hence everyone reallocating to AI, the only growth market.
Hiking interest rates is a fancy word for planned economic destruction. It's very goal is to reduce demand. It comes with layoffs and cost cutting, as that is the thing that suppresses demand.
My point being, if you're still in a well paying job, take it on the chin. This isn't the time. Sit still when being shaven.
I wonder if there will be a mass resignation at Microsoft as a new job might pay more.
To me, it sounds like they considered this, and thought majority would not resign and go work for someone else that pays more. Some of those will not be replaced and some might need more pay. Over all this might be cheaper for MS.
The tech bubble implosion has a long way to go before things stabilize. Companies will go through hiring sprees and freezes all the way down. I feel sorry for fresh computer science graduates, or those with only a few years of experience, who were left "holding the bag" after the rest of us enjoyed two decades of plush tech jobs, pushing pixels around a webpage for money. We just have a supply/demand problem now. There's too much supply. Many will re-tool in some other field (pharmacy tech is looking pretty good right now), and many who stay will have to take a pay cut and/or work harder.
I wonder if this could be fallout from the ABK deal being blocked? If I understand correctly, they "owe" ABK $2.5-3B in the event that the deal doesn't close?
Weird. Here in Sweden we get, generally, a higher wage increase than normally. IT included, as far as I know. Honestly I think people would try jumping ship qiuckly if they did not get a yearly increase. On other hand, maybe thats the intended result.
I guess the difference is that the compensation levels in IT here are not, and were never, close to the stratospheric levels as in the US.
Microsoft's business performance has nothing to do with the labor market. The hard truth is the Big Tech layoffs are lowering the cost of tech labor. Rather than cutting salaries, as some companies have done, Microsoft has chosen to maintain current salary levels. Really, this is how a labor market is supposed to work.
Microsoft is a cancer and has been since the 80s. Time for the younger generation to learn that. Seems they’ve been drinking the PR kool-aid the last few years and believing it.
Wouldn’t touch it with a ten-foot pole, though I understand it is decent technically. There’s just too many great choices, that don’t require submitting to a known abuser.
Don't freeze salaries. The best people leave. The salary freeze is bad enough for morale, then the best people leave one by one and there's a morale hit for each one. Prefer layoffs.
Even the biggest corporate CEOs get confused by socialist talk and end up recreating some of socialist inefficiencies in their own companies. Why would I invest exceptional effort or take risk working on far fetched projects if exceptional success in terms of market share or profits will not be rewarded? If I am good, I can work 6 hours a day and still be the most productive employee on the team. How does one-fit-all compensation policy motivate me to do more or to stay on rather than finding a place that will pay me to be productive to my full potential?
What if I told you that the time and effort required to develop and deploy accurate tracking metrics for every employee's individual productivity and the negative externalities that would fall out of openly stratifying worker pay based on these minutiae (worker dissatisfaction, turnover, degraded performance, poor reputation among potential new hires) would outweigh the benefit your marginal increase in motivation and job satisfaction brings to your employer?
Say I have a fairly good idea how to make a #3 product in a category a #1 product in a category. But, my work life balance would suck for a couple of years and I would have to be more adversarial with others to get them to pull their weight and not waste time on bad ideas. Eventually, if it works, existing employees will benefit from growth and new ones will want to join a success story.
Or maybe I am mistaken and someone else is more capable of making the top product, in which case I might still get my own team out of growth. Let there be some meritocratic process and ability to assume responsibility for risks and reap the rewards. But if there is no potential reward, why should I suffer from overwork and inevitable interpersonal conflict when stuff needs to get done? Why should anyone? Eventually the whole product will be cancelled since it's not making headway and all of us will move to new gigs.
Socialism is when workers own their workplaces, and receive the full amount of value that their labor creates, rather than that value being arbitrarily allocated by the owners of the firm. It has absolutely nothing to do with your imaginary concept of everyone getting assigned identical compensation. Bizarre post, you may as well have typed some gibberish word rather than "socialist".
In China, during Mao Zedong's era, factory workers would laugh at and scorn other workers who worked harder than others. This is the direction that Microsoft is headed with their policies.
I don't think that's a tactic unique to or originating from communist China. I've heard stories about coopers in England beating up bright sparks who worked faster than the pace the workers had settled on. I think that's just how physical laborers sometimes ensure that people are working at a sustainable pace, such that people at every stage of their career can work alongside each other without destroying their bodies. (I personally neither condemn not condone this, it seems like bullying to me so I'm inclined to condemn but I've never worked in an environment like that so I withhold judgement.)
For most people I think work is just work. The kinds of people who were into computers in the early days were arguably different than average; it was a fringe thing once upon a time. Today, it's just work. People need jobs, large corporations offer jobs.
I've eschewed these companies myself, but... I'm not sure it has been so wise all the time. I could have worked at a FAANG at one point, and the offer was astronomical compared to what I typically earn. The weird part is, I don't like social media because I have kids and I don't like what it's doing to kids. Yet I have kids to take care of, and that money would have made a meaningful difference to their security. So what's the right call to make?
It reminds me of Cato the Younger. He was steadfast to his virtues and principles with unwavering integrity, but it appears to have lead his life to ruin. Was it worth it? Do compromises make sense here and there?
I don't blame people for wanting to work for these companies. It isn't for me, I think, but I totally get it. No one deserves mass layoffs and tanking equity because they don't have retro-hacker cred.
You can increase the income taxes of wealthy people considerably (specifically income taxes, not business taxes). A 50%+ marginal rate will help motivate C-level execs to opt for re-investing profits into their business rather than into buybacks of their stock to boost their own personal income. At the same time you'd be helping to provide services that will benefit the lives of the bottom 90% of the country with higher tax receipts.
Wealth inequality has been getting steadily worse in the US for decades, and moves like what Microsoft is doing only make that worse.
> increase the income taxes of wealthy people considerably (specifically income taxes, not business taxes). A 50%+ marginal rate will help motivate C-level execs to opt for re-investing profits into their business rather than into buybacks of their stock to boost their own personal income
Why would anyone try to make less money as taxes on them increase? Makes no sense.
Because they'd have more capital to reinvest in their business, as I stated. But even if they don't reinvest it the rest of us still benefit in the form of increased tax receipts.
Capital is distributed to shareholders when the company has few good options to deploy it internally.
These distributions are then reinvested by shareholders to more efficient purposes.
If a company can’t efficiently deploy its capital and can’t distribute it… it just buys other companies and becomes a conglomerate with ever increasing market power.
It’s not about poor or rich engineers, it’s about fairness. When people at the top do that, people at other organisations take a page out of their book at rinse and repeat. It’s corporate version of monkey see monkey do. And the worst affected will be on the lower side of salary scales.
Let me put it this way, would you rather have joined at Meta a couple years ago where you got small raises or MSFT where you didn't? Hint: Stock price is way better for people who picked MSFT.
just buy the stock, which keeps going up....this is effectively the same as a raise. Profit that would go to employees goes to shareholders. It's like a conservation law.
Generally speaking, holding (significant to you) stock in your employer is a bad strategy.
Because if the company goes under you lose your job, and your savings at the same time. In other words it consolidates risk rather than diversifies it.
But honestly the idea that you don't need a raise but rather invest and wait for a dividend return is bonkers. Those are to completely unrelated things.
By all means invest. There are lots of stocks to choose from. But that's completely orthogonal to your salary package.
Theoretically you can short the stock to offset the risks, though this creates a conflict of interest and can be considered insider trading. Alternatively maybe invest in a fund that invests in a competitor and other industries.
That's pretty much what I've always done (well, the ETF equivalent VTI), even when I worked for S&P500 companies like Walmart or Apple. I wanted to hedge my bets a bit and make sure that even if the company went a bit pear-shaped, I would have my money stashed in whomever was there to pick up the pieces.
You know, I never even considered that maybe I should have disclosed that to employers until right now...
There are some companies that are "unlikely to fail" in the sense that their stock price falls to zero. I would agree that Microsoft likely falls into that category.
But really large companies have "failed" in very short time. Usually as the result of some sort of illegal activity. WorldCom being the obvious example here. (A place where employees were "strongly encouraged" to buy their own stock.)
Bear Stearns, Lehman Brothers and others have also been "too big to fail" - yet failed.
The fact that these events are relatively uncommon (for the very large) doesn't negate their impact. Equally less-large companies fail all the time, and so if you work for something a bit smaller it's a prudent strategy to invest you time in one place, and your assets elsewhere.
> just buy the stock, which keeps going up....this is effectively the same as a raise.
No, its not. Its “effectively the same as” using some of your shrinking-in-real-terms salary to buy stock; if you can afford to do it at all, you could afford to do it more if you had a raise, so clearly the two are not equivalent.
(OTOH, if Microsoft undershoots the market on salary and has stock worth buying, if you are good at your job you can get a job someplace that isn’t undershooting and use your additional salary to buy Microsoft stock — which is equivalent to both getting a raise and using some of your salary to buy stock.)
EDIT: Of course, if leaving for places not undershooting on salary becomes popular with the competent, buying Microsoft stock based on past performance may turn out to be a suboptimal idea.
Buying individual company stock is a worse strategy than sector ETFs, especially if it's your own employer.
(Individual stocks have more returns because they're riskier, not because they have more alpha. And you're accepting however much risk you get instead of planning for it - just borrow someone else's money if you like it so much.)
If MSFT matches the same YTD return this time next year, a $120k salaried worker would have to invest $18k to get the same return they'd receive with a 5% raise. $18k is a lot of money for someone making $120k, probably living in an expensive city, to dump into stock that has no guarantee of a massive return.
If a raise was a gamble in either direction then sure. There are numerous aspects that could drive MSFT lower, its trading near 45% higher than January, presumably based on ChatGPT, if that enthusiasm pops you'll see a dive.
ESPP isn't exactly like buying stock, it's more like lending the company your paycheck for a few months in return for a free 10-15% return. Which is pretty good!
"Microsoft to Nearly Double Salary Budgets, Expand Stock Compensation"
https://www.shrm.org/resourcesandtools/hr-topics/compensatio...
So they are freezing after the doubling? This behavior seems skittish and an overreaction, especially given their continued profitability and high margins. Corporate executive behavior reminds me of interacting with ChatGPT:
Exec: "What should I do to retain people?"
GPT: "One possibility is to double your salary budget and expand stock compensation."
Exec: "All my golf buddies' are cutting compensation at their companies, what should I do?"
GPT: "In this situation, try freezing salaries and reducing stock compensation."