@tonyshowoff said in Nine Out of Every 10 Silicon Valley Jobs Pays Less Than In 1997, Report Finds:
Nine out of every 10 Silicon Valley jobs pays less now than when Netflix first launched in 1997, despite one of the nation's strongest economic booms and a historically low unemployment rate that outpaces the national average.
Can we clarify something? Wages DO NOT EQUAL Total Compensation.
Wages may be stagnant, but that doesn't mean compensation isn't up! (FWIW mine are not, and the raises for the time I've worked for a Vally Company they exceed inflation).
So If my base pay is said 100K, but they give me 50K in stock every year on a 4 year vestment schedule (1 year cliff, quarterly thereafter), then at the end of 4 years assuming the stock doesn't go up or down I"m looking at 300K in compensation tied to me staying there year over year.
Now let us say the stock goes up (Many Silicon Valley companies are hypergrowth companies). Lets say it doubles after the first year. Now that first grant is worth 100K instead of 50K (so 25K per year instead of 12.5K per year). So my first 365 days take home is now 125K at vest cliff. Lets also say the company is doing well and a variable bonus is paid out at 25% of the base so I'm at 150K on that 100K in base wages. Not bad? Now year two, let's say it doubles again. Now that first grant is going to deliver 50K per year, and the second grant will deliver 25K so I'm at 175K before bonus. This can continue to rise as long as the stock goes up (which can be stupid amounts for some companies) or as long as the RSU's keep getting refreshed every year (until whatever the RSU age limit is, so say 4 years). At this point, the base salary is a joke compared to the stock compensation. Now let's say I'm kicking ass and my companies becoming less popular, or the stock isn't doing anything fun and another cool company comes along and wants to hire me? They are not going to pay me 300K a year, but what they will do is offer me an even bigger pile of RSU's to offset the giant pile I have at vestment ( as well as the company is the next big thing so I can ride this mountain back up).
Also if I enrolled in ESPP and maxed it out at 15K for the year, that means if it doubles I got 30K in stock for 12.75K in post-tax money (assuming RSU's are bought at a 15% discount).
Now here's another scam... If I hold those RSU's and ESPP for a year from vestment (not a good idea initially for someone with low diversification, but for senior people not uncommon) then I can get taxed on that at Long-term capital gains rates rather than income tax rates. If I'm in a state that has it's own income tax structure (California, North Carolina) this delta can be massive. This tax dodge right here, and the fact that the company can pay you tomorrow, with a cheaper per $ asset today (Stock) is why wages are not going up. Given the choice between being paid 200K in cash, or 100K in cash, and 200K in stock that costs 50K today what muppet would want higher wages to pay more taxes on, and what company would want to burn more cash now on compensation?
Throw in the fact that companies will report "non-GAAP earnings" where they exclude forward stock liabilities (which is bullshit, but I digress) the company can look to outside investors to be more profitable than it is, but taking the stock compensation method.
@DustinB3403 said in Nine Out of Every 10 Silicon Valley Jobs Pays Less Than In 1997, Report Finds:
To be fair, a lot of them likely do make a ton of money, just not for the area. But when a 1000 sq ft house cost $400,000 on the median your 6 figure paycheck is a joke.
Work for a Silicon Valley company, but do it while remote in a low-cost state. The ultimate scam.
The other thing that's annoying here is the use of Wages in this article. Wages are pay per hour. Salary is differnet (It's the pay tied to what is quoted per year and broken down for non-hourly work, or the sum).