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Federal Reserve chair says decline in workers' share of profits 'very troubling'

latimes.com

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Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#221

Post by dunpeal »

gbacon wrote: post #160
methodover wrote: post #79

The allocation of profits in startups, at least, feels... problematic. I was the #2 engineer hire when I was hired five years ago. Since then, we haven't become super successful -- yet -- but we're at least at breakeven. We have three engineers and we're working on a huge new project that hopefully will really grow the company. I have 1.8% equity. Sometimes when I'm working late or working on the weekend, which is of…

We've thrown a significant percentage of our lives, and they've only thrown in money Money saved, borrowed, or inherited represents a significant percentage of someone’s life. Even if you deny this, the money in someone’s pocket in the present represents an enormous percentage of that person’s future life. Put yourself in the shoes of the owner who took risk up front. Yes, you took some as well, but at any time you c…

> Everyone wants equity. Lots if not all employees feel like the deserve it, even the person who answers the phone and could be most easily replaced.

This is not a moral question of who deserves what. Compensation is a business issue, not a moral one.

The question is whether OP is getting as much as he could get elsewhere, and the answer is likely "no".

If startups could compete fair and square with non-startup comp, employees like OP wouldn't be discovering that their equity stake is tiny and they are therefore underpaid after 5 years of working for the same startups every day.

> Put yourself in the shoes of the owner who took risk up front.

Why should he? Is this "would-be millionaires sympathy hour"? You're saying the founder took more risk. Maybe he did. That's actually not always the case, when you factor in opportunity cost for a non-technical founder vs an engineer - I've seen founders earn as much as they would elsewhere in base salary, without factoring their enormous equity at all.

But even if the founder took more risk, how does that compel OP to work hard to make him a millionaire, while foregoing fair market compensation for himself?

You are implying it's OP's moral duty to compensate the founder for the supposed risk he may (or may not) have taken.

OP's only duty is to do what's best for himself. The founder and investors are certainly doing that by making OP work weekends for what is likely below-market comp.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#222

Post by marme »

inetknght wrote: post #206
pembrook wrote: post #124

Earlier quoted context omitted.

That's not what the Fed chair is talking about. Nobody is concerned about wages in tech. Tech is one of the few industries that has the opposite of a stagnant wage growth problem.

> Nobody is concerned about wages in tech. Speak for yourself. Wages in tech is highly consolidated into tech owners, tech engineers, and then tech support. Anyone on the periphery is not getting their fair share whatsoever.

how to define fair?

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#223

Post by rayiner »

digikata wrote: post #214
rayiner wrote: post #107

Earlier quoted context omitted.

Are you thinking of any specific one out of the "so many" examples, or are you assuming? Because for Senators, it's illegal to sit on a corporate board, and for Members of Congress, it's only legal if the position is unpaid: https://politics.stackexchange.com/questions/10976/legislati... .

"Unpaid", but members of congress are allowed to inside trade, and their portfolios are curiously successful.

See: https://pdfs.semanticscholar.org/c294/8992cb8681c41dbb1d163f...

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#224

Post by Wingman4l7 »

rayiner wrote: post #107
colordrops wrote: post #82

Earlier quoted context omitted.

You mean the same lawmakers that sit on the boards of so many multinational corporations? Might as well ask for world peace.

Are you thinking of any specific one out of the "so many" examples, or are you assuming? Because for Senators, it's illegal to sit on a corporate board, and for Members of Congress, it's only legal if the position is unpaid: https://politics.stackexchange.com/questions/10976/legislati... .

They can get around that through the "revolving door" between legislators and lobbying groups: opensecrets.org/revolving/

The old "you pass legislation that we want, and we'll have a seat waiting for you on the board after your term is over, with a nice paycheck attached".

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#225

Post by rayiner »

pimmen wrote: post #211
rayiner wrote: post #107

Earlier quoted context omitted.

Are you thinking of any specific one out of the "so many" examples, or are you assuming? Because for Senators, it's illegal to sit on a corporate board, and for Members of Congress, it's only legal if the position is unpaid: https://politics.stackexchange.com/questions/10976/legislati... .

However their relatives can sit on boards, so a senator's spouse would be fair game. And they can use the paid board gig to make money between terms. Susan Bayh, ex senator and governor from and Indiana married to another senator, sat on multiple boards between her own political terms and while her husband was in office (also while she was governor). She's been on at least 14 boards in total: https://en.wikipedia.org…

Are you suggesting that spouses of Congressmen shouldn't be permitted to sit on corporate boards? (And presumably, should be excluded from any of a range of careers in the private sector.)

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#226

Post by dunpeal »

3pt14159 wrote: post #173
colordrops wrote: post #88

Earlier quoted context omitted.

This is a common discussion item here at HN. Really it only makes sense to work at a startup in the following scenarios: you are founder, you are new and need experience, you are getting paid very well, or you don't care about money and love the work. Trying to get rich as a non founder is a fools game.

Well, this isn't completely true. Founders are much more likely to make ten or a hundred million than first hires, but first hires are at least as likely to make $500k to $3m as founders, especially in net present value accounting terms, and not even adjusting for risk adjusted returns or opportunity cost differences. Most startups don't get to first hire. Most startups have founders that don't just make nothing, the…

I'm seeing a lot of these irrelevant moral arguments thrown around. The fact that the founder is taking as much or more risk than you does not mean you should forgo better opportunities to work for him. You should work for him if the combination of salary and equity is competitive, and nowadays it often isn't, even for early hires.

Which makes the argument that being an early hire at a startup doesn't make sense at the current low equity and salary commonly offered.

> first hires are at least as likely to make $500k to $3m as founders

I know too many startups where early hires failed to make anything close to $500k, and in fact didn't cover the difference between their salary and market rate even for a single year.

Exits in which early hires make even just $500k are very rare nowadays.

> First hires don't lose money.

But of course they do! They lose the difference between what they could make elsewhere, and what the startup is paying them.

Non-technical founders have far lower opportunity cost.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#227

Post by codexon »

joyeuse6701 wrote: post #31
noobermin wrote: post #15

Earlier quoted context omitted.

BTW, this isn't a moral argument (at least it need not be), practically people cannot invest in anything and yield an actually substantial return. Almost half(E) people in the US cannot weather a $400 emergency without going into debt, how could they possibly have enough money to invest for either themselves or their children? This arguably would be only valuable for people in the middle class to upper middle class.…

If one has internet, one can invest in oneself through education in very tangible lucrative ways. Never before has access to so much knowledge been available from MIT courses to marketing books, much of which is free.

I've never heard of anyone that would even remotely consider hiring someone who got their knowledge from MIT opencourseware.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#228

Post by methodover »

DenisM wrote: post #127
methodover wrote: post #103

Earlier quoted context omitted.

I'm pretty sure the equity I have is already incredibly generous for an employee. But yes, I did bring up the issue a couple weeks ago. He doesn't believe we're in a position to go to the board and make any changes to stock compensation at this time. He thinks we should first figure out how to accelerate (with this new project) and then we'd be in a better position to ask for more stock for employees from the board.

At 5 years you're fully vested. You should get a stock/options refresh if they want you to stay.

That 1.8% figure I gave includes shares that have not vested yet. My original stock compensation was significantly smaller. I've received small stock option bumps over the years, including a significant one last year. I have about half of my total shares vested today, and I won't be fully vested until 2021.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#229

Post by test6554 »

TaylorAlexander wrote: post #139
test6554 wrote: post #108

Earlier quoted context omitted.

If Bernie Sanders was elected, I wouldn't just move my money. I'd take my chances with the cartels. Free health care, free tuition, $15 minimum wage, guaranteed sick days and paid time off. Universal basic income, unicorns, etc. And the 3-5 trillion dollars it costs each year can just be paid by either the wealthy or by placing crippling debt upon future generations. Either way, free stuff is good.

You leaving is a risk I’m willing to accept to help millions of Americans access health care.

As long as you don't have to lift a finger or reach into your own wallet, eh?

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#230

Post by dunpeal »

methodover wrote: post #103
tramGG wrote: post #90

Earlier quoted context omitted.

Have you tried asking for more equity? Negotiating new terms is fine if you feel you deserve it and are passionate about your work.

I'm pretty sure the equity I have is already incredibly generous for an employee. But yes, I did bring up the issue a couple weeks ago. He doesn't believe we're in a position to go to the board and make any changes to stock compensation at this time. He thinks we should first figure out how to accelerate (with this new project) and then we'd be in a better position to ask for more stock for employees from the board.

Your equity isn't "incredibly generous" for a startup in your position, where you are the 2nd engineering hire, the team is still a handful of engineers, and you're likely going to see more dilution (unless you close shop before).

Practically, from what you describe (startup not doing very well after 5+ years of active development), I'd be very surprised if you see any serious money from that 1.8%.

> He doesn't believe we're in a position to go to the board and make any changes to stock compensation at this time.

The board isn't some harsh unreasonable committee. They would quickly grant you equity if they thought it was important enough to do so.

This really is a BS excuse. He basically told you "I don't want to give you more equity, and I'm going to blame it on some external entity rather than own up to it".

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