2011 August 09 Tuesday
Manhattan Beating Silicon Valley In Wage Increases?

An article in The Atlantic entitled "Can The Middle Class Be Saved" (answer: no) explores rising wage inequality. In the process of comparing the most meritocratic parts of America to the rest the writer reveals that wages are rising more rapidly in Manhattan than Silicon Valley. Hmmmm...

It’s hard to miss just how unevenly the Great Recession has affected different classes of people in different places. From 2009 to 2010, wages were essentially flat nationwide—but they grew by 11.9 percent in Manhattan and 8.7 percent in Silicon Valley. In the Washington, D.C., and San Jose (Silicon Valley) metro areas—both primary habitats for America’s meritocratic winners—job postings in February of this year were almost as numerous as job candidates. In Miami and Detroit, by contrast, for every job posting, six people were unemployed. In March, the national unemployment rate was 12 percent for people with only a high-school diploma, 4.5 percent for college grads, and 2 percent for those with a professional degree.

If this is true then does this mean that the financiers are even gaining ground relative to the most productive workers in America? Or with US corporations increasingly focused overseas do their top managers rake in big bucks on their management global operations from Manhattan headquarters?

My deeply felt advice: Raise your game. Become more ambitious, aim higher, work harder, and advance. You can't stay still. Either you go up or you will go down. The upper class is unmooring itself from national ties and it doesn't need as many Americans to serve it. The competition is getting more intense, the stakes higher. Rise and shine or sink.

Just how far can one sink to? Even as wage inequality rises there's something even worse than stagnant or slowly declining wages: getting relegated to the ranks of the long term unemployed. As Catherine Rampell reported in the New York Times some help wanted ads exclude the long term jobless. For companies that want to hire the very best this bias against the unemployed is even rational.

Since less than 40% of our high school drop-outs have jobs the plight of the least educated is especially bleak. Yet the elite still want a big influx of the least skilled and least educated. Gardeners can never be too cheap.

Share |      By Randall Parker at 2011 August 09 11:30 PM  Economics Labor


Comments
Rick said at August 10, 2011 1:58 AM:

"My deeply felt advice: Raise your game. Become more ambitious, aim higher, work harder, and advance."

Why? You just showed that that's a sucker's game. Even the guys who are doing relatively good in this current situation, the Silicon Valley types, don't even get high quality women if they get women at all. It seems more like the incentives for young males are increasingly to drop out, become disruptive somehow, join or form gangs, etc.

Lono said at August 10, 2011 9:08 AM:

I have to agree - the only way to win - is not to play.

Becoming self employed is the most intelligent and rewarding choice for the free man.

(that - of course - does require many Americans to indeed raise their game - but not just to put themselves yet again in total bondage to some amoral corporation)


Engineer Dad said at August 10, 2011 10:12 AM:

Randall said: "For companies that want to hire the very best this bias against the unemployed is even rational."

Yesterdays results published in Molecular Psychiatry and PubMed add further evidence that human intelligence is highly heritable and polygenic. In summary it states,

"Our results unequivocally confirm that a substantial proportion of individual differences in human intelligence is due to genetic variation, and are consistent with many genes of small effects underlying the additive genetic influences on intelligence."

http://www.ncbi.nlm.nih.gov/pubmed/21826061

Since more and more evidence has shown intelligence is highly heritable, astute leaders wanting to increase their nations wealth and stability should immediately put in place immigration policies to retain the capable while discouraging the feeble while separating the talented from their neighbors and competitors.

Failure to make this effort should be considered negligence.

solaris said at August 10, 2011 12:25 PM:

Wait ... "America’s meritocratic winners" hang out in Washington DC?

As long as we define "meritocratic" as "those who managed to make the most money, by whatever means", I guess it's true. Of course every place on Earth is a meritocracy by the circular definition that those with the most money are the most meritorious, and those who are the most meritorious will have the most money.

solaris said at August 10, 2011 12:34 PM:

>"For companies that want to hire the very best this bias against the unemployed is even rational."


I don't think it is rational, at least if your goal is to hire the very best, period. If your goal is to hire the best who can be found with the minimal level of effort on the employer's part, THEN it makes sense. This "no unemployed" rule really says "we're going to let other employers do our screening for us - if those other employers hire you then you'll magically be upgraded in our eyes".

solaris said at August 10, 2011 1:03 PM:

Reading that Joel on Software link reminds me on one of the irritating things about discussion of "computer jobs" - the belief in some quarters that these jobs are all about brilliant programmers.

This is like suggesting that the US Air Force is all about fighter pilots (which many fighter pilots do believe) when in fact these individuals make up a tiny fraction of all Air Force personnel. The guys flying the bomber and transports and AEW are just as important, to say nothing of the ground crew.

In a typical large technology company programmers have a role, maybe even an important role, but they are not gods. Even in a pure software house the "brilliant programmers" typically make up a minority of the employees, and this is by design rather than from an inability to find good people. The people doing Q/A, for instance, don't need to be brilliant programmers. The in-house tech support people maintaining the PC's, the network people, the database people - they don't need to be brilliant programmers. And that's just on the tech side. Obviously the HR dept, the marketing dept, etc do not require these elite programmers either.

Randall Parker said at August 10, 2011 7:27 PM:

Rick,

A sucker's game? Not for the people who earn high salaries. How do they do this? Probably the same way that great scientists do great work: They are smart but they also try much harder.

Richard Hamming, a very accomplished researcher in communications theory, gave a great talk about how to be a more productive researcher and Hamming's advice can be applied to anyone who works:

Now for the matter of drive. You observe that most great scientists have tremendous drive. I worked for ten years with John Tukey at Bell Labs. He had tremendous drive. One day about three or four years after I joined, I discovered that John Tukey was slightly younger than I was. John was a genius and I clearly was not. Well I went storming into Bode's office and said, ``How can anybody my age know as much as John Tukey does?'' He leaned back in his chair, put his hands behind his head, grinned slightly, and said, ``You would be surprised Hamming, how much you would know if you worked as hard as he did that many years.'' I simply slunk out of the office!

What Bode was saying was this: ``Knowledge and productivity are like compound interest.'' Given two people of approximately the same ability and one person who works ten percent more than the other, the latter will more than twice outproduce the former. The more you know, the more you learn; the more you learn, the more you can do; the more you can do, the more the opportunity - it is very much like compound interest. I don't want to give you a rate, but it is a very high rate. Given two people with exactly the same ability, the one person who manages day in and day out to get in one more hour of thinking will be tremendously more productive over a lifetime. I took Bode's remark to heart; I spent a good deal more of my time for some years trying to work a bit harder and I found, in fact, I could get more work done. I don't like to say it in front of my wife, but I did sort of neglect her sometimes; I needed to study. You have to neglect things if you intend to get what you want done. There's no question about this.

What I'm tell you all is to excel. The difference in outcomes for those who excel versus those who do not excel are becoming bigger every day.

Randall Parker said at August 10, 2011 7:31 PM:

Lono,

Life isn't an Ally Sheedy and Matthew Broderick teen near nuclear disaster movie. The only way to win is to play.

The self-employed rarely make as much as those who work in groups. Though if you can find a way to make big bucks working solo then, sure, do it.

Lou Pagnucco said at August 10, 2011 10:19 PM:

Before Wall Street developed creative financial derivatives, inventive investment vehicles, high frequency trading, dark pools, hedge funds, ..., and took a much smaller share of national income, the U.S. certainly was a less pleasant place to live and work.

We owe a lot to the financial sector.

Only the envious would begrudge them their bonuses.


Rohan Swee said at August 11, 2011 7:34 AM:

The only way to win is to play.

Randall, to whom among your likely readers is it news that drive and the willingness to work very hard matter in success?

Strange, but we once had a country where the most gifted and driven could accomplish a great deal, and be rewarded for it, to the benefit of all, without the not-so-bright being reduced to the level of scavenging animals. And by "not so bright", I do not mean "the undeserving lazy". I mean probably the majority of human beings, who - from an economic-reductionist view, encompassing an unwillingness to think through first principles about what "the economy" is for - are a waste of space. (And by "gifted and driven" or "meritocrat", I do not mean the current rabble of mediocrities posing as an elite, hardworking and high-IQ though many of them doubtless are.)

Apparently the whole point of striving for excellence and high human accomplishment is merely to be one of the few who gets out of the favela and into an elite that exists as an end in itself, while life just gets shittier and shittier for the ever-expanding "lower orders". Sez who?

I understand all the ways in which "progress" is an illusion, but this is ridiculous.

solaris said at August 11, 2011 1:04 PM:

>"Before Wall Street developed creative financial derivatives, inventive investment vehicles, high frequency trading, dark pools, hedge funds, ..., and took a much smaller share of national income, the U.S. certainly was a less pleasant place to live and work."

This is probably parody.

The problem is, so may people actually believe this sort of thing that it's difficult to be sure.

solaris said at August 11, 2011 1:14 PM:

>"What I'm tell you all is to excel. The difference in outcomes for those who excel versus those who do not excel are becoming bigger every day."


The number of people n America who "excel" via drive and intelligence is rather small, It is dwarfed by the number of people who "excel" by being members in various cliques. The multi-cultural cities are the worst in this regard - it's a lot easier to "excel" in NYC or Los Angles if you happen to be a member of certain groups. For instance, if you are Jewish *and* gay it's very hard to be a failure in metropolitan America.

The very wealthy people in America "excel" at gaming the political and economic systems to their advantage, not at creating anything of value. Actual scientists tend to be rather poor, by comparison.

Randall Parker said at August 11, 2011 7:03 PM:

Rohan,

Some people who do not want to drive hard to achieve want to dismiss the idea that there are legitimate paths to big success. They do this to rationalize feeling good about their own choices. The summary of their view: The big bad meanies have made striving pointless.

The not-so-bright being reduced to scavenging: That's a logical outcome of:

- Running out of cheap high quality land to bring into agricultural production.
- Depletion of mines.
- Depletion of oil fields.
- Depletion of aquifers.
- Decline of the two parent family.
- A reversal of the selective pressures that previously made a growing fraction of the population smart.
- A slower rate of innovation because the lower hanging fruit has been taken.

You can't blame Wall Street for these changes. These changes are far more important than the extent to which an elite has rigged the game in their favor.

solaris,

You help to prove the point that I'm making to Rohan.

Randall Parker said at August 11, 2011 7:10 PM:

solaris,

Speaking as someone who has directed development of lots of software test suites: High quality people developing tests make much better tests than lower quality people doing the same. Also, bright observant people testing complex systems will notice more anomalies and patterns than less bright doing the same.

Tech support talent: The brightest ones can figure out a firewall problem that otherwise causes problems for months or years. I speak as someone who has had to work around firewall problems. The brightest ones can foresee and prevent problems from impacting the most talented programmers. In my experience IT support needs brighter people doing that work.

BTW, speaking of upward mobility: Given that bright people can pretty cheaply learn their way to really high level Cisco certs and thereby start making $100k+ per year there's no reason for a bright person to be poorly paid aside from an unwillingness to spend a few years learning complex technical subjects. I am amazed at the laziness that prevents that learning from happening more.

A typical large technology company? Better to work at one of the best technology companies where talent is more highly valued.

Ryan said at August 11, 2011 9:12 PM:

"BTW, speaking of upward mobility: Given that bright people can pretty cheaply learn their way to really high level Cisco certs and thereby start making $100k+ per year there's no reason for a bright person to be poorly paid aside from an unwillingness to spend a few years learning complex technical subjects. I am amazed at the laziness that prevents that learning from happening more."

Randall,

Have you heard of this thing called "sociobiology"? Apparently it's some kind of mysterious black art....

What kind of chicks do these IT Cert nerds pull?

I'm sure young Western males are just dying to become IT Cert nerds and put up with being surrounded by smelly male nerds and foreigners all day because of all the hot, young, fertile chicks flocking to IT technicians....

Johnny said at August 11, 2011 9:52 PM:

A little off topic but:


Pakistanis and Indians Jailed for Starting Birmingham Riots

http://www.birminghammail.net/news/top-stories/2011/08/11/saltley-man-first-to-be-jailed-for-birmingham-riots-full-court-report-from-first-day-of-prosecutions-97319-29216078/


John Derbyshire estimates that blacks comprise about 2% of the British population but 60 - 70% of the rioters.



http://www.nationalreview.com/corner/274226/epitaph-britain-john-derbyshire#

...

bbartlog said at August 12, 2011 8:06 AM:

I used to work in software QA and can second what Randall says about returns to ability in various roles in any tech company. IT and QA are both jobs where a very bright person will outperform one who is just bright, and the merely above average are often a drag on the organization.
That said, I chose not to pursue this career path further. Essentially all of the software world has drunk the same kool-aid that Randall is promoting here: work really hard, 'neglect things.. to get what you want done', take a salary and work sixty hour weeks. The real returns will be to rentiers, not to you; you'll make over $100K if you're lucky, or if you have management (*not* technical) skills, or if you work in one of a handful of cities with inflated wages (NYC, DC, etc.). That's hardly awful in a world where so many are taking food stamps or are long-term unemployed, but it's still a shitty share of the value you should be creating if you work that hard. I quit the game.

Randall Parker said at August 12, 2011 11:23 AM:

Ryan,

If they are nerds and act like it then of course they aren't going to get hotties. But getting an IT Cert isn't going to make that worse. At least with some upper level IT certs they'll be able to afford decent clothes and a nice place to live and not have to work in a total low status job like burger flipper or trash collector or meter reader.

Who you work with: Why does that matter? Do you need to meet women where you work? I'd recommend not getting involved with co-workers (and so far have resisted the advances of married women in work settings) just because it can get very complicated and problematic.

You can pick up on women in other settings. If not, time to study.

Randall Parker said at August 12, 2011 11:26 AM:

bbartlog,

I'm not just saying work longer hours. I'm saying learn more, get way better at your game, and then find better places to use your skills. Sure, lots of companies will take 60 hours per week from you and not reward your additional labor. That's only worth it if you can learn more and position yourself to get to a better position.

solaris said at August 12, 2011 12:38 PM:

>"Given that bright people can pretty cheaply learn their way to really high level Cisco certs and thereby start making $100k+ per year there's no reason for a bright person to be poorly paid aside from an unwillingness to spend a few years learning complex technical subjects."

The people currently working in IT (and other technical fields) ALREADY have those certification and usually a computer science degree as well. I just don't recognize the world you live in where IT companies have trouble finding people with certifications. There are masses of certified people currently out there unemployed. It's simply untrue that a bright person can get Cisco certified and have lucrative jobs offers thrust upon him. The certification is necessary but not sufficient - your bright and certified person would also need to have some experience and, ideally, be young.

solaris said at August 12, 2011 12:45 PM:

>"Some people who do not want to drive hard to achieve want to dismiss the idea that there are legitimate paths to big success."

I don't accept the underlying assumption that there are "legitimate" paths to success which consist of hard work and high IQ and "illegitimate" paths to success which do not. The vast majority of successful people all through history have been successful via networking. All those bright people (and the children of already successful people) who attend the "elite" colleges are doing so for the networking opportunities, not because they will learn physics any better there.

solaris said at August 12, 2011 3:05 PM:

>"IT and QA are both jobs where a very bright person will outperform one who is just bright"

Janitorial work is a field where smarter people will outperform less intelligent people. Name ANY job and it is one where smart people will outperform less smart people. But QA work itself (as opposed to designing the QA tests) is drudge work, and not many IQ 140 people will want to do it. Nor, given the limited supply of IQ 140 people, will the employer want them it do it. Smart people are better employed at work where being smart is more essential.

Randall Parker said at August 12, 2011 5:15 PM:

solaris,

Yes, experience is necessary. But there are entry level positions for getting experience.

I know people who are getting dangled in front of them economic incentives to get more certs. Some support organizations need more people with certs to maintain their status with MSFT and other companies. If there was a huge surplus of people with certs then the payscales for the Cisco certs wouldn't be so high.

IT and certs: In IT support departments I rarely run into people with C.S. degrees. There are people maintaining routers and lots of virtualized servers without C.S. degrees. Most people with C.S. degrees don't want to maintain routers. Why work in tech support when you can work in development?

Randall Parker said at August 12, 2011 6:08 PM:

solaris,

Let me make my point a different way: I know lots of people who could be better at what they do than they are. They do not want to take the time to learn what would make them more productive. I'm saying that to even maintain our current living standards we need to become more productive.

Since I see lots of people who are less skilled than they are capable of being I know that raising productivity is possible.

Since out of the people I know I see more productive people getting paid more than less productive people on average (though not in every instance) I expect raising one's productivity will, on average, increase compensation. It won't always increase the compensation of every person in every instance. But it will increase compensation.

I get why people don't raise their productivity. They've got other priorities. But since hard times are here and hard times are going to get worse I think it behooves people to work on their skills.

Mthson said at August 13, 2011 4:02 AM:

Build a career in which you'll enjoy working 60 hour weeks because of the challenge.

Sexuality and its epiphenomena are an illusion that evolution tricks us into, and all that area of experience does is mess with your instincts and drain your temporal resources. (I say this as a reminder to myself.)


(Randall, thanks for the Hammond link.)

no i don't said at August 13, 2011 11:58 AM:

"I have to agree - the only way to win - is not to play." Now ya talkin'

Maybe one can start with growing their own vegetables and raising their own chikens -although I hear that govt wants to make it illegal, arguing health issues and crap like that-

It's gonna be tough though, because the government doesn't want self-sufficient citizens, but I think it's time to stop relying on paternalists goverments, to stop keeping your money in the banks, to stop consumming all that soda and junk food, etc.

john shade said at August 15, 2011 2:00 PM:

Randall, Hamming's talk inspires me to take my professional skills as far as I can even though many of my competitors have superior cognitive ability. Thank you for reminding me of the importance of hard work and devotion to enhancing your productivity in a time of economic stagnation.

solaris said at August 15, 2011 6:01 PM:

>"since hard times are here and hard times are going to get worse I think it behooves people to work on their skills."

That's great. But you are being terribly misleading when you suggest to people that they can make $100,000/yr just by getting Cisco certified. And I see this same mistake being made with curious regularity by people with one toe in the IT market. It's as if they're convinced that people in that OTHER discipline (e.g. database work, or network engineer) are making a mint with little effort.


>"If there was a huge surplus of people with certs then the payscales for the Cisco certs wouldn't be so high."

Who says they are "high"? What does "high" mean in the context of a free market?

Besides, the pay scales you linked are for employed network people. Their qualifications are not merely a Cisco certification. I suggest you spend some time on Dice and have a look at the qualifications necessary to get work as a "Senior Network Engineer". Cisco certification is only a part of it, you need a basketfull of other skills and qualifications as well.

In said at September 6, 2011 7:45 PM:

My deeply felt advice: Raise your game. Become more ambitious, aim higher, work harder, and advance.

The only way to win is to play..

Randall
I'm curious, what is your idea of success and "winning"?

It seems if one were to follow your advice, you become more of a slave. The harder you have to work to live, the less of life you can experience and the more you have to give to your employer. Ideally work should be a tool for ordering peoples lives and clarifying their purpose, not as an end in itself. In your posts you suggest a lot of pragmatism, but not a lot of principle. IMHO the economy and work should serve people, not the other way around. Just my 2 cents, but I would be curious to know your views on this more.

Randall Parker said at September 7, 2011 10:45 PM:

In,

Success and winning: Have enough money to afford rejuvenation therapies when they become available. Then fully rejuvenate and throw in some IQ-enhancing gene therapy so that every mental task becomes easy.

Becoming more of a slave: People who achieve more work harder on average. But they often find their lives very satisfying. You can certainly work harder at tasks and for employers which do not deliver rewards, higher status, and higher security. But my advice would be to choose a different career path of that's a problem.

The economy should serve people: Well, what is the economy? Other people. If the economy is serving you then people are serving you. Go into a restaurant and the waitress serves you. Go into a massage parlor and ditto.

Not clear on what you mean by work as "a tool for ordering peoples lives".

RD said at September 8, 2011 12:28 PM:

Economic slavery is irreversible debt bondage and the loss, irrevocably, of one's means of self-support -- the land.

You can still be a slave despite earning a lot of money, rejuvenating yourself, increasing your IQ, etc. A robot or computer can have high marginal product that goes to profit and rent (like a person whose marginal product goes to profit and rent and wages which can in turn go entirely or largely to debt service), be able to replace its parts and last very long, and upgrade itself to make tasks ever easier and faster, and still be a slave. Even if the high marginal product of a robot or human were returned entirely to the robot or human as wages and there were no debt service to be paid by the wages, the robot or human can still be a slave by being utterly dependent on the wages.

High wages, rejuvenation, cognitive enhancement, etc. by themselves won't necessarily decrease slavery and increase freedom unless they enable individuals to increase more "land" i.e. means of self-support.

In said at September 11, 2011 11:50 AM:

Randall

To clarify, what I meant is that a job gives a person a convenient way to satisfy some basic human needs, i.e. daily structure, basic level of status and respect, a way to contribute to and participate in society, income, etc., etc. These things are good for people and why work and jobs are good for society.

What I meant by the "economy should serve people" is that it is doing worse and worse job of providing for human needs. Humans are being more and more exploited. How many people are unemployed or underemployed? How many people work over 40 or 50 hours a week, out of pressure from the employer? Both the middle and lower classes are getting a crappier deal. I still don't see the satisfaction in spending most of one's life energy working for the man. Sure, some people like being a big shot and there is certainly meaningful work to be had but most of it seems like a race to nowhere.

Living wage and work life balance are what we should aim for IMO.

Mthson said at September 11, 2011 1:08 PM:

I know a lot of liberals whose ideology makes them not good at doing work, and then they complain that society doesn't want to pay them huge amounts for doing work that doesn't really need to be done.

What most people don't realize is that building a challenging career is the only way to make serious gains in our personal growth. The personal problems of my low-contribution-to-society friends now seem so simplistic and solvable, and I can't spend time with them because their minds are so uninteresting and made of goop.

As long as they have a choice whether to be useful to society or not in a 21st century manner and they choose the negative, it seems appropriate that they're less likely to be able to afford future rejuvenation therapies, and thus they'll have less influence on society in the future.

In said at September 12, 2011 5:21 AM:

What most people don't realize is that building a challenging career is the only way to make serious gains in our personal growth.

Obviously that isn't the only way. Likewise there are many ways to contribute to society and they don't all involved 50 or 60+ hour work weeks.


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