Friday, November 06, 2015

Never Shortchange Yourself In Tech-Land

I really got into a tussle yesterday on my friend's Facebook wall. Her immature "friends" were endorsing the non-cash benefits of employment at a very large, well-known tech company in Silicon Valley. I argued for ignoring the non-cash amenities and for prioritizing compensation. I was the lone voice crying out in the wilderness. I am right and everyone else is wrong.

Silicon Valley techies love to think of an employer as a substitute parent. Tech firms encourage this juvenile mentality with free food, on-site gyms and masseuses, video game break rooms, and other nonsense. The global firms with billions in revenue can afford to spend on this baloney. Startups that can't afford it with organic revenue convince their venture investors to subsidize them, like adult children whose parents cover their rent. Replicating a fun college campus is supposed to incentivize creativity. I think it's a misguided but unfortunately effective way of keeping highly productive workers psychologically attached to a big employer.

The workers who fall for this Silicon Valley wage slavery are usually highly logical in their daily work. It makes the seduction all the more befuddling until we consider behavioral economics. Humans are not as rational in making decisions in their personal lives as they believe themselves to be. We give more weight to recently acquired information, for example, than we should give to more thoroughly proven information learned at various points. The behavioral habits inculcated from daily trips to the free "campus" cafeteria and free yoga rooms are hard to break even when a competitor offers a five-figure cash raise.

I'll work the math for my super-smart Silicon Valley friends. Let's say I'm weighing two job offers, one with $20K more than I make now and the other with no raise but free food. Eating the equivalent of a $10 meal three times a day is a cost savings of $30 a day, which BTW is also a couple week's worth of groceries for the few Silicon Valley people proactive enough to plan their own meals like grown-ups. Anyway, I have digressed. The $30 savings over about 260 or so actual work days per year (not counting the weekends or a few holidays) comes to about $7800 in annual savings. Any proposed offer from a competitor that exceeds that $7800 after taxes and commuting costs is a step up in lifestyle. I would rather take the extra $20K if it meant I'm back to buying my own meals, because my penchant for cheap groceries means my bills will be much less than that $7800 meal cost avoidance. Too many very smart Silicon Valley engineers fail to run those numbers when weighing job offers. They stick with the free stuff and their employers know it. The HR people hidden on these big tech campuses know the math and that's why spending on free food matters more than cash bonuses.

Non-cash benefits are always ephemeral. Companies that hit a rough patch for a quarter or two cut back on frivolous expenses first, before they cut more important things like ad spending or the IT budget. They cut those other things too in recessions, right when they're about to cut people. The non-cash benefit of a corporate reputation also means just about nothing. The prestige of having a high-flying company's brand name on a resume means nothing without the personal pedigree to back it up. Plenty of people went to work at Webvan, Enron, Bear Stearns, and Lehman Brothers with high expectations before those firms collapsed. Top programmers are in demand because of their reputations earned at big firms, startups, hackathons, and academia. They are their own brand. I have a couple of top financial brands on my resume that mean nothing because elitists look down their nose at me. Prospective employees who prioritize a company's prestige and empty promises over cash have their priorities backwards.

I can't tell my fellow Bay Area professionals how to live their lives or spend their incomes. I am sometimes sad when I realize that so few of them think like me. Many STEM graduates work hard solving complex problems and not all of them are highly compensated. The enormous cognitive load of coding, designing, and diagramming all day must leave little energy left on the charter bus ride back home to think about gaining financial advantages. Maybe these top-notch Silicon Valley producers are just as immature as the spoiled brat trust fund kids and permanent adolescents I've met in San Francisco. They all need to get spanked. Adults work for money because that's what pays rent, taxes, insurance, college debts, and every other bill that would otherwise bring bankruptcy if left unpaid. Cash compensation enables wealth creation that accelerates retirement and makes our final years of life comfortable. San Francisco and Silicon Valley need to grow up. Part of growing up is learning not to sell yourself short. I will never shortchange my financial future in exchange for the phantom freedom of high-tech campus paternalism.