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January 25, 2008

Bumps on the Flat Earth

Michael Feldman

In response to last week’s “Flat Earth” commentary, I received several thoughtful letters. One of the most interesting was from Enda O’Brien, the founder and director of Parallel Programming Services in Ireland, who argued that the world is not nearly flat enough. If it were, he says, salaries of technology workers would be much more globally equitable than they actually are.

Writes O’Brien:

If pay-rates were similar the world over, there would be no pressure to outsource work or export jobs in the “knowledge economy” to places like India or Russia where pay-rates are lower. Instead, engineers everywhere would be competing on the basis of their knowledge, skills and experience. This is roughly how it is within the U.S. or within India, even if places like Silicon Valley and Bangalore stick out from the national “flatness”. People and businesses “cluster” into these local centres because the premium pay on offer and the premium output produced tend to positively feed back on each other. I suspect that this is an organic kind of “un-evenness” that most people are comfortable with.

The only real solution to this problem of global “tilt” is for pay-rates in India, Russia and other countries to rise to the levels where their appeal will be based more on their engineering skills than the cheapness of their labour. This is happening already to a certain extent, but still has some way to go. (When I worked for HP in Galway, the company brought over 3 engineers from India for us to train, so they could in turn train their own teams in Bangalore, who would then take over our work and allow us to be laid off. That cunning plan only failed because on return to India, our 3 heroes left HP for better jobs with another company.) Pay in India doesn’t have to rise to American levels for the playing field to “level”: While multinational corporations find Indian engineers very attractive at 10-20 percent of “western” salaries, the attraction tends to vanish at 60-70 percent of that same “western” pay-rate.

The second problem is that even national economies aren’t flat enough. By this I mean that the average software engineer or rank-and-file scientist in any discipline is grossly under-valued and under-paid for what he or she does relative to other professionals in western countries. As a corollary, software and related services are likewise under-valued and too cheap. Why would any average rational human choose to become a scientist or engineer when the starting pay, career prospects, and job security are all so poor relative to other careers in the medical, legal, or financial services sectors (current difficulties in the latter notwithstanding)?

There are several reasons for this national “deficit” in the professional status of scientists and engineers. One is that they are just not “professionalized”, in the sense meant by George Bernard Shaw when he called all professions “conspiracies against the laity”. You need a formal certification to be a teacher, a nurse, a pharmacist, an accountant, or a lawyer, but all you need to be a software engineer is the ability to do the job. Pharmacists and lawyers command set fees which are inflated by virtue of their certification, even for very simple, routine work. Scientists and engineers command no such premium. If your 14-year old brother can build a web-site for the price of a movie ticket, why bother with a “real” engineer? Maybe rank-and-file software engineers will professionalize some day, but realistically, it won’t be any time soon.

Another reason for the low status of scientists and engineers is simply cultural inertia on the part of both themselves and society at large. Scientists and engineers are not primarily businessmen, so others tend to control and benefit from their work. As with your iconic woman who reads “People” but not “Time”, or even those who read “Time” but not the “New Yorker”, a certain anti-intellectualism pervades American society. Among the ignorentia or the scientifically semi-literate bourgeois, scientists and engineers are not appreciated as they would like to be, and certainly not as much as they are appreciated in countries like India, where they have (almost) the status of professional sportsmen!

O’Brien highlights some telling contradictions here. Although most people might not put scientists and engineers in the category of “underpaid professions,” the fact is that these are essentially middle-class jobs. If we are to believe the standard rhetoric that tells us that technologists not only represent the drivers of 21st economic progress, but also are in critically short supply, then why aren’t salaries higher? After all nobody is saying we need to start cranking out more movies stars, sports heroes, plastic surgeons or trial lawyers. Yet all of these latter professions reach into the seven-figure range — eight if you’re talking Tom Hanks.

There are lots of reasons for pay disparity, and O’Brien hits on most of them. But the aggregate truth is that your salary is determined by what the market will bear, which is just a polite way of saying what “society” thinks you’re worth. For example, the fact the plastic surgeons make more money than general practitioners represents a cultural bias; it’s not a reflection of the relative intelligence, skill, educational level, job difficulty, or number of certificates on the wall. It’s easy to imagine a culture where a plastic surgeon would have no value at all. The more favorable treatment tech workers receive in countries like India and Russia is another example where societal values are reflected differently than in the United States. So for better or worse, the value of technological expertise is a function of the culture it’s applied in, not just its economic worth.

For the argument that upper management tends to hoard the wealth of a firm, market forces would counterbalance that by drawing the best talent to companies where monetary rewards were more equitably distributed. In that sense, the ability for executives to reward themselves is self-limiting. In truth, that model breaks down on a pretty regular basis, especially in industries dominated by just a handful of companies or where the execs are engaged in “creative financing” unbeknownst to the worker-bees. In any case, this is an area where I see the culture changing for the better, as people react to the horror stories of CEOs making thousands of times more than the average worker. The younger generation seems to be particularly concerned about balance of wealth distribution within companies.

In general though, waiting for the cultural revolution that assigns more value to scientists and engineers is likely to be a frustrating strategy. The conventional wisdom these days says that the positions in most demand in the tech fields are those that combine technical skills with people skills. According to PricewaterhouseCoopers’ 11th Annual Global CEO Survey announced this week at the World Economic Forum annual meeting in Davos, Switzerland, CEOs said that “combined technical and business experience, global work experience and leadership skills are the most difficult areas for their companies to recruit.”

Well, no kidding. People who can do it all tend to be in short supply. The cynic in me would suggest that CEOs are really telling us they would like to hire workers with the same skill sets as themselves, but at 1/10 of the pay.

On the other hand, there’s no denying that following a purely technical career path is a precarious strategy these days. Between outsourcing, skill obsolescence and automation, technologists are exposing themselves to three of the biggest dangers facing the contemporary worker. In a world where being old-fashioned means spelling Internet with a capital I, the technological juggernaut is going to run over workers who still act like they live in the 20th century.


As always, comments about HPCwire are welcomed and encouraged. Write to me, Michael Feldman, at