[IP] more on Tech: A 'hostile environment' for US natives????

[David Farber <dave@farber.net>]

Begin forwarded message:

From: Tom Goltz <tgoltz@QuietSoftware.com>
Date: May 7, 2005 1:33:42 PM EDT
To: dave@farber.net
Cc: Benjamin Black <ben@layer8.net>
Subject: Re: [IP] more on Tech: A 'hostile environment' for US  
natives????


At 06:03 PM 5/6/2005, Benjamin Black wrote:

> I think this hits the nail on the head: developers in the US have
> unrealistic expectations of how they are to be compensated that are
> based on the view that developers are scarce.  Outsourcing gives the
> lie to the scarcity myth.
>
> There are always developers far above average who will continue to
> command premium compensation, but the preponderance of folks will have
> to come to grips with the fact that they must compete not just on
> ability, but on price.

Ignoring the question of supply for the moment, being a developer is  
a business, and like any other business, must have a higher income  
than expenses.  For the purposes of my example here, I'm going to use  
San Jose, since it has more jobs for developers than anywhere else in  
the United States.

Federal, State and local taxes account for approximately 30% of the  
average household income.  Note that this is a national average, and  
fails to account for the fact that the taxes in California are  
significantly above average.

According to the San Jose Department of Housing (http:// 
www.sjhousing.org/data/costs.html), the average monthly rent in 2004  
was $1,236.  The median home price for Santa Clara County was $649,000.

According to Bank of America's online mortgage calculator, and  
assuming a 10% down payment of $65,000 and a 6.5% interest rate on a  
30-year fixed rate loan, you will need an annual household income of  
$150,000 in order to be able to afford to purchase that median  
house.  This is an optimistic number based on no other debt payments  
(no school loan, auto loan or credit card payments), and gives a  
monthly housing payment of approximately $5,000.

According to the U.S. Department of Labor Bureau of Labor Statistics  
(http://www.bls.gov/oes/current/oes_ca.htm#b15-0000), in November of  
2003, the average annual pay for computer programmers in California  
ranged from $74,040 to $89,000.  Assuming a household that has two  
people earning this level of money, they can barely afford to  
purchase the median house.  Assuming that one of the wage earners has  
family care responsibilities that significantly reduce their outside  
earnings or significant school loan debt, they probably cannot afford  
the median house.  (The average undergraduate student loan debt as of  
2002 was $18,900, $31,700 for graduate school, giving your household  
a school loan debt of up to $64,700)

Now, based on the idea that developers must compete on price on an  
international basis, where do you propose that a developer living in  
Santa Clara County should cut their expenses so they can afford to  
deliver their services at a significantly lower price?




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