> The social contract between large companies and employees has been broken for years now. US companies are optimized for quarterly earnings, not long term investment in their employees.
Going to throw out another anecdote here. At a company that a number of my friends work for (a fortune 50), they are currently making record profits that they loudly brag about during employee townhalls. They also are in the process of gutting multiple departments as fast as possible with little regard for the long term consequences. This is not the only company that I know of acting in this way (acting like they're about to go bankrupt when in fact they are seeing record profits).
To me the societal risk is that an entire generation of employees becomes extremely jaded and unmotivated, and fairly so. We used to work under the assumption that if our company is successful, then the employees would be successful. Record profits == raises for all, bonuses for all. And while we know that that connection was never that strong, it was strong enough to let us at least pretend that it was a law of universe.
That fundamental social contract is now at its breaking point for so many workers. Who can really blame people for putting in minimal effort when they have so much evidence that it will not be rewarded?
Those of us familiar with the Dilbert comic strip of the '90s-'00s are having a good chuckle at the idea that there was ever a social contract. What you think of as a social contract was a fiction enabled only by the explosive growth of the software industry during the Internet and mobile web of the last twenty years. It's easy to be generous to employees when the profits just keep growing on their own. It's easy to overlook mediocrity (and sub-mediocrity) when as many warm bodies are possible are needed to fulfill business objectives.
That's all over now; the growth spurt of a young software industry has given way to maturity. We'll be navigating an employment environment much like what the norm is in other technical professions with tougher standards and fiercer competition for good jobs.
>It's easy to overlook mediocrity (and sub-mediocrity) when as many warm bodies are possible are needed to fulfill business objectives.
dismissing technical talent as "warm bodies" is exactly how the old guard of IBM/AT&T/Oracle fell to the new scrappy talent. I'm sure history will repeat itself again in due time.
> We'll be navigating an employment environment much like what the norm is in other technical professions with tougher standards and fiercer competition for good jobs.
if every other sector except healthcare wasn't experiencing the same thing, you may have a point. This clearly isn't a problem limited to tech, though.
I agree, but to say that it's 'downhill' implies (correctly IMO) that since that period and until today there still _is_ some notion of a social contract that has been decaying, not that the day that the new deal period ended that the social contract went away instantly. We now appear to be entering some kind of terminal phase.
I think a lot of this has to do with the explosion of CEO (and by extension CxO) pay over the past 30 years.
Today, a CEO can turn in a few quarters of really solid earnings growth, they can earn enough to retire to a life a private jets. Back when CxO pay was lower, the only way to make that kind of bank was to claw your way into the top job and stay there for a decade or more.
The current situation strongly incentivizes short-term thinking.
With today's very high, option-heavy compensation a CEO making long-term investments in the company rather than cutting staff and doing stock buybacks is taking money out of his own pocket.
CEO’s also never face consequences for destroying companies. Zaslav has run WBD into the ground and it’s currently being surrounded by vultures, and he’s still making like half a billion a year.
I wish I could find the article about it that I read a few years back. But CEOS needs skin in the game again. the incentives are all broken. running a good business doesn't matter anymore (at least in the US).
While I definitely agree CEO pay is quite egregious, in theory, to mitigate short-sighted quarterly earnings hyperoptimization, couldn't a board simply tie equity incentives to performance targets and timeframes though?
Lip Bu Tan, for instance, has performance targets on a five year timeline, which are all negated if the stock falls below a certain threshhold in 3 years. [1]
Or, ever controversial Elon Musk, certainly has an (also egregious) $1 Trillion dollar pay package, but it has some pretty extreme goals over 10 years, such as shipping 1 million Optimus robots [2].
All in all, we can debate about the Goodharting of these metrics (as Musk is keen to do), but I feel boards of these public companies are trying to make more long-term plans, or at least moving away from tying goals to pure quarterly metrics. Perhaps we can argue about the execution of them.
Note: I own neither of these stocks and my only vested interest is buying the S&P.
IMO it's not risk so much as foregone conclusion. You can see the hopelessness in GenZ and (to a lesser extent) millennials.
But we only care about short term metrics now, so no one cares. They don't even care to develop the tools to understand it. It might as well not exist. Blame the young people and move on.
> This is not the only company that I know of acting in this way
At this point in the tech industry, it'd be easier to name companies not doing this. Maybe Apple? I think they got aroudn it by not renewing contractors. But I might have missed something.
>To me the societal risk is that an entire generation of employees becomes extremely jaded and unmotivated, and fairly so.
I sure am jaded. But more motivated than now in my goals. They used to be to be this knowledgeable IC who can dig deep into a domain, but it's definitely been shifting to being able to sustain myself off my talents. I'll grab short term contracts and let my own products be the steady income.
(yeah, a lot easier said than done. But I have time to prepare for that).
>Who can really blame people for putting in minimal effort when they have so much evidence that it will not be rewarded?
Worse than that. Why put in effort when your reward for providing all that value is still getting the axe?
My industry is finally starting to see real moves at unionizing, but I hope tech as a whole is starting to wake up to this fact?
It's more like "this product is underperforming, let go of the team". Regardless of the reasons the product is underperforming. Could be that it was still in development and money dried, could be that they want to pull out of a region and need a product as an excuse.
You can't outwork corporate greed, unless you're working for peanuts in a 3rd world country. Then you're truly irreplacable (and still broke).
What social contract? Companies have always been for shareholders. Do you people have some kind of contract with Tesla that I don't know about?
This entire discussion sounds crazy to me. If you want socialism, vote for socialism. If you want raw unfiltered capitalism, vote for the billionaire. You can't vote for the billionaire and expect safety nets. That's madness.
> What social contract? Companies have always been for shareholders.
You are not wrong, but the contract is/was metaphorical.
For a long time people were able to make a living for themselves by studying hard (usually STEM) and end up with a career which payed off. That was the invisible "contract". Hell I went to university for things which seem like academic navel gazing, but I still got a good tech job on the other side. That's not the reality for a lot of graduates nowdays who take more practical degrees at masters and phd levels.
Again even if the literal statement is clearly false, it is the sentiment which matters, and this sentiment does not just apply to graduates. I think many just feel like working hard does not work anymore, especially in the face of housing, cost of living, job competition and social media flaunting the wealth of others.
I get the idea from my younger siblings, "Why try if you are already a looser."
> For a long time people were able to make a living for themselves by studying hard (usually STEM) and end up with a career which payed off
Recessions like the GFC, the Dot Bomb, the early 90s, the Asian Financial Crisis, the early 80s, Stagflation, and others show otherwise.
The extended bull run that SWEs had from the early 2010s to 2022 was an outlier, and the whiplash being felt today is comparable to what law and finance grads faced in the 2010s, accounting majors in the 2000s, and Aerospace/MechE majors in the 1990s.
Henry Ford for all his faults (and there were MANY) at least understood that you gotta have a customer base for your products, and that paying workers well helps everybody out.
Many of our current society's problems can be directly traced back to Reagan-era policies. Anyone who seriously believes in trickle-down Reaganomics is a fool or a liar.
Those economic policies were a backlash to the 1970s Civil Rights pushes. You can always count on racists to destroy themselves rather than to stop abusing others.
That LBJ quote rings true more and more with each passing year.
“If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you.”
Henry Ford wanted to raise salaries of his employees but the Dodge brothers (who owned only 10% of the company) successfully sued and "As of 2025, in Delaware, the jurisdiction where over half of all U.S. public companies are domiciled, shareholder primacy is still upheld."
My understanding is that that legal case really states that you can’t defraud your shareholders by funnelling money into other businesses they have no ownership in.
It doesn’t set the legal standard that profits must be maximized which is impossible.
Correct, a quote from the linked wiki article:
"Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate. The business judgment rule [which was also upheld in this decision] protects many decisions that deviate from this standard. This is one reading of Dodge. If this is all the case is about, however, it isn't that interesting."
— M. Todd Henderson
It is not socialism to note that in the past, some companies have believed that their optimal relationship with their employees required recognizing their value and awarding them accordingly, thusly allowing them to attract/retain the best employees as well as maximizing the quality of the output from those employees. There has always been such a spectrum, that's not socialism. The trend to notice is that the spectrum is so strongly weighted towards the merciless, cutthroat end of things that may actually not be optimal for long term survivability of those companies whilst also as I noted, be breaking the social contract that workers have assumed for decades, which is also not socialism.
Socialism has a specific meaning, it's not just a label we get to put on behaviors that we - or rather, specifically you in this case - don't like.
There's never been any such contract. You guys must not have studied the Great Depression at school.
Or more to the point, productivity has consistently outpaced pay for most of the US workforce since the mid-1970s. That's ~50 years that companies have been ripping you off. It's only now you notice, because rent/mortgage/school/medical have finally become so much larger than pay.
Well now you get to live through the Great Depression and study it up close.
> That's ~50 years that companies have been ripping you off. It's only now you notice, because rent/mortgage/school/medical have finally become so much larger than pay.
The alternate way of looking at it is that the 50s to mid 70s era saw a period of unprecedented prosperity and now we are just seeing a reversion to the mean.
What do you mean "we"? The rich are much much richer than they've ever been. The stock market is soaring. Companies are seeing record profits. GDP is through the roof.
Socialism is when the state (ie: the government) _owns_ industries.
A social contract is an implicit agreement that everyone more or less accepts without anything being necessarily legally binding.
For example, the courtesy of two weeks notice in the US is a social contract: there’s nothing legally requiring it, but there are _social_ consequences (ie: your reference might be less positive) if you don’t follow it.
Everything that’s kind of in an employee’s favor is not socialism. You don’t have to like the idea of “work hard, help the company do well, get rewarded,” but that isn’t socialism. It’s just a thing you don’t like.
There has never been an understanding that rising profits = no layoffs. Zero idea where that came from. Companies will reduce workforce when they dont think those workers are providing value, that has always been the case.
This was not the case for much of the 20th century, where layoffs were seen as an embarrassment.
For decades, engineers at IBM, HP, Xerox, etc assumed that they had a job for life; because they did.
The management culture you describe may predate Jack Welch, but certainly came into vogue with him. It has all the well-known downsides: management often lays off critical staff because they can’t really measure productivity, it destroys morale, many of the remaining high-performers leave, and is often followed by hiring replacements in the next year or two because the people cut were actually necessary.
So it is odd to see it happen for highly profitable companies.
It's not that I don't like it. It's more that I think you're being lied to. Inequality has been going up in the US for a very long time, which means a lot of people are not being rewarded as much as they should. But they still buy into the system that is impoverishing them.
Inequality going up means the situation is changing and that is what people are complaining about. There definitely has been a culture shift as MBAs took over executive leadership and their compensation packages skyrocketed. Companies were always for the share holders but there used to be more consideration of the longer-term value for the company that amounted to appreciation of and fairer treatment for both employees and customers.
I also think though that individual experiences of this kind are more about specific companies maturing than a widespread culture shift. A lot of people on these forums worked in tech companies that are relatively young and have changed a lot over the past two decades.
"Inequality has been going up in the US for a very long time, which means a lot of people are not being rewarded as much as they should."
The second part of your sentence is not necessarily true. It might be true in some or even many cases, but it's certainly not something you can just assert & move on, as if it's a physical law.
I'm just tired of re-litigating this issue. Discuss with your favorite frontier model. Roughly, productivity has been outpacing pay since the mid 1970s, and I wrote about this in another comment here.
There's just so much confusion here. Some people like you don't get why a world where a handful of billionaires own everything is a bad idea. Madness. I think nothing less than another depression will get through to most.
If I lease tools that triple your productivity for the same cost as your wage, how much more do I pay you?
My point is increases in productivity can be caused by capital investment, not totally attributable to the worker. That money has to come from somewhere.
Ideally there's a fair balance. This isn't it but you can't look at the number you referenced blindly.
You're not thinking at a systems level. Check this out - https://data.worldhappiness.report/chart. The US is increasingly a miserable place to live in - in large part because of pay not keeping up with housing/school/medical/etc.
Correct systems-level answer to your question "how much do I pay you" is "as much as it takes to stabilize the US curve". Happiness correlates with financial security, which we won't get if the rich get richer from those capital investments then buy up all the housing.
Fun fact: Fit 2 lines on that data and you can extrapolate by ~2030 China will be a better place to live. That's really not that far off. Set a reminder on your phone.
I don't care if you are tired or not, it's not something you can just assert and move on.
Also, you know nothing at all of my opinion on whether "a handful of billionaires own everything" is a bad idea or not. All you know about me is I don't agree with you that rising inequality AUTOMATICALLY means some people haven't been rewarded as much as they "should", whatever that means. Reading comprehension, combined with not assuming others' POV, for the win.
Dude go figure it out yourself, it's not that hard. I remember discussing inequality with friends in 2014, and probably knew about it since Occupy Wall Street (2011). Or earlier. At this point if you still don't get it, with a billionaire in office, surely it's on you.
well we can trace that back to the 1920's, for one example.
>Do you people have some kind of contract with Tesla that I don't know about?
Are you aware of what a "social contract" is? There's nothing wrong with seeking to fill in gaps of knowledge.
>This entire discussion sounds crazy to me. If you want socialism, vote for socialism.
I'd be down for it, but this is almost orthogonal to the main point of the discussion. Social contracts exist in all forms of governing. Even rampant capitism has the bare bones social contract of "don't make your customers TOO angry so you can maximize extraction".
When billionaires own the media companies that influence public opinion and have legal avenues to essentially bribe elected officials, does the public have a meaningful avenue to vote anti-billionaire?
Going to throw out another anecdote here. At a company that a number of my friends work for (a fortune 50), they are currently making record profits that they loudly brag about during employee townhalls. They also are in the process of gutting multiple departments as fast as possible with little regard for the long term consequences. This is not the only company that I know of acting in this way (acting like they're about to go bankrupt when in fact they are seeing record profits).
To me the societal risk is that an entire generation of employees becomes extremely jaded and unmotivated, and fairly so. We used to work under the assumption that if our company is successful, then the employees would be successful. Record profits == raises for all, bonuses for all. And while we know that that connection was never that strong, it was strong enough to let us at least pretend that it was a law of universe.
That fundamental social contract is now at its breaking point for so many workers. Who can really blame people for putting in minimal effort when they have so much evidence that it will not be rewarded?