Compared to other professions? maybe SV is just treating "Engineers" more like other older professions and has less of the class distinctions you see in the UK for example.
Initially this was true, certainly SV would use higher salaries to draw developers and engineers to the valley. But cost of living has exploded since then. A modern developer living in SV does not command a higher standard of living as food and housing costs are significantly higher than most of the rest of the country. A similar trend plays out on the east coast so it’s not just SV.
It’s balanced by the CoL adjustment. In short, SV engineers are not better off, and haven’t been for the past decade. This is apparent by the observed exodus in the light of Covid forcing a shift to primarily remote work. Engineers are trying to reclaim their wage advantage by moving to cheaper locations, and companies are fighting back by reducing compensation accordingly.
Sort of. Often a big chunk of your CoL is going into a massively appreciating asset. People always seem to ignore this when talking about the top n most expensive cities in the world. You can literally sell your apartment and go live in a mansion most other places on the planet when you feel like it.
People in general or people in tech? Well what’s the typical mortgage multiple, 6 or 7 times salary? So for the latter, it seems pretty attainable to get an apartment at the lower end of the market to start out on. Correct me if I’m wrong, though.
Pay is nowhere remotely close to being proportional to impact on revenue though. Many engineers are much more offended by unmeritocratic pay than by absolute value of pay being low - hence why you can convince amazing engineers to work for peanuts at start-ups.
I want the greatest share of the returns of my own labor I can get. If that results in very high salary, great, it’s earned. If I take a risk at a place where that translates to much lower salary, that’s fine too - as long as it’s very objectively meritocratic.
If I am making $200k per year as a top, top performer, while my employer is paying far more mediocre performers $175k (perhaps based of geolocation), or where both of us are bringing in ~ millions of revenue, that’s super unacceptable.
As time goes on, the surplus of my labor productivity that a big corporate employer can capture beyond my total compensation should be decreasing heavily - and expert software labor is one class that has the negotiation power to actually push that issue.
So I’d flip your question on its head. Why do we pretend that rent-seeking executives deserve the surplus revenue generated by rare talented engineers? Why (with complete sincerity) aren’t many, many, many more software engineers paid on the order of what Hollywood actors are making, while executive salaries simply have to come way, way down in these lines of business?
Hollywood executives get paid more than most actors. Only the absolute elite talent are making above scale let alone more than what the executives are making, and their managers (aka recruiters) are negotiating that for them.
I’m exclusively drawing the comparison with high demand actors / athletes. Perhaps athletes has the better clarity - many NBA players are paid more than their head coach, and even those paid less are still paid much more competitively to their revenue contribution than engineers by comparison.
Superstar athletes/actors have much higher roi - nobody is buying your product bc of star c++ developer you hired. Besides there are only like 50 or superstar players/actors at any given moment. Pretty sure you can find this many engineers who made millions
I guess we need data to back this up - I’m not buying it without more data. Even the top, top valued sports franchises only have estimated market caps in the range of $5 billion.
In other words, for small cap companies, yes, the ROI of athletes to their franchises is relatively higher than engineers to their companies. But for most of the SP500 this is not true, and there are lots of software-heavy companies with much higher market cap to the extent that even with 10k or 100k employees, I doubt an athlete’s ROI for a small sports franchise is proportional to the ROI of employees in the large company.
For example, virtually any engineer at a FAANG company should be making top pro athlete money (not considering endorsements). There are literally thousands of engineers at Amazon and hundreds at Netflix that have this ROI on the soaring revenues of these megacorps, to a much greater degree than athletes have on their teams.
This seems like it's incorrectly estimating orders of magnitude.
Some actual numbers:
In 2019, Google's gross revenue was ~$162b. ~$76b went to "costs of revenue", ~$26b went to R&D, and ~$11b to stock-based compensation. It's unclear what % of costs of revenue is attributable to "salaries of software engineers", though. Let's approach it another way. Google employs 30k+ SWEs, the vast majority of which are in the US. The median outlay probably falls somewhere in the L4 - L5 range, though there's a fat tail at the top. If we want to be conservative, we can just ignore the tail and say ~300k/dev. $300k * 30k = $9b (this is probably low).
Google's net income in 2019 was $34b. So you could multiply SWE comp at Google by not-quite-5 and zero out Google's net income.
What do top pro athletes make? Wikipedia says the top pro athletes earn mid-high eight-figures/year.
There's some headroom to pay engineers more, but it's definitely not "top pro athlete" more. Engineers can and do make that kind of money by founding & growing successful startups, not by working for FAANG (possibly with a very small # of exceptions at the top).
Also consider that top athletes can only sustain that level of pay for max 10y while engineers generally can increase their comp for much longer. All in all I don’t think it’s a good comparison bc film/sport industries have constrained supply and demand - there’s only so many teams/films each year and only so many players/credited roles.
Exactly. The funny thing is the same people making the counter to your argument no doubt don't bat an eye at 8 figure annual salaries for the best sports players. The argument is the same in either case.
