This adage is used mostly by snake oil salesmen slinging get-rich-quick schemes. Working for somebody else is probably the best way to get rich. Putting a qualification here, rich is not filthy rich, but affluent to comfortably rich.
I'm defining rich as making 7 figures a year. I think that's a pretty fair assessment. You'll never get that working for someone else (especially as an engineer), barring extenuating circumstances. High equity employee #1 or co-founder is the way to go.
High risk, high reward.
And wealth is not defined by how much money you make, but by how much money you have.
There are other considerations as well, including cost of living (most high salary jobs are in high-cost areas), liabilities (debt), and so forth. If you want to get rich (again, 7-figure range), this just doesn't seem like a good bet to make.
My personal slant on things is that even if you do become a millionaire, let's say in your 60s, who cares? The point is to get rich while you can still enjoy your money. There's no virtue in being buried with your treasure.
You can work at Google for a decade and end up a multi-millionaire, with enough money to retire to most places in the US.
From your other comment, it seems like you haven't done the analysis on this. Top companies are routinely paying $200k-300k these days. That's enough to save a million dollars over a decade even if you have a family.
You might be able to become a millionaire in 25 years assuming a frugal lifestyle and no big life event costs, but that's optimistic.
This is backed up by own personal experience as a developer in NYC (hardly a low cost area). I expect to have a million dollars saved up within a decade and I certainly haven't relied on political panache to get there.
Even with a 300k salary, you could only save 10k a month if you only had 5k worth of monthly expenses (3-4k is easily rent in NYC).
And keep in mind that making 300k-400k is not typical.
$5k is high for monthly expenses. I rented a single bedroom in Manhattan for $1850 and you can save even more if you're willing to live with roommates.
I'm not sure what I can do to convince you I'm not lying, but consider that median household income is less than $100k in both SV and NY. If the average person can get by on <$100k, why wouldn't you be able to save tons of money if you're making $200k? I have friends getting by on $40k in NYC. Can you imagine how easy it is to save if you match your lifestyle to theirs?
Of course, it's not going to buy you a luxury lifestyle. But personally I'd rather maintain a high savings rate than live in a glitzy apartment and spend thousands on bottle service.
10k - 2k for rent - 1k for expenses = 7k saved if you don't go on vacation, and literally do nothing that costs money for ten years. Even saving 7k a month, you won't save 100k a year.
[1] https://www.glassdoor.com/Salaries/new-york-city-software-en...
You're forgetting to include investment gains. With them, I can go on regular vacations and still reach $1m within 10 years.
Also, since someone else mentioned it, my model conservatively assumes a 4% inflation rate. Over the 3 years I've been tracking, my model has consistently underestimated the growth in my savings.
Heck, your marginal tax rate isn't even 40%, and all those numbers are without taking a 401k tax deduction.
People get this crazy idea that $200k isn't rich in NYC or SF. It is very, very rich, even for the area. COL adjustment for rent and groceries shaves off $15-30k, but it doesn't keep scaling up from there.
That's wrong. The marginal tax for even a $50,000/year earner in NYC is over 42%.
Source: http://arjun-menon.github.io/taxes-in-nyc/?income=50,000
It's kind of outrageous, marginal tax rates going down for high earners, but there we are.
But thanks for pointing out that I had the wrong zip code, so I missed NYC income tax, which is 3.65% marginal, bringing average tax rates at 200k to 36%, not 33% (albeit with zero deductions and exemptions, which obviously isn't reasonable, you'll deduct state income tax at the very least and shave off 1.4% immediately).
Your link is in error, it treats Social Security tax as continuing past $118k.
Actually, the tool does stop adding Social Security after the income limit: http://arjun-menon.github.io/taxes-in-nyc/?income=200,000
> you'll deduct state income tax at the very least
The tool also factors in state income tax deductions. You'll see it deducted in the link above
The tool reports the marginal tax rate for a $200,000 earner as ~36%.
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But yea, you're right, it sucks that $50k earners are taxed even more % than $200k earners. The employer pays payroll taxes of 7.65% (6.2% + 1.45%), so actual marginal taxes are ~50% from an employer cost perspective. It's truly insane.
Only if you insist on living by yourself, or renting a luxury apartment with your friends/family in Manhattan. Going under $2k a month is easily possible if you have a large, multiple earner family or roommates, especially if you live outside Manhattan/Brooklyn. Plenty of New Yorkers manage with incomes less than $60k, and if you can live like them, saving 10k a month on a $300,000 salary is easy.
There is nothing requiring you to spend a certain amount of money just because you are earning a certain amount of money. We don't have sumptuary laws, after all.
Yup, all four of them - Apple, Facebook, Google, Netflix.
</sarcasm>
https://www.glassdoor.com/Salaries/principal-software-engine...
Also, why look at median salary? We're arguing over whether it's "possible" to become affluent as a mere employee—even if only the top 20% of engineers are capable of it, it's certainly possible.
Unless you're Norvig or Dijkstra.
https://www.quora.com/What-would-a-CTO-compensation-equity-b...
Per CIO magazine (2015), CTOs make up to $220K, directors up to $174K:
http://www.cio.com/article/2878056/salary/tech-salary-guide-...
Pretty much all surveys show similar ranges. Do they all "skew heavily downwards"?
New grads at Google get paid around $170k a year. https://www.quora.com/What-is-the-salary-for-graduates-start...
As an example, I'm in the Boston area and ~2 rungs away from a "director" type title, working at a company known to not pay top dollar and without things like stock. It wouldn't take much stock for me to enter into the range that's being discussed here, albeit likely the lower side of it. OTOH none of the people I talk about this stuff with are remotely near the top end of that range when you take stock options out of the picture.
Stock in startups and options in general are a gamble, of course.
They're still plenty valuable, as opposed to startup options which I consider worthless, but my point was that IMO this is one of the sources of all of these debates as to how much people make. Some people will count them and others won't
Yes, totally agree, if you want to compare numbers, you have to agree on what you compare.
In theory, we could just always talk about total compensation, and just plug in standard financial valuation models. (Those models would typically value startup equity at close to zero value---especially the kind of equity that tends to get horribly diluted.)
Just checked glassdoor, and a senior software engineer makes ~114k so that gives you a pretty good idea of their compensation structure...average.
Not to call you a liar or anything, but I get emails from wayfair recruiters all the time and my understanding of their compensation has led me not to respond but I'd love to be wrong.
There are also many more tech companies which will give such salaries to distinguished engineers.
edit: Reading your other comment, median is not the right parameter to compare in this situation.
But, yes, the limitations of popular knowledge are part of the reason why we wade through lots and lots of applications from people who have absolutely no clue at Google. (The most clueless just haven't heard of the less well-known companies that also pay well.)
Every time salary is discussed on HN, inevitably someone brings up this "fact" that engineers are "routinely" making $200K or $300K or $400K or whatever other ridiculous figure. Given average Bay Area software engineer compensation being between $100K and $140K depending on your source, even at $200K we're probably talking at least 1 or 2 standard deviations from the mean. But there's no fighting HN anecdotes. There's always someone here who knows That Guy At Google Who Makes $300K or That Buddy's Roommate That Gets $400K Straight Out Of School At Facebook, and suddenly this turns into "everyone must be earning that much." Come on.
Yes. It is surely possible to work at Google for a decade and end up a multi-millionaire. It's possible to bowl 300, too, and hit 3 hole-in-ones in a row. It's astronomically more likely most people who work at Google or any other software engineering role for a decade will not end up multi-millionaires. Pretending otherwise grossly overstates the (admittedly okay) lifestyles and salaries most tech folks enjoy.
For more specifics, large, prestigious companies such as Google have salary and equity bands based on levels. The majority of engineers at Google are going to be above $200k total comp (salary + bonus + equity). Here's a glassdoor link for context: https://www.glassdoor.com/Salary/Google-Senior-Software-Engi...
The point I'm trying to make is that both likelihoods are very small. Maybe you have a 1 in 1000 shot at becoming a multi-millionaire by working at BigCo vs. a 1 in 2000 shot at a startup. Some people are claiming that Google, Facebook, etc. are simply pumping out millionaire after millionaire and this is obviously not true. And when you call them on this, they trot out the usual "Bbbbut I know That One Guy At Google Who..." anecdote to somehow prove that everyone in the valley is printing money.
I generally don't trust equity figures when looking at Glassdoor, because there are no details. My guess is most of what's self-reported as yearly equity is really just signing bonus equity that vests after 4 years and then you're back to making base salary.
> My guess is most of what's self-reported as yearly equity is really just signing bonus equity that vests after 4 years and then you're back to making base salary.
Generally, I think people would be reporting what they are going to make this year. (e.g. #shares vesting this year * value).
Companies continually issue refresher equity as time goes on. At year 2, you'd be expected to be vesting significantly more equity than you did at your start date (especially if you have been promoted)
$200k/year is most definitely rich by the standards of most of America. If you think that's silly, hang out with someone who makes $30,000 a year and think about how much $200,000 would change their lives.
[1]http://www.slate.com/blogs/moneybox/2015/03/03/how_americans...
>but affluent to comfortably rich.