It's possible companies have access to capital based on current profitability. If they raise employment costs, their profitability changes and their capital access can change as well.
It sounds like capital markets are saying, we like this cost structure. Continue it and take more money.
Companies are responding saying we can't scale because developers at current costs are rare. They will need to increase costs to hire more.
The capital markets care about the bottom line, not about internal cost structure.
So for example, a company with 100 devs and 1 CEO looks exactly the same to "capital markets" if the CEO makes $105m and each dev makes $100k, or if the CEO makes $5m and each dev makes $1.1m.
There's quite a large room to change the current cost structure without eating into the margins.
Beyond that, those margins at tech companies tend to be quite wide, giving even more room for flexibility.
They care primarily about one thing: their Return on Investment.
If the company becomes more profitable by shifting more comp to developers, then the investor will support that wholeheartedly.
Tellingly, some of the most profitable companies right now are those paying their developers the best, e.g. FAANG.
Suggesting that paying developers more is a good move, financially, for the employer.
Anecdote: I was involved in the hiring process of a certain tech company. The entire company had "engineers are a scarce resource, use sparingly" as a key principle. There were many rules about how to apply that, and people regularly got yelled at by the CEO for violating said rules.
Fast forward to a hiring spree. The company was hiring for a particular non-technical position, as well as for engineering. They tell me how much they're paying each position.
Pay is the same.
The non-technical position had about x20 candidates than open positions. The engineering position had roughly 25% less, before screening out unqualified candidates and those who didn't pass technical interviews.
Same pay.
Doesn't compute.
> When you are raising money, the market very much cares about the cost structure.
TFA and all other evidence points to the opposite conclusion: that engineers are becoming some the most valuable resource in the organization, the demand for them is only increasing, so they should be paid accordingly.
Therefore, as an investor I'd be quite happy to see my engineers paid very competitively, thus ensuring their retention and performance.
Most people who are smart enough to jump ships now have 2-3 offers. In cities like Bangalore, a jump can fetch anywhere from 20-200%. 20% is minimum irrespective of the current salary.
Perfect time for anybody who hasn't tried checking this in a couple of years.
All I've seen are 30-50% increases over something like a decade. These are hardly "crazy" increases for a field in which profits have gone through the roof, and they only apply to the "top end" as you say.
Developers below that top - i.e. the majority - have seen very modest increases at best.
Check how much executive pay increased over the same time span, to get an idea of "crazy growth".
20 years ago is 1998, i.e. before the internet revolution and the first bubble!
What are the numbers for the past 5 years? That's way more relevant.
> They've gone up about 20% in the last _three_ years, in SF.
How much did cost of living rise in SF during that time?
Your time frames aren't correct though. The Web/Internet revolution ignited in 1994 with Netscape. The dotcom bubble started in August 1995 with the Netscape IPO. By September 1998 (20 years ago), it was already 3/4 of the way to peak bubble and everything was already very crazy. 1998 was prime Internet revolution (also the year Google was founded). The Nasdaq climbed 100% over two years, first hitting 2,000 in mid 1998. The dotcom mania topped out in late 1999, the market topped out shortly thereafter.
The sustainable, profitable tech industry we know today was just getting started back then.
The sustainable, profitable tech industry existed then, it just wasn't Internet-related (mostly).
We all have the "optical illusion" that things started once we were around to perceive them. They usually go further back than that.
Sounds like you jumped from a low-level sysadmin role to a senior devops role. That's a quantum leap and not comparable to what the average developer saw during the same timeframe.
5 years ago salaries in SF for an SWE were already around 150k base at least, won't you agree?
So if GP was typical, you'd expect the a average base to be around $750k now.
Obviously it's not.
Overall SF is higher than most places, but maybe 25% higher. Not 2x higher, let alone 5x higher.
There are many that are highly paid.
Which is to say it's one of those journalist framing of a situation that means nothing.
I am not sure if you have noticed, but over the last 10 years, software engineering as a career, has grown extremely quickly. Both in number of people joining the careers and also in salaries.
I really don't think 150K salaries for new grads, and 100K salaries for recent bootcampers was normal, 10 years ago. Even in San Francisco. And yet in SF, that isn't too uncommon these days.