This is fascinating. What do you think possible causes for that might be? Is this an America/Bay Area thing or do you suspect it to be more widespread? Would be interested in other people's take on this also.
My perception is that salaries for direct-hire software engineers at top-tier companies have gone way up in the last ten years or so. My impression is that contractor wages are... keeping up with inflation.
Also note, my perception is that contractor interviews have not gotten much more difficult at all, while direct hire interviews have practically become contests of endurance; like you are expected to spend like 5x as much time on a direct hire interview than, say, 10 or 15 years ago, while you can do a contract interview over a long lunch.
Companies also seem to be okay paying Engineers very significant sales-style performance bonuses (in fact, this is where almost all of that increase in pay has come from) and this really helps them keep the gamblers; the people like me who jump every few years 'cause someone offered 20% more. (I mean, the bonus system is another system you need to learn to game, but it's not harder than the interview system.)
My speculation (and I'm totally unqualified to speculate on sociological trends, but you asked.) is that something has changed, and the cultural prestige of the Engineer has gone way up, and that this has changed management's willingness to spend directly on Engineer compensation.
I am a "linux systems administrator and programmer"
in silicon valley, me too. I mean, I'm sure that my lack of a degree gets my resume binned some places, but almost nobody mentions it, and there are plenty of jobs where they clearly don't care; I don't have trouble finding work.
My experience is that if I try to get a job outside of silicon valley (and especially if I try to get a job outside the USA) my lack of credentials becomes a big issue.
Part of this is cultural, I think, though a lot of it has to do with work visas. As a US citizen, I can vacation most places without too much trouble, but I still need to jump through hoops if I want to work elsewhere, and if I want to get a 'skilled worker' visa, they usually expect a degree.
Conventional employers/clients (e.g. your friendly diesel manufacturer) spend money on developers when they have a problem they want solved, they love expensive freelancers: if they could they would fly in a squad of experts, get a solution for a single lump sum payment and then hand it over for maintenance to that underpaid slob they keep in the basement.
Overfunded startups as well absurdly profitable SV success stories are a very different story. Building a talent pool is a core investment for them. In many cases they would rather have one good hire than two good ones and two bad because their immediate needs are already met and low performing hires are avoided not so much because of another head on the payroll, but because talent dilution is impossible to undo. They are not interested in adding quantity, but building quality teams is just the way they spend their money. Offers will be either high or nonexistent, and freelancers not welcome.
YMMV, but the quality of life, at least for me in Phoenix feels significantly better. I may not be making a quarter million or more a year as I might in SV, but I also don't have nearly the level of stress in my life.