If you make 400k / year (typical for a FAANG senior engineer, which plenty of people people reach in their mid-to-late 20s) your expenses might break down as:
- 160k taxes
- 50k housing (luxury 1 bedroom in SF or Palo Alto)
- 10k food (eat at work on weekdays for free, $200 a weekend to eat out at nice restaurants)
- 10k transportation (Tesla Model 3 like everyone else)
= 230k total
So you end up with ~170k a year of disposable income while living very well. If you were willing to cut expenses to the bone (roommates is the big one, cook for yourself, old car) you'd probably end up at around 200k of disposable income. 170k-200k is more than most software engineers can hope to make in gross income in the Midwest. Sure, you might not want to buy a house for $2M, but with just two years of savings you can move to the Midwest and buy a house outright. After 10 years (remember, most of these people would be in their late thirties) you could easily save ~$2M before investment returns and retire to a low cost of living area.
For people who are not tech workers and live in the Bay Area making <$100k / year, there is definitely a great argument that the cost of living is way too high. For software engineers, it's worth remembering the cost of living is so high only because software engineers get paid so much.
Not doubting it, it's just fucking nuts. I do wonder though what percentage of engineers are making that type of money though? How typical is it really?
Overall, I'd guesstimate 40% make 400k or more, with most senior engineers making that much. Not at all atypical, particularly if you've been at one for a couple years.
As to how many engineers are liquidating at vest? It’s honestly the most sensible option to diversify quickly since you don’t want your investment, savings and income all tied up in one company.
Go look at the 2-year or 5-year stock charts of any of the FAANG companies and you'll see why.
An engineer who started working at a FAANG company several years ago got some RSU grants, and the value of the unvested shares grew a lot since then. On top of that, refresher grants every year or two are pretty common. Total compensation really ramps up after a few years even if you don't get promoted.
Nobody knows what will happen when the inevitable finally happens.
Maybe the companies will step in and make employees mostly whole. Maybe they will have to in order to keep their best people.
Or maybe the gravy train will end.
L
All anyone can tell you for sure is that the companies will continue to pay what is required to get the people they need, and no more.
Using FB as an example, engineers are expected to make it to E5 within a set time period (~5 years) or they're fired. So anyone still employed after that time is at least an E5. The E5 comp target is 330-400k. So yes, anyone still employed after 5/6 years is making at least that much.
Its not expected nor required to go beyond that, so that will be the career top for many. E6 is a 500-600k range, and I've no clue about E7-9.
Google is similar, and there are equivalent levels at Uber, Lyft, etc.
And then there's Netflix which only hires senior engineers and has a single level with a huge comp range. Pretty much 100% of Netflix enginners are making 300k+, most 400k+. But, Netflix is also an all cash shop - need to pay for benefits out of pocket, buy stock out of pocket, etc; so not 1:1 comparable to others.
LOTS of grads do not make it to the $500K land. The FAANG companies have also been around a bit, so now google / facebook etc just have a fair number of more senior folks who are making good money. So pay is out of control but these companies make so much gross revenue (check out apple / google financials) that they can afford it.
Totally annoying if you are not in tech! And sometime you are like, do you really need to be spending x billion on comp to run y website?
Even granting that I'm not very good as a salary negotiator, I suspect an awful lot of software engineers, even out here, are making around $150-200K for their base pay, and are not getting another $100K+ annually in benefits and stock options.
Of that, maybe 60% is salary, and the rest is bonus/stock/etc. The breakdown varies by company, and the non-salary comp is somewhat highly variable.
A senior new hire will be more like $250k
More junior folks will naturally make less.
But I also make more than basically all of my friends / family, and manage to save 30-40% of my income each year, so I have to say I can't complain.
And I'd wager COL here is also higher than Iowa.
There is a market if you're willing to play the game.
Did have a large transformation under my belt and critical national infrastructure as feathers in my hat.
The intention isn't to brag, it's just to point out there is a market here that can be tapped even if you can't travel to SoCal.
He took a 35% pay cut, and he tells me that cost of living in London is much higher than what he left behind in California.
It made sense for him, because he had personal reasons both to be in Europe and to take the specific open position he took that he wouldn't have been able to get on California, but he was much richer in California.
It does take a few years of being at senior for pay to ratchet up to the $350k range that is typical of long-tenured senior engineers at FAANG companies. A newly-minted senior engineer will be more in the $300k range
Also, I was under the impression that those 400K FAANG salaries were not that common in the bay area, i could be wrong.
This comparison makes sense only if your salary is spent on literally nothing else but housing.
Some very expensive places like nyc allow you to factor out automobile expenses making the rent burden manageable.
Food is a bit more, going out is the same if you figure out where to go, and day to day expenses aren’t too far off either.
I’d say it’s about 20% more overall all things considered.
Pre-tax savings and having more to set aside after tax as well as faster appreciating real estate equity is the winning path in today’s economy.
Starting your career in the Midwest at their typical salary levels and given the kinds of problems many of these companies or their IT departments are solving is a very short sighted approach. I say that having been there.
I pivoted my career. My first 6 months I had more impact and learned way more than in working 4 years in the Midwest.