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Comment by mensetmanusman | Hacker News Reader

The flaw with this argument is the assumption that the value add of a given skillset is approximately equivalent in different environments.

We see this for example on a larger scale in OLED tech, where a key OLED engineer in South Korea might be worth $250k to the Korean Economy but worth $2.5M to the Chinese economy, which is why poaching was halted by classifying the job as a national security interest.

The profit/employee ratio at Apple is over a million dollars, so a valuable tech employee there should be making seven figures. That kills MBA’s brains (and the traditional power structure), which is why the cartel worked behind the scenes on wage suppression.

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Author here! I'm not arguing that software engineers should necessarily be paid in proportion to the end economic result of their employment. Although that's an interesting point for another article perhaps! Rather simply that companies tend to undervalue domain specific knowledge and forget how costly and time consuming it is to hire and retrain new team members. This should be taken into account when considering compensation structures to retain your top talent when considering the open market is always available to them.

Consider the question of "could you get into a bidding war with Apple or Netflix for a tenured developer?" Is there a point where another company can pay more than the economic product of the developer at the original company?

Yes, hiring and training is expensive... and the loss of domain knowledge is costly too.

There are a lot of places that aren't making that much money to be able to get to "market rate".

I'd also like to put forth that the idea of a market rate for developers across all industries is one of the things making it hard to find developers. There are more than a few new grads out there that are discounting any job that pays less than $100k/y because they believe that the market rate is that and anything less is being underpaid regardless of industry, company maturity, or locale.

Similarly, there are plenty of companies here in the Midwest who think it's ok to pay devs 50k/yr, and I want to say in the strongest possible terms fuck that. Employers who won't pay an equitable wage for devs don't deserve to hire them.

I'm not really sure that equitable is the right term to use here. $50k a year may very well be in line with what everyone else at a hypothetical midwestern company is making.

I think it's always important to keep in mind that current developer salaries are the result of a constrained market and not because we innately deserve it or something. Yes it is a high-skill job, but there are plenty of high-skill jobs out there that pay much less.

I wish more people understood this.

I spent the first twenty years of my career as a public school teacher, and the last four as a software engineer.

Most of the teachers I knew worked _literally_ twice as hard as the average software engineer I know now, even though they're paid one third as much.

And finding good teachers is just as difficult as finding good ICs. I think the ONLY difference is that it is possible for a lot more people to teach badly than to code badly. And of course that society has decided that teachers aren't worth paying very much.

I made about $50k/y at a two different midwestern companies. I was getting paid about 2x the per capita income. I was able to buy a house with a double lot with a nice fenced lawn for $60k (no typo there, yes, $60k).

I was reasonably paid for the area. Sure, I could have been making more if I was to go to a different company (challenging in '09). I'm making more now for a different employer in the midwest.

The thing is that there are companies that don't make $100k/y revenue for the work that the devs do. There are also devs who are willing to work for $50k/y in the rural midwest (which is better than other jobs in the area pay).

To assume that those devs should be paid the same as one in SF would have ultimately meant a loss of jobs in the area as the business wouldn't be able to afford to do that.

There are plenty of places that are not the mid west that are paying more.

Valuable tech employees at FAANG absolutely make seven figures.

That's a stretch. A staff/senior staff engineer (or equivalent) at FAANG will top out at mid-six figures annually, maybe more than that if there was a lot of stock appreciation since it was granted.

Nitpick: From the PoV of the (public tech) employers, they typically look at compensation not including appreciation of the restricted stock. It's typically "base + bonus + new stock grant value" or sometimes "base + bonus + value of the restricted stock that vests this year, but using the value at GRANT time, not at VEST time".

More specifically as an employee, I think any incremental value from holding the stock is not compensation FROM the company, since the employee equally has to carry the risk of stock prices going down.

Of course, practically, one's cash flow in any given year is "base + bonus + actual value of the stock that vests in the given year" and can be vastly different from how the company does compensation planning. And this is also what determines income taxes (unless I'm bizarrely mistaken about how income taxes work in some jurisdictions).

Having been a manager at multiple public tech companies, I'll say that this has led to very many 'interesting' comp conversations and not everyone comprehends the distinctions here -- regardless of what's arguably more 'correct'.

Thank you. I’ve gotten a bit tired of hearing people talk about their absurd compensation as though it’s their yearly earning and that everyone should get it, only to ignore the part about it vesting quarterly starting 1 year after reception, over 4 years.

When people talk about comp, they usually talk about the # of $$ they took home last year - anything else is magic money so to speak.

For the same reason a manager isn't going to value a $10MM grant in company that ended up being a penny stock, he isn't going to downgrade a company that resurrected from the pits either. Money in hand last year is the best measure possible/available.

That's not what it looks like on levels.fyi. It's regularly: "SDE 1, 110k + 75k stock options", and then levels.fyi will declare that 185, not 110 + 0, 112 + 38, 115 + 19, 120 + 19

edit: and then people will come on here and say "look! Brand new Google employees make 200k!"

That is incorrect, the stock figure on levels.fyi is per year. It does average out over the grant though, ignoring uneven vesting schedules.

Levels FYI doesn't usually do that.

Looking at how they handle Google, for example they show base|annual stock|signing bonus.

So when you see 130K base + 33K stock, that was a grant of 130K vesting over 4 years. And then with signing and annual bonus of ~20K, that person is in fact making 200K starting (although the median is probably a bit lower for a completely new employee).

On the other hand, people often forget about refreshes when looking at these things. And while a refresh grant won't be as large as the initial grant, they do make the overall comp significantly larger.

Most people give their total compensation as their base salary + (initial grant / vesting period). It is an annual figure, but only a good proxy for year 1.

In later years the situation is more complicated as the stock price will move, you'll receive annual refreshes which are performance dependent, and you might reach a new level. While the base salary changes with levels can be modest, 15% or so, refresher targets can practically double from level to level.

There is definitely a class of staff/seniors making seven figures in FAANG - this may be because of stock growth, 'special' bonus stock awards from extreme performance or retention, matching offers etc.

But yes - these won't be the public / known numbers. These folks have no incentive to make it public and affect their own future numbers.

Depends on your definition of valuable, I suppose. Directors and equivalent ICs (L8 / Principal level) or above can and do get over $1M in annual compensation even before appreciation. At F/G anyways.

Per year? Usually only director and higher levels make $1m+/yearly (not accounting for stock appreciation).

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