If the typical founding engineer equity was 5%, that would equate to $250k/yr which would mean most startups would have greater total comp than Google.
The math is simple:
As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward.
If the founder is the main source of capital, I can understand. But if all the founder does is build the product and raise money, how different is (s)he from you?
If you believe you're doing 90% the work of a founder and getting paid 5%, then you should be an actual founder and get paid 20x as much as you be as a founding engineer
Of course, the odds are not static and some people genuinely do have a better RAROC by being a founder but most people overestimate their founder abilities vs the odds and feel like they're not fairly compensated at 1%, which is fine, most people shouldn't be founding engineers either.
But there's a reason it's equilibrated around the 1% mark because early equity compensation is about risk, not effort.
In other words, we need more startup engineers and less google engineers.