Reading the article my biggest take away is how low executive compensations are in Germany compared to the US. The top ranking ICs at US tech companies can hit low 7 figures!
IMHO this will be the downfall of US engineering, the high salaries will make US engineers too uncompetitive.
This is not true at all.
When I started working at Microsoft in 2007, Microsoft was one of the most profitable tech companies of all time. (They still are!)
Salaries in the Pacific Northwest were around 1/2 to 2/3rds what they were in the bay area, and total comp was a lot less, since MS's stock was flatlined at the time.
But do you know what we all told each other?
"Housing here is cheap, traffic isn't bad, it isn't worth it to move to the Bay Area."
A senior engineer is happy earning 130K a year if they can get a good house for 500 or 600k!
Once housing prices started exploding, salaries had to go up.
(The other counterpoint would be that many companies have location specific CoL adjustment to their salary bands)
> The reason US salaries are high is that US software companies can make staggering amounts of money.
SAP makes staggering amounts of money!
For knowledge workers, salaries are very disconnected from how much value the employee brings to the company.
I see two ways it could be working:
1. High engineering salaries cause high housing prices
2. High engineering employer demand causes high housing prices (more employees in the same area and stagnant housing supply)
For 2, the high housing prices probably do push up salaries to an extent but the real cause is demand for engineers
It is clear that in certain US metros, sellers are both able and willing to pay a lot, and buyers are not willing to settle for less, because they can find other sellers able and willing to pay more.
Higher land prices come downstream of that. No one is stopping businesses from paying less in areas with lower priced land, but evidently, it is more difficult to make a successful, highly profitable business in lower priced areas.