Why are tech salaries so low?
Especially from these companies with large profit margins and huge revenue per employee numbers. It seems like engineers have captured almost nothing of the fruit of their labors.
Especially from these companies with large profit margins and huge revenue per employee numbers. It seems like engineers have captured almost nothing of the fruit of their labors.
After a few of years on the job their salaries will be higher, but by that time they will also get green cards, so they won't show up in these statistics anymore.
Also, stock is not included in the data.
This is the big one. None of those numbers include equity, which can often be 40% or more of total compensation for engineers.
Over here in Europe (or at least Germany) salaries are incredibly uniform (doesn't really matter if you suck or get as much done in a day as others in 1-2 weeks; if your bugs get constantly reopened or your code is rock-solid), and most people seem to get maybe 35-50k€ after graduation (diploma/master's degree).
Money certainly isn't everything.
Company policy was that vacation was a reward for tenure, rather than a negotiable component of compensation. Best they could do was offer 20 days for the first year, and only the first year.
It was an asinine policy if you ask me. An immigrant is exactly the type of person who would want to take a holiday back home to see friends and family. To make the cost and hassle of two long flights worth it, it would have to be two weeks at least. And that would leave 0 days left for the rest of the year.
Why aren't companies competing with that in the US? If I was offered $150k with 10-15 days holiday and 50hr work weeks (expected), I'd immediately start bargaining for 25-30 paid days off, and make sure I wouldn't be expected to work more than 40h/w. Is that uncommon in the US?
Or is it common to take unpaid days off, which you can afford given the high salaries?
Startups that need to launch yesterday I realize often have young employees without family, but these are large corps like Oracle/Yahoo/Google, these have to employ quite a lot of engineers in their 30s, 40s and 50s? Like I said, I'd be willing to accept a substantially lower pay for a good holiday (5-6 weeks), and a good work/life balance otherwise, like good processes that ensure there's no regular "crunch time".
People working the longest hours aren't necessarily making more money because of it. There's no overtime.
People don't want to make less as they go on in their careers, and don't want to look like they don't want to work a lot, so if they take less time they try not to do so overtly.
> then you get a "quieter" job somewhere else when you need a job that allows you to pick the kids up at 4.30pm?
Recalibrate your expectations. No one is leaving work at 4:30pm. 45 hours a week is called "40 hours a week" and no one works just 40 hours a week. People don't expect to do very much outside of work except on the weekends.
As for my questions above, it still doesn't add upp. Either you don't have kids as long as you hold one of these jobs or at least both parents can't have such jobs, so it's basically a job that requires one parent to stay at home at least part time? Or you need a nanny to pick up your kids after school/kindergarten? My guess is that you are going to say that normally one parent (and not a random one) just stays home for years after having kids, but that would be a real blow to my view of SF/NYC as progressive...
It seems odd to me that people making a lot of money (which I hope these salaries are considered), wouldn't just invest a huge chunk of it in family/free time, by simply working less hours, e.g. 75% at 75% pay.
With my european glasses, the salaries look huge, but of course I haven't factored the cost of living and certainly not the impact on work/life balance. I hold a well paid (by local standards) full time dev job, and I drop off kids at 8 and pick them up at 4.30. Every other day my wife does that so I can work a bit longer. I never manage to do 40h at the office, but it's considered normal for people with kids to leave early and do an hour or so of work in the evening.
Not sure what my point is, I guess it's that I'm surprised of how a "culture of work" can form in this way in a country that is often percieved as valuing family quite a lot, especially in progressive regions where presumably equality means a lot. Also I'm surprised of how employers (candidates, rather) aren't pushing the compensation in a more work/life balance friendly direction. Especially since these were visa applications, a lot of which I assume come from people used to 5w holidays and actual 40h workweeks.
Almost universally what you see in job ads and recruiter spam is "we offer exciting challenges" and that they've created the most fun place to work ever and if they mention compensation at all they offer "market salary" or "salary commensurate with experience", to the point where all these different messages sound pretty much the same.
I get hundreds of messages on linkedin and they all sound like the above with exciting challenges with a market salary, but I don't recall anyone attempting to promise above-market salary or better vacation time, even once. You would think that you could get a competitive advantage by promising tangible benefits as you suggest, but I've never seen it.
Some do mention being more flexible with remote work though.
> so it's basically a job that requires one parent to stay at home at least part time?
Yes, basically.
> Or you need a nanny to pick up your kids after school/kindergarten?
In the US children are universally bussed to/from school, you don't need to come pick them up yourself. So once they're old enough that they don't need constant supervision they often have a couple hours to themselves at home.
> My guess is that you are going to say that normally one parent (and not a random one) just stays home for years after having kids, but that would be a real blow to my view of SF/NYC as progressive...
In terms of labor conditions? CA and NY have a handful of better labor protections than the rest of the country, but progressive by your standards? absolutely not.
> It seems odd to me that people making a lot of money (which I hope these salaries are considered), wouldn't just invest a huge chunk of it in family/free time, by simply working less hours, e.g. 75% at 75% pay.
That would be great. I would totally do that.
Remember, people don't get paid by the hour so there's no counterincentive to employers using social pressure to get you to put in as much time as possible. There is no concept of a set number of hours you're supposed to work.
> Also I'm surprised of how employers (candidates, rather) aren't pushing the compensation in a more work/life balance friendly direction.
Yes. People are not willing to fight for this.
> Especially since these were visa applications, a lot of which I assume come from people used to 5w holidays and actual 40h workweeks.
The bulk of these these are from Asia or India where the salary differential might be very large.
By working ~40h I maintain my strength and keep delivering really good results. But when I sometimes do 1-2h overtime I notice that others (who come to work at 9:30-10) also leave at 5:50-6, so generally in Germany I'd say regular work hours are a given thing and most people don't do that much overtime, at least in IT. I've heard bad things about creative industries like ad agencies, or IT companies with lots of young engineers w/o kids.
I mean why would I work more - for more money, sure, but not for free. My employer doesn't pay me "overmoney" for the same amount of work, does he? I at least get an overtime account and this year I managed to reduce it by ~10 hours. With different overtime policies I definitely would NOT have taken the job - NOT good for the company ;-)
I would suppose that they were single with no dependents.
Vacation sounds like a real problem, but it seems like you could circumvent that by going freelance and just taking off x days a year between projects.
http://www.statista.com/statistics/215502/per-capita-health-...
If you can get additional unpaid 15 days leave, then it's just 6% less salary per year.
These employees are bringing in billions of dollars for these companies and for them to still receive < $200k per year is appalling.
Think about this. You get into work at 8am and you leave work at 8pm. You manage a team of engineers that are literally building the foundation for the future of the company. Your entire life is dedicated to making this company money.
Do you still find those salaries low?
Do you really think this is truly representative of what the typical programmer is doing day-by-day?
Many will get in at 10am, leave at 4:30pm, manage nobody, and work on somewhat important projects that nevertheless are not even remotely the foundation for the entire company or the company's future.
The people who actually worked on the foundations of these companies are already multi-millionaires. The people spearheading huge projects at the highest level are also almost certainly making far more than $200k/year.
To be comparable, a salary number should reflect a full time work week, and be for a position which TWO people can hold, full time, while still having time to pick up kids. Obviously if I worked 12h days I'd be supporting my partner who could NOT have the same full time job. Not sure what these figures represent, I thought they were regular day-jobs, which you could hold while still having a meaningful work/life balance?
> These employees are bringing in billions of dollars for these companies and for them to still receive < $200k per year is appalling.
The same can be said for employees of any large corporation. Sure you may be more or less replaceable, but still: the dollars brought in are return on risk by investors. It's no more appalling than fast food workers being paid peanuts in fast food chains that make a billion.
What are the numbers per employee?
Net income per employee:
Apple: $456,800
McDonald's: $12,530
http://www.wolframalpha.com/input/?i=profit+per+employee+app...
Revenue per employee:
Apple: $2,111,000
McDonald's: $64,320
http://www.wolframalpha.com/input/?i=revenue+per+employee+ap...
Apple has about 3x what it pays out in salaries left over after paying everyone, McDonald's only has about 1x salary per employee profit. McDonald's would go broke if it doubled everyone's salaries, Apple could afford to do that and still be hugely profitable.
Still, there is nothing that should make Apple pay more because they can, they only need to be competitive in salaries, not excessive. If they wanted to compensate employees more, that would probably not show up in these figures as it would likely not be base salary but rather bonuses/stock etc.
No, but to hear people complain about how it's impossible to hire anyone...
while inflation- and cost-of-living-adjusted salaries actually have not increased at all... what's going on here?
But still: tech salaries in Europe are low, and are being systematically depressed. The influx of relatively cheap engineers from Eastern EU countries is one influence, but not even such a big one, since most of them pretty quickly catch up (the tech culture means they're not easily isolated and exploited like other migrant workers).
The biggest depressing influence is simply social status: despite the scarcity, despite the value they add, there is an enormous resistance against awarding higher salaries to "nerds".
Now that I operate at management level, I experience this first hand. Everything adds up: our budget, the economics, the scarcity. We should easily be able to offer 30% higher salaries and still make out just fine, and it's the only way to compete with a handful of enlightened companies that pay well and the lure of self-employment (the only other way for engineers to break through the salary ceiling).
Nothing stands in the way of paying engineers better, except social status: paying a software engineer the same as (or more than) a manager is unthinkable. Despite the fact that those managers are less scarce, less skilled and add less value.
The "nerd" idea is a myth, a prejudice I myself had back in college. But it's not the reality. Most engineers are very very boring family men, not the enthusiastic hipster type in funky colored pants.
But developer salaries - definitely not.
The salaries listed here are in our highest cost of living areas. The vast majority of developers aren't earning anywhere near these wages. Most are in the $50,000-$90,000 range (not too far off of your EUR$35k - $50k figures). Second, I think you're discounting far too heavily how much extra the average American has to contribute on his own for his own health and retirement. One might consider the 15%-20% one should take out of his pre-tax salary for savings to be an implicit tax we have to pay. The federal marginal rate for an individual earning $130k/yr is around 30% (for the sake of argument--it's actually a bit higher). In SF and NY, the state taxes wll boost that 8%-10% (or more). So the base tax rate is already around 40%. Couple that with this implicit tax, and Americans are paying a "tax" that is about what Europeans pay. Except we get a lot less for it by a long, long way. And, actually, since it's infreqent to earn that much money as a software developer without having a college degree, there is the additional factor of the cost of our education. Most people can't afford the 15%-20% hit to their pay because of the high cost of everything else, so the 'add-on' cost that hits them in retirement is even worse.
I'm surprised by the (low) 50-90k salaries you mention. I've always read much higher numbers. Probably due to the bias on blogs/news sites to West Coast companies.
EDIT: Should probably define middleman class then...I guess I'd have to say, being able to purchase a house, pay off student debt in less than 10 years, afford to have children, buy a car, go to events and maintain a relatively comfortable lifestyle.
Devs in HK aren't valued outside of banking; Taiwan is similar (many are coming to mainland to make more money, go figure).
India, oddly enough, seems much more competitive to me in terms of dev salaries.
I should mention that those salaries are much more variable than developer salaries. It's not uncommon to find an insurance salesmen make less than $50k per year, but it also wouldn't be uncommon to find one that makes well over $150k.
It's really hard to see the future of the middle-class here in the U.S. I can't name five jobs that are a ticket to a comfortable lifestyle, whereas 20 years ago you could fire off 20 or so jobs.
OK, the difference between Germany and the US is that job creation is easier in the US -- less regulations on employers. One piece of evidence that this is so is the high youth unemployment in Europe compared to the US. Once all the developers willing to work for less than they could get have been hired. The employers in the US (at least during go-go times like now) are still motivated to hire additional developers -- because the US economy is good at utilizing all the development talent it can get. It is still profitable (just not quite so much) to hire a developer who demands the be paid comensurate to the value they add to the employer.
So, in the US, people who are good at negotiation and know they're good can hold out for higher salaries -- and still get hired -- at least until there is a slowdown.
There is my theory: German dev jobs are filled by workers who are bad at negotiation (like many many nerds are) or they do not have enough work experience to realize what they are worth. German employers probably do not have the capacity to employ everyone willing to work as a dev.
In contrast, in the US, a lot of devs are also paid less than they are worth -- because people, i.e., young nerdy men are basically the same wherever you go -- but there are also devs whose attitude is, well, I'd be happy to work for you if you pay me $200,000 a year. If you cannot meet my salary requirements, well, there's other productive things I could be doing with my time or maybe I'll travel and live off savings for a few years -- or maybe I'll keep on job hunting.
US employers would prefer to hire from the first group, but eventually all the qualified devs in that group have been hired. US employers are willing to hire from the second group -- since their labor can still be converted into more income than required to pay the dev the high salary -- making it profitable to do so.
If my theory is correct, the way to get a high salary in the US is to have the option of refusing to work -- i.e., no immediate need for money (or to please one's parent by getting a prestigious job). That's the way negotiation works: if my best alternative to a negotiated agreement (BATNA) is pretty good, then my negotiating position is pretty good.
This is basic microeconomics, and it works even if many devs are willing to work for much less than the value they create. There is no need for us to convince those devs to get better at negotiation. Or unionize of anything like that. That all changes, though, when not every dev who needs a job can find a job. (Which is an argument for taking a pay cut during economic downturns, I guess.)
Maybe it's the business (consulting) where they only care about the hourly margin, not about your performance (although I did an internal fixed-price project back then; probably saved the company's ass on that botched POS they had built). Generally, my impression is that salaries in Germany are very homogenous, and affected largely by age/experience and rank. You'd have to be a well-marketed freelancer to achieve high hourly rates (only a few people - relatively speaking - can do that).
When you write, "rank", what exactly do you mean?
Here in California, I think we do not use that word.
That said, I've been to Ireland lots of times for vacation. (I should go check the job sites.)
And none of that really amounts to much if you subtract the taxes, overhead and most of all the time spent between gigs.
If you do well you can make out considerably better than on a salary, but still, 490 per day for a .NET engineer (biggest shortage there is in IT in Europe) contractor is on the low end.
If engineers aren't capturing much value, it's because they're fungible, and there are many other people on the market who can do the same thing. Engineers that do have very specialized skills - say, compiler design experts or people with deep expertise in transaction algorithms or high-ranking engineers on Google's search team - can frequently make into the millions in stock grants.
If you think it through, one reason is pretty obvious: jobs can also go to those people in wherever they happen to be born, in many cases. Letting them come to your country makes things better for everyone. Remember, the labor market is not a zero-sum game, a "lump of labor": http://en.wikipedia.org/wiki/Lump_of_labour_fallacy
There is the additional twist that an immigrant foreigner who got their degree abroad won't nearly be as encumbered by student loans as someone with a domestic degree and won't negotiate quite as hard for a higher salary.
The American Middle Class Hasn’t Gotten A Raise In 15 Years:
http://fivethirtyeight.com/features/the-american-middle-clas...