What I'm taking away from this is that many (most) companies are grossly underpaying their engineers. I've been through the SF/NYC Senior SWE interviewing gauntlet twice in the past three years, and received 10+ offers at half this rate. Levels claims to be checking offer letters, which is great IMO. It's really hard for people to know they're being undervalued when the employers are low-balling and the self-reporters are lying.
> many (most) companies are grossly underpaying their engineers.
No, that's simply unfair to the companies who don't have billions of dollars in free cash flow or effectively infinite amounts of VC money.
The top firms have gotten themselves into an insane bidding war which has a side effect of creating an oligopoly on talent, as it's simply unrealistic to impossible for many firms to compete. Not to mention they apparently pay many people these sort of salaries to do basically nothing [1]: they've decided it's better to simply retain talent than risk them going to a competitor, regardless if they provide any value or not.
That all said, as an employee in whole debacle, you should simply focus your interviews on firms willing to pay these levels and maximize your income while you can.
> The top firms have gotten themselves into an insane bidding war.
That may be true, but there's more to it than that. The first wave of successful IPOs (Facebook, Amazon, Google, Twitter, etc.) caused a spike in housing prices as employees purchased houses. On top of that, companies have added tens of thousands of new jobs, without proportional growth in the housing supply. So housing prices are now absurd, and these companies need to pay more so their employees can buy smallish houses on the peninsula at $1.5-$2.5M a piece and have a middle-class quality of life.
Just look at Vancouver as a far more extreme example of how local property prices can be out of whack with wages.
House prices are a function of wages (or, more accurately, have a floor set by wages if land is constrained) not the other way around.
Also, the level of entitlement by a lot of such engineers I find to be borderline disgusting. Why do you think you're entitled to a $1.5m house at all let alone 3 years out of college? If you really want cheaper housing (as a function of income) just move to a lower income area. It's actually pretty simple.
But the most objectionable part for me is not just how much of a non-problem this is but it completely ignores people with real problems, like, oh I don't know, the people who drive the shiny white buses who need to live 2+ hours away. Or those not in tech who have to do the same.
Engineers are compensated well now because of the value they create for their employer, nothing more, nothing less.
> House prices are a function of wages (or, more accurately, have a floor set by wages if land is constrained) not the other way around.
I guess if you state it as a fact, that makes it true?
But if that’s the case, why would the company pay an engineer more when she moves from the Austin office to the NYC office? She has become more valuable to the company overnight? And the most valuable engineers just happen to live in the most expensive cities?
Sorry, but salaries are impacted by cost of living. Because if they’re paying top talent too low relative to cost of living, those engineers will just move elsewhere, as you suggest.
Yes, this puts a tremendous amount of pressure on the housing market, affecting everyone in the Bay Area. I’m not claiming this is good.
Vancouver is a different situation entirely.
> Why do you think you're entitled to a $1.5m house at all let alone 3 years out of college?
This is not at all what I said. And most people I know here cannot afford a house 10+ years out of college, unless they’ve worked at a top-paying company all those years.
Who is claiming they’re entitled to it? I’m saying companies are offering it to retain employees, because it’s in the companies’ best interest.
> it completely ignores people with real problems, like, oh I don't know, the people who drive the shiny white buses who need to live 2+ hours away.
And there are plenty of people less fortunate than the bus drivers. By your logic, if they don’t like it, they can just move somewhere cheaper. Maybe it’s just too late in the evening, but I’m not really seeing your point here.
No, COL definately is a large reason. Even the same engineers at Google will get paid different amounts based on where they are located. I believe the Bay area is x1.5 more than other cities, for google.
Yes, labor market competition is the primary factor. But is there a place in Australia where engineers can work for higher salaries and the same or a lower cost of living?
In the US, the discrepancy between Bay Area and non-Bay Area salaries is not as great as they seem at first glance, once the real cost of living is factored in.
Under/overpaying has nothing to do with how much any particular firm has and everything to do with what other companies are willing to pay. If there's a bidding war, then whatever that produces is the fair market rate.
Yes, it's the market rate but no, that doesn't mean it's necessarily a good buy; it's set by the most optimistic buyer. Buyer's remorse is sometimes a thing in auctions too.
That's the reason we have labor unions -- to stop those that otherwise would work for low wages and/or in deplorable conditions, from doing so. Thus undercutting those that "hold out" for fair wages and conditions.
Think about it. If the entire graduating BSCS class of 2020 banded together and declared they would not work for less than $400k/yr starting, FAANG would simply have to pay that (they have the cash). It's because there's one dipshit willing to work for $250k TC that all the rest have to take that salary as well.
>> Not to mention they apparently pay many people these sort of salaries to do basically nothing [1]: they've decided it's better to simply retain talent than risk them going to a competitor, regardless if they provide any value or not.
I don't think Google is purposely ok with some of their employees doing basically nothing. I've heard the theory that companies pay for some top talent who don't generate value just to prevent them from going to competitors, but is there any hard evidence for it?
> No, that's simply unfair to the companies who don't have billions of dollars in free cash flow or effectively infinite amounts of VC money.
I mean.... so what? Why should I, as an engineer, care if some companies are suffering under the "unfairness" of high salaries?
> which has a side effect of creating an oligopoly on talent
It doesn't really make sense to use the work oligopoly, which has certain negative connotations, for a situation where companies are merely choosing to outbid others.
I would only use the term oligopoly, if there is some sort of unfair barrier to entry, such as because of some government law that is hindering competition.
> I mean.... so what? Why should I, as an engineer, care
You shouldn't, you should always maximize your income. That wasn't my point. My point was the guy shouldn't interview at a 5-person bootstrapped startup and act bewildered when they cannot offer Facebook level comp packages.
> oligopoly
It's absolutely an oligopoly. There are a small number of firms who possess the capital to compete on salary and that creates a extremely high barrier to entry. It's not a bad thing, it's just the reality of the situation. There's plenty of options though, e.g. don't decide your HQ must be in San Francisco.
Maybe that's true of Walmart and GM, but your random A/B round startup? I don't think it is unfair at all. They could offer legitimate equity of they choose not to. Sure, it would be still be a gamble but at least it would be French roulette and not the West Virginia lottery.
I think it's less that self reporters are lying and more that there's a selection bias among self reporters. Engineers with average salaries probably don't bother to report.
Some of the numbers are skewed by the unicorn startups: since employees at Airbnb and Stripe (and Lyft and Pinterest, at the time these numbers were reported) can't sell their equity, and since the equity may drop considerably after IPO, these companies compensate by offering more of it.
LinkedIn is widely known for paying extremely well (to the chagrin of people at parent company Microsoft). Same with Netflix.
I think it's more that software development's divided between the maybe—maybe—5% who are looking at comp at these levels, and everyone else who's in the $70K-180K range, with a cap somewhere in lower-leadership positions that perhaps reaches $200K, maybe mid $200Ks at best as you start to move into management proper. Anything past that you've gotta really nail some niche that someone with lots of money (probably finance) needs and likely become a consultant of some kind, or move into the smallish (relative to all US software development) set of positions that compensate like the ones at the link.
Relative to all software development, I mean. There are tons and tons of places employing anywhere from hundreds to tens of thousands of developers each, in the US, not paying anything like this. And almost no smaller shops are, of course. All the positions at all the companies like this, even though most of them are large, I'd still be surprised if it's more than a single-digit percentage of all software positions in the US.
Levels.fyi seems to be pretty accurate in my experience, though there may be selection bias as there are more offers at the top of band than bottom submitted.
This is top 5. Look at the difference betwen position 1 and 5 (30% (sic!) for entry level). Ask yourself how many companies are in the SV area?
Then think where MEDIAN of those numbers is.
Looking at top 5 is like looking at best performing stocks in last year (from 5000 of ohers), and thinking "YEAH, thats what I should expect from my future investment portfolio".
Your portfolio should only contain FANG companies. Every single one has outperformed the market by at least 2X and up to 6 X over the last 5 years.
The contrarian position now is to double down on a small number of stocks where the business model function as a data aggregator hence FANG. As opposed to index tracking style portfolio investing, even your Uber driver has ETF's.
> Your portfolio should only contain FANG companies. Every single one has outperformed the market by at least 2X and up to 6 X over the last 5 years.
Based on this, your portfolio should have only contained FAANG companies for the last 5 years.
The argument for "Your portfolio should only contain FANG companies" would be "Every single one will outperform the market by at least 2X and up to 6 X over the next 5 years".
Buying FAANG in 2020 is buying assets whose price has just gone up a lot - the very opposite of contrarian.
I've been in this industry in NYC for about 20 years of progressive levels of responsibility where I'm now directing multiple project teams and doing company strategy and am somehow earning as much as a college grad in SF.
Honestly, it all depends on the type of company. There are only about 20-30 tech companies who consistently pay this much, and at your level of seniority, half or more of your comp is going to be equity. If you're working for startups, agencies, Fortune 500 companies, etc, you're just not going to be making anywhere close to what the big tech companies pay.
Why don't you do a round of interviews for roles at the big tech companies in NYC? You could probably double your comp pretty easily.
Oh, I have. Thought I did pretty well in some of them, but never got anywhere. Not really sure what kind of role I would actually do since I haven't really been a coder for so long.
