[HN Gopher] Is Dev Compensation Bimodal? (2016)
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Is Dev Compensation Bimodal? (2016)
Author : ZephyrBlu
Score : 81 points
Date : 2021-02-15 07:29 UTC (1 days ago)
(HTM) web link (danluu.com)
(TXT) w3m dump (danluu.com)
| kache_ wrote:
| https://en.wikipedia.org/wiki/Pareto_principle
|
| When you select for the tails of the normal distribution, the
| following distribution will have a pereto-like-shape. Since it's
| such a high skill field (abstract symbol manipulation to create
| automatons that carry out work), it selects on the right end of
| conscientious & intelligence distributions, which are both
| normal. That has a long tail, and incomes follow that
| distribution.
|
| The more normal distributions you are cross selecting for, the
| more extreme the skew becomes. When you begin selecting for
| intelligence, conscientiousness, privilege of opportunities,
| sociability, creativeness, negotiation skill ... it gets more and
| more extreme.
|
| Practice :)
| rcardo11 wrote:
| My theory: The amount of leverage computers give to us as
| programmers is not seen in any other field.
| dang wrote:
| (Threads about this article certainly are:
| https://hn.algolia.com/?query=danluu.com/bimodal-compensatio...)
|
| If curious see also
|
| 2018 https://news.ycombinator.com/item?id=16337434
|
| Discussed at the time:
| https://news.ycombinator.com/item?id=12588202
| TuringNYC wrote:
| >> Appendix B: why are programmers well paid?
|
| I'm disappointed at this section, it is missing fairly obvious
| things.
|
| - Because programmers are disproportionately also living in the
| most expensive regions, so they may be paid well, but not as well
| once you consider the CoL. Imagine if you told 50% of
| plumbers/pilots/etc they would have to move to Palo Alto or SF to
| practice their career, those salaries would also jump.
|
| - Because volatility. Anyone who's lived thru 2001 or 2008 knows
| that feast-and-famine jobs have to pay well to compensate for the
| famine periods, otherwise people wise up and dont take the deal.
|
| (EDIT) - Because unlike with law/medicine/plumbing/piloting and
| practically most other fields, there are constantly new things
| introduced that dont really push the field forward much. Consider
| the 200 web frameworks. Some are great. Many are just rehashes of
| older stuff with slight tweaks. However, this has the effect of
| making experience moot -- because newcomers always have an
| incentive to create something new and level the playing field.
| Look at the Cravath salary scale on the site, and imagine if law
| vastly completely every 5 or 7 years. The salary curve wouldnt be
| as steep.
|
| - Because they are like athletes and many have a shelf life.
| There is ageism for many, and for those w/o that problem, there
| is often a shelf-life for their technology skills. You are being
| compensated for continuous improvement and the risk that your
| skills become stale.
|
| - Because scale. Like investment firms, one person in tech can
| have massive impact and collect some of the premium as salary.
| formerly_proven wrote:
| > Programming pays so well that it seems a bit absurd.
|
| As usual it's important to keep in mind that this is a bubble.
| This is the SV bubble, where programmers get paid out of
| wheelbarrows filled with money.
|
| Elsewhere programmers get paid about as much as other kinds of
| engineers, maybe a little bit less on average.
|
| Maybe that's because developers outside the SV are garbage,
| maybe that's because there's a set of fairly unique and hard to
| replicate conditions in the SV that resulted in companies
| having to pay these sums.
| nicoburns wrote:
| > Elsewhere programmers get paid about as much as other kinds
| of engineers, maybe a little bit less on average.
|
| That's not true. I'm in the UK, and while software dev
| salaries are considerably lower than in SV, they're still
| quite a bit higher than is typical is other engineering
| disciplines.
| emteycz wrote:
| I don't know about elsewhere in the US but here in [edit:
| south-eastern] EU programmers basically formed their own
| social class, one considered even higher than executives, top
| tier managers etc.
| ClumsyPilot wrote:
| I like in UK and have never come across this strange idea
| emteycz wrote:
| UK isn't in EU, is it?
|
| Makes sense though - as all of you and not just
| programmers are rather well paid compared to people in
| continental EU, the difference is not that huge. Where I
| am _the average programmer has 5-10x more_ than any other
| person, and 2x more than directors - and the outlier
| programmers can make even 20x more than other people, and
| that 's still ignoring the millionaires (and few $
| billionaires) that sold their startup stakes.
|
| In the past decade, _only_ programmers became rich from 0
| here - all other people inherited their wealth.
| Mkoo wrote:
| May I know what country we are talking about here?
| emteycz wrote:
| Czechia, Slovakia, Poland, Croatia, Slovenia, Serbia,
| Romania, Hungary, Latvia, Estonia, Lithuania, Bulgaria
| and Montenegro. Probably Greece too but I don't know how
| it's there personally. Plus the non-EU countries in the
| region - Albania, Serbia, Kosovo, Moldova, North
| Macedonia and Bosnia and Herzegovina.
| [deleted]
| Mkoo wrote:
| I sort of thought so. I'm in Prague myself and I would
| say that 5x-10x may be a bit of a stretch. I'm personally
| only a bit over 2x country average, though I think I'm
| underpaid so I might be checking out the market soon.
| emteycz wrote:
| Most people in CZ have around 24k CZK/month, and
| 240k/month is certainly doable for a programmer. Not an
| average one, that's true - though not necessarily the
| best one, there's still plenty room to the top.
|
| Shoot me an email at emteycz@gmail.com, I might be able
| to help you.
| [deleted]
| walshemj wrote:
| And I have seen several Germen developers on here saying
| they are not seen as high status professionals.
| ploika wrote:
| I'm in the EU too and I don't know of a single place where
| programmers are considered to be a higher social class than
| executives and top tier managers.
|
| The EU is a big place and everyone's experience is
| different, but I think you're overstating matters hugely.
| emteycz wrote:
| It's most probably more of south/eastern thing, but it
| definitely exists here literally as I am describing it -
| even the government acknowledged it in their yearly
| statistics; even the EU did actually.
| ploika wrote:
| Fair enough. In my part of the world it's probably still
| the finance types who would have that public perception.
| Programmers are seen as well-paid, but not particularly
| influential in comparison to executives.
| Rumudiez wrote:
| I'm an engineer in the US and this is my personal viewpoint
| as well. I tested this attitude the last time I was
| interviewing and picked a company that values engineers by
| choosing to stay small rather than fill the ranks with
| middle managers. My CEO wouldn't have a product without me
| or someone else filling this role, so while his value to
| the company is capped at fundraising, mine is only capped
| by my own abilities.
| AngrySkillzz wrote:
| SF plumbers only get paid a lot because SF engineers can afford
| it. Tech companies only pay SF engineers a lot because they can
| afford it. That entire distributional outcome comes from the
| top: tech companies make absolutely embarrassing amounts of
| money, and engineers have (for now) enough bargaining power to
| get some of it for themselves.
|
| Or as a counterexample, there are plenty of industries that do
| not exist in SF because they don't have large enough profit
| margins to support it. There are no factories in SF. CoL comes
| from the high salaries, which comes from the high profits. Not
| the other way around.
| ClumsyPilot wrote:
| And half that money is being captured in the totally un-
| productive real-estate market that adds nothing to the real
| economy.
| yourapostasy wrote:
| I've long maintained to those defending high real estate-
| dirt pricing to show me how such pricing creates a
| smartphone industry, cancer treatments, disease lab tests,
| and more currently, mRNA vaccines, versus letting 100,000
| smart people coalesce into the same physical proximity
| without worrying about shelter costs (in the US, they would
| also have to not worry about medical bankruptcy). In an age
| where economic advantage accrues to those with the greatest
| cognitive capacity to throw around, instead of land, the
| first nation to commoditize the complement of the cost of
| land and the utilities underneath it, and shift all that
| trapped capital into developing many vibrant, dense
| Shenzen-like communities, will vault over the other
| nations.
|
| I don't have a dog in that hunt. I have my land on a
| somewhat sane cost basis. My interest is academic.
| ForHackernews wrote:
| still better than adtech. At least you get a crummy
| apartment to live in.
| sudosysgen wrote:
| It's even worse than adtech. Construction is a small part
| of the money that gets siphoned away by housing.
| mettamage wrote:
| Here here! The more companies I see, the more I experience
| this as true.
| xwolfi wrote:
| It s very US centric as well. I disagree there s a shelf life
| for a known technology since the skillset you require as a
| programmer is more to adapt, work with a good speed/quality
| compromise and connect with your business/users beyond the
| minimum.
|
| I wouldnt know the real US wide situation, but I ve worked in
| continental Europe and Hong Kong, and we have nice salary but
| well far from 300k a year (I reached 100k this year with 7
| years of XP, in an investment bank and I think Im paid at the
| average).
|
| Programmers, in my experience, are still paid less than profit-
| incentivized workers like sales traders or trading floor
| quants. But you could say a quant is a programmer and skew the
| pay up I guess. Just dont let them near your source code (as a
| Quant you dont get the variable pay part of your big salary if
| you do enough quality to have version control :D)
| ithkuil wrote:
| honest stupid question: are plumbers in SF (relatively) well
| paid too? How can they afford living there? Is there a "bimodal
| lifestyle" there too?
| metalforever wrote:
| Yes.
| [deleted]
| Tempest1981 wrote:
| Check the data for teachers or firefighters. They tend to be
| paid more, but are not "well paid" enough to afford living
| there. Many have long commutes.
| TuringNYC wrote:
| The thing about plumbers/electricians/doctors and other
| professions are that licenses are often at the state-level.
| So while a developer at XYZ startup in SF doesnt have as much
| option to pack up and move to the exurbs or relocate to a
| more affordable area in California, most other professions
| do. This creates a smoother pay/CoL ratio because you have
| freedom to walk away from a bad deal.
| 908B64B197 wrote:
| > However, this has the effect of making experience moot --
| because newcomers always have an incentive to create something
| new and level the playing field
|
| I would rather trust someone who's been through a few paradigm,
| languages and ecosystems as compared to someone two simply
| memorized the invocations of whatever framework from the
| bootcamp-du-jour.
| luftbbb wrote:
| And uh, you're leaving out probably the most important reason -
| being a good software engineer is a skill. Why shouldn't we be
| compensated for it? People think you can just go ahead and read
| a medium article and blend in to the industry. Those guys are
| bottom rung hires. Top software devs worked their asses off to
| carve out a career and deserve every penny they earn.
| treis wrote:
| >unlike with law/medicine/plumbing/piloting and practically
| most other fields
|
| The odd thing about software engineering is the number of these
| jobs that remain unfilled. As an example, Microsoft has 3,746
| engineering jobs available plus probably another 1,000
| technical roles in sales, service, and support. You'll find
| pretty similar numbers across the FAANGs and other major tech
| companies and VC start ups. So you've got lots of open roles
| and lots of developers that could double their salary but the
| connection is not being made.
|
| Contrast with something like law. Law Firms will fill the roles
| they have with the best lawyers they can find. There's not a
| bunch of open slots at top firms that aren't getting filled
| because they can't find associates that will raise the bar.
| TuringNYC wrote:
| >> The odd thing about software engineering is the number of
| these jobs that remain unfilled. As an example, Microsoft has
| 3,746 engineering jobs available plus probably another 1,000
| technical roles in sales, service, and support. You'll find
| pretty similar numbers across the FAANGs and other major tech
| companies and VC start ups. So you've got lots of open roles
| and lots of developers that could double their salary but the
| connection is not being made.
|
| >> Contrast with something like law. Law Firms will fill the
| roles they have with the best lawyers they can find. There's
| not a bunch of open slots at top firms that aren't getting
| filled because they can't find associates that will raise the
| bar.
|
| Microsoft often calls me also. And i ignore the recruiter
| calls. The reason they have "3,746 engineering jobs
| available" is probably because it is a raw deal compared to
| the alternatives -- especially once you account for moving to
| Seattle and paying Seattle rents. They would have to increase
| salaries, and poof, all the openings would disappear.
| Alternatively, they can make the jobs WFH and they would
| disappear, because i'd be very interested to apply to these
| jobs if it didnt involve relocating to Seattle, I could live
| somewhere with sensible housing costs.
|
| Anyone can create underpaid openings and they will go
| unfilled. I want a personal trainer for $5/hr. Except it
| doesnt make sense for a personal trainer after accounting for
| costs, especially given alternatives.
|
| >> Contrast with something like law. Law Firms will fill the
| roles they have with the best lawyers they can find. There's
| not a bunch of open slots at top firms that aren't getting
| filled because they can't find associates that will raise the
| bar.
|
| Look at the Cravath pay schedule. If you paid these sums to
| SWEs, those positions would also get filled really fast.
| treis wrote:
| >Anyone can create underpaid openings and they will go
| unfilled.
|
| Sure, but these positions are not underpaid. They are often
| 2-3 times what other software engineers make. Location can
| explain some of it, but in other industries that stuff
| tends to equalize.
|
| >Look at the Cravath pay schedule. If you paid these sums
| to SWEs, those positions would also get filled really fast.
|
| That's pretty close to what the FAANGs pay and they're
| sitting on thousands of open positions. I doubt Cravath
| even has one open slot.
| TuringNYC wrote:
| Totally disagree. Engineers are rational. If these were
| appropriately paid, engineers would go there and take the
| job.
|
| The positions are obviously not underpaid at face value
| nor are they underpaid on an absolute scale -- but they
| ARE underpaid relative to what is expected (experience,
| skills), and what has to be given up (cost of living.),
| and what you actually get (cash comp vs stock w/ vesting
| periods)
|
| Cravath pays cash salaries, not step-vested stock that
| can fall long before it vests. There is no comparison. If
| there were a comparison, people would be flocking to
| these FAANG jobs. The fact that there openings again
| suggests there is something amiss.
| ghaff wrote:
| Cravath also has a pretty simple pipeline for the most
| part. Try to hire the top grads from a relative handful
| of top law schools. Associates are mostly up or out.
| Rinse and repeat.
| treis wrote:
| >Totally disagree. Engineers are rational. If these were
| appropriately paid, engineers would go there and take the
| job.
|
| As far as I can tell engineers are falling over
| themselves to take these jobs. It's the FAANGs et. al.
| that are rejecting them for, as you note in your other
| post, rather arbitrary reasons. It's an extremely unusual
| situation.
| TuringNYC wrote:
| Well thats the thing, some of these positions are
| expecting absolute 0.1% rocket scientists (IMHO
| unnecessarily) but w/o the rocket scientist pay.
|
| Remember that some of that top talent are well into their
| career, they have families, kids with health costs,
| school districts, college funds, etc. So its a raw deal
| to offer them just enough to jam them into a 1br or 2br
| apartment. Why would someone with years of experience and
| family obligations take such a terrible deal?
|
| The salaries are great for entry level graduates, but in
| many cases the requirements (either explicit or via
| tests) are not selecting for entry level graduates.
|
| W/r/t the requirements, I'm not even sure being able to
| rebalance a B-Tree on pencil and paper -- without a
| computer or debugging code -- is reflective of any real
| situation i've ever encountered in my career. It is a
| fair test if you just want really sharp people...but then
| you better be offerring really sharp salaries.
| throw1234651234 wrote:
| Is this really true? Seems to me like they get endless
| applications.
| geodel wrote:
| Exactly. It is an old scam. I am surprised otherwise smart
| engineers still fall for this.
| treis wrote:
| Perhaps I'm dense, but what's the scam here?
| TuringNYC wrote:
| 3,746 openings that supposedly cannot be filled. Except
| 100,000 people are applying and failing because in order
| to get the position, you need to pass a test with a 5%
| pass rate -- because you need to write and debug code on
| a whiteboard within 30 minutes. Oh, and once you get the
| position, you dont get all your comp, rather it is in
| stock that vests over time, and the stock can fall. Oh,
| and you also have to pay rent NOW (not when your stock
| vests.) Oh, and the rent is absurd. Oh, and you went to a
| top school got great grades and you're rewarded with a
| shitty 1br apartment because that is all your cash comp
| can buy you since you are limited to one or two cities.
| blamestross wrote:
| Is software engineering a situation where hiring engineers
| below a given bar would result in net-negative productivity?
| lordnacho wrote:
| It think it has to do with the pseudo-monopoly FAANGS. They make
| so much money that they reckon throwing a lot to the devs makes
| sense. They're less likely to leave if you pay them, but one
| should also emphasise the pseudo in that: these are firms that
| feel stuff needs to keep moving, and they want to foster a pro-
| dev culture to make that happen. By comparison you have Oracle,
| which is also entreched, but from what I can see are never
| mentioned as a dev-friendly place, and are not often lobbed into
| the FAANG salary debate.
|
| SV also has a load of startups that reckon they are gonna be a
| FAANG someday, so they figure they'll take on some of the
| business practices, such as paying devs a lot of money.
|
| The other lump is places that don't see devs as central to the
| business model, which is a lot of diverse places.
|
| About supply, I'm not sure even with that upward curve of CS
| grads, that there's enough. A fair few of the people who take CS
| during a bubble are not in there for the long run. How many
| people do you know who sat next to you in a coding course and now
| can't write a Hello World? Strip those out, and you still get an
| upward curve, but a few tens of thousands of grads doesn't seem
| like very many.
|
| I'm not so familiar with the other branches of engineering, but
| my impression is that many of them are in capital-intensive
| industries. If you need a chemical plant to be able to do your
| job, that will have an impact when you negotiate to get on the
| job ladder. You'll get more than your average wage slave, because
| the owner of the factory wants his capital utilized effectively,
| but he's also got a lot of leverage over the employees.
|
| So why don't the FAANGS think this? After all, you can't work in
| ML without a load of machines? Thoughts to ponder.
| falcolas wrote:
| FWIW, Oracle is a great place to just do a 9-5. Their
| compensation is competitive with FAANG, their health package is
| ridiculously good, and you can pretty much do anything you
| want, so long as it doesn't cross division lines.
|
| You won't change the world there, but you will work on
| interesting projects, have good job security, and you can put
| your work down at the end of the day.
|
| Source: Acquired by Oracle, left shortly thereafter because I
| believed I still wanted to change the world.
| [deleted]
| sdevonoes wrote:
| > Why are programmers so well paid?
|
| Why are programmers so well paid... in the USA? In the rest of
| the world that's not the case (programmers are paid a bit higher
| than other engineers but the difference is not that pronounced as
| it is in America).
|
| Edit: And I would add: programmers are paid very well in the USA
| at FAANG companies. I would love to know what's the percentage of
| programmers that work at American FAANG companies (my bet is less
| than 1% of the world's population of programmers... but I haven't
| done the math).
| JMTQp8lwXL wrote:
| As you refer to, it's the presence of FANG's. I wouldn't be
| surprised to hear movie stars are paid more in America than the
| world. Los Angeles is the world's entertainment capital. A lot
| of the answer to the question stems from 'Why is the US a
| hegemony?'
| zuhayeer wrote:
| Stock compensation is also the real kicker. Probably one the
| most amazing things that Silicon Valley made widespread is the
| ability for employees to own pieces of the business. I noticed
| that many non-US companies don't provide too much ownership to
| engineers (although it is starting to change for the better
| now). As many company stocks grow over time, each employee's
| compensation package balloons to much heftier amounts. People's
| salaries have the potential for non-linear outcomes.
|
| It's also great incentive alignment, the higher you go the more
| you're compensated in stock to tie your work to company
| performance. See:
| https://www.levels.fyi/company/Google/salaries/Software-Engi...
| ghaff wrote:
| Stock options were pretty widespread, at least among senior
| employees, before Silicon Valley. However, we've seen a huge
| run-up in stock prices at many of the big SV employers since
| about the dot-bomb recovery.
| screye wrote:
| It is the case in India. You can make $60k/yr back home in
| India in a good tech job. Very few salaried jobs pay that well.
| lainga wrote:
| I sure wish I had been paid 50,000 [USD exchange equivalent in
| my local currency] on graduating :)
| [deleted]
| franciscop wrote:
| I thought the same 5-10 years back, but at least in Europe
| things seem to have taken quite a turn and now programming is
| definitely paid a lot higher than other Engineers (I studied
| Industrial Engineering in Spain but moved to programming). Same
| in Japan.
| sdevonoes wrote:
| > paid a lot higher
|
| It's higher, but I wouldn't say "a lot higher". I have lived
| in France, but I think the situation is similar (if not
| worse) in Spain, Portugal and Italy:
|
| The majority of senior software engineers (more than 5 years
| of experience) get around 60K euros/year. It's more difficult
| to get around 80K euros/year but it's possible.
|
| Now, the average non-software senior engineer in those
| countries gets around 45K euros/year. So, yes, 60K euros/year
| > 45K euros/year... but it's not such a huge difference.
| 908B64B197 wrote:
| For France, the portrait is very different if you compare
| "devs in France" with "French devs".
|
| It's not uncommon for guys from Polytechnique to go
| straight to SV, sometimes after multiple internships in the
| Bay.
| franciscop wrote:
| "Now, the average non-software senior engineer in those
| countries gets around 45K euros/year."
|
| For Industrial Engineering (the most common) it's
| EUR18k-EUR22k when you finish the 6-year degree (4+2), and
| if you go so far as to become "project director" with some
| extra qualifications you get EUR71k/year (which is
| literally a "director-level" position). I'd say that these
| are rare enough to be well matched with the few people
| making EUR100k+ working for a company abroad.
|
| One of the problems is that there is a lot of self-taught
| developers, where they make that same "junior" salary of
| 18k-22k after 1-2 years of a bootcamp or learning on their
| own. So this brings the whole average down, but for the
| same amount of experience (studies+work) I'm pretty
| confident a software developer makes 1.5x-2x that of an
| Industrial Engineer for all of their _technical_ careers.
| wwww4all wrote:
| Software engineering is extremely difficult and there are very
| few people that can deliver solutions.
|
| High performance software engineers are rare and valuable.
|
| That is the reason why some software engineers make tons more
| money than others.
| [deleted]
| angarg12 wrote:
| Very thorough analysis that could use an update.
|
| I feel sites like levels.fyi and Blind have given us a better
| look into the salaries of top (and not so top) paying companies.
| However they are missing the vast majority of companies paying
| modest salaries. I suspect these make up the bulk of the lower
| peak of a theoretical bimodal distribution.
| ghaff wrote:
| It's not obvious why it should be bimodal.
|
| For law, it's pretty obvious. There's the partners at white shoe
| law firms and then there's everyone else--many of whom are doing
| personal injury law or scraping by doing routine wills, real
| estate, etc. Sure you have in-house corporate counsel and the
| like who are somewhere in the middle, but it's not hard to
| imagine why it's generally bimodal.
|
| With programming/software engineering OTOH, yes you have outsized
| salaries at some big firms mostly in some high CoL areas, but
| it's a generally pretty well-paid field even if it does tail down
| for developers at non-tech companies in low CoL areas.
| rm999 wrote:
| Agreed - in law you can essentially get away with a single
| predictor for much money you make (given your level of
| experience): whether you work at a big law firm. This creates a
| natural bimodal distribution.
|
| In tech there are far more factors: 1. What
| industry you work in 2. How big your company is 3.
| Geography (this plays a much bigger role than in Law in my
| experience) 4. How good you are at negotiating 5.
| Equity luck 6. What type of tech you do (front end vs
| backend vs ML etc)
|
| Given this complexity, I'd be shocked if there is a bimodal
| distribution for devs.
| 908B64B197 wrote:
| > It's not obvious why it should be bimodal.
|
| Software scales massively. Other industries do not.
|
| You are simply paying for the cost of innovation. Whole
| categories of products created overnight. If you can afford it,
| it's best to get the best possible engineers onboard. Else your
| competitor will.
|
| Anyone remembers BlackBerry?
| ghaff wrote:
| That's not really an argument for being bimodal though. A
| bimodal distribution suggests that you either win the
| tournament with a FAANG or the startup lottery or you'll be
| scraping by with a generally low-paying job. And that doesn't
| really describe programming that I've seen.
| ska wrote:
| > or you'll be scraping by with a generally low-paying job.
|
| That's not what bimodal means, it just means there are two
| modes (i.e. peaks). It could equally well mean that the
| general case is pretty well paid, but there is a distinct
| peak of high earners (e.g. FAANG etc.)
| jldugger wrote:
| The question we have to answer though is why there's no
| middle ground. It seems like we have a ton of middle
| grounds between 'ML engineer at Netflix in SV' and
| 'Frontend developer for H&R Block in KC.' I see three
| possible gradients in those descriptions alone:
| specialization, company and location.
| 908B64B197 wrote:
| With permanent remote at a bunch of companies becoming
| the norm, location will increasingly become less
| important.
|
| I can foresee a talent grab happening in the next years
| where the best devs in KC all start working remotely at
| 2x what they are currently making.
| ska wrote:
| > The question we have to answer though is why there's no
| middle ground.
|
| Again, this isn't what bimodal (or multimodal in general)
| means. There can be lots of middle ground, it just
| doesn't end up with a single mode.
|
| To turn this around the other way, is there a reason that
| we would imagine a unimodal or even normal distribution
| for salaries here? If so, why?
| abeppu wrote:
| So, my understanding is that law firms have the structure they
| do in part because there are legal restrictions that say that
| law firms must be owned by lawyers, not just by any old group
| of shareholders. Ostensibly this is supposed to be about
| professional ethics. But so structurally, ownership is reserved
| for people who are at least in principle involved with doing
| the actual work of the firm.
|
| I wonder how engineers would do with the same sort of
| structure? If tech firms had to be owned by people who actually
| participate in creating tech, how would that change us? And how
| would it change what we build?
| zitterbewegung wrote:
| My theory that dev compensation is bimodal is that there are
| really two kinds of software engineering jobs.
|
| One is where you are a cost center where you get paid around
| $50k.
|
| Another is when you aren't as much which is the ~$100k.
| ghaff wrote:
| I'd be surprised if there were a mode as low as $50K (which is
| less than median US household income)given that implies that
| salaries as low as $40K or even $30K aren't uncommon. And if
| you move that mode up to $70K or so, it's going to start to get
| hard to distinguish the two modes.
|
| I don't disagree with your basic point. I just think there's
| likely to be enough variance in both categories that they may
| not resolve themselves into clear modes such as seem to exist
| in law, for example.
| zitterbewegung wrote:
| I think trimodal is possible but the classification gets any
| higher then you will get a more flat distribution
| suyash wrote:
| Article fails the define salary, which is a big thing..is it just
| cash compensation or does the numbers include stocks as well?
| analog31 wrote:
| One thing that would be interesting to study is the relationship
| between the number of programmers on a project and its output.
| Why does version 2 require more 10x programmers and effort than
| version 1? (Fred Brooks wrote about this).
|
| A difference between programming and engineering is that you
| can't really use a team of 50000 electrical engineers. Also, the
| number of EE's in an organization can't grow to the point of
| controlling the business.
|
| There may be some kind of positive feedback cycle where
| programming takes on a life of its own within a given business,
| and demand for programmers expands exponentially.
|
| Also, I think the author underestimates how hard it is to learn
| programming. It seems easy to those of us who program, because we
| somehow got past the "wall" at some point. But for most people on
| the other side of the wall, it's prohibitively hard.
| franciscop wrote:
| Something I'm unsure when discussing "total compensation" is how
| to include things like Stock Options to try to make an objective
| metric, because:
|
| - They vest in 4 years in most companies, so do you do Salary +
| 1/4 of stock options?
|
| - They are _options_ and not even stock, so you are not getting
| much _at the moment_ you receive them. Is $1 of stock options ===
| $1 of hard cash?
|
| - Do you even discount the stock options accounting for risk? I
| know I do in my head when evaluating an offer (0 < multiplier <
| 0.2 depending how generous I'm feeling based on certain metrics).
|
| - Refreshers make things messier, now you have salary + 1/4th *
| N_0 * val_0 + 1/4th * N_1 * val_1 + ...
|
| - What about bonuses or incentives for referrals or similar?
|
| - Transportation, food, etc. budgets?
| jldugger wrote:
| From what I can see, people who want to compare TC use the
| formula: TC = base_salary + bonus +
| current_year_rsus_granted
|
| The argument in favor of using this metric is 'this is how
| management values you right now'. It has the bonus of making
| vesting schedules moot, and avoids concerns about stock
| valuation -- shares in GOOG granted 4 years ago are more
| valuable than shares granted today, leading to an almost
| unintentional increase in compensation.
|
| If you just want to budget your life, well, IMO just use base
| salary for that when looking at FAANG scale comp. The rest goes
| to retirement / brokerage investment / Tesla. If you need to
| proceed anyways, I recommend:
|
| - if paid in Restricted Stock Units in a publicly traded
| company, discount the value by 20 percent - if paid in non-
| public shares or options, mark to whatever you could get for
| them if you sold today (typically 0 dollars) - consider all
| shares vesting this year, regardless of when they were granted
| -- summing your refreshers is not that hard - plan on 2/3'rds
| of last year's bonus. - don't rely on referral bonuses unless
| your job is "recruiter" - don't bother calculating fringe
| benefits unless you know the money would be spent similarly if
| you spent a few months on unemployment.
| mattnewton wrote:
| At least for me I convert everything in the offer letter to
| cash as directly as possible. So the RSU's I can sell after the
| year are included in my 1 year comp and the ones I can't
| aren't, those are easy. Bonuses, straight to cash as well at
| the expected value (and it's in your contract, emails or verbal
| agreements I would value at $0 unless they made its way into
| the employment contract). Transportation or other perks I value
| at my BATNA- which, if I can walk to a competitor, the fact
| that they are offering a shuttle is worth $0 to me, but if I
| have to drive to the competitor it's worth the car upkeep
| costs.
|
| Options are harder because you have to predict an expected
| value and may not be able to actually exercise them early for
| cash: in that case I usually default to valuing them near 0 for
| yearly comp.
| mrwh wrote:
| Is it normal in other industries to work on one product for a few
| years, then switch and work on something totally different, and
| then switch again a couple of years later? That's a normal
| pattern at a FAANG - Google explicitly tries to hire generalists
| for example. If I am working in one thing today, it's easy to
| jump ship and work on something else tomorrow. That's a lot of
| power that employees in other industries don't have, or don't
| have to the same extent.
|
| (The other answer to the problem is that looking outside of the
| upper-tech bubble programmers aren't particularly well paid at
| all. But the linked article does make a decent case that there's
| a real mystery here.)
| wilsynet wrote:
| Seems pretty normal. Every few years Ford has new cars, Frito
| Lay has new flavors of chips, Coca-Cola markets new drinks,
| Corning has a more resilient glass, and Taylor Swift has a new
| album.
| mrwh wrote:
| Just to follow up on this: the problem is not Why is there so
| much money sloshing around in tech (that's obvious!), it's, Why
| are tech workers somehow getting a decent slice of it?
| mattnewton wrote:
| My guess? Because tech companies have small enough startup
| costs outside the employees that they can credibly leave to
| start their own company. (And there is enough market demand
| where they could succeed, unlike some field like Law where
| it's true the fixed costs are all lawyers and what they know,
| but your case record and prestige sets the demand)
| mrwh wrote:
| I think that's probably a big part of it - and certainly in
| Silicon Valley. Part of the whole idea of the place. It
| might not require that much extra power on the side of
| labor (which this is) to create a large effect.
| cryptica wrote:
| There is a pay grade for ethical developers and there is a pay
| grade for fraudsters.
| Bostonian wrote:
| A statistical test for whether dev compensation is bimodal is
| whether a mixture of two lognormal distributions fits the
| compensation data substantially better than a single lognormal.
| One can use an information criterion such as AIC to compare fits
| with different numbers of parameters.
| nicoburns wrote:
| > Why are programmers so well paid?
|
| Because the companies paying have silly amounts of money and can
| afford to pay them silly amounts of money. See also: bankers.
| solosoyokaze wrote:
| The companies paying have silly amounts of money _because_
| programmers can create an enormous amount of value. An extreme
| example, but think of Linus who created both Linux and Git. A
| single person created billions of dollars in value. I don 't
| know that there are other professions where an individual can
| create massive scale like that.
| xenadu02 wrote:
| There is a field like that; movies. And we see this to an
| even greater degree there. A big name star can literally
| boost the number of people who will go see the movie. Studios
| are some of the most unethical money-grubbing cheats. They
| wouldn't be paying $10m to A-list stars if their bean
| counters weren't sure it would be a good return on
| investment.
|
| The dynamics in software are different obviously but the core
| truth is the same: good engineers make a difference and the
| return on investment justifies the cost.
| Jyaif wrote:
| Git's CLI is so bad (for example compared to Mercurial's) it
| could be argued it's destroying billions in productivity.
| isbvhodnvemrwvn wrote:
| You don't need to be Linus to deliver a lot of value quickly,
| either.
|
| - the cost to start delivering value is effectively nothing
| (a computer and access to the internet)
|
| - the cost of delivering value is small (you need to
| provision hardware your stuff runs on, sometimes) which gives
| you high margins
|
| - you are not limited to one geographical area nearly as much
| as other engineers are (since you don't make anything
| physical, and legislation is relatively light)
|
| - you don't need to wait a lot of time for dependencies like
| you do in manufacturing
|
| You can go on and on.
| littlecranky67 wrote:
| Well, inventors did. There are so many single inventions (or
| discoveries) created by one or two persons, which have
| created value for hundreds of years and will continue to do
| so.
|
| Just think about Fritz Haber who (with Carl Bosch) created
| nitrogen fixation, which completely changed our agricultural
| landscape. That is actual, real value (=increased food
| production) we all benefit to this day. Or look at Alexander
| Fleming, Edison, Tesla, Nobel, etc. this list can go on
| forever.
|
| Yes, Linus did good on Git and Linux, but I think with
| RCS/CVS/SVN and Windows/macOS the world would not have lost
| _that_ much value.
| robertk wrote:
| I think the point is moreso that developers can be self-
| sufficient in the full value chain. Haber didn't personally
| go to farms to create improvements in their agricultural
| process, the industry did that jointly by incorporating his
| invention in their manufacturing. Edison and Tesla never
| mass produced their inventions to get them into people's
| homes, that required thousands of people working manual
| labor and many corollaries of factories. Whereas Linus can
| push changes and millions of people can pull them in to add
| value immediately without any extra steps. You can argue
| that Linus didn't build the communications infrastructure
| and hardware surrounding that and that is true, but the
| salient difference is this was truly a one-time exercise.
| For "physical" inventors like you described, mass
| production is hard precisely because it is bespoke and
| requires so many physical resources. Until we have a
| general purpose self-configuring factory, their leverage is
| fundamentally lower compared to the world-tier software
| engineer. And even then if that did exist, it would require
| programming to operate it to usher the physical inventors
| into complete self-sufficiency in their value chain.
| adflux wrote:
| Maybe billions is even understating it...
| jbob2000 wrote:
| Disagree, banks do not pay software devs a lot. Tends to be
| average or slightly above average. But nowhere near tech
| company salaries.
|
| Bankers see powerful staff as risks, they much prefer having
| subpar staff that are guarded by rigorous process and
| management, as that is viewed as less risky. A single staff
| member who knows a lot and controls a lot of systems means they
| have dangerous leverage over the business.
|
| Tech companies don't view labour as a risk, they are part of
| the product.
| bidirectional wrote:
| Depends entirely on the bank. Retail banking pay is about
| average, investment banking pay is generally slightly under
| FAANG but still relatively high.
| [deleted]
| nicoburns wrote:
| I wasn't talking about banks paying tech workers a lot. I was
| talking about banks paying bankers a lot. There are plenty of
| bankers of various sorts making $500k+ salaries.
| jldugger wrote:
| Sounds more like investment banking vs retail banking?
| kgwgk wrote:
| He meant bankers get paid a lot.
| walshemj wrote:
| Using childish terms like "silly" does not help the debate its
| also the same sort of term like "gold plated" used to attack
| civil service pensions.
| mattnewton wrote:
| > Why are programmers so well paid?
|
| My pet theory that I don't know how to rigorously test in data is
| that programmers are very well paid so they don't go to the
| competitor or start their own competitor.
|
| Programming software requires very few fixed costs outside of the
| programmers themselves; electrical engineers aren't going to be
| able to make fabs (or get contracts with fabs), file patents and
| compete with intel the way software engineers can rent out a
| garage and make a social network with some novel twist and
| capture enough attention to get significant advertising revenue.
| tejtm wrote:
| > Why are programmers so well paid?
|
| Because for now, we are necessary tools in the enterprise of
| automating wealth concentration at scales never previously
| achieviable.
|
| I may be able to tell myself; Oh I don't do any of that directly,
| but I benefit from those that do none the less, through pay
| inflation of those who are bent the same way I happen to be.
| jeeyoungk wrote:
| but on the article it's also pointed out that the compensation
| isn't the same in London, UK, so it's not just attributed to
| that.
| thewarrior wrote:
| Interesting idea though it needs some refinement. What makes
| one job aid wealth concentration while another one is merely
| just increases returns on capital ? All jobs make capital
| owners wealthier. Returns on capital in the long term grow
| quicker than wages even though labor is an essential component.
| JMTQp8lwXL wrote:
| It should be noted that Piketty walked back a lot of his
| thesis surrounding the rate of return on capital (r) being
| greater than the rate of economic growth (g). Or, to be more
| terse, r > g.
|
| As a framework, it's stretching its usefulness when applied
| to inequality in labor markets, and that would include
| bimodal compensation of developers.
|
| https://en.wikipedia.org/wiki/Capital_in_the_Twenty-
| First_Ce...
| mhh__ wrote:
| I'm basically just a mathematically competent but
| economically dumb observer, so I can't weigh in myself, but
| there is generally a huge amount of debate over Piketty's
| work in the economics community.
|
| I've had the book recommended to me several times by "I'm
| happy to pay more taxes"-types as a one-stop shop for
| societal ills, but it's not that simple.
|
| The seeming lack of attention on land and other rentseeking
| also puzzles me.
| thewarrior wrote:
| I don't know about r > g but stock owners have made more
| money in the pandemic while actual people are starving.
| That's evidence enough. The system is rigged to make house
| owners, stock owners etc richer as they have power.
|
| Wages don't keep up with productivity.
| freeone3000 wrote:
| Capitalism inherently creates income inequality, as labor
| will forever be paid less than capital accumulation, while
| having less opportunity to accumulate capital themselves.
| There is an inherent inequality in allowing wealth to create
| more wealth, while labor cannot create the same wealth.
| ClumsyPilot wrote:
| If that were true, the system would be unstaible. As
| inequality tends towards infinity, something's gonna break.
| freeone3000 wrote:
| The system _is_ unstable. When inequality has reached
| sufficient levels, there 's traditionally been a "hard
| reset" (France, Venezuela, Cuba...), with wealth being
| redistributed by force. The United States currently has
| the highest wealth inequality seen in a democracy. It
| likely won't remain a democracy much longer.
| notJim wrote:
| I think US democracy will survive, but it's surely not a
| coincidence that we're seeing more extreme, and
| potentially destabilizing ideas gain ground on both the
| right and the left amid widening inequality.
| username90 wrote:
| Only if the inequality isn't warranted. If it is backed
| by by armed autonomous drones or other ways to
| efficiently project power without needing lots of people
| then there is no reason it wouldn't be stable.
| ClumsyPilot wrote:
| I sincerely doubt that is on the cards.
|
| You can have a dictatorship, but you will still need
| people / your crownies. The day the drones are smart
| enough that they don't need anyone to maintain them and
| adjust them, maybe they start getting ideas about that
| one meatbag in charge of them.
| mhh__ wrote:
| The answer is that there is an inherent tradeoff between
| Risk and potential growth, i.e. amongst the "initiated"
| (like people engaged in active debate over these matters)
| the people who just want a simple life and a job are
| vastly underrepresented.
| sudosysgen wrote:
| This isn't accurate at all. The people that have the
| capital to actually be able to achieve financial
| independence have much less marginal utility downside
| from an equal amount of risk than the average people that
| have a simple life and a job. For many people, taking
| that kind of risk can have vastly outsized impacts.
|
| Risk labour is simply a convenient myth.
| thewarrior wrote:
| No you see actually the billionaire investing 10 million
| of his own money is taking a really big risk. This needs
| to be rewarded.
|
| Unlike the wage earner who loses his house and health
| insurance the moment he is fired ....
| jeffreyrogers wrote:
| I'm not sure that returns on capital always grow quicker than
| wages. It depends on how things are structured, right? If
| labor has more power than more of the gains go to labor.
| We're currently in an environment where labor has very little
| power.
| david-gpu wrote:
| > I'm not sure that returns on capital always grow quicker
| than wages
|
| Suggested reading: "Capital in the 21st century" by
| Piketty. He presents data and arguments for why this is a
| major trend in capitalism, and suggests a progressive
| wealth tax to ameliorate this.
|
| Note that I'm not advocating for or against it.
| username90 wrote:
| Before software there was a limit to how much
| infrastructure could be built. There is no point in
| building more factories than you have workers for etc,
| but with software we can continue building software
| infrastructure more or less forever which makes wealth
| limitless.
| caenorst wrote:
| First of all: supply and demand.
|
| Software development is a field where supply and demand apply
| without debate. Supply and demand are only ineffective when
| there is a form of monopoly / regulation in place. Which is not
| the case here:
|
| 1) It's very easy to make a startup software company (in
| comparison to others types of companies), and there is a
| healthy pool of existing company
|
| 2) CS education is very popular and we have a flow of new
| graduate every year, on top of that self-teaching is quite
| accessible.
|
| Now, that means that the market is leaning toward demand (for
| programmers). Being "necessary" have never being enough to have
| a high salary, there are countless jobs badly paid at very
| wealthly companies, you must be necessary (demand) AND
| difficult to replace (supply too low) to have a high salary.
|
| Some reason of the current trend:
|
| - Very low supply of very high quality that a lot of projects
| requires: there is a huge difference between "programming" and
| actually doing software engineering at scale. And if you add
| some specialities like ML or security, the pool of candidate is
| getting very low.
|
| - Rush for leading certain fields like AI, Autonomous vehicule,
| blockchain, etc... Those rushes are so fast paced that it
| drives the demand up.
|
| - There are so many new startups, as I said earlier it's one of
| the field where making a startup is the easiest, and a good
| amount of them have strong ambition and investments (again in
| comparison to other fields)
| varelse wrote:
| AKA you can make whatever you convince someone else to pay
| you...
| endisneigh wrote:
| I'd love to see an analysis like this based on how the company is
| monetized.
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