
Are Silicon Valley’s Engineers Underpaid? - mjfern
http://www.fastcompany.com/magazine/153/engineers-to-the-valley-pay-up.html
======
tassl
Being born in a foreign country, I have to smile when I see a blog entry like
this one. I agree that the salary is relative to where people are living and I
get the point of the writer. To specify an example, let's say that some
Silicon Valley engineer wants to buy a $1M house. With $100K salary, it will
make 10 years of salary.

Now, let's move to another country: Spain in this case. A normal salary for a
junior engineer is around 15K/year (euro) up to 30K for a senior developer. A
big house (for europeans, 950sq ft) in a normal neighbor in Barcelona costs
around 400K (euro), which would be like... 26 years of salary?

And I have compared different houses, for what I have seen, in general the
price $/sq.ft. is pretty similar between both cities.

As I said, I understand that the engineers might not get back what they
produce (and I agree) but I just wanted to give another point of view.

~~~
znq
@tassl: Do you live in Barcelona? If so, please get in touch with me:
stefan.klumpp (at Gmail) - I'm always looking for interesting people to meet
in BCN.

PS: is there no direct messaging system on HN? Or am I just too stupid to
discover it?

~~~
tassl
Born and raised, but currently not living in Barcelona; I moved to California
for Graduate studies.

As you probably should know by now it's a really beautiful city. And probably
the city with more entrepreneurs on the country, which unfortunately doesn't
say much (given the country that we are talking about).

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dlevine
I'm not sure that I agree with the tenets of this article. Silicon Valley
Engineers don't seem underpaid to me. Sure we could potentially make more in
finance, but that doesn't mean we are underpaid. I feel like there are a
number of things that I value (in the following order):

1) Exciting work

2) Large potential impact

3) Financial compensation

Notice that money is third, and that isn't an accident. I probably make less
than many of my classmates who went into finance (although the difference is
likely smaller that one might assume based on comparing "averages"). However,
most of them don't really seem to like their jobs all that much. I get to work
on interesting things that will hopefully have a large impact, and get paid
pretty well for it (I've usually made significantly above the Silicon Valley
"average").

In addition, I think that many people in finance are likely overpaid relative
to the value they generate, and that there will be a correction at some point
in the future.

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patio11
Well, let's see:

1). Does the market clear? Can every company wanting to hire someone for $100k
find someone?

2). Do different firms routinely value the sane person consistently, such that
switching jobs results in no significant salary increase?

3). Do developers routinely capture gains made as a result of productivity
increases? For example, has the adoption of frameworks which make web sites
about 10x faster to build in ten years resulted in 10x increases in salary?

...

Well, look on the bright side: you're not Japanese engineers.

------
angelbob
If so, then more of us should go work for ourselves. Put our money where our
mouth is.

If we're truly creating so much more wealth for these companies than we take
in salary, it should be easy (ish) to turn that into more money for ourselves,
even if large companies don't want to do that.

And if working for ourselves doesn't instantly turn into way more cash,
perhaps we're not creating as many billions in actual value as we think we
are?

~~~
larrik
There's no reason to assume that a programmer on her/his own is worth the same
as s/he is in the right position at the right company. A team can (and should)
be worth far more than the sum of it's members.

Reading HN a lot can make us forget that being a great programmer doesn't make
you great at business.

~~~
angelbob
I would argue that in that case, the business guys are creating a lot more of
those billions in value than we generally credit them with.

~~~
timr
Let me make reduce the cognitive dissonance for you: being a good hacker
doesn't make you _lucky_ , and that's the difference.

Nobody admits it, but a lot of the secret of creating a sustainable business
boils down to luck, not being a "great business guy". Our industry is set up
to reward risk-takers disproportionately...when they succeed. It's a lottery,
but we like to justify the disparity in compensation _post hoc_ by assuming
that there's corresponding disparity in skill that somehow created most of the
value.

~~~
praptak
_"Our industry is set up to reward risk-takers disproportionately..."_

But then we're back to square one: why don't you become a risk-taker yourself?
It's easy to paint oneself as an underpaid creator of millions of dollars in
value, but for this to be possible someone had first to take a risk and then
succeed.

And in case of failure - would you, an employee who gets such a
dispropotionately small share of generated value, be so eager to increase your
share in the generated loss?

I wouldn't and that's why I don't see much value in the "created value"
argument.

~~~
timr
_"But then we're back to square one: why don't you become a risk-taker
yourself?"_

Who says I'm not? Most of the time that people take risks, they fail. That's
why it's called "risk", and not "guarantee".

 _" would you, an employee who gets such a dispropotionately small share of
generated value, be so eager to increase your share in the generated loss?"_

That's a straw man. Created value isn't allocated in strict proportion to risk
of loss, and you don't have to take more risks to get paid more. If that were
true, the people who funded a startup would get 99% of the upside, because
they had the most to lose. (Also, doctors and lawyers wouldn't get paid squat.
Anybody who knows a doctor or lawyer will tell you that that they're just
about the most risk-averse people on earth.)

The real answer is that compensation is about market forces. The people with
the money are only willing to pay as much as the people who create value
demand to be paid.

------
redstripe
Anyone who believes 100k is underpaid has serious entitlement issues they need
to examine. You need to look around and see how the rest of the country/world
lives. Sure google, apple, and others may generate enough revenue to pay
people more than that but they would also do it without you because 100k will
buy them good developers.

American programmer salaries are so far above the country average that
complaining is just ridiculous.

~~~
tomjen3
If you can get 130k across the street, 100k _is_ underpaid. It has nothing to
do with entitlement issues at all: it is simply market economics.

How much the janitor makes doesn't figure into the salary for a programmer,
except as an indirect consequence.

~~~
flyosity
Also: if you're being paid $100k and, in turn, generating hundreds of
thousands of dollars of value for your company, you're undervalued and
underpaid.

The software industry is one of the few industries where a single person can
create mountains of value all by themselves. Comparing software engineer
salaries to janitor salaries makes no sense as janitors aren't creating
multiples of their salary in value for their employer.

~~~
us
The only problem with this example is not every software engineer has the
ability to be an entrepreneur. Sure, they can create monumental value for
their employers, but there are some people that just can't be founders or
cofounders or anything more simply because of how they are. I know quite a few
people like this. At the end of the day, it takes a variety of personality
traits, skills, brains, and a slew of other things to create a well rounded
individual who can maximize value. Outside of this, no matter how much value
you're adding to your employer, how can you honestly say you're worth more.

~~~
Dylanlacey
I've been thinking about this, and trying to come up with a solution.

The best solution I can come up with is options/stock and salary... That way
creating more value DOES help them get more income, subject to the vagaries of
the stock market.

Unfortunately, as wonderful as it would be for everyone to receive their exact
value in return as a percentage, that's _HARD_... It's hard to quantify and
it's hard to justify.

------
waterlesscloud
Employers are constantly complaining about a shortage of good developers, so
the only possible answer is "yes".

~~~
electromagnetic
Think more and you'll only get an answer of "yes".

Throughout history there has been areas that excel in certain trades. Steel
Work and boat building moved from highly talented areas in the UK pre-WW2
where workers were underpaid compared to their skills. As wages rose, this era
ended and the steel work and boat building jumped straight to post-WW2 Japan.
Similar things transpired as wages rose and it shifted to South Korea that the
government suppressed unionization and allowed its steel industry to flourish
and still only appears to be in the declining phase of its ship-building.

Whilst the elite of the worlds technology reside in the valley, good
developers will be underpaid. When the workers get stupid and want to be
overpaid for their work (IE unionise) then there work will move to the third
world overnight.

Then there's the other valuation of income. I always make less than I should,
simply because if I worked for myself doing whatever job I do I will be making
more. If you're an employee, you'll never make what you would as an employer
or as a self-employed.

~~~
Dylanlacey
Unless you are no good at business tasks. It's an unpopular truth, but still
truth: Some people could never run their own business. They don't have the
skills, or the mental chemistry. Some kids could never be president, some
people can never run at a competitive level, and some people can't work for
themselves.

It's not fair, or glamorous, or even particularly PC. But it's true.

------
herf
One big issue is that engineers haven't seen cost of living increases in the
last 10 years nearly on par with lawyer/finance/professional jobs. This was
justified by the "tech crash" for many years, but it went on too long (only in
the last few years are salaries going up again).

The only way to afford to live well in a California tech center as an engineer
has been to have a big startup exit or a very senior job.

I managed a team at Google, and had 4 direct reports ask to work from home 50%
of the time, or even to work 100% remotely, mostly so they could live
somewhere cheaper.

This comes out in "work/life balance" - when your commute gets too long so you
can afford a big enough house in your 30s, spouse gets mad, you get overtaxed,
and it's not a good scene.

~~~
nagnatron
How is working from home viewed at Google?

~~~
ChuckMcM
Poorly.

But to make this post more than just noise, much of the Google culture for a
long time revolved around personal relationships and being in peoples cubes to
get their attention. Not something you could do from home anyway. The Anybot
experiment would have been interesting to see.

------
knieveltech
I'd say the overwhelming majority of programmers everywhere are underpaid. I'm
basing this on the fact that I could roughly double my current salary if I
quit tomorrow and spent a year working my way up as a welder and my salary is
pretty much in the median range for the area I live in.

~~~
baddox
Your argument is insufficient, and I suspect it's because you're implicitly
assuming that programming is also more difficult than welding. I could say
that McDonald's employees are underpaid, since they could double their salary
by quitting tomorrow and working their way up as a welder. That would probably
be true, but that alone doesn't mean that McDonald's employees are underpaid.

 _edit: prepended "sufficient" with "in," which makes a big difference_

~~~
knieveltech
I am not assuming anything. I've welded professionally. I've programmed
professionally. I know welding is a hell of a lot easier than programming.

~~~
krschultz
Then why are welders paid more?

At my company welders are paid less than programmers, but you can probably
blame that on the welder's being in a union more than anything else.

~~~
knieveltech
Union FUD? Really? Spend some time working in the trades (union and non-union
gigs) and then come back and make declarative statements regarding unions.

~~~
krschultz
Well I work with the trades on a daily basis. I stand by what I said. The new
guys get screwed, the pay scale is entirely weighted towards the guys who have
the most years in the union. For the first few years you get paid like crap.
And when there are layoffs they trim from the bottom up based on years of
service. So it doesn't matter if the guy who is 25 is busting his ass, the guy
who is 50 and slacking all day gets paid three times as much and can't be
fired.

I know for a fact that the younger guys resent the older guys (and the union
that protects the older guys) far more than they resent the non-union or even
at times the company itself.

Now I don't know much about non-union welders other than two friends I know.
One started his own business making railings and fences and things like that
and makes a good amount of money working for himself. He's non-union but also
a small business owner so maybe that is a bad data point.

If we eliminated the union at my company, the welders would get paid on merit.
It would be a very good thing for most of the younger guys who work their butt
off. It would be a bad thing for most of the guys who have been here for 30
years.

~~~
knieveltech
So you're saying you'd rather have a quick bump in pay than annuity, pension,
access to the local's placement services and guaranteed working
conditions/benefits? That's your call ultimately but you'll excuse me if I
think it seems a bit short-sighted. Out of curiosity do you have your
journeyman's book yet?

Edited to add: nepotism and "good ol boy" networks are pretty much how
business gets done everywhere, regardless of industry. A lot of people have
this knee jerk reaction against such things and don't stop to consider this is
the working end of "Networking".

------
joe-mccann
Here's a tip: move to Austin.

1) No state income tax. Read that again. 2) Cost of living is at least HALF of
SF/SV/NYC 3) Real estate is actually affordable, even close in.

Now, I know there is the argument for needing to be in SF/SV for startups and
tech, but Austin is a hotbed of tech activity and with more and more companies
allowing remote work, it's worth a shot.

~~~
hkarthik
As a Texan that would love to see more talented engineers and innovative
companies here, I agree with you.

But we have a weird mix here. Houston and Dallas have the rich people, but
Austin has all the nerds. We need more cross pollination of both to ever be as
attractive as Silicon Valley. That, and a lot less hardcore conservatives.

------
sequoia
Almost everyone ITC is focusing on the developers' attitudes and whether they
are "entitled" etc., but it seems to me the article was just as much (more?)
about the impact that such salaries have _on the companies._ The author isn't
so much arguing that it's "not fair" so much as "it's short-sighted on behalf
of the employers," at least how I read it.

The developers' attitudes are relevant only insofar as they influence their
actions in this case. If it's making it difficult for companies to hold on to
talent, that's a big deal. If it's causing developers to grumble on IRC, not
so much.

------
meowzero
Silicon Valley engineers probably feel underpaid because of the high standard
of living of that area. If they made $125k in Atlanta, for instance, they
would be living very comfortably.

I'm still surprised at the number of Tech startups still locating themselves
in Silicon Valley. I would figure if they started up in a cheaper city like
Atlanta it would be more economical for them. But I guess they want to be near
the talented people.

Although I would think if you build it, the talent will follow.

------
ShardPhoenix
I think the thing people aren't taking into account is risk. Sure, you don't
get to capture all the value you create, but you also aren't (usually) liable
for any value you might accidentally destroy, and you still get paid even if
your project generates $0.

------
praptak
I don't see any reason for the market not to sort it out in this case.
Thresholds for starting an IT business are low nowadays and access to the
information about the market is pretty easy.

------
bootload
_"... But these tales of high-rolling nerds mask a greater truth, one that
actually threatens to hurt the tech industry over the long term: Software
engineers in the Bay Area are underpaid when you consider the billions in
wealth their work creates. ..."_

This observation isn't new, cf: _"Career Guide for Engineers and Computer
Scientists"_ ~ <http://philip.greenspun.com/careers/>

