
The Big Five in tech are paying like the Big Four in sports - acconrad
https://adamconrad.dev/blog/the-big-four-sports-or-tech-companies/
======
ydnaclementine
This article is comparing starting salary for professional sports, vs "Staff
engineer" salary.

The average MLB salary dropped slightly in 2019, but still north of $4million

src: [https://www.espn.com/mlb/story/_/id/28341983/average-mlb-
sal...](https://www.espn.com/mlb/story/_/id/28341983/average-mlb-salary-drops-
second-straight-year)

~~~
adventured
The article is so far off as to be laughable.

Here's the top salaries in MLB:

[https://www.spotrac.com/mlb/rankings/](https://www.spotrac.com/mlb/rankings/)

The top 141 players are making $10m or more per year (and that keeps rising
year after year). The big five in tech don't come even remotely close to
paying the way professional sports does and that includes the top thousand
engineers. It's closer to a 5%-10% _total_ compensation ratio at best
(including stock-based compensation), in terms of elite athletes to elite
engineers.

There are too many engineers and they're too replaceable, versus a Lebron
James or Mike Trout. Those players are among the few best in the world at what
they do, in a field with a very small number of people being compensated and
from a relatively massive pie (MLB money is being split between just ~750
primary players; ~1200 including reserves).

Everything about the comparison is off by a large margin.

~~~
tclancy
Are you questioning the article where the link to the 500k salary is a 404?
For shame!

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kevan
It's not really relevant to the overall point and I know it's fuzzy estimates
anyways but there's a mixup in stocks and flows. linked Quora source says:

>L6 is staff engineer. Only about 15% of Google engineers are at this level or
higher

And the post:

>People who make it to Staff engineer at Google per year: 1,875

I'm not sure about google but at Amazon there's definitely not that many
people making it to principal/staff every year.

~~~
compiler-guy
No way that 1,875 people are promoted to L6 every year.

I have no idea how he gets from "15% of google engineers are at this level or
higher" to 1875 people, and then on to that many being promoted.

I might believe that 1875 is the total number of engineers at L6 or above
across the company. Seems slightly low, but not impossible. But I guarantee
nowhere near that many are getting promoted every year.

Also, making L6 is in no way guaranteed. It takes years.

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buryat
The question is how long it's going to be like this? There's a sense that the
software industry is living its golden years and salaries wont stay high
forever. And boy, when my RSUs hit 0 I wish I stayed in better shape to join a
three-letter industry like NBA or NSA

~~~
JMTQp8lwXL
The biggest threat to Big Tech is regulation, but these companies are so deep-
pocketed they could regulatory capture and lobby their way out of anything.
There could be minor setbacks for the unicorns who haven't been doing so well
in public markets, but this isn't a 2000-esque situation that would impact all
companies: just the late arrivals who existed at the right place at the right
time, when way too much capital was chasing far too few opportunities (the
Lyfts/Ubers/AirBNBs/etc).

~~~
9nGQluzmnq3M
You seem to assume that the current tech investment bubble will gently deflate
with minimal collateral damage. But judging by the historical record, it's far
more likely to go out with a bang along with a general market overcorrection,
the least of which is a whole bunch of startup software engineers suddenly
looking for a job. Google had almost nothing to do with the GFC, but it still
froze hiring for a while in 2008 when Lehman Brothers collapsed.

~~~
adventured
The salaries will be there so long as the profit and margin is there to pay
them, versus the relative scarcity of labor supply. It's that simple.

Microsoft, for one example, will double in size in the next ten years and
they're already generating ~$50 billion per year in operating income (next
four quarters).

They're going to fire people while doubling in size, from their already
extreme scale? Nope.

Adobe is now worth as much as SAP. They're booming, extracting vast profit
from their global cloud business. They'll more than double in size in the next
ten years, their operating income will zoom from $3b to $6b or more. They're
going to fire people in that environment? Nope.

The same is true of Google, Facebook, Amazon, Apple.

Apple will fire people while generating $60-$70 billion per year in operating
income? Nope.

So where will the labor slack come from in tech to reset salaries lower? It's
not going to.

Plus, the Fed has its hands all over the financial system in several ways that
it didn't in 2007. Rates will stay perma low by necessity, they'll drown
everyone in inflation before they allow rates to ever rise beyond 3% again for
a consequential duration of time (it'll bankrupt the US Government, they can't
allow it for the same reason Japan couldn't). Those perma low rates will
provide a very large support base under valuations and will persistently push
money to chase greater risk (public multiple expansion; and VC capital flowing
very freely).

When there is inevitably a large downturn or correction, the low rates and
massive QE injections will make the bottom higher than it otherwise would be.
The next downturn will be far more gentle than the great recession (and the
bounce back to prime conditions also might be even slower).

The only way any of this changes substantially, is if US tech is decimated by
foreign competition. US tech can pay so well because they dominate globally,
extracting vast global profit and paying a relatively small number of
employees (vs the profit scale) from that big haul. That's the equation that
has to change to drain US tech salaries.

~~~
9nGQluzmnq3M
That money does not come from thin air. If the rest of the economy implodes or
even stalls, it means less companies buying ads and less people buying new
shiny iDevices, which _will_ impact FAANG as well.

As for foreign tech eating American tech's lunch, it's pretty clear that the
next big social network will be (already is) TikTok, which is Chinese.

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choppaface
Tech does NOT pay like pro sports* and will not until workers get organized
enough to form a collective bargaining agreement or something similar. Could
software engineers do that? Lawyers and accountants have successfully guilded.
And Partners get paid a lot more than Staff engineers. But tech companies
strongly prefer having engineers as employees versus farming out work to
firms. Software engineers have also been walled off from competitive salary
information for many years (before Glassdoor or levels.fyi). This blog article
should be seen as a potential aspiration versus a present day achievement
(which isn’t true anyways).

* In addition to other counterarguments noted here: not everybody makes Staff engineer (many consider Senior terminal) but every rookie in sports gets a similar deal; athletes get cold hard cash but in tech a large part of total comp is tied to stock; athletes can get endorsement deals; athletes don’t “work” 12 months a year; athletes usually retire long before age 65.

~~~
rusticpenn
We have a collective bargaining agreement and a huge Union where I work
(Germany). The pay is still much less than USA for the same type of jobs.

~~~
perceptronas
A bit offtopic, but interested to know: having such a union/agreement - does
it mean you cannot bargain to get higher salary just for yourself?

~~~
rusticpenn
You can have a talk with your manager to move to the next level on the
Tarifftable, but these are extremely well defined. Another option is to move
out of the agreement and get a free lease on a car, but it is not a very good
idea.

------
achiang
Accurate headline but incorrect analysis.

Big Tech pays like sports, not because of average salary levels, but because
of the _spread_ between highest and lowest paid engineers.

Let's say an entry level role in big tech pays about $200k per year in total
comp.

It would not be surprising for your top engineer (Jeff Dean ~= LeBron James,
e.g.) to rate north of $10m in annual total comp, so 2 orders of magnitude
difference.

Multiples in sports are higher, but the point I'm making is that just as
LeBron makes multiples of what a bench warmer does, so do the Jeff Deans of
the world make multiples of what new college grads do. This is a markedly
different landscape vs say, the late 90s when spreads were much MUCH tighter.
Unfairly so in my opinion.

Disclosure: I work for Google but have no special knowledge of Jeff Dean's (or
any other superstar) comp. I simply claim I wouldn't be surprised if I ever
learned the real numbers. :)

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google234123
I do think it would be more fun to make 500K at age 20 than at age 37 so those
athletes do have that going for them.

~~~
JMTQp8lwXL
Yeah, but at 37 you're not going to be suffering brain damage in a FANG job.
Sitting at a desk sure beats getting tackled for a living.

~~~
buryat
> you're not going to be suffering brain damage in a FANG job

wouldn't be so sure about that

> Sitting at a desk sure beats getting tackled for a living

standing desks exist and some of the sports mentioned don't have tackling at
all (MLB)

~~~
JMTQp8lwXL
There's enough people in the software industry for long enough to know if
routinely subjecting your brain to deep analytical thought 40 hours a week
would be in any way brain damaging. If health data is attached to employment
data, it could be teased out. But there are studies that absolutely confirm
the brain damage incurred from an NFL career.

~~~
kapilvt
Perhaps they meant a different type of damage.

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sytelus
Wait... these numbers doesn't make sense!

# of software dev jobs per US gov: 1,365,500 [1]

# of people employed by big tech (FAANG+Microsoft): ~500k

Assuming 30% people are dev, still this would mean ~10% chance that given
person with software dev job is in big tech. So sports comparison doesn't
sound sound.

[1] [https://www.bls.gov/ooh/computer-and-information-
technology/...](https://www.bls.gov/ooh/computer-and-information-
technology/software-developers.htm)

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erik998
And yet the athletes are still smarter than the geeks... They have a union...

------
xxpor
I have to imagine more people than that are being hired out of college every
year at all of FAANG.

~~~
JMTQp8lwXL
Junior engineers probably aren't as appealing to FANGs. You have to train
them, and teams built of senior engineers may not want to put the time into
doing the training.

~~~
lacker
Junior engineers are very appealing to most big tech companies because there
are lots of them and they need to hire lots of engineers. Also, the smartest
engineers with zero years of experience are all looking for a job. The
smartest engineers with n > 0 years are mostly happy where they are.

The main exception AFAICT is Netflix, who really prefers not to hire new
grads.

~~~
hamstercat
It's definitely a mix. You can't hire just juniors because you need seniors to
mentor/train them. You also probably don't want just seniors because as you
said, they need the bodies. Add to that the fact that you must expect people
to leave, so you have to plan for the future.

If you can manage a balance of both, depending on the individuals in the team
it can end up being beneficial as juniors level-up and seniors tackle the
higher-level stuff.

------
khazhoux
average != median

~~~
dredmorbius
Arithmetic mean, median, and mode, are all measures of central tendancy, and
are called "average". Median is often popularly considered as _the_ average,
but that's not strictly true, and an unambiguous use references one of the
_specific_ measures.

Stating that median or mode are _not_ average measures is also false.

[https://www.thoughtco.com/measures-of-central-
tendency-30267...](https://www.thoughtco.com/measures-of-central-
tendency-3026706)

[https://www.thefreedictionary.com/average](https://www.thefreedictionary.com/average)

~~~
khazhoux
No offense but that's a pedantic distinction. "Average" is commonly understood
to be arithmetic mean.

The point of my comment is that if the compensation is truly showing the
average / arithmetic mean, then the data is skewed by outliers. If it's the
median instead, they should should say so.

~~~
dredmorbius
Precision in thought and expression can often hinge on such pedantry. A word
itself deriving from _pedante_ , "teacher":
[https://www.etymonline.com/word/pedant](https://www.etymonline.com/word/pedant)

The roots of _average_ come from shipping, "any small charge over freight
cost", from French _avarie_ "damage to ship".

The notion of _which_ average specifically is meant varies, the association
with "mean" dates only to the late 18th or early 19th century.

[https://www.etymonline.com/word/average](https://www.etymonline.com/word/average)

What's ironic in the argument between _mean_ and _median_ is that they do in
fact share the same root of the Latin _medius_

[https://www.etymonline.com/word/mean](https://www.etymonline.com/word/mean)

[https://www.etymonline.com/word/median](https://www.etymonline.com/word/median)

And again, in current dictionary usage (as well as my several uni stats
courses), you'll find that "average" applies to _any_ of the measures of
central tendency, though yes, "mean" is probably most commonly (and
ferverantly, as you demonstrate) understood.

Merriam Webster, first defintion:

average: 1 a : a single value (such as a mean, mode, or median) that
summarizes or represents the general significance of a set of unequal values

[https://www.merriam-webster.com/dictionary/average](https://www.merriam-
webster.com/dictionary/average)

Which makes the argument of your initial comment, that the median is _not_ a
meaning of "average", again, false.

~~~
khazhoux
> Which makes the argument of your initial comment, that the median is not a
> meaning of "average", again, false.

As you note, my point is that "average" is most commonly understood as mean.

The original article seems to fall prey to the classic mean-vs-median
distinction. The compensation numbers being presented do not necessarily
represent what one would expect. FAANGs are known to give a small number of
employees multi-million-dollar comp packages -- that will skew the average
(erm... mean) but not the median.

~~~
dredmorbius
Fair point, and a highly useful one to keep in mind when looking at long-tail
vs. normally-distributed statistics.

The article ... contains numerous misspellings and other flaws (I can note
though not really complain as I do similarly...), but yes, really should note
_which_ of the various available "average" values it's considering.

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RickJWagner
As a nerdy person, I find this satisfying.

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buryat
I bet a high payed software engineer is still better at playing sports than a
low payed sports player at coding

