And the minimum NBA salary for a rookie dictated by the 2017 CBA is over $800k, and rises to 1.3M with one year of experience[0].
I don’t think that the data the author used reflects what he think it does. There have to be minor league/partial contract players in those averages to make sense.
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.
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.
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.
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
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).
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.
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.
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.
Google had nothing to do with 2008 indeed, but look at where tech salaries are today. Clearly that unrelated disaster was not going to impede tech's climb. I considered the parent poster's question within the context of uniquely big tech risks. Global economic risks impact all industries; there's nothing particularly unique there. If we have another global crisis, we could tank for a bit, then recover, and FANG staff salaries could end up exceeding the $500-600k mark. When implying these "golden years" could end, do we mean a local maximum or an absolute maximum? We could be quantifying this a bit more precisely to uncover more insightful reasoning.
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.
The collective bargaining agreement works for pro sports because players get a big chunk of overall revenue. In the NBA, players get half of all revenue. The CBA also stopped team owners colluding on no-poaches that were very similar to the Apple-Google-etc no-poach of yore. Union or not, software engineers would probably garner a larger portion of revenue and/or equity through some sort of group arbitration. Opening up salary info and other financials is at least a good first step.
Moreover, the top pro athlete earners are pulling in more on endorsements than salary. If the CBA prohibited that, it might look more like a typical union / employment contract.
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.
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. :)
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.
Depends on what you value. If living a hedonistic lifestyle is your life goal, then you can have as much fun as any 20 year old way past 37 and for little money. People in their 20's are more likely to live that lifestyle before discovering that it's not for them. Then they get into some sort of grind in which they become a statistic for reports which claim "mid to late 40's are the most miserable age."
# 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.
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.
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.
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.
Don't forget internships.. it's essentially a hiring pipeline that is only available on students..
It's a lot easier to get hired when you are given a multi-month internship to prove yourself. Instead of having to prove yourself in 5x45min interviews.
(On the other hand students don't have experience to draw on)
As I get older I understand the systems better but I get lazier. Give me 20 people and I will blow your mind, but on my own I get very little done. Part of why I manage people is I know what to do but can't actually do it myself (emotionally). Junior engineers are hungry and willing to burn themselves out working to learn what I know (like I did). I love love love junior engineers.
I haven't seen many junior engineers write code I was particularly impressed by, or that could stand the test of time. It's more tech debt, but it's also learning. Others here have said a mix of junior + senior is ideal, and I agree. But for some things, you need speed and low tech debt: those projects are when you should lean more heavily on your senior staff.
Junior engineers willing to burn themselves out doesn't bode well for the quality of work you're getting.
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.
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.
Precision in thought and expression can often hinge on such pedantry. A word itself deriving from pedante, "teacher": 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.
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
> 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.
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.
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...