> if engineers in America are ridiculously overpaid, or
why do you only compare to Japan and EU? American engineers get paid more than anyone else (except for EU outliers). I make slightly above 100k in Australia, it's a bit tight with the housing situation and cost of living but it's liveable. Cost of living in the US is lower except for maybe healthcare but engineers get companies pay for them anyway.
I don't have insights into other engineering, but
I think software engineers are overpaid. Would I enjoy being overpaid? Of course, but it's hard to say it's fair pay considering what people in other professions are making.
> why do you only compare to Japan and EU? American engineers get paid more than anyone else (except for EU outliers). I make slightly above 100k in Australia, it's a bit tight with the housing situation and cost of living but it's liveable. Cost of living in the US is lower except for maybe healthcare but engineers get companies pay for them anyway.
Well those are just the biggest/most relevant tech labor markets I could think of, roughly by GDP. I don't know much about Australia but couldn't comment there, thanks for the insight.
> I don't have insights into other engineering, but I think software engineers are overpaid. Would I enjoy being overpaid? Of course, but it's hard to say it's fair pay considering what people in other professions are making.
I don't think comparing pay across professions makes sense -- why compare a plumber or doctor to what a software engineer does? the outcomes are completely different, the risks are completely different, the upside/profit potential is completely different.
I lean towards considering software engineers as underpaid because the power of automation (whether software or hardware -- because you generally need some kind of soft/firmware to make robots move) is insane. If software engineers were ever paid a percentage of the revenue impact they generate (which is not how markets work, but I digress), software engineers would be paid much much more. I think it might be possible to compare across professions if you think of % of value creation captured let's say but it gets tenuous.
In the end the only "fair" determination is what supply and demand based markets dictate. They're not perfect, but they approximate other forces/influences decently enough. When those aren't enough, governments may need to step in to enact policy.
fair enough, fyi my line of thought is a bit Marxist, you should get paid based on your labour, time, mental energy etc put in the work as much as the result. When you pay people according to only "impacts" you create an incentive to make "viral" things. In software these days even without such incentive taking full effect, over abstraction, one-size-fits-all, github star counting are becoming bigger problems.
> you generally need some kind of soft/firmware to make robots move) is insane
The fact that you completely ignore the hardware is very telling. CPU has been improved according to Moore's law in the past few decades, if anything modern software engineering failed to live up to that potential and has been free riding on top of progress in hardware.
It's insane to make robots move but software is a small part of that, there is also mechanical/electrical engineering, battery techs etc. Software sitting at the top of that stack shouldn't takes all the credit. It's very hard to innovate on the lower layers with all the lab work and physical constrains.
I think what is happening is that people in general, not only software engineers, are getting paid much more and sometimes less because of increasing impact due to tech/globalization scaling and winner takes all network effects.
Look at how much some YouTubers make. Due to the Internet, they can reach far more people than before and make far more money. Also, their popularity begat more popularity without commensurate additional work on their part.
The same is happening to tech companies. You have that same power law with a few at the top making a lot of the money. It applies to YouTubers, tech companies, software engineers at those tech companies, etc... The rise of tech billionaires is another manifestation of this.
Of course this is creating a lot of pushback from other parts of society that are sometimes actually losing influence, money, etc... since there is a negative feedback loop on the other side.
> fair enough, fyi my line of thought is a bit Marxist, you should get paid based on your labour, time, mental energy etc put in the work as much as the result. When you pay people according to only "impacts" you create an incentive to make "viral" things. In software these days even without such incentive taking full effect, over abstraction, one-size-fits-all, github star counting are becoming bigger problems.
Hmnn but doing it that way feels like it would devalue doing things smarter which seems to be more beneficial to society. Single-mindedly incentivizing labor seems like it would skewer efficiency -- I guess like most things the right answer is in the middle.
I'm not sure what you mean by "viral" things but I'm trying to discuss only about work output. If the work output is virality (let's say a social media manager), then it makes sense to measure that way, but usually businesses don't deal in that currency -- they deal in product shipped out or contracts landed, etc. That said, I'm well aware that systems that think themselves to be closest to the capitalist ideal are pretty brutal on the cogs in the machine.
As a side note, it's a red flag for me when I see github projects that are too concerned with stars/going viral, or even when I see presentations about projects that mention stars. Everyone thinks it's silly but everyone keeps doing it -- if only we'd stop then people would start judging projects on things other than adoption. Then again, adoption is the biggest metric for most people, because it generally is a proxy for "availability of free support/feature development", and in that sense I'm guilty of the same.
> The fact that you completely ignore the hardware is very telling. CPU has been improved according to Moore's law in the past few decades, if anything modern software engineering failed to live up to that potential and has been free riding on top of progress in hardware.
> It's insane to make robots move but software is a small part of that, there is also mechanical/electrical engineering, battery techs etc. Software sitting at the top of that stack shouldn't takes all the credit. It's very hard to innovate on the lower layers with all the lab work and physical constrains.
Agreed! There is more than enough value to go around to be shared between all those kinds of engineering -- just because I didn't mention lithography engineers or materials science engineers or people who smelt silicon doesn't mean they don't exist and don't deserve to be paid.
Viral or scalable in business/tech terms, means things that can be sold multiple times. Often times the value is already created and rewarded. In our economy we're not only incentivizing value creation but also building walls around innovations and gatekeeping the fruits of them, so that the innovators, the software developers like you wish, or whoever can earn royalty while no longer innovating.
Yeah, I get where you're coming from but I can't really agree that incentivizing raw labor is the way to get there (to a more equitable outcome for labor). The capital/labor struggle is a deep deep topic, but I think we can say at this point that with automation becoming increasingly common, labor is losing it's leg to stand on. We're going to get a lot farther by reining in capitalism than trying to return to piece work payment.
> I can't really agree that incentivizing raw labor
I read history books, I'm not that stupid.
The reason I bring this up is a couple of comments up you said software creates tremendous value, I guess this is true for many other types of innovations too. You proceeded to say software developers need to be paid proportionate to that value and I disagree there.
If we look at salary as incentive I would say that software engineers get enough incentive to do our job. As long as we get paid better than most other professions, society/the economy don't need to pay us more.
While pay should not be based on labour, it should be capped, probably based on the labour. Otherwise every cog in the machine earns some royalty (infinitely, if the machine scales infinitely) and there is no money left for "non-machine".
The bad thing in this industry is work/life balance, we just need to fix that. Although the pay in some countries are atrocious, I'd say that software engineers in most western countries are fine.
> If we look at salary as incentive I would say that software engineers get enough incentive to do our job. As long as we get paid better than most other professions, society/the economy don't need to pay us more.
I disagree. The value created is going to be accreted somewhere, and I would prefer that somewhere be the labor that created it rather than the capital funded the creation.
Should you be accredited for the Internet, PC and other things, would that be fair? I think it's a delusion. You write some code that do a specific thing. It's the whole infrastructure and economic structure combined with that piece of code and creates such a massive value, it can't be acreditted to just you.
Didn't imply you were! I am assuming the best as people do here on HN.
> The reason I bring this up is a couple of comments up you said software creates tremendous value, I guess this is true for many other types of innovations too. You proceeded to say software developers need to be paid proportionate to that value and I disagree there.
> If we look at salary as incentive I would say that software engineers get enough incentive to do our job. As long as we get paid better than most other professions, society/the economy don't need to pay us more.
> While pay should not be based on labour, it should be capped, probably based on the labour. Otherwise every cog in the machine earns some royalty (infinitely, if the machine scales infinitely) and there is no money left for "non-machine".
So I still disagree with this point, but I want to point out that I am in favor of the idea that every cog in the machine earns a royalty on every piece of the process. I believe both machine and non-machine could win in that situation. If you have a new idea (and the funding to go after it, etc) then you get to decide the cap table essentially -- so it's up to you to set rates on the royalties and up to labor to agree/deny. How you'd work out royalties in relation to work done/etc is difficult, but it's something that feels like it can be worked out. Pensions used to be a thing, and they're kind of like that.
> The bad thing in this industry is work/life balance, we just need to fix that. Although the pay in some countries are atrocious, I'd say that software engineers in most western countries are fine.
Weird, I think that work/life balance for software is actually really good -- you're not going to find much work/life balance (or companies that even pretend to care about that) in the blue collar job market. The ability to up and move with transferable skills is really remarkable in tech as well... In short I agree with you that tech has it good, but I don't think it makes sense to restrict that "good" based on the "bad" of other fields -- we don't need to be equal. If workers are getting exploited outside of tech, let's make them less exploited and get them what they're worth -- if tech workers are exploited let's get them what they're worth.
The question of how to determine that worth is the big difference we're at loggerheads about I think, and I don't think it makes sense to judge by amount of "work" done. That very idea is rooted in some sort of moralistic argument that work/expenditure is good/virtuous/worth being paid for, and I don't think that's a shared value. Labor is given meaning by the fruit it produces, and that's how I'm trying to judge the value of labor -- the value it produces (whether immediately or down the line) -- royalties do that rather well compared to our current system.
> fyi my line of thought is a bit Marxist, you should get paid based on your labour, time, mental energy etc put in the work as much as the result.
You can work very hard (dig useless ditches with shovels) or on very tricky things (write about things nobody cares about, nobody understands and do not matter) and not make things of much value. A society that does that in aggregate is a society that either dies or falls behind.
Simply looking at the number value might be too surface level for this. The bay area has high wages because of the cost of living - due to the housing crisis and overall pay required to live in the area, FAANG and non-FAANG alike pay more simply in order to have employees that can actually afford living somewhere within an hour of the city - and with remote work, companies are docking employee pay to more competitive rates if they move out of SF[0] (although, with Covid, every metropolitan area has began gravitating towards this issue[1]). While this might mean an overall higher standard of living and nicer cars, it isn't crazy and, after the mortgage, chances are it's closer to the SoL in other cities and possibly Australia.
It's not really backwards, it's a cycle that reinforces itself.
House expensive -> salaries jump -> people have more money to pay for house -> house becomes more expensive.
This is like arguing about the chicken or the egg. More housing supply would help to a point but it would take an order of magnitude change to make a dent in the current self-reinforcing cycle, and probably would need that level of increased production for a period of time.
The maximum possible salary doesn't change because of more expensive housing, only your ability to negotiate for a salary rise does. Therefore expensive housing will let you get the maximum possible salary at most.
There is a self reinforcing cycle but it has nothing to do with housing. You're saying that expensive housing is the only factor in salaries which is completely wrong.
The self reinforcing cycle is that developer salaries rise in Silicon Valley, people start moving there, which kicks out existing residents. You can enact rent control and rent prices will stay the same but you still end up kicking people out because nobody is building anything. The reason why it is self reinforcing is that developers living in close proximity results in agglomeration effects, each additional developer makes every other developer more productive.
It doesn't really matters that all salaries don't jump the same way. It matters that someone whose salary jumped can still pay more for a house.
I've never claimed that rent control works. But house prices would not keep rising if no one had the salary to afford the mortgage. People still do, they're just all concentrated in the one profession, and due to bumper results they can demand more.
You probably couldn't negotiate SV level salaries in, say, Tulsa, and pretty much every large company I have heard of expanding remote work is doing so with geographically adjusted pay downwards from SV. (I never really got the angle of people who thought they would get to have their cake and eat it too with SV-level salary and dirt-cheap COL; employers aren't blind.)
I'm no expert on the history of SV or your housing (I've never lived there, probably never will), but I thought the general story was something like this:
0. California existed
1. Government investment comes to the valley during the cold war in early SV companies
2. Innovation happens in leaps and bounds thanks to the government checkbook
3. Profit is made hand over fist by some people/groups/entities
4. People/groups/entities from (3) buy more of everything
5. More People & entities come in search of interesting ideas/cutting edge technology/profit/fame/etc
Depending on how far back you want to go 1 isn't even really the start of it.
Stanford was founded by Leland Stanford, the robber baron who owned the Central Pacific, which built the transcontinental railroad. This has more or less been the cycle since the Gold Rush.
It is true that higher housing costs lead to labor scarcity which leads to higher salaries, and also that employers do cost of living adjustments, but these effects are small compared to the core "companies offer higher salaries to attract the best talent -> housing becomes more expensive" driver.
And housing factors in offering the higher salaries to attract the best talent. It takes a lot of money to eventually buy property in the Bay Area and if you manage to apply to companies there unaware of that fact you probably literally live under a rock.
If pay is increased solely to compensate for house prices, then working in a higher cost of living area is still better because the job buys you a more valuable house. Imagine if house prices were a non-issue because companies just give you a free house when you start. Would you consider still the job in a cheap housing area equal?
Anyway at the senior levels the pay is even more stupid high in SV, way more than anything you'd need to live on. How high do salaries go in Australia?
individual contributors top at around 140k (AUD180k package), but the 90% tops at 128k which is a "tech lead salary". I don't have the experience to tell how high tech leads go, but I'm guessing 200k.
Some outliers are Optiver (a prop trading firm) paying 160k (half of which is bonus) and Google paying (up to I heard) 125k to grads. However the number of companies like that in Australia you could count on one hand (Amazon, Atlassian, Canva), so there is nothing to drive average salary up like in SV.
RSU is way less common. There are also cases of double standards such as companies founded in Australia expanding to the US offers way better perks and RSU to US staff but stop offering RSU to new Australian hires.
> I make slightly above 100k in Australia, it's a bit tight with the housing situation and cost of living but it's liveable
100k USD (So ~130k AUD)? Even if that's 100k AUD, it's a bit odd to hear that it's "tight" when you're on 100k. I didn't think Aussie's COL was that high.
it's USD, with mortgage and the need to save and invest, not tight in the literal sense.
COL is higher than most countries in the world. It being a remote continent, that should not come as a surprise. Average house price in Melbourne is now AUD 1m or USD 775k
I'm curious why you would think this. In some ways software is a trade, but what makes it unique to nearly any other profession is its multiplicative effect. One software engineer can write a program that improves the productivity of thousands or more people.
What would you pay the person who invented the lever? Now, what you would the pay the person who invents the lever every couple weeks?
If anything, many software engineers are still underpaid.
I'm sorry a typical software developer doesn't do anything innovative. At the current stage, the majority of the industry does works like porting things from lang X to lang Y or mapping between convoluted systems that they themselves created (for "DX"), making skins around databases, again and again. Another hughe chunk of developers works in the attention economy: ads, game, streaming, whatever, the things that I doubt have a net positive contribution to society. They give people nonsense to do and watch and take away their time, sounds like mutiplier of negative productivity if anything.
There are indeed developers working on useful things to society, but they usually work on top of amazing intercom and hardware infrastructures that drive more innovation and deserve more credit than their crappy software.
I think the issue there, to continue your analogy, is that some carpenters are busy creating new levers, while others are busy repeating the same carpentry over and over again. Same trade, different aims.
The "multiplicative effect" is easy to translate to economic factors: it's what allows software-based companies to have very high marginal profit. The average net profit margin of a small business in the US is less than 10%, but in scaled, software-centered businesses it's not unusual to be above 30% or 50% due to the zero marginal cost of production.
But for every company like Facebook, Amazon, Oracle, Google etc which understand this and plays to it to shoot for sky-high unit margins, there are N companies like Tata Consultancy, Accenture, Capgemini (or in-house IT departments) which effectively employ software engineers to do non-reusable "glue" tasks where the margin expectation is topping out somewhere between around 10%. These folks cannot pay as much for talent, in part because their stock isn't valued nearly as much, whereas it is a relatively cheap source of compensation for tech companies.
A key to understanding the difference between US and other markets is the 1:N ratio. Software engineers in the Bay Area are gifted with very low ratios, and places where the ratio is higher in my experience have much more depressed software engineering compensation because there are not enough high margin software businesses to drive them.
why do you only compare to Japan and EU? American engineers get paid more than anyone else (except for EU outliers). I make slightly above 100k in Australia, it's a bit tight with the housing situation and cost of living but it's liveable. Cost of living in the US is lower except for maybe healthcare but engineers get companies pay for them anyway.
I don't have insights into other engineering, but I think software engineers are overpaid. Would I enjoy being overpaid? Of course, but it's hard to say it's fair pay considering what people in other professions are making.