Short Thoughts On Current Engineer Salaries in Silicon Valley

I just saw this tweet from Patrick McKenzie that I thought was interesting:

That's about accurate from everything I have heard (with maybe a little bit of fluctuation in the numbers depending on whether an engineer is at a startup or a large tech company). It's interesting to note how high the entry-level number is for fresh graduates, and also how low the top-end salary is compared to salaries and total compensation in professional services firms.

More importantly, though, salaries explain a large part of why Silicon Valley is so successful compared to other startup ecosystems. Last week, I criticized Boston for its paltry engineering salaries in a post on TechCrunch. I wrote:

The second mistake Boston firms make is to consider the city a cheap talent market. It ain't cheap folks. Every single person in Boston has the ability (and often the desire!) to live in one of the world's global cities. Local firms pay significantly less on average than comparable firms in NYC or SF (to the tune of 30-40% based on some recent numbers I have seen). Sure, cost of living is higher in those cities, but it isn't that much higher.

Again, simple solution: pay Silicon Valley market rate. Every time. Regardless of competition. Regardless of anything. You want to retain the talent, you have to pay for that talent. We want the best people here, period. The best cost a lot of money, but thankfully, we have a lot of it lying around.

This is the reason rents in San Francisco are skyrocketing. Engineers from around the world are converging to get access to those salaries at the same time that there is almost no growth in the local housing supply.

Boston is not exceptional in its low relative engineering salaries. In South Korea where I was just traveling, engineers are regularly paid significantly worse than business majors. The numbers I heard from some Koreans were $35-40,000 for engineers and $55-60,000 for business majors (sample size is less than a dozen, so consider this anecdata). That's by design: the government specifically increased the quotas on computer science major slots at universities in order to over-produce them.

Unfortunately, lower salaries tends to mean that the best people move on to other fields, and even the people inside the field don't want to stay very long. Silicon Valley long ago figured out that the best way to get the best talent into engineering and product design was to pay them so well that there were no alternatives. Other regions have a lot to learn here to compete effectively.

Image by Pictures of Money used under Creative Commons.

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