Based on that data, most FAANG engineers are already paid more than the profit their employers make per-employee.
Yes, a lot of engineers at FAANG make more than $400k total comp. People seem to have a hard time believing that, but it's true. And according to that chart, only two companies actually make that much profit per employee.
Because if (when) the markets crash by 40% and show no sign of recovery, salary will remain a lot more constant than total comp.
Seriously markets only go up (and the absurd inflation of tech company stock prices since 2008) is a deep, deep problem with society which will inevitably end.
Companies exist to reward their shareholders. Employees at most companies get paid as little as possible, as long as they don't quit. At tech companies, employees are shareholders and therefore they get to be part of the group of people that the company exists to reward.
If you approach your stock compensation with that understanding, you'll be fine. If you expect the stock to only ever increase in value then you are being stupid. In my experience, tech workers at public companies are pretty savvy about their stock compensation. At startups, it's another matter...
a lot of engineers at FAANG make more than $400k total comp
This is the problem as I see it: $400k sounds like a good compensation, but we have no idea if that's as high as FAANGs would go. Maybe all those engineers could be on $800k if they'd negotiated better.
We don't, and can't, know the answer to this problem. And frankly it doesn't matter if those engineers are happy with $400k, and FAANG companies happy paying them that, then everybody comes away feeling like they've won. I'm just wondering if, as a whole, engineers are actually leaving a lot of money on the table because using the 'market rate' is really the average of all the negotiations that have come before, and if the average engineer is bad at negotiating that means everyone is basing their salary expectation on lots of previous low offers that people shouldn't really have accepted.
This is really a pricing problem, and everyone knows pricing is hard.
If both parties are winning what's the problem here? Do you feel compelled to make one party win at the expense of another? Is that a more desirable outcome on net?
I didn't say everyone wins. I said everyone feels like they've won. Those aren't the same.
If I have to split $2,000,000 between you and me, but you don't know how much money there is, then you might be happy with me giving you $400,000. That's $400,000 you didn't have before. Hell yeah, $400k! That's loads. The fact we're both going away happy doesn't make it right though. There's a big disparity there. If you found out that I'd kept 4* what you got you'd have every reason to be pissed about it.
That's what I'm suggesting FAANG companies might be doing - giving developers $400k, which makes them very happy, while keeping a far greater amount for themselves that could have been distributed between the workers at the company had those workers negotiated better by having greater knowledge of the system.
I don't even know if that's really a bad thing if that's what's going on. The line that I originally quoted ("Tech workers are in so much demand that they don't really suffer such a disparity of negotiating power") just made me wonder if it's actually true that demand for tech workers has really driven wages to a natural equilibrium, or whether we just think that's true because $400k sounds like a lot.
> If I have to split $2,000,000 between you and me, but you don't know how much money there is, then you might be happy with me giving you $400,000. That's $400,000 you didn't have before. Hell yeah, $400k! That's loads. The fact we're both going away happy doesn't make it right though. There's a big disparity there. If you found out that I'd kept 4* what you got you'd have every reason to be pissed about it.
Do you honestly believe that every penny a company makes ought to be given to its employees?
If not, then why should employees expect to make more than the market rate for the labor they provide?
Do you honestly believe that every penny a company makes ought to be given to its employees?
I didn't suggest anything of the sort. I said that maybe companies are paying their employees much less than they could, and that maybe employees aren't getting a good deal despite wages being high relative to other industries. I didn't say that all of the value an employee generates should go to that employee - just maybe it could be more than does right now.
If not, then why should employees expect to make more than the market rate for the labor they provide?
"Market rate" is basically the median negotiated salary for similar roles. There's an assumption that a salary is like a price, and supply and demand will drive that price up for in-demand skills. This is the part I'm challenging. I don't know if price theory works for salaries where one side of the market (employers) has far more information and leverage than the other side (developers). If most developers are bad negotiators then getting a "market rate" salary means you, as an individual, are being paid the same as the other bad negotiators, and you actually lost out on getting a higher salary.
It could be that using the market rate to derive the appropriate salary for a job actually keeps developer wages lower than they could otherwise be.
At this point this is all just futile speculation though, and no one is going to change anything so we might as well just accept it.
> "Market rate" is basically the median negotiated salary for similar roles.
Ok, then most FAANG engineers are far above the market rate. If they unionized they would probably lose money when the union tries to level everyone out.
This is another problem with using the market rate to drive salary expectations. Roles aren't the same between companies even if titles or grades are. Basing a salary on what other companies pay "Developer L5" assumes that "Developer L5" is the same job everywhere, and it really isn't.
We all know people at companies that give devs 'lesser' titles (and lower wages) and then expect the person to do the work of the higher title role.
Yes, a lot of engineers at FAANG make more than $400k total comp. People seem to have a hard time believing that, but it's true. And according to that chart, only two companies actually make that much profit per employee.