Why Do Tech Companies Pay So Much?

Business Insider analyzed data on the salaries of thousands of workers to find out how much big tech companies are paying. Levels.fyi, which collects salary data from numerous technology companies, recently compiled a report on the highest-paid software engineers, and some of the results were surprising.

Tech companies pay so much because they want to attract the most talented developers. This ensures their talent remains excellent while preventing competitors from acquiring similar skills. The software developed there is often lucrative enough to warrant the massive salaries developers acquire.

Not surprisingly, Silicon Valley salary data shows that software engineers from companies like Google, Facebook, Amazon, Apple, and Microsoft are making very good money. Equity is an important component of remuneration for software developers at Big Tech and top tech startups.

Tech Companies Host Lucrative Professions

Both publicly traded Big Tech companies and startups often issue large stocks for software developers. A growing number of startups and big tech companies are offering shares — stocks, options, and more — as rewards for developing software. In these companies, fairness becomes more important at the level of senior and engineering staff.

Chief engineers can have a major impact on the health of their company, hence the huge payoff. The payout is due to the fact that an engineer who has been with a company for a long time will have more influence over that company than any other company. The truth is that engineers in any industry, in almost any engineering profession, earn high wages.

The brutal truth that many companies struggle to understand is that they should be paying their experienced engineers above the market rate. This is not a company I want to be a part of, so at Ethena I work to create career paths and pay structures that encourage long and happy assignments by paying our engineers generously and proportionately to their contribution. First, this pay structure is unrealistic for early-stage startups, where paying early engineers at market salaries is usually not possible.

Tech Companies Rarely Cut Wages

Our experience also shows that companies rarely cut wages, but this is a separate issue. When companies go down this path, employees are not necessarily happy. What critics of Facebook’s policy don’t take into account is that, in the long run, the flexibility and trust that teleworking creates between employees and their companies will soon ease worries about wage changes.

Of course, by allowing employees to work remotely, tech companies will save on wages, office space and operating costs. While allowing employees to work remotely will undoubtedly move the bulk of the workforce out of tech hubs like Silicon Valley, many offices will remain open. Social distancing and adjusting wages accordingly may actually lead to a more diverse tech scene, more inclusive jobs, and changes in the way companies value and retain employees.

Companies that pay “local” market wages in cities like Atlanta or Chicago can find it difficult to compete with tech companies even for functional and non-tech jobs. Because in man-made geographic areas, real estate prices and rents are rising due to well-paid jobs. Not only have such tech companies already been paying more than local data suggests, but since those same tech companies are now open to hiring in the United States, they may end up boosting “local” wages for tech jobs.

Tech Companies Compete for Top Talent

Bridgerton aside, a company like Netflix understands this and will always outperform the competition for the best Netflix talent. The math won’t be that easy for companies that want to keep the best talent.

This compares to the 48% of tech workers who have negotiated their salary for a new job at a new company. Along with low overall tech unemployment, the rise has led to competition for talent, leading to higher wages. Perhaps unsurprisingly, these wage increases result in greater satisfaction for technology workers. Dice Tech’s latest payroll report showed that 61% of technologists received a pay raise last year, up from 52% in 2020.

Even though many companies have slashed their budgets, the average salary for technicians in the US has grown by 3.6% between 2019 and 2020, reaching $97,859. Tech companies are generally doing well, with many companies reporting higher sales and profits as demand for technology grows as more and more people continue to work from home. will be $330 per month next year. In fact, the average wage for each type of engineering job was in excess of $110,000, with most earning over $120,000.

Software Can Be Highly Lucrative

To get an idea of ​​what salaries are like in a competitive industry these days, Business Insider analyzed disclosure data from the U.S. Foreign Workforce Certification Authority for permanent and temporary foreign workers to find out how much companies are paying employees in key positions. including engineers, designers and salespeople.

Tech companies pay so much money to their employees because if they didn’t, they would go to work elsewhere for the same or more money that they usually do. Employees are often surprised at how much taxes they will have to pay when exercising options.

This is within the range of what the few employees pay. In our imperfect world, engineers join a company with a certain level of expertise, they spend time within that company to learn and develop that experience, and then, for some reason, they find it easier outside of that company Get recognized. This company. Many major technology vendors are in more or less the same position, including companies building email services and video engines.

Gene Botkin

Gene is a graduate student in cybersecurity and AI at the Missouri University of Science and Technology. Ongoing philosophy and theology student.

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