Ok if you’re considering a single income family then the numbers change since you’re paying more for housing but less in taxes. Say instead of 50% tax rate it’s now 45%, which is $330k take home.
Cash is only a portion of the total comp. You have to either consider publicly tradable RSUs or equity pre IPO. This can be 50+% of the cash salary. At staff or higher levels, this grows to 100+%. My assumption of $600k TC is a $300k cash and $300k stock, which is reasonable for a staff engineer.
$330k - $80k (housing) - $50k (expenses) = $200k
So with these numbers you’re still saving $200+k a year.
Note that if we’re talking dual income families, the numbers are even more in your favor.
I’m not sure where you’re getting your $330k take home figure from. If your paycheck direct deposit is $6197 and you get paid every 2 weeks, that’s 26 paychecks per year, or 26 * $6197 = $161,122. if your take home pay was $330k annually, your direct deposit would be $330,000 / 26 ~= $12,692.
Also not sure why total compensation is relevant. Of course if you’re getting more money you can save more money but we’re talking about being a software engineer and getting $6k checks deposited. Some engineers get equity, but many don’t, and of those that do get options many don’t stick around long enough for their options to mature, and of those that do, only some of them have matured options that have actually appreciated enough to make them worth exercising. I’m not saying equity can’t be very valuable, there are engineers out there who’ve made serious bank with equity, but it is more often than not a carrot dangled in front of engineers to entice them to tolerate their shitty job a little longer. I don’t think assuming a $161k/yr check translates to a $600k/yr return is a sound or accurate assumption. It is, however, a common one. Junior engineers fresh out of college are good at math, and they calculate out what their equity should be worth and get dollar signs in their eyes and sign up. A few of them get that, most do not.
Are we talking about the big tech companies or a SWE at a non tech company?
Because ALL the big tech firms will have similar levels of TC. For example a staff SWE at Google in SF will make $267k cash and $292k stock according to levels.fyi. This cash amount can reasonably be $6000 after taxes. Note that the stock vests monthly. You can literally auto-sell the stock for an extra 100+% cash every month.
Meta vests quarterly which is still sufficiently often and they pay even more stock.
Netflix is known not to grant stock but they will pay the equivalent in cash.
Amazon has a graduated vesting policy but the annual TC is still normalized.
If $6197 is your only form of compensation per two weeks, then that’s not a big tech salary. you can go make that outside a high CoL area. But if you live in SF, it’s a reasonable cash deposit for a staff SWE (except Netflix).
Something to keep in mind here is that senior and super-senior engineers (staff, principal, distinguished, whatever honorifics they’re using now) are a minority within the engineering population, by design. Of engineers with those titles, only a minority of them work at the megatech companies that sit at the top of the stock market. They are huge corporations, but they aren’t the majority of the market. And there’s nothing to suggest that someone getting that paycheck is making over half a million a year in total comp.
And speaking of “Total Compensation”, a general PSA for anyone in tech (especially new devs): don’t consider equity as compensation until you can and do cash it out. If it’s not money in your bank account, it’s not compensation, it’s a lottery ticket. If you are offered options, especially if you’re early in your career, you’re very likely to exit the company (either voluntarily or via a layoff) before any of your options mature, much less all of them. Most options plans start vesting after 12 months, and don’t fully vest until 4 years. the median tenure for tech workers with a college degree in the US aged 25-34 is 2.8 years, so the majority of them would be leaving before a significant percentage of their options mature. It might still be a good gamble in some cases, and even bad gambles sometimes pay off, but don’t make the mistake of equating equity with cash, they aren’t the same.
Hope you’re willing to relocate to SF and still spend 50+% of your income on housing you will never own.
If you get a good offer from big tech to move to a high CoL area, it can be worth it because the offers are that good. You will be able to pay off a home within a decade. Even if you start at entry level you will be expected to be promoted within a couple of years. For most hirees this will already make them senior. It’s expected that everyone can eventually make it to senior.
I wasn’t suggesting someone randomly move to SF without an excellent employment opportunity.
As for startup equity, one could argue it shouldn’t be considered part of total comp since most startups do not exit successfully and even fewer exit in a way where the payout will be comparable to a big tech salary.
It’s expected that everyone can eventually make it to senior.
I think this may be the crux of the issue. Of course it is possible to make a lot of money in software. Of course you only want to take excellent offers. The issue I am addressing is that a lot of people see the annual salaries (or the TC figures, or projections of where their career will take them in five years) and take them as inevitabilities, and they simply aren’t. They can’t be; corporations are structured as pyramids and the higher you go, the fewer spots there are with more people competing for them. Promotions can’t be expected because the system is designed to make sure that most people don’t get them. And yet, everyone treats them as inevitable because the the ones who do get them stick around the company and the ones who don’t leave and fall out of touch with their former colleagues. It’s a pretty stable self-sustaining delusion.
I will allow that it is possible to make that salary without living in SF or any major tech center. I’ve done it and I know others who have done it. But it takes a while to get there and most people never do. And crucially, it’s not because they’re worse engineers. It takes a strong network, a little bit of educated risk-taking, and a series of lucky breaks that you won’t be able to fully appreciate until after the fact. But I think for people who want to get into software with a high salary, taking a junior engineering role at a massive company in the bay area (or wherever) with a lucrative salary is the more common route, and those engineers usually get disillusioned pretty quickly at how far that paycheck doesn’t go.
Ok if you’re considering a single income family then the numbers change since you’re paying more for housing but less in taxes. Say instead of 50% tax rate it’s now 45%, which is $330k take home.
Cash is only a portion of the total comp. You have to either consider publicly tradable RSUs or equity pre IPO. This can be 50+% of the cash salary. At staff or higher levels, this grows to 100+%. My assumption of $600k TC is a $300k cash and $300k stock, which is reasonable for a staff engineer.
$330k - $80k (housing) - $50k (expenses) = $200k
So with these numbers you’re still saving $200+k a year.
Note that if we’re talking dual income families, the numbers are even more in your favor.
I’m not sure where you’re getting your $330k take home figure from. If your paycheck direct deposit is $6197 and you get paid every 2 weeks, that’s 26 paychecks per year, or
26 * $6197 = $161,122. if your take home pay was $330k annually, your direct deposit would be$330,000 / 26 ~= $12,692.Also not sure why total compensation is relevant. Of course if you’re getting more money you can save more money but we’re talking about being a software engineer and getting $6k checks deposited. Some engineers get equity, but many don’t, and of those that do get options many don’t stick around long enough for their options to mature, and of those that do, only some of them have matured options that have actually appreciated enough to make them worth exercising. I’m not saying equity can’t be very valuable, there are engineers out there who’ve made serious bank with equity, but it is more often than not a carrot dangled in front of engineers to entice them to tolerate their shitty job a little longer. I don’t think assuming a $161k/yr check translates to a $600k/yr return is a sound or accurate assumption. It is, however, a common one. Junior engineers fresh out of college are good at math, and they calculate out what their equity should be worth and get dollar signs in their eyes and sign up. A few of them get that, most do not.
Are we talking about the big tech companies or a SWE at a non tech company?
Because ALL the big tech firms will have similar levels of TC. For example a staff SWE at Google in SF will make $267k cash and $292k stock according to levels.fyi. This cash amount can reasonably be $6000 after taxes. Note that the stock vests monthly. You can literally auto-sell the stock for an extra 100+% cash every month.
Meta vests quarterly which is still sufficiently often and they pay even more stock.
Netflix is known not to grant stock but they will pay the equivalent in cash.
Amazon has a graduated vesting policy but the annual TC is still normalized.
If $6197 is your only form of compensation per two weeks, then that’s not a big tech salary. you can go make that outside a high CoL area. But if you live in SF, it’s a reasonable cash deposit for a staff SWE (except Netflix).
I’m talking about this image
And this comment:
Something to keep in mind here is that senior and super-senior engineers (staff, principal, distinguished, whatever honorifics they’re using now) are a minority within the engineering population, by design. Of engineers with those titles, only a minority of them work at the megatech companies that sit at the top of the stock market. They are huge corporations, but they aren’t the majority of the market. And there’s nothing to suggest that someone getting that paycheck is making over half a million a year in total comp.
And speaking of “Total Compensation”, a general PSA for anyone in tech (especially new devs): don’t consider equity as compensation until you can and do cash it out. If it’s not money in your bank account, it’s not compensation, it’s a lottery ticket. If you are offered options, especially if you’re early in your career, you’re very likely to exit the company (either voluntarily or via a layoff) before any of your options mature, much less all of them. Most options plans start vesting after 12 months, and don’t fully vest until 4 years. the median tenure for tech workers with a college degree in the US aged 25-34 is 2.8 years, so the majority of them would be leaving before a significant percentage of their options mature. It might still be a good gamble in some cases, and even bad gambles sometimes pay off, but don’t make the mistake of equating equity with cash, they aren’t the same.
And I was addressing this:
If you get a good offer from big tech to move to a high CoL area, it can be worth it because the offers are that good. You will be able to pay off a home within a decade. Even if you start at entry level you will be expected to be promoted within a couple of years. For most hirees this will already make them senior. It’s expected that everyone can eventually make it to senior.
I wasn’t suggesting someone randomly move to SF without an excellent employment opportunity.
As for startup equity, one could argue it shouldn’t be considered part of total comp since most startups do not exit successfully and even fewer exit in a way where the payout will be comparable to a big tech salary.
I think this may be the crux of the issue. Of course it is possible to make a lot of money in software. Of course you only want to take excellent offers. The issue I am addressing is that a lot of people see the annual salaries (or the TC figures, or projections of where their career will take them in five years) and take them as inevitabilities, and they simply aren’t. They can’t be; corporations are structured as pyramids and the higher you go, the fewer spots there are with more people competing for them. Promotions can’t be expected because the system is designed to make sure that most people don’t get them. And yet, everyone treats them as inevitable because the the ones who do get them stick around the company and the ones who don’t leave and fall out of touch with their former colleagues. It’s a pretty stable self-sustaining delusion.
I will allow that it is possible to make that salary without living in SF or any major tech center. I’ve done it and I know others who have done it. But it takes a while to get there and most people never do. And crucially, it’s not because they’re worse engineers. It takes a strong network, a little bit of educated risk-taking, and a series of lucky breaks that you won’t be able to fully appreciate until after the fact. But I think for people who want to get into software with a high salary, taking a junior engineering role at a massive company in the bay area (or wherever) with a lucrative salary is the more common route, and those engineers usually get disillusioned pretty quickly at how far that paycheck doesn’t go.