When dealing with capital projects and contractors, however, they had no problems whatsoever giving people on very long contracts hourly rates that weren't just good for their industry, but would have been good for Northern California. I worked for 3 years straight, 40 hours a week, where I was making three times the take-home pay than coworkers with the same responsibilities. And this was after accounting for all taxes, health care, and giving myself more days off than the full time workers did.

Management seemed fine with that arrangement too. Said coworker's direct manager tried to talk to the CTO about the situation. The argument was that if they were happy paying people like me really well, and that they were losing their best FTEs to other companies in a regular basis, that maybe they should pay their best workers a competitive way, instead of ending up with FTEs that just were not competent enough to be hired at regular rates somewhere else. The answer was "If our best FTEs are getting poached by west coast companies, this means that we are good at training"

Remember the story about how some government agencies in charge of building things are getting hollowed out, losing all expertise, leading to very slow, very expensive projects being mostly handled by consultants? It's how it works in software for a big percentage of private sector firms that were already big in the 1970s.

The irony is the same companies can pay 3x the comp for external consultants.

I once worked for a university during a large ERP migration.

There was a mix of employees and consultants working on the migration.

Everyone that the university managed to hire (at salaries WAY below-market price) was almost immediately snatched and started working as consultants themselves (in other companies, obviously). And rightly so.

Sadly, 90% of them just quit before there is even a chance to give mid cycle raise.