That's a reason for first-generation employees to get paid highly, not a reason to continue to pay that highly to new employees joining today.
The real determinants of tech company salaries are the same old boring ones that govern salaries in most lightly regulated industries: productivity and competition. Each marginal employee earns a lot of revenue for a company, and competition ensures most of that is paid out in salary to them (I'm aware the company makes more from you than it pays you, but that's about average productivity not marginal productivity).
Marginal productivity is harder to pin down empirically, it's the first derivative of productivity with respect to inputs of labor. Not all labor is productive to the same degree, it was hired at different times, and there's variance in negotiation so your comp definitely doesn't (===) your marginal productivity. It's also probably greatly distorted for startups that are banking on a unicorn valuation where the expected productivity is something like (0.99 * 0 + 0.009 * 1 million + 0.0001 * 1 billion). But for Google et. al where they're in a relative steady state, they have a good idea of how much revenue grows when they add an employee and they'll be willing to pay up to that.
Isn't that true for the whole economy?
Last two years I agree, and fueled by a acceleration of business for tech companies. But continue this year? Who is forecasting that?
https://www.washingtonpost.com/business/2021/12/08/wages-202...
The fed is assuming that inflation is being driven by wage increases.
Thus they raise rates to force employers to cut back on compensation and job openings.
How they do this with a clear conscience is beyond me.
Wage growth has lagged behind inflation, let alone productivity for 40+ years!
Inflation is caused by a lot of different factors, but wage growth doesn’t appear to be one of them.
Do you know whether the Fed forecasts that for software engineering jobs? I think that is what’s most relevant for a large number of folks in this thread.
I don't know of any specific forecasts. It's possible the actual report by the Fed does break down by industry, but I'm not sure.
In other words, free market mechanisms are slowly starting to redistribute wealth from high-earning SWEs and other high earners to middle class workers and lower.
In other words, it is not possible for too many people to be making 5x+ the median household income regardless of the value they may create.
In other words, expect non-tech wages to rise faster than tech wages for the foreseeable future.
Believing in trickle down would actually undermine GP's point. If trickle down was true, SWEs' spending would offset the housing cost increases caused by SWEs, so middle class workers would have more disposable income to buy things from companies that pay the SWEs -- and that would be the opposite of what GP is describing.
The WFH/remote is actually good for this problem as it reduced concentration and enables wealth to be a bit more spread out where it’s less impactful to the local communities. Of course, in resort areas we got concentration again (because of shallow supply) and many of the ills came back. Hopefully things stabilize a bit more on that front and a semblance of affordability is achieved.
Also, it assumes that non-tech workers won't just move to cheaper areas.
Which creates non-tech labor shortages in the original HCOL area and puts upward pressure on non-tech wages and downward pressure on tech wages, as non-tech wages are ultimately paid by the spending of everybody, including tech workers, who consume more than non-tech workers by virtue of simply earning more.
Tech salaries are going to be on a decline for a while with the Fed rate hike, like it or not, most tech companies are floating on VC money and that all depends on a stock market giving them high valuations. In situations we're in now, fundamentals start to matter and the phony valuations get corrected.