My estimate of the value of a marginal hour in tech was based on my experience and pretty general reasoning, and I have pretty low confidence in it, so I think there’s plenty of room for disagreement. However, it’s still my best guess, and I have considerable certainty that a marginal hour in tech is worth less than an average hour. One place my intuition comes from is this: if I work 80 hours a week instead of 40 (or invest in career capital for that long), do I expect my lifetime expected earnings to double? This seems pretty unlikely to me. A typical senior software engineer salary is around $150K, so if I can get there working 40 hours a week, I would need to be earning at least $300K at the end of my 80 hours a week career (and probably more to make up for not immediately earning twice a typical junior salary now). Very few tech workers (or people who started their careers as tech workers) earn that much, and although working 80 hours a week may increase your probability of getting there, it certainly doesn’t increase that probability all the way to 1. That doesn’t prove that your 41st hour isn’t worth more than your 40th, but you have to hit diminishing returns at some point.
In general though, my main point is that marginal pay works differently from average pay, so you need to actually evaluate what you think a marginal hour of work is worth. Your right that for some people a marginal hour is worth more than the average hour, and for some people it happens to be basically the same, but that’s not true for most people. If you think that your marginal hour is worth the same as your average hour, you should by all means use that number when deciding how to use your time.
A typical senior software engineer salary is around $150K
Maybe my impressions are atypical, but I think this is on the pretty low end at least for solid tech companies in SF? Like there are places (e.g. Dropbox, Google?) that sometimes pay 150K straight out of college, and most of the intermediate/senior people I know (admittedly not many and not representative) make way more than that.
Interesting. In terms of predicting Ruthie’s salary as a senior engineer, I don’t know whether to trust my anecdata (which presumably is sampled from closer to the same distribution as Ruthie), or the BLS, which is clearly a lower-variance estimate but possibly of the wrong quantity (systems programmers across the country).
The BLS also has regional data if you check the second link. Seems the BLS thinks programmers in the Bay Area make perhaps 1.3x the national average. But Bay Area programmers don’t just work for highly profitable tech companies… there are non-software-company salaries and salaries at less profitable tech companies pulling the average down. It’s also not clear whether the BLS is taking in to account equity compensation, which is obviously very significant at many Bay Area tech companies.
Hi Ryan!
My estimate of the value of a marginal hour in tech was based on my experience and pretty general reasoning, and I have pretty low confidence in it, so I think there’s plenty of room for disagreement. However, it’s still my best guess, and I have considerable certainty that a marginal hour in tech is worth less than an average hour. One place my intuition comes from is this: if I work 80 hours a week instead of 40 (or invest in career capital for that long), do I expect my lifetime expected earnings to double? This seems pretty unlikely to me. A typical senior software engineer salary is around $150K, so if I can get there working 40 hours a week, I would need to be earning at least $300K at the end of my 80 hours a week career (and probably more to make up for not immediately earning twice a typical junior salary now). Very few tech workers (or people who started their careers as tech workers) earn that much, and although working 80 hours a week may increase your probability of getting there, it certainly doesn’t increase that probability all the way to 1. That doesn’t prove that your 41st hour isn’t worth more than your 40th, but you have to hit diminishing returns at some point.
In general though, my main point is that marginal pay works differently from average pay, so you need to actually evaluate what you think a marginal hour of work is worth. Your right that for some people a marginal hour is worth more than the average hour, and for some people it happens to be basically the same, but that’s not true for most people. If you think that your marginal hour is worth the same as your average hour, you should by all means use that number when deciding how to use your time.
Maybe my impressions are atypical, but I think this is on the pretty low end at least for solid tech companies in SF? Like there are places (e.g. Dropbox, Google?) that sometimes pay 150K straight out of college, and most of the intermediate/senior people I know (admittedly not many and not representative) make way more than that.
It sounds about right to me, the 90th percentile for software developers in the US is $143k-150k excluding overtime.
Interesting. In terms of predicting Ruthie’s salary as a senior engineer, I don’t know whether to trust my anecdata (which presumably is sampled from closer to the same distribution as Ruthie), or the BLS, which is clearly a lower-variance estimate but possibly of the wrong quantity (systems programmers across the country).
The BLS also has regional data if you check the second link. Seems the BLS thinks programmers in the Bay Area make perhaps 1.3x the national average. But Bay Area programmers don’t just work for highly profitable tech companies… there are non-software-company salaries and salaries at less profitable tech companies pulling the average down. It’s also not clear whether the BLS is taking in to account equity compensation, which is obviously very significant at many Bay Area tech companies.