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How Engineering Salaries Could Get Dinged by the COVID Crisis

By Daniel Bean on Jul 10, 2020

How Engineering Salaries Could Get Dinged by the COVID Crisis

I’ve written before about how software engineering jobs are well-positioned to weather an economic downturn. But as the COVID crisis continues to force tech companies of all sizes to adjust their operations and make cutbacks, could we soon see some salary erosion in these famously high-paid gigs?

To get a read on this, I spoke with Zaheer Mohiuddin and Zuhayeer Musa, the co-founders of salary research and comparison site Levels.fyi. The pair, who come from engineering backgrounds themselves, told me they are paying particularly close attention to the expanding world of remote software engineering roles and how its progression may impact compensation across the board.

Read on for more of their thoughts on the (relatively good) state of software engineering salaries.

The following interview has been edited for clarity and brevity.

Tech companies are tightening their belts. Have you seen that some are pulling back on what they’re paying for new software engineer hires in these tough times?

Zuhayeer Musa: What we’ve noticed is that compensation has largely remained the same. Obviously, we’ve seen offers rescinded and hiring slowing more for lower levels and new grads. But overall, I think things have been kind of relatively stable [for salaries when offers are made].

I think it comes down to this: If you're a senior engineer, staff engineer, and you're kind of central to some of the products at the company, you’re helping the company kind of survive and push through. So, you are kind of like an essential member. That’s why the compensation probably hasn't given too much.

So for jobseekers entering negotiations right now, is there anything in particular in offers that they should be paying attention to? Or since salaries are holding strong, should they proceed as usual?

Zaheer Mohiuddin: Some companies are benefiting more from the current climate, like Amazon, whereas companies like Uber and Lyft are not benefiting as much. So when making sense of equity right now, it helps to take that into consideration.

We just released a compensation calculator tool that helps you compare multiple offers across companies, and it factors in stock growth. If let's say I have an offer from a company that's not benefiting in these times, it helps to be able to visualize what that full comp might actually look like two years, three years from now.

Some tech companies have announced that they plan to continue with either fully remote staffs or offer more remote roles after the COVID crisis clears. Since it’s never been uncommon for companies hiring full-time remote positions to pay those roles based on the regional cost of living for where those employees lives, I’m wondering what more of this could do to software engineering salary competition at large.

Zaheer: With the few anecdotes that I've seen with larger companies, the cost of living differences in salary is negligible compared to the actual differences in cost of living. At least from the examples I'm seeing around Google and Uber having presences in Pittsburgh. Pittsburgh’s cost of living is much lower [than Silicon Valley], and we've seen salaries still remain high. So I think it is kind of in the favor of candidates and cases like that.

But overall, this is something we'll have to wait to see where it goes as more of it rolls out. Will companies even get into more incentivizing with significantly higher packages for engineers who come and work at HQ? Maybe.

Zuhayeer: And one other thing Zaheer and I found quite interesting while thinking about this growth of remote work is that I think benefits start to play a bigger role in your package. What does insurance look like? What do child care benefits potentially look like? And can you negotiate these at a higher level because salary competition might not be something you can move as much if it’s market-defined?

I think companies already do this when employees go up the individual contributor (IC) track and start to negotiate things into their offer letter that would become part of their total rewards but not necessarily part of their cash or monetary compensation.

Along this line, actually, something else that we've been thinking about is how this move to remote actually affects the speed of career development in new talent. Whether it's the watercooler conversations that you would normally have or just the benefit of being able to ask someone in person about something work-related. It's a very different experience than having to ping someone on slack or whatever. Again, we don't have enough data for this yet, but I think an interesting trend to watch out for is how will this affect new engineers starting out at this time? Will they be able to progress at the same rate as engineers that were able to start off in person?

Yeah, that's pretty interesting. And maybe a promotion and salary bump takes a little longer simply because you have less face time with your team or bosses?

Zaheer: Right. And that's a trend I think we've already seen in tech companies. Individuals that are remote typically have slower career progression. I've had colleagues that were remote. They would be amazing engineers, but it was evident that their career progression was slower than engineers in the office just because the majority of the team was not remote and it was hard for them to get that face time, that visibility.

Now, if everyone is remote, then maybe it's a little bit better because remote engineers won’t be the odd ones out. But something else to keep an eye on in the coming months.

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