Most of us can only dream of the six-figure salaries and huge signing bonuses commanded by top talent in Silicon Valley. Of course those salaries are, in part, a function of labor scarcity: You don't find math whizzes that can tweak Google's search algorithms just anywhere, so employers have to pay dearly for that talent. But Silicon Valley isn't necessarily paved with streets of gold, especially for those with non-engineering tech jobs.
Check out this infographic by Focus and Column Five. Two factors seem to heavily influence the labor market: For one, the intense funding activity by venture capitalists has created a wealth of new startups, and a wealth of new jobs. Meanwhile, top-tier companies such as Google and Facebook are putting a heavy premium on talent:[Click to view larger]
As you can see in the last chart above, not every job demands quite the same premium in the Valley. At the low end, you've got product and project managers, who don't really earn too much more than their peers elsewhere. Other functions are surprising: Can graphic designers in the Valley really command 25% more than anywhere else? If so, why is the graphic design you see there still so shitty? And marketing managers command a 33% premium? Really? If you had any doubt that Silicon Valley was experiencing Bubble 2.0, look no further than the fact that pitchmen are in short supply.
But the premiums for engineers and web developers are no less surprising, for a different reason. Your average Valley software engineer seems to be earning about $18K more than they might elsewhere. But unlike a marketing manager or a web developer, they can't expect to find that job just anywhere: New York could be the only other labor market that might have as many similar opportunities. And the same $92K salary would cost just $75K in New York:
Notice anything? The difference between salary premium and a cost of living markup are virtually the same: About $18K. Which makes you think the Valley's engineers aren't really in a hiring bubble after all. Their salaries are in tune with what rationality would predict. Where the pay rates go a bit crazier is at the high end, thanks to Google and others. There, the pecking order produces salaries that are almost twice the mean.
This still seems not so crazy — unlike say, baseball, where top players might get 20-30 times what an average player is paid for perhaps only a 25% improvement in performance. Silicon Valley is sane!
Oh, but wait: Some guys actually do get $100 million retention bonuses.