The topic of software engineer salary has long been the subject of debate. According to a widely held belief, a typical developer salary is sky-high. If that’s really the case, how come 54.8% of devs are unsatisfied with their paycheck?
To give you a better understanding of the intricate subject of software engineer salary, we’ve gathered data from The Bureau of Labor Statistics, Stack Overflow, LinkedIn, Glassdoor, Jobvite, PayScale, Hannah Riley Bowles, Linda Babcock, and Lei Lai research, and InContext.
Let’s get started!
Software engineer salary infographic and data breakdown
While The Bureau of Labor Statistics reports that median developer pay equals $102,280 per year, Glassdoor data suggests their average base pay is $81,994 per year. PayScale data indicates that a “Software Developer earns an average salary of $69,083 per year”. The discrepancy between these numbers can be explained by a number of factors. While some of them are related to the individual (such as their level of expertise which can be improved based on their motivation and willingness to learn), others should be treated as external factors. These include e.g. geographical location of the company or its size (which the developer has no or little control of). Interestingly, the software engineer salary differences between cities are quite striking. Considering the 6 locations presented in the infographic, the salary difference between the top one (San Francisco) and the bottom one (Minneapolis) reaches over $28K.
Factors affecting developer salary
As mentioned in the infographic, there are multiple factors influencing software engineer salary differences. These include for example:
- Knowledge of languages and libraries,
- Talent pool size,
- Company size,
- Industry concentration,
- Location Quotient.
What is Location Quotient?
According to the Bureau of Economic Analysis, location quotient (LQ) is a statistic that “measures a region’s industrial specialization relative to a larger geographic unit (usually the nation)”. It allows determining which industries make a given region unique.
When it comes to software developers, Washington boasts the highest location quotient (2.83), followed by New Jersey (1.88), Colorado (1.83), Virginia (1.64) and Massachusetts and (1.59). The LQ for California equals 1.43.
Gender pay gap
Luckily, the gender pay gap in tech is smaller than that of other industries. That said, there’s still work to be done. According to PayScale data, “the uncontrolled gender pay gap for individual contributors who work in the tech industry is -18.8%”, as opposed to 21.1% for those who don’t work in the tech industry. For women and men in similar positions (controlled) “gender pay gap for individual contributors who work in the tech industry is -1.2%”, as opposed to -3.2% outside the tech industry. The gap between similar men and women doing similar jobs (controlled) is even higher for managers, directors, and executives as it reaches up to -5.6% of median pay.
There are a number of things you can do to create a female-friendly tech company. For further reading, I highly recommend our post 10 steps to hire more women in tech.
How to turn this knowledge into action?
- Given that compensation is the second biggest obstacle to attracting top talent, companies may need to be more flexible when it comes to negotiating pay. This means that candidates have gotten used to and are now more confident when negotiating pay. As an employer, you need to prepare a strategy of how you want to communicate during negotiations.
- Think about non-monetary factors which can give you recruiting advantage, like building a strong employer brand or offering remote work options, which are important for 64% of developers.
- Look through your job ads and look for any bias, including gender bias when it comes to pay. Although the gender pay gap in tech is smaller than that of other industries, it’s still worth looking at your developer salary data and see if you’re guilty of paying female developers less than male developers for doing the same job.
- While sourcing, identify developers who openly express their willingness to relocate.
- Think about introducing relocation support packages in your company to draw top tech talent from less concentrated areas.
I hope you’ve found the data useful. Here’s a list of sources cited in our software engineer salary infographic for further reading: