We don’t understand why programmers are paid so well
It might be pretty straightforward.
GDP is 2x higher than in 2000Real GDP per capita is up 25% since 2000, so some category of workers must have gotten at least 2x more productive in that timeframe, so their real income should be 2x higher. That seems like a plausible story for the software engineering career.
This simplified model is consistent with my inside view. I can help sufficiently big companies save $millions/yr, or earn $millions/yr more, by writing software that streamlines some detail of their internal processes or external interactions. And my ability to do this is obviously much higher thanks to all the tools that exist today that didn’t exist in 2000: cloud computing, tons of third-party APIs, ubiquitous mobile phones with fast chips and internet connections, huge high-resolution monitors, Stack Overflow, etc.
The tech entrepreneur and investor Naval Ravikant talks a lot about how “leveraging yourself up” is the key to getting rich. E.g. these days Joe Rogan makes $1M for recording a 90-min podcast because he built a following. He has distribution as leverage.
Programming in the internet age is an unprecedentedly huge source of economic leverage on human capital. A doctor or lawyer sells an hour of their time with a limited impact multiplier—they benefit one patient or one party in one case. In contrast, it keeps getting more common throughout the economy for an hour of a programmer’s time to give value to thousands or millions of customers. Plus, the programmers are constantly getting better tools to get 10x more functionality built in that hour of time than was possible a few years ago. For example, building a basic form to accept a credit card payment has gone from taking days to minutes thanks to Stripe, a company that launched in 2010 and is now worth $30B. But they didn’t just make themselves rich, they added to the leverage that the rest of us have. It’s a real leveragefest.
It seems like software will continue to “eat the world” and add tons of economic value for a while. At the very least I’d confidently bet on another decade where supply increases much more slowly than demand, and the gap between career appeal of doctors/lawyers and software engineers will widen further in that time.
Ah right yes, ok so not a huge increase. Meanwhile, I’ve seen real value of entry-level programmer compensation packages at least double since 2000, probably more like triple.
I think my point about GDP growth helping the outside view is this: *some* significant chunks of sectors in the economy are getting significantly more productive. What kind of workers are producing more value? What are the characteristics of a job that enables more value creation? One where there’s more leverage, i.e. an hour of work produces more economic value, without a corresponding increase in supply. And any sector where the leverage on time is increasing say 5x+ per decade is a good bet for an area where supply is trailing demand.
If you measure programmer productivity by the number of jobs replaced by their code, not lines of code, then programmer productivity is almost unlimited.
It might be pretty straightforward.
GDP is 2x higher than in 2000Real GDP per capita is up 25% since 2000, so some category of workers must have gottenat least 2xmore productive in that timeframe, so their real income should be2xhigher. That seems like a plausible story for the software engineering career.This simplified model is consistent with my inside view. I can help sufficiently big companies save $millions/yr, or earn $millions/yr more, by writing software that streamlines some detail of their internal processes or external interactions. And my ability to do this is obviously much higher thanks to all the tools that exist today that didn’t exist in 2000: cloud computing, tons of third-party APIs, ubiquitous mobile phones with fast chips and internet connections, huge high-resolution monitors, Stack Overflow, etc.
The tech entrepreneur and investor Naval Ravikant talks a lot about how “leveraging yourself up” is the key to getting rich. E.g. these days Joe Rogan makes $1M for recording a 90-min podcast because he built a following. He has distribution as leverage.
Programming in the internet age is an unprecedentedly huge source of economic leverage on human capital. A doctor or lawyer sells an hour of their time with a limited impact multiplier—they benefit one patient or one party in one case. In contrast, it keeps getting more common throughout the economy for an hour of a programmer’s time to give value to thousands or millions of customers. Plus, the programmers are constantly getting better tools to get 10x more functionality built in that hour of time than was possible a few years ago. For example, building a basic form to accept a credit card payment has gone from taking days to minutes thanks to Stripe, a company that launched in 2010 and is now worth $30B. But they didn’t just make themselves rich, they added to the leverage that the rest of us have. It’s a real leveragefest.
It seems like software will continue to “eat the world” and add tons of economic value for a while. At the very least I’d confidently bet on another decade where supply increases much more slowly than demand, and the gap between career appeal of doctors/lawyers and software engineers will widen further in that time.
Why not use per capita real GDP (+25% since 2000)?
Ah right yes, ok so not a huge increase. Meanwhile, I’ve seen real value of entry-level programmer compensation packages at least double since 2000, probably more like triple.
I think my point about GDP growth helping the outside view is this: *some* significant chunks of sectors in the economy are getting significantly more productive. What kind of workers are producing more value? What are the characteristics of a job that enables more value creation? One where there’s more leverage, i.e. an hour of work produces more economic value, without a corresponding increase in supply. And any sector where the leverage on time is increasing say 5x+ per decade is a good bet for an area where supply is trailing demand.
If you measure programmer productivity by the number of jobs replaced by their code, not lines of code, then programmer productivity is almost unlimited.