Software engineering: Britain vs Silicon Valley
by Carl Shulman on February 21st, 2012
Several British members of 80,000 hours, both students and people considering switching careers, have asked about entering the field of software development. The field has a reputation as high-paying, and in Silicon Valley, the heart of the global software industry, average salaries are now reported over $104,000 (£66,000) with generous bonuses. This image is bolstered by the spectacular success of tech startup founders like Bill Gates and Mark Zuckerberg, communicated by news media and movies like The Social Network. Moving from salaried to startup status and back is easier than in many industries, a fact which should be of special interest to altruists with strong skills, as discussed in the two linked 80,000 hours blog posts. The media report fierce competition for engineers between companies like Facebook and Google.
Meanwhile, in the United Kingdom there have been recent news stories with titles such as “Computer Science graduates are the least employable in the UK”. What is the real story here? How attractive is the software industry for those who want to make money and use it to do good? In some ways, the British statistics are misleading, but they also reflect a real difference: software engineers in the US, and especially Silicon Valley, really are better compensated. This post will lay out the supporting data, and discuss ways people outside the United States can make their way to Silicon Valley.
Software salaries, on both sides of the Atlantic
In the United Kingdom the Office of National Statistics conducts an Annual Survey of Hours and Earnings, which is a great starting point for thinking about the financial outlook for different jobs. This article ranks the occupational categories in the survey by median income, with selected professions produced below, including the top four. An all-inclusive “software professionals” category ranks 50th out of 422 categories, at £36,634, a little over $58,000. In contrast, Silicon Valley salaries would exceed everything on the table except airplane pilots, medical doctors (after schooling and low-paying early years), and senior executives (who do not spend their whole careers as senior executives!).
Median salary (£)
Directors and chief executives of major organizations
Corporate managers and senior officials
Aircraft pilots and flight engineers
Brokers (finance and insurance);
Financial managers and chartered secretaries
Solicitors and lawyers, judges and coroners
In the United States, the Bureau of Labor Statistics provides a similar database of occupational employment statistics. The category of “Computer and Mathematical Occupations,” overwhelmingly composed of computer professionals, has the following earning distribution (showing wages by percentile), with the median professional earning $73,720 annually (not including bonuses):
Annual Wage (USD)
Annual wage in GBP (Jan 28, 2012 exchange rate)
However, the BLS also breaks down the category more finely than the UK data for “software professionals” of all kinds. This reveals that areas like software development (in the BLS table) below focused on systems software) do significantly better than computer occupations as a whole.
Annual Wage (2)
Annual wage in GBP (Jan 28, 2012 exchange rate)
And for non-developer computer programmers:
Annual Wage (2)
Annual wage in GBP (Jan 28, 2011 exchange rate)
The regional BLS statistics show that, for the computer (and math) category, salaries in California are 14% higher than elsewhere in the United States, reflecting the presence of the Silicon Valley software industry, at $87,990, while the survey noted above puts wages within Silicon Valley itself at $104,192, about £66,000. These high wages partly reflect higher average ability among workers in Silicon Valley, as software companies hire the best, but also reflect the scale economies of Silicon Valley. Firms that locate in the valley benefit from ready access to a huge pool of nearby venture capitalists, potential employees, customers, suppliers and partners. These effects allow companies to produce more with the same workers, and drive up wages to attract talent from elsewhere (and for software engineers, it is often a good idea to be attracted) despite attachment to other places and cities.
Tech unemployment rates
However, this salary information is for current workers. What about the risk that one will be unemployed? The UK article “Computer Science graduates are the least employable in the UK” article notes that unemployment rates for new computer science graduates 6 months after completing their degrees are 17%, the highest of any degree, although other seemingly practical majors such as business, engineering and architecture follow a few points behind. Further, this trend of somewhat higher unemployment rates goes back for some time in Britain. In contrast, in the U.S. computer science has better than average employment statistics relative to other majors, along with its high earnings for the employed.
While this shows a real difference between the USA and UK, one should be careful to interpret the results in light of the fact that computer programming is a relatively “hard” as opposed to “soft” skill, and programmers can be judged to a significant extent through interviews involving programming questions and problems, sample code, etc. Someone who is lacking in ability, but is armed with a computer science degree (and also without much relevant coding experience, for many computer science graduates) is not the most desirable prospect. We can illustrate this by examining employment rate information by university for computer science grads, from Unistats.
These statistics allow us to sort universities by the UCAS points (used in university admissions, the more points the better) achieved by incoming students, as a proxy for student body ability, and read off rates of “graduate employment,” meaning the rate at which students take jobs classified as requiring university education (which will be lower than the rate of employment, for computer science as well as for all other fields). At the top, Cambridge, known for its excellence in the sciences, has 100% graduate employment with an average of 580 UCAS points, with similar numbers immediately below:
Average UCAS points achieved
% of employed with grad job
On the other hand, for the schools with the weakest student bodies employment rates are comparatively grim. Importantly, computer science, information systems, and allied degrees are relatively common, as seen in HESA data and thus often taken by those who may lack the ability or fit for actual professional programming.
UNIVERSITY OF GREENWICH
UNIVERSITY OF BRADFORD
UNIVERSITY CAMPUS SUFFOLK
Not enough data
CANTERBURY CHRIST CHURCH UNIVERSITY
UNIVERSITY OF WOLVERHAMPTON
BUCKINGHAMSHIRE NEW UNIVERSITY
LONDON METROPOLITAN UNIVERSITY
Those who have excelled in other quantitative and analytical fields, and especially those who have taken easily to programming, should not be unduly concerned about unemployment rates. In my own experience, several highly intelligent acquaintances with backgrounds in fields like physics and engineering, but almost no coding experience, have sought jobs in Silicon Valley in recent years. In general, they have been able to find jobs in Silicon Valley, with salaries approaching six figures, within 6-18 months through self-study and practice programming, or self-study combined with very junior lower-paid software positions.
Can I get to Silicon Valley?
One might try to access top salaries by pursuing American and international companies in the United Kingdom. However, there can be large differences even within companies, reflecting local labor markets and resistance to migration. For example, the career and salary information site Glassdoor.com (which is skewed towards more junior employees) has data on Google Salaries in both Silicon Valley and the United Kingdom. For a basic software engineer position the offer is £45,825-£47,933 in the UK, but the Valley number is $103,408 or £65,365. For a senior software engineer with several years of experience, figures are £62,350 in the UK vs $135,709 or £85 783 in the U.S.
For Europeans seeking to work in the United States, the most common method is the H1-B visa (please note that I am not a lawyer, and this should not be taken for legal advice). Wikipedia notes that the visa allows for skilled workers with at least a bachelor’s degree (or equivalent, in some cases including experience) in the field to enter the US for up to three years to work for a specific employer (although employees may switch employers), which must sponsor the application. The visa can be renewed once, for another three years, and during the total 6 year window a migrant may apply for permanent residency in the United States. The number issued is limited by a quota (with a rush to fill it as soon as applications are accepted, although in recent years the competition has not been too severe) with extra slots available for foreigners who have completed an American advanced degree, and similar E-3 visas for Australian citizens, and unlimited visas for those working for a university or research organization.
If you are interested in this possibility, and already have a computer science or related degree, this option may be open for you now. If you have programming skills, but your degree is in another area, you might be able to take advantage of the opportunity after a short Master’s course in computer science (perhaps in the U.S., with quota benefits).
Interested members of 80,000 hours, please feel free to contact me to discuss your situation, as I am happy to talk and also to provide appropriate introductions in Silicon Valley.
Postscript: if you like what you’re reading here at the 80,000 hours blog, please consider adding our feed on Google Reader or otherwise.