Studying wages and compensation can offer insights into the supply and demand of various skill sets in an employment market. Despite recent layoffs across many technology companies, our data indicate that the number of professional developers across the globe continues to rise. A driving factor in the persistent growth of developers worldwide is that modern enterprises recognise the fact that, as technology becomes increasingly intertwined with society, all companies are or will ultimately become technology companies.
This means that grocery store chains, online commerce platforms, and car manufacturers alike must all compete against one another to attract developers. Compensation is one of the principal means used to vie for said talent. Understanding the compensation landscape for developers can help companies make informed decisions about salary, bonuses, equity, and other benefits they offer to attract and retain skilled developers. Likewise, studying compensation can aid developers in making decisions about their own careers, including negotiating salaries and benefits.
In this chapter, we present findings from SlashData’s latest Developer Nation survey – the 24th edition – exploring developers’ compensation patterns. We look at differences across regions and note how developers and companies alike, when negotiating compensation, need to take into account differences in costs of living and expenses. Further, we will examine developers’ self-perceptions regarding their salaries and what factors are associated with believing that they are under or overpaid.
The compensation landscape for professional developers varies greatly across the globe. In our latest survey, we collected information from developers living in more than 160 countries across the globe. As expected, the distribution of reported annual compensation reflects the diversity of respondents and the myriad of personal situations.
According to our data, 9% of professional developers earn less than $1,000 per year in total compensation – including base salary, bonuses, stock options, and other perks. This group encapsulates many of the developers working part-time, starting off their careers in internships, or working on commission. As expected, reported annual compensation is significantly correlated with overall experience in software development. Hence, as developers gain experience, they are able to command higher compensation. When we control for the differences across the globe, we find that, on average, for every year of experience a developer gains in software development, they earn nearly $4,000 more each year.
On the upper end of the spectrum, we find that roughly 6% of professional developers earn more than $200,000 per year. According to the World Inequality Database, in almost every country in the world, workers earning above $200K a year belong to the top 1% of earners in that country. This is one indicator that developers’ average compensation is higher than in other sectors of the economy. Below, we break down the average compensation by region to offer a bit more context to the earnings of developers.
Regional differences
North American professional developers report the highest average annual compensation – more than $100,000. The median compensation in the region, however, is closer to $75,000. Meanwhile, on the opposite end of the spectrum, developers working in South Asia report the lowest average compensation of just under $27,000 and the median compensation is around $5,500 per year. As is frequently the case with compensation, those with higher earnings greatly inflate the average, as is evident when we compare the median vs the average annual compensation.
Anyone who has travelled outside their hometown recognises that the costs of goods and services can vary depending on where you are in the world. Compensation very often reflects these differences in the cost of living. Should developers and companies wish to compare compensation between two locales, considering these differences is crucial.
As an example, we examine two countries with large developer populations: the United States of America and the People’s Republic of China. The median compensation of developers in the USA is around $75,000 per year. This is five times greater than the median developer compensation in China of $15,000 per year. However, when we account for differences in costs of living using the purchasing power parity index, we see that the average developer in China earning $15,000 per year can afford similar goods and services as a developer in the USA earning $25,000 a year. In practical terms, this means that developers in the USA still generally enjoy a higher wage compared to Chinese developers, but by a lesser margin (3 times more vs 5 times more) than is apparent when we directly compare compensation.
Perceptions surrounding compensation
On top of asking developers about their current annual compensation, we also asked them about the compensation they think would be fair for their role. Just over half (51%) believe that the compensation they currently receive is fair for their role. Meanwhile, 39% believe they are underpaid, whereas 11% of developers report that their current compensation was more than what they believe is fair for their role.
To better understand what factors are associated with developers believing they are over or underpaid, we modelled developers’ sentiments about the compensation in their current role. We find that men are significantly more likely to report feeling underpaid in their current role. More specifically, 16% of men report feeling underpaid compared to 11% of women and 14% of developers who identified as non-binary. Conversely, 7% of women feel overpaid compared to 4% of men and 1% of non-binary individuals.
We additionally see that developers with more experience and those working for larger companies are more likely to report feeling underpaid. For each additional year that a developer gains in experience, we estimate that there is approximately a 7% increase in the odds that the developer will report feeling underpaid compared to fairly compensated. This suggests that companies do not financially value experience to the same degree as developers do amongst themselves.
However, more experience and working for a larger company are both correlated with being compensated higher. This could indicate that more experienced developers working at larger companies have responsibilities that they feel are not commensurate with their compensation. On the other hand, sentiments of being underpaid could also stem from a perception based on a lack of information, being influenced by larger companies’ generally greater profit margins, or unrealistic thinking from the developer.
Finally, if a developer has an undergraduate degree in software engineering, they are more likely to report feeling underpaid. The odds of a developer with an undergraduate degree in software engineering feeling underpaid vs paid fairly, are 9% greater when compared to all other developers. This effect disappears, however, once developers have a postgraduate degree; as having a postgraduate degree increases the odds of feeling overpaid by 50% compared to not having a postgraduate degree.
This could indicate that companies place a lesser value on undergraduate education than developers perceive they will; possibly leading to the sentiment of feeling underpaid by those who do not yet hold advanced degrees. Other external factors, such as geographical location, also affect how a developer perceives their compensation, likely due to cost of living differences, as discussed in the previous section.
Compensation is often considered a difficult topic to discuss and research due to the taboo nature of discussing money in many companies and cultures. Our aim with this chapter is to open up the conversation surrounding developer compensation with our analysis.
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