Income Gap Between Tech CEOs, Software Engineers: Huge

How much of an income gap exists between tech-company CEOs and the software engineers who actually drive the business?

Business.org recently crunched the numbers on CEO salaries, and then compared those executives’ per-hour earnings to the hourly wages for the most popular jobs at their respective companies. For example, it matched up Amazon CEO Jeff Bezos’s $1.6 million per year against an Amazon warehouse associate’s annual earnings of $27,206; the latter would need to work 62 hours in order to earn the equivalent of one hour of Bezos’s pay.

And Bezos is something of an outlier, as he “only” takes that $1.6 million; the vast bulk of his wealth comes from Amazon stock (and because that’s risen so stratospherically in recent years, he’s now the world’s richest man). A Netflix customer service rep ($29,141 per year) would need to work 2,338 hours in order to equal one hour of Netflix CEO Reed Hastings’s income (Hastings makes $36 million per year).

But we’re not necessarily interested in each of these tech firms’ most “popular” jobs; we want to see how CEO salaries match up against software engineer income. For the latter, we consulted Glassdoor, which crowd-sources its salary info. 

Good news! The income gap between “average” software engineer salaries and CEO pay is much narrower than for the “popular jobs” at these respective companies.

But there’s bad news! Income-wise, CEOs still earn an insane multiple over what software engineers make, even if the engineers earn over $100,000 per year. Check out the chart below. (We calculated the per-hour for software engineers off a 40-hour workweek for 52 weeks per year, per business.org’s original methodology.)

Software engineers earn a good deal of compensation (especially when you consider the stock options and bonuses they rack up on top of these salaries), and yet their salaries still look paltry in comparison to CEOs.

But we knew that, of course—and the income disparity isn’t limited to tech. In May, a study by the Associated Press found that CEOs at S&P 500 companies made a median salary of $12 million last year—not only base pay, but also stock grants and “other compensation.”

“Pay for typical workers at these companies isn’t rising nearly as quickly,” the Associated Press added at the time. “The median increase was 3 [percent] last year, less than half the growth for the top bosses. Median means half were larger, and half were smaller.”

Meanwhile, according to the 2019 Dice Salary Survey, the average tech pro earned $93,244 in 2018—a mere 0.6 percent increase from 2017. That’s a good average income in many places around the country, but it’s a drop in the bucket compared to CEO take-home. 

5 Responses to “Income Gap Between Tech CEOs, Software Engineers: Huge”

  1. Robert N

    The CEO compensations mentioned are not accurate and are off by an order of magnitude. What’s states in the article is merely their base salary and it excludes their stocks and bonuses.

  2. The perspective of this article begins with the presupposition that executive pay should be equivalent to worker pay. Why? What grounds the idea that equal pay is morally superior? What reasons would support inequal pay? The fact of differences in pay with a prejudiced framing is not an argument.

    I am a software engineer. From a personal perspective: If I ran my own business, I would want a huge piece of the pie. I take on the risk so that I can reap the reward. From a business perspective, the ambiguity and impact of executive decisions is vastly greater. Do we not in general practice increased compensation commensurate to increased responsibility?

  3. Samantha

    Completely agree. Left used to pretend that it’s the “injustice” that they care about. But these software engineers are making huge salaries. Everyone is getting rich, and they’re still complaining and until they redistribute everyone to the exact same salary it will never be “fair.” And even then, they will complain that some people are smarter at saving/investing/buying than others. Why not take it to logical completion, it will only be “equal” when govt forces everyone to have the same pay, the same apt, same food, same shirt. Freedom just gets in our way of things being “equal.”