Why Don't Tech Companies Pay Their Engineers to Stay?

Original Article ↗ Hacker News Discussion ↗

Many software engineers say they rarely leave purely for money, yet switching jobs remains the most reliable way to secure large pay increases, highlighting how incumbents are often kept below “market rate.” Commenters argue that management cultures treating engineering as a fungible cost center, opaque pay structures, and weak people management matter as much as raw compensation, even when replacing experienced staff is clearly more expensive than retaining them. Several note stark regional differences (e.g., UK vs US), the impact of stock-based incentives and tax regimes, and how post‑2021 market cooling has reduced leverage for job hoppers while leaving long‑standing retention problems unresolved.

Geographic Pay Disparities (esp. UK/EU/Canada)

  • Strong disagreement over UK compensation: some claim 150–200k GBP TC is attainable at non‑FAANG firms; others say realistic mid‑senior offers are ~90–120k with far worse upside than US roles.
  • Several argue UK tech underpays relative to cost of living, with poor equity culture and risk‑averse VC; advice is often “go to US/FAANG/finance or consult.”
  • Contractors in the UK used to do better, but IR35 and tax changes reduced advantages.
  • Similar complaints from Canada: non‑FAANG dev/SDET roles can be paid far below six figures.

Reasons Engineers Leave: Money vs Management

  • Many say they start looking due to bad management, poor environment, or stagnant work; higher pay is a side‑effect of switching.
  • Others are explicit: repeated job changes for large raises (30–100%+) are the primary path to market pay and financial independence.
  • Some accept lower pay for academia, non‑profits, or good WFH conditions, prioritizing autonomy and low stress.

Retention, Counteroffers, and Pay Inertia

  • Common pattern: long‑tenured engineers paid below market while new hires in same level earn more; seen at big tech and elsewhere.
  • Internal raises are constrained by bands, budgets, and “fairness” across peers; large adjustments are politically hard.
  • Counteroffers are rare or small; once someone resigns they’ve often mentally moved on. Some refuse counteroffers as proof of prior underpayment.
  • RSUs and staggered stock grants act as “golden handcuffs,” especially in US big tech; people often leave at or after the 4‑year cliff.

Institutional Knowledge vs “Fungible” Engineers

  • Several engineers argue that deep system knowledge and business context are irreplaceable or take many years to rebuild; mass layoffs or attrition often lead to rewrites or degraded velocity.
  • Others note companies behave as if most devs are interchangeable and prefer hiring “potential 10x” newcomers over paying proven staff more.

Comp Structures, Transparency, and Impact Metrics

  • Some companies experiment with public salary formulas; people like the fairness for cash, but equity remains opaque and large part of TC.
  • Measuring “impact” is seen as inherently fuzzy, especially for senior engineers whose value is indirect (design, risk reduction, mentoring). Metrics tied to pay can be gamed.

Culture, Perks, and Signals

  • Non‑pay signals (free snacks, soda, small perks) matter: removal is often read as “culture is changing” or “cuts are coming,” and prompts people to leave.
  • Perceived unfairness—pay gaps, broken promises after mergers, bonuses cut while acquisitions continue—drives attrition even when salaries are nominally okay.

Management Mindset and Cost‑Center Framing

  • Many commenters say software in non‑product companies is treated as a cost center; managers and HR optimize averages and budgets, not retention of specific people.
  • Contrast with law firms: partners (practitioners) know exactly who brings in revenue and will aggressively counteroffer; tech leadership often lacks this practitioner focus.

Market Cycles and Strategy

  • The original post is from 2021, when “the market is hot”; multiple commenters stress that 2024 is much colder, making big pay jumps via hopping less reliable.
  • Still, the consensus is that switching every few years remains the main way to escape salary stagnation; staying long term usually means falling behind market rates.