If tech salaries were risk premia, you would expect the expected value (weighted average over all foreseeable futures) of compensation packages at startups to be higher than those at established tech giants. This might be true, but it doesn't seem obvious: there are often comments on HN doubting the claims of high packages at tech giants, suggesting the commenters aren't getting paid more at their more risky (p(fired | laid off | shutdown)) jobs.
Software engineering salaries are high because there's competition for the 'best' software engineers. In a competitive hiring market, the absolute upper cap on compensation is the marginal contribution of an additional engineer, less some percentage to account for uncertainties. That marginal contribution is high at the largest tech companies, so salaries are high. Other companies can either pay high, too or, if they can't use a software engineer as efficiently (e.g. because they don't get as much leverage from software, or if their engineering is poorly managed), they won't be willing to pay the market rate.
If tech salaries were risk premia, you would expect the expected value (weighted average over all foreseeable futures) of compensation packages at startups to be higher than those at established tech giants. This might be true, but it doesn't seem obvious: there are often comments on HN doubting the claims of high packages at tech giants, suggesting the commenters aren't getting paid more at their more risky (p(fired | laid off | shutdown)) jobs.
Software engineering salaries are high because there's competition for the 'best' software engineers. In a competitive hiring market, the absolute upper cap on compensation is the marginal contribution of an additional engineer, less some percentage to account for uncertainties. That marginal contribution is high at the largest tech companies, so salaries are high. Other companies can either pay high, too or, if they can't use a software engineer as efficiently (e.g. because they don't get as much leverage from software, or if their engineering is poorly managed), they won't be willing to pay the market rate.