This article is about a thorny issue in tech — compensation. Websites like Blind, Paysa and levels.fyi have revealed numerous issues with how people in tech are paid, with the gender pay gap being the most well known. Employers are cagey about disclosing their reasons behind deciding how much employees get paid, and they encourage their workers to treat salary as a taboo subject that mustn’t be broached. This behavior helps the employers’ bottom line low by keeping wages depressed. It also leads to pay inequity. As new graduates entering the workforce, compensation has (unfortunately) become an important issue in our lives.
College was expensive, and most of us took out student loans to pay for our education. Now, as we are reviewing job offers and deciding where to begin our careers, we’ve begun to wonder whether or not the cost of our education was worth it when faced with the prospect of having to pay these loans off. This leads to an important question: Does the college you go to affect how much money you can make in the industry?
Folks in other fields have found something they call the “Ivy League Pay Gap” — where Ivy League graduates’ median salaries 10 years after starting school is over $36,000 more than their non-Ivy League counterparts. We wanted to find out whether something like this exists specifically in the tech industry. Levels.fyi and Glassdoor have lots of information on compensation based on experience in tech, but nothing connects one’s university background to how much employers decide to pay.
The question of connecting college to compensation is critical now because of the rising cost of tuition. Tuition and fees at public four-year universities has increased 35 percent over the last 10 years, and has risen 26 percent in private four-year schools. Every prospective college student must consider difficult questions about how they are going to pay for their education. And the problem is worse in our field of computer science. Many schools are charging “differential tuition” — increased cost of education for those pursuing technical degrees — with the assumption that a career in technology pays more so it will be easier to handle a greater load of debt.
To this end, we set up an anonymous survey to answer this important question. We asked employees of tech companies about their alma mater, their total compensation for 2019, the years of experience they have on the job and their current location. We then posted our survey on several tech industry-focused Reddit and Facebook groups. This resulted in a total of 60 responses that represented 25 schools, from “top-ranked” (and often the most expensive) schools like MIT, to large state schools such as the University of Michigan and University of Maryland, to smaller lesser known schools including Truman State University. Critically, we found that internships and experience matter more than the university you go to. Years of experience mattered the most, with salaries increasing about $25,000-30,000 per year depending on where you worked.
Our methodology for arriving at this conclusion was as follows: We first eliminated all the data points from people that were not working in software. This left a total of 50 responses. We then used data to apply a cost-of-living adjustment to the salary data based on someone’s location. The place you live has a high impact on the amount employers are willing to pay you, so we can’t compare the amount of money you earn without taking into account how much it costs to live where you work. After doing this we found that the median salary of folks that went to name-brand private schools, like an Ivy, was only $8,000 higher than those with cheaper degrees (as compared to the $36,000 dollar “Ivy League Pay Gap”). As you can see in the graph below, there are some minor differences in the distributions of earnings between private school and public school grads. We used a “t-test” to determine whether these different distributions were statistically significant. This statistical tool measures the likelihood that differences observed between two sets of data are the result of an external force or merely random chance. The t-test told us that there was no significant difference between the two distributions (the p-value that they differ is 0.17), which indicates a good sort of meritocracy that isn’t present in other lines of work.
There are some limitations to the data set we collected. Like many other surveys, there is certainly going to be a self-report bias, and our sample size also has to be kept in mind when drawing any conclusions. Despite these issues, we think our survey begins to indicate that the college you go to matters less than people think. At least in technology, there seems to be little to no correlation between the university you go to and your earning power. With this being said, the tech industry is by no means perfect. It suffers from widespread gender discrimination and underrepresentation of minority groups.
However, unlike the American job market as a whole, it looks like your alma mater is not a big deciding factor in the shape of your career. This has important implications not only for tech employees and college students but also for tech-interested high school students making the tough decision of picking the university they will attend. It may not be worth it to spend the extra money to attend expensive private schools when their salary outlook will be the same if they went to an often much cheaper public university. All in all, the public schools have it the best; they are both relatively inexpensive and yield the same return on investment as their more expensive private school counterparts.
David Wu and Diwakar Ganesan are Computer Science Graduates from Stanford University and can be reached at dwu937@gmail.com and diwakar.ganesan@gmail.com.