I can’t go anywhere in the Boston startup scene without someone asking if I know a good developer (and not being out quite as much lately given our relaunch, this has seeped directly into my inbox). Earlier this week HubSpot let me know that my observation around this desire for developers in Boston is very real. The company announced it is offering $10k to people who refer great developers and $4k to the devs themselves, letting other Boston companies know that the battle for top developer talent in Boston is on.
Today, Seattle-based PayScale put some numbers behind startup IT salaries and hotspots across the nation so we can really see how Boston compares.
Overall Hotspot Ranking – Boston Stands Tall
According to the report, and as no surprise, San Francisco tops the list. The city employs well over twice the national average in terms of number of tech startup employees. Not only does it employ a considerable amount more, it offers pay over a third higher than the national average.
On to Boston, where we can vouch for the incredible startup ecosystem and resources. As far as this startup salary hotspots report goes, we land at #5 on the list out of the twelve cities considered.
As you will note below, some cities experience higher than average employment ratios, but lower than average median pay ratios (e.g., Austin and Salt Lake City). For Boston it is almost the opposite: we have a good employment ratio, and also pay relatively well — albeit, we are no San Francisco. Check out the full data below. (If interested in how PayScale avoids population bias and their methodology behind ratios, scroll to the very bottom of the article.)
Salary Cuts: From Big Company to Startup – Boston Competes Well
According to PayScale, the average pay cut for working in tech at a startup as compared to a large company is 18 percent. Again, this is an average across cities, with cuts ranging from 22 percent (Seattle) to an 8 percent (Salt Lake City). This, of course, does not take into consideration stock options and equity, which for a very small number of startups can mean big payouts down the road.
Boston lands #2 behind Salt Lake City, with a median IT startup salary of $72,700 — only a 10 percent cut from the $81,100 median salary at large companies here in the area.
If you want to build a successful startup, you need the best talent. And more so than perhaps ever before, you’re going to have to pay for it. In Boston, despite our big ideas, there seems to be a drought of talent on the developer side. If you are looking to recruit it, don’t expect it to come cheap — especially with HubSpot’s latest offer!
A big thank you to PayScale for providing and compiling this fascinating data. The company is a leading provider of compensation data (providing it in real time to publishers like the WSJ, Forbes, CNN and others), thanks to their patent-pending indexing technology.
______________________________________________________________
A couple of important notes about the data: (1) salaries are median not average; (2) salaries do not take into consideration cost of living; (3) median salaries are pulled only from employees with less than 10 years of experience; (4) a startup is defined as those with less than 75 employees.
As far as ratio methodology and population bias, I will quote directly from their report: “To avoid population bias, for each metro PayScale finds the ratio of IT workers at a startup IT firm to all workers and standardizes the ratio by the national proportion of IT workers at startup IT firms. A ratio greater than one implies the metro has more startup IT positions available than average, while a ratio less than one implies the metro has less startup IT positions available than average. For this study, Median Pay Ratio means the ratio of the median pay for IT workers at startup firms by metro to the national median pay for IT workers at startup firms ($64,300). The higher the ratio for a metro, the higher its median IT startup pay, relative to the national median.”
