Can Engineers Make $500k in a Technical Role?

Can engineers make $500k? Absolutely, but it’s uncommon. Also, the $500k is a total compensation package and not a base salary.

I’m going to go over engineering positions that pay this illustrious $500,000 and beyond. The keyword is “engineer,” NOT business founders or managers.

To point out, engineers in this pay grade often lead other engineers. Also, they directly work with higher management. Their core work is still complex engineering though.

Also to reiterate, the $500,000 is almost never a base salary. It includes a mix of the following:

• Restricted Stock Units (RSUs)
• Healthcare, dental, and vision
• Retirement (401k)
• Bonuses
• Overtime

Our stage is now set. I’m going to go over the following employment opportunities that offer these positions:

• Government
• FAANG / high tech
• Consulting
• Fintech

Important Note: my main focus is on employment in the state of California. That’s where I currently live and I’m most familiar with. 

Surprising to some, $500k in California doesn’t stretch as far as it would in other corners of the globe. The typical home costs $1.15 million in San Jose according to Zillow. This is a very small and run-down home too.  

Government engineering positions

High paying government engineering positions are often for traditional engineering fields. This includes civil, structural, power, and so on.

These engineers maintain city infrastructures. Think of a water treatment plant or the maintenance of roads.

Below is a list of several total compensation packages of California state engineers. The data is from Transparent California.

To point out, these aren’t pure engineering positions. They have some managerial components too. It’s unavoidable in the state at such a high pay grade.

Also, the “other pay” column includes stipends, car allowances, bonus pay, and so on.

Clearly, you can make boatloads of money as a state worker if you play your cards right. But it’s the exception, not the rule. Also, these high-paid engineers typically have 30 plus years of experience.

Does this make you interested in government jobs? Check out what government jobs are like for engineers.

High tech engineering positions

When you think of high-paying tech salaries, you first think of FAANG companies.

The acronym FAANG refers to the following technology companies:

• Facebook
• Apple
• Amazon
• Netflix
• Google

These companies can and do pay their engineers A LOT of money. They have exceptionally high margins as internet-based companies. This makes them highly profitable.

So they can afford to throw extra money at rockstar engineers. All without putting a dent in their bank accounts.

The below table lists top compensation packages from FAANG companies. Levels.fyi verified the figures through reviewing W2s, offer letters, and personal identities.

Just keep in mind these salaries are outliers. They’re a subset of Silicon Valley companies.

In other words, these salaries go to 10X engineers. To make this level of moola, you need to be slightly more than brilliant.

To put it another way, these engineers turn impossibles into possibles. When you generate $10 million for your company, a company will bend over backwards to pay you $1 million-plus.

What’s more, employee wealth isn’t only shared through FAANG companies. Let’s take a look at some other companies that you may recognize. The total compensation packages are still monstrous.

Important Note: the bulk of these compensation packages are RSUs. FAANG stocks historically have been valuable. 

But for companies like Facebook and Google, their stock can tank with a cooling ad market or strong privacy regulations. Thus, compensations can quickly shrink from $1,000,000 to $300k. 

Also, stock options vest over time in blocks. For example, let’s say you’re granted 1000 shares, and your options vest 25% per year over four years.

So, within the first year of the stock issuing date, you can buy 250 shares (25%). While noting, a four-year vesting schedule is very common. 

Tech outliers

Beyond typical FAANG software engineers, there are other crazy outliers.

In Silicon Valley, experts in Artificial Intelligence (AI) demand absurd salaries as well. These engineers can make an excess of $1 million.

It’s because the supply of these engineers with their level of expertise in AI is extremely low.

Plus, these engineers bring more to the table than just their skills. On hiring superstar engineers, Mr. Nicholson from the startup Skymind said,

“When you hire a star, you are not just hiring a star. You are hiring everyone they attract. And you are paying for all the publicity they will attract.”

When you’re this good and influential, companies will do anything to retain you. Because getting paid more isn’t for doing more. It’s for doing work that has greater impact.

Important Note: the compensation packages can grow exponentially for unicorn startups. Many engineers get in early with a company and hope for a successful IPO.

According to a Facebook engineer, he had the right to sell around 325,000 shares post-IPO. Figuring a $40 share price at the time, that’d yield $13 million. 

Consulting agency engineers in specialized niches

If you find yourself in a high in demand yet low supply consulting agency niche, you can rake in money.

The key is having a rare sought-after specialty skill. Your skill may be with a new sexy technology or just an advanced skill few engineers have.

Like in power engineering, many people can do low voltage commercial lighting design. But few power engineers can do high-voltage substation design from the ground up.

I’ve written an article on the construction staging for the retrofit of an existing high-voltage substation. Check it out, to get an idea for a deeply woven niche in power engineering.

Profits aren’t insanely high though. Because you don’t find many substation retrofit projects sitting around. Also, the supply of power engineers who do this work isn’t super low.

The brilliant Principal Engineer

In coastal California cities, I’ve seen the billing rates of some Principal Engineers. The highest billing rate being $655/hour!

A lot of the time, these engineers lead the way on mega and cutting-edge engineering projects. Projects you read about and see on TV.

This $655/hour Principal Engineer has a very specialized skill in renewable energy. He also has mountains of hands-on experience. Then throw in the small firm he worked for was wildly busy.

Now, based on a 40-hour workweek and 52 weeks in a year, a full-time employee will work 2,080 hours a year.

Doing simple math, this calculates to 2,080 hours x $655 = $1,362,400.

In consulting, an engineer typically pockets anywhere from 33% to 50% of their billing rate. So, this engineer would net the following from his firm $449,592 to $681,200.

If you’re a one-person show engineer though, you could pocket a much larger percentage of the $1,289,000. Starting your own consulting engineering firm is an option, but easier said than done.

Let’s have some fun though, and crunch some numbers for a one-person show engineer.

Say you’re a workaholic and your workload is swelling. So you work 80 hours per week like you’re possessed while kicking ass.

That’ll gross you $1,362,400 x 2 = $2,724,800!

Financial technology engineering positions

Financial technology, Fintech, is new technology and innovation in the finance sector.

Some fintech companies are banks, but not all banks are Fintechs. Mainly, fintech includes hedge funds, HFT firms, and prop shops. Overlaps do exist in the work these firms do though.

Now, these firms typically employ quants and algorithm trading focused software engineers.

Below are total compensation packages from Levels.fyi for Citadel.

What’s more, I’ve heard about some highly skilled quants who pull in $1 million-plus. But unfortunately, I don’t have a data source to hang my hat on.

So let me piece together a case scenario myself.

Given market liquidity and leverage, a single trading tactic may have a cap of $500 million.

In our example, we’ll use Tiger Global’s exceptional return rate of 22.4% in a year. Thus, $500,000,000 x 0.224 = $112,000,000 profit for a single trading tactic.

Hedge funds will then take a percentage cut of the profits as their fee. Industry-standard is 20%.

So, $112,000,000 x 0.20 = $22,400,000. Also, there’s also a lot of overhead costs like data and infrastructure. But you can see how a superstar quant in this case scenario can easily make over $1 million.

“Can Engineers Make $500k?” wrap up

The financial success outlined in this article is only a small handful of the engineering workforce. These engineers have a combination of the following attributes:

• Insane drive
• Many years of valuable experience
• A deeply specialized and sharpened skillset

BUT, also, they have the opportunity to work on important projects to flex their skills. So, there’s definitely a good sprinkle of luck involved too.

I compare all this to athletes in professional sports.

How many 6’8″ people exist who have a 40″ vertical with lightning-quick speed? Very very few. So these athletes like Lebron James demand tens of millions of dollars in salary.

So, engineers can certainly make $500,000 plus by strategizing and leveling up. Just don’t settle when you still have juice in the tank to level yourself up.

How many engineers do you know who make $500k annually? What do you consider a good engineering salary to be in your zip code?

Engineer Calcs

Koosha started Engineer Calcs in 2020 to help people better understand the engineering and construction industry, and to discuss various science and engineering-related topics to make people think. He has been working in the engineering and tech industry in California for over 15 years now and is a licensed professional electrical engineer, and also has various entrepreneurial pursuits.

Koosha has an extensive background in the design and specification of electrical systems with areas of expertise including power generation, transmission, distribution, instrumentation and controls, and water distribution and pumping as well as alternative energy (wind, solar, geothermal, and storage).

Koosha is most interested in engineering innovations, the cosmos, our history and future, sports, and fitness.