Why it’s better to be a developer at a tech startup if you can’t be its founder

This is a contributor post by Carrie M. King from Jobspotting.

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There’s an international understanding that people who work for startups don’t earn that much at the start, but when the company pulls a Google and goes global, they’ll be there with the founders making it rain.

But very few startups make it out of the first five years, and we all have to pay the bills in the meantime. So what do startup employees actually earn? Up till now, there has been very little conclusive data that could answer that question.

Today, Berlin startup Jobspotting released The Berlin Startup Salary Report, based on survey data which questioned almost 3,500 employees about what they were taking home in their pay packets.

The idea behind the study was to increase salary transparency in the recruitment market, allowing people to benchmark their earnings against their peers, and enabling job seekers to cite concrete data when negotiating for the big bucks.

So if you’re interested in working in a startup in Berlin – or elsewhere – read on.

Who’s bringing home the Berlin bacon?

People who move to Berlin are often sold the idea that they don’t really need to earn much because the city is so cheap, however, Berlin rents aren’t as famously low as they used to be. And while the cost of living is still lower than most metropoles of its size, it’s not the pittance that’s often touted.

So what kind of job do you need to have in a Berlin startup to earn a decent salary?

Perhaps somewhat predictably, the highest salaries in Berlin startups are going into the pockets of managers and software developers.

Devs start at the top of the financial food-chain, and stay there throughout their careers, only to be overtaken by management at the highest experience levels. Designers experience the most dramatic upswing in salary, starting out among the lowest-earners, with salaries rising swiftly as they gain experience.

More generally, the survey found that entry-level employees reported median earnings of €2,337 ($2,670), while those with three to five years of experience are taking home a monthly median of €3,080 ($3,515). Predictably, the higher the experience level, the higher the median salary reported. Those with six to ten years of experience reported median earnings of €3,845 ($4,390) while more than 10 years of experience yields a median of €4,603 ($5,250).

While there is a clear increase in salaries as experience levels rise, it’s perhaps less than people might have imagined. With startups of course, there’s always the potential that more experienced employees are being remunerated through ESOP (Employee Stock Ownership Plans) etc.

The worst prospects it seems are in sales where entry-level median salaries are €1,950 ($2,225), only rising to a median of €2,500 ($2,850) with more than 10 years of experience. However, this doesn’t take into account additional financial rewards like commissions or bonuses.

Marketing is a step up from sales financially, but not a big one.

Entry-level marketing salaries come in at €2,092 ($2,390), only rising to €3,300 ($3,760) with 10 or more years of experience. This is worth keeping in mind for sales and marketing jobs that sound amazing, but don’t yield that much financially.

Don’t forget, these positions are being sold to you by pros, but may not be all they seem to be. Be careful of the spin!

Interns don’t earn that much anywhere – sorry guys! – and that’s not any different in Berlin.

According to the survey’s findings, interns earn a monthly median of just €660 ($750), and this is a lot more than it used to be! In January 2015,

Germany introduced a mandatory minimum wage for the first time in its history which obliged companies to pay all employees including interns an hourly minimum of €8.50 ($9.70). Before then, companies weren’t required to pay interns at all.

Potential beats paper

Perhaps one of the most surprising findings in the survey is that university dropouts – six percent of respondents – earn more than those with master’s degrees. Ph.D holders do pip them to the post, but not by that much.

Median salaries for dropouts are €3,450 ($3,940), while university graduates earn a median of €3,000. Ph.D holders – two and a half percent of respondents – reported median earnings of €3,750 ($4,280).

What does this say about startup hiring processes?

Dropouts clearly aren’t cheaper hires than university graduates, so what, as they say, is the big idea? You could argue perhaps, that in startups talent, hard work and ideas trump on-paper qualifications, that potential is more valuable that experience.

It’s also a possibility that startups are leaner by nature, which allows them to skip all the usual red tape and internal politics that big, lumbering institutions have to face.

To earn more, be a dude

Startups have a reputation for being progressive, open-minded and egalitarian. You’d be forgiven for thinking that this might be reflected in what they pay their employees.

Well, I’m sorry to report, you’d be wrong.

Men are earning more than women in Berlin startups. A lot more. The median salary for male respondents was €3,333 ($3,800), while female respondents reported a median salary of €2,500 ($2,850).

According to the report, “the salaries of female respondents are concentrated in a much smaller range (25th percentile = €1,800, 75th percentile = €3,100) than those of the male respondents (25th percentile = €2,400, 75th percentile = €4,250). The highest earners of the female respondents earned only slightly more than the median of male earners”.

The gender pay gap average across the EU is 16.4 percent. In Germany, the average is 22.4 percent. According to the survey, in Berlin startups the gap is almost 25 percent.

It seems the gender pay gap is sadly endemic to the working world, regardless of how progressive the society or the employer. It begins at entry level, and only expands as employees get older or gain more experience.

You could attribute the widening of the gap between the ages 31 and 40 to the fact that that is the time at which most women will start their families, but you can see from the graph that the inequalities start far before that point.

Of course, most employers will pay their employees the minimum they can manage, and it has been well-documented that women tend to be less assertive in salary negotiations than their male counterparts.

Perhaps most surprisingly, the survey shows that there are large pay gaps across all job types that people reported, from marketing to software development.

What does all this mean for wannabe startup employees?

Those who are interested can check out the full report.

Median salaries before tax are generally comparable to many other startup hubs, meaning that the city is perhaps a more appealing destination for those who want to work in a startup and still maintain a high quality of life.

However, there are also some obvious drawbacks – with low prospects for financial growth if you don’t work in areas like software development, management, or design.

Women, too, might consider the city less rewarding in terms of earning prospects, but now know that they can negotiate more assertively for remuneration equal to their abilities.

Berlin is likely to remain a tempting destination for young digital workers drawn to the techno beat of the city’s pulse. But maybe now when the salary conversation comes up, they’ll know exactly what they can ask for.

Image credit: Shutterstock