Cost of living changes and salary changes will never match. It is a never ending debate because of the disconnected way in which the cost of a basket of goods and services change. In India, in the last 20 years, petrol price has risen only 3x but gold has risen 12x which people compare it to a standard way of thinking about inflation but it is not, as it is also a commodity backed by demand and supply.

By comparing the absolute number cost in the last 20 years, vehicles cost about 2x, petrol 3x, clothing 3x-5x, food 5x min in staple raw material cost, almost 10x in green groceries, rental and property 5-10x, phone bills 0.7x, feature phones 0.3x, in general electronics & communication – more features and lesser cost. For a basic living it is generally considered that we have good food, clothing and shelter. In that sense the cost of living has gone up around 5x-7x for most of us. There are some services like hospital and education which have increased the spectrum on both ends thereby making it difficult to assess but in general we can say that also falls in the 5x-7x bucket. We spend a significant amount of money on the basic expenses so 5x-7x change looks a good ballpark.

The inflation data from across the world suggests that India went through an inflation of around 4x in the last 20 years. This data takes a wide basket of goods and services not just the basic few we have looked at. With that in mind if I compare to the wages offered 20 years ago. The big IT companies in India provided an average entry level salary of 2.1 lakhs per annum in the year 2004. This is for a person just out of college without any experience. The range was something between 1.5 to 5 lakhs per annum. If this was the case in 2004, as per the economists figures in 2024 should be around 6 to 20 lakhs per annum for fresher programmers. If we use our 5x-7x yardstick then the number jumps up a great deal. In reality salary numbers do not keep up.

Why do not salaries keep up with the cost of living? The answer is demand and supply. In the early 2000s an entire state of Tamilnadu produced programmers who have good comprehension and coding skills to just fill up a small office building year on year (In 1000s to 10,000s). Initially companies were so choosy that it was difficult to appear even for an interview if you are not from a top tier college, slowly they moved to lower tier colleges and by the end of 2000s massive walkins were encouraged to hire talent. This trend disappeared when the supply caught up for freshers leaving the salaries stagnated as there were more freshers than available jobs.

It applies in other fields as well, my neighbour who was owning and driving a taxi which was semi luxury 20 years ago earned around 20,000 rupees a month in profit. The cabs and drivers supply hit more than the demand that now the same person will barely make 1.5x to 2x of that money. The only way for us to keep be on the happier side of the cost of living is to create a demand for our skills. A lot of freshers do the mistake of early specialisation, choosing a well paying tech job in a narrow field which works in the immediate future but locks them up forever in a stagnant skill set.

I keep repeating this statement – software development is about communication of different systems built by different teams. The more things the software does, the more overhead it has, to deal with people and process. For us to get a hang of what is going on in the overall landscape, it is possible only if we have explored the lengths and breadths of technology and tools. It is not necessary to be an expert in each and every aspect, but should understand them in first principles. A developer who spent their early years working in UI, backend, infrastructure, mobile development, data engineering and using different programming languages like Javascript, java, python will have a thorough understanding of the tech landscape. The same developer when working on legacy projects, green field development, brown field development and maintenance will gain enough experience on people, process and engineering in the long run to become a VP of engineering compared to someone who specialised very early in a tech because that was hot.

With AI coding assistants growing in capabilities, there is now even more demand for generalists who can grok and handle a lot of things in the length and breadth. Avoid the temptation of now and plan for the long run, a career is not over in 10 years. Flexibility in the early years and learning compounds to a great growth in the long run.