While the differences skill levels are true, I don't think "you are just not as good as Steve" is the usual case for salary differences. Salaries tend to stay

While the differences skill levels are true, I don't think "you are just not as good as Steve" is the usual case for salary differences. Salaries tend to stay mostly fixed while in employment at a single company, raises over 10% are rare. As a result, salary is much more related to your negotiation and self-marketing skills at the time of the interview - when the new employer has very little hard evidence of your developer skills - than any objective measure. You might in fact be much better than Steve, but may have changed jobs less often, or have worked on less marketable past projects. For example, I've never heard of anyone negotiating upwards based on relative skills, as in "Bob is making X, I'm 3 times better, therefore my salary should be 3X".