Whether project managers get higher salaries than programmers and business analysts, at all exist as a class, depends squarely on the software world you live in.
A simple answer to this question would be “because in our societies, we still think the salary is bound to the position in the hierarchy.” But this answer, whilst reflecting the fact that people are paid based on their perceived value, doesn’t explain why PM and BA are on top of the hierarchy in many software organisations. Another question, why does the management go for this hierarchy in the first place as a structure of choice for software project teams? These are the two questions that seems to be really worthy asking.
Organization Types
Broadly speaking there are two categories of software making organisations. I will call them ‘Widget Factories’ and 'Film Crews’.
'Widget Factories’ are born out of management school of thought revolving around motivation Theory X proposed by McGregor: rank employees are lazy and require constant control and supervision, jobs are held in the name of a pay check, managers are always able to do their subordinates’ jobs to the higher or, at least, same standard. This thinking lands to a natural idea that the entire team can easily be replaced with and represented by the manager alone. With this said everyone else on the team is either easily replaceable, or there just to enhance the manager’s ability to complete tasks. Hence the hierarchy as the structure for the team which provides rather horizontal job roles.
'Widget Factory’ management operates on the assumption that software can be manufactured out of a specification prepared by a business analyst through a clearly defined process run under the close supervision of a project manager. The manufacturing is taken care of by staffing the project with enough qualified yet interchangeable programming and testing resources. Work is driven by a prearranged budget based on the initial business case prepared by PM and BA.
Management that runs a 'Widget Factory’ is easy to spot just by paying attention to the way these people talk. They are likely to be on about resources (including when referring to team members), processes, operating efficiency, uniformity, repeatability, strict control over use of resources, clear-cut job roles and defined process inputs and outputs. They’d casually mention the actual factory metaphor when trying to convey the image of the ideal software development operation as they see it.
Then there are 'Film Crews’. They are based on the notion that people are intelligent, self-motivated, work really hard and enjoy their jobs as much as kids enjoy playing. Film Crews recognize that due to specialization individual contributor abilities may by far surpass the abilities of people organizing, coordinating and directing the work. Since the manager can no longer substitute for everyone, the hierarchical structure just doesn’t work that well. The people in the team have to cooperate within a much flatter and complex formation to get things done. Job roles themselves tend to be much more vertical - start to finish - and involve a broader variety of skills. This management thinking is underpinned by McGregor’s Theory Y.
A director of a 'Film Crew’ knows that her vision for a piece of software can only come true should she be able to assemble a great crew, fascinate the imaginations and help the team to gel and work together. Her role is to inspire, guard the vision, provide direction and focus the efforts. Every single person matters because the “director” believes that quality software results from a combination of worldviews and abilities of all participants, which results in a unique way the group carries out the work together. Everyone recognizes from the onset, the importance of getting the stars to join the crew – star performers increase every chance for success. Vision drives budget and attracts funding.
Compensation
When it comes to compensation 'Widget Factories’ deem that the most value is derived from the work done by the project manager and the business analyst who reside on the top of the hierarchy. Due to this viewpoint, the project manager and the business analyst have to be compensated accordingly, the rest of the team doesn’t matter that much as long as they’ve got the right qualifications to convert requirements into working code. PM and BA work hard to maintain their position on top of the pack by restricting free access to the sources of project information to the rest of the team. Without formal access to the primary info sources the team struggles to make any value judgments or come up with good solutions, programmers are relegated to taking orders from above and working on the problem as defined by PM and BA. This situation further reinforces the 'Widget Factory’ notion that programmers are akin to factory shop floor workers only capable of mechanically carrying out though technically complicated, but nonetheless standard tasks.
In a stark contrast 'Film Crew’ acts as a more egalitarian formation; members are given unrestricted access to primary information, encouraged to form value judgments and are free to select a course of actions to fulfill and contribute to the vision. Leadership structure is based on ability rather than a specific role within the team. Compensation reflects how desirable getting a specific person to take part in the project. Its often tied to the perception of how much more valuable the end result will become if that person can be convinced to devote their energy to creating that piece of software. In this environment the role of a project manager becomes less prominent as he is unlikely to be the creative leader; the role comes down mostly to administrative support and external relations. Business analyst’s duties are partly replaced by the role of visionary (I called her earlier “a director”) and partly absorbed by other team members.
Now, it won’t come as a surprise that most in-house software development teams and some consultancies are run as 'Widget Factories’ relying on a process to produce consistently boring software; it is these environments where project managers and business analysts are routinely paid more than programmers based on the assumption that they bring the most value with the environment structured accordingly, making it difficult for programmers to prove the management wrong. This can result in the degradation of software quality and the increase in expenses due to the technical debt accumulated from wrong technical decisions and viewpoints.
Successful software companies tend to adopt 'Film Crew’ viewpoint, any other philosophy would hinder their ability to attract great people that they rely on so much to produce great and lasting software. It’s unlikely you’d ever see a business analyst role in that setting and project managers are less prominent. The PM and BA routinely get paid less than great programmers.