Then you go try to find a job where you're actually only expected to work 40 hours per week, and everyone goes home by 5:00. But then, you find that the salary offer is at least 20% lower than the place that worked you 50+ hours/week.
High salaries come with high expectations. If you're getting paid a lot, expect to work a lot, too. If a good work/life balance were free, everyone would have it. It has a definite opportunity cost.
All 11 years of my work experience thus far is in the defense industry, so keep that in mind as I state the following.
I have yet to see an instance where salary scaled 1:1 with time put in. Where I used to work, the people that busted their asses for 50+ hours week in and week out, showing they were "team players", might get a 6% raise at review time instead of a 2% raise for a strict 8-5 engineer. They might also get a few thousand in extra bonuses, if their department has funding for them. After a while they might get to the point where they were making enough extra to justify the effort, but "a while" could be 10 years or more.
Note that I am specifically avoiding any discussion of non-monetary considerations and that my analysis sounds rather mercenary. I am specifically trying to address the issue of engineers making more money for being expected to put in more effort. Discussion of the non-monetary considerations could be a lengthy tangent on its own.
Suppose you start at $80k and work at the company for 5 years. After five years the strict 8-5 eng in your example is making $87k--barely keeping up with inflation--and the hard worker is making $101k. The total compensation difference over 5 years is $35k.
Unfortunately, real world compensation schemes often don't even work out as well as your example...
Indeed, a 4% difference compounds quite well. Unfortunately many people imagine they might get a 3% or 4% net bump, when they are really going to get 1% extra.
Working an extra 20% so that you are paid appropriately larger salary 19 years down the line is not a terrible choice if you really need the money. It is also possible you will earn true grade improvement along the way and get a one time additional bump of 5% for your effort.
Of course, if we reverse the equation, things might look differently. I have about 3 potential free hour per workday and 12 free hours per weekend day, for a net 39 hours of "my own time", earned by showing up to work. Giving 10 hours of those to the employer is a "pay cut" of 25%.
Except there are plenty of places that expect 50+ hours/week and pay 20% less than market at least. Likewise, I'm sure there are jobs that pay market or better and get close to 40 hour weeks.
The market doesn't work as efficiently as you imagine it does, nor could it since companies do all they can to hide what salaries actually are (i.e. imagine trying to buy fruit when nothing had prices, no one would tell you what they paid, and you had to negotiate in private for what they cost you).
Agreed, employers often take advantage of market illegibility as it allows them to underpay people who don't know what their market value is. The employment market has very imperfect information, and the information asymmetry is usually in the employer's favor.
In order to get the best of both worlds (reasonable hours and high pay) as an employee, you not only need to be a top-notch employee, but you also need to find a top-notch company to work for. Middling employers will either underpay you or overwork you, and the worst employers will do both.
I don't have a problem with that, as long as the 50h/week is reflected in the contract and stated during the wage negotiation. The problem is that often(?) it's not, so you can't know your true wage until you've changed the employer and there's no turning back.
High salaries come with high expectations. If you're getting paid a lot, expect to work a lot, too. If a good work/life balance were free, everyone would have it. It has a definite opportunity cost.