Another way to look at it: the absolute amount of money you save matters, especially if you're young. It's better to make a lot and save a lot. And I don't think it's too hard to save money with a $160K salary, unless you have kids.
That is, the salary to expenses ratio isn't the only thing to look at.
For example, if you save 10% of your money in SF and make $150K, that's $15K a year in savings. If you save 14% of your money in Austin and make $100K, that's $14K a year in savings.
Even though you went through 90% of your salary in SF and only 86% in Austin, living in SF is better, because you saved more money in absolute terms. You can move elsewhere and take advantage of that savings.
If you only care about money, the ideal strategy is probably to move to SF in your 20's, make a high salary, and then move out of SF. A lot of people these days don't have kids until their 30's. (Anecdotally that seems to be what a lot of people have done in the past decade -- move out of the Bay Area when they want to have kids.)
This also doesn't account for the fact that SF has more "outliers" and more choices. You might be pleasantly surprised by the kind of job you can get or the kind of money you can make in SF. In most cities (certainly not all), you probably won't be surprised. The job market is what it is.
(I'm assuming something about their methodology here, feel free to correct me if I'm wrong.)
Your numbers are just not in the right ballpark. The pay gap between SF and Austin is not as large as your figures, and the COLA gap is far larger.
I think an Austin engineer making the average $110k can save more even in absolute terms than the SF engineer making the average $134k.
The median rent for a SF 1BR is $3370, or $40,440/yr[0]. The median rent for an Austin 1BR is $1150, or only $13,800/yr[1]. Rent alone ($26,640) has already consumed the entire difference between the $134k and $110k salary.
Next, factor in local taxes. California has income tax; on $134k of single income, that's another $9,450. Texas has none. Federal taxes will also be higher for the nominally higher SF wage.
There are other COLA factors this simple analysis doesn't even consider. But Austin comes out far ahead on rent and income tax alone.
If the goal is saving money in your 20s, having a 1BR is kind of absurd. You can live in a multi-bedroom apartment/house in SF for much less than that.
Having a 1BR as a young, single professional with a six figure salary isn't totally absurd, even if you're trying to save some money. And costs in Austin scale down with lifestyle, too.
I'd say Austin is actually a pretty good place to be a software developer. Texas has several other big cities, including Houston, which have reasonable opportunities as well.
Really depends on your lifestyle, don't you think? Plenty of people are happy with a 1 bedroom if it lets them live in the heart of a city they love. Different people have different priorities.
Living conditions have a large impact on productivity and general mental wellbeing. For introverts, I think there's an argument to be made that splurging a bit on more space for yourself could lead to better performance in many areas of life. It's hard to put a dollar figure on that. For extroverts, this may be less true.
I feel like I should point out that in most of the country, including large cities, it's hard to even spend $2k/month on any apartment, let alone save that much by opting to have roommates.
I'd agree that having roommates can be made news for a strong introvert, but I don't think the amount of physical space you have is necessarily all that important. It's more whether you can have time to yourself.
> It's just one of the least productive things you can do if trying to save money.
... in SF.
In most other cities with many tech employers, NYC excepted, living with roommates instead of in a 1BR isn't going to save you $2k/mo. Median 1BR in Austin or Seattle is less than $2k/mo. Yes, housing is still your biggest cost, but it's so much cheaper than SF, and the taxes are lower than California. The marginal savings you can get by reducing your standard of living aren't as huge as in SF.
For the same price you could live in a nicer whole apartment, in most of america. I pay $1200/month for 1664 sqft in a nice townhome, with a garage, next to a park, as a software developer with plenty of opportunities and no I'm not going to tell you where I live or else you'll all move here lol.
It depends on where you live. In places with lower rents it seems more common for young professionals to live alone (most people I know live alone or only with a significant other)
Yeah it's possible that's true for those two cities at this particular time -- I haven't run the numbers. But you can apply the argument for Austin too.
If you're living in Iowa or Wyoming, Austin probably seems like it has a high cost of living. You could probably find an apartment for $300 or $400 a month in a lot of small towns. But it's probably better to move to Austin, make more, and save more, if you have a job offer.
I would say that if you are young and in tech, you should apply for jobs all over the country, including in SF. Don't worry about the cost of living. That's focusing on the downside rather than the upside.
But if you are older and have more expenses, and less variance in what your salary will be, then you might want to run the numbers, and not bother applying to some places.
FWIW I've lived in SF for 15 years and I've never paid close to $3370. I did pay $2600 once for huge place, and now I pay less than that. But even if I paid $3370 I would still save a ton of money. It's all relative.
One bedrooms are also the worst market, precisely because people are moving in and out a lot. I've known people with very nice 2 BR apartments in desirable areas splitting it at $1500 a piece. Although granted this was several years ago and the market may have changed.
I think it got insane in 2013-2014, hopefully it's a bit better now. There are also places to live outside the city that are less expensive.
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Also, two asymmetries to consider:
1) There's no hard upper limit on the amount you make, but there is a hard cap on how much you can save.
2) If you live in an expensive area like SF, you can move back to your hometown at any time. But the converse isn't true, because at a certain point the expenses will probably be intimidating.
> If you're living in Iowa or Wyoming, Austin probably seems like it has a high cost of living. You could probably find an apartment for $300 or $400 a month in a lot of small towns. But it's probably better to move to Austin, make more, and save more, if you have a job offer.
Yeah, but again, you'd have to run the numbers at this specific point in time. And I suspect Wyoming would not come out ahead (at this point in time), unlike Austin.
> Don't worry about the cost of living. That's focusing on the downside rather than the upside.
This is total nonsense. Anything you can save while young has the biggest impact on your future fortunes and ability to retire, or retire early. Compare job offers by net income — after taxes and after housing and utility expenses.
> FWIW I've lived in SF for 15 years and I've never paid close to $3370.
That is the median rent figure for 2017, not the prior 15 years. If you managed to find a rent-controlled apartment years ago, you may pay a below-market rate.
> 1) There's no hard upper limit on the amount you make, but there is a hard cap on how much you can save.
Can you explain what you mean by either of these clauses? Income will be limited by basic supply/demand economics of your skillset and ability to impress employers. Savings are a function of income and spending. Neither of these are set in stone.
> 2) If you live in an expensive area like SF, you can move back to your hometown at any time. But the converse isn't true, because at a certain point the expenses will probably be intimidating.
The expenses of SF are intimidating from the get-go! As a young college graduate with no savings, moving to SF is even riskier than for someone older with a modest emergency fund to cover gaps between jobs.
Anything you can save while young has the biggest impact on your future fortunes and ability to retire, or retire early
I think this is where we're not agreeing. My point is that focusing on the upside is more important than focusing on the downside. Making more allows you to save more.
I don't think retiring by cutting costs is a great goal, especially for someone with decades left to live.
But you may disagree and that's OK. I don't have any interest in convincing people to move to the Bay Area!
I think I'm one of the more pessimistic and conservative people in Silicon Valley, but still I believe in focusing on the upside, and I believe in a dynamic world where things that are true now won't be true in 5 years.
The decision-making process that I intuit from your posts seems like more of a static model of the world. For a young person, your skillset can and must change! You can learn things that will earn you more money!
> I think this is where we're not agreeing. My point is that focusing on the upside is more important than focusing on the downside. Making more allows you to save more.
I don't think focusing on income and ignoring costs is a good approach to saving money, or life. Both are important. We can agree that focusing only on cost and ignoring income is totally foolish.
> I don't think retiring by cutting costs is a great goal, especially for someone with decades left to live.
The alternative is working longer to save up a bigger nest egg that can support a higher level of spending. That trade-off between working longer and lowering costs is fully a personal choice. To be clear, I'm not taking a stance on which of those choices other people "should" make.
> The decision-making process that I intuit from your posts seems like more of a static model of the world.
I think you're reading in something that isn't there.
None of my engineering friends are paying over 2.4k for an apartment in sf. Most have roommates. I moved in with my gf last year in a studio w/ garage for $1900 (glen park). If someone is paying 3k+, I'm not sure who it is or why. Thats insane.
If you want a one bedroom apartment in SOMA or Mission you pretty much have to pay more than 3k. A lot of people are saving costs by staying in larger "mansions" and splitting the rent, but 3k+ is absolutely standard and I know many people paying that.
You can live in the Mission with a roommate or a few and save a lot of money. I have a bunch of friends splitting a nice Glen Park apartment for $1500 each and its right next to BART. I personally pay $1750 a month with a few roommates and I love my situation, and I’m also close to BART.
You have absolutely no right to complain about rent unless you’ve done.. literally anything but nothing to pay less than those absurd amounts. You don’t need to live in a luxury SOMA apartment to exist in SF.
I've heard this argument before and it's predicated on a set of assumptions about savings rate that may not hold true.
It's easy to come up with a plausible set of numbers where the absolute savings are better in Austin even allowing for it being a greater percentage of income.
Beyond that though, I would submit two other caveats:
1. If you were to become involuntarily unemployed in San Francisco for any length of time then you will find your burn rate is still the SF burn rate and not the Austin burn rate.
2. Spending your twenties in a Gold Rush town with the intent to move to some other more rooted town later means you don't put any roots (professional or otherwise) down in that other town. You may find yourself with no connections and no relevant experience when it's time to move back to Grand Rapids.
1. Short of an economic downturn (which would likely impact Austin as well), if you lose a job in SF, depending on your field that is not super concerning given the available jobs and steep competition. So yes you might have a higher burn rate, but presumably you have less risk in the form of more available jobs.
2. Roots are subjective and depending on your line of work may not be as important to have locally vs. distributed. That's just professionally speaking. Personally, not everyone needs that same kind of community connection.
These obviously vary based on quite a few factors, but I don't think it is really black and white.
> ...move out of the Bay Area when they want to have kids...
This is fascinating to me, because if demographers' prognostications are to be believed, then future growth economies (on the multiple-decades-scale) are heavily represented by new middle-class families, in Asia and Africa, and to a lesser extent the Middle East and South America. So not only is the Bay Area ecosystem doubling down on its geographic centrism into a non-growth geography, it is tripling down on a bet that a non-family-oriented HQ culture (where the majority of unicorn companies consider the majority of their staff "who matter" to be located) will innovate sufficiently to penetrate and hold family-oriented heavy-growth markets of the future.
By the way, I have first hand experience that raising kids in SF is quite good apart from some financial questions. There is a lot of community in places like playgrounds etc. More so than in some other places I have been. The average kid my kids meet is far kinder and more socially aware than what I grew up with, for example. So when people say SF is geared exclusively towards childless 20 somethings, don't believe them. Of course the financial picture continues to be challenging for many people, but many would be surprised at what a great place it can be for kids.
Are your kids in school yet? I am pro-San Francisco, and don't have kids. But my neighbors do, and told me about the school lottery.
While I understand the logic, it sounds awfully inconvenient. SF is already annoying to drive around, I can't imagine dropping off and picking up a kid to/from a random location in the city during rush hour. That seem like a good way to kill a lot of your day.
Yes, the lottery sucks and creates traffic problems. Even if you don't have kids, make note of days when there is no school, your work commute will be much easier on those.
Is this before/after taxes? The problem is if you live in SF vs Austin, the sales taxes are similar but California's income tax will take 10-15k off the top. After that, you have to think about cost of rent. I'm currently debating between moving to SF vs Austin and would end up spending ~30k a year for rent and utilities. For a similar, or slightly nicer, place in Austin, I'd spend ~12k. The difference there, ignoring cost of living of other things, is ~30k. Beyond that, (based on my anecdotal offers in both cities), the differences in salaries between the 2 cities are smaller than 50% (closer to 30% before tax, which seems to match the data in the article, if not still larger). By that point, you have approximately the same amount of money left over in either city.
Granted, in Austin, you'd probably need a car unless you live/work downtown or near the campus so there are trade-offs but I don't think it's as simple as directly comparing percentages.
Even after all this, I'm definitely considering moving to SF since I think it'd be better for my career in the long term but I'm not fooling myself about the money I'd be making. Seattle seems to be the sweet spot for that (no income tax, good tech, cheaper housing than SF).
Seattle has a sales tax, I think you mean no income tax is what we have in Washington state. But there's discussion of having a capital gains tax, so we can reduce the regressive sales taxes on poor folks. It's a scary time, better stay in SF :-)
What I was trying to get across is that Washington state doesn't have income tax or capital gains, we only have sales tax and home owners taxes. California has all of those, I believe.
No where in the article do they mention how they factor in cost of living into the comparison. As other commenters have pointed out, most studies naively make a linear adjustment; i.e. if cost of living is 2x you need 2x the salary. This makes no sense. Say your cost of living is 30k and your salary is 100k in one city. In a 2nd City your cost of living is 60k and 180k. A rational economic decision would be to live in City 2 since it maximizes your savings. The linear adjustment based on cost of living only make sense if a person is saving 0% of their salary.
The other issue is I don’t buy the 110k vs 130k difference in Austin. They are not considering total comp in which case the delta is way bigger.
Finally, Hired is mostly used by startups and low to medium paying employers. There is a huger salary difference at large tech firms between SF and other cities.
What this study is really saying is “if you want to work at medium size companies, don’t earn anything beyond a salary, and spend all of your salary San Francisco is not worth it”.
"Say your cost of living is 30k and your salary is 100k in one city. In a 2nd City your cost of living is 60k and 180k. A rational economic decision would be to live in City 2 since it maximizes your savings."
This doesn't actually happen, except in the heads of naïve young dudes who want to justify living in SF right now.
Total REAL compensation for a non-senior engineer in SF is somewhere around $130k right now, with some Magic Stock Bux (probably worthless! maybe not!) thrown in for fun...but those don't buy burritos. Total comp of $110k sounds reasonable for Austin, as well. You can shift the ranges up or down based on seniority, but the spread is about the same, and the range caps out at around $200k in both markets for all but the most exceptional people.
In other words, the salary premium they're talking about here sounds right to me, and a premium of $20k a year is more than consumed by the 3x difference in rent, alone. You can perhaps justify going to SF on other grounds (career growth, networking, etc.), but it's not purely economically rational for most people.
Ok, your salary estimates for SF are completely off.
Let me level set by saying I went to a bootcamp and have two years experience. I make 165K (25% higher than 130) and my 3 close bootcamp colleagues all make around the same. I don’t work for some hot company like Google - 95% of people reading this haven’t heard of us. And just to be clear this is all liquid compensation (cash, bonus, and public stock equity).
So yes for me and my closest friends with comparable experience SF is by far the best option economically.
Note as others have mentioned; I don’t think that will be the case when I start a family.
"Let me level set by saying I went to a bootcamp and have two years experience. I make 165k...(cash, bonus, and public stock equity)."
I lived and worked in SF for nearly a decade until this year. I operated a company for a good portion of that time. I know what the market rates are.
Personal anecdotes doesn't mean much when the aggregate numbers disagree with you. Maybe you're special. Maybe you're lucky. You're probably underestimating what you'd make elsewhere. But I'll say this: if you're truly getting a significant fraction of your salary in liquid RSUs, you are at a public company, and are quite likely being paid above market.
If you are counting illiquid RSUs, you are doing funny math.
I don't get this thread... both cities are close enough in salary and cost that the exact economics become less of an issue. Other things, like the cities themselves and the people in them become more important.
Ok maybe I should clarify that I’m originally from Texas and work in sf so I have some pretty direct experience and know that there is a big economic difference and the salary differential is not that small.
I completely agree that there is way more to life than economics, but for the young single engineer the business case for Bay Area (and even more Seattle) is very compelling.
To put it in perspective, when I compare myself to a friend with similar skills my net worth is already 2x greater.
What? Total comp for a non-senior engineer in Austin is somewhere between $75-90k, nowhere near your $110k number, that's senior engineer territory.
Also $250-$400k is the norm for senior engineers in big companies here in the Bay Area.
I graduated from UT Austin and now live in the Bay Area, financially speaking it's the best decision I've ever made since I'm now on track to retire before 35.
Total comp for a non-senior engineer in Austin is somewhere between $75-90k, nowhere near your $110k number, that's senior engineer territory."
OK, that's fair. I haven't been a junior engineer in Austin, so I'm estimating from what I see on hiring sites.
$130k is at the top of the SF range for a junior engineer, too, so let's call it a $40k spread. That's still entirely consumed by the difference in rent and taxes.
"Also $250-$400k is the norm for senior engineers in big companies here in the Bay Area."
On this point, you are absolutely full of it. You're talking to a "senior engineer", formerly in the Bay Area. Real-dollar compensation for elite people can get that high, but most people aren't elite. Also, I don't count future value of Magic Stock Bux as salary (nor should you).
Comments about retiring at $some_young_age are treated with the same respect as when they were coming from 20-somethings in 1998: put up actual numbers or shut up. Internet People have been ambiguously bragging about their early retirement scenarios since the internet supported bragging.
A new grad offer from Google comes in at an all in compensation of approximately 150K/year. Facebook is marginally higher (or significantly higher for returning interns).
That's 105-115K base, 25-30K in stock (which is real money in this context), and 15-20K in annual bonuses. Most people also get signing bonuses that can range from 15 up to 100K (no, seriously, Facebook sign-on bonuses for returning interns are ridiculous).
All in that means 160K up to 250K in comp your first year. No, really.
Stock refreshes, laddering, and performance make it much more difficult to calculate overall compensation after that, but just as a point of comparison, the "standard" Google offer for someone graduating in 2015 (or maybe 2014, I can't remember) came with 250 shares of stock vesting over 4 years. Averaged over the past year, that's around 50K in stock. Plus a base salary that should be around over 120K, and an average bonus breaks 200K. And that's assuming no stock refreshes, and no promotions.
Granted, "working at Google" isn't average even for SF, but still.
Other than Seattle and NYC, there's a notable difference. It's not 50%, but its there. And I'll admit that Seattle is probably the best value place to live.
That said, those jobs at $bigCo also make up a smaller portion of the job market in every other city. In the bay area, something like 1% of everyone (not just SWEs) works as a SWE at Google, Facebook, or a similarly paying company. Seattle is similar, although with Microsoft and Amazon instead. While there are some jobs that pay six figures in Atlanta or Austin, they're fewer and further between.
As a result of this, I know lots of people who make 150K+ all in comp in the bay area and Seattle, and no one who breaks 6 figures in, say, Austin (all at a Junior/New Grad level).
I'll admit Seattle is where I have personal experience, and that it may not be representative of other non-SF cities.
I mean, my earlier analysis (another thread) just used the compensation figures from the fine article. Maybe those figures are an inaccurate comparisons of the two cities. If we can find a better data source, I'd be happy to re-run with those numbers. Ditto on the housing cost numbers.
It's certainly possible that one could put aside slightly more money in SF than Austin off a much bigger comp package for the same role.
Anyway, Google and Facebook are just two employers. Clearly the average junior compensation is somewhere lower. I made a lot less than that as a junior employee, but it was a few years ago, not in SF, and not for Google or Facebook.
Unfortunately there's a lack of reliable data, but from the offers I've heard, of my guess would be that someone making 100K in Austin would be making 50% more in SF, and possibly making double if they got lucky. That may in part be due to my familiarity with the area though, but again, I know more people in SF making 200K as right-out-of-college-kids than I know people making 100K in Austin.
As far as Seattle goes, I think that the state tax makes up for most of the comp differences, and housing is cheaper there, so its a better value if that's all you're optimizing for.
Which end of that range do you consider "that high?"
Anecdote for anecdote: most of the people I know who are in the 3-5 year experience range are earning closer to $200k/year than $140k. In my bracket (>10 years) it's closer to $250k than $200k for average senior developers (in which bucket I place myself).
Also $40k is not consumed by the difference in rent and taxes. At most about 85%-90% of it is (say, $20k for rent, a generous $15k for taxes).
The low end of that range starts at the high end for a mid-level engineer, and goes up into VP and director levels.
Again: I count only compensation that is liquid. Magic Stock Bux don't get marked to market, and "bonus" is a number that can fluctuate dramatically from year to year. A mid-level Googler might be making $250k in a good year, all-in, but their base salary is a fraction of that, you won't get nearly as much outside of the big tech giants.
that 75-90 seems right, but I know several in Austin/Houston that are not senior level (and have just a few years exp) making low six figure salaries. I would think the range for senior is closer to half of your 250-400, though.
However, unless you're making double in SF what you would in Austin/TX in general - I think you wouldn't be doing much better/the same/or maybe slightly worse, comparably.
If you were hired straight from college to work at a big company/one that pays graduates very competitively - then yes, SF or similar will always be better.
Yeah, it is a gold rush. It's pretty easy (relatively speaking) to make well over 200k at a public company with some experience if you include stocks. And some people are lured by options of startups (it's a gamble!). It's harder to get that elsewhere. Not everyone (or most) get there, but a lot do, and even more try.
$200k/year is a great salary, and anyone who has it should be proud. But it's not exactly "gold rush" money. You won't be "rich", nor will you be able to retire at 40.
It is entirely possibly to retire at 40 earning $200k (~ $139k net). If you spend $60k a year (I live in Sunnyvale and spend $30k a year) then you have a savings rate of a bit over 55%. A 55% savings rate has an expected time to financial independence of 14.5 years.
You could easily be a multimillionaire by 40 with those numbers. If you spent as much as me it would take about 6 years.
I don't disagree with your numbers, many people live on $30k/year by necessity. But if you do so by choice, you'll have to give up quite a bit. You won't be able to engage in much of the social activities that others enjoy in your 20s and 30s. And while it's possible (even easy) to live on $30k/yr in your early 20s, as you get towards your 30s, you'll start feeling quite a bit of social pressure from your peers to conform to a more expensive lifestyle.
So if you're willing to buck society and sacrifice some of the best years of your life, just to sit on a million dollars at the age of 40, then go ahead. But if you are willing to buck society and sacrifice so many luxuries, why do you care about money at all?
No, it is not "easy" to get that. Most Bay Area jobs are not senior engineers at Google. Like I said before, a mid-level salary in SF is somewhere around $130k. The numbers are well-documented.
If you win the stock lottery, or stay in the industry for a while and become one of the top 10% of earners, you can do upwards of $200k. But that excludes the bottom 90% of jobs, which is what most people actually have.
As a PSA to all junior engineers: if you actually believe you can "easily" earn over $200k in the bay area, I strongly encourage you to take some phone screens before acting on your notions. Tell companies your salary expectations in advance.
I agree with you and don't believe the high salaries reported here. The best reference set is the H1B salary data which trends with the glassdoor self reported data.
The folks making closest to 200k or higher are largely Computer and Information Systems Managers in Santa Clara county at levels 3 and 4. I imagine these are Senior Directors or VPs.
The argument is that the expected value of salary + rsu/stock/options is effectively just salary. These reddit posts basically agree with H1B data. Salaries are the bar. A H1B has to be paid more than the prevailing wage for the position and the company has to have documented that they could not find a qualified American for that role. Prevailing wages are set as a function of the H1B + American workers so over time salaries rise.
But that's not the case, since salaries are significantly less variable than stock comp.
For high paying jobs, salary is 50-80% of total comp. For lower paying ones, it's 95+%, which is what the salary surveys show.
So comparing salary only, you strongly bias against top paying positions since salaries make up a smaller portion of the compensation for those positions.
It's weird to see articles like this not even mention the massive sampling bias. Most Seattle devs work for Amazon or Microsoft, whereas SF is a tech hub filled with startups and other low-paying opportunities.
And the fact they're only including base salary instead of looking at total compensation. Bonus and (public) equity would probably skew the numbers and thus change the conclusions drawn here.
This kind of distortion makes the Toronto market seems a lot better compared to SF because it's not common to receive a large equity grant in Toronto.
That isn't what I meant. I wouldn't consider SF for $134k, either. But someone getting $110k in Austin should be wondering why they aren't getting $134k in Austin instead. They're basically leaving $2k a month on the table because of some absurd adherence to regional pay scales.
A regional variation isn't absurd. If someone offered me a job in SF, I'd insist on at least 20% more to try and counter the 50% higher cost of living.
The price of an engineer's labor isn't determined solely by the value of her work. It's a function of supply and demand. Demand is driven, in part, by value. But supply is driven, in part, by cost of living. In other words, if more people were willing to endure San Francisco's cost of living, supply would be higher and prices (salaries) would come down.
salaries would come down and cost of housing would go up which begs the question... why are people that live and work in SF trying to bring more people in? (maybe because they already own the property)
> The value of an engineer's work doesn't magically adjust downward because of the circumstance of his or her location
Yes it does!
It's only absurd if you assume every person is able, willing, and has no barriers to relocating. But there are plenty of engineers with families and/or established ties who don't want to move. One of the main reasons Facebook, Google, and Apple have engineering offices in Seattle is to attract engineers from Microsoft/Amazon that don't want to uproot their families and move to the bay.
So I guess it's interesting to look at salary in terms of the local cost of living but that's actually pretty meaningless. The reason is you don't have to live "average". This is the strategy many employ. Do their time, save a lot of money and leave.
I come from Australia. I live in Manhattan. The amount of money I can save here is now than I can earn in Australia. It's just ridiculous how much better it is.
Also I think just is the real winner for this strategy. For one you don't need a car here. That saves you on buying a car, gas, maintenance, insurance, tickets, damage, parking and so on. Plus you can actually live in decent places for much less than anywhere in the Bay Area, like Jackson heights.
I mean Austin isn't bad either but you need a car there.
Maybe possible if you live in a low cost of living place, have good insurance record and a old crappy car, own your car and rarely drive but it would be close.
Triplebyte's customers are disproportionately in the Bay and NYC. That doesn't alter facts, of course, but it is worth considering in the presentation (e.g. your link) and discussion of them.
Obviously, it’s a stunted metric. Cost of living handicaps don’t factor in the quality of life that bigger, more diverse cities have to offer. It’s more than just the cost of “rent, transportation, and groceries.” Some people value that and others don’t and that’s fine. But don’t pretend it’s an absolute, universal metric. I know plenty of people who moved out of SF only to lament what they’re missing and in several cases, move back.
As an engineer living in SF, I agree that it doesn't really make sense for the average software developer to live here.
But, if you are top 10-20% (not necessarily a superstar), it's definitely the place to be. Whether you want to work at startup or a big company, the pay vastly exceeds the extra cost of living.
At a startup, you actually have the chance to make lots of money in an acquisition or IPO. In other places, you really don't. I used to live in NYC. There's tumblr, mongodb, and zocdoc, all in the $1 billion range, which only makes the founders and a few early employees rich. Foursquare was really hot for awhile, but ended up disappointing. Rapgenius imploded. Betaworks companies either stagnated or outright failed. I know tons of great people who got jobs at the hottest companies in NYC at the time and ended up with nothing. In SF/bay area, there's uber, facebook, google, palantir, airbnb, twitter, linkedin, pinterest, lyft, stripe, square, etc, etc, etc. All of these recently started companies are worth billions, and have created or will create lots of millionaires. More importantly, I don't remember any big disappointments in bay area companies, besides maybe dropbox. Almost every hot company from 5 years ago is now worth a lot more money. It's fairly easy to select which startup to work for if you want to optimize for equity payout. Today, I would probably pick flexport.
At a big company, you get to work on the most interesting projects. The top executives for all the biggest tech companies are here, so all the best projects are going to be here as well. And the pay is very good - I don't know any senior engineers making less than $300,000 a year, including people who are just a few years out of grad school.
In both cases, you get to work on the most interesting technology. For example, there are no self-driving car companies in other areas (besides Pittsburgh). The most successful blockchain businesses (coinbase, ripple) are here. The companies that have to deal with the biggest scale are here (google, facebook).
Personally, I more than doubled my already-high pay in NYC by moving to SF. Not moving here earlier was a big career mistake - I would have worked on far more interesting projects with much more competent coworkers and I would have been able to retire by now.
Everyone I know who moved from NYC to SF before me is now a multi-millionaire, because they got a job at stripe, palantir, pinterest, or some small companies that managed to get acquired for a large amount of money.
This article doesn't seem to mention non-salary compensation like stock options and RSUs, which can form a pretty large fraction of total compensation, and might vary wildly between locales.
L5 Google engineers are getting $800k RSU packages over 4 years. Netflix pays their senior engineers > $400k/yr straight cash. I have a friend with 8 years experience getting $200k/yr base at Facebook and 125k/yr in RSUs.
Sure, exactly 50% of the engineers in SF make below average salaries, but the top 50% are doing phenomenally well.
They are also one of the largest employers in the Bay Area, with tens of thousands of engineers in total. So they represent quite a large number of engineers and large percentage of Bay Area employment. Plus LinkedIn, Apple, Amazon, etc all strive to have equitable pay as well. It's not just 1% of the engineers that make this.
No, Nice places in SF are still a bit more expensive than nice places in LA (and Santa Monica of course). They both have been getting more expensive, but the difference is still there.
You need a car in LA, not SF so there's the cost of car ownership. Venice and Santa Monica have skyrocketed the past 3 years due to Snap. $9500/mo for a 2BR at 4th and Rose? Happening location, but that's much higher than SF.
Most of Santa Monica isn’t that bad, and even Venice can be reasonable away from the water. There are plenty of places in SF that exceed high end places in LA for rent, and they are similar or greater in area to boot. Let’s at least compare apples to apples.
It isn’t just SNAP, google is big in Venice as well. Many tech startups are in the west of LA. I just don’t a year in Westwood. It was pricey, but not SF pricey. And ya, you need a car, which is also true for much of the Bay Area. (Well, we didn’t need a car until we had a kid, Uber + bus worked well enough before child car seats became an issue)
They probably just multiplied cost of living straight up. Of course it doesn't work like that. If you live 20% below your "maximum means" then you can sock away a lot more money in the higher cost markets.
Also, certain expenses, like cars, 401ks, and student loan payments are fixed cost and thus their relative percentage grows in cheaper/lower salary areas.
So, anyone saying "adjusted for cost of living" needs to also cough up methodology details, or the comparison is impossible.
I'm very jealous of my friends with SF jobs who work remote and live with their parents. I know three who do this, they're all late 20s/early 30s. I totally would do it if I had the opportunity, I still get along great with my folks.
I also know 1 person with a remote SF job in the midwest who lives like a king.
That is, the salary to expenses ratio isn't the only thing to look at.
For example, if you save 10% of your money in SF and make $150K, that's $15K a year in savings. If you save 14% of your money in Austin and make $100K, that's $14K a year in savings.
Even though you went through 90% of your salary in SF and only 86% in Austin, living in SF is better, because you saved more money in absolute terms. You can move elsewhere and take advantage of that savings.
If you only care about money, the ideal strategy is probably to move to SF in your 20's, make a high salary, and then move out of SF. A lot of people these days don't have kids until their 30's. (Anecdotally that seems to be what a lot of people have done in the past decade -- move out of the Bay Area when they want to have kids.)
This also doesn't account for the fact that SF has more "outliers" and more choices. You might be pleasantly surprised by the kind of job you can get or the kind of money you can make in SF. In most cities (certainly not all), you probably won't be surprised. The job market is what it is.
(I'm assuming something about their methodology here, feel free to correct me if I'm wrong.)