That's ok. When Airbnb, Square, and Stripe IPO in 12-36 months, all of the people currently flooding into SF to work for them will surely be able to sell their pre-IPO shares to ... Well, I don't know, honestly. I doubt that employee #1000 at Square would even be able to pay the down payment on a SF condo with their earnings.
Also, just FYI: Seattle isn't that much cheaper than SF, the people are way meaner, traffic is awful, and the weather really sucks. So I highly recommend against moving up here.
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edit: Since people are apparently missing the joke, I've lived in Seattle for 12 years, consider it home, and can't imagine living anywhere else.
Everybody is running with your Seattle humor but your comment on IPO'ing is worth discussing. 1) The reason a startup is appealing is because you're supposed to make a great low 6 or even 7 figure sum once your company goes public. 2) To achieve success you're supposed to work intensely hard and smart (@pmarca) for a short period of time (3 - 7 years) and then if you've picked successfully you'll create a really nice nest egg for yourself while you're peers who graduated will only be up to around $50K in their contributing 401K's. 3) Based on the size of that exit you are free to go somewhere else and enjoy luxury or double down in the Bay Area but this time with a little more money to get a better apartment or even buy something in the burbs.
So the point is looking at just Income isn't helpful. One would hope your stock is appreciating in value at an equivalent or greater pace than your income.
> One would hope your stock is appreciating in value at an equivalent or greater pace than your income.
OTOH, hope is not the same thing as reality.
Some startups will exit successfully and yield really big payouts. Some startups will have modest exists, and equity will have some additional value, but nothing to write home about.
And some startups will fail.
If you are a capital investor in lots of startups, the small share where the first occurs have a good chance of being enough to make the average return good. But if you are a 20-something that's putting 3-7 years of labor into each swing at the startup piñata...
I love the mental image evoked by a startup piñata because it is so deep with symbolism: blindly swinging away at a brightly-painted papier mâché dream, hoping for the outpouring of sweets by sheer random luck.
Hopefully people are putting a little more thought into their career choices than that, but piñatas are definitely fun, and you're surrounded by your friends shouting encouragement and direction at you all the while. So while I'm positive that life isn't as bleak as this image conveys, I'm still going to borrow it to use in the future!
> One would hope your stock is appreciating in value at an equivalent or greater pace than your income
One would, but given the stock performance of GRPN or ZNGA, or more recently HDP and BOX, I'd be leery of this.
Betting that you happen to pick the unicorn that's gonna IPO is a tall order. Betting that you happen to pick the IPO'ing unicorn that isn't going to fall apart post-IPO seems like too much to ask for.
Contribution limit has been 17500 or 18000 last few years, it's only expected to go up, and lots of bigcorps have good 401k matching.
Also, the 17.5k (plus possible match) that you put in 3-7 years ago has been compounding for 3-7 years. Sure, the stock market may have taken a tumble in the interim and you might say that that means you end up with less in your 401k, which is true, but broad market movements affect startups' prospects as well, so you are still likely to come out ahead with the safe bigcorp option.
Today we substitute Californians with Chinese, but same old same old. I'm a Seattlite living in Beijing, and you don't see me messing with their real estate market (I wouldn't go near it with a 10 foot pole).
Maybe if you beat the bushes hard enough. The companies offering positions without non-competes are going to be rare as the employers labour law council will include it if they can get away with it. It will also very likely be non-negotiable and the documents you get on your first day of employment will be offered up as "sign or be fired".
It's much better for the employee if there is legislation prohibiting non-competes as you can choose any employer to work for.
Seattle is the worst place I've ever lived in including multiple third world countries. The weather really, really, really sucks to the point where it ruins your whole life.
NOOOOOOO. Don't tell anyone. It is terrible here and there is lots of sadness from all the rain. I hate Seattle.
Seriously though F* 405 traffic. The new "Toll route" is a nightmare and now everyone is using side roads making my drive to work from a quick 10 min jaunt into a 25-30 min parking lot.
I ride a motorcycle every day from Redmond to Seattle. The new express lanes have screwed it up even for me, even though I get to use those lanes. Problem now is getting to those lanes. Traffic in the other lanes is now worse, and I can't cross the double white lines until about a mile after I get on 405. Granted, it adds maybe five minutes at most. But it poses the question: who are those lanes supposed to help if it only adds time an inconvenience even for those that have access to them?
Who do you think is making money on running this system? Surely someone is, that's why (in their view) it's 'successful' everywhere... (Successful being to extort the upper middle class for an unfair share of taxes, and regressively dis-enfranchise everyone under them by making their commutes worse so those 'lucky few' can pay a premium to drive at least 45MPH.)
The real solution, as pointed out above, involves incentives for desired behavior from all actors via taxes/tax breaks (stick/carrot). Parties that should be affected include businesses, employees, housing providers, and civic planners on all levels. The true cost of living rural should be felt (you should /pay/ for your share of the infrastructure required to provide /you/ with modern services; but you should /get/ them, including actual /good/ Internet). The true cost of employing should be felt (pay for the infrastructure to get workers to you, and for the education that trained them). Housing should be more consistently priced, in city and out, and should also scale up large enough to have 'raise a family well' sized dwellings. Also while you're at it, discount taxes slightly for better auditory insulation (or make it a side effect of /awesome/ fire codes).
This way workers would be more likely to be able to afford to live, and thus move closer to their jobs. With the lack of 'lifetime employment' at a company, responsible living is now an apartment, not a house.
It will, in a few years. The plans are already set and they've held the public meetings on it where the public doesn't get any chance to change the plans.
> The weather was great (two days of sunny blue skies).
Seattle from October through January is nothing like this. I literally didn't see the sun for over 20 days straight at one point (it's foggy and rainy non-stop during the winter).
Smart-assery aside, yeah, Seattle has awesome summers, albeit mighty short some years. November comes, you better head down to the NorthFace outlet and get a GoreTex jacket or two.
That's nothing. In 1998 (I'm pretty sure) Seattle had 96 days of light drizzle with nary a ray of sunshine. The suicide rate went up massively, and I decided to move to CA as soon as I had the means.
I remember that winter well. I was founder-CTO of a Silicon Valley-based startup, and we were working on a big deal with Microsoft. After they hired away the first two people we put on the project, I stepped in, and spent several weeks a month up in the Seattle area. I still remember telling the board, "the only way they'll be able to hire me is to buy the company!" and we all had a good laugh.
Which is of course what happened -- they decided they wanted the technology and the engineering team (including me) and after some negotation got to a price that worked for everybody. Moving up to Redmond was part of the deal.
At the celebration party, people gave me various presents -- including a scuba mask, flippers, rubbers, several umbrellas...
And yeah, everything they say about the winters here is true. So please please please don't move here :)
As a Seattle resident born and raised, and having spent a fair amount of time in other parts of the world, I take issue with your characterization of the people as "way meaner." ;) The traffic is terrible though; I wouldn't want to commute into the city from anywhere outside of it. And the weather... well, let's just call it an acquired taste. :)
Wow, Seattle actually doesn't seem that much more expensive compared to the $1,263 average 1br in Dallas. But SF... Holy shit. And I'm actually seeing $2,965 on Rent Jungle for SF right now.
That's only true if you need to live in new construction. My previous apartment was an old crappy 2BR on Capitol Hill, with Cascade views, from 2012-2014, for $1500. Currently I'm paying $2200 for a 2BR house with a nice yard in the Central District.
If anyone wants to rent a nice 3BR house north of the UW for $3-4K, email me, I know of one for rent.
May be intended to be joke, but the weather is atrocious, and the traffic is worse than the Bay Area (but probably not worse than LA). People are nice though!
Source: Lived there 22 years, moved to the Bay Area a dozen years ago, bought a house here, love it. Also, nobody complains about all the "outsiders" driving up housing costs here, whereas in the Northwest, blaming outsiders has been a mantra for decades.
How much does a decent house or decent condo cost in an nice (not very nice) neighborhood in SF? I can look at Zillow but I do not know which areas are good vs. bad.
The economics of equity for employees in general is out of line with most people's expectations.
You can expect pre-Series A shares to drop by an order of magnitude in ownership proportion between issue and IPO. Since this can take 5-10 years, the equity carrot is nothing more than a bonus unless the company unicorns. It's less than one could probably make in the same time at an established company.
From a compensation standpoint, there's no point being an employee at a startup that isn't aiming at a billion dollar+ exit: there just won't be enough money to go round unless it does.
> "the rule of thumb is that you shouldn't spend more than 30% of your monthly take home on rent",
as they say, but that's just a rule of thumb. What actually matters is how much money you end up with. For example, assuming taxes remove 30% of income (probably close enough; would need to look up federal and state tax codes to be precise),
1. A Zynga employee makes 147,000, loses 30% to taxes, spends 3,545 times 12 on rent, and ends up with 60,360 to spare.
2. A RadPad employee makes 120,000, also loses 30%, and spends 1,475 times 12 on rent, giving them 66,300.
In other words, while the Zynga employee spends 47% on rent, and the RadPad employee a mere 23% - less than half! - the difference is much smaller than that would imply. At the end of the year, the RadPad employee has an extra 5,940.
Certainly a significant amount of money, and noteworthy in that the person has a lower salary but still ended up with more income after taxes and rent, but the amount is in the single digit percentage of the salaries we are talking about here.
More importantly, the problem becomes more obvious if we look at second place after Zynga. Doing the same calculation on a Google employee, then we get that despite paying 42% on rent, the employee is left with 71,128, which is more than the RadPad employee.
In other words, looking just at % of take home spent on rent is a useful rule of thumb, but looking at the actual money is better, and it can lead to different conclusions than the article would imply.
edit: Perhaps the best conclusion from their data is that it actually doesn't matter where you live, since salary actually compensates surprisingly well for location. Whether you work at Google or Zynga in SF, or RadPad in LA, you'll end up with +- a few % of the same amount of money in your bank account anyhow.
Indeed. The cost of living is a powerful multiplier as long as you don't overspend. The same car is that much cheaper in a high COL area, you can contribute more to your retirement, and so on. The problem with living in a low-COL area is, even if you save a very high % of your income, you're "stuck" and unable to move somewhere cheaper. There's a reason New Yorkers retire to Florida. You have options.
That doesn't mean it works for everyone, but do your own numbers and make your own decisions.
The 33/33/33 rule aims to provide you with enough savings to cover your current cost of living in retirement. It's based on the assumption that your cost of living won't drastically change in the meantime. That assumption breaks down when you're living in a very high cost of living area where you don't intend to retire. I doubt that very many people who live in 1BR apartments in downtown SF will maintain that lifestyle into retirement.
Realistically, they won't maintain that lifestyle once they have kids.
One of the reasons I got out is that it was too weird living in a place with tons of 20-somethings (I was one too, at the time) and not a lot of everyone else.
I think it started as expenses/spending/saving but has now become rent/other expenses+spending/savings.
Recently I've seen other "rules" emerge which are far heavier on the expenses. Fidelity, for instance, suggests a 50/15/5 split between expenses/retirement savings/short term savings. I think having such high expenses is pretty risky, myself.
The other faulty reasoning here is that living without roommates is a reasonable expectation for most single, urban twentysomethings. Most engineers I know have roommates as much for social reasons as economic reasons.
If you take most of those two bedroom rents and look at the cost per month per room, most are less than 30% of after-tax income. (And that's if you choose to live in SOMA, which also seems like an extravagant and uncommon choice for most engineers I know, many of whom are happy with a short commute to the Mission, Pacific Heights, or Oakland.)
You are underestimating the taxes. The simple way to get the after-tax income is just divide the annual cost of the 1-bed apartment by the % of salary and multiply by 100. The google employee only keeps $56k after paying for the 1-bed apartment, if my calculations are correct (compared to $59k for the RadPad employee).
If you do the calculations with 2-bed apartments the numbers are much worse for SF. Google employee gets to keep $39.5k, compared to $53.5k for the RadPad employee!
Problem with high housing cost is that it drives up prices for all things in the area - from fastfood to haircut and day care. Of course iPhone, cars cost the same, but all the local services would cost more.
I always see articles like this and I wonder...who is winning here?
I'm waiting for an article to break out the stats on who owns which property in these types of areas. What % of housing is owned by the government, foreign investors, domestic investors, institutional investors, real-estate holding companies, and the actual inhabitants of the property?
For all we know, the whole story could just be that tech companies are hiring some kids from ivy leagues and well-off families that are just paying rent back to their parents, who somehow or other own shares of the SF property market. Or that a lot of rent money is flowing to foreign investors, as is the case in NY and London.
So while it's interesting to see who is losing and by how much, what I'd really like to know is - who are the winners? Where is the money flowing?
Long story short: people that own single family homes in SF are winning the most because of the massive gains in value and we don't have to pay increased property taxes because of proposition 13. Basically anyone who currently owns property in SF is a "winner" and that includes the many small time property owners that own the 2-6 unit buildings that dominate the city. The rent money is flowing to those people. Who probably are mostly local.
Seriously, the number of companies still not hiring remotes is ridiculous. We work in the most flexible industry out there yet most companies still want you sitting in a chair in some downtown office of a giant and expensive city. No thank you. No you don't need to make your entire team remote but you can easily augment a large portion with talented remotes. Keep your high living costs and horrendous commutes, been there done that. There are other options.
I deeply enjoy when recruiters are convinced that I'll move to SF for their company, even though I haven't over the past decade. They also balk when I ask for the cost of living adjustment to make the move (+180%, give or take).
Hell, I live in the peninsula and I ask for a $40k ($2k/mo after taxes) raise to cover the rent differential to move back to sf in order to be in the office 5 days per week and companies are taken aback.
try moving to SF short term, put in the hours in the office of a flexible, reasonable company and then ask to move to remote after they are more comfortable with you. It worked for me :)
Which is silly....honestly companies need to start opening offices in more affordable areas. Colorado (Blouder, Denver, The Springs), Texas (Austin, San Antonio), Missouri (Kansas City, Saint Louis)....there are so many places you can put your employees that saves them money as well as your company a lot of money not only in Salaries because you'll be able to employees less but your rent/power/etc.
The problem is they explicitly had to create something like Bay Area.
They needed the engineers to be @ place. And the same can happen anywhere if you recreate the Bay Area.
Solution: remote work
Honestly...160k salaries for some sw roles are silly. But there is need for them because the costs of living are so high. That's plain bs.
That's not a fair way of looking at it, though, from a business-owner's perspective. You need to look at the overall market, and you can find equally good developers in cheaper parts of the country for fractions (50-60%) of that cost.
It's an entirely fair way of looking at it. Just because other developers live in cheaper areas of the country doesn't change how much value a good developer is bringing to your business.
> Concentrate your tech workers in a area that isn't hostile to expanding the housing supply when needed.
Sure, you can try that.
But if the place doesn't offer the environmental features that make the Bay Area attractive, your going to have to offer them a premium to live there; lower housing costs may cover some of that so that you are only paying the same, but may not.
The Bay Area is expensive, more than anything else, because people want to live there.
I'll give you Denver, definitely high quality of life in Colorado. Not Vegas, most definitely not Texas (save for Austin), not Phoenix, and Atlanta is nowhere near friendly unless you work from home and never need to get into a car.
Chattanooga is good, Nashville is good (but getting pricey), lots of space and smart people in North Carolina (Asheville or Raleigh Durham Research Triangle Park). I've heard good things about Des Moines (not a fan of the cold though).
At this point, its just masochistic for SF startups to require their tech staff to live in the area, and throw away so much of their income to landlords.
That's a broad and rather incomplete generalization.
I spent two years in a California high school and two years in a Texas high school. I have seen first hand how terrible schools can be in CA and, conversely, how fantastic they can be in Texas.
For reference, I'm comparing Benicia HS in the North Bay with Seven Lakes HS in suburban Houston.
In California, teachers were restricted to six pieces of copier paper per student per year. One security guard for 1500 students. Ancient textbooks and the most antagonistic administration you can imagine. AP classes? Gone. School buses? Discontinued. Arts and music? Better hope your parents can pay for it.
Between my sophomore and junior years I moved to Texas. Seven Lakes was the most expensive school ever built. We didn't just have a computer science class, we had a computer science department. Our AP US History teacher had more students score 4 or 5 on the AP exam than any other US history teacher in the country.
To Benicia's credit, their band was actually quite a bit better.
And just to underline the difference in affordability, the average home price in Benicia at the time was $629k. Katy's average was $161k.
Safe to say I have no regrets about having left California.
"Texas earns C-minus, ranks 39th in nation on education ranking"
* 52 percent of 3- and 4-year-olds in the state are not in school.
* Hispanics had the lowest rate of 4-year-olds enrolled in preschool at 39 percent. Meanwhile about half of black, white and Asian 4-year-olds were enrolled.
* 64 percent of of 3- and 4-year-olds in households earning at least $100,000 or more attend preschool compared to 40 percent of those living in households earning less than $20,000.
* About 44 percent of those enrolled in Texas preschool attended a private school.
> "Texas earns C-minus, ranks 39th in nation on education ranking"
California ranked 42nd in the same report with a score of D+. [1]
I'm obviously not arguing that every school in Texas is good. There are some utterly terrible districts in that state.
I don't think anyone would that point.
But there are also some great schools. The existence of some (even many) bad schools shouldn't necessarily deter someone from moving to a community in Texas with good schools.
All of that applies equally to California—there are some horrible schools there too.
Or, keep your salary and work remotely for an SF co. Best of both worlds! But, you'll have to do without the longboards if you don't move to a properly hip location.
Assuming that elsewhere you would do 30/30/40 % split on rent/savings/spend, then as long as you're making 40%+ more income (than elsewhere) you're okay to spend 50% on rent because you can save just as much or more.
This is one of those things that is a great idea until it isn't. When your employer goes belly up, in SF, you have to fight off job offers. That's not going to be the case elsewhere.
It's also much harder on the employers: if you think finding one good job is hard, try hiring an entire team of decent employees at once.
Ultimately, it's worth the extra cost of staying where the tech is, prefixing your city name ala 'Silicon xxx' not withstanding.
Anybody in tech in SF is constantly fighting off job offers, not just when their employers go belly up.
At some point, costs will reach a tipping point where people will start to look elsewhere(I don't mean 1% of people and I don't mean the Easy Bay, but actual significant people moving away from the Bay Area).
> When your employer goes belly up, in SF, you have to fight off job offers.
That's a chicken-and-egg problem. Companies choose to set up shop there so employees will feel more comfortable taking risks because of the demand for developers. However, the demand for developers exists because companies tend to set up shop there.
"When your employer goes belly up, in SF, you have to fight off job offers. That's not going to be the case elsewhere."
In my experience, this is not going to be the case in almost every major city and in some areas not near a major city. Places where I've found/been recruited for jobs easily: Seattle, Portland, Austin, Philadelphia, Central NJ, NYC, San Diego, Atlanta, Dallas, DC. And those are just the places I was looking into at the time. Sure, if you're looking for a very specialized niche, the bay area is a better choice, but for most engineers that just isn't the case.
Keep in mind that the job market is not predictable. For the moment, getting a job seems to be a little less painful than it usually is, but I will bet you any amount of money you want that this situation won't last. Remember 2007/2008... nobody was "fighting off job offers" back then.
It's not like those other cities are tech wastelands. You'll be able to find a good job. Maybe it won't pay as much as a city where you're being fought over, but then, it doesn't need to.
I had multiple clients (I'm a developer and a contractor) who had job reqs open for months at a good pay scale and had a heck of a time finding people in the Boulder Denver area.
I think that the tech frenzy is great enough that people are fighting over tech folks in other areas--maybe not as violently as in SF, but still fighting.
I guess that could have been it. I did some hiring a year or so ago and they pay scales were comparable. And the numbers I see are similar to what I've seen with other jobs (friends, email lists, etc).
In Denver and Boudler I'm seeing SWE postings with salary 100K - 160K. Not really much different then SF and a lot cheaper housing. You are really much better off in Colorado then Norhter California. Don't tell anyone!
Spending 50% of your income on rent isn't the same thing as losing money, unless you're defining "losing" to mean "spending." I doubt many of these SF tech workers started with some savings and are watching their savings decrease each month.
No, the context is insane rent prices. That doesn't translate to losing money. Several people have stated that the difference in salary is making up for it, to where they have as much after rent, after tax income or more than in other places.
I have a new hypothesis that I may actually try out: it's the business people that should be in the Bay Area but the engineers can be elsewhere. A lot of the companies having a great deal of success are iterating on the business model, customer acquisition and user experience side of things far more so than on the technology or engineering. I am hypothesizing that it is those people that benefit from being in the Bay Area and that the builders can be elsewhere. In fact they might be better off elsewhere far from the echo chamber and framework-of-the-month cattle (and cost, of course).
Airbnb's new 72,000-square-foot office allows employees to work wherever they want inside (no fixed workspaces), so why not just let them work remotely instead of spending millions on a new building.
Or even Oakland. I don't understand why there aren't as many startups on the eastern shore of the bay: same pool of candidates; often cheaper/quicker commute for people; cheaper housing.
because the Bart, which better than most of what the US has, is basically a shambling 3rd world disaster. It's slow, uncomfortable, constantly delayed and doesn't go that many places.
There's a PE firm based out of Austin called Vista Equity Partners that does this. Recently they purchased a tech company and moved their headquarters from San Diego to downtown Dallas. This is probably a great way (for the PE firm) to get high salary employees to quit and hire employees at the lower Dallas salary rates. Also probably a stealthy way for them to shed headcount without layoffs and without running the risk of ruining the culture and having the black mark of layoffs.
PE firms kill companies over the long term by sucking all of the value out, then spitting out the (much smaller) shell of a company.
When a company becomes controlled by PE, cost-cutting is the number 1 priority. Layoffs happen, the company slow-pays its suppliers and is constantly on credit hold, pay gets cut, benefits are cut, schedules become completely unrealistic, and misconceived products are launched which fail.
I've seen this all happen in the last company I worked for.
if you working for a company and it gets bought by PE, leave ASAP.
No doubt. There's a term for this: Harvest mode. I worked at a company pre-ipo all the way to the point where they were almost ready to turn off the lights. This was a 25 year timespan. In hindsight it was a mistake. I should have left when the PE guys took control.
Where I work (www.crystalknows.com) is based out of Nashville. I'm remote in Portland, ME (tons of good beer & restaurants) and I pay $1200/mo for a mortgage on a 2bedroom condo on the ocean. Just moved from Boston, and I'm saving a ton on living expenses. SF is the last place on earth I would move to.
I too am a remote worker, and I make an engineer salary while living in low cost-of-living US locals. You can live very well if you're not blowing your salary on rent in SF.
>Learn to be remote teams. It makes you a better company in the end.
Does it? I hear everyone on here say that more work should be remote but I haven't seen any studies that show that workers can be just as productive when not in the office. I would assume they would be.
They are ... for their non-engineering employees (Lyft in Nashville is the most recent example).
But for engineering talent, it doesn't work. I don't know the exact reason but it seems to be some combination of the ability to poach from each other, herd mentality, and the concentration of VC money.
Take a look at the remote engineering jobs on WWR. Most of them aren't in SF. To me that screams "We opened an office in an affordable city but we still can't get people to come here"
In Boulder itself houses are far from affordable (but also still far below Bay-area prices) due to growth restriction, but since Boulder is very small in terms of land area the surrounding towns are an easy commute compared to anywhere in the Bay area. And while the locals like to complain about getting scammed out of commuter rail, the existing bus mass transit to and from Denver and the suburbs along Highway 36 is really pretty decent (albeit expensive unless your company or company's tax district subsidizes the pass).
Come to Boulder. While rents in the Denver area have been climbing recently, they still fall short of the craziness of SF/NY (some facts, here: http://www.denverpost.com/business/ci_28740315/denver-area-a... "median price for a two bedroom is $1550") . And we have 4 real seasons and skiing, unlike LA.
If you want startups, Boulder or downtown Denver are pretty good, or if you want more established tech companies, Interlocken or the Tech center are where it's at.
This is not a great analysis. What they measured was average salary compared to average rent in the neighborhood where the company is located, not what their employees are actually paying. At Weebly I would estimate less than 10% of employees live in Soma where our office is.
This is not surprising at all. We keep complaining about it here and elsewhere but it's not going to change any time soon. The more people flock to SF the worse it will become.
When I left SF my studio "jr. one-bedroom" in SOMA was $3100 a month. I'd walk or muni to work by the ballpark and usually saw at least one person smoking meth, shooting up heroin, or pissing on the street. I pay less than half of that now for a 2 bedroom house in Michigan and have a stress-free 20 minute commute to the FarmLogs office.
3100 is almost double the average salary of IT worker in Central/Eastern Europe and these people are considered middle class.
Take a look at China and India there they earn even less.
How many and for how long can these companies keep hiring people for such huge salaries ? And if these people can't live comfortably off these salaries then there is something wrong.
Complex cross-geo projects aren't the same as local projects, except everything happens overnight. There are explicit and implicit expenses involved in managing and supporting projects in widely varied time zones that aren't obvious until you're involved in one. Especially if there's hardware involved.
A few questions if you don't mind. What percent of your after tax income was rent? Are you making the same salary in Michigan? And what is the percent of your after tax income is rent now? Thanks! I would love to work remote / in a cheaper location, but salary decrease is worrying me.
I certainly think rising housing costs are a problem, but is no one going to comment on the fact that this company put together a list that just so happens to put them in a very favorable light against companies they are competing with for talent? We probably shouldn't just accept RadPad's statement as fact that RadPad's employees are much better off than other startup employee even though they are paid less. I would be very interested in seeing the actual raw data that includes companies not listed here and includes other costs besides housing (e.g. transportation costs are higher in LA due to a worse public transit system).
I was recently contemplating the hostility between tech workers and some SF residents who have lived here longer. Long-term residents blame tech workers for increasing housing prices and resulting evictions, but high rent is detrimental to both groups.
Then I considered the interest group who is coming out on top in all of this: SF property owners. The total value of all residential property in SF is probably well into the hundreds of billions (a few hundred thousand units, multiplied by a resale value probably approaching a million dollars per unit). That value is driven by scarcity.
So you have a group protecting a half trillion dollar investment. Is it really so surprising that they have convinced long-term residents (most of whom still rent) and populist politicians to rally in favor of scarcity?
Is anyone trying to organize a coalition of tech workers _and_ long-term residents against SF property interests?
Prop 17 in CA magnifies the effect. When your property taxes can only go up by a small amount every year, there's literally no incentive for your property values to not go sky-high.
The critical flaw in Prop 17 is that it applies to nearly all properties. Florida did homestead protection right. The homestead protections there are nearly as strong as, if not stronger than, Prop 17; however, only owner-occupied residential properties qualify. I think it is ridiculous that someone can move out of their house or condo in SF, rent it out, and still reap the property tax benefits.
Always remember the #1 industry sector in CA is real estate, not tech. Furthermore, this is why I generally won't consider offers for work in the Bay area (as much as I love NoCal). I do the math and realize I'm cutting my own throat.
On the other hand, I'd love to get a great offer and then buy a Blue Bird bus and convert it into a rolling home but only if I could semi-permanently park it in the company parking lot!
Pretty sure I see people living in RVs in Palo Alto, on El Camino and around Cal Ave. Definitely plenty doing it in SF. Has something changed in PA recently?
I remain surprised that Bay Area tech companies don't move to Sacramento. Near the Bar Area for quick access, near the state seat of power for lobbying, well away from major faults so less prone to earthquakes, significantly lower costs of housing (2 Bdrm apt would be about $1k) - so presumably could save on salary.
The problem is that "near the Bay Area" is pretty relative; the travel between them is 2+ hours without substantial traffic, and most people aren't going to want to make that commute. So that leaves you with some of the drawbacks others have mentioned in this thread: if your company is there, you'll likely have a smaller talent pool to draw from; if you live there and you lose your job, you'll have a smaller pool of companies to move to.
Having said that, Sacramento is a much nicer place than a lot of folks in the Bay Area give it credit for -- a lot of pretty, walkable neighborhoods, a lot of good cafes and bars and restaurants and "third wave" coffee places, and as you mentioned a way lower cost of living. The only real downside (setting aside the commute) is that it gets ungodly hot in the summer.
um, have you been to sac? Given the choice, people (both founders of the companies & the best employees) would rather live in the bay area vs. sac. Hence the price difference. SF bay people are paying for things like: 20 min access to world class airport, one of the most human friendly climates on the planet, access to the capital of the internet & the people from around world building said internet, a stop on world tours of every major music act or performance, Ocean, Bay, coastal ranges, the ability to get to work, beach, entertainment without getting in a car, etc etc. I personally trust the wisdom of the crowd and find the best places on the planet to live/visit are often the most expensive: NYC, Copenhagen, Tokyo, Paris, Maui, Coastal Los Angeles, SF
Why aren't more companies investing in building out remote teams? Have the main office with a small core team in SF but hire remote devs, customer service, sales. Seems like it would save companies a ton of money and devs would be happier too because they would actually be pocketing more.
I have no interest in moving to SF mostly because of the rent. Spending 33%+ of your paycheck on rent is absurd. I'd rather get a remote job and live somewhere cheap enough to where I could potentially put a down payment on my own place.
The nicest, most expensive 1 bedroom apartment I can find in $my_medium_sized_city is $1200/mo. Brand new, great view, walking distance to everything...I don't even own a car anymore.
Any kind of six figures goes very, very far if you are willing to be away from the center of the universe. If living in SF to work at a startup with options is speculating in penny stocks, living in a second or third tier city and squirrelling away a nice chunk from $120k a year is buying bonds. Lower variance, lower maximum rate of return.
In the 1950s, the average New York City resident paid 10% of the income for rent. It was federal, state, and city policy to keep rents down, with new low-cost housing being built by Government agencies and insurance companies.
This article makes the rather flawed assumption that all the housing in SF is being taken up by people who work at startups, and not by people who work at Facebook/Google but live in the city and commute, who likely are both more numerous and have even greater salaries.
The article doesn't mention studio prices at all, which are high but not stupid high.
I recently turned-down a great job offer for a Bay area tech company. Their office was just too far outside my commute range. I even offered to remote-work part-time and be in the office some days a week (I had already been a 100% remote worker for 3+ years, so I had a proven track record as a remote worker). But the founder insisted everyone be on-site, daily, even though many aspects of the company were quite comfortable and capable with remote-work (they had a remote team in Europe).
This "must be colocated" mind-set is lose-lose no matter which way you cut it. I turned down a compelling/interesting job, the company lost a great-fit. If I had taken the job, burdened with an absurdly long daily commute, we both would have lost time/productivity to commuting (not to mention the broader societal costs).
Maybe it's going to take a billion-dollar startup to scale-up with a remote/distributed approach to really shift things.
If you're talking about their products, yeah that's my point. Plenty of products for remote/distributed collaboration. If you're talking about their workforce... not so much. Just checking their careers page, and every job I saw was tied to some location. Didn't see a single "Location: Anywhere" job posting.
Sure, they'll find someone more local, eventually. recruiting is a cost and challenge. Self-imposing an additional barrier, one that technology melted away over a decade ago, just baffles.
Unless I won the stock option lottery, I think it'd be more cost effective for me to do a complete career transition to, say, medicine or dentistry, including lost income and educational debt, than it would be to move to SF as a programmer. Granted, I'm fortunate to have a relatively high salary in a much cheaper location right now.
Do (m)any of the SF startups allow workers to occasionally commute from places like Sacramento? I actually knew bankers who lived in Sactown and got up at 5AM to head out to SF every morning. But technology requires less in-person time. And Sacramento is much, _much_ cheaper than the Bay Area...I shared a great 2-bedroom place in the nicest area of town for around 1,200, where you could walk to great food, parties, and bars. I now pay way more for that to live in a converted garage in Palo Alto...in fact, this garage costs more than my nice 2-bdr apartment did in downtown Manhattan.
Even if you commute 3 times a week from Sacramento, you'd save a lot of money while still having a good social life...and 3 days/week in-person seems sufficient for a lot of dev work projects.
The commute from Sacramento to SF is not really workable. Traffic across the Bay Bridge has reached a point where there's almost no lull, and parking at BART stations is impossible to find. I go to a Sacramento colo sometimes and would never dream of trying to make the trip on a weekday or Sunday afternoon.
Of course, that's not actually a bad thing if their remaining income is higher in absolute terms (or adjusted for non-rent cost of living) than it would be in other cities. The percentage income isn't really relevant on its own. I'd rather make $10m a year and spend 90% of it on rent than make $100k a year and spend 20% of it on rent.
And when you add in the subjective value of living in SF (which is small or perhaps slightly negative to me, but surely large for many people), it could still be a perfectly reasonable decision to live and work in SF.
This article is missing one really key point about working for these unicorn companies, the stock that goes along with salary.
The article is comparing salaries of mid-senior level engineers and that $120k-$150k salary also often comes with $200k - $1+M in stock. As a SF-based startup founder and having been in tech recruiting for years, the clear upside of working for a unicorn is the stock with much lower risk of downside, but still plenty of upside growth.
If you look at percentage of Total Comp to rent, the numbers aren't nearly as outrageous.
Nobody wants to bother questioning the numbers. The first line shows Zynga, $3545, $147K, 47%. First hit on federal income tax calculator using single standard deduction no kids gets a federal tax liability of $30K, leaving $117K or a monthly of $9750, so $3545 is 37% of after tax income, which is not too bad. And anyone making a decent income should put some thought and money into deductions: 401k+HSA/FSA being the obvious ones. But actually, the 30% of monthly is generally calculated before taxes, so at 147K the monthly rent could be up to $3675. Not that I'm recommending spending that much or approving of the astronomical SF rents, but any article on the subject should at least do math correctly.
No, what's really going on is a certain company is trying to justify paying employees 20% less, under the excuse that local cost of living is lower. So if I live in SF in my parent's house and pay little to no rent, someone can pay me less? What if I eat ramen instead of going out to eat every night? That's absurd -- we should be paid according to what value we bring and it's up to us how much we spend on cost of living. In fact, a company in LA that can't attract top talent such as presumably are now in SF should be offering even higher salaries.
I'm in NYC and I pay ~10% of after-tax income for rent. I visited a friend in SF recently and after hearing about his situation I concluded it would be very difficult for any company to get me to move to the Bay Area. It just doesn't make financial sense for me. NYC has plenty of tech opportunity, so that doesn't tip the scale either.
I have to ask: which neighborhood do you live in, and how far do you commute? I'm moving to NYC in two days and I still don't know where to live (thankfully, my company will pay for a nice apartment for 30 days).
I actually wrote off SF and the entire Bay Area during my job search, largely due to the cost of living. I know that in New York I'll at least be able to find a 1br for $1700 (in Western Queens or Wash Heights, whatever), which is 25-30% of take home.
I live with one other person. Combined rent is less than $2k / month for a good sized 2 bedroom apartment a block and a half from a big subway hub. We have a full size grand piano in the living room and it's still spacious. The kitchen is also a pretty good size (at least by Manhattan standards). I suppose some might call this modest. But I wouldn't consider it "very modest". I also have friends who live in the city fairly comfortably on as little as ~30k / year.
I love these high salaries. My thought is to find a job in SF, live there temporarily for 3-6 months, then become remote and move back to my real home on the east coast. Is that feasible? Aren't these kinds of companies pretty comfortable these days with video conferencing, IM, screen sharing etc.?
"Sorry, blisterpeanuts... we know telecommuting is really attractive, but we like to have people in-office at least four days per week so we can get together in a room and really hash out problems. But feel free to work from home on No Meeting Thursdays!" - Your future SF manager
In my experience, no, most people assume you're not working if they can't see you working..
I'm a sysadmin, I could do my job anywhere with stable power and a low latency internet connection- but people insist on sticking me in a room with 80+ people so they can observe my work.
There are strong advantages to working in direct contact, despite what sentiment on HN and logic dictates. Working in SF for a few months wouldn't make you super rich anyways.
I was on site for 2 years, then have been remote for the past 3. Five years is the longest I've been at any job, and remote is what's kept me here.
But my salary is well below the $140K averages I'm seeing in SF. So hire me at $160K, I'll be on site for a while, then if it's all right with y'all, I'll go back and be with my family and my productivity will be even higher!
Everything's negotiable in this world. I can see why 20-somethings want to be in the big city and are willing to compromise on their living conditions. That's always been true. But there comes a time when you just can't do that any more.
I think his/her strategy of working in SF for a few months at first is not to become "super rich", but to establish a high salary that could then be "exported" to a cheaper area while staying on with the same company.
I'm reasonably sure that a decrease in CoL would be adjusted into the salary, or at the least, any company in a lower CoL is less likely to give a competitive salary.
Solution: buy a property in a lower CoL area and then rent it out to yourself. It helps if you establish a few shell and holding companies. Charge as much rent as you're paying in SF and then they can't lower your salary based on CoL because your CoL is still high. Win-win-win! ;-)
So if you are living and working in SF and making $150K (plus bonus, stock options etc) and you decide to move to, say, Phoenix and buy a house for $140K, they'll say, "OK, minimaxir, we'll be cutting your salary to $90K to reflect the vastly diminished cost of living, although of course we'll be able to give your desk to a new hire and save money on office space!" -- ??
Seems unlikely. If you're contributing, no rational company is going to suddenly cut your salary. Basically, no one cuts salaries in the U.S. unless it's a company-wide belt tightening move to stave off bankruptcy.
You can't make a statement like that without facts to back it. The truth is that companies do this all the freaking time. Besides that, it has also been common for a decade+ for CA-based employees (both LA & SFBA) to sell their artificially inflated house and quit their job to move a lower COL state (often Texas, Washington, Oregon, or North Carolina, all of which are much cheaper and have lower income tax schedules). If they stay with their existing company, their salaries are frequently decreased based on COL calculations. Otherwise they use the previously mentioned tactic and quit for something different, using their current salary as a negotiating point.
Any citations for this "all the time" claim? It's not against the law, but I would think (and online discussion/blog/advice seems to support) that most people would rather quit, as you suggest.
I live in Baltimore, which is only a notch above Detroit in people's minds (we're talking perceptions here...). I work remotely and can afford to live a life I'd only dream about in Brooklyn, NY: Great apartment, great neighborhood, and enough disposable income left over for travel and other activities.
The nice thing about owning a reasonably sized home is that I have a pretty decent home office setup when I need to WFH. I can segregate it from my 'play' area enough so I don't feel like I'm constantly on the clock.
Baltimore seems like a great place. Plus you have the advantage to ultra-commute to DC if you need to.
sure, a cheap cost of living can be had anywhere in the world. but I think it's unique in a 4 million+ person metro area in the united states. Especially with the history and architecture that Detroit has.
This is insane. I work as a software engineer in Zurich, and I'm able to set half of my net salary aside as soon as it arrives. Without any significant saving efforts.
The rent around RadPad is not that cheap. While you might be able to find something for that price, it won't be pretty.
Most of westside is starting to be as expensive as Venice/Santa Monica and these two aren't that different from SF in prices. Unfortunately, you don't get much besides weather and ocean breeze, unlike in SF where public transit and neighborhood cafes actually exist.
Friends are looking for a 2BR with $2500 budget and it's a really sad experience. If you are willing to spend $3500, you can do much better, but still not prime SM or Venice locations or Playa Vista (newest hotbed in the area for tech).
The article mentions Hawthorne, but that's not the best of neighborhoods and has a good amount of industrial/petrochemical activity near by. Redondo Beach is still sort of affordable, but you have to deal with traffic going north/west in the morning and back.
This is precisely the reason why I turned down an offer with a big company in SF to work for a software company in Utah. I just graduated from school 6 months ago, but I am living very comfortably - the payment on my 4 bedroom house is less than half of what I would have paid in SF for rent in a 2 bedroom apartment.
Most people don't live by themselves in a 1 bedroom. They usually live 2+ people per room, so that they can afford it. For example, a 2 br apt might have 5 people living there, two couples and then one living in the living room. That's how they can afford the $5000/month rent.
By "most people" you mean mostly 20-somethings? It's hard to imagine people in their 30s and older, married and starting to have kids, living like that. I mean, great if you can pull it off, but you'd have to stagger the shower schedule not to mention maybe get a 2nd refrigerator?
That's not uncommon in London, especially amongst immigrants from Eastern Europe — it makes sense, if the aim is to save money rapidly to put a deposit on a house in Poland/Romania etc — and people in their 20s.
I took a room for ~9 months in what was originally a 3 bedroom house. It was (a) very flexible regarding the contract (b) very cheap (£400/mth). (I had to move out of my previous place, but was looking for a new job, so didn't want to commit to something that might be in an inconvenient area.)
I had my own room, and for most of the time there were 4 people in the three other rooms, age 30-40s and one at 50.
Everyone apart from me worked in the kind of jobs where you have to be in by 7-8am, so I never had an issue taking a shower. We had 2 fridges.
This was a "nice" house, in a nice area, with nothing dodgy about the contract / rent etc. In other areas there are really scummy landlords overcharging people for individual rooms, often none of them are British / western European, so they don't seem to know that there are regulations in their favour, for example for getting a deposit returned, or not paying for wear-and-tear repairs.
This is the bigger problem. Companies like Google & Salesforce have been there long enough for their early hires to have grown up and gotten ready to lay down roots ... but they can't afford to buy a house and they don't want to raise a family in a small/crappy/inconvenient apartment or condo.
> Most people don't live by themselves in a 1 bedroom.
Citation required. None of my post-college friends are sharing a room (though many do share their apartment). Yes, rent is high, but it's not that high when compared to dev salaries.
> Yes, rent is high, but it's not that high when compared to dev salaries.
This is skewed if all your friends are devs. The sentiment is true to my experience as far as my non-dev friends go. Many share rooms with strangers or live with their significant other.
"in a 1 bedroom" means living in a 1 bedroom apartment (might also include living in a studio. What you're referring to would be "in 1 bedroom". The article "a" changes the meaning of the phrase.
yes people live with roommates in separate rooms, and some convert a part of their living room to another room (this is actually really common) but I know very few people living 2+ (you seriously mean 3 or 4 here?)
I don't know about the US. In Germany there is the general rule that you not pay more than 30% of your income for rent, if you want to have decent living.
May be in the US it is different because there are diffrent costs for food.
50% and more just for living seems to be to high for me.
NYC is also expensive. Spending 50% on rent for a 2BR. (That said, I elected to pay a little more to get a clean, modern place in a new building. A lot of NYC apartments look like something out of 1980s Russia, only not as nice.)
Employees at these companies don't mind paying 50% of their salary for rent because their salary is at most only 60% of their total compensation. Lot of people are getting 1M + deals paid out over 4 years.
and, do you mean 4 years of salary + the equity grants, or just the equity grants, because not very many people get $250k/yr worth of equity [from any company]. A few do, but not the unwashed masses.
The startups I have talked to in SF don't take you seriously unless you live there. They are real jerks about it. Tell them you live in San Jose and can take Caltrain and they never call you back.
Yeah this is expensive, but they're talking about living right next to your office. Of course the rents are extremely high there -- you're downtown. Kind of a misleading article
Any econ101 book will do. I'd suggest Basic Economics by Thomas Sowell.
Short version: Supply (housing) is being artificially restrained from being built out (through regulation). While demand (those moving to the area) keeps increasing. Low supply and high demand = higher prices.
Solution: Build more housing.
It's a simple problem, navigating the bureaucracy is the hard part.
I think it's safe to assume that the rent is too damn high for companies relocating or setting up offices in SF. It would have been much more insightful of they could supply that graph with office or residential space data over time to get the full picture.
I mean, I like LA a lot better, but I think even that is too expensive, especially when you're getting hit with CA taxes. I moved to Tennessee. No income tax, friendly people, fewer NIMBYs and restrictive building policy, fewer feminist harpies, etc. Apparently many others have had the same idea, since people are streaming into the state from places like NY and CA. You'd be surprised how much tech is here as well. Unfortunately, winter is way worse and there are no real beaches, but you can always buy a plane ticket.
Also, just FYI: Seattle isn't that much cheaper than SF, the people are way meaner, traffic is awful, and the weather really sucks. So I highly recommend against moving up here.
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edit: Since people are apparently missing the joke, I've lived in Seattle for 12 years, consider it home, and can't imagine living anywhere else.