Six figures in San Francisco is a joke. I was working out of Raleigh, NC until recently, with a take home pay w/benefits around $85k. I calculated to have an equivalent standard of living and spending money in SF, I would need to take home around 150-160k. Equivalent! That includes no raise over my previous position!
Housing was a large part of it, but equally problematic was taxes. The more you make, each extra marginal dollar is taxed at the highest bracket. So each marginal dollar earned goes a little bit less far. Combined, the high cost-of-living and marginal tax rates make SF extremely expensive. I laugh at 120k offers in SF, that's like making 65k in a reasonable city.
Perhaps its been a long time since you calculated those numbers, or you don't have first hand familiarity with the SF bay area, but your 2x estimate is woefully under comp. For the general bay area, you need to add another x. And if want to live in SF proper, add still another x.
The SF bay area is such an extreme outlier that none of the cost of living comparison calculators are accurate.
Taxes, housing, childcare, quality of schools, gas prices, and on and on and on pile onto the expense. Even things like traffic tickets add up: a red light ticket in California will cost over $500 before even factoring in higher insurance costs; this is roughly quintuple most of the country. I pay less than $0.08/kWh for electricity; bay area rates are 3-4x that.
I lived in the bay area for a long time before moving to a suburb of Seattle, where I own a nice home and live near excellent schools. I estimate that I would have to make at least 2.5x more to maintain the same standard of living in the bay area (forget about SF).
It's extremely hard to come up with any across the board cost of living comparison.
For example, you mentioned a red light ticket. That presupposes you drive a car, which is pretty much required in NC but far from a necessity in the SFBA.
Not to mention that while your expenses might increase substantially, there's no reason you have to keep your savings rate consistent. I'd much rather save 30% of $200k/yr than 40% of $80k/yr.
> Not to mention that while your expenses might increase substantially, there's no reason you have to keep your savings rate consistent. I'd much rather save 30% of $200k/yr than 40% of $80k/yr.
This is what most of these naive cost-of-living conversions tend to miss, by always assuming a savings rate of 0%.
High income earners like software engineers tend to be able to save a very significant percentage of their income, and the stock market grows at the same percentage no matter where you live (within the US), which compounds the difference in net worth growth.
This is why I vastly favor high cost-of-living, high salary areas when looking for work. Of course, if you project for yourself a 0% or lower potential savings rate at both locations, then the original naive comparison holds, but then you have bigger problems.
> High income earners like software engineers tend to be able to save a very significant percentage of their income
Exactly, especially when you're young. It's very possible to save 50+% of your income as a software engineer in a HCOL.
This is especially useful since nothing says you have to retire where you work. Even before then, lots of high-ticket purchases (like vacations) don't scale with your COL.
Both homes have a toll bridge to cross, though I suspect the Tacoma Narrows has a lower toll than any of the options in the bay area.
The home you listed: in Vallejo, which is very undesirable; has $2460/year HOA dues; is in a borderline terrible school district; is on 4200 sq ft lot, with most of the windows blocked due to the neighbors being within normal talking voice distance.
The home I listed: is in Gig Harbor, which is very desirable; in an excellent school district; is on a third of an acre.
In short, the two homes are not at all comparable. For a good comp, you would need to find something in the south bay.
That's not accurate. My gross before moving out here was less than your net. I doubled that with the move. A larger fraction of my take home is consumed by rent. That take home is less than twice my previous take home because of state taxes. Food, utilities and commute costs are all about the same. (Edit) My wife (who's salary didn't change when we moved) and I support a family of four, including private school tuition and service a mountain of school and medical debt and live just fine. And I'm saving twice as much. Our gross household income is in the neighborhood of $200k, give or take.
Although I do agree that the common low $100k range for engineers is a joke. We're underpaid by a significant factor. Just like most other low status workers.
Sounds about right. I mean, I don't want to get too detailed, but our take home after taxes, 401k/retirement, etc. covers the two expenses you mentioned and leaves plenty left over for other living expenses and debt service.
No, I contribute much more than 50% of our household income. But it is a dual income, and much less than the person I was responding to thinks he'd have to have to live here with a _mostly_ equivalent lifestyle. The biggest hit would be housing. There's no getting around it: either you're rich, or you rent. A home one could buy almost anywhere else for $250k-$300k would cost $1M and up in this area, depending on where it is. My salary didn't increase by a factor of 5, but the cost to purchase housing did. Even so we live comfortably enough, and certainly not in a little 900 sq ft shoebox of an apartment.
I laugh at 120k offers in SF, that's like making 65k in a reasonable city.
Even if you think you can easily do better, you shouldn't "laugh" at salary offers in that range. The vast majority of people in the U.S. won't ever -- at their current (and for many, basically immutable) education level -- stand a chance of making anywhere near that much.
And being as it's just a matter of blind luck that we've been born at a certain time and place that enables us to make that kind of a salary.
For basically playing with shiny toys all day, and all.
The point is that you don't get to keep much of it. Basically, unless you're making >$200k or so (which is def possible and not st all unreasonable for engineers or management out here) , you might be able to save more post-tax post-expenses elsewhere.
The real game to be in here is real estate. Don't mine the gold, sell the shovels.
Isn't that a strawman argument though? The discussion is around engineers making the most out of their salary so why would be lump in folks with different education / jobs?
The point is that you aren't more fortunate with a nominally higher salary if your baseline (not luxury) costs consume it all. I'm doing about the same as anyone else who can barely afford to rent a studio and can't afford to have a car or travel.
Someone with a third of my salary gets a house, a car, and more disposable income which goes further. The one area where I'm really blowing them out of the water is my $5/mo health insurance that makes all care effectively free. That's a function of the company, though, not the salary. Our much lower paid, lower skilled workers in satellite offices get the same benefits package.
The point I'm trying to make is that, thanks in a large part of very some "boom" you and I riding on, a lot of people not only can't afford to live in SF (or other pricier parts of the Bay Area) with a car and travel money -- nowadays, they can't afford to live there at all. Whereas 20 years ago, while it was never easy to make it in the Bay Area -- at least theoretically they could, at their skill and education level.
So while $120k may seem like chump change to you, it'd be a godsend to them. They may still not be able to travel, and they may have to cut back in a whole lot of other areas -- but at least they'd be getting by.
I do the same but in Virginia. Unfortunately, living close to D.C. is very expensive so I don't enjoy the benefit as much -- but the work itself is way better than yet another boring government contracting job that you can not talk about.
Now that truly is the dream. Probably make enough extra income to rent your own place in a We-Work or something similar too if you don't like working from home as much and still bank most of the difference.
How do you figure out an equivalent standard of living?
For example, in housing, if you were living in a standalone house in the second most desirable neighborhood of Raleigh of 2000 square feet on a quarter acre lot, is the equivalent a standalone in the second most desirable neighborhood of San Francisco of 2000 square feet on a quarter acre lot?
That's totally a personal call. Some people would be OK trading a bedroom and bathroom to be able to walk home from the bar. Others wouldn't.
But the obvious criteria universally apply: commute time, square footage of the residence, crime rate in the area, quality of the local school district (YMMV), etc.
Most people when moving to a more expensive city compromise at least a little on all of those to keep rent manageable. So maybe a Bay Area resident spends three times as much on housing but they get half as much square footage and a much longer commute.
I agree that is the best way to think about it, but it means discussions about CoL differences are inherently subjective.
Perhaps, the least bad way to figure out what an equivalent salary in RDU and the Bay Area is to use revealed preferences and look at people that move between the two areas and what they are paid in either city.
I rented before, so I considered equivalent to be the same sqft (900f sqft), same quality neighborhood. I'm sure you could save some by getting a roommate or smaller living arrangements, but that wasn't what I wanted to compare.
I'm in a similar situation in Columbus, OH. The jobs are here are generally more boring, but ultimately more profitable, at least for me. Especially given that we have Ohio State here, I wouldn't be surprised if the job market continued to improve here. I don't think I'd start a business anywhere else.
This is wayyy off in housing. I don't know anyone who is paying 10k a year for rent in santa clara county. This is the rent if you are sharing a house with 5 other people in bad parts of san jose. Peninsula rents are almost the same as SF.
Likewise for SF, their estimate is $1250/month, which will rent you a garage or a converted living room with a curtain separating it from the kitchen in the far reaches of the city.
As a grad student, this is about my budget for housing, and I promise you I'm not exaggerating.
>Likewise for SF, their estimate is $1250/month, which will rent you a garage or a converted living room with a curtain separating it from the kitchen in the far reaches of the city.
You found a garage for $1250? Link? Is there an open house soon?
> Likewise for SF, their estimate is $1250/month, which will rent you a garage or a converted living room with a curtain separating it from the kitchen in the far reaches of the city.
Jeez, this is a ridiculous estimate. I have a 2BR on the edge of downtown that has big bedrooms with bay windows, a solarium, a nice big kitchen with granite counters, quite a bit of living space, and the only downside is an old building.
Me and my flatmate each pay around $1300, BUT that's after 6 years of rent control. The last time I checked, market rent on this place was almost double what we pay. The idea that this is a normal price for anywhere else in SF is kind of silly.
Yea the info for Seattle is also really off. 10k for a years rent. I'm paying 2400 a month for a two bed flat. You could definitely get it down quite a bit but I doubt you can get anything decent for around $900 a month.
Depends on where the rent is. I rent on the Peninsula. Show me a place in SF where I can rent a 1500 sq ft home for $4k/month and I'll show you a seedy drug alley in the Tenderloin.
I know people in Alameda who pay $800/month in rent. It's definitely possible to find good deals. There are also brand new studio apartments for $1700/month. It's definitely to find good deals.
I moved from Australia (with ~50% top marginal tax rate) to the US (where everything's all about "low" taxes and getting nothing for them except funding dumb wars) and my take home pay was higher in Australia.
Let's not even get started on the underfunded schools, crime, etc, etc. To send your kid to a decent school in SF costs 25k+/year per kid.
50% That's about the same as American blue states. Remember to include state, city, medicare, social security and property taxes. Add healthcare and I'm pushing 55%
It's 45%, and it's for the bracket above 254.447€ as a single. I make decent money in SF, and made decent money in Germany. My effective taxe rate is about the same.
45% is the ceiling bracket for income insurance, then there's pension insurance (~9.x%) capped at ~70k income, unemployement (1.5%) also capped at 70k, solidarity surcharge (up to 5.5%, basically redistribution between parts of Germany). Health insurance is separate again (up to %7 capped at 50k).
But with that you have free education including college, health insurance without deductibles & co-payments, continued payment in case of loss of work, kinda somewhat decent-ish retirment money.
Base salary in the Bay area has never been particularly high compared to comparable cities, but in my admittedly anecdotal experience, The Bay Area has the highest equity compensation of anywhere in the US.
Equity should only count as a lottery ticket unless the company has IPO'ed and there is a place for the employee to actually value and sell those shares.
One could argue that if a company has had a public offering, they probably aren't at the low end of this pay scale anyway, but that's more speculative.
I mean...a really, really good lottery ticket which has a much higher chance of paying out than your standard powerball ticket. It's true that there is variance in your pay if it's partially made up of equity but it's clearly not worth nothing, which is how I would evaluate a lottery ticket in practicality.
It's more like a lottery ticket where a VC can come in and say sorry you now have 0.001 lottery tickets and if you hit a jackpot, I get the first $50M of it before we split the rest of the pot.
Hard to compare apples to apples with equity. Some equity is worth close to nothing, others (RSU) are pretty much just like cash. Many places give a little equity every year, others only your first few years, then you don't get any anymore (so does that equity count in your "total" or not?), for others it's totally random and variable.
So? Just budget the proceeds. If you need a bit of extra help not spending it all at once it's not that hard to set up an automatic transfer on a monthly interval with a bank. Just set it up for {Proceeds} / 3 for three transfers.
Yea, by the time I left Google, I was making about 50% of my gross pay in equity, and this equity was basically as liquid as cash (the difference being the volatility).
What is this based upon? Do tech companies give different equity if you e.g. Work out of the boulder office? I've been looking for an excuse to move to CO.
I find this pretty off for silicon valley. <$1000/month for housing? Even with utilities, this is still nothing. If you added in all of misc, it'd be more realistic. Wasn't aware that salaries in Seattle had risen to $130k+ so quickly either. I remember starting at $80k being a good salary there just 3-4 years ago.
Am I crazy in thinking the listed comp is crazy low?
Not disputing that the COL is too damn high, but the only people I know making that little are very early in their careers and/or working for a startup, and that's be valuing their equity at 0 (which is probably an appropriate valuation).
According to Glassdoor[1] and Payscale[2], the median/average for a software engineer in SF (not counting equity) is around $110K. So the SF number seems in the ballpark, a little high.
Not 'crazy low'. But it also depends on how you 'share' how much you're making. Do you include the bonus you got (even though it might not be there next year?) do you include what your RSUs count for even though when you go to sell them they might be worth less than when they vested? Etc.
East Bay (El Cerrito/Albany/Berkeley) is where it's at. Great weather, no suburban sprawl hell, easy commute to anywhere, great food and culture, top notch schools, decent rents. Every time I try to leave this place I just can't justify it.
The problem with Berkeley is that the rental stock is shit and overpriced because they know plenty of students are price insensitive and have no clue about the market. However if you stay on top of craigslist you can eventually get lucky enough to find something amazing with a better commute to Fidi/Soma than half the city.
Do you rent or own? I've been looking to buy in the East Bay, but it's becoming extremely difficult to find something that an engineer's salary can afford that's in a good school district and is of a reasonable size.
I rent in El Cerrito but we've been looking at buying. It's really the best option around here IMO. Decent 3 bedrooms in a wonderful neighborhood can still be had for < $700k. Case in point: https://www.zillow.com/homes/for_sale/El-Cerrito-CA/fsba,fsb...
I've never seen such bullshit! I live in Chinatown with a 100k salary. According to this website the median is 111k salary, with 11k discretionary income.
I have a decent place in Manhattan (Chinatown), which I'm paying $800/mo for (split with 2 friends), absolutely not paying 5.3k/y for transportation (3 subway cards a month??), and I have NO idea what these mystical $1500/mo miscellaneous expenses are, unless they could be attributed to savings, $600/mo on groceries is just feckless profligacy--and $500/mo on utilities??? WTF!???
I have so much discretionary income I literally have nothing to do with it except save/reinvest. My two roommates constantly make fun of me for being a spendthrift, but according to this website I must be in the top 25 penny-pinchers in Manhattan...
It includes $19k of "Misc." in the "Basic Expenses" category, which is nearly $10k more than most other cities. It's unclear what that is exactly, but they say the data comes from expenditures from "professional and executive households". I wonder if it says more about the behavior of professionals and executives living in Manhattan than the true cost of just living there.
Also the transportation category for Manhattan is 50% more than the NY Metro overall, which is weird given that one of the benefits of living in Manhattan is not needing to own a car.
It doesn't matter what dataset you are using to base it off of, if you think that the average person pays $1,263 per year in total healthcare costs you're crazy. I'm paying something like 3 times that as a very healthy 20-something.
Is it common that employers pay 100% of healthcare costs? I've never heard of a company doing that outside of big tech companies. I work at a startup and for us its about 50/50 employer/employee contribution, which is similar to the deal I've gotten everywhere I've ever worked.
Big FYI for all you devs - this is how content marketing is done correctly. This page is quality content (similar strategies provide useful tools) that is tangentially related to a companies product/service. BUT there is no call to action, no pitch, and no mention of the actual company being a company - it comes off as a publisher.
The benefits to this are: links for SEO, links/blogs/news articles about it, discussion around the topic, and some percent of users who are interested in the subject will poke around the site for more info... and they'll find out this company will store and move your belongings for you.
So, fun observation. The site estimates the housing cost for year to be ~$18k. LOL. It's kinda difficult to get a room (in a shared apartment) in an accessible part of SF at that rate today. I guess it's worse than mediocre.
According to the "Methodology" section, the data is based on:
> May 2016 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates from the Bureau of Labor Statistics (BLS), U.S. Department of Labor. Unless otherwise specified, the salary is the “Mean Annual Wage” column of the data set.
This data also has a 75th percentile and 90th percentile column. It would be cool if the visualization worked with those parts of the data too, because the salary gap between the 50th percentile and the 90th percentile can sometimes be huge.
Questions about the data aside, I really like the Data visualization UI and UX, its very nice-to-use and you play around with it without thinking.
However, whenever it shows "Physics Teachers and Business Teachers" and says they are for postsecondary, I think they mean professors for college or other postsecondary education because teachers tend to mislead and bring up images of highschool teachers instead.
I make $140k in Detroit. With decent 401k benefits, insurance, flex time, remote twice a week. I'm a programmer working for just a regular company. Building your typical enterprise CRUD app. I know people making $190k 45 minutes away in Ann Arbor. I've often been tempted by the valley but it's just not worth it. I'll need to make $250k cash at the very least.
I wound up deciding to live in the midwest while working remotely for California companies. Now it's as if my salary has gone up by 200-300%. The midwest gets an incredible amount of hate from west coasters, but meanwhile I'm living a life which feels like an easy paradise compared to the rat race back on the west coast.
The trove data for housing is way off. Especially for cities like NY or SF. Where in San Francisco can you find a place to rent for $18k/year or $1500/month?
Housing was a large part of it, but equally problematic was taxes. The more you make, each extra marginal dollar is taxed at the highest bracket. So each marginal dollar earned goes a little bit less far. Combined, the high cost-of-living and marginal tax rates make SF extremely expensive. I laugh at 120k offers in SF, that's like making 65k in a reasonable city.