8 ms·

Would really like to see some methodology here. I find it extremely hard to believe that programmers can only afford 4% of SF's housing stock, but doctors can

Would really like to see some methodology here. I find it extremely hard to believe that programmers can only afford 4% of SF's housing stock, but doctors can do 41%. Sure doctors might make an average of $175k while programmers pull $100k, but by the time the doctor exits residency, the programmer will have earned about $400k+ post-tax while the doctor is $200k in debt. It'll take quite some time (12+ years) for a post-tax salary difference of $36k to make up that imbalance.

johnloeber 11y ago
> After finding the average annual salary for each profession in each city from Glassdoor... Yeah, they don't take into account critical factors such as estimated student loans or time invested.
superuser2 11y ago
>programmers pull $100k My understanding is $110k is an unsurprising entry-level salary; people who are mid-career would be making quite a bit more.
- withdavidli 11y ago
  There is something really off about these numbers. unless i'm totally off about how many entry level employees are in the area vs mid/senior level employees. Since this data is collected by people reporting their salaries, I think that people that are more junior are more likely using and submitting their salary info to the site. This will skew salary data toward entry level employees. I also see Glassdoor is accounting for stocks now, though that's not factored into avg salary, but total comp. Looking at some companies this raise compensation by ~$50k.
  - pmiller2 11y ago
    I would say that counts, provided it's actual stock and not options. If it's actual stock, it's liquid, which makes it almost as good as cash for most purposes.
    - withdavidli 11y ago
      RSUs and other post ipo options should definitely count cause you can sell it right after they vest, basically treating it like cash. What I'm saying is that Glassdoor does not count it towards their avg salary number. If you click a salary for a role at a certain company it'll give you a different breakdown showing Avg Salary, and one showing Total Comp that includes salary + bonus + stock
    - ryandrake 11y ago
      RSUs will typically all vest after a certain period of time, depending on the company (4-5 years?). But your mortgage is for 30 years. I wouldn't count that stock towards your "yearly income".
      - tamana 11y ago
        RSUs refresh, or employees go to another employer for new RSUs.
      - withdavidli 11y ago
        they vest over a period of time, not usually all at once. my company does it evenly over 4 years with a 1 year cliff. other companies can have it skewed towards the latter 4 years. employees do get refreshers as well. so if it vests equally over a certain amount of years, totally should count that portion towards yearly income. In your analogy, it's like counting how much you owe in mortgage payments every year towards yearly expenses.
- vostok 11y ago
  We're just talking about entry-level salary, right? I've heard really high numbers for first year total compensation.
- TuringNYC 11y ago
  Some of these entry level "compensation" figures include illiquid stock. Ask HR what the outstanding number of shares are and you get a blank face. Other stock classes? Silence. Liquidity preferences? Secret. The real worth is zero, yet they get treated like $30k on top of salary.
  - deleted 11y ago
    [deleted]
  - superuser2 11y ago
    I am specifically talking about base cash salary here, but point taken.
- gambiting 11y ago
  A bit off topic, but I just cannot grasp those US salaries for programmers. Even for UK, that would be insanely high, with the exception of maybe london, but if you work anywhere else the number is 1/3 of this. Average junior programmer salaries in the North East of England are around ~$35k/year, and I know seniors with 15-20 years of experience and they make 60k pounds/year(so ~85k USD/year). I have friends working as C++ programmers in Krakow, Poland, and they make ~$20k/year(bear in mind that it's extremely good salary there, as houses rarely cost more than $100k, in fact you could buy land and build a house for less). I just cannot grasp how an entry level position would pay $100k/year.
  - seren 11y ago
    It is hard to compare European salaries to their US counterpart. You have to take account they have much less holidays on average, you have also some sort of "free healthcare" that is not tied to your job, a state pension plan, access to some cheap higher level education for your children. In my country, between what is paid by the employer and what I actually get there is a factor of 2 to pay for all the "free" service aforementioned.
    - refurb 11y ago
      I would be careful with that comparison. Many higher-wage US jobs get much more vacation than the minimum 2 weeks, health insurance is paid for by the company (employee only pay ~10% of premium), you get a pension (Social Security) and you're kids can go to a state school with subsidized tuition (albetit, nowhere near as cheap as Europe).
      - seren 11y ago
        That is why I mentioned "not tied to your job" which seems, from my very European viewpoint, a bit saner. I heard at least one horror story of an expat who went to work in the US, got a cancer, lost its job, and then had to come back because he was totally uncovered. I don't know the system well enough to determine if it was a total lack of precaution (and luck) on his side, or that was how the system was supposed to work.
- ryandrake 11y ago
  According to Glassdoor[1] and Payscale[2] the average salary across all (not just entry-level) software engineers in San Francisco is $103K. So I doubt $110k is even close to a normal entry-level salary. 1: https://www.glassdoor.com/Salaries/san-francisco-software-engineer-salary-SRCH_IL.0,13_IM759_KO14,31.htm https://www.glassdoor.com/Salaries/san-francisco-software-en... 2: http://www.payscale.com/research/US/Job=Software_Engineer/Salary/a5e48575/San-Francisco-CA http://www.payscale.com/research/US/Job=Software_Engineer/Sa...
  - tamana 11y ago
    That ignores substantial publicly-traded equity and cash bonuses
eloisant 11y ago
The problem is that they use the national average revenue, but revenue varies greatly by city. $92k seems pretty low for a San Francisco computer engineer. Actually I think even restaurant servers make more in SF than the rest of US.
- manarth 11y ago
  The article claims that they localised the revenue: > "After finding the average annual salary for each profession in each city" Whether the numbers are reasonably accurate is another question though.
moomin 11y ago
Actually, their stated methodology is a bit rubbish, in that they just take the mean salary and compare it to the housing distribution when they've actually got the salary data and so could create a weighted average, which would be more accurate. (Plus everything you just said.)
nilkn 11y ago
First, how many programmers, even in the Bay Area, have base salaries of $175k and higher? I'd wager not very many at all. You'll frequently see total compensation packages quoted in that range and higher, but those include various forms of deferred payment that are not guaranteed (like unvested stock options, whose value is often measured in a fairly unreliable way). Second, one's cash salary is the primary determining factor in how much house one can "afford" (and I use quotes because I think there's a vast gap between what a bank tells you you can afford and what you actually can afford, but that's a different discussion). If you just use the 3x rule of thumb, the $100k programmer can only afford a $300k house and the $175k doctor can afford a $525k house. But of course in SF people more often use the 5x rule of thumb, so the programmer could "afford" a $500k house and the doctor an $875k house. Don't forget also that there are many doctors who make vastly more than $175k in salary. $300k+ salaries are not all that uncommon among specialists. Indeed, $284k is the average for specialists: http://www.medscape.com/features/slideshow/compensation/2015/public/overview#page=2 http://www.medscape.com/features/slideshow/compensation/2015...
- steven2012 11y ago
  I take it you're not from the Bay Area. Base salaries over 175k are common for senior engineers (10+ years). I would say that's a common base salary for the bigger companies like Google, etc. Netflix pays $400k cash for senior engineers. Also the median house price in SF is over 1M.
  - nilkn 11y ago
    I didn't say there aren't programmers making $400k or any particular figure. I said it's not common. And I don't think you've written anything here that would convince me that it is common. Could you link to some statistics that show $400k base salaries are common among programmers in the Bay Area in any reasonable sense? If so, then I will completely re-evaluate my stance. My guess is that $400k is about as high as it gets (feel free to correct me if I'm wrong -- with a reliable source, mind you). If we're going to do a fair comparison to doctors, then we need to compare it to a top income for a doctor as well, which is easily in excess of $1M/year.
- 11y ago
kelly-estately 11y ago
Hi usaar333, We got the median software engineer salary off of Glassdoor for San Francisco. It's possible that this skews lower than the actual median salary in the area, based on the type of people who report their salaries on Glassdoor, but that's probably the case for all the salary information we got. We were plainly looking at software engineers, not senior ones or any unique specialities. From there, we used a typical formula for mortgage affordability to figure out how much they could spend on a home. We compared that with recent sales over the last 6 months to determine what % of those homes they could have purchased. Hope that helps! Kelly from Estately
- usaar333 11y ago
  Hi Kelly, Thanks for the follow-up. I understand you are pulling the data from Glassdoor, but what I wanted to further understand is: a) Are we talking about the city limits or metropolitan area or something else? b) What is the formula used for mortgage affordability? Are we assuming dependents? Debt? Age? c) How is housing cost determined? The doc implies home sales, but is this reweighed? If a new condo opens up with 400 units, that can significantly distort the "home sales distribution", but insignificantly affects value of housing across the market. My high-level thought is that is that intuitively the data feels off. i'm not sure if two of the largest issues: A. Considering sales of larger homes (3 beds+) that would almost always be purchased by dual-income individuals B. Using salary means to claim occupation X can afford Y% of homes. "Average salary for occupation X can afford Y%" of homes is different than stating "The average worker in occupation X can buy Y% of homes". (Example: 4 eng make $100k; 1 makes $200k. 1 home in the market costs $400k. Say you use 3x income for affordability standard. Average income is $120k = no one can afford the home (0%). But actually 1/5 engineers can afford the home, meaning that the average worker can buy 20% of all homes) completely explain the discrepancy from my own world-view (almost every programmer I know could in fact purchase a 1 bedroom condo).

johnloeber 11y ago

> After finding the average annual salary for each profession in each city from Glassdoor... Yeah, they don't take into account critical factors such as estimated student loans or time invested.

superuser2 11y ago

>programmers pull $100k My understanding is $110k is an unsurprising entry-level salary; people who are mid-career would be making quite a bit more.

withdavidli 11y ago
There is something really off about these numbers. unless i'm totally off about how many entry level employees are in the area vs mid/senior level employees. Since this data is collected by people reporting their salaries, I think that people that are more junior are more likely using and submitting their salary info to the site. This will skew salary data toward entry level employees. I also see Glassdoor is accounting for stocks now, though that's not factored into avg salary, but total comp. Looking at some companies this raise compensation by ~$50k.
- pmiller2 11y ago
  I would say that counts, provided it's actual stock and not options. If it's actual stock, it's liquid, which makes it almost as good as cash for most purposes.
  - withdavidli 11y ago
    RSUs and other post ipo options should definitely count cause you can sell it right after they vest, basically treating it like cash. What I'm saying is that Glassdoor does not count it towards their avg salary number. If you click a salary for a role at a certain company it'll give you a different breakdown showing Avg Salary, and one showing Total Comp that includes salary + bonus + stock
  - ryandrake 11y ago
    RSUs will typically all vest after a certain period of time, depending on the company (4-5 years?). But your mortgage is for 30 years. I wouldn't count that stock towards your "yearly income".
    - tamana 11y ago
      RSUs refresh, or employees go to another employer for new RSUs.
    - withdavidli 11y ago
      they vest over a period of time, not usually all at once. my company does it evenly over 4 years with a 1 year cliff. other companies can have it skewed towards the latter 4 years. employees do get refreshers as well. so if it vests equally over a certain amount of years, totally should count that portion towards yearly income. In your analogy, it's like counting how much you owe in mortgage payments every year towards yearly expenses.
vostok 11y ago
We're just talking about entry-level salary, right? I've heard really high numbers for first year total compensation.
TuringNYC 11y ago
Some of these entry level "compensation" figures include illiquid stock. Ask HR what the outstanding number of shares are and you get a blank face. Other stock classes? Silence. Liquidity preferences? Secret. The real worth is zero, yet they get treated like $30k on top of salary.
- deleted 11y ago
  [deleted]
- superuser2 11y ago
  I am specifically talking about base cash salary here, but point taken.
gambiting 11y ago
A bit off topic, but I just cannot grasp those US salaries for programmers. Even for UK, that would be insanely high, with the exception of maybe london, but if you work anywhere else the number is 1/3 of this. Average junior programmer salaries in the North East of England are around ~$35k/year, and I know seniors with 15-20 years of experience and they make 60k pounds/year(so ~85k USD/year). I have friends working as C++ programmers in Krakow, Poland, and they make ~$20k/year(bear in mind that it's extremely good salary there, as houses rarely cost more than $100k, in fact you could buy land and build a house for less). I just cannot grasp how an entry level position would pay $100k/year.
- seren 11y ago
  It is hard to compare European salaries to their US counterpart. You have to take account they have much less holidays on average, you have also some sort of "free healthcare" that is not tied to your job, a state pension plan, access to some cheap higher level education for your children. In my country, between what is paid by the employer and what I actually get there is a factor of 2 to pay for all the "free" service aforementioned.
  - refurb 11y ago
    I would be careful with that comparison. Many higher-wage US jobs get much more vacation than the minimum 2 weeks, health insurance is paid for by the company (employee only pay ~10% of premium), you get a pension (Social Security) and you're kids can go to a state school with subsidized tuition (albetit, nowhere near as cheap as Europe).
    - seren 11y ago
      That is why I mentioned "not tied to your job" which seems, from my very European viewpoint, a bit saner. I heard at least one horror story of an expat who went to work in the US, got a cancer, lost its job, and then had to come back because he was totally uncovered. I don't know the system well enough to determine if it was a total lack of precaution (and luck) on his side, or that was how the system was supposed to work.
ryandrake 11y ago
According to Glassdoor[1] and Payscale[2] the average salary across all (not just entry-level) software engineers in San Francisco is $103K. So I doubt $110k is even close to a normal entry-level salary. 1: https://www.glassdoor.com/Salaries/san-francisco-software-engineer-salary-SRCH_IL.0,13_IM759_KO14,31.htm https://www.glassdoor.com/Salaries/san-francisco-software-en... 2: http://www.payscale.com/research/US/Job=Software_Engineer/Salary/a5e48575/San-Francisco-CA http://www.payscale.com/research/US/Job=Software_Engineer/Sa...
- tamana 11y ago
  That ignores substantial publicly-traded equity and cash bonuses

eloisant 11y ago

The problem is that they use the national average revenue, but revenue varies greatly by city. $92k seems pretty low for a San Francisco computer engineer. Actually I think even restaurant servers make more in SF than the rest of US.

manarth 11y ago
The article claims that they localised the revenue: > "After finding the average annual salary for each profession in each city" Whether the numbers are reasonably accurate is another question though.

moomin 11y ago

Actually, their stated methodology is a bit rubbish, in that they just take the mean salary and compare it to the housing distribution when they've actually got the salary data and so could create a weighted average, which would be more accurate. (Plus everything you just said.)

nilkn 11y ago

First, how many programmers, even in the Bay Area, have base salaries of $175k and higher? I'd wager not very many at all. You'll frequently see total compensation packages quoted in that range and higher, but those include various forms of deferred payment that are not guaranteed (like unvested stock options, whose value is often measured in a fairly unreliable way). Second, one's cash salary is the primary determining factor in how much house one can "afford" (and I use quotes because I think there's a vast gap between what a bank tells you you can afford and what you actually can afford, but that's a different discussion). If you just use the 3x rule of thumb, the $100k programmer can only afford a $300k house and the $175k doctor can afford a $525k house. But of course in SF people more often use the 5x rule of thumb, so the programmer could "afford" a $500k house and the doctor an $875k house. Don't forget also that there are many doctors who make vastly more than $175k in salary. $300k+ salaries are not all that uncommon among specialists. Indeed, $284k is the average for specialists: http://www.medscape.com/features/slideshow/compensation/2015/public/overview#page=2 http://www.medscape.com/features/slideshow/compensation/2015...

steven2012 11y ago
I take it you're not from the Bay Area. Base salaries over 175k are common for senior engineers (10+ years). I would say that's a common base salary for the bigger companies like Google, etc. Netflix pays $400k cash for senior engineers. Also the median house price in SF is over 1M.
- nilkn 11y ago
  I didn't say there aren't programmers making $400k or any particular figure. I said it's not common. And I don't think you've written anything here that would convince me that it is common. Could you link to some statistics that show $400k base salaries are common among programmers in the Bay Area in any reasonable sense? If so, then I will completely re-evaluate my stance. My guess is that $400k is about as high as it gets (feel free to correct me if I'm wrong -- with a reliable source, mind you). If we're going to do a fair comparison to doctors, then we need to compare it to a top income for a doctor as well, which is easily in excess of $1M/year.
11y ago

kelly-estately 11y ago

Hi usaar333, We got the median software engineer salary off of Glassdoor for San Francisco. It's possible that this skews lower than the actual median salary in the area, based on the type of people who report their salaries on Glassdoor, but that's probably the case for all the salary information we got. We were plainly looking at software engineers, not senior ones or any unique specialities. From there, we used a typical formula for mortgage affordability to figure out how much they could spend on a home. We compared that with recent sales over the last 6 months to determine what % of those homes they could have purchased. Hope that helps! Kelly from Estately

usaar333 11y ago
Hi Kelly, Thanks for the follow-up. I understand you are pulling the data from Glassdoor, but what I wanted to further understand is: a) Are we talking about the city limits or metropolitan area or something else? b) What is the formula used for mortgage affordability? Are we assuming dependents? Debt? Age? c) How is housing cost determined? The doc implies home sales, but is this reweighed? If a new condo opens up with 400 units, that can significantly distort the "home sales distribution", but insignificantly affects value of housing across the market. My high-level thought is that is that intuitively the data feels off. i'm not sure if two of the largest issues: A. Considering sales of larger homes (3 beds+) that would almost always be purchased by dual-income individuals B. Using salary means to claim occupation X can afford Y% of homes. "Average salary for occupation X can afford Y%" of homes is different than stating "The average worker in occupation X can buy Y% of homes". (Example: 4 eng make $100k; 1 makes $200k. 1 home in the market costs $400k. Say you use 3x income for affordability standard. Average income is $120k = no one can afford the home (0%). But actually 1/5 engineers can afford the home, meaning that the average worker can buy 20% of all homes) completely explain the discrepancy from my own world-view (almost every programmer I know could in fact purchase a 1 bedroom condo).