6 ms·

It looks like the salary differential of $33k listed in the article is gross earnings. After taxes this would just barely cover the rent differential of $1.5k/m

It looks like the salary differential of $33k listed in the article is gross earnings. After taxes this would just barely cover the rent differential of $1.5k/mo ($18k/year). Note that this is the best case scenario according to their estimates. What troubles me is the use of median rent to compare housing costs. As rent increases, renters are likely to downsize offsetting some of the rent increase. I'd be willing to bet Seattle renters are able to get more space for the area's median rental. Accordingly, the salary increase probably doesn't cover the rent increase for a similar sized home.

linkregister 10y ago
How would a renter effectively downsize if the entire market is increasing? Is this the typical reaction from those who can afford it?
- harterrt 10y ago
  A renter can get get roommates or landlords can subdivide properties further. Renters may also consider increasing their commute time.
- sjg007 10y ago
  2bdrm to 1brm, 1bdrm to studio, studio to van.
  - shemnon42 10y ago
    van to nap-pod
- OmarIsmail 10y ago
  Compromise on neighbourhood. If you're in SF instead of living in the nice areas, go to Tenderloin, Hunter's Point, etc. You can find great deals in those areas.
ammon 10y ago
EDIT I incorrectly multiplied the tax rate to the salary difference, and said that this was a 5$ difference. This is totally wrong (as multiple people point out below). I'll leave my original embarrassing comment as a cation to not write stupid things :) == I just added in a mention of the tax difference. But the numbers are 13.3% in CA vs 0% in WA. That's significant, for sure. But 13% tax on $33k is about $5k. I don't think that changes the conclusion that the salary difference does (in many cases) cover the housing costs. You're likely correct about the price for a similarly sized home. People who want large homes should probably not move to the Bay Area.
- harterrt 10y ago
  Thanks for adding the note on the tax difference! That doesn't address my point though. If the salary difference of $33k is the difference between gross salary, that $33k is going to be taxed at the marginal tax rate. My guess at a marginal tax rate would be ~40%. Accordingly, that $33k becomes closer to $20k after tax. Edit: to clarify, consider a Seattle salary of $100k and a Bay Area salary of $133k. The take-home salary for each location would be: Seattle : $100k*(1-0.4) = $60k Bay Area: $130k*(1-0.4) = $78k Leaving $19.8k in additional income to cover the median rent increase of $18k annually.
  - serge2k 10y ago
    > My guess at a marginal tax rate would be ~40%. Sounds high for Seattle.
  - brotherjerky 10y ago
    Washington state has no state income tax, which in California is a little under 10%: https://www.tax-brackets.org/californiataxtable https://www.tax-brackets.org/californiataxtable Works out to $9k according to this for a single filer: https://smartasset.com/taxes/california-tax-calculator#8TRRj8YaEI https://smartasset.com/taxes/california-tax-calculator#8TRRj... -- so your additional income is more like $11k, or just under $1k / mo. In my experience, the difference in housing is far more than $1k/mo, so you come out ahead in Seattle. EDIT: Looks like I forgot about California's other taxes on payroll, so it's actually even more in Seattle's favor.
VLM 10y ago
A peculiarity of "median" is neither my income nor lifestyle are median. I'm currently thousands of miles from SV and earn and live at the 90th to 95th percentile depending on who's fuzzy math and crazy definitions you trust. So its interesting to know median expenses for something like coffee or restaurant food, but I'd never live in a median real estate so whats the standard of living like at the 95th percentile assuming I'd get a raise? Its pretty good for me and my family where I live... Median would be relevant if you were talking about moving to CA to sell car insurance to tech people.
amelius 10y ago
Best is to move there in an RV :)
- closeparen 10y ago
  Where do you imagine you're going to park it? It's 2 hour parking in resdidential areas unless you have a resident permit (not that there'd be any available), no overnight parking in commercial areas. A paid parking space will run you the price of a 1-bedroom in a sane region.
  - LeanderK 10y ago
    i don't know the Bay area, but can you maybe get a job at a company that has some parking spaces?
  - amelius 10y ago
    Then use an autonomous RV. As long as it keeps moving around, you don't have to pay for parking :)
  - Tempest1981 10y ago
    Some Walmart stores allow RV parking -- not sure if there is a limit, or what the quality-of-life is like. Mountain View's Walmart does not, according to this: http://www.walmartlocator.com/no-park-walmarts-in-california/ http://www.walmartlocator.com/no-park-walmarts-in-california...
- petters 10y ago
  People have lived in an RV in Google's parking lot. Being on the campus all the time, they could save almost all of their salary.
- icantdrive55 10y ago
  It's too bad living in an RV is a good idea. That said, RV parks are pricy and many have waiting lists. I have known guys who try to find cheap/free parking; and it's a constant battle. "You can'park here". Cops that are beyond vigilant. I could go on forever. If anyone is considering living in a vechicle; I honestly think a converted commercial van is the way to go. I've lived in the Bay Area my entire life, and housing is just cruel. The problem is so bad I would like to see state/federal/local county land opened up immediately for campers. Plus--companies should provide low rent/free areas to camp. Why is Walmart the only business that saw this a need for overnight parking? All your bosses want to live in the nice parts of the Bay Area, and they can. For everyone else housing is just a nightmare. If I was an employer; I would have a hard time looking my employees in the face. (I know I not going to solve anything, but I'm right now sitting in my truck on Bush street; and there a lot of building--luxury condos. Since as long as I can remember it's been just expensive condos. Something most of us will never be able to afford.)
baccheion 10y ago
Downsizing is a plus, not something to be baked into estimates. If down sizing to having roommates in the Bay Area, then the only fair comparison is the same roommate situation elsewhere. The idea is to normalize salaries by cost of living. If you have more specific information for each area (you have actual offers), then you can use that. However, using a lower rent for the Bay Area, for example, because you'll have roommate, may set you up to take an equivalently lower salary. For example, if you're going from $100k/$2000 location to $100k/$3000 (salary / rent), but you set it back to $2000 because that's your rent with roommates, you've foolishly/ignorantly accepted a lower equivalent salary.

linkregister 10y ago

How would a renter effectively downsize if the entire market is increasing? Is this the typical reaction from those who can afford it?

harterrt 10y ago
A renter can get get roommates or landlords can subdivide properties further. Renters may also consider increasing their commute time.
sjg007 10y ago
2bdrm to 1brm, 1bdrm to studio, studio to van.
- shemnon42 10y ago
  van to nap-pod
OmarIsmail 10y ago
Compromise on neighbourhood. If you're in SF instead of living in the nice areas, go to Tenderloin, Hunter's Point, etc. You can find great deals in those areas.

ammon 10y ago

EDIT I incorrectly multiplied the tax rate to the salary difference, and said that this was a 5$ difference. This is totally wrong (as multiple people point out below). I'll leave my original embarrassing comment as a cation to not write stupid things :) == I just added in a mention of the tax difference. But the numbers are 13.3% in CA vs 0% in WA. That's significant, for sure. But 13% tax on $33k is about $5k. I don't think that changes the conclusion that the salary difference does (in many cases) cover the housing costs. You're likely correct about the price for a similarly sized home. People who want large homes should probably not move to the Bay Area.

harterrt 10y ago
Thanks for adding the note on the tax difference! That doesn't address my point though. If the salary difference of $33k is the difference between gross salary, that $33k is going to be taxed at the marginal tax rate. My guess at a marginal tax rate would be ~40%. Accordingly, that $33k becomes closer to $20k after tax. Edit: to clarify, consider a Seattle salary of $100k and a Bay Area salary of $133k. The take-home salary for each location would be: Seattle : $100k*(1-0.4) = $60k Bay Area: $130k*(1-0.4) = $78k Leaving $19.8k in additional income to cover the median rent increase of $18k annually.
- serge2k 10y ago
  > My guess at a marginal tax rate would be ~40%. Sounds high for Seattle.
- brotherjerky 10y ago
  Washington state has no state income tax, which in California is a little under 10%: https://www.tax-brackets.org/californiataxtable https://www.tax-brackets.org/californiataxtable Works out to $9k according to this for a single filer: https://smartasset.com/taxes/california-tax-calculator#8TRRj8YaEI https://smartasset.com/taxes/california-tax-calculator#8TRRj... -- so your additional income is more like $11k, or just under $1k / mo. In my experience, the difference in housing is far more than $1k/mo, so you come out ahead in Seattle. EDIT: Looks like I forgot about California's other taxes on payroll, so it's actually even more in Seattle's favor.

VLM 10y ago

A peculiarity of "median" is neither my income nor lifestyle are median. I'm currently thousands of miles from SV and earn and live at the 90th to 95th percentile depending on who's fuzzy math and crazy definitions you trust. So its interesting to know median expenses for something like coffee or restaurant food, but I'd never live in a median real estate so whats the standard of living like at the 95th percentile assuming I'd get a raise? Its pretty good for me and my family where I live... Median would be relevant if you were talking about moving to CA to sell car insurance to tech people.

amelius 10y ago

Best is to move there in an RV :)

closeparen 10y ago
Where do you imagine you're going to park it? It's 2 hour parking in resdidential areas unless you have a resident permit (not that there'd be any available), no overnight parking in commercial areas. A paid parking space will run you the price of a 1-bedroom in a sane region.
- LeanderK 10y ago
  i don't know the Bay area, but can you maybe get a job at a company that has some parking spaces?
- amelius 10y ago
  Then use an autonomous RV. As long as it keeps moving around, you don't have to pay for parking :)
- Tempest1981 10y ago
  Some Walmart stores allow RV parking -- not sure if there is a limit, or what the quality-of-life is like. Mountain View's Walmart does not, according to this: http://www.walmartlocator.com/no-park-walmarts-in-california/ http://www.walmartlocator.com/no-park-walmarts-in-california...
petters 10y ago
People have lived in an RV in Google's parking lot. Being on the campus all the time, they could save almost all of their salary.
icantdrive55 10y ago
It's too bad living in an RV is a good idea. That said, RV parks are pricy and many have waiting lists. I have known guys who try to find cheap/free parking; and it's a constant battle. "You can'park here". Cops that are beyond vigilant. I could go on forever. If anyone is considering living in a vechicle; I honestly think a converted commercial van is the way to go. I've lived in the Bay Area my entire life, and housing is just cruel. The problem is so bad I would like to see state/federal/local county land opened up immediately for campers. Plus--companies should provide low rent/free areas to camp. Why is Walmart the only business that saw this a need for overnight parking? All your bosses want to live in the nice parts of the Bay Area, and they can. For everyone else housing is just a nightmare. If I was an employer; I would have a hard time looking my employees in the face. (I know I not going to solve anything, but I'm right now sitting in my truck on Bush street; and there a lot of building--luxury condos. Since as long as I can remember it's been just expensive condos. Something most of us will never be able to afford.)

baccheion 10y ago

Downsizing is a plus, not something to be baked into estimates. If down sizing to having roommates in the Bay Area, then the only fair comparison is the same roommate situation elsewhere. The idea is to normalize salaries by cost of living. If you have more specific information for each area (you have actual offers), then you can use that. However, using a lower rent for the Bay Area, for example, because you'll have roommate, may set you up to take an equivalently lower salary. For example, if you're going from $100k/$2000 location to $100k/$3000 (salary / rent), but you set it back to $2000 because that's your rent with roommates, you've foolishly/ignorantly accepted a lower equivalent salary.