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Great article, this you articulate perfectly what has been on my mind lately “It means raising engineer salary to match the higher cost of living ("cost of livi
by cryptozeus 8y ago
Great article, this you articulate perfectly what has been on my mind lately “It means raising engineer salary to match the higher cost of living ("cost of living adjustment") is pointless: it translates directly to higher housing prices (X goes up for everyone, so R*X goes up proportionally), which eats the benefit.”
- pmalynin 8y agoWell except its not as simple as that, is it. There are a lot of second and third tier Tech companies in SV (not considering startups even) that can't raise salaries as quickly -- or at all. Also then there is the question of simultaneity, if I'm the first engineer to get a 20k raise then I will be ahead of everyone else, while everyone else catches up.
- almost_usual 8y agoThe landlord will be ahead while tech workers attempt to catch up.
- 01100011 8y agoYeah I'm surprised to see how many companies in the valley still pay low wages compared to the FANGs. I can make anywhere from $120k-300k+ depending on the company.
- sharkmerry 8y agoSlightly off topic, but this has been my fear with the push for UBI, it feels like rents/costs will just go up as they did with gov't backed student loans..
- zjaffee 8y agoThis is exactly what will happen with UBI. Throwing more money at a problem through consumers only works when it results in an equal supply increase (such as food stamps and food production).
- Xcelerate 8y agoThe difference is that additional housing can be created in most places that aren’t the Bay Area.
- anonymous5133 8y agoUBI is slightly different because UBI would not be enough to live in an expensive city. So if you plan on living purely on UBI then you would need to move to the outer city or rural areas where COL is low.
- itchyouch 8y agoI'd imagine that with UBI, the incentive to stay in a low CoL area increases and for a subset of the population, they will seek out a low CoL area. Then there will be the subset of the population that takes their UBI and goes to an expensive city for the "opportunities" and pay the higher rents for said opportunity. If it doesn't work out, they can take their UBI and go back to a low CoL area. Of course this mobility gets harder once one has a family.
- mjevans 8y agoRelated: Hypothesis: The most effective way to increase (effective) minimum wage (and quality of life for anyone not in the top (small) n%) is to increase the SUPPLY and quality of all basic quality of life items.
- 8y ago
- oihoaihsfoiahsf 8y agoIt's not pointless from the perspective of any given engineer. If a given engineer is willing to accept a lower relative quality of life in the Bay Area, the absolute amount they save as a result of that decision is larger at a larger absolute salary. This is relevant as long as the probability of living outside the Bay Area in the future is greater than zero.
- tspike 8y agoWhich, of course, cascades into an even worse problem in the areas where the Bay Area people flood into. "Relatively affordable" to people coming from the Bay Area translates to "completely out of the question" for people who are from the areas affected.
- oihoaihsfoiahsf 8y agoThis might be a problem for one or two of the top areas, but there are not enough Bay Area emigres to materially move the needle in the vast majority of non-Bay Area localities.
- tristor 8y agoTry "tens to twenties of 'top areas'". Just look at the housing market in any other city in the US that's started to build a tech hub. Austin, TX in particular is a good example where the average cost of a decent house has basically doubled in the last 10 years.
- oihoaihsfoiahsf 8y agoI don't think you're going to be able to attribute that to Bay Area compensation. Urbanization in general: yes. Bay Area? No.
- burlesona 8y agoThis is what has happened in Austin and Portland, just to name two. As another commenter said it isn’t enough to affect every market but I think it affects many markets, and there is a domino effect as people cash out of those second level cities and move into third level, etc.
- 01100011 8y agoLast time I checked, rents weren't that bad, even in Mountain View. Now, rents aren't cheap, but compared to what you'll pay in, say, Los Angeles or San Diego, the rents are not insane. I'm trying to relocate to the valley and I'm looking at about $1k(a bit less even) in extra rent every month for a comparable apartment. Now if I wanted to buy a house... yeah, the valley sucks. But so does owning a house and I have no interest in that anymore.
- chipotle_coyote 8y agoYour quoted rents are kind of -- surprising to me. I'm paying $3500 a month for a 2BR/2BA apartment in Santa Clara (a nice one, to be fair: 1100 square feet, W/D in unit, blah blah blah), and a quick look at San Diego apartment prices on Rent.com suggests I could very easily find a comparable apartment for hundreds less. My apartment management company shows a 1300-square foot apartment in San Diego's East Village with better amenities than my current place for just over $3100 a month.
- 01100011 8y agoYou could pay a lot less if you didn't live downtown. I live in north county, where most of the tech jobs are. I'm about 5 minutes from work. I'm paying $2300 with water and a monthly dog fee. That's for a 2 br with W/D in unit.
- closeparen 8y ago>I'm looking at about $1k(a bit less even) in extra rent every month Normal people are looking at less than $1k in total rent.
- chipotle_coyote 8y agoI think that honestly depends on what "normal" place you're looking in. Tampa, Dallas, Orlando, Minneapolis -- they're all above the $1K average apartment rental price as of right now, according to RentCafe's market trends.
- acchow 8y ago> “It means raising engineer salary to match the higher cost of living ("cost of living adjustment") is pointless Precisely. And companies don't do this. Price differences are decided by negotiation. It happens in the labor markets.
- Spivak 8y agoCompanies absolutely do this, it's usually just not explicitly stated. When cost of living goes up the minimum compensation a given person is willing to accept goes up so salary ranges go up. If you mean companies don't adjust for CoL for current employees well... yeah, wages are sticky.
- tcbawo 8y agoIn a similar comment thread a couple months ago, someone brought up the book Progress and Poverty (https://en.wikipedia.org/wiki/Progress_and_Poverty https://en.wikipedia.org/wiki/Progress_and_Poverty), which described this effect nearly 140 years ago. I could have used this wisdom when I was just starting out in my financial career.
- cryptozeus 8y agoHave you read it ? Would you recommend?
- tcbawo 8y agoI have not read the entire thing yet, but I would recommend it. It's available at Project Gutenberg (http://www.gutenberg.org/ebooks/55308 http://www.gutenberg.org/ebooks/55308).
- cryptozeus 8y agoNeat , has kindle version
- angel_j 8y agoI read this to mean that Silicon Valley SWE's are suppressing the ceiling on all SWE salaries; this corresponds to my feel that SWE could be making quite a bit more.