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I think there’s a step missing in the analysis there. If tech workers are spending all this money — what are they spending it _on_? If they’re spending it loca

I think there’s a step missing in the analysis there. If tech workers are spending all this money — what are they spending it _on_? If they’re spending it locally shouldn’t that increase wages locally?

jameslevy 8y ago
Shelter and avocado toast.
x3n0ph3n3 8y ago
We're spending it on housing, mostly.
jchrisa 8y ago
Rent. Are the landlords local?
- mlindner 8y ago
  All apartment complexes around here are owned by Californian corporations. So yes, they're local. For example, Essex: https://www.essexapartmenthomes.com/about https://www.essexapartmenthomes.com/about They're even publicly listed: NYSE:ESS Or the Irvine company, after which Irvine, California is named after because they designed the city. https://en.wikipedia.org/wiki/Irvine_Company https://en.wikipedia.org/wiki/Irvine_Company
  - deleted 8y ago
    [deleted]
  - tomjakubowski 8y ago
    Irvine and the Irvine Company are both named for the Irvine Ranch and James Irvine who developed the property after donating a chunk to the University of California. A fun fact is that the University of California, Irvine, was named that six years before the city was incorporated.
theDoug 8y ago
An area it's being spent on is rent at properties largely owned by property firms. In the case of the building I live in (in "downtown" Sunnyvale), the three front office workers and two maintenance persons come nowhere near making a dent in the $4.5 million in income this one property earns yearly. Can't speak to the wages of the staff in the other >12 buildings in the portfolio, but the folks keeping this place running aren't driving Teslas.
burlesona 8y ago
No. They’re spending it all on housing. To be clear the flow is: tech companies make enormous revenue but require high skill workers. To make this work they pay whatever it costs to get workers and no more - in this case that means just enough to offset the enormous cost of housing. Since the baby boomers practically banned all housing development in the bay once their little burns were built, this result in a little see-saw battle where landlords raise the rent until tech companies are forced to raise wages, back and forth. Employees are left with an equation that looks basically like: enormous salary - obscene rent = just a bit more cash flow than you’d earn in software anywhere else. Thus the flow of capital is from tech companies to landlords, in an arms race that will only end when the landlords have taken so much of the capital out of tech that the industry sputters and moves away.
- rrcaptain 8y ago
  Or until landlords are abolished like they should be.
- orangecat 8y ago
  Employees are left with an equation that looks basically like: enormous salary - obscene rent = just a bit more cash flow than you’d earn in software anywhere else. It's probably true that the cost of minimally acceptable housing drives entry level tech salaries, but they go way up from there. A senior SWE at Google with salary+bonus+stock of $300k/year has a whole lot of disposable income even after the ridiculous housing expenses.
  - solidsnack9000 8y ago
    There are very few senior SWEs at Google, relative to tech employees as a whole.
  - burlesona 8y ago
    First off, Google employees are the outliers even in SF. Second, there are many situational factors that make a huge difference as to whether 300k leaves “a whole lot of disposable income.” The simplest is families living on one income. In most of the country this is easily achievable if you can break six figures, but in SF housing is priced for two full area incomes, so if you want to make it work with one parent at home you either have a relatively small and ratty apartment (compared to housing stock elsewhere) or you spend $6000+ per month on housing which takes a dramatic bite out of that $300k you’re taking about.
dragonwriter 8y ago
> I think there’s a step missing in the analysis there. If tech workers are spending all this money — what are they spending it _on_? They often aren't, they are saving it (effectively, often directly, investing in the global capital markets and/or, insofar as their compensation has an equity component, directly in their own firm.)

jameslevy 8y ago

Shelter and avocado toast.

x3n0ph3n3 8y ago

We're spending it on housing, mostly.

jchrisa 8y ago

Rent. Are the landlords local?

mlindner 8y ago
All apartment complexes around here are owned by Californian corporations. So yes, they're local. For example, Essex: https://www.essexapartmenthomes.com/about https://www.essexapartmenthomes.com/about They're even publicly listed: NYSE:ESS Or the Irvine company, after which Irvine, California is named after because they designed the city. https://en.wikipedia.org/wiki/Irvine_Company https://en.wikipedia.org/wiki/Irvine_Company
- deleted 8y ago
  [deleted]
- tomjakubowski 8y ago
  Irvine and the Irvine Company are both named for the Irvine Ranch and James Irvine who developed the property after donating a chunk to the University of California. A fun fact is that the University of California, Irvine, was named that six years before the city was incorporated.

theDoug 8y ago

An area it's being spent on is rent at properties largely owned by property firms. In the case of the building I live in (in "downtown" Sunnyvale), the three front office workers and two maintenance persons come nowhere near making a dent in the $4.5 million in income this one property earns yearly. Can't speak to the wages of the staff in the other >12 buildings in the portfolio, but the folks keeping this place running aren't driving Teslas.

burlesona 8y ago

No. They’re spending it all on housing. To be clear the flow is: tech companies make enormous revenue but require high skill workers. To make this work they pay whatever it costs to get workers and no more - in this case that means just enough to offset the enormous cost of housing. Since the baby boomers practically banned all housing development in the bay once their little burns were built, this result in a little see-saw battle where landlords raise the rent until tech companies are forced to raise wages, back and forth. Employees are left with an equation that looks basically like: enormous salary - obscene rent = just a bit more cash flow than you’d earn in software anywhere else. Thus the flow of capital is from tech companies to landlords, in an arms race that will only end when the landlords have taken so much of the capital out of tech that the industry sputters and moves away.

rrcaptain 8y ago
Or until landlords are abolished like they should be.
orangecat 8y ago
Employees are left with an equation that looks basically like: enormous salary - obscene rent = just a bit more cash flow than you’d earn in software anywhere else. It's probably true that the cost of minimally acceptable housing drives entry level tech salaries, but they go way up from there. A senior SWE at Google with salary+bonus+stock of $300k/year has a whole lot of disposable income even after the ridiculous housing expenses.
- solidsnack9000 8y ago
  There are very few senior SWEs at Google, relative to tech employees as a whole.
- burlesona 8y ago
  First off, Google employees are the outliers even in SF. Second, there are many situational factors that make a huge difference as to whether 300k leaves “a whole lot of disposable income.” The simplest is families living on one income. In most of the country this is easily achievable if you can break six figures, but in SF housing is priced for two full area incomes, so if you want to make it work with one parent at home you either have a relatively small and ratty apartment (compared to housing stock elsewhere) or you spend $6000+ per month on housing which takes a dramatic bite out of that $300k you’re taking about.

dragonwriter 8y ago

> I think there’s a step missing in the analysis there. If tech workers are spending all this money — what are they spending it _on_? They often aren't, they are saving it (effectively, often directly, investing in the global capital markets and/or, insofar as their compensation has an equity component, directly in their own firm.)