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But the cost of living is so high there that the inflated salaries are pretty much required to bring anyone out there. A company wants to have competitive hirin

by moftz 8y ago

But the cost of living is so high there that the inflated salaries are pretty much required to bring anyone out there. A company wants to have competitive hiring so they offer a little bit more than competition so what was a $200k job is now $220k. Prices increase to what these inflated salaried workers can afford and the cycle continues. It will be incredible to watch when SF finally starts to allow for more high density housing. Housing prices will fall and the salary bubble will pop. A lot of companies will start cutting back on starting salaries and as a result, experienced workers will start either taking paycuts to switch jobs or be first in line for layoffs because they cost the company too much.

nostrademons 8y ago
This gets causality backwards. Employers don't give a shit about whether employees can afford housing - if they did, we wouldn't have such a big homelessness problem, and our teachers/firefighters/policemen wouldn't live over the mountains in Pleasanton. Employers pay enough to prevent employees from going to a competitor. The reason FANG salaries now hit $300-400K is because Facebook refused to play ball with the wage-fixing cartel that Schmidt/Jobs/et al had worked out, then the DoJ cracked down, and so now that's what you need to pay to keep your software engineers from working for someone else. Then you have a lot of tech workers with extremely fat salaries and not enough housing for everyone who wants to live here, so they bid up rents & housing prices until they're unaffordable for all the middle-income folks who used to live here. If more high-density housing was built, then rents would fall, middle-income people could live here again, and tech workers could pocket their fat salaries as savings (or live extremely lavish lifestyles). They would still be paid a lot, because there'd always be another tech company around the corner willing to bid up wages to their current level. For the salary "bubble" to pop, a lot of these companies would have to go out of business at once. This was exactly what happened in 2001 and 2009, and it had the predicted results: unemployment spiked, wages fell, rents fell, and people moved out of the Bay Area back to wherever they came from.
- deleted 8y ago
  [deleted]
- ascar 8y ago
  If that would actually be the case you would have these salaries all around the world, but you don't. Because it's mainly a few big highly profitable companies (FAANG) that can afford these salaries and a big VC and stock market funded bubble around them. And even FAANG pays much lower salaries in cheaper regions, because hightech employers have to give a shit about housing. You can't compare it to teachers. I think it's a dangerous attitude to think the salaries in CA are the actual worth of a software developer's work. It's just what FAANG can afford to pay. For many companies devs at that price point are not economically sustainable.
  - nostrademons 8y ago
    It absolutely is what FAANG (and newer companies like AirBnB/Uber/Lyft/Stripe/DropBox etc) can afford to pay. And what FAANG can afford to pay is not going to change if more housing gets built in the Bay Area. And yes, for many companies devs at that price point are not economically sustainable, but that's why FAANG are sucking all the oxygen out of the startup developers market and maintaining their oligopsony. (Also, while there's some variance for cost-of-living in FAANG salaries in different regions, it's not that much. Google developers make less in Beijing than they do in Mountain View, but their salary still looks much more like a Google salary than a Beijing salary.)

by moftz 8y ago

nostrademons 8y ago

This gets causality backwards. Employers don't give a shit about whether employees can afford housing - if they did, we wouldn't have such a big homelessness problem, and our teachers/firefighters/policemen wouldn't live over the mountains in Pleasanton. Employers pay enough to prevent employees from going to a competitor. The reason FANG salaries now hit $300-400K is because Facebook refused to play ball with the wage-fixing cartel that Schmidt/Jobs/et al had worked out, then the DoJ cracked down, and so now that's what you need to pay to keep your software engineers from working for someone else. Then you have a lot of tech workers with extremely fat salaries and not enough housing for everyone who wants to live here, so they bid up rents & housing prices until they're unaffordable for all the middle-income folks who used to live here. If more high-density housing was built, then rents would fall, middle-income people could live here again, and tech workers could pocket their fat salaries as savings (or live extremely lavish lifestyles). They would still be paid a lot, because there'd always be another tech company around the corner willing to bid up wages to their current level. For the salary "bubble" to pop, a lot of these companies would have to go out of business at once. This was exactly what happened in 2001 and 2009, and it had the predicted results: unemployment spiked, wages fell, rents fell, and people moved out of the Bay Area back to wherever they came from.

deleted 8y ago
[deleted]
ascar 8y ago
If that would actually be the case you would have these salaries all around the world, but you don't. Because it's mainly a few big highly profitable companies (FAANG) that can afford these salaries and a big VC and stock market funded bubble around them. And even FAANG pays much lower salaries in cheaper regions, because hightech employers have to give a shit about housing. You can't compare it to teachers. I think it's a dangerous attitude to think the salaries in CA are the actual worth of a software developer's work. It's just what FAANG can afford to pay. For many companies devs at that price point are not economically sustainable.
- nostrademons 8y ago
  It absolutely is what FAANG (and newer companies like AirBnB/Uber/Lyft/Stripe/DropBox etc) can afford to pay. And what FAANG can afford to pay is not going to change if more housing gets built in the Bay Area. And yes, for many companies devs at that price point are not economically sustainable, but that's why FAANG are sucking all the oxygen out of the startup developers market and maintaining their oligopsony. (Also, while there's some variance for cost-of-living in FAANG salaries in different regions, it's not that much. Google developers make less in Beijing than they do in Mountain View, but their salary still looks much more like a Google salary than a Beijing salary.)