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This is a great deal for Stripe, but bad for workers. $20k could easily be eaten up just on moving expenses (breaking a lease, hiring movers, etc). Let’s say an

This is a great deal for Stripe, but bad for workers. $20k could easily be eaten up just on moving expenses (breaking a lease, hiring movers, etc). Let’s say an engineer making $150k year manages to frugally move for only $5k. That means, after one year they’re already loosing money. And when it comes to find a new job, they very well be in a tighter labor pool compared with what they had in NYC or SF.

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jtchang 6y ago
$20k is just relocation. Not to make up for the reduction in salary.
kodablah 6y ago
> but bad for workers. $20k could easily be eaten up just on moving expenses That's the point of the $20k, to cover the move. The deal is to keep your job at 90% of your salary while potentially living in a place that is only 75% (or less) of the cost of living as SF/NY. Get yourself a nice big place, some indoor/outdoor breathing room, etc.
- bobthepanda 6y ago
  90% of your 2020 salary. I would not be shocked if next year the people who took this deal were not given raises as high as Bay area employees because "lower cost of living".
ska 6y ago
Let's say the 20k is a wash on moving. Your 150k/year engineer is going to net about 100k, dropping it to 135k/year will have a net of about 90, so round numbers call it a 10k "loss" after taxes on income. So if they save 1k/mo in expenses, they are ahead 2k a year net. I've made moves before that shifted my monthly expenses far more than that. It's not obvious there aren't win-win version of this.
- wobblykiwi 6y ago
  Are there any states that tax 30+% on income? That's a ridiculously high number. Every other state has lower taxes than California.
  - ska 6y ago
    Try this with an income tax estimator. You need FICA, state, local, federal etc. people often underestimate all of this when they are tossing tax rates around. Effective tax rate for a single earner of 150,000 in NYC with no extra deductions is a bit over 32%. Remember that the before-tax delta here gets applied at the marginal rate, so it's always going to be knocked down a fair bit for higher earners; the net impact will be smaller. Anyway I assumed above leaving NYC for somewhere else in NY. It's easy to come up with scenarios where you might actually take home more with the pay cut (e.g. SF, CA -> Houston, TX). Housing costs there would be way lower (less than 1/2?).
  - jdavis703 6y ago
    There’s a myth about California’s sky high taxes. Looking at the overall tax burden (sales, property, income, etc) as a percent of income, CA doesn’t really even crack the top 10 states.
    - nullc 6y ago
      California figures are distorted by existing long term property owners effectively getting a windfall at the expense of more recent property owners.
  - dangus 6y ago
    This is not true, California does not have the highest tax rate in the nation. The word “rate” is important here.
driverdan 6y ago
You could move to almost any other state and end up ahead. CA's extreme taxes and the bay's high cost of living are easily more than the 10% you'd lose in salary, especially if you move to a state with no income tax.
jtsiskin 6y ago
Even entry level at stripe is above $150k: https://www.levels.fyi/company/Stripe/salaries/Software-Engineer/ https://www.levels.fyi/company/Stripe/salaries/Software-Engi...
ZephyrBlu 6y ago
> Let’s say an engineer making $150k year manages to frugally move for only $5k. That means, after one year they’re already loosing money How do you come to that conclusion without taking COL into account?
hinkley 6y ago
> That means, after one year they’re already loosing money. Only if you live in a van, by yourself. Most of that money is going to a landlord, or the bank. There are quite a few reasons you could decide to do this. Huge promotion for your partner (it's great that we make so much money, but there are plenty of people with higher earning potential than us, and you might have married one.) Ill family member. Pulmonary disease. In-state tuition for your twin children. Continuing education, or plans to switch careers or retire in a few years. All of these may end up being cheaper for you than the $15k a year you're losing.
C1sc0cat 6y ago
And they have moved their partner and possibly kids to an area with lesser opportunities - and may have lost the ability to go back to a higher COL.

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jtchang 6y ago

$20k is just relocation. Not to make up for the reduction in salary.

kodablah 6y ago

> but bad for workers. $20k could easily be eaten up just on moving expenses That's the point of the $20k, to cover the move. The deal is to keep your job at 90% of your salary while potentially living in a place that is only 75% (or less) of the cost of living as SF/NY. Get yourself a nice big place, some indoor/outdoor breathing room, etc.

bobthepanda 6y ago
90% of your 2020 salary. I would not be shocked if next year the people who took this deal were not given raises as high as Bay area employees because "lower cost of living".

ska 6y ago

Let's say the 20k is a wash on moving. Your 150k/year engineer is going to net about 100k, dropping it to 135k/year will have a net of about 90, so round numbers call it a 10k "loss" after taxes on income. So if they save 1k/mo in expenses, they are ahead 2k a year net. I've made moves before that shifted my monthly expenses far more than that. It's not obvious there aren't win-win version of this.

wobblykiwi 6y ago
Are there any states that tax 30+% on income? That's a ridiculously high number. Every other state has lower taxes than California.
- ska 6y ago
  Try this with an income tax estimator. You need FICA, state, local, federal etc. people often underestimate all of this when they are tossing tax rates around. Effective tax rate for a single earner of 150,000 in NYC with no extra deductions is a bit over 32%. Remember that the before-tax delta here gets applied at the marginal rate, so it's always going to be knocked down a fair bit for higher earners; the net impact will be smaller. Anyway I assumed above leaving NYC for somewhere else in NY. It's easy to come up with scenarios where you might actually take home more with the pay cut (e.g. SF, CA -> Houston, TX). Housing costs there would be way lower (less than 1/2?).
- jdavis703 6y ago
  There’s a myth about California’s sky high taxes. Looking at the overall tax burden (sales, property, income, etc) as a percent of income, CA doesn’t really even crack the top 10 states.
  - nullc 6y ago
    California figures are distorted by existing long term property owners effectively getting a windfall at the expense of more recent property owners.
- dangus 6y ago
  This is not true, California does not have the highest tax rate in the nation. The word “rate” is important here.

driverdan 6y ago

You could move to almost any other state and end up ahead. CA's extreme taxes and the bay's high cost of living are easily more than the 10% you'd lose in salary, especially if you move to a state with no income tax.

jtsiskin 6y ago

Even entry level at stripe is above $150k: https://www.levels.fyi/company/Stripe/salaries/Software-Engineer/ https://www.levels.fyi/company/Stripe/salaries/Software-Engi...

ZephyrBlu 6y ago

> Let’s say an engineer making $150k year manages to frugally move for only $5k. That means, after one year they’re already loosing money How do you come to that conclusion without taking COL into account?

hinkley 6y ago

> That means, after one year they’re already loosing money. Only if you live in a van, by yourself. Most of that money is going to a landlord, or the bank. There are quite a few reasons you could decide to do this. Huge promotion for your partner (it's great that we make so much money, but there are plenty of people with higher earning potential than us, and you might have married one.) Ill family member. Pulmonary disease. In-state tuition for your twin children. Continuing education, or plans to switch careers or retire in a few years. All of these may end up being cheaper for you than the $15k a year you're losing.

C1sc0cat 6y ago

And they have moved their partner and possibly kids to an area with lesser opportunities - and may have lost the ability to go back to a higher COL.