5 ms·

This is backwards, the high cost of living in the bay area is a result of the high salaries (and the barriers to expanding the housing supply).

• bobthepanda 5y ago
  It's not really backwards, it's a cycle that reinforces itself. House expensive -> salaries jump -> people have more money to pay for house -> house becomes more expensive. This is like arguing about the chicken or the egg. More housing supply would help to a point but it would take an order of magnitude change to make a dent in the current self-reinforcing cycle, and probably would need that level of increased production for a period of time.
  • hardwaresofton 5y ago
    I'm no expert on the history of SV or your housing (I've never lived there, probably never will), but I thought the general story was something like this: 0. California existed 1. Government investment comes to the valley during the cold war in early SV companies 2. Innovation happens in leaps and bounds thanks to the government checkbook 3. Profit is made hand over fist by some people/groups/entities 4. People/groups/entities from (3) buy more of everything 5. More People & entities come in search of interesting ideas/cutting edge technology/profit/fame/etc 6. return to (3)
    • bobthepanda 5y ago
      Depending on how far back you want to go 1 isn't even really the start of it. Stanford was founded by Leland Stanford, the robber baron who owned the Central Pacific, which built the transcontinental railroad. This has more or less been the cycle since the Gold Rush.
  • imtringued 5y ago
    You got it completely backwards. The maximum possible salary doesn't change because of more expensive housing, only your ability to negotiate for a salary rise does. Therefore expensive housing will let you get the maximum possible salary at most. There is a self reinforcing cycle but it has nothing to do with housing. You're saying that expensive housing is the only factor in salaries which is completely wrong. The self reinforcing cycle is that developer salaries rise in Silicon Valley, people start moving there, which kicks out existing residents. You can enact rent control and rent prices will stay the same but you still end up kicking people out because nobody is building anything. The reason why it is self reinforcing is that developers living in close proximity results in agglomeration effects, each additional developer makes every other developer more productive.
    • bobthepanda 5y ago
      It doesn't really matters that all salaries don't jump the same way. It matters that someone whose salary jumped can still pay more for a house. I've never claimed that rent control works. But house prices would not keep rising if no one had the salary to afford the mortgage. People still do, they're just all concentrated in the one profession, and due to bumper results they can demand more. You probably couldn't negotiate SV level salaries in, say, Tulsa, and pretty much every large company I have heard of expanding remote work is doing so with geographically adjusted pay downwards from SV. (I never really got the angle of people who thought they would get to have their cake and eat it too with SV-level salary and dirt-cheap COL; employers aren't blind.)
  • s17n 5y ago
    It is true that higher housing costs lead to labor scarcity which leads to higher salaries, and also that employers do cost of living adjustments, but these effects are small compared to the core "companies offer higher salaries to attract the best talent -> housing becomes more expensive" driver.
    • bobthepanda 5y ago
      And housing factors in offering the higher salaries to attract the best talent. It takes a lot of money to eventually buy property in the Bay Area and if you manage to apply to companies there unaware of that fact you probably literally live under a rock.