Most of those people in the Bay Area are not forced to live in the Bay Area. Most have fairly portable professional skills that they could bring to a lower cost

Most of those people in the Bay Area are not forced to live in the Bay Area. Most have fairly portable professional skills that they could bring to a lower cost area. They might take a pay cut, but they’d still certainly be among the highest income circles in Iowa. There’s two primary reasons they choose to continue to live in the Bay Area. One is they value the amenities of the metro. Many view Iowa as a terrible fate, even if they are living in a mansion. In this case, they may be “living poor” in terms of housing, but only because they choose to spend most of their income on the luxury good of Bay Area living. Same way, I wouldn’t be crying for a high income guy who’s always broke because he spends all his money on his boat. Second reason people live in the Bay Area is because it gives them access to very high paying career paths. Even if it’s a bad deal for an L2, by the time they make L6 at Google, their living standards will be much higher than what they could earn in Iowa, even given the cost of living. This group is best thought of as sacrificing consumption today to invest in their human capital. Much like medical residents, while they’re low paid today, they’ll be very high paid in short order. Again, we really wouldn’t feel two bad about medical residents having to drive a used car for a couple years while they rocket up the career ladder.