4 ms·

> What am I missing? The cost of living in the bay area is basically the highest in the world. So after rent, taxes, and food, $250k there is more like $100k a

> What am I missing? The cost of living in the bay area is basically the highest in the world. So after rent, taxes, and food, $250k there is more like $100k almost anywhere else in the country. The UK has single-player healthcare instead of the US system where nearly all health care dollars go to private companies incentivized to charge as much as the market will bear (how much would you pay to keep from dying?) PLUS a whole insurance industry sitting in the middle and taking an enormous slice of the pie. So healthcare costs in the US are a huge fraction of a US worker's paycheck, even if they are perfectly healthy. The US tech industry is famous for its 60-80 hour work weeks, especially among the FAANGs, and those companies are willing to pay high wages in exchange. And at the trailing edge, it's just a different culture and job market all around.

sershe 5y ago
That shouldn't always matter for someone arbitraging it though... companies could hire UK-based developers (themselves pretty expensive by European standards as far as I understand) and pay them less than SFBA developers, and that would continue until the salary difference is somewhat sane. If the displaced SFBA developers then coudln't afford SFBA prices, they would have to move and/or prices would have to come down. Why don't they? Are timezones/regulation/culture/... really more costly than $100k+/developer-year? Don't get me wrong, as a developer in Seattle I like the gravy train, just wondering when it will end, why it doesn't end, and if I can save enough to retire by then ;)
tzs 5y ago
> The cost of living in the bay area is basically the highest in the world. So after rent, taxes, and food, $250k there is more like $100k almost anywhere else in the country. I have my doubts that cost of living explains the high pay in the Bay Area. 1. Median one bedroom apartment in the Bay Area is about $1.2-1.5k/month more than Seattle, Chicago, Nashville, Orlando, Sacramento, Austin, Fresno for example. That justifies $14-18k/year of pay difference between the Bay Area and those other places. Also, the median household income in San Francisco is $119k. That's household income, not individual income. That suggests that an individual making $100k should be able to do fine in San Francisco. 2. The average monthly spending on food in San Francisco is about $150/month more than the US average. So that's another $1800 of pay difference you'd need for the Bay Area. Although maybe with the long hours at many tech companies people don't have time to go home and cook, so let's assume that a Bay Area worker needs to eat out all the time. According to budgetyourtrip.com tourists average $32/day to eat in San Francisco, so tech workers should be able to do fine on that. That's a little under $12k/year, so let's be generous and say Bay Area salaries need a $12k boost for that. 3. The marginal state income tax rate in California is under 12% for most tech workers. So maybe that means a company might have to pay another $12k or so compared to what they'd have to pay someone in a state with no income tax. So far all together that is, with the generous estimate for food, $42k. That's a lot less than how much Bay Area pay is above so many other US cities and thus I suspect something more than just rent, taxes, and food is going on.
- BadCookie 5y ago
  Proximity to the Silicon Valley VC money spigot is probably the answer.

sershe 5y ago

That shouldn't always matter for someone arbitraging it though... companies could hire UK-based developers (themselves pretty expensive by European standards as far as I understand) and pay them less than SFBA developers, and that would continue until the salary difference is somewhat sane. If the displaced SFBA developers then coudln't afford SFBA prices, they would have to move and/or prices would have to come down. Why don't they? Are timezones/regulation/culture/... really more costly than $100k+/developer-year? Don't get me wrong, as a developer in Seattle I like the gravy train, just wondering when it will end, why it doesn't end, and if I can save enough to retire by then ;)

tzs 5y ago

> The cost of living in the bay area is basically the highest in the world. So after rent, taxes, and food, $250k there is more like $100k almost anywhere else in the country. I have my doubts that cost of living explains the high pay in the Bay Area. 1. Median one bedroom apartment in the Bay Area is about $1.2-1.5k/month more than Seattle, Chicago, Nashville, Orlando, Sacramento, Austin, Fresno for example. That justifies $14-18k/year of pay difference between the Bay Area and those other places. Also, the median household income in San Francisco is $119k. That's household income, not individual income. That suggests that an individual making $100k should be able to do fine in San Francisco. 2. The average monthly spending on food in San Francisco is about $150/month more than the US average. So that's another $1800 of pay difference you'd need for the Bay Area. Although maybe with the long hours at many tech companies people don't have time to go home and cook, so let's assume that a Bay Area worker needs to eat out all the time. According to budgetyourtrip.com tourists average $32/day to eat in San Francisco, so tech workers should be able to do fine on that. That's a little under $12k/year, so let's be generous and say Bay Area salaries need a $12k boost for that. 3. The marginal state income tax rate in California is under 12% for most tech workers. So maybe that means a company might have to pay another $12k or so compared to what they'd have to pay someone in a state with no income tax. So far all together that is, with the generous estimate for food, $42k. That's a lot less than how much Bay Area pay is above so many other US cities and thus I suspect something more than just rent, taxes, and food is going on.

BadCookie 5y ago
Proximity to the Silicon Valley VC money spigot is probably the answer.