Silicon Valley salaries don't seem so great

[SimpleLife]

If we apply the example of discrepancy of tech pay and cost of living depending on the location to the concept of pay from one profession to another, the concept still holds. Some professions pay more even though they are easier and have a lower barrier to entry. For example, you can become a project manager and make more than a typical developer, even though your job as a PM has a lower barrier to entry and largely involves simple things like running meetings, email, RACI charts, etc. vs. deep knowledge of three programming languages.

In any case, as was presented in the article, when you consider the standard of living, a lower salary in a different part of the country can give you the same standard of living. Yes, you may not get to work for Facebook or Google (though they have offices here in Seattle...) but other than chest thumping, you can still get financially ahead. Perhaps the biggest thing to be gained from the article is that the compensation in the area is completely elastic to the cost of housing, even though the supply of housing is limited (SF is seven square miles from what I hear?), and the demand curve is rapidly shifting to the right.

My take away is that the cool jobs and cool locations that people think are so great are not always. If the goal is to get financially ahead, for me it would make more sense to pick a location or career that has the lowest cost of living, with the highest salary, for the least amount of effort, that I can tolerate the longest. I mean, you could become a relatively mediocre project manager in Seattle and make what a Senior Engineer at LinkedIn makes if not more, and have a lower cost of living, get paid more or the same to do an easier job, and save more of your money, tolerate the job the longest (since the engineers have to do the actual work).

[SimpleLife]

The valley is very close to amazing destinations. Where else in the US comes close?

Totally depends on your personal definition of "amazing," but in addition to the midwest, I've also lived on the Gulf coast, in Honolulu and in San Antonio. And I assure you that both Hawaii and Texas are all kinds of amazing.

My favorite place in the US is Wyoming, however, since I strongly prefer the amazing places with very few people in them. And I expect Alaska is even more amazing in that regard... I look forward to finding out someday.

Edit: Does anybody else want to visit that town in Alaska where almost everyone lives in the same building? I'm so intrigued. G says this is almost as crazy as my desire to stay at the ice hotel.

I don't know that I'd want to live in the same building with everyone. The town of McCarthy at the "Edge of Alaska" seems pretty cool. Although there is a guy there bringing generator power into the city, the people are fighting it to keep it off grid. Everyone there pretty much takes care of their own. You'd have to be pretty frustrated with society to want to move out there. I'm surprised at the number of people I see on these Alaska shows that moved out there at 18 with no wilderness experience and built themselves a life there off the grid.

[Dave]

If the goal is to get financially ahead, for me it would make more sense to pick a location or career that has the lowest cost of living, with the highest salary, for the least amount of effort, that I can tolerate the longest. I mean, you could become a relatively mediocre project manager in Seattle and make what a Senior Engineer at LinkedIn makes if not more, and have a lower cost of living, get paid more or the same to do an easier job, and save more of your money, tolerate the job the longest (since the engineers have to do the actual work).

Totally agree with you here.

This has been mentioned by numerous lifestyle writers, but doing things that fall out of the majority's preference generally has rewards. In this case, it seems the aggregate prefers to be in SV for assorted reasons, but you can essentially get the same career in the GSA with a much better salary/expense ratio.

It seems I took a step backward - why did I move to Chicago from Indianapolis again? I suppose lentils and rice do not cost much anywhere!

[SimpleLife]

If the goal is to get financially ahead, for me it would make more sense to pick a location or career that has the lowest cost of living, with the highest salary, for the least amount of effort, that I can tolerate the longest. I mean, you could become a relatively mediocre project manager in Seattle and make what a Senior Engineer at LinkedIn makes if not more, and have a lower cost of living, get paid more or the same to do an easier job, and save more of your money, tolerate the job the longest (since the engineers have to do the actual work).

Totally agree with you here.

This has been mentioned by numerous lifestyle writers, but doing things that fall out of the majority's preference generally has rewards. In this case, it seems the aggregate prefers to be in SV for assorted reasons, but you can essentially get the same career in the GSA with a much better salary/expense ratio.

It seems I took a step backward - why did I move to Chicago from Indianapolis again? I suppose lentils and rice do not cost much anywhere!

I'm curious, is Indianapolis a good tech city? I've been considering moving to Indiana due to the low cost of housing but wanted to be within an hours drive of good tech jobs. Right now I'm leaning toward Florida as it meets my criteria and has no state income tax, but I have not crossed Indiana off my list, and still need a "back-up" city/state.

[jasonman]

Hey guys

Saw this thread about SV and thought I'd chime in. I believe the cost of living these days eclipses the benefits of having the larger wage. However, a few years ago, it didn't, especially after the housing bust. This huge rent and property spike is relatively recent

But I think there are two reasons why people come down here. First, the name recognition - having one of the big names on your resume and working at their head office is an attention-getter. But, secondly, and probably more importantly, is the promise of the big IPO money. Of course, it's debatable as to how often this happens and if the end dollar amounts are worth it, but to someone just out of school and seeing 30-year-old founders making millions, it's seductive.

In my mind, it's similar to the people that go to Hollywood to be in the movies. You need a hard deadline; "I'm going to give it X years and if I haven't made it after that, I'm going to do something else." Without that, you'll keep hanging on and get diminishing returns. It's why I'm leaving the area.

[jacob]

Of course, it's debatable as to how often this happens and if the end dollar amounts are worth it, but to someone just out of school and seeing 30-year-old founders making millions, it's seductive.

Anecdotally, I confirm.

It goes along with the "just find your passion and success is guaranteed [because you're unique and special]"-meme. My personal attempts at injecting a modicum of realism into that thought pattern has failed so far. So now I just don't bother. #cynicism

[Ego]

hence why living in a van while working in SV is genius

Seems you started a trend
http://qz.com/524138/rent-is-so-high-in ... -in-a-van/

[steveo73]

Of course, it's debatable as to how often this happens and if the end dollar amounts are worth it, but to someone just out of school and seeing 30-year-old founders making millions, it's seductive.

Anecdotally, I confirm.

It goes along with the "just find your passion and success is guaranteed [because you're unique and special]"-meme. My personal attempts at injecting a modicum of realism into that thought pattern has failed so far. So now I just don't bother. #cynicism

I often read about people trying to create their wealth like this. Its either this or the Tim Ferris approach. I'm completely cynical about it.

I live in Sydney Australia and reading this thread makes me realize how the situation is very similar in regards to salaries and house prices. Houses in Sydney are often worth $1million. Our house would be worth over that for sure. Our salaries are relatively high however everyone has dumped it into borrowing money and therefore paying more for houses. It also creates a vicious circle because people then borrow to buy investment properties. On top of that people like to have the standard consumer lifestyle - plenty of eating out, nice cars, gadgets, clothes and plenty of paid recreational activities.

[Dave]

I'm curious, is Indianapolis a good tech city? I've been considering moving to Indiana due to the low cost of housing but wanted to be within an hours drive of good tech jobs. Right now I'm leaning toward Florida as it meets my criteria and has no state income tax, but I have not crossed Indiana off my list, and still need a "back-up" city/state.

You know, there are more tech firms there than you might expect. It is not even close to the level of SV or Seattle, but there are some. A few that come to mind are Angies List, ChaCha, Exact Target, Interactive Intelligence, T2 Systems. I know there are numerous others, but those are the ones that come to mind.

FWIW, Indiana is a very business friendly state. The state also has a balanced budget, which is interesting since it does not have a balanced-budget requirement in the state constitution.

In my opinion, Indy is sort of a sweet spot if you like medium-large cities with decent salary/cost of living with reasonable access to professional sporting teams, casinos, restaurants (ethnic selection is so so), concerts, etc.

[James_0011]

The valley is very close to amazing destinations. Where else in the US comes close?

Totally depends on your personal definition of "amazing," but in addition to the midwest, I've also lived on the Gulf coast, in Honolulu and in San Antonio. And I assure you that both Hawaii and Texas are all kinds of amazing.

My favorite place in the US is Wyoming, however, since I strongly prefer the amazing places with very few people in them. And I expect Alaska is even more amazing in that regard... I look forward to finding out someday.

Edit: Does anybody else want to visit that town in Alaska where almost everyone lives in the same building? I'm so intrigued. G says this is almost as crazy as my desire to stay at the ice hotel.

I worked on a commercial boat in Alaska for awhile, and have been to that town (Whitter) many times. It is extremely depressing there, I would suggest you don't visit unless you're into meth or binging on alcohol.

[Did]

Getting out can be the difficult part, especially if saddled with debt, ego and narrow specialisation.

[James_0011]

Anyone have any insight on whether or not it is worth it to move to sv for the accumulation phase?

I mean, does anyone know that their savings were significantly improved by moving to sv?

[bryan]

@James, Definitely worth it, especially so if you have frugal tendencies. There is an argument for moving away once you obtain a high salary and someone outside of SV is willing to "match it" (where I always look at Net Income, Cash Flow, Take Home, and Net Total Savings). Can't beat SV for the competitive SW/HW job market and large corps + small corps.

Not too difficult to make a copy of your current year financials and do a little playing around with.

[Chris]

Anyone have any insight on whether or not it is worth it to move to sv for the accumulation phase?

It's typically easier to land a job locally than remotely, as many companies want to ensure they get their "culture" on you. So one strategy might be to start a job at HQ in SV, gain the high salary and equity, then move to a lower cost branch office after a couple of years. HQ will have more teams there, but if you demonstrate that you're good, a sane manager won't have a problem with you working out of the Pittsburgh office.

[Sclass]

Anyone have any insight on whether or not it is worth it to move to sv for the accumulation phase?

I mean, does anyone know that their savings were significantly improved by moving to sv?

Depends on a bunch of things like what you're doing and where/how you live.

My short answer is Yes.

I am where I am today (I'm retired after working 12 yrs) financially because I worked in SV. If you can avoid the expense traps like housing and lifestyle you can save a nice pile of money to invest. Couple that with aggressive and successful investing you can be far ahead of places where you'd earn less. I mostly invested in stocks and owned three small businesses. I lived in rented rooms in peoples' homes. Then a tear down home that was also rented for cheap. I finally relocated to SoCal when I really didn't need to live in SV anymore.

But it's all about how your numbers work out. I'm sure you can do well earning less elsewhere while living simply and aggressively investing. Just work it out on paper first. Income-Expenses. It's not rocket science.

So I could have earned less and lived on less elsewhere. The big difference is I probably paid more taxes in SV because of the absolute value of the compensation. I also lived in some pretty lousy living situations. Coworker's made fun of my living arrangements because I lived like a student who rented rooms in homes for awhile.

I know some new grads living in SF right now (pal's kids) and they are paying $4000/mo rent for a one bedroom. They make $100k each but between rent and life I don't think they're on a path to early retirement. So it really depends on how you handle your lifestyle.