Silicon Valley salaries don't seem so great

[SimpleLife]

It looks like I make more as an IT Engineer in the greater Seattle area with a far lower cost of living, especially housing, than the vast majority of Engineers in Silicon Valley. A recent article I read showed many of them spend 40-60% of their pay on housing alone. Even in my newer McMansion I spend 12K a year after tax benefits, and I could cut that down to 6K a year if I moved back into an older McMansion I currently rent out, while making more money than the average SC Senior Engineer salary.

Housing in SF sure is inflated...wonder if Seattle is going to turn into that. I mean, it's inflated now, but not SF inflated.

[SimpleLife]

I wasn't able to find the article I had read, but found this which further illustrates how where you choose to live is a bigger factor in being able to ERE and your standard of living.

http://www.businessinsider.com/silicon- ... ies-2011-8

[zarathustra]

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

[thrifty++]

Those salaries are not that great. Stuff Silicon Valley. Vote with your feet folks. Drive those prices back down.

[JamesR]

Assuming SV salaries are twice the Seattle salaries (likely true), is it still a bad deal? My friend is renting a 1br apartment place for $2.5k/mo with his gf, but his salary is somewhere around $200K (counting the hidden benefits/stock vesting/etc). Pretty good eh?

[bryan]

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

Doing it now. Parked around the corner from one of my favorite spots in SF tonight..

[Sclass]

Wow yes. If you can find that cheap living situation your golden. You'll never hear the end of it at work. I tried it many decades there so I know. Makes for unpleasant work lunches. People are competitive there (jealous?).

I rented very cheap homes/rooms. If you don't share in the SV real estate pain you will become an outcast at work.

This prolly won't stop anyone here.

How come this site logs me out after 30 seconds. Are you trying to keep my rambling posts in check? I'm on an iPad air.

[jacob]

As far as I understand, people don't go to SV for the salary but because it's the center of tech and thus the place to go if you want to get a start-up funded or work for a "prestigious" company. It's much harder elsewhere because the opportunities are fewer. It's similar to how you "need" to be NYC or Chicago for finance even though finance is done elsewhere too at better geoarbitrage.

TL;DR - People don't go to SV for the salary. They go for the [tech] culture, the opportunities, and the shot at option equity. Salaries are relatively higher elsewhere because people need to be compensated to miss these aspects.

[SimpleLife]

Assuming SV salaries are twice the Seattle salaries (likely true), is it still a bad deal? My friend is renting a 1br apartment place for $2.5k/mo with his gf, but his salary is somewhere around $200K (counting the hidden benefits/stock vesting/etc). Pretty good eh?

Sorry to burst your assumption, but not true at all. I make 150K a year salary in greater Seattle, not even in Seattle, with 200K total compensation and then some if you want to go by that number. Reality is you can still buy a house in the GSA for 250K. Again if you read the article, you will see that compared to the rest of the country the cost of living there does not meet the salary.

Fact of the matter is even at 2015 prices, you can get a higher salary in Seattle than with the well known SCV companies (except google) and have a faaar lower cost of living than SCV. One million dollars for a tear down house in SCV? lol, no thanks...

[GandK]

Ugh. You couldn't pay me to work in Silicon Valley. Or Wall Street, or anywhere else that has such a "culture" associated with it that whether you're at work or not, work dominates almost all of your decisions.

Most of my tech career was spent in the family-oriented midwest, and the prevailing attitude here is "get your shit done right, then go home." I made good money in tech in Ohio before getting out. Working 40 hour weeks, with a reasonable commute, and without any expectation from either my employer or my coworkers that my off hours would be spent in a specific manner.

Jacob is right. Unless you want to found/work at a start-up, or you have a truly horrifying case of status anxiety, who'd want to work in The Valley? I now think a lot of people go there initially because they've been told it's just "the place to be" for us nerds, and they end up staying not because they're actually happy there, but because by the time they realize they're not happy they've come to see everything outside of SV as a step down for them. (How convenient for SV employers.)

[bryan]

You just have to be a strong enough individual to set your own terms and eventually find a place that won't fire you for it. The second part is easy.

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

[GandK]

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.

[Tyler9000]

I definitely moved to SV for both the salary and the opportunities. As a young engineer in an in-demand field out there, I negotiated double what I was making before in another state. I also enjoyed being able to walk down the street and pass a dozen companies who would all love to hire you, and I took the opportunity to work at a few different companies and learn many new things. The cost of housing is stupid high, but since I never had any intention of buying a home and staying there long term it wasn't an issue. Personally, both my career and savings would not have been the same without moving to SV.

But everything has a tradeoff. The biggest one for me was how competitive business is and how much of a drain it becomes on your personal life. All the beautiful weather and amazing destinations are worthless if you're working 12 hours a day and constantly flying around the world to solve "urgent" problems for products that often never even make it to market. So after experiencing what SV had to offer, I took the experience and moved to another state, largely transferring the salary with me. Geographic arbitrage at its finest!

Like someone once told me before I moved out there, the Bay Area is a great place to live for about five years. Not every decision needs to be permanent, and there's nothing wrong with soaking in the good things it has to offer before moving on.

[sky]

Seattle and SV are both boom towns. Just like Detroit from 1910 to 1960.

[Sclass]

Like many threads on this forum, it all depends on your personal situation. I agree SV is a boomtown and I survived four cycles there. One as a student so that really didn't count.

At the end of the day you need to sit down and figure out how to get your savings rate and investment growth rate up to where you'd like it to be given your desired comfort. I lived somewhat uncomfortably mostly due to peer pressure but I was able to save more there than in other places where my salary would have been lower. Had I squandered the extra income on a home I'd be in a worse situation than I'm in today. But that all depends on who you are and what you can do.

I had many technicians working on my assembly line who made good salaries ($100k with overtime) who were no more than assemblers. Some were super smart savers who lived cheaply and quietly survived in the company. Others took out tons of debt on new cars and made silly mistakes like buying condos as investments during 2006. Some could make the situation work very well for them. One guy, who was very private, was running two moonlighting businesses (tour bus and excavation company) besides soldering wires for us. He was an older guy but my gut feel his net worth exceeded $1M from doing this kind of thing for decades. He was an immigrant type who lived among his own people in a cheap neighborhood in Fremont. He got a lot of visits from people who were paying him back in our loading dock. He was kind of a lender of last resort to his kin. Envelopes of money and lotsa thank yous. Desperate folks.

My grad school roommate (a resident of Sunnyvale and a programmer at a major) once put it really well. He said we all tell ourselves a little lie that the options will work out. That the high salary will compensate for the sky high housing...that always goes up. And we bury ourselves in our work so we don't have to think about the holes in the plan. He abused alcohol to aid in the self deception. I pretty much refused to do this and it ended our friendship. I use him as my financial benchmark to see what had happened if I actually 'toed the line' as a tech worker for the last twenty years. He did ok on his house that he bought with his first job but its about all he has for assets. SV is not a nice place for engineers hitting 50 who have increasing expensenses as kids go off to college.

It all depends on who you are and what you're capable of. For him, he was better off hunkering down in his cube. He'd be miserable and worse off than when we started. For others, the Valley opens up some really interesting possibilities.

Another friend literally blew up his engineering salary on hookers and blow. He was a coke snorting embedded systems designer. He's in his fifties wasted down in Santa Cruz now. Unemployed.

Just my way of saying there a multitude of ways to make it work or not work.

[Dave]

If we assume that labor markets are generally efficient, then there must be an explanation for your observed discrepancy.

It could be any number of things: your data point is an outlier, tech is in a period of geographic transition, there are not as many exciting opportunities in Seattle and therefore supply for jobs is lower, etc.

It does appear that Seattle is a more ERE-friendly city for those in tech, but as others mentioned there are additional factors that play into the decision of where to work other than salary and rent.

[Sclass]

If we assume that labor markets are generally efficient, then there must be an explanation for your observed discrepancy.
.

Yes, but people are irrational in SV. I don't thing you're going to find a purely efficient market there. The place is a boom town since the gold rush. There are times when things are more or less rational but that is when all the air is let out of things.

[Dave]

If we assume that labor markets are generally efficient, then there must be an explanation for your observed discrepancy.
.

Yes, but people are irrational in SV. I don't thing you're going to find a purely efficient market there. The place is a boom town since the gold rush. There are times when things are more or less rational but that is when all the air is let out of things.

I think I was unclear.

What I was getting at was that wages in SV are efficient - they are at the intersection of actual supply and demand. The "irrationality" that people seem to be exhibiting is reflected in the supply of labor for jobs there.

This is not a precise thing, but I find the "efficiency" model to be a useful tool for analyzing situations. Things might not make sense to me, but they always make sense from the right perspective. Now what the price does in the future is a different story.

[Sclass]

Got it.

I guess the market is certainly being cleared.

[Peanut]

I’m guessing greater Seattle is probably like Oakland east—far enough out to avoid the real estate premium that many who work in downtown Seattle and SF are willing to pay to live close to work/entertainment. Given that constraint, neither of these cities is cheap even to those pulling down 200k/yr.

A couple of examples: My pharmacist cousin and her MSFT husband moved from a 3 or 4-bedroom 600k house somewhere outside Seattle to a 1-bedroom condo downtown that cost more than their previous house.

A Pixar friend just bought a 2-bed 900k condo near the Mission. He told me he had to trade in his ‘baby,’ an M6 BMW (100k car) to afford it. Apparently just servicing this car cost 5k(?!) every time. Apparently he traded in for a C-class Mercedes. Pleb!