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Scraping By On Six Figures? Tech Workers Feel Poor in Silicon Valley's Wealth Bubble (theguardian.com)
Big tech companies pay some of the country's best salaries. But workers claim the high cost of living in the Bay Area has them feeling financially strained, reports The Guardian. One Twitter employee cited in the story, who earns a base salary of $160,000 a year, said his earnings are "pretty bad", adding that he pays $3000 rent for a two-bedroom house in San Francisco. From the article: Silicon Valley's latest tech boom has caused rents to soar over the last five years. The city's rents, by one measure, are now the highest in the world. The prohibitive costs have displaced teachers, city workers, firefighters and other members of the middle class, not to mention low-income residents. Now techies, many of whom are among the highest 1 percent of earners, are complaining that they, too, are being priced out. The Twitter employee said he hit a low point in early 2014 when the company changed its payroll schedule, leaving him with a hole in his budget. "I had to borrow money to make it through the month." He was one of several tech workers, earning between $100,000 and $700,000 a year, who vented to the Guardian about their financial situation.
If getting paid slightly late forces you to take out a loan, you're a dumbass who doesn't know how to manage his money. This is true regardless of how much or how little money you make. Rule #1 of personal finance is "live below your means."
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
Serious question, how are people working in retail or supermarkets or places like that manage to live there?
How do people with kids make it work?
It's not like there aren't any other metro areas with strong tech communities. California is a great place to visit, but I'd never live there again.
I live in Oakland, and make exactly 100k. Last year the rent on my 1 bedroom apartment was $2,800 a month and I split that with my partner. I still managed to travel, eat out, and save $25k. Just learn to budget and stop spending money on useless shit. I have no sympathy for the person making $700k that was complaining. Fuck that guy.
I make $50K+ per year as a virtual ditch digger (IT Support) and live in Silicon Valley. I get by just fine by living a modest lifestyle. Never mind that everyone else thinks I'm poor because I don't have the big house, big cars, big wife and big kids.
Rent is usually the biggest expense of a budget. So that's $36K for rent, leaving $124K for every other expenses. Saying it's "pretty bad" to have $10333 left to live after paying rent every month is why people around the world hate Americans. You fuckers are rich and you're still complaining.
#DeleteFacebook
Do it. I did. I thought I was banishing myself to a life of dreariness when I decided to leave the startup bubble in the Bay Area where I worked for the better part of 12 years. I worked for 2 very successful startups which are no longer startups but long term viable businesses now. I took a job in the midwest and I really thought I was actually doing it as sort of a lark or social experiment. I knew I would have a much better quality of life in terms of traffic, home I could afford, etc... I figured I would be comfortable but have no one to date, no one to hang out with, nothing to do. What I discovered was such an epic drop off in general douchiness, not just among the tech crowd but SFers in general and where I moved to. What I also found was a dating life that was amazingly more real and fulfilling that it ever was out there. People who were just much more substantial, even if not so well versed in all 12 kinds of Moroccan coffee presses. I think I was desensitized to the sheer amount of douchebags and vapid women in my every day life in the bay, both professionally and casual social circles.
The amazingly more affordable lifestyle was the was the only improvement I thought I would see, but it turned out to the be the least of the improvements I saw in my life.
Computer Programmer/Analyst here making $38k per year... i could make more as an H1B employee.
You chose to live and work out there. Meanwhile, here in metro Atlanta (which has a pretty decent tech scene itself, although it's not my field), I own a house and have 2 paid off cars on a combined income of 90k between me and my wife. This even includes paying off student loans every month and putting money away into savings. My wife's sister's family makes it on my brother-in-law's $80-90k a year salary at Redstone with 3 kids. You can get by just fine on less than 100k in NC near the research triangle as well (and Charlotte is big with banking if working in the financial sector is your thing). There's more to the country than just SF/SV and NYC
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
He makes 160k, with bonuses I make 80k. He pays $3k in rent, my Mortgage is $1500 a month. I'm not broke, somehow this guy is?
If someone makes $100k and spends $50k on the cost of living, then someone who earns $200k and spends $150k on the cost of living, you are both in the same boat.
You're getting a lot better living for the $150k, you're definitely not in the same boat. That's like the people who say, "Oh, my BMW payments are so high, they're forcing me to cut back on my quality of life." And even in the Bay Area, you can buy a nice house for $150k a year.
"First they came for the slanderers and i said nothing."
There are over 50 Starbucks(alone) in San Francisco. Where do all the baristas live and how do they get by?
Some have said that people live far away and commute for hours.
But that can't be true. Who would do that before moving within a year to someplace you could commute by bus within a half hour?
Quite obviously what is really going on, is that there is a large Demolition Man style underground city below SF, populated almost entirely by baristas and where no mans law applies. Only the "Law of the Bean" as the lower denizens refer to the code they live by. It is a stricter but simpler life.
If you look carefully the proof of this is obvious. Why would steam be coming from vents in the street in a place where it hardly ever rains? Obviously cooking fires from those who live below. Also of course there is the incredible pale skin that is the hallmark of the barista, in a state known for its generous sunshine.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I was wondering this too.
160k, takes home about 10k/month.
after rent that leaves 7k for all other expenses? Unless everything else scales incredibly high (higher than the rent, which I doubt), that's a pretty comfortable life, even with some student debt.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Let's round it up and say you are paying $40K/year for housing and say $40K for taxes. If you are burning through $80K a year on food, clothing, transport and entertainment, then you are doing something very wrong.
Stop eating at restaurants for every meal.
Stop buying expensive coffee.
Stop using uber for everything.
Stop subscribing to every stupid service.
Stop spending real money to buy fake money in video games.
Anons need not reply. Questions end with a question mark.
You're not getting the point, which is: don't live in the bay area unless you can afford it.
I live in metro New York, another very high cost-of-living place, but slightly less insane than SV or LA. I can understand wanting to live in places where the cost is high. California has really great weather. Metro DC has a combination of extremely stable federal jobs and gov't contractor jobs that are basically like pulling money out of an unlimited ATM. New York has a very good public education system, access to a large, diverse pool of jobs and the city itself. But, I've never had the desire to move to Silicon Valley or San Francisco despite my interest in the computer field. Especially now, there's no justifying the huge cost of owning a house there or throwing away thousands a month to rent a bedroom.
Maybe I'm just not enough of a hipster to "get" startup culture -- but why would anyone other than a new college graduate want to sign up for paying a million plus for a tiny starter home that they're never in because their "all inclusive" company provides all their meals and 16 hours of work a day? Worse yet, why would anyone pay _more_ to live in San Francisco, then let their all inclusive company bus them out to the suburbs 2 hours each way?
I can definitely sympathize with the "scraping by on 6 figures" sentiment -- but the keys to living in a high cost area are living below your means, and not living where everyone else wants to live. I don't care how gentrified and hip some of the former industrial sites in Brooklyn are; there's no way I'm paying $2 million for an apartment there...I live further away where house prices are still way high but not bubble-esque. Plenty of New Yorkers pull up stakes and move to North Carolina or Texas all the time; they hate paying taxes and (IMO) don't take full advantage of the place they live in. If you're childless and don't care where your house is as long as it's huge and on 2 acres of land, then there's no reason to pay the premium. I know plenty of people that have gone from a starter home with $10K in taxes to a McMansion out in the country in a gated community with $3K in taxes. They're happy and that's fine, everyone's entitled to do what makes them happy.
I do feel like you get what you pay for though - I have 2 kids who are going to get a decent public education without paying tuition to a private school. I was asked by a former company to relocate to Florida a while back, and even the real estate agents trying to sell me on the idea agreed that I wouldn't get the same educational experience unless I shelled out for expensive private schooling.
Sometimes moving takes you to a higher salary but also a higher cost of living.
I'm making $73k per year myself, but I also have a 1700 sqft house in a nice suburb that I pay $710 per month for (total purchase price was $115k back in 2013). While I could potentially make more if I moved I'd not necessarily have any more disposable income. As it is right now even after all of my bills are paid I've still got around $2000 per month in "open" income to do with as I wish.
Plus there's the fact that my friends and family are here, so truthfully I'm not sure I'd be willing to move for anything short of an obscene amount of money anyways.
"People who think they know everything are very annoying to those of us who do."-Mark Twain
Take-home would be closer to $6.5-7k in California. That makes $2,300 the traditional limit of affordable rent and $3.5k the "new normal" limit on affordability. I am in a similar boat; California can feel punitive, although I pay less rent for a smaller place.
From a tax perspective what sucks is you are considered "rich" by both the state and the IRS, but it is what it is. I wonder if the people who vote republican without a 6-figure income understand how disproportionately lower taxes will hurt them.
Assuming $400,000 (20%) down on 2 Million, with taxes and insurance you're looking at ~$10K a month. Monthly take-home on $150,000 a month is roughly $7,800. So you're $1200 in the hold just on your mortgage.
You are definitely not only paying 25% tax when you're earning 160k in CA.
To take home 10k a month in CA, you need to earn around 220k a year before taxes.
LOL, only in Silicon Valley bizarro-world (or NYC, or DC). In sane parts of the country, the normal recommendation is three years' salary.
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
my theory is the VC firms have bought up the property around these tech hubs and recoup their money easily via rent.
Wrong.
I'm sure plenty of software engineers realize this, and have realized this for a very long time now.
The problem is that it's not up to them. It's up to managers and executives, who don't like remote workers. From what I've seen, telecommuting is becoming more and more rare; it was more common 10 years ago. Now the managers all want everyone on-site, and they want them working in noisy open-plan offices, sitting at open tables with no partitions whatsoever.
I was born and raised in the midwest, and while everyone around me was convinced it was a dead-end hellhole, lacking in any sense of "style" or appreciation for the arts -- the time I spent in California convinced me that was so untrue.
I mean, one thing you will find in the midwest is a larger percentage of folks who aren't highly educated by formal institutions. If you're used to living in an area with far more college grads running around, it can be off-putting. But if you get to know these people better -- they're often far more substantial folks with real concerns and aspirations. They may laugh at the idea of ordering a coffee being more than deciding if you want cream and sugar or not -- but chances are good they have real skills doing useful things the CA crowd has to pay someone else to do for them.
But IMO, it's really nice living someplace where people don't *care* if your clothing choices are just practical and reasonably priced, vs. spending 5x more to chase after trends, and it's something you grow to really appreciate when your neighbors want to look out for each other and volunteer to help you when they see you working on something.
In CA, I just ran into a lot of people who invested WAY too much time in superficial stuff they collectively deemed important. My friends from CA who came to visit me in the midwest couldn't stop complaining about such things as stores that closed by 9 or 10PM instead of being open 24 hours a day. You know? These things really aren't a big problem for everyone who gets used to the concept of things having schedules that don't just cater to your whims ....
The "traditional limit" assumes all expenses scale across all income levels and that technology sits at a standstill forever.
Even in the Bay area, I can feed an individual human pretty decently for under $100/month (I can actually feed a human passably for $25/mo, but that's a grueling exercise in finances). This is because it still costs $5.83 for 50 pounds of bread flour at Sam's Club no matter what city you're in; the same goes for beans, various meats (although beef is cheap in Wisconsin--still expensive as all hell; pork is cheap everywhere), and a lot of other things. Vegetables are universally-expensive--even frozen--although I don't put much stock in vegetables; I put more vegetables in stock.
Food in home basically doesn't scale, while food out of home scales linearly: a 16-inch pizza will cost you $12 in Baltimore and $30 in Seattle. Chain fast food might hold about the same price--McDonalds doesn't charge $4 for a hamburger anywhere--and everything else tries to play up to the area's income spread. Likewise, you can get the same clothing (and you can order it online for the same price--size yourself in Sears if you want), electronics, and cars, at the same price, anywhere in the country; people like to use cars as a metric because the most commonly bought car in rich areas costs $38k, and the most commonly bought cars in poor areas costs $12k, and then they can say an "affordable" car in San Francisco is $28k and so people "can't afford a new car" and thus complain about rich people and salaries again.
With all that in mind, food has fallen from 40% of the median-income household spending in 1900 to 33% in 1950, and then to 12.5% today as agricultural technology advanced rapidly up to the 1980s (and continued more-moderately since). Clothing has fallen from 12% of expenses in 1950 to 3.5% today. We spend 6% to buy more and better healthcare than we got on the 4% we paid in 1950; and we spend an utter assload (about 40%) on entertainment, luxury, and other discretionary spending, versus about 25% in the 50s.
While that suggests that spending more than the traditionally-prescribed amount on housing is viable, your financial management plans may suggest it's less-sustainable than you'd like--you still have a smaller proportion of your income to pull from if you get into a pinch. That would be sound finances, but every single person in America has ignored that as the median new single-family home size increased from 978sqft in 1950 to 2,300sqft in 2010, and the percent of income spent on housing (shelter plus utilities, maintenance, etc.) increased from 28% to 33%. People can buy more stuff, so they spend a bigger proportion of their income to buy much larger houses in which to keep all this stuff; if they had just stayed with 978sqft homes and the 400sqft 1-bedroom apartments of the 1920s, they'd only spend 14% on housing today, as a national average--New York would still rape you for renting a 395sqft studio.
So yeah. Maybe grow up a little and get your head out of the 50s. Technical progress happens.
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Rents go up, new housing developments get started, rents go down and eventually stabilize.
You've left out an important piece in the middle of the saga, and frequently the one with the loudest explosions. I like to call it "Gentrification II: The Wrath of NIMBY".
I live down the street from a cute little 1,700 square foot ranch house with a yard in Lafayette, just east of Oakland and Berkeley. It went for $1.7 million. In my native San Diego, no slouch when it comes to overpricing, it wouldn't command even a third of the price. Should the cities in the Bay Area do the sane thing and allow for concentrated vertical development near BART and other transit lines, the value of that place would plummet. Do you think the idiot who bought that house is going to let a real estate developer undercut the value of his investment without a fight?
Instead, like his aging hippie brethren in SF, he will make all sorts of arguments about preserving the "character" (translation: affluent whiteness) of the neighborhood, and fret loudly about the quality of life issues that increased density would bring.
Not when they're (a) optional and (b) used to obscure the point, they're not! It is goddamn dishonest to pretend that Silicon Valley tech-worker take-home pay, with gold-plated health care, a maxed out 401k (and maybe exercised stock options), and a metric ass-ton of other fringe benefits is in any way comparable to normal-person take-home pay that includes taxes, basically zero retirement savings (outside of social security) and fuck-all else.
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
Three times annual gross pay for the price of a house, has been the standard for people who don't live wastefully for at least 60 years and probably much longer. This is merely prudent behavior, so that money can be set aside for emergencies and opportunities, etc..
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I get $11k a year because I'm disabled.
So when I hear someone that make $160k a year complaining it sort of pisses me off.
You can have it a lot worse, so serious, fuck off.
Be seeing you...