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Comment by nugget | Hacker News Reader

The future is here it's just not evenly distributed, as they say. Besides a bubble either bursting or continuing to inflate it seems likely that mature tech companies like Yelp, Twitter, Salesforce, and others will realize they can't afford to keep paying their average developer $250,000/year and relocate people to cheaper second tier cities. Yes, you need superstars wherever they are but instead of treating everyone like a superstar can you differentiate between mission-critical and non-mission-critical roles and locate them appropriately? I haven't seen this happen yet but it makes sense that at some point it would, due to the diminishing quality of life in the bay area. Or do they wait for the capital markets to turn on them before doing this?

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As long as big tech makes big bucks in the Bay Area, the money's gonna want their labor within arm's reach. Remote work has its place but for most companies you can't have your cake and eat it - remote is either all or nothing. That leaves local employment. Paying a quarter million to a developer seems like a lot, until you compare the efficiency gains of keeping everyone in one place.

I think the real issue with Silicon Valley's future isn't financial, it's cultural. I believe it is rapidly becoming a second Wall Street: the place where young professionals tough it out for a few years until their bank accounts and resumes are good enough for a more fulfilling job in a cheaper and more preferable location without the cost and the crazy.

The Bay Area is a great place to make money, but is it truly a great place to live? Strip away the nice weather and trendy restaurants, and it's hard not to notice how much of the communitarian counterculture that peaked in the 60s has been, like so much of the world today, eaten by software.

I think it's a fantastic place to live, albeit expensive. I don't go to trendy restaurants, but there's a lot to do in the area. Lots of hiking/running/mountain biking opportunities. Don't undervalue the nice weather; it's a lot less enjoyable to do most outdoor activities when the weather is crappy or unpredictable. Easy access to the ocean. Relatively easy access to the mountains, assuming they get snow again. I'm a motorsport enthusiast; lots of great racetracks and mountain roads for cars+motorcycles.

While I don't disagree with you, I do want to make clear for the sake of argument that those mountains were there before the microchip, and they'll remain for a very long time. My point is that a big money monoculture is a great way to homogenize and wash out a cosmopolitan culture. The homeless might remain, but the hippies are long gone...

The hippies are starting to die of old age, anyway.

San Francisco is a city defined by successive invasions.

"The Bay Area is a great place to make money, but is it truly a great place to live?"

SF now costs about the same money as living in Manhattan. I suppose you might value the "theoretically outdoorsy tech-bro/bro-burner" lifestyle here enough to pay New York City prices for it, but you're definitely getting ripped off in terms of everything else: from food to culture to social life, New York is a dramatically better scene. Like 10x better. It isn't even close. And if you truly value mountains and great weather and whatnot, there are lots of cheaper places to get that.

Somewhat related: the little statistical summary they slipped into the end of the article noted that 60% of the caltrain riders are men, and 50% are single. Hope you like celibacy, young tech dude! Keep livin' the dream!

"Single" probably means "not married," which doesn't mean celibacy (unless that's your thing).

It's terrible here, stay away :)

Proximity to the outdoors are just one reason people like living here (even if they aren't bros or bro-burners whatever that is). The food's endlessly great and people generally seem content with the culture/social life. That doesn't mean Manhattan is bad- it has a lot of great things. Different strokes for different folks. If you feel your SF dollar is worth 10 Manhattan dollars, act accordingly. It's worth noting the software jobs pay less well there, and there's a smaller community which has it's plusses and minuses (like being at a large school vs a small school).

Not all men are into women, and not all single people are celibate. Enjoy the snow :)

I've lived here for nearly a decade. I wouldn't recommend it to anyone at these prices. It's not that one SF dollar is worth ten Manhattan dollars, but rather that people are paying Lamborghini prices for a Mini Cooper and congratulating themselves on the purchase.

The bay area is definitely a world leader in smugness and self-satisfaction. The restaurant selection in SF is perhaps on par with the east village, but more expensive and provincial. It sure is "endlessly great" not to be able to get decent food after 10pm!

Also, you're wrong about salaries.

I've lived here for a decade, and am yet to tire of the food. There are more places to try than time and energy, new ones opening all the time, and plenty of great food from nearly every culinary tradition. Ukranian? Burmese? French? You name it, you can get something pretty decent or better in the Bay. Yes, just like NYC.

Whether or not it's valuable to live here depends on a lot of factors. The general advice tends to be of little value- like telling people where to go to college.

There's a lot of smugness here, sure. And SF has no monopoly. In Manhattan, I've met plenty of people that think they're at the center of the universe and the peak of civilization. Some that grew up there and never left and don't understand why anybody should see what else there is.

If you know where to look, you can find decent food after 10PM. Yes stuff closes early, it's true, and it'd be great if you could buy alcohol until 4am like Manhattan.

"Also, you're wrong about salaries."

Any data? Any explanation?

> There's a lot of smugness here, sure. And SF has no monopoly. In Manhattan, I've met plenty of people that think they're at the center of the universe and the peak of civilization. Some that grew up there and never left and don't understand why anybody should see what else there is.

When I lived in London I feel like a I regularly ran into New Yorkers who would roll their eyes at the mere mention of an American city that wasn't New York. Certainly SF has the lock on tech douchebags but NYC is unrivaled in civic arrogance.

It's justified. People draw comparisons between SF and NYC, but it only serves to underscore the fact that they know absolutely nothing about what they're comparing.

One is a world-class city on par with London, Paris or Tokyo. The other is a mid-sized American city with nice weather and small-town infrastructure, and a notoriety that accidentally exceeded its potential in the 1960s. The main reason it's the epicenter of the tech world today is because it's the closest thing to culture that silicon valley gets. And I say that as someone who loves (or used to love) this city. It's simply not worth paying New York prices to live in Nerdistan sur Mer.

I think what we've learned today is that New Yorkers and San Franciscans are both equally deluded about the quality of life in their matchbox lofts.

> The bay area is definitely a world leader in smugness and self-satisfaction.

If anything is neck and neck with it, I would say it's NYC. To some of the people I knew who came from NYC, that fact almost formed the entirety of their identity.

By average developer do you mean in terms of general deveoper skill or in terms of average salary? I'd be surprised that even that the companies you list, the average salary for developers is 250k. And I'd be even more surprised if it's the median salary.

It's close to that when you factor in benefits and perks. That said, proximity has a lot going for it, and software is a high margin business. I don't see companies moving away from the Bay Area any time soon, and I don't see developers salaries falling soon either.

It might be, but it's still hard to believe. Has anyone written a blog post with some reasonable napkin math? Some breakdown of a prominent company of engineers by salary range?

Fully agree, a lot of software will be entrenched in the Bay for decades to come.

Maybe look at glassdoor: http://www.glassdoor.com/ ?

I feel like Oakland is the place to be right now. It's super convenient to the city. BART isn't the worst thing in the world -- it gets you where you need to go. Housing prices aren't too bad (I'm paying $1k for a 1 bedroom). Traffic isn't too bad. Office prices aren't bad either -- the startup I work for got a great deal on real estate.

Perhaps the low property prices are due to the high crime rates?

I'm down for high crime if it keeps the yuppies at bay.

Really? You don't give a shit about personal safety or your possessions?

I live in a (practically) zero crime area that has no yuppies and is very cheap. It's nowhere near SFO :)

The parts of Oakland near BART are either not that cheap or Fruitvale levels of get-shot-for-not-being-poor.

You are nuts. Crime in east oakland is almost entirely "poor people vs poor people".

I was exaggerating for effect. Parts of east Oakland are definitely the kind of place where you might get mugged for looking like a techie and carrying a laptop.

To anyone who doubts this direction, come to Portland, aka Bay Area 2. While you're here, ask local realtors how many homes sold to Californians in the last year.

It rains all year in Portland-- and it's cold. Artisanal is just another word for amateur. Wages are low. This is bad advice -- do not move here.

Wasn't advising, just stating the facts: people are coming here from the Bay Area in droves.

    paying their average developer $250,000/year

Are these really the kinds of salaries you get in SF/SV?

Some people do but they are expectational and not average. It'd be interesting to know but I don't think there is good data.

http://www.glassdoor.com/Salaries/san-francisco-software-eng...

No, but the prevailing myth is part of what a previous commenter referred to as the area becoming the new Wall Street. All the carpetbagging MBA types I'm acquainted with who would've gone to NYC/London in the go-go mortgage bubble days are here now. It's the logical place for a talented young person with hustle to go and try to get some.

I know brilliant people who live 5 to a 2br in SF despite being all on Tech salaries. As long as people think that this is the living arrangement they want, companies will be able to get away with hiring people in a housing shortage here.

I think about this quite often. Perhaps a more effective argument for this effort is social impact (rather than financial savings). The tech industry is reeking havoc upon lower income earners by rapidly increasing the cost of living. Ironically, many of these companies are social minded and have programs to assist those in need from a day-to-day perspective (i.e. free meal, cleanup projects, etc etc). However, the elephant in the room is that they've done far more damage than is possible to rectify via charity.

Which comes back to the social argument: if tech companies proactively migrate these highly paid tech workers to other municipalities, it could significantly reduce the pressure on rent and home prices. The initiative could be sold as a massive goodwill effort to the local community. And, of course, the employees who willingly move away would get rewarded with a much lower cost of living.

This is an option right now, almost all big tech companies have offices in Seattle Austin or Boulder. People just want to stay in San Francisco.. Its a great city to live in both when you are a fresh collage hire and if you are trying to raise a child.

Companies aren't proactively encouraging employees to migrate though. The employee has to ask for a approval, and if granted it's generally considered a favor.

I assume you meant not a great city if you're trying to raise a child?

Between the insane rent and child care costs... it's just not worth it. ~$4k/mo for a 2 bedroom and then you're looking at $1k+/mo for one kid in daycare. I've been living in SF for the past five years and despite how much I like it, I'll probably move out with a baby on the way.

I have two kids and I live in SF. I'm just a regular old developer too. For day care you should probably be budgeting more like $2k, FYI.

I live in the outer sunset and I own my home.

Why is it the tech industry's fault? It's a good thing that the industry is prospering. Would you rather have people losing their jobs? However, it is a bad thing that the housing supply is not keeping up, leading to high rents. There needs to be way more housing supply. This is the obvious solution that is somewhat of a third rail issue due to local politics and homeowners. The fact that even Palantir employees have lobbied for more housing in Palo Alto shows it is really affecting everyone who doesn't already own a house or condo, even those well off.

Also, it's not like the area isn't benefitting from prosperity through taxes. Why is it a company's responsibility to donate for cleanup projects when their taxes already pay for such things? If there should be more meal programs in a city, the city can vote for that, and fund it through taxes.

The correct thing to do is build a shit ton of housing. But that will never happen politically. So I was simply offering a solution that might be attainable.

Wrong, building housing as a means to reduce housing prices is a huge misconception. If a low-rise neighborhood sees the construction of a mid-rise condo building, you've suddenly raised the opportunity cost of not having dense housing, and prices go up regardless.

EDIT: Apparently I'm being downvoted without comment. Great way to further the dialogue. Well, I will: I live in a college town and when developers promised a decade ago that replacing houses with high rises would lower housing prices, well, they built the apartment blocks and prices still went up across the board, by a lot. I'm not talking out of my ass, here.

As long as demand outstrips supply, prices will go up. How much depends on how big the gap is. Government action can try to limit this (subsidizing construction in nearby areas, improving public transit to areas with more room to build, slashing police budgets to increase the crime rate....) but it only works if it can shift the demand.

> slashing police budgets to increase the crime rate [to reduce housing prices]

That sounds interesting -- can you point me to any documentation about this practice, or are you just brainstorming?

It's simply a matter of supply-and-demand economics. Supply is going up, but demand is going up even faster, like one or two orders of magnitude faster.

San Francisco's population has been growing at about 900 people per month for the past few years. San Francisco's housing stock has been growing at about 150 units per month. Approving new housing is way too hard, and the economically illiterate voters just throw up even more roadblocks to housing (e.g. Proposition B, passed by 14% of San Francisco's registered voters in a very-low-turnout June 2014 election).

Tall buildings also cost more per unit to build, which needs to come out in the price. But the way I see it, 1 unit of rich person living in a luxury condo is 1 unit of rich person not out-competing a middle-class family for a little house in a boring neighborhood.

Again, the reasonable expectation and misconception. When you have a remarkably elastic demand for housing (tech workers and college students WILL pay), then it signals to property owners that they can raise rates by a few ticks. Like I mentioned above, if you create a ton of prime housing stock and charge a ton to live there, then you've effectively moved the goalposts and set the new normal for rent. So while that rich person may not live in the boring neighborhood, the middle class family will have to pay more to live there because of the presence of proximate wealth.

Economic illiteracy, Exhibit A.

The definition of elastic demand is that there is change in demand given a change in price. College students and tech workers, who will pay anything for their place, are examples of demand inelasticity. The demand keeps going up, despite the price.

Though, I suppose you have a point, considering the global market. There are enough houses in the United States for everybody to live. It’s just that more people want to live in the Bay Area than in Detroit, so we’re double- and quadruple-packed here while entire neighborhoods go empty there. And then, skyrocketing house prices attract speculators, who will bid against people who actually belong here and keep the price rising as long as possible.

The missing bit is that that first dense housing signals unmet demand. The real keys are:

1. is to keep on going with the dense housing to saturate.

2. a city council that insists on below-market-rate housing be included with the development

3. layer cake development: bottom floor is retail, middle is office, top floors are apartments/hotels + below market rate

This prevents developers from cherry-picking the highest demand usage for their building at the expense of the total needs of the community.

I would say the havok is caused by NIMBYs + rapid economic expansion. For example, there are no height minimums for new construction in the bay area, but constant height maximums.

Would this havok occur in a building friendly city, such as Dallas? They have encountered a recent economic boom due to oil, but you don't hear many complaints of rapid price increases.

height minimums would be great.

It's almost disgusting walking around ~8th st soma and seeing single story car maintenance places or strip malls take up entire blocks. Tear them down and build rows and rows of 5 story to 20 story apartments.

As for Dallas (err... THE METROPLEX), it isn't a peninsula with restricted growth, crappy highways, and old money refusing anything new that doesn't look like a quaint bombed out city from the old country. I still don't understand why south san francisco looks like a 3rd world country. Eminent domain the whole area and build neotokyo on top of the existing shanty town.

Indeed. Unfortunately there is a lot of pushback on anything that increases building height. I've received notices in the mail urging residents to oppose new constructions that could set a "dangerous precedent" in this regard.

Argh.

But it's "the city"!

Yup. The Bay Area needs to start aggressively building up. The people already there have to give it up and realize their little California suburb isn't that anymore.

Those scared that building up will lower their property values need to relax. Population density will bring more value and thus more desire to live in an area raising the property values of locals. A house that sells for 1.5 million right now could be sitting on a piece of land worth 50 million if a high rise wanted to use it.

So, we need to vote. San Francisco’s stupid direct democracy system means 14% of registered voters voting in an off-year primary election (June 2014) are now forcing everybody else to have to come out to vote yes on Proposition D this November in order for the Mission Rock housing project to get off the ground.

We also need to defeat Proposition I. A moratorium on new housing permits along with more “studies” is exactly not what we need in this housing crisis.

I haven’t looked at the other propositions enough to have an opinion to relay about those, yet. However, you can be sure that the anti-growth voters will be out in force, and we need to come out and vote for more housing.

Problem is, something like %40 of the bay area are immigrants, and a good chunk of them cannot vote. I don't even know if it would be legal for them to participate in the political process through promotions and so on.

Maybe a proposition to allow immigrants to vote in city politics might be good too.

It's havok upon more than just lower income earners. That is the most ironic part of it to me, the tech industry is doing this to itself, like a dog trying to chew off its own tail. When you're earning a lot and spending a lot you feel like you are doing well, even if your net savings is close to zero. I've found this attitude especially prevalent among younger folks. The real beneficiaries in a gold rush are the landlords, the government (more taxes), and vandwellers who can effectively arbitrage the high wage-high cost of living gap.

> The real beneficiaries in a gold rush are the landlords, the government (more taxes), and vandwellers who can effectively arbitrage the high wage-high cost of living gap.

Another issue is that there is quite a bit of an income gap within the tech industry itself. Yes, a $100k salary out of college is fantastic, but the cost of living is so ridiculously high that it's almost impossible to buy decent housing here unless you already have old money (which I don't). My parents had an easier time in the 1970s buying a house with their lower salary (adjusted for inflation) than I do now in the Bay Area.

Conversely, many of my hip millenial techie peers are willing to blow their entire salary living in San Francisco, going out to eat every night, driving up their credit cards. I don't have enough fingers on my hands to count the number of folks I know who make six figures and spend 70%+ of their income on rent alone just to be around their friends.

You need to work a company that will pay you in liquid equity. I suppose cash bonuses would also work. You only need 5-10% down payment.

Couldn't agree more. This is the consumer version of a business that focuses on revenue while ignoring profit margin.

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