Employees at Airbnb, Square and Stripe Are Spending 50%+ of Income on SF Rent
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Also, just FYI: Seattle isn't that much cheaper than SF, the people are way meaner, traffic is awful, and the weather really sucks. So I highly recommend against moving up here.
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edit: Since people are apparently missing the joke, I've lived in Seattle for 12 years, consider it home, and can't imagine living anywhere else.
Just saying. Might not be Seattle that's the problem.
As to traffic, I commute via boat, which is rad, since there are dolphins and orcas sometimes. Seriously!
Every few years these Californians muck everything up with their SF equity turned into bidding wars, and their fancy cars and stuff.
Stickers, that'll keep 'em out!
Seattle is still quite affordable, especially where startups tend to have their offices (in boring east side office parks).
And roving gangs will steal your teeth
It's much better for the employee if there is legislation prohibiting non-competes as you can choose any employer to work for.
Unions or advocacy groups are a potential third, too.
If anyone wants to rent a nice 3BR house north of the UW for $3-4K, email me, I know of one for rent.
Source: http://ny.curbed.com/archives/2015/05/14/rents_rise_across_n...
You can expect pre-Series A shares to drop by an order of magnitude in ownership proportion between issue and IPO. Since this can take 5-10 years, the equity carrot is nothing more than a bonus unless the company unicorns. It's less than one could probably make in the same time at an established company.
From a compensation standpoint, there's no point being an employee at a startup that isn't aiming at a billion dollar+ exit: there just won't be enough money to go round unless it does.
The people were super friendly. The weather was great (two days of sunny blue skies). The food was great. Even the roads were easy to deal with
I do take bitcoin.
Seattle from October through January is nothing like this. I literally didn't see the sun for over 20 days straight at one point (it's foggy and rainy non-stop during the winter).
Smart-assery aside, yeah, Seattle has awesome summers, albeit mighty short some years. November comes, you better head down to the NorthFace outlet and get a GoreTex jacket or two.
Which is of course what happened -- they decided they wanted the technology and the engineering team (including me) and after some negotation got to a price that worked for everybody. Moving up to Redmond was part of the deal.
At the celebration party, people gave me various presents -- including a scuba mask, flippers, rubbers, several umbrellas...
And yeah, everything they say about the winters here is true. So please please please don't move here :)
Huh, just noticed this: http://minimsft.blogspot.com/2007/11/low-hanging-late-harves...
It looks like you and I left Microsoft in the same week. Funny timing.
Seriously though F* 405 traffic. The new "Toll route" is a nightmare and now everyone is using side roads making my drive to work from a quick 10 min jaunt into a 25-30 min parking lot.
The real solution, as pointed out above, involves incentives for desired behavior from all actors via taxes/tax breaks (stick/carrot). Parties that should be affected include businesses, employees, housing providers, and civic planners on all levels. The true cost of living rural should be felt (you should /pay/ for your share of the infrastructure required to provide /you/ with modern services; but you should /get/ them, including actual /good/ Internet). The true cost of employing should be felt (pay for the infrastructure to get workers to you, and for the education that trained them). Housing should be more consistently priced, in city and out, and should also scale up large enough to have 'raise a family well' sized dwellings. Also while you're at it, discount taxes slightly for better auditory insulation (or make it a side effect of /awesome/ fire codes).
This way workers would be more likely to be able to afford to live, and thus move closer to their jobs. With the lack of 'lifetime employment' at a company, responsible living is now an apartment, not a house.
So the point is looking at just Income isn't helpful. One would hope your stock is appreciating in value at an equivalent or greater pace than your income.
One would, but given the stock performance of GRPN or ZNGA, or more recently HDP and BOX, I'd be leery of this.
Betting that you happen to pick the unicorn that's gonna IPO is a tall order. Betting that you happen to pick the IPO'ing unicorn that isn't going to fall apart post-IPO seems like too much to ask for.
OTOH, hope is not the same thing as reality.
Some startups will exit successfully and yield really big payouts. Some startups will have modest exists, and equity will have some additional value, but nothing to write home about.
And some startups will fail.
If you are a capital investor in lots of startups, the small share where the first occurs have a good chance of being enough to make the average return good. But if you are a 20-something that's putting 3-7 years of labor into each swing at the startup piñata...
Hopefully people are putting a little more thought into their career choices than that, but piñatas are definitely fun, and you're surrounded by your friends shouting encouragement and direction at you all the while. So while I'm positive that life isn't as bleak as this image conveys, I'm still going to borrow it to use in the future!
a) you love the company and the mission b) you are a founder or a very early employee
I am not sure the expected value is there from a pure financial point of view for late employees, compared to working for an established company
I'm saving quite a bit with my $bigcorp job, and at the current rate, I'd be way over that in 3 to 7 years.
Also, the 17.5k (plus possible match) that you put in 3-7 years ago has been compounding for 3-7 years. Sure, the stock market may have taken a tumble in the interim and you might say that that means you end up with less in your 401k, which is true, but broad market movements affect startups' prospects as well, so you are still likely to come out ahead with the safe bigcorp option.
[1] http://d2dtl5nnlpfr0r.cloudfront.net/tti.tamu.edu/documents/...
[2] http://d2dtl5nnlpfr0r.cloudfront.net/tti.tamu.edu/documents/...
[3] http://d2dtl5nnlpfr0r.cloudfront.net/tti.tamu.edu/documents/...
[4] http://d2dtl5nnlpfr0r.cloudfront.net/tti.tamu.edu/documents/...
http://www.washington.edu/uwired/outreach/cspn/Website/Class...
This is the cheapest home available in SF, for $288,000, in the worst neighborhood http://sf.curbed.com/archives/2015/05/27/at_288k_san_francis...
> "the rule of thumb is that you shouldn't spend more than 30% of your monthly take home on rent",
as they say, but that's just a rule of thumb. What actually matters is how much money you end up with. For example, assuming taxes remove 30% of income (probably close enough; would need to look up federal and state tax codes to be precise),
1. A Zynga employee makes 147,000, loses 30% to taxes, spends 3,545 times 12 on rent, and ends up with 60,360 to spare.
2. A RadPad employee makes 120,000, also loses 30%, and spends 1,475 times 12 on rent, giving them 66,300.
In other words, while the Zynga employee spends 47% on rent, and the RadPad employee a mere 23% - less than half! - the difference is much smaller than that would imply. At the end of the year, the RadPad employee has an extra 5,940.
Certainly a significant amount of money, and noteworthy in that the person has a lower salary but still ended up with more income after taxes and rent, but the amount is in the single digit percentage of the salaries we are talking about here.
More importantly, the problem becomes more obvious if we look at second place after Zynga. Doing the same calculation on a Google employee, then we get that despite paying 42% on rent, the employee is left with 71,128, which is more than the RadPad employee.
In other words, looking just at % of take home spent on rent is a useful rule of thumb, but looking at the actual money is better, and it can lead to different conclusions than the article would imply.
edit: Perhaps the best conclusion from their data is that it actually doesn't matter where you live, since salary actually compensates surprisingly well for location. Whether you work at Google or Zynga in SF, or RadPad in LA, you'll end up with +- a few % of the same amount of money in your bank account anyhow.
That doesn't mean it works for everyone, but do your own numbers and make your own decisions.
If you take most of those two bedroom rents and look at the cost per month per room, most are less than 30% of after-tax income. (And that's if you choose to live in SOMA, which also seems like an extravagant and uncommon choice for most engineers I know, many of whom are happy with a short commute to the Mission, Pacific Heights, or Oakland.)
One of the reasons I got out is that it was too weird living in a place with tons of 20-somethings (I was one too, at the time) and not a lot of everyone else.
Recently I've seen other "rules" emerge which are far heavier on the expenses. Fidelity, for instance, suggests a 50/15/5 split between expenses/retirement savings/short term savings. I think having such high expenses is pretty risky, myself.
If you do the calculations with 2-bed apartments the numbers are much worse for SF. Google employee gets to keep $39.5k, compared to $53.5k for the RadPad employee!
I'm waiting for an article to break out the stats on who owns which property in these types of areas. What % of housing is owned by the government, foreign investors, domestic investors, institutional investors, real-estate holding companies, and the actual inhabitants of the property?
For all we know, the whole story could just be that tech companies are hiring some kids from ivy leagues and well-off families that are just paying rent back to their parents, who somehow or other own shares of the SF property market. Or that a lot of rent money is flowing to foreign investors, as is the case in NY and London.
So while it's interesting to see who is losing and by how much, what I'd really like to know is - who are the winners? Where is the money flowing?
Wow, had to look this up. That is one insane law.
Clearly there are benefits (worth to many people) of being collocated.
SFBA companies! Get it together! Learn to be remote teams. It makes you a better company in the end.
EDIT: And you're not slaving your employees by forcing them to spend so much of their income on the unnecessary expense of SFBA housing.
Does it? I hear everyone on here say that more work should be remote but I haven't seen any studies that show that workers can be just as productive when not in the office. I would assume they would be.
Solution: remote work
Honestly...160k salaries for some sw roles are silly. But there is need for them because the costs of living are so high. That's plain bs.
Concentrate your tech workers in a area that isn't hostile to expanding the housing supply when needed.
http://www.wsj.com/articles/construction-in-new-york-city-go...
Chattanooga is good, Nashville is good (but getting pricey), lots of space and smart people in North Carolina (Asheville or Raleigh Durham Research Triangle Park). I've heard good things about Des Moines (not a fan of the cold though).
At this point, its just masochistic for SF startups to require their tech staff to live in the area, and throw away so much of their income to landlords.
Having sampled a fair number of places, I can safely say quality of life in Houston and San Antonio is far better than people on HN believe.
Unless you have a family. Texas schools are absolutely terrible.
I spent two years in a California high school and two years in a Texas high school. I have seen first hand how terrible schools can be in CA and, conversely, how fantastic they can be in Texas.
For reference, I'm comparing Benicia HS in the North Bay with Seven Lakes HS in suburban Houston.
In California, teachers were restricted to six pieces of copier paper per student per year. One security guard for 1500 students. Ancient textbooks and the most antagonistic administration you can imagine. AP classes? Gone. School buses? Discontinued. Arts and music? Better hope your parents can pay for it.
Between my sophomore and junior years I moved to Texas. Seven Lakes was the most expensive school ever built. We didn't just have a computer science class, we had a computer science department. Our AP US History teacher had more students score 4 or 5 on the AP exam than any other US history teacher in the country.
To Benicia's credit, their band was actually quite a bit better.
And just to underline the difference in affordability, the average home price in Benicia at the time was $629k. Katy's average was $161k.
Safe to say I have no regrets about having left California.
"Texas earns C-minus, ranks 39th in nation on education ranking"
* 52 percent of 3- and 4-year-olds in the state are not in school.
* Hispanics had the lowest rate of 4-year-olds enrolled in preschool at 39 percent. Meanwhile about half of black, white and Asian 4-year-olds were enrolled.
* 64 percent of of 3- and 4-year-olds in households earning at least $100,000 or more attend preschool compared to 40 percent of those living in households earning less than $20,000.
* About 44 percent of those enrolled in Texas preschool attended a private school.
http://educationblog.dallasnews.com/2015/01/texas-earns-c-mi...
California ranked 42nd in the same report with a score of D+. [1]
I'm obviously not arguing that every school in Texas is good. There are some utterly terrible districts in that state.
I don't think anyone would that point.
But there are also some great schools. The existence of some (even many) bad schools shouldn't necessarily deter someone from moving to a community in Texas with good schools.
All of that applies equally to California—there are some horrible schools there too.
[1] http://www.edweek.org/ew/qc/2015/state-highlights/2015/01/08...
Sure, you can try that.
But if the place doesn't offer the environmental features that make the Bay Area attractive, your going to have to offer them a premium to live there; lower housing costs may cover some of that so that you are only paying the same, but may not.
The Bay Area is expensive, more than anything else, because people want to live there.
When you think about the value that a single SWE can create it's not that crazy
The amount of choice in employer I have as an individual is also much greater here.
Still, I'll probably head back to one of those "small" towns soon. Not really worth it here for me personally, despite the employer-choice and the $.
You only have to spend 50% if you want to live in a hipster/trendy area of SF.
(rhetorical, trying to imply you might make quite a bit more than me)
Now I feel bad for spending 50% of my income and still not living anywhere hip.
Assuming that elsewhere you would do 30/30/40 % split on rent/savings/spend, then as long as you're making 40%+ more income (than elsewhere) you're okay to spend 50% on rent because you can save just as much or more.
I'm so biased.
It's also much harder on the employers: if you think finding one good job is hard, try hiring an entire team of decent employees at once.
Ultimately, it's worth the extra cost of staying where the tech is, prefixing your city name ala 'Silicon xxx' not withstanding.
At some point, costs will reach a tipping point where people will start to look elsewhere(I don't mean 1% of people and I don't mean the Easy Bay, but actual significant people moving away from the Bay Area).
I think that the tech frenzy is great enough that people are fighting over tech folks in other areas--maybe not as violently as in SF, but still fighting.
Each client did end up hiring, but it was a slog.
Sure, maybe you would be better off somewhere where the competition isn't as hard, and the living costs aren't as high.
That's a chicken-and-egg problem. Companies choose to set up shop there so employees will feel more comfortable taking risks because of the demand for developers. However, the demand for developers exists because companies tend to set up shop there.
Framing it that way doesn't make it any easier to resolve.
In my experience, this is not going to be the case in almost every major city and in some areas not near a major city. Places where I've found/been recruited for jobs easily: Seattle, Portland, Austin, Philadelphia, Central NJ, NYC, San Diego, Atlanta, Dallas, DC. And those are just the places I was looking into at the time. Sure, if you're looking for a very specialized niche, the bay area is a better choice, but for most engineers that just isn't the case.
But for engineering talent, it doesn't work. I don't know the exact reason but it seems to be some combination of the ability to poach from each other, herd mentality, and the concentration of VC money.
Take a look at the remote engineering jobs on WWR. Most of them aren't in SF. To me that screams "We opened an office in an affordable city but we still can't get people to come here"
However, as soon as my employer opens up an office in Berlin, I'm out of the US. Even denser, even cooler and way better public transit.
Boston, Chicago, Philadelphia, and Miami would all like a word with you.
> SF has all the 99% of the good tech jobs
Boston would really like a word with you, now...
Uptown is getting busier, and this just happened: http://www.bizjournals.com/sanfrancisco/blog/real-estate/201...
If you want startups, Boulder or downtown Denver are pretty good, or if you want more established tech companies, Interlocken or the Tech center are where it's at.
When a company becomes controlled by PE, cost-cutting is the number 1 priority. Layoffs happen, the company slow-pays its suppliers and is constantly on credit hold, pay gets cut, benefits are cut, schedules become completely unrealistic, and misconceived products are launched which fail.
I've seen this all happen in the last company I worked for.
if you working for a company and it gets bought by PE, leave ASAP.
At least that's what the window said when I walked by it every morning on the way to work.
When I left SF my studio "jr. one-bedroom" in SOMA was $3100 a month. I'd walk or muni to work by the ballpark and usually saw at least one person smoking meth, shooting up heroin, or pissing on the street. I pay less than half of that now for a 2 bedroom house in Michigan and have a stress-free 20 minute commute to the FarmLogs office.
Take a look at China and India there they earn even less.
How many and for how long can these companies keep hiring people for such huge salaries ? And if these people can't live comfortably off these salaries then there is something wrong.
This is why I like living in an area with -20F winters... keeps out the riff raff, oh and winter sports too.
Then I considered the interest group who is coming out on top in all of this: SF property owners. The total value of all residential property in SF is probably well into the hundreds of billions (a few hundred thousand units, multiplied by a resale value probably approaching a million dollars per unit). That value is driven by scarcity.
So you have a group protecting a half trillion dollar investment. Is it really so surprising that they have convinced long-term residents (most of whom still rent) and populist politicians to rally in favor of scarcity?
Is anyone trying to organize a coalition of tech workers _and_ long-term residents against SF property interests?
Prop 17 is something else entirely :) https://en.wikipedia.org/wiki/California_Proposition_17_(197...
On the other hand, I'd love to get a great offer and then buy a Blue Bird bus and convert it into a rolling home but only if I could semi-permanently park it in the company parking lot!
http://www.wsj.com/articles/SB100014240527023038478045794799...
and a few articles like it. It seems the laws aren't well enforced though (probably for the better).
Having said that, Sacramento is a much nicer place than a lot of folks in the Bay Area give it credit for -- a lot of pretty, walkable neighborhoods, a lot of good cafes and bars and restaurants and "third wave" coffee places, and as you mentioned a way lower cost of living. The only real downside (setting aside the commute) is that it gets ungodly hot in the summer.
Any kind of six figures goes very, very far if you are willing to be away from the center of the universe. If living in SF to work at a startup with options is speculating in penny stocks, living in a second or third tier city and squirrelling away a nice chunk from $120k a year is buying bonds. Lower variance, lower maximum rate of return.
In the 1950s, the average New York City resident paid 10% of the income for rent. It was federal, state, and city policy to keep rents down, with new low-cost housing being built by Government agencies and insurance companies.
The article doesn't mention studio prices at all, which are high but not stupid high.
This "must be colocated" mind-set is lose-lose no matter which way you cut it. I turned down a compelling/interesting job, the company lost a great-fit. If I had taken the job, burdened with an absurdly long daily commute, we both would have lost time/productivity to commuting (not to mention the broader societal costs).
Maybe it's going to take a billion-dollar startup to scale-up with a remote/distributed approach to really shift things.
Is it? Are they that starved for talent? You turned it down, but was it that hard for them to find another?
Even if you commute 3 times a week from Sacramento, you'd save a lot of money while still having a good social life...and 3 days/week in-person seems sufficient for a lot of dev work projects.
And when you add in the subjective value of living in SF (which is small or perhaps slightly negative to me, but surely large for many people), it could still be a perfectly reasonable decision to live and work in SF.
The article is comparing salaries of mid-senior level engineers and that $120k-$150k salary also often comes with $200k - $1+M in stock. As a SF-based startup founder and having been in tech recruiting for years, the clear upside of working for a unicorn is the stock with much lower risk of downside, but still plenty of upside growth.
If you look at percentage of Total Comp to rent, the numbers aren't nearly as outrageous.
No, what's really going on is a certain company is trying to justify paying employees 20% less, under the excuse that local cost of living is lower. So if I live in SF in my parent's house and pay little to no rent, someone can pay me less? What if I eat ramen instead of going out to eat every night? That's absurd -- we should be paid according to what value we bring and it's up to us how much we spend on cost of living. In fact, a company in LA that can't attract top talent such as presumably are now in SF should be offering even higher salaries.
I actually wrote off SF and the entire Bay Area during my job search, largely due to the cost of living. I know that in New York I'll at least be able to find a 1br for $1700 (in Western Queens or Wash Heights, whatever), which is 25-30% of take home.
There are strong advantages to working in direct contact, despite what sentiment on HN and logic dictates. Working in SF for a few months wouldn't make you super rich anyways.
Seems unlikely. If you're contributing, no rational company is going to suddenly cut your salary. Basically, no one cuts salaries in the U.S. unless it's a company-wide belt tightening move to stave off bankruptcy.
But my salary is well below the $140K averages I'm seeing in SF. So hire me at $160K, I'll be on site for a while, then if it's all right with y'all, I'll go back and be with my family and my productivity will be even higher!
Everything's negotiable in this world. I can see why 20-somethings want to be in the big city and are willing to compromise on their living conditions. That's always been true. But there comes a time when you just can't do that any more.
I'm a sysadmin, I could do my job anywhere with stable power and a low latency internet connection- but people insist on sticking me in a room with 80+ people so they can observe my work.
Some people do it, but at most companies the "butt in the chair employee is best employee" thing still sticks.
SF is a cartoon world. Yes salaries are less here, but I feel so much more at ease owning my place and can live a pretty comfortable life.
If worst comes to worst, there is always remote work.
Baltimore seems like a great place. Plus you have the advantage to ultra-commute to DC if you need to.
Some great companies like StackExchange or GitHub read it long ago...
This figure does not surprise me in the slightest.
In London I was _easily_ paying 50% of my salary after tax in rent, because I didn't want to share an apartment with someone else.
Most of westside is starting to be as expensive as Venice/Santa Monica and these two aren't that different from SF in prices. Unfortunately, you don't get much besides weather and ocean breeze, unlike in SF where public transit and neighborhood cafes actually exist.
Friends are looking for a 2BR with $2500 budget and it's a really sad experience. If you are willing to spend $3500, you can do much better, but still not prime SM or Venice locations or Playa Vista (newest hotbed in the area for tech).
The article mentions Hawthorne, but that's not the best of neighborhoods and has a good amount of industrial/petrochemical activity near by. Redondo Beach is still sort of affordable, but you have to deal with traffic going north/west in the morning and back.
I took a room for ~9 months in what was originally a 3 bedroom house. It was (a) very flexible regarding the contract (b) very cheap (£400/mth). (I had to move out of my previous place, but was looking for a new job, so didn't want to commit to something that might be in an inconvenient area.)
I had my own room, and for most of the time there were 4 people in the three other rooms, age 30-40s and one at 50.
Everyone apart from me worked in the kind of jobs where you have to be in by 7-8am, so I never had an issue taking a shower. We had 2 fridges.
This was a "nice" house, in a nice area, with nothing dodgy about the contract / rent etc. In other areas there are really scummy landlords overcharging people for individual rooms, often none of them are British / western European, so they don't seem to know that there are regulations in their favour, for example for getting a deposit returned, or not paying for wear-and-tear repairs.
Citation required. None of my post-college friends are sharing a room (though many do share their apartment). Yes, rent is high, but it's not that high when compared to dev salaries.
This is skewed if all your friends are devs. The sentiment is true to my experience as far as my non-dev friends go. Many share rooms with strangers or live with their significant other.
50% and more just for living seems to be to high for me.
That's why the 50% figure in SF is newsworthy.
http://www.sf-moh.org/modules/showdocument.aspx?documentid=7...
and, do you mean 4 years of salary + the equity grants, or just the equity grants, because not very many people get $250k/yr worth of equity [from any company]. A few do, but not the unwashed masses.
Why is rent so high in SF and the Bay Area in general? Can anyone recommend good reading material on this topic?
Short version: Supply (housing) is being artificially restrained from being built out (through regulation). While demand (those moving to the area) keeps increasing. Low supply and high demand = higher prices.
Solution: Build more housing.
It's a simple problem, navigating the bureaucracy is the hard part.