My rent went up by around $2000. At a marginal tax rate (Medicare + Federal + State) of ~40% this meant post tax income would have to go up by $40000 to "break even". Tack on an extra $5000 per year to cover the high state tax rate (this difference varies based on origin state). In comparison, my gross income went up by over $50k within a year and $150k within 3 years.
There are other aspects that add to "why I personally live here". (1) Job security is much better, not in the sense that companies are more loyal or successful here, but in that there is so much going on that you get job security from the strength of the market, and I feel like if I ever lost my job or wanted to change I can. (2) Because of the strength of the market, employers treat employees much better here than in smaller markets. (3) Everybody else is here. The proliferation of people who I can learn from here is amazing to take in.
There are definitely things that will tip the scale in favor of going away. Kids and buying a home are a big one, since those costs are even more outsized here than rent alone. Also, the valley is disproportionately friendly to the cutting-edge, type-A career, and the numbers (in terms of the jobs you can get) are not as friendly if you want to settle down. It's for these reasons it's likely I'll leave, but in the meantime, the cost of living is offset by a long shot, to say nothing about the intangible benefits.
People are quite comfortable living in places (yes, rent is shit) where there are multiple opportunities so that when one doesn't work out, they can move to the next without uprooting their family/social system. Silicon Valley allows for that in a 30-40 mile radius.
- Number of likeminded folks as @dhogan pointed out. The sheer volume of meet ups, etc. is incredible.
So many startups, so many cutting edge tech companies and a lot of driven folks. You can bounce around as much as you like in the valley. Companies tend to home themselves here, since there is an easier talent pool to tap into. I am not saying other places don't have that, but the volume of such folks + opportunities is very high!
2) You don't have to live in SF proper.
it is very rare for someone to intentionally decrease their income for a new employment opportunity , and the highest paying jobs precede your next highest paying jobs.
in the tech industry you are often rewarded for changing your job regularly. if you subscribe to this model, and the bubble doesn't burst , than this can be a very profitable approach to life.
Optimizing for independence is something you would explicitly be moving away from by living in SF, since your income (adjusted for cost of living) is lower there. There are studies showing that as well.
Ex: living in NL and getting WA level remote salary 150K+ (you get the point).
That only works when you're early in your career (< 5 years experience, beginner to intermediate). You hit a wall fairly quickly after that. Also, in those five years, you hit your 80% learned with 20% of the effort. After that, you can learn and earn far more by making your own products and selling them. Or starting your own company.
But really I think it's largely being around so many like-minded people. The community and the fact that companies are there for similar reasons. At least that's one reason why I personally would want to be there. To have the best opportunity to learn and grow.
I left because I wanted and liked living in the middle of the city and wanted a change. I'm in Austin now and I feel like downtown Austin offers a nice compromise between expense of living and salary and tech community (like minded individuals) when compared to San Francisco. My salary is similar to what I was offered in San Francisco (almost negligible difference), but my apartment is substantially nicer than anything I had a fighting chance for in San Francisco. I bike or walk everywhere and don't need or use a car. I'm very close to feeling like I've hit the sweet spot and being content.
Personally, I wouldn't live in San Francisco itself. I live in Alameda (quiet small island life ftw) and that lets me save quite a bit every month.
That actually translates into something of a financial advantage. The two largest pay raises I've gotten have been from quitting and joining another firm.
It depends how settled down you are of course. Being willing to move is generally financially beneficial as well.