Low salaries are an incentive for companies to move to Ohio, but are a disincentive for employees to move there.
https://www.indeed.com/jobs?q=software+developer&l=Columbus%...
Which is the general problem with the midwest tech scene.
"Woe are we, we can't attract talent". Well, when Google's annual bonus is larger than your entire compensation offer... yeah, no shit.
It was great growing up there. It still catches me off guard when I have to pay admission to walk into another city's zoo/art museum/science center.
The thing about saving for retirement is that you can contribute huge amounts of absolute dollars in a high COL place and then move to a low COL place to spend it when you retire.
The other part thats virtually impossible to account for is quality of life. Hard winters and big houses in Omaha vs Great weather and 1 bedroom with other people in SF, etc.
I don't know of strict rule of percentage or nominal dollars that works except for using annual expenses as the measuring stick.
But snark aside, this is a good point. If you keep all your budget percentages the same, then living in a high COL area you can save/invest more and still also have more spending money left over for hobbies or travel.
Even those who bought post-2010 are still up by varying amounts, although those amounts are all likely 6 figures given the median home prices and recent increases.
One doesn't need to pay off house. Upon retirement, just sell it and cash out and move to a cheaper area.
1) Your chances of becoming a millionaire through stock options are likely higher in silicon valley. Evaluating the optionality value of stock options at various companies isn't something a journalist can do. 2) If you are able to save 20% of your salary in Omaha, but only 15% in San Francisco, you are likely to save much more in San Francisco.
Then there is all the questions of quality of life, where it's easier to find new jobs in your field, where you are more likely to meet and work with the best in your field, etc.
And your odds of winning the lottery are better if you play Ohio Lotto rather than California Lotto. However, we're kind of ignoring the big elephant in the room...
Evaluating the optionality value of stock options at various companies isn't something a journalist can do.
A journalist can probably do a better job of investigating that than your average tech employee.
If you are able to save 20% of your salary in Omaha, but only 15% in San Francisco, you are likely to save much more in San Francisco.
And if a frog had wings, it wouldn't bump its ass when it hops. From what I'm hearing, having never lived there but having investigate the possibility, saving anything at all while paying SF housing prices can be difficult. Sure, you can save a few bucks renting with six house mates, but then we're back to QOL. Because I don't know if you've ever played the "what could we get somewhere else for what our current house is supposed worth?" game. In our case we could exchange the 1200 sq. ft. house in Redmond, WA for a 5400 sq. ft. house on a couple acres in a swank suburb of Indianapolis. I don't think we'd have any problem making the payment on Indianapolis wages, either. The difference is that you'll probably be working for an insurance company doing LOB apps. But, hey, it's a living and you get to go home to a 5400 sq.ft. house.
Now, despite all my contrariness, I'm in full agreement that it's hard to quantify beyond a gut feeling. For instance, we used to live in the Indianapolis of my example above. Notice that we don't live there anymore. Some of it is subjective, because some like the hussle and bussle of a big city like SF, others (like me) would do it only because that's where the money is at. But if the money is getting eaten up by housing costs, but OTOH what about the opportunity cost of living in Ohio and not SF...argggh, you could drive yourself crazy.
I think at the end of the day, live where you want to be at the moment. A software techy isn't going to starve no matter where in the U. S. they live.
On the contrary, employees are far better suited to value options than journalists. Journalists can’t value options because these companies are private, they can’t know average option grant, vesting period, strike value, total share count, company fair market value, etc, etc. They have no way of comparing the typical option value in silicon valley to other businesses, they can only compare cash comp.
Employees can know what their companies last valuation was, what about yay means per share, and reasonably estimate it’s future value if it succeeds, and roughly estimate how likely that is.
If you think you need $150K in silicon valley to match the $85K you make in the heartland, if some silicon valley company offers you $150K plus 1% of the company you don’t know exactly how much the stock is worth, just that its a lot.
For example a simple calculation goeslike this. Let’s say you think it’s a 1 in 10 shot get company succeeds, and it will be worth on average $400M if it does. That’s means $4M for you if it does or $1M a year, assuming vesting over 4 years. The 10% chance of success says you be zero most of the time, but your options value still works out to be worth an average value of $100K/year.
So when a journalist says engineers who make $150K in SV would have a higher standard of living in the heartland making $85K, that’s because they don’t have a clue what those options are worth.
I've done the math on this and I've never been able to figure a way that $100k in <generic midwestern city> gets me to retirement quicker than $200k in Seattle or even SF.
I just don't buy it.
As far as I'm concerned, it's a bullshit excuse midwestern companies use to under-pay their engineers.
No, but you answer the question of what that's still a fair comparison yourself:
> What you have to include is weather, cultural opportunities, etc.
Turns out that a small apartment feels a lot less like a jail when the weather's bearable almost the entire year and there's world-class hiking 30 minutes away.
> And the marginal tax rate is higher.
1. Which I include. In the worst case, this merely wipes out the delta between the real bonuses you get on the coast and the (conspicuously tiny) bonuses you get in the mid-west. The difference in tax is gone before you even start comparing salaries!
2. And that's not even fair to the coasts, because higher taxes do, in fact, buy some differences in quality of life.
Adjusted for Cost of Living, you might make more in savings, even if you earn less. This isn't something I've looked into personally, but great school systems are easier and more affordable too.