Hacker News Reader

Comment by librish | Hacker News Reader

The data all these articles are based on simply defining 'low income' as the bottom 20% of income earners. It has no ties to cost of living.

Unless you're the sole earner for a big family with bad benefits, it is not hard at all to live anywhere in the Bay Area at $117K a year. Yes, it might be prudent to make some basic sanity checks on your spending, especially when it comes to housing (IE don't rent a 1BR in the most desirable part of one of the most competitive cities in the world unless you're making bank).

I would argue that the data in this article should actually be used to realize what a good financial decision the Bay Area is for many people. 80% of people are making more than $117K. As someone in tech you should not have a problem climbing well above that.

View on HN

Agreed. These articles and their following comments all stink to me as boisterous reactionism...the bay area definitely has problems and housing costs are probably the number one problem of all of them, but this is statistical mangling, and if you think that for a second workers across the country - except in some of the least desirable places - aren't being squeezed on housing and other costs, you're mistaken.

For instance, my hometown of Grand Rapids, Michigan is also experiencing a housing crisis. This is a place that 10 years ago I could've bought a decent house in a decent neighborhood for well under 100k provided that I weren't a recent high school grad and had money to do so with...this is also ignoring the bubbly job markets and quality of life improvements that come from living in a vibrant coastal city.

>Unless you're the sole earner for a big family with bad benefits, it is not hard at all to live anywhere in the Bay Area at $117K a year.

It isn't hard per se, but it isn't good either, compared to what the same salary would buy in terms of quality of life nearly anywhere else in the country. And let's get real: "Bay Area" is overbroad. You can't compare life in SF proper to living somewhere like Redwood City or Milpitas. They are completely different experiences with shamefully small variations in cost.

> compared to what the same salary would buy in terms of quality of life nearly anywhere else in the country

That same person probably wouldn't be worth $117k outside the Bay Area. Density, network and agglomeration effects are real.

Yeah, but there's wiggle room there. $117k/yr in SF is equivalent to roughly $88k/yr in Houston, and it's arguable that $88k in Houston will buy you a far nicer quality of life than you could get for $117k in SF.

For those outside the bay, $117k a year is what a new college graduate could easily make in the bay area. The first rung of career ladder at any of the top tech companies makes ~$150k [1]. At that level it is very doable to be living in the bay renting an apartment in an OK area with a family.

[1] https://www.levels.fyi/

>For those outside the bay, $117k a year is what a new college graduate could easily make in the bay area.

Bullshit. That's what a college graduate with a CS, Finance or Accounting degree from a school targeted for recruiting by the biggest megacorps can make in the Bay Area. Those that didn't attend the right schools or programs aren't nearly so lucky. I can personally attest to that: my firm (still huge, but no unicorn) pays a good deal less than $117k/yr for fresh graduates with degrees in things like Finance, Accounting, Management, Information Systems, etc.

It's not bullshit. $120k base salary (before RSUs and maybe a signing bonus) is "not even blink" territory for new undergrads from state universities. You don't need to be at a highly desirable university. You "only" need to pass the interview.

That's not only the Bay Area either. A friend of mine has a sister who graduated from a downright forgettable school and landed a job with Google in NYC right after graduation. The base salary was $120k.

Someone else I am acquainted with received an offer for $180k all-in compensation (base, bonus, RSUs) from Facebook as a new graduate from a middling school.

It has very, very little to do with the school. It's the companies themselves. It's not even outlandish to get hired at the top tech companies without any college degree these days.

I didn’t go to a target school (at least according to some of the companies I got offers from) and all of my offers eclipsed that number.

My school isn't even in the top 100 and I was able to get interviews with most of the big tech companies. While I do agree it is harder, it definitely isn't impossible or unreasonable. Nowadays you can participate in hackathons and other events that recruiters attend that will allow you to show off your skills and also get in touch with recruiters. After that it's up to you to pass the interviews.

A good school gets you an interview (which is still admittedly huge for many major tech cos). Passing the interview is still required though.

It's not hard to live well on $117K in SF either. That's over $6K a month after tax. There are so many people living perfectly good lives on so much less. If you can't make $6k a month last easily without dependents you have really poor money management skills.

It all comes down to what 'living well' entails. 'Living well' on $6k in net income someplace like Houston, Chicago, Denver, etc. is far, far nicer than what you can manage in SF or the Bay Area in general.

And why does that matter in the context of this discussion? Who is claiming otherwise?

Good point. Everyone seems to want to have the same kind of life everywhere. You probably can't own a huge McMansion in SF Bay (well not anywhere convenient), but the city (and region) provides other benefits (great culture, food, weather, density of tech jobs etc) which are hard to factor in financial calculation.

Two assumptions about "live well": we want to be on track for homeownership, and we'll go for median rent rather than scraping the bottom of the market.

$6000 income

($731) 401k contribution of 15% discounted by 50% total marginal tax rate

($2083) savings towards a goal of $150,000 in six years for a down-payment

($3200) rent on a median 1-bedroom apartment

------

-$14

How'd I do?

It looks like there are hundreds of 1 bedroom apartments for less than $3000 a month.

https://www.zillow.com/homes/for_rent/San-Francisco/20330_ri...

Why are you using 3200 a month?

We stipulated a middling apartment rather than low-end. It's (slightly below) average [0] [1]. It's also around what the military thinks a junior enlisted man should pay [2].

In reality most people choose a well-below-average place, live with roommates, aren't actually on track for homeownership, or some combination of the above.

[0] https://www.rentjungle.com/average-rent-in-san-francisco-ren...

[1] https://www.zumper.com/blog/2018/01/zumper-national-rent-rep...

[2] https://www.federalpay.org/military/calculator?grade=E-1&yea...

You're expecting to have a 47% savings rate, and at the same time refuse to make any concession in how you're living (get a studio, pick a lower cost area, get roommates). I think that's a very high bar for defining "live well".

The goal was to achieve baseline middle-class financial health norms (homeownership, retirement). The savings rate that requires turned out to be astronomical. That's my point.

Try another scenario: Madison, WI, where entry-level pay is $80k and the median home is $250k.

4702 income

(717) 15% 401k contribution discounted by marginal tax rate

(700) savings goal of $50k in six years for a down payment

(1017) 1-bedroom rent

-------

2268 left to spend

SF is a very significant lifestyle sacrifice. In a more reasonable market, you could afford baseline middle-class financial health, median-quality living arrangements, and some luxury spending all at the same time. In SF it's "pick at most two." Obviously that's still enough for a lot of people (myself included) or we wouldn't be doing it. But in normal places, those are not tradeoffs that people making even half our incomes need to face.

And sure, SF has urban amenities that Madison doesn't, but if you live in a premium location with lots of shops in walking distance, you can't afford to shop at them. At least not on $6,000/mo.

This is only true because you've defined homeownership in your current job market as a necessity. If you either forgo it, or choose to save for a mortgage in another area suddenly SF comes out way on top.

You could have even more to spend by foregoing retirement savings, but would you? If you did, how would it feel?

Living large on an irresponsible budget is not the same as living well.

Or are you saying renting as a long-term plan actually is healthy/responsible? Maybe I have just internalized too much American Dream propaganda. But with SF's rate of rent and price growth, the calculators say "buy even if renting is free."

Including the value of stock options in those figures is incredible bullshitting.

For those wondering: the “first rung” is more like $110k plus stock options (which you have to pay for - they’re not RSUs - so calling them “income” is rank nonsense)

The estimates for stock options value on there are also WILDLY high compared to people I know who actually work there.

Very suspect.

Public companies don’t offer options anymore. It’s all RSU which is yours yearly/quarterly etc.

Even mature startups (like Airbnb and Uber) don’t offer options.

Yeah, but then you are working for AirBbB or Uber (or worse, Facebook). Eww.

Private companies/startups are still doing options.

And options are worthless. My employee recently loaded all employee stock options / holdings into a stock trading/tracking system and as soon as the FMV from the latest 409a was loaded in people flipped their shit. Turns out that no, joining a nearly decade old private company with limited stock options and a "mature" FMV isn't going to make you millions of dollars. Especially when you're going to be spending five figgies to exercise.

Reply on news.ycombinator.com