I'll agree with you that if you work at a rando tech startup, the costs of living are going to be quite high, and make it probably not worth it.
But, the whole equation changes if you are working for a big 5 tech company, or hot unicorn company.
These companies will pay you double what the rando startups pay. Who really cares if you are paying 40k a year on rent, if your total compensation breaks 250K.
And getting 250k+ as an engineer, with a couple years experience, is only really possible in the Bay area.
If more high-density housing was built, then rents would fall, middle-income people could live here again, and tech workers could pocket their fat salaries as savings (or live extremely lavish lifestyles). They would still be paid a lot, because there'd always be another tech company around the corner willing to bid up wages to their current level. For the salary "bubble" to pop, a lot of these companies would have to go out of business at once. This was exactly what happened in 2001 and 2009, and it had the predicted results: unemployment spiked, wages fell, rents fell, and people moved out of the Bay Area back to wherever they came from.
I think it's a dangerous attitude to think the salaries in CA are the actual worth of a software developer's work. It's just what FAANG can afford to pay. For many companies devs at that price point are not economically sustainable.
(Also, while there's some variance for cost-of-living in FAANG salaries in different regions, it's not that much. Google developers make less in Beijing than they do in Mountain View, but their salary still looks much more like a Google salary than a Beijing salary.)
Seattle and NYC can also easily reach that.
Source: I'm in Seattle making 210k 3 years out of college.
(It's also significantly more reasonable in the South Bay - my family pays about $2650/month for a 2BR, and most of the fat Facebook/Apple/Netflix/Google salaries are in Silicon Valley proper.)
Much better for those who can arguably restructure their salary as business income (e.g., real estate developers, some contractors), then they only get a 15% tax. Far worse for those who cant make that argument and live in high tax states like NY, CA, and many others.
https://www.irs.gov/taxtopics/tc751
50% is a high estimate, good for budgeting though. With property taxes, vehicle registration fees (aka taxes), school fundraising (aka taxes), tolls (also tax), health insurance (a tax if it’s mandatory), and other fees for dealing with government, you get pretty close to 50%.
The only way to beat this is to make a significant portion of your income via capital gains, that’s one big advantage of the real estate business, various loopholes exist to let you minimize taxes (like 1031 exchanges) on increases in your net worth.
That's not really true. Restaurants are more expensive in the Bay Area. Fresh produce is not, if you know where to shop - actually, when I go basically anywhere else in the world, one of the things I miss is the ability to fill a whole shopping bag with 10-15 lbs. of vegetables for < $10. Gas is more expensive, largely because of taxes. Cars are not. Durable goods cost the same as everywhere else. Amazon charges the same (modulo taxes) regardless of where you live. Airline tickets don't have appreciable differences. Baby things (modulo housing and childcare) are cheaper, because the Bay Area is dense enough and tech savvy enough that you can get a lot of toys/cribs/strollers/mats/gates/playthings for free or cheap on NextDoor/Craigslist. A dollar of savings is the same in SF as in Alabama.
The point about tax rates is true for rentals. You can do the math yourself on whatever offer you happen to get - figure on housing in SF being ~$40K/year, meals out costing about $20/person, grocery food being about the same, public transportation being a few dollars a trip, and gas being negligible because you'd have to be pretty crazy to want to drive (and park) in SF.
For that matter, the higher home prices also come back to you if you choose to move elsewhere (as long as Bay Area real estate doesn't crash). A number of the homes I've been looking at are on the market because the kids are grown, the owners are retired, and now they want to take their $1.3-$2.4M and move to Nevada/Florida/Arizona or some other low-COL area.
If saving $30k in Chicago lets you sustain your lifestyle for 12 months of unemployment, and saving $30k in San Francisco gives you the option to leave everyone you know and move 2200 miles to Chicago for 12 months of unemployment, those dollars of savings are not at all the same in terms of the protection they offer.
Living in the Bay Area can be a good deal, but to figure out whether that's the case, you need to set savings targets in terms of equivalent capabilities. Different people can place higher and lower value on location stability, but in any case the value is not $0; moving trucks and realtors are not free.
Not surprisingly, this makes recruiter jaws drop. We're not even on the same page.
In most parts of the country, though, those requirements work just fine.
Can't recall the specifics, but my offer from a FAANG back then was a bit over $200K gross. But a lot of that isn't really liquid cash that you could use to pay the mortgage. It doesn't really fly.
These days, for the scenario above, even $300K/y cash seems marginal. And AFAIK, no one in the BA would seriously consider offering me that.
Lest someone complain that I seem entitled, let me say that I in no way consider that I somehow deserve such an offer. But at the same time, no BA employer deserves someone like me when I can get equivalent comp elsewhere.
IMO, the way BA comp works is you engage in raids for five to ten years when you're in your late 20s or early 30s. Live in squalor, three or five roommates, and bank it all. Do not marry. Then take your winnings back to the real world and retire, or at least, live an easy life.
But if you want a traditional life, thar be dragons...