A drop in salaries and in the number of jobs available in the Bay Area
forbes.com
forbes.com
> PR people fear bloggers for the same reason readers like them. And that means there may be a struggle ahead. As this new kind of writing draws readers away from traditional media, we should be prepared for whatever PR mutates into to compensate.
Alas, the days of "bloggers are more authentic than the print media" are long gone. The PR people are now everywhere: blogs, social media, messaging apps, movies, OTT series etc. The "crap" pervades all media, not just print. The PR has indeed mutated as predicted.
Basically, the general guidance in this post now applies to _anything_ you read.
I wonder if there will be another new type of media technology that will go through this same evolution, or if “authentic” content will gather somewhere else.
Ever since Forbes pivoted to basically being a hosted blogging platform I've felt their business, both directly and for contributors, is leveraging their historical brand and whatever benefits it confers for SEO and PR
So, inflation adjusted, we're back to 2018 levels which doesn't seem too bad. Anecdotally, it felt like that was about when the whole "I get paid $200k and work 2 hours a day" type stories really started to take off. This doesn't feel like a massive issue. Just the bubble deflating a bit.
> Tech professionals have been moving from expensive cities to lower-cost locations. U.S. inflation-adjusted remote salaries have been higher on average. Employers have decreased the number of open roles in high-cost-of-living markets by 19% and have nearly quadrupled the number of positions in low-cost-of-living markets to 9% since 2020.
Completely unsurprising, IMO.
It feels to me like big tech is trimming the fat now that they realized their race to hire as much talent as possible at any cost wasn't paying off and small companies that have embraced remote work have realized there's cheaper options elsewhere.
I wonder if this trend will continue, or if companies will hire for in office roles which are in more HCOL markets.
My guess is that the top paying jobs are going to be primarily in office (even when adjusted for COL) because executives will believe that in person collaboration gives them an edge.
The “2 months off” deals and the bankruptcies due to high vacancies popping up [1] points to the answer being ‘No’. Which means this is a double drop for the residents of the bay.
[1] https://www.globest.com/2023/08/22/default-imminent-on-384m-...
People moving out of the city could reduce demand, if a significant number of people actually do. But this is not a sharp drop and the growth rate is already back to being non-negative:
https://www.macrotrends.net/cities/23130/san-francisco/popul...
Lower salaries could reduce demand in a different way.
The better way is, of course, to increase supply.
We're trying to reduce the number for fossil fuels, one of these is actually working.
If you have more demand than supply, the only ways to make it otherwise are to reduce demand and increase supply. Methods of reducing demand are generally unpleasant.
What alternatives do you imagine there even are? If you have a million families and 800,000 housing units, your choices are building 200,000 more housing units or something worse than that.
Then corporate investors buy large buildings instead of single family homes (note that this is primarily what they do anyway), the prices for rentals in multi-unit buildings goes up (because it costs more to buy the property with more corporations bidding on it), the prices for single family home rentals goes up (because some of the landlords sell to occupants rather than smaller landlords so there are fewer rentals available) and what you've done is transfer some of the cost from more affluent prospective single family home buyers onto less affluent renters.
> occupancy requirements
They just convert unoccupied units to some other use or claim they're under construction, and if there is no exception for units under construction you've made construction more expensive and get less of it.
It's also kind of weird because they're already losing thousands of dollars a month in rent if the unit is empty, and the higher rents are the more they lose, so isn't the market already providing the incentive you're trying to get here? There's a reason well over 90% of the units in high demand areas are already occupied.
If you really want to increase occupancy then get rid of rent control -- it lowers that exact incentive to put the unit on the market which raises rents for all other units across the city, and has the same effect for new construction because of the risk (or certainty) that the building will be put under rent control in the future.
> mandated development on state-owned landed
The state often makes inefficient use of the land it owns, but it typically doesn't own that high a proportion of land in the city, especially if you're just going to use it to build more single family homes. Allowing a 100-unit building to be built where there is currently a single family home creates 99x more housing than converting some park to a single family home -- and then you lose the park.
> direct state construction vs. subsidies
Then the state uses government contractors who charge more and you get less construction for the same number of tax dollars.
And also, this is just a different kind of construction subsidy. You're not getting out of needing to build more housing.
You suggested the use of state land as a means to increase supply. If it's an alternative to zoning reform then the zoning still prohibits anything other than single family homes. If you do the zoning reform so that it's possible to build multi-unit buildings then why would you need the relatively modest amount of state land? Anyone could just turn existing private single family homes into multi-unit buildings.
> Even the most extreme market fundamentalist would acknowledge that within the basic principles of supply and demand, flooding the market with a fire sale of the properties currently in the possession of corporate investors would cause prices to go down.
It would cause single family home prices to go down, not rents -- you would be removing units from the rental market because some would be bought by occupants instead of smaller landlords.
It's also not obvious that the home prices would go down much either, because the rents would be going up, which would cause those homes to have a better return than they do now for any investors still eligible to buy them.
And at bottom it just isn't increasing the number of housing units.
The vast majority of rental units are owned by large companies, not individuals. Here in Texas all of the biggest landlord companies set rents to whatever the "YieldStar"[0] software tells them to. YieldStar is essentially used to outsource/whitewash pricing collusion.
Personally I'd expect a large % of individual small landlords to be using property management firms to handle their listings/rent collection/maintenance/etc, and for those property management firms to be using something like YieldStar to set their prices. If not now, then definitely soon enough.
0: https://www.propublica.org/article/yieldstar-rent-increase-r...
And landlords who'd used this company to collude would be offered plea deals, in which they're wiped out financially, and permanently banned from investing in residential properties. Bonus: they can see what it's like to be an exploited renter.
The resulting funds can partly compensate some of the renters who were harmed, including many of those impacted by the effect this collusion had on the larger market.
Hopefully, that would double as a warning to any other startup founders who want to pull yet another "it's not illegal, if you call it an app" scheme.
Justice fantasies aside, at least HN could condemn these awful companies and the people who make them; never celebrate them.
That's not actually true. The vast majority of rental units are owned by individuals or small and medium-sized companies. The largest apartment owner in the US has 115k apartment units, out of tens of millions:
https://www.statista.com/statistics/603416/leading-apartment...
> Here in Texas all of the biggest landlord companies set rents to whatever the "YieldStar"[0] software tells them to. YieldStar is essentially used to outsource/whitewash pricing collusion.
Which doesn't actually work because they don't have market power. Any landlord who isn't an idiot would realize that they could set a slightly lower price and fill their empty units immediately, which is profitable as long as the discount is less than the loss of rent from leaving the unit empty until you can find a tenant at the higher price, which it would be if the software is suggesting rents above the market-clearing price.
There huge numbers of landlords, they all have the incentive to fill their units quickly and they have no enforcement mechanism to punish anyone who charges a lower price to do it.
This doesn't imply that no one uses them, it implies that it's not an effective mechanism for price fixing. Because it has no enforcement mechanism; nothing to stop any individual landlord from charging a lower price to fill their unit faster to their own private advantage.
It's just a computer doing the things landlords have always done -- looking at the existing state of the market to figure out how much to ask.
You cannot look at the entire US. You have to look market by market. It's not price fixing across the entire US, but it's absolutely price fixing in particular markets.
That doesn't really square with how large multi-unit properties are valued, though. Once you get past 4 units in a building, you're into the world of commercial real estate. Commercial real estate is commonly valued based on a percentage of the projected (i.e. theoretical) cash flow the building would generate if all units therein were rented out.
Notice how you don't have to actually rent out the units for this formula to work? If you have vacancies, you can just "project" that they'll be rented out at whatever your current asking price is.
At this point, you might be saying to yourself something like "WTF, that's basically fraud, isn't it?" Well, it basically isn't, as long as you can convince at least one person (e.g. a banker or potential purchaser) that your projections are sound in order to either get a loan against any equity you have in the building, or to buy it outright, respectively.
Just so you know I'm not making any of this up, here's a page that lays it all out for you: https://www.firstrepublic.com/insights-education/five-common...
To bring it back to vacancies and rents, that's the reason you see buildings sitting with tons of vacancies and owners not dropping rents. It's also the reason you see those "N months free, then $R per month thereafter" deals (because $R is the value they get to "project" they'll be taking in every month, regardless of the fact that it cost N months' worth of rent to bring in a tenant. If you start lowering rents, then that fucks with your "projections," see.
If you're like me when I first heard all this, you probably think this is insane at best, or shady at worst. And, yeah, it kinda is. But it also explains the phenomenon of units sitting vacant and bringing in $0/month when the landlord could just lower the rent and bring in $POSITIVE/month instead.
Of course it is. Apartment units have turnover and if you have a non-trivial number of them then at any given time you'll have some proportion which is on the market rather than already rented out.
That doesn't mean the landlord wants the unit to be empty. They want to fill them as soon as possible because every month they're empty is a month of lost rent.
Waiting a month or two or three to get a tenant at the market price could be worth it over offering a huge discount to fill the unit immediately. Holding out for even more by receiving no rent for years... isn't.
I think the only reasons they need to resort to such gimmicks instead of just dropping rent are the above accounting considerations and limits on rent hikes (not extending the deal increases the rent without increasing the rent)... the end result is still low rent thanks to market forces.
per https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100.00&year1=2... (latest data available is August 2023) we've had 3.67% inflation from August 2022 to August 2023
So the inflation adjusted "drops" of 163->161 and 161->156 were nominally increases from 157.23->161 and 155.30->156 respectively, which were less than inflation. Given that inflation is uneven and also that the headline is much more alarming as-is than "after adjusting for inflation" (A huge portion of hourly and less-privileged salary workers get 0% nominal raises every year, just not often in tech) it seems like a whole lot of nothing.
Of course this is predicated on you wanting to work there and them wanting to retain you. For the latter half of that equation this may be the exact litmus test you need to give you the signal on where you stand. Many of the places I've worked will refresh stock grants for at least the top 10% of their employee pool, even if that's not an explicitly stated policy.
Huh. Weird. I don’t really even hide that I’m always working towards my own goals. This includes keeping an eye out for opportunities that better align with them. And I’m a firm believer that having a discussion and seeing what options there are is healthy and good. There have been many times in my career I’ve spoken to recruiters and come away with a better appreciation for where I was.
Didn’t realize this was not a normal approach.
>shareholders/board demand immediate profits rather than future growth -> executives oblige
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
As an aside, H-1B admits 85K new people every year; not sure where you got the “hundreds of thousands” number.
National inflation is also just not that useful. See https://www.employamerica.org/researchreports/real-wages-and... for why (classic dividing aggregates issues). If we want to look at a "Bay Area price consumer price index", clearly housing dominates. The recently passed YIMBY laws are very promising in this regard.
If housing prices continue to level off, and even come done, Bay Area tech worker purchasing power will go up a lot further than the methods in this document would indicate.
Anecdotally, I’m used to getting recruiters for Bay Area firms reaching out for, say, a 50k jump in compensation. On paper that’s a great deal more but rents always seemed exorbitant for a simple 1 bedroom such that I never bothered contemplating these pitches. It seemed like my quality of life would remain or lessen (cheap, small city) to (expensive, large city) with most of my increased income being sucked up by landlords, increased taxation, and (presumed) higher cost of goods.
So, for the typical guy working at an off-brand company, not making 300k+ at FAANG was SF ever really worth the move?
If it's anywhere close to flat, as in all the extra wages are eaten up by cost of living increases (pretty easy to price this out with Zillow + tax calculator + nomadlist for daily expenses), it's not worth it IMO, because what you're doing is adding risk to your situation. What I mean by that is a lower cost of living is just less risky, because if you ever lose your job or need to go without work for some other reason (like when I needed to go home and help my parents for a while a few years back), lower fixed expenses make that easier.