Hot IT jobs: Why location matters

Cities with high salaries and high cost of living also offer plenty of opportunities in case the job doesn't work out, the company goes belly up etcerera. Anyone with desirable skills and a bit of a local network can get a new job there within a few weeks, if not days. In most places with a low cost of living however, things are very different.

I think articles like this are pretty pointless. The reason for living in a bit city is that it is a big city - it is a cultural choice. Where you live has so much impact on what you can do, so much impact on your overall happiness, that it probably ought to be the first thing you decide - all else should follow from that.

Getting out late at night is a pain (even in midsize cities). Places close too early and too many road blocks.

There's also (in some places) this "conservative, religious mentality" and risk avoidance (no fun) that's awful. At times, I feel like I'm working among 18th/19th century Amish or fundamentalists that think only witches/warlocks use computers! Thinking about moving out of there before I'm burned at the stake! ;)

If average cost of living in absolute dollars is $30,000 and average salary is $100,000, living in San Francisco nets you ($100,000 * 1.36) - ($30,000 * 1.63) = $87,100. Living in Pueblo nets you ($100,000 * 0.76) - ($30,000 * 0.88) = $49,600.

I'm afraid this will spark an unnecessary mass-exodus to Pueblo.

The reason is that there is also quality of life, which is hard to measure. I think that in the absence of a dedicated measure for quality of life, rent levels are a relatively reasonable proxy, and those are one of the biggest factors in the cost of living.

So, as indicators go Salary&Cost of Living&Quality of Living > Salary alone > Salary&Cost of Living.

(Obviously this logic also doesn't necessarily hold across continents, or even in a market as fragmented as Europe, because people rarely move between different countries in Europe, whereas people move between states all the time in the US.)

First off, what exactly does 'cost of living' mean? My old apartment was $1400 a month in rent, and we put at least $300 a month towards gas, insurance, and maintenance for each of 2 cars. (excluding depreciation or car payments, we owned both cars outright). So a minimum of $2000 in car & apartment costs. We had a 3 bedroom condo with 2 and a half bathrooms - for 2 people. We had almost half of the place entirely empty, but it was hard to find anything smaller of the same quality. Crappy apartments were $1000, so it didn't really make sense to move.

Now we are paying $2500 a month for a 1 bedroom apartment. It is really nice, in a doorman building, with a rooftop patio on the 20th floor with big city views, a nice kitchen, family room, eating area, walk in closets, etc. On a per square foot basis, it is probably 3x as much. But we sold the two cars, so we are really only about $500 a month higher than before. And instead of having 15-20 minute commutes in the car, we both can walk a couple of blocks to work.

Then there are a few more wrinkles. The old apartment was all electric, and my utilities were from $100 in the summer to $250 in the winter. This apartment has steam heat and chilled water cooling included in the rent. I no longer have to pay for water. I'm paying less for TV & Internet than before. Groceries are a little more expensive, but Fresh Direct delivers to my door and costs about 10-15% more than the suburbs at most.

The biggest increase in cost is going out to bars & restaurants, but that is a totally discretionary expense.

Overall, I would say a conservative estimate is that our cost of living went up a total of $1000 a month. We needed a combined extra $20,000 salary to pay for that. Our raise was multiple times that amount.

If you move to an industry backwater just for a relative cost-of-living benefit it could be disastrous to long-term skill development or general happiness where you live.

For example those with the largest adjusted incomes probably live in the safest areas where one can get comfortably wealthy over a long period of time. However, they probably forgo the option at huge wins by shirking the cost/risk of getting a tech startup lottery ticket.

Same thing occurs with those who go into med/law/normal engineering. They essentially shoot themselves in the head to take themselves off the lottery list and put themselves on the steady, safe and slow wealth generation list.

Those in extremistan pay a greater entry fee in terms of risk vs. reward to play the finance/startup lottery and have a small shot at winning really big. In turn, risk adjusted their salaries are pitiful when adjusted for risk/cost of living - but somewhat decent if you factor in the value of the lottery ticket.