Why do Salaries in SV Suck So Much? (to buy, calculation)

[mysticaltyger]

Originally Posted by abqcd

Sure, in Texas. In SV, that doesn't even get you to the middle class now, which I define as the ability to buy a modest home and two reliable, safe cars plus two kids.

Middle class people can't afford this lifestyle in SV. If you're living the lifestyle described above in SV, you're upper middle class by definition.

[checkup]

Originally Posted by abqcd

I was offered a job in the SV for a base salary of about $120k and $165k in total comp. Right now, I'm making $115k in base salary living in an area with US average COL, which is about half the SV COL.

By my calculations, figuring a similar, modest house in the area, I would need to make $180k just to maintain my standard of living, figuring in housing costs and taxes alone. This is to say nothing of food, child care, etc.

This means, I would have to continually depend on my bonus and selling stock options just to pay my rent. Moreover, both of these could easily vanish if the company does poorly or a downturn hits. Plus, forget ever being able to save for the massive downpayment it would require to buy a house someday!

To add insult to injury, the company is extremely secretive, and won't even tell me what the job is, other than the general category. They won't allow me to publish at conferences, which seems like a real potential career killer in the long run, since I couldn't build a widespread reputation.

Question is: what gives? If these companies are swimming in billions in profits right now, why don't they at least pay enough to match the cost of living? And why don't they compensate you extra for not being able to build your professional reputation?

Companies aren't going to pay more than they have to. If they pay 160k all-in, and that extra 20-30k per year is enough to attract the talent that they are satisfied with, then why pay more?

Ppl come to SV because an extra 20-30k partially offsets the higher COL and taxes; the potential upside to make much more is higher than anywhere else; you get to work with the smartest ppl on the coolest technologies and projects; if you get fired or want to change jobs, there are a ton of other companies looking to hire you, so your "career security" is high; and the weather and scenery. If it really was a short-term COL/salary decision, then yes, you're mostly right that moving to SV wouldn't make a whole lot of sense

[abqcd]

Originally Posted by SMUR

A base salary of $120K in the bay area definitely meets the COL needs of any family (of four) and give you small savings. Any bonus you make will go towards additional savings. Of course, this depends on your standard of living.

If you are making $115K where COL is only about a half, you are either being paid very generously, and should keep that job; or your new job is not comparable to your current one; or your skills are unique where you are, but not all that unique in the Bay area. If your skills are unique even in the Bay area and you bring excellent value, you need to negotiate better terms.



$3K-$3.5K rent should let you rent a very good apartment; which is well under the $45K bonus you expect to make each year. Now, what is this company that is swimming in billions in profits, but might not pay you a good portion of the anticipated bonus?



Have you asked the prospective employer these questions (in appropriate language, of course)? If you haven't, maybe you should, as part your negotiations.

First of all, you don't want to depend on something uncertain like stock options or a bonus just to afford the roof over your head. Second, if rent is about $2300 more per month, figuring a marginal tax rate of 40%, it would cost $46k in pretax dollars in additional rent. Third, my wife won't make nearly as much as I will. Not complaining, just stating the facts.

[MediocreButArrogant]

120k base salary is far below what a senior developer should be making in SV. We're paying $100k base salary for kids graduating with a BSCS from top CS schools (Stanford, Cal, CMU, MIT, sorry if I left your school off the list).

We did our annual salary reviews at the beginning of the year and I have access to salary benchmark data from Radford. Off the top of my head we used Google, Apple, Yahoo, Oracle, Salesforce.com, Adobe, eBay, and Intuit as our benchmarks. 50th percentile for a senior developer (7+ years relevant experience) was around $172k, not including bonus, profit sharing, and stock grant. I'd expect total cash/stock compensation of around $220k minimum for someone you want to retain.

[Azmordean]

Bottom line - the job offer is a bad one for you. I wouldn't take it. If I could make close to what I make here somewhere cheaper, I'd do it.

For me, the job offer here almost doubled my salary as compared to what I was making in the DC area (which is cheaper than SV, but not cheap).

For most people the pay here is substantially higher than in other areas. Even with the upgrade, housing is so insane you often still end up downgrading in the housing category living here. But you generally end up better off financially over all.

It's been said many times - if a large home is a priority, this is a bad place to live regardless of income level. Single family home is more than upper middle class here - in my opinion it's rich. You don't see many well located SFH under $1M.

[artillery77]

Not sure where you're at, but if you don't hate it, you shouldn't move, especially if money is the driver. Between income taxes, property taxes, SDI tax (CA special), car fees and inflated prices so discounted prices can be given to a big population that isn't making that kind of money, you'll be soaked. The cumulative benefits the government employees have given themselves is over $600 Billion...that's going to come from somewhere.

Another key negative is hopefully your company is one of the big ones. In a land of Apple, Google, Oracle etc. etc. imagine the brain drain that is left for Joe's Distribution and Bob's pizzaria to fight over? Companies try and backfill by bringing in people from other parts (immigrant or otherwise) and that's the group that ends up working. This tends to upset a portion of the native population that can't get 1999 out of their heads, but the Great Recession has helped that.

That said, the place is setup to be able to live like a rock star. Nothing is extravagent here. CA dreaming is the accumulation of money and power. The math will not work looking at the salary. It's looking at control of these huge companies in the Bay Area and the connections that can be made. If you sell something for $5x price to a company making 80% margins....do they care? Did it cost you a $5M contribution to a trophy wife's not for profit to save starving Ostriches in Greenland? That's the big game.

However, as an outsider, you can come for the ride, pay some native their ridiculous rent, and do the work so another one can sit around doing nothing at your company. Your labor will be traded around by those who are connected. In time things will improve, but it takes awhile. You do get to have some awesome fun in the cities and have access to just about everything you could imagine...and that's pretty awesome. The weather is great nearly year-round and you can grow just about anything.

As for me, I came for the wrong reasons, but fell in love and am working through what I don't like. So don't let someone talk you into coming out here thinking you're getting a huge raise. Come because that's what you want to live here.

Happy Dreaming,

[sezzam]

Originally Posted by abqcd

First of all, you don't want to depend on something uncertain like stock options or a bonus just to afford the roof over your head. Second, if rent is about $2300 more per month, figuring a marginal tax rate of 40%, it would cost $46k in pretax dollars in additional rent. Third, my wife won't make nearly as much as I will. Not complaining, just stating the facts.

I won't debate facts, but I will reiterate a couple of things:

* If the particular company is "swimming in billions in profits", why would it not pay you (a good portion of) the anticipated bonus? Granted, the economy/company can take a downturn. If that is your concern, perhaps you should not take the offer. Remember, the company can also let you go altogether.

* If your skills are unique in the Bay area and you bring excellent value, you need to negotiate better terms.

Based purely on what you have written, it looks like your perception of the Bay-area middle-class life and of Bay-area jobs/compensations are both a bit off reality. (Judging by other members' comments to your post, I doubt I am alone in feeling this way.)

[cardinal2007]

Originally Posted by abqcd

I was offered a job in the SV for a base salary of about $120k and $165k in total comp. Right now, I'm making $115k in base salary living in an area with US average COL, which is about half the SV COL.

The issues is that you're counting only one income, I work as a developer, and almost no-one I know would actually think to raise a family on ONE engineer income. If you are going to have a family, presumably you will have a husband or wife, and he/she would also have a career. I know if I marry my boyfriend our combined income should be enough to eventually buy a house.

[checkup]

Originally Posted by MediocreButArrogant

120k base salary is far below what a senior developer should be making in SV. We're paying $100k base salary for kids graduating with a BSCS from top CS schools (Stanford, Cal, CMU, MIT, sorry if I left your school off the list).

We did our annual salary reviews at the beginning of the year and I have access to salary benchmark data from Radford. Off the top of my head we used Google, Apple, Yahoo, Oracle, Salesforce.com, Adobe, eBay, and Intuit as our benchmarks. 50th percentile for a senior developer (7+ years relevant experience) was around $172k, not including bonus, profit sharing, and stock grant. I'd expect total cash/stock compensation of around $220k minimum for someone you want to retain.

Your benchmarks are highest paying companies. Most companies pay a bit less on base and far less on bonus and stock.

[abqcd]

Originally Posted by silverkris

I don't know how significant this is, but there are "halo" companies here that are attractive by their reputation and consequently, don't offer top salaries in their segment to their people, at least for more junior hires. Google and Apple supposedly practice that. Microsoft about 20 years ago was known to do this, too. It might be a bit different for really more experienced/outstanding star hires.

I'm not going to say publicly which company I'm speaking of, but I do believe you are correct about "halo" companies leveraging their name. However, somebody needs to break the news to them that the IPO was almost 10 years ago!