The only problem: It’s really hard for a family of four to live in the Bay Area on just one income — even if it’s a great income
In any of the prime real estate markets it's hard to live on one salary. That is not a problem unique to the Bay Area. Furthermore, barely breaking 6 figures is not a generous salary in tech (he even says it was on par with his salary in AZ).
Having the same problem. I have a lot of job offers for the bay area but can't make the jump because it would destroy my family life due to the high cost.
Middle class families are basically priced out of Silicon Valley.
Perhaps... some companies would see that as an advantage? If you were a company who only wanted to hire young people with no family to keep them from working 70 hours a week, then locating in Silicon Valley could be a great strategy.
High on the list of signs that you've bought far too much into lifestyle inflation is thinking that a car costing 70% of the US median household income is only "nice-ish."
Lets take the product of Silicon Valley, the Tesla. Even take the cheap one at $35,000. I don't think that is much to expect in a lifestyle also considering you make more than most people.
Henry Ford back in the day raised wages and cut hours because he noticed not even his employees had money or time to enjoy his product.
I think Silicon Valley is at this same point. Work your butt off to not enjoy life. If your single I think the economics work out but for families the area is very hostile.
I don't understand why someone having trouble supporting their family would buy a new car at all. A nice used car is not that different and significantly cheaper.
Tesla is a luxury brand. You can get a new car for half of that. A used one for even less. And a six figure income is barely higher the median for the area.
Nobody "deserves" or should "expect" a lifestyle. Life is simply a series of choices. If you choose to have a $40,000 car on 100K income, then you choose to take money from your stocks because you choose a lifestyle over substance.
I make more than 100k, and I have never bought a car for more than $14,000... why? Because I choose my family over my lifestyle.
And no one deserves customers. What silicon valley is doing is destroying the consumers that would be buying its products.
The guy doesn't work at Tesla, but if the average employee in Tesla can't afford their standard model and have enough money left over to live they are not a viable company, as Henry Ford figured out more than a century ago.
It's capitalism 101, you cut labour costs only to find that you've cut demand as well.
The author and I both make the same, about 90th percentile income for the nation so we "deserve" 90th percentile cars, which is probably much more expensive than $40K. I mean $40K isn't even enough for a fancy pickup truck or fancy SUV.
I thank God every day that I don't live in California, so my standard of living at the same income is awesome and times are great for my entire family. All because I won't work in CA.
I still drive a no frils Chevy I bought 10 years ago what happened to me was a wife + kid. Sure I could have bought wife a 19K car but with everone driving around trucks and SUVs it doesn't matter how great your air bags are the laws of physics are not in your favor. 40K is easy for a decent sized car/truck/suv
Perhaps you wouldn't consider spending $40k on a car. But I'm sure that there are items that you would splurge on, even if you didn't.
Some people really enjoy cars. I mean, yeah, you're not going to get sympathies from people about the Bay Area being "so hard" to live in (let's be real: it is really fucking expensive to live out there), but at the end of the day, it's your cash.
Then again, I'm biased; I would never drive a cheap beater car. Too uncomfortable, too unreliable, too much sadness. I like cars.
No, I'm just saying that when you've inflated your idea of reasonably comfortable living to require a $40k car, that you should at least be somewhat self-aware that you're making a very deliberate tradeoff and spending far more than is required to achieve "nice." A newish Camry is "nice." It's reliable, it's comfortable. In fact, it's one of the most long-term reliable cars on the road. It's not exciting. It's not spectacular. It's obviously not what the person in the article wants. It's ~$23k new. Prius V. The list continues.
There's a large gap between a $40k car and a "cheap beater." It's full of ... nice cars. There've been plenty of other examples in this thread.
The author of the article didn't want a nice car. He wanted to indulge an expensive passion for high-end cars. I'm not going to criticize the passion - I'm in the middle of a hideously indulgent kitchen remodel (which is costing quite a bit more than that car, alas). Where I disagree is with the implied lack of awareness that these expensive hobbies are one of the underlying factors that rendered his lifestyle incompatible with his salary.
"I love expensive, fast cars, and found that by getting a good job in a low-cost-of-living area, I could feed my family and still indulge my passion" -- good on you! Three thumbs up for making that move. I just moved back to Pittsburgh from Palo Alto. You'll get no disagreement about the cost of living in the bay area in general. Housing is offensively expensive there.
If you're working a high-end job (one that not many people would qualify for, presumably), making well over $100,000 per year (FAR above the average family income in the US), then why should you settle for a near-poverty lifestyle?
Wow. Not being able to drive a new $40K car, live in a big house with a yard (in the most expensive area of the US) and only have one spouse work is near poverty?
Let's not exaggerate. $100K/year in the Bay Area (as a single person) isn't living it up, but it's not "a near-poverty lifestyle." It's a "living in the East Bay with roommates, commuting at least an hour, (very) occasionally going out," lifestyle but it's eating good food with a roof over your head. If that sounds like poverty, well, you should see real poverty sometime.
The choice of words was poor, but living with roomates and commuting an hour when your salary is $100/year is, in my opinion, unreasonable. There's good food and roofing available all over the country.
But the living expenses in cities like SF and NYC are entirely different compared to the rest of the country. 100k is not really a magical number aside from the fact that it's six digits instead of five. You see similar things in other countries.
$100K/year is an entry level salary at many places these days. If you're not entry level and don't have absurd amounts of student loans, then you can afford to do better. You can have less of a commute, or maybe not live with roommates, and actually put some money into savings. It's still nowhere near poverty wages.
""living in the East Bay with roommates, commuting at least an hour, (very) occasionally going out," but it's eating good food with a roof over your head."
That sounds like me as a part time student / part time grocery store minimum wage shelf stocker around 1990 in the greater Chicago land area (well, within a very distant orbit of Chicago). I suppose most people would have considered me very poor at that time. I was on no government programs (other than uni student loans like everyone else). I had no medical insurance but I ate good food when I wanted. On the other hand I couldn't afford good steak, it was cheaper, but good and healthy, food. I was financially very hand to mouth no savings couldn't afford to "go out". Probably why I don't go out drinking now, never got in the habit when I was young. There are certainly poorer people, but the best case scenario being I'd have to downgrade to a starving student lifestyle is incredibly unappealing.
In summary it sounds like if you work full time plus at Facebook in CA (admittedly in 2016), your standard of living will be the same as working part time as a grocery store shelf stocker outside CA (admittedly in 1990). Of course my commute was better, but the CA guy has already graduated so he doesn't have to balance work and school like I did, so it kinda balances out.
It's 2016 though - before IPO, Facebook, like many other startups, could afford to pay employees less salary with the options.
On that same note, the author should count his blessings. He received options. He was able to sell those options (a move many of us are criticizing) to buy a luxury car. Most people don't, or leave before they vest years later.
Thank you, this is my point exactly. Why should anyone work hard to get an advanced education and build a good professional resume, then go to work at a job that pays far above the average family income for the US, just so he can live like a part-time grocery store worker?
I doubt you can do much better. You'll have to compromise on either the commute or the rent. Live near BART and you'll pay up for the convenience. Oakland is the 4th most expensive city to rent in the US; further out and you start looking at even longer commutes. You literally can't get less than an hour commute by public transportation into SF from the East Bay. Trust me, I've tried.
Live by yourself, and you won't find a decent place for less than $2k/month anywhere. Accounting for taxes, that's about $40K/year, which is more than someone with a $100K income should be paying for rent if they want to stay financially stable.
And while Facebook might have East Bay shuttle buses (though I don't think they do to any meaningful extent), what about all the other companies that aren't Facebook?
I believe you but your constraint is getting to SF. For someone working at Facebook (like in the article), they are on one end of the Dumbarton bridge. The East Bay is not that far away.
It's not that, it's the part about having to live with roommates in a tiny apartment. I did that in college. Why would I want to go back to that lifestyle? Why should I? If that's all you can afford by working at a super-high-end job these days, then what is the point? (Again, remember that $100k is well above the average family income in the US right now; a single guy making that much should be able to live very, very well.)
Part of the reason he's making that much is because he's in the Bay Area; Facebook would pay their employees less if they were based elsewhere. He can't say he deserves a certain lifestyle based on salary, and is being punished unfairly by location, because those are not at all separate factors.
I don't buy it. He deserves that lifestyle because the job he does requires an advanced education, and we're constantly told these jobs are critically important to society and that there's a massive shortage of these workers. Hence, they deserve pay high enough to afford an upper-middle-class lifestyle, which definitely does not mean living in a small apartment with roommates or anything like that.
If you're saying that he does not deserve an upper-middle-class lifestyle with a higher-than-median-price car, then we've been sold a bill of goods.
If I wanted to live in a tiny apartment with roommates and never get married and have a family (because what woman is going to do that with you when you can't afford your own place?), then why would I bother going to college for a difficult degree, racking up student loan debt, and working hard in a difficult profession to build up a professional resume and quality work experience? I could just go work at a grocery store, and/or get on welfare, right?
What exactly is the point of striving to accomplish something if you're not going to be rewarded for it at all?
Barely breaking 6 figures is an entry level engineers salary in the bay area. Also in the world that I live in single income families are the exception rather than the rule.
He was barely breaking 6 figures in 2009. I wasn't around the Bay Area then, but that strikes me probably significantly better than entry level at the time, given the way rents have gone.
Back in 2009 you could rent a house with a yard in a nice part of Palo Alto for ~2.5k/month (Or less, my wife and I were paying 1.8k at the time for a small but very nice house with a 1 acre yard). ~$100k (while still reasonably entry-level) went pretty far then.
the price increase of silicon valley homes partly is affected by all the foreign capital seeking stable, safe investment in US, particularly China's in the last few years (due to China's exponential growth in debt creation). we should see substantial slowdown/decline in the coming months (because China's economy has stagnated, and because the capital control for most normal citizens have worked)
I hear this anecdote all of the time. In fact, when I was buying a house I lost two offers to foreign buyers. I've seen studies show the impact of AirBnB on real estate prices, are there similar one for foreign buyers?
Am I the only one who thinks the great big takeaway from this is the guy works for local motors?!? Talk about landing on your feet. I've wanted to work for them for years, but their need for web developers is small and the timing never quite worked out.
I was quite sympathetic until I hit the mini-bio at the bottom:
"Matt Kulka works for Local Motors in Phoenix, Arizona. He loves to drive cars around race tracks, his expensive hobby that he just doesn’t want to kick."
"My salary was about on-par with what I was making at my last job in Phoenix — just barely breaking into the six figures — but housing costs were significantly different."
Who in their right mind would move to the Bay Area on a Phoenix salary?!
> We knew as our family grew that we wouldn’t want to live with a roommate forever. So when the opportunity arose for me to supplement my salary by selling my Facebook stock, I took it. I’d been granted a few thousand shares when I got hired, and after the company had its IPO in 2012, I sold all the shares that had vested.
> We could finally rent a house for just our family, no roommate. It was great, but that also meant even larger housing costs. In order to afford that, selling stock became necessary every quarter it vested. Obviously, this is not the path to financial security, but when the sum of money that lands in front of you isn’t life changing, you look to the short term and what it can do for you right now. In many ways, this follows exactly with the Silicon Valley hustle that many startups fall into. The path in front of you isn’t always clear, so you hedge your bets.
WTF? If your day to day financial survival depends on selling stock as it vests you're either a) an idiot or b) backed into a corner. In this guys case, it should have been obvious when he started the gig that it wasn't sustainable. If not immediately, then when he moved out and started selling stock to cover renting a house.
A pretty simple rule is that you should be accumulating capital, not spending it to cover operating expenses. Sure if shit hits the fan, and it invariably will at some point, you will be spending from capital till you get back on your feet. But it shouldn't be a day to day thing.
I agree completely with you, I would stipulate one thing. When starting a new job its reasonable to take a short term hit in the hopes of advancement (and higher wages). So its fine to have a room mate and live a less than desirable life time short term. I think the time to pull the plug though is at dumping the stock.
I think the point is: his salary while not high by SF was high in nearly any other location in the US. In any other location, he and his family could live how they wanted. In any other location, have a $40,000 car instead of a $10,000 or less car is a perfectly reasonable. In any other location, eating out more than once a month would be perfectly reasonable. Having a expensive hobby racing cars is reasonable, just not in SF.
The point of the article wasn't that I am poor you should feel sad for me. The point was: look the Bay Area is so expensive that it is impossible to afford unless you are making an extremely high salary. A good salary isn't enough, a high salary isn't enough, it has to be extreme otherwise you will need to make life style sacrifices to live in the Bay Area.
Well yeah. That rings true for a lot of popular cities... is that really edifying? Fundamentally before moving to a new city, you can calculate your salary minus expenses and see how much you have to sacrifice to make it viable to save money. It was practically the first thing I did when looking for an apartment in NYC after taking a new job.
Especially with major cities, having a single income family is only viable if one person earns a lot and/or the couple has no intention of buying a property and settling down.
Just to be clear - racing cars is EXPENSIVE if you're even remotely serious. You're talking about blowing easily $2,000 per weekend of racing, and that's if you're operating on a budget and already own the car.
But part of the reason he was paid so much was because he lived in the Bay Area; Facebook wouldn't pay nearly as high salaries if they were based in the Midwest. In "any other location," he still might not have been able to afford hobby racing, and it's weird to act entitled on the one hand and not acknowledge the other, as if the salary is deserved solely based on the work he's done, and the cost of living is a completely separate punishment.
He says he's just slightly north of $100k (six figures) which I assume somewhere around $125. I'm certain he can get a similar salary in many parts of the country if he's a good SRE, at the very least: Seattle, Portland, Phoenix, Dallas, Austin, DC, NYC, Philadelphia, Boston, San Diego, LA (those are the markets I'm familiar with from my job searches). Other cities might be slightly lower, but still right around $100k. Compared to the difference in cost of living (a few hundred percent now), it's essentially the same salary as the bay area most anywhere else without the expenses.
Well, then he should take those jobs and move there. Of course, he might also consider living in the Bay itself to be a benefit, which has also been priced into the model: the cost of receiving that benefit is just... the cost of living in the Bay.
I guess I'll respond everywhere you tried to make this point. A $40k car will likely come with a 5yr loan that's cheaper than student loans. That'd actually be $8k/yr+interest... which is not 40% of your salary. Find something else to judge the guy for.
Even if it's 0% interest across 5 years, it's still forty thousand dollars. Whether you pay it all at once, or in dribs and drabs each month, you are paying more than you can reasonably afford.
(To say nothing of the prudence in financing a depreciating asset)
I don't know, it seems like a lot of this guy's problems are totally within his control. I sort of assume he's the only income source for his family, but also has an expensive hobby he doesn't want to give up and also wants to live a life of (somewhat) luxury.
I mean, I get it, kids and the Bay Area are expensive, but I think there are better examples of "the cost of living in the Bay Area is out of control" than a guy with a reasonably good job and an expensive hobby he doesn't want to give up.
Yeah, I don't get it either. What happen to living below your means?
I make 6 figures, drive a 16yo car (2000 accord FTW!), take public transpiration to work, brown bag lunch. My partner works part-time to take care of our child. My home is the right size for what we need.
Why does this guy have to live in a Bay Area? No one is going to weep for you, buddy. You made bad life decisions and you need to deal with them.
> I’d been granted a few thousand shares when I got hired, and after the company had its IPO in 2012, I sold all the shares that had vested. … We could finally rent a house for just our family, no roommate. In order to afford that, selling stock became necessary every quarter it vested. Obviously, this is not the path to financial security, but when the sum of money that lands in front of you isn’t life changing, you look to the short term and what it can do for you right now.
What‽ Selling capital in order to finance daily survival is terrible: the entire point of a working life is to accumulate capital in order to finance a retirement.
Not having a roommate was, literally, a luxury he and his family could not afford.
> But for a person with a family of four who has a certain lifestyle that they want to try to maintain (a niceish $40,000 car, the ability to go out once a month and leave the kids with a sitter, a house that wasn't last remodeled in ’70s, etc.) it can be difficult.
If you have a wife and two kids, then maybe buying $40,000 cars is a mistake. Maybe getting a fancy house is a mistake. True fact: children survived into adulthood just fine in the 1970s. Part of being an adult is knowing how to differentiate between essentials and luxuries.
Honestly, with his sort of (admitted) short-term financial mismanagement, I don't think he could survive on six figures in Dallas, Houston, Denver, Kansas City or anywhere else. He'd make the same sort of bad decisions, perhaps with a longer runway to ruin.
>What‽ Selling capital in order to finance daily survival is terrible: the entire point of a working life is to accumulate capital in order to finance a retirement.
And yet people do it all the time. Not to mention the billions living hand to mouth.
People want the nice things their parents had, but not on the same timeline. They don't realize that nice things take a while to accumulate.
Yes my parents drive a Prius. But growing up in a family with 5 other siblings, they pretty much drove beaters. And our house started with, as we so fondly called them, the seven ugly carpets of the world. And those were slowly replaced over time. The house we lived in until I was one had slanted kitchen floors - just throw a towel at the correct wall if you spilled.
The point is that our parents affluence isn't the result of a general rise in affluence - it's accumulated. But we often don't think about that when making our early financial decisions.
> People want the nice things their parents had, but not on the same timeline
I don't think that's telling the whole tale.
Soon after my parents got married in '74 they bought their first home, brand new. It cost 5 years of my Dad's salary at the time (a new teacher). So with the two of them working, they paid it off in just over 3 years.
Go find me a house for sale now that's less than 10 or 15 years of an individuals salary.
The world is a much different place - so I think people want the nice things their parents had, and they'd be happy if it were even the same timeline, but it's much, much longer.
My home is 2-3 years of my annual salary. So is most of my co-workers. Yes, that is probably not true for a teachers salary (although my first home was definitely within 4 years of a teachers salary.)
Are you living in the Bay Area? Is that why medium home prices are so high?
> Go find me a house for sale now that's less than 10 or 15 years of an individuals salary.
My condo is worth 1-1½ times my salary.
'The Census ACS 1-year survey reports that the median household income for the Dallas-Fort Worth-Arlington Texas metro area was $59,530 in 2014, the latest figures available.'[1]
'The median home value in Dallas is $147,400.'[2]
$147,400 is 2.47 years. Double that, if you think the median household has two incomes.
U.S. median household income is $56,500. There are plenty of houses to be had for less than $565,000–$847,500.
It's very easy to say all of this from an armchair. Not doing those things is harder when your friends are doing them. Some people are better at averting that social pressure than others.
That being said, I'm making $115k in Dallas and have zero intention of having kids on this salary. One kid is expensive; I can't imagine having two or more. The sacrifice would be too much for me to handle. Even when I made $160k in New York I wouldn't have considered it.
I think there is something to be said about living beyond their means but, to me, a new car and home for my family is a fair middle class lifestyle. (You can quibble over the 40k price tag, but buying a 40k car and making it last doesn't have as much of a financial difference as a 30k car over the long term)
I think this article is speaking out against this narrative that techies are incredibly well paid while in reality we mostly work in over priced cities with awful commutes and have a government and industry openly trying to suppress wages.
Any time one of us says "hey, we aren't that well paid" there is always someone to say we should move further away from work, or downsize, or skip having a family, or stick to rice and beans and it's getting old.
When you support an entire family on a single income, spending 30% or 40% of your annual pay on a car is irresponsible.
No "ifs," "ands," or "buts." That's just bad financial planning. It's a totally unnecessary luxury that holds the potential to burden the entire family.
Additionally, your definition of "middle class" is quite peculiar. The median wage in the United States is less than $30k. The median household income is less than $60k. Do you really think "middle class" families are buying cars that cost as much as one of their salaries?
The narrative is that we are so well paid that we should be able to do that. But we obviously can't.
I'll concede that software engineers are overpaid and in such high demand when that is the case for the median case.
Just caught your edit. Middle class is relative to cost of living. Most of us work in cities where the CoL is much higher and so is the middle class income. It'd be better if we can both stick to comparing apples to apples and I think in this case sticking to cities is our best bet. SF median income is 100k [0]
Does no one here buy cars? I forgive you. A $40k car will likely come with a 5yr loan that's cheaper than student loans. That'd actually be $8k/yr+interest... which is not 40% of your salary. Find something else to judge the guy for.
You could also by a nice used car for 10-15k or so, pay cash, and have no payments for many years. People who can afford better will willingly do this to save cash for other things. If you refuse to play the game well it's probably because you have weird ideas about what you "deserve".
Definitely. Also, getting a new car that prioritizes reliability is a smart move as well. The author didn't do this though. A nice(imo) new car can be had for less than ~$25k and his $40k tells me he wanted something a little more flashy. I agree these overextended purchases usually come down to someone's ego getting in the way. A direct consequence of our "what you buy defines you" culture.
I'm moving to the bay area to take a job at Facebook in 2 weeks. When comparing all my offers, my wife and I made a budget for each offer to understand the salary differences and their cost of living. We know exactly what we can afford. I don't understand why everyone doesn't do this before taking a job somewhere.
That's exactly why I chose not to work in the Bay Area. Perhaps I have chosen the less challenginger or rewarding path (I don't know), but my first job as a programmer paid me peanuts(40k) and I lived in a pretty nice place with a roommate; a year later I got another job that paid 84k and got to rent a small house, live on my own, and not have to worry about how much I spend. Entry level pay, even in SoCal, can mean decent living. Entry level in the Bay seems to mean constantly struggling to make ends meet while living with several people. Granted, I know people who get a thrill out of that, and that's perfectly fine, but that's just not for me. Living both in San Francisco and the East Bay taught me that. Was fun, but I like not being a workhorse and having excess cash to spend on my various projects.
Then again, it sounds like tat guy's spending was way out of line. Like many people, he probably blew his money on expensive toys(and a penis car) to gain a feeling of status.
On craigslist, I find 2-bedroom houses in Santa Clara for $2300 [1]. That would give you a very decent commute to Facebook (much better than living in the East Bay). That's $28K/year. His net salary should be around $65K. You should be able to go out more than once a month with the money.
I wonder why the author wholesale ruled out apartments when homes like the one you linked to are all together very similar in living space.
On a side note the Bay areas' affordability problem could be greatly reduced if more dense housing stock was pursued. Sadly, I fear too many of us demand living in houses as an unassailable demand.
Tech is a well-paying job in areas where you need to be well-paid to live somewhat comfortably. It isn't nearly as lucrative in other areas unless you're a remote worker and you negotiate well and/or you work in the right industry (finance, healthcare, law).
At least that's what I'm beginning to notice anyway.
The fiscally responsible thing to do would be to move to New York City, take a $100k+ job, live about 45-60 minutes away in Brooklyn, Queens, Staten Island or the Bronx, create an emergency fund, get promoted a few times and spend a good while finding a high-paying job in the area you actually want to live in that has a significantly lower COL.
The thing about SF is that it isn't just the rent that kills you. You also get taxed like crazy for everything and, from what I've heard from coworkers over the years, you'll need to have a car to be realistically mobile outside of the Bay (unless you never leave the Bay, of course). Insurance premiums cost more there and CA gas is the most expensive in the nation.
As much as we like to complain about it, public transit in NYC is amazing. You legitimately don't need a car to live there. It's darn convenient in the outerboroughs, but it isn't a necessity and, in many cases, it's a pain in the ass. Speed limits are low city-wide. Expressways top out at 50 and are usually set at 40 because of population density and shitty road conditions. People are super aggressive. NYC is not fun to drive in. Manhattan is much much worse.
Nearly the entire city is reachable by train and/or bus. You can save a lot of money this way.
The higher prices for housing are because of politically induced scarcity through zoning density restrictions. SF, NYC, LA, Boston, DC, London, and other cities suffer from these "market failures" in this case called "economic rents." The result is a regressive "tax" transferring wealth from renters to landlords. Income that should be going towards goods and services are going toward landlords such as Donald Trump instead making landlords far wealthier than they would be in an efficient market.
In NYC, there was formerly a politically induced scarcity of taxi medallions (limited to 13,000) with the result that medallions had a market value for $1.2 million and taxi riders paid higher fares to help cover the higher taxi leasing prices of drivers. Once Uber/Lyft came to town, the politically induced scarcity was no longer occurring as there were many more taxi-like vehicles. The result: taxi medallions dropped in value to $700,000 and Uber/Lyft rides have been getting cheaper (but still far higher than LA, Chicago).
Many people complain about the high cost of living, but the issue is simply political. High tech people, particularly need to get involved in politics to help make housing more affordable for all. Simply fix the "rent seeking" laws that restrict zoning density.
In the 19th century, David Ricardo wrote about the "Corn Law" which placed high tariffs on all grain imported to England with the result that landlords that owned land that grain was grown on realized far greater "economic rents" amounts of money for their land while other people paid for for basic food such as bread. Ricardo went into politics to help reverse the Corn Laws with the result that landlords no longer realized their regressive tax on consumers while food prices decreased.
The housing problem is simply another case of "Corn Laws."
In particular, Google (Alphabet) has a profit making subsidiary called Sidewalk Labs for improving cities.
From the website:
"Sidewalk Labs is a new type of company that works with cities to build products addressing big urban problems."
City Labs is in a position to use Google's resources to make housing more affordable. Google owns one of the largest office buildings in NYC and Sidewalk labs is located in NYC, so NYC might be a good place to start.
Like Ricardo's case of reversing the "Corn Laws" this is simply reversing unfair laws that benefit landlords over renters and make housing unaffordable. No increase in taxes are required.
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[ 3.7 ms ] story [ 187 ms ] threadIn any of the prime real estate markets it's hard to live on one salary. That is not a problem unique to the Bay Area. Furthermore, barely breaking 6 figures is not a generous salary in tech (he even says it was on par with his salary in AZ).
http://www.zillow.com/homedetails/152-Sagamore-St-San-Franci...
http://www.zillow.com/homedetails/1055-Gilman-Ave-San-Franci...
http://www.zillow.com/homedetails/15320-Swan-Ct-Gulfport-MS-...
Middle class families are basically priced out of Silicon Valley.
ish.
High on the list of signs that you've bought far too much into lifestyle inflation is thinking that a car costing 70% of the US median household income is only "nice-ish."
Henry Ford back in the day raised wages and cut hours because he noticed not even his employees had money or time to enjoy his product.
I think Silicon Valley is at this same point. Work your butt off to not enjoy life. If your single I think the economics work out but for families the area is very hostile.
I make more than 100k, and I have never bought a car for more than $14,000... why? Because I choose my family over my lifestyle.
The guy doesn't work at Tesla, but if the average employee in Tesla can't afford their standard model and have enough money left over to live they are not a viable company, as Henry Ford figured out more than a century ago.
It's capitalism 101, you cut labour costs only to find that you've cut demand as well.
I thank God every day that I don't live in California, so my standard of living at the same income is awesome and times are great for my entire family. All because I won't work in CA.
I have a cushy tech-job yet still drive the hatchback I bought fifteen years ago for $2000. Choices...
Perhaps you wouldn't consider spending $40k on a car. But I'm sure that there are items that you would splurge on, even if you didn't.
Some people really enjoy cars. I mean, yeah, you're not going to get sympathies from people about the Bay Area being "so hard" to live in (let's be real: it is really fucking expensive to live out there), but at the end of the day, it's your cash.
Then again, I'm biased; I would never drive a cheap beater car. Too uncomfortable, too unreliable, too much sadness. I like cars.
There's a large gap between a $40k car and a "cheap beater." It's full of ... nice cars. There've been plenty of other examples in this thread.
The author of the article didn't want a nice car. He wanted to indulge an expensive passion for high-end cars. I'm not going to criticize the passion - I'm in the middle of a hideously indulgent kitchen remodel (which is costing quite a bit more than that car, alas). Where I disagree is with the implied lack of awareness that these expensive hobbies are one of the underlying factors that rendered his lifestyle incompatible with his salary.
"I love expensive, fast cars, and found that by getting a good job in a low-cost-of-living area, I could feed my family and still indulge my passion" -- good on you! Three thumbs up for making that move. I just moved back to Pittsburgh from Palo Alto. You'll get no disagreement about the cost of living in the bay area in general. Housing is offensively expensive there.
That sounds like me as a part time student / part time grocery store minimum wage shelf stocker around 1990 in the greater Chicago land area (well, within a very distant orbit of Chicago). I suppose most people would have considered me very poor at that time. I was on no government programs (other than uni student loans like everyone else). I had no medical insurance but I ate good food when I wanted. On the other hand I couldn't afford good steak, it was cheaper, but good and healthy, food. I was financially very hand to mouth no savings couldn't afford to "go out". Probably why I don't go out drinking now, never got in the habit when I was young. There are certainly poorer people, but the best case scenario being I'd have to downgrade to a starving student lifestyle is incredibly unappealing.
In summary it sounds like if you work full time plus at Facebook in CA (admittedly in 2016), your standard of living will be the same as working part time as a grocery store shelf stocker outside CA (admittedly in 1990). Of course my commute was better, but the CA guy has already graduated so he doesn't have to balance work and school like I did, so it kinda balances out.
I don't know by direct experience, but I hear even entry level hires are doing significantly better than $100K at Facebook.
On that same note, the author should count his blessings. He received options. He was able to sell those options (a move many of us are criticizing) to buy a luxury car. Most people don't, or leave before they vest years later.
Live by yourself, and you won't find a decent place for less than $2k/month anywhere. Accounting for taxes, that's about $40K/year, which is more than someone with a $100K income should be paying for rent if they want to stay financially stable.
And while Facebook might have East Bay shuttle buses (though I don't think they do to any meaningful extent), what about all the other companies that aren't Facebook?
If you're saying that he does not deserve an upper-middle-class lifestyle with a higher-than-median-price car, then we've been sold a bill of goods.
If I wanted to live in a tiny apartment with roommates and never get married and have a family (because what woman is going to do that with you when you can't afford your own place?), then why would I bother going to college for a difficult degree, racking up student loan debt, and working hard in a difficult profession to build up a professional resume and quality work experience? I could just go work at a grocery store, and/or get on welfare, right?
What exactly is the point of striving to accomplish something if you're not going to be rewarded for it at all?
The good ones.
"Matt Kulka works for Local Motors in Phoenix, Arizona. He loves to drive cars around race tracks, his expensive hobby that he just doesn’t want to kick."
"My salary was about on-par with what I was making at my last job in Phoenix — just barely breaking into the six figures — but housing costs were significantly different."
Who in their right mind would move to the Bay Area on a Phoenix salary?!
Stock Options
Work at Facebook
> We could finally rent a house for just our family, no roommate. It was great, but that also meant even larger housing costs. In order to afford that, selling stock became necessary every quarter it vested. Obviously, this is not the path to financial security, but when the sum of money that lands in front of you isn’t life changing, you look to the short term and what it can do for you right now. In many ways, this follows exactly with the Silicon Valley hustle that many startups fall into. The path in front of you isn’t always clear, so you hedge your bets.
WTF? If your day to day financial survival depends on selling stock as it vests you're either a) an idiot or b) backed into a corner. In this guys case, it should have been obvious when he started the gig that it wasn't sustainable. If not immediately, then when he moved out and started selling stock to cover renting a house.
A pretty simple rule is that you should be accumulating capital, not spending it to cover operating expenses. Sure if shit hits the fan, and it invariably will at some point, you will be spending from capital till you get back on your feet. But it shouldn't be a day to day thing.
The point of the article wasn't that I am poor you should feel sad for me. The point was: look the Bay Area is so expensive that it is impossible to afford unless you are making an extremely high salary. A good salary isn't enough, a high salary isn't enough, it has to be extreme otherwise you will need to make life style sacrifices to live in the Bay Area.
Especially with major cities, having a single income family is only viable if one person earns a lot and/or the couple has no intention of buying a property and settling down.
(To say nothing of the prudence in financing a depreciating asset)
I make 6 figures, drive a 16yo car (2000 accord FTW!), take public transpiration to work, brown bag lunch. My partner works part-time to take care of our child. My home is the right size for what we need.
Why does this guy have to live in a Bay Area? No one is going to weep for you, buddy. You made bad life decisions and you need to deal with them.
EDIT: spelling
What‽ Selling capital in order to finance daily survival is terrible: the entire point of a working life is to accumulate capital in order to finance a retirement.
Not having a roommate was, literally, a luxury he and his family could not afford.
> But for a person with a family of four who has a certain lifestyle that they want to try to maintain (a niceish $40,000 car, the ability to go out once a month and leave the kids with a sitter, a house that wasn't last remodeled in ’70s, etc.) it can be difficult.
If you have a wife and two kids, then maybe buying $40,000 cars is a mistake. Maybe getting a fancy house is a mistake. True fact: children survived into adulthood just fine in the 1970s. Part of being an adult is knowing how to differentiate between essentials and luxuries.
Honestly, with his sort of (admitted) short-term financial mismanagement, I don't think he could survive on six figures in Dallas, Houston, Denver, Kansas City or anywhere else. He'd make the same sort of bad decisions, perhaps with a longer runway to ruin.
And yet people do it all the time. Not to mention the billions living hand to mouth.
Yes my parents drive a Prius. But growing up in a family with 5 other siblings, they pretty much drove beaters. And our house started with, as we so fondly called them, the seven ugly carpets of the world. And those were slowly replaced over time. The house we lived in until I was one had slanted kitchen floors - just throw a towel at the correct wall if you spilled.
The point is that our parents affluence isn't the result of a general rise in affluence - it's accumulated. But we often don't think about that when making our early financial decisions.
I don't think that's telling the whole tale.
Soon after my parents got married in '74 they bought their first home, brand new. It cost 5 years of my Dad's salary at the time (a new teacher). So with the two of them working, they paid it off in just over 3 years.
Go find me a house for sale now that's less than 10 or 15 years of an individuals salary.
The world is a much different place - so I think people want the nice things their parents had, and they'd be happy if it were even the same timeline, but it's much, much longer.
Are you living in the Bay Area? Is that why medium home prices are so high?
Canada/Australia.
Pretty much anywhere you want to live houses are insanely expensive. Upwards of $450k for a 2-3 bedroom built in the 60s.
My condo is worth 1-1½ times my salary.
'The Census ACS 1-year survey reports that the median household income for the Dallas-Fort Worth-Arlington Texas metro area was $59,530 in 2014, the latest figures available.'[1]
'The median home value in Dallas is $147,400.'[2]
$147,400 is 2.47 years. Double that, if you think the median household has two incomes.
U.S. median household income is $56,500. There are plenty of houses to be had for less than $565,000–$847,500.
[1] http://www.deptofnumbers.com/income/texas/dallas/
[2] http://www.zillow.com/dallas-tx/home-values/
[3] http://www.nytimes.com/2016/09/14/business/economy/us-census...
There seem to be a few houses in San Francisco for sale now that are under $600k: https://www.redfin.com/city/17151/CA/San-Francisco/filter/so...
Raising the limit to $1 million, which is less than 10 to 15 years of many tech people's salary, greatly increases the number available.
Note I've set the filter to only include houses. It excludes condos, townhouses, and multi-family dwellings.
Median American home sale price July 2016: $244,100 [1]
[0]: http://www.reuters.com/article/us-usa-economy-poverty-idUSKC... [1]: https://ycharts.com/indicators/sales_price_of_existing_homes
That being said, I'm making $115k in Dallas and have zero intention of having kids on this salary. One kid is expensive; I can't imagine having two or more. The sacrifice would be too much for me to handle. Even when I made $160k in New York I wouldn't have considered it.
I kinda stop reading and just started skimming after that.
I think this article is speaking out against this narrative that techies are incredibly well paid while in reality we mostly work in over priced cities with awful commutes and have a government and industry openly trying to suppress wages.
Any time one of us says "hey, we aren't that well paid" there is always someone to say we should move further away from work, or downsize, or skip having a family, or stick to rice and beans and it's getting old.
No "ifs," "ands," or "buts." That's just bad financial planning. It's a totally unnecessary luxury that holds the potential to burden the entire family.
Additionally, your definition of "middle class" is quite peculiar. The median wage in the United States is less than $30k. The median household income is less than $60k. Do you really think "middle class" families are buying cars that cost as much as one of their salaries?
The narrative is that we are so well paid that we should be able to do that. But we obviously can't.
I'll concede that software engineers are overpaid and in such high demand when that is the case for the median case.
Just caught your edit. Middle class is relative to cost of living. Most of us work in cities where the CoL is much higher and so is the middle class income. It'd be better if we can both stick to comparing apples to apples and I think in this case sticking to cities is our best bet. SF median income is 100k [0]
[0] http://www.deptofnumbers.com/income/california/san-francisco...
If "the narrative" indicates you "should" be able to spend that much, you need a new narrative. Ideally one that will not send you into penury.
Then again, it sounds like tat guy's spending was way out of line. Like many people, he probably blew his money on expensive toys(and a penis car) to gain a feeling of status.
[1] http://sfbay.craigslist.org/sby/apa/5780924443.html
On a side note the Bay areas' affordability problem could be greatly reduced if more dense housing stock was pursued. Sadly, I fear too many of us demand living in houses as an unassailable demand.
At least that's what I'm beginning to notice anyway.
The fiscally responsible thing to do would be to move to New York City, take a $100k+ job, live about 45-60 minutes away in Brooklyn, Queens, Staten Island or the Bronx, create an emergency fund, get promoted a few times and spend a good while finding a high-paying job in the area you actually want to live in that has a significantly lower COL.
The thing about SF is that it isn't just the rent that kills you. You also get taxed like crazy for everything and, from what I've heard from coworkers over the years, you'll need to have a car to be realistically mobile outside of the Bay (unless you never leave the Bay, of course). Insurance premiums cost more there and CA gas is the most expensive in the nation.
As much as we like to complain about it, public transit in NYC is amazing. You legitimately don't need a car to live there. It's darn convenient in the outerboroughs, but it isn't a necessity and, in many cases, it's a pain in the ass. Speed limits are low city-wide. Expressways top out at 50 and are usually set at 40 because of population density and shitty road conditions. People are super aggressive. NYC is not fun to drive in. Manhattan is much much worse.
Nearly the entire city is reachable by train and/or bus. You can save a lot of money this way.
In NYC, there was formerly a politically induced scarcity of taxi medallions (limited to 13,000) with the result that medallions had a market value for $1.2 million and taxi riders paid higher fares to help cover the higher taxi leasing prices of drivers. Once Uber/Lyft came to town, the politically induced scarcity was no longer occurring as there were many more taxi-like vehicles. The result: taxi medallions dropped in value to $700,000 and Uber/Lyft rides have been getting cheaper (but still far higher than LA, Chicago).
See (Harvard Economist) Edward Glaeser: Build Big Bill http://www.nydailynews.com/opinion/build-big-bill-article-1....
and Financial Times columnist and BS, MS Economics Oxford Tim Harford: The Undercover Economist https://www.amazon.com/dp/B007NIDW1Q/
Many people complain about the high cost of living, but the issue is simply political. High tech people, particularly need to get involved in politics to help make housing more affordable for all. Simply fix the "rent seeking" laws that restrict zoning density.
In the 19th century, David Ricardo wrote about the "Corn Law" which placed high tariffs on all grain imported to England with the result that landlords that owned land that grain was grown on realized far greater "economic rents" amounts of money for their land while other people paid for for basic food such as bread. Ricardo went into politics to help reverse the Corn Laws with the result that landlords no longer realized their regressive tax on consumers while food prices decreased.
The housing problem is simply another case of "Corn Laws."
In particular, Google (Alphabet) has a profit making subsidiary called Sidewalk Labs for improving cities.
https://www.sidewalklabs.com
From the website: "Sidewalk Labs is a new type of company that works with cities to build products addressing big urban problems."
City Labs is in a position to use Google's resources to make housing more affordable. Google owns one of the largest office buildings in NYC and Sidewalk labs is located in NYC, so NYC might be a good place to start.
Like Ricardo's case of reversing the "Corn Laws" this is simply reversing unfair laws that benefit landlords over renters and make housing unaffordable. No increase in taxes are required.