I'm curious if the salaries include stocks and other compensation - my stocks are a large portion of my compensation package, and I work for a major company, not a startup. It makes me wonder if this might skew more in favor of west coast, where (I think?) those compensation schemes are more common - as where I'm at, those numbers all seem really low compared to what most people I know make.
There is a lot of selection bias in the type of people that post on those sites. The salaries are almost always deflated. Software engineers making $200k+ aren't posting on indeed.com.
Really? Last I looked self-reported numbers tend to be _inflated_ compared to govt collected figures (from tax returns and payroll reports). My intuitive understanding of this is that people being underpaid tend to not want to brag about it, even anonymously.
I don't know what the truth is either, but sites like Glassdoor are specifically designed so you can find out if you're being underpaid, and let others know they're being underpaid. So intuitively it could go the opposite as well. People who think they're getting underpaid report, and people who are clearly not ($200k+ crowd) may not. It would be really interesting to know, though.
I agree. The salaries seem inflated compared to talks with co-workers. If I look within my own company and even within my own company+city+job title Glassdoor is way to high. Honestly the most accurate numbers we get are probably from the H1B visas because they are required to be reported by the employer but I don't know how that correlates to pay of national citizens.
I guess the best way to know if you are underpaid is applying for other positions and see what kind of offers you get.
The salaries are probably pretty accurate for people that need to look at job boards to figure out whether they'd be best moving to a new company or city though. If you're in the relatively small subset of software engineers eligible for roles paying north of $200k, the opportunities to radically improve your disposable income and lifestyle are searching for you.
It is nice a cost of living discussion that looks at total discretionary earnings rather than useless metrics like percentage of income spent on rent+food.
I think averaged adjustments for cost of living are senseless as this is quite individual.
Let's take me as an example: I manage to live modestly but well on around 1000 CHF (1050 USD) in Zurich while making around 6400 CHF (6700 USD) in net-salary. I am a junior software engineer hacking on Python in a SMB.
(Full disclosure: My company is hiring; feel free to reach out to me at iwang{at}fastmail.net. Also, my experiences working in Switzerland can be found here: "Eight reasons why I moved to Switzerland to work in IT" http://goo.gl/EIX4UX)
Very true. Different individuals have their own spending amount. I tried to use a reasonable average when adjusting the salaries but if you are far away from average, then your own calculations will be different.
> I think averaged adjustments for cost of living are senseless as this is quite individual.
Well it's a base to work from. If it costs, on average X for Y things, and you know you are happy with about half of Y, then it'll still be cheaper to live in Cyanide Springs, Oklahoma, than in central London.
I remember saving lots of money in Switzerland because it was too expensive to actually buy anything. When that frappechino costs 8CHF, you think hard about getting it (now it's probably even worse!).
In Zuerich maybe, I rented 3.5 room apartment in Adliswil for 1.970 CHF last week.
Close to nature, and for me close to office since my company in in Binz.
Same here, move from Berlin to Zürich. From time to time I miss some things, but now I can fly there and spend a weekend more intensely than while living there ;)
BTW, I think I saw that appartment in Adliswil. Switzerland is so small ;)
But do you think you are the exception or the norm? I've looked into Zurich real-estate last year and 1000CHF wouldn't even come close to the prices I saw for a small 2br.
The idea of the average adjustments is to get a general idea of the cost of living.
I am an exception as I rent a room for 500 CHF (the norm is 750-1000 CHF). Also, I pay 200 CHF for the cheapest insurance. Then, I budget about 300 CHF to buy food.
If you insist on renting a nice 2bd aparment, you can do so for 2500 CHF in Zurich-city. If you move just slightly out of town, prices drop. I live on the southern end of town and my company is in the north. It takes me only 35 min to go through the whole city (Zurich is rather small).
In my opinion, cost-of-living averages give a misleading idea because people mentally give "cost of living" equal weight as to net-salary.
Although my life in Zurich costs more than my life in Munich, the ridiculous-high salaries and excellent working-conditions (I pay only 16% as taxes) make me feel that I win the lottery each and every month on pay-day. However, in case of sickness I would probably take a day off work and go to Germany (45 min trip) to go to the doctor there as doctors in Zurich also earn double as much.
It's easy to say COL is innacurate if you're a single person willing to live a frugal lifestyle. These are typically based on average family size, so in the US, that's a family with 2.3 children. I'm not sure what the average family size is in Switzerland.
My point being- I used to be able to save a tremendous amount of money; something like 65% of my after tax income, when I was single. Now that I'm married with two kids, I'm only able to save a much smaller 35%. I still live frugally, however, when you have young kids going to school, it's no longer possible to live like a monk. School is expensive, and kids are expensive to raise.
Cost of living is a very valid metric. At a minimum, it reflects the local property tax rates, which are basically the cost of schools and other government services.
Even so, the way a family with 2.3 children lives can differ significantly between cities. A successful middle-class family with 2 children isn't abnormal if they live in a 2-bedroom apartment in NYC, but they are well outside the norm in most other cities.
Is that itemizing the CA taxes or just taking the standard deduction? The rule of thumb in CA is if you make more than $100,000, your state taxes are larger than the standard deduction.
well, based on the ADP site, that's about a $3k difference in annual state tax vs. standard deduction for CA, so I don't think that changes things too much, but good to know for someone like me who's already here in san jose.
Very nice work! I'd love to see it expanded and "opened up" in the form of a Google Spreadsheet or something else where people can plug more cities into it.
I suspect the cost of living data for Austin trails reality by some significant margin. The sources don't indicate the age of the data, but even if it's only a couple of years old, it's going to be wrong by enough to be a factor.
I have lived in Austin for a couple of years, and also lived here (and owned a house here) about 8 years ago. The cost of homes here has gone up tremendously since then. I was shopping for a house a few months ago, and was simply unable to buy one; those in my price range wouldn't accept my offer because it wasn't an all-cash offer (despite being $5000 or more over the asking price). Investors paying cash are buying aggressively here, driving up prices. Rental rates have risen at an even faster pace.
Certainly, it's cheaper here than in Silicon Valley. Five years ago, I was paying $2145 a month in rent for a house a couple of blocks from downtown Mountain View. Today I'm paying $1690 a month for a house quite far outside of downtown Austin and on the east side; renting in downtown is not an option, even at $2000+ a month. Apartments are somewhat cheaper, and buying a house is still notably cheaper than Silicon Valley, but the gap has been closing rapidly.
In short, Austin has grown incredibly fast in recent years, and the real estate market hasn't been able to absorb that growth in anything like a reasonable manner. So much so that I'd be shocked if the graphs in this article still reflect reality for Austin.
Tremendously is relative. Austin and SV real estate prices are not close at all. High property taxes keep home prices lower across almost all of Texas. Austin prices are limited in their 'irrational exuberance' upside since there's no way to finance a property tax bill and existing homeowners start to suffer. California is the opposite with low tax rates and proposition 13 covering existing homeowners - perfect conditions for price speculation.
The salaries in neither area match up to current housing prices, nor do they keep up with the increasing prices year over year. What I have observed is that housing prices going up by 20% usually results in salaries only going up by 8%.
After 5 years, houses cost twice as much but salaries are only 40% higher. And to see those salary gains you have to switch companies and risk being labeled a "job hopper".
The game is rigged for developers in most of the tech hubs. There is a reason so many of us opt out of it by working remote in low cost areas.
So the question is, how much does that Mountain View place cost today? You don't need 1 million to buy a decent house in Austin. In SV/San Fran, good luck.
In a lot of places even 1 million isn't a decent house, once you try and accommodate kids.
If you consider sqft of home/land, amenities and distance to highly rated schools, Austin can be 10x less expensive, and it's easy to show examples of this.
You do if you're looking in south Austin (78704). Even tiny 1br bungalows go for $750k+.
Unlike SV though, if you go a few miles outside south Austin there are plenty of affordable homes in good neighborhoods. They may not be as hip or convenient, but at least they exist.
Average $1.8M for 3b/3b in Mt View. $1.2 for 2b/1b. I paid $1600 for 2b/2b for a decent apartment (2625 California St) in Mountain View--in 2001. Now the same apartment goes for $3200.
This is a common refrain, but one I consider misguided, having lived in Austin since the first .com collapse.
While Yes, housing costs have moved up, others have remained flat (so relatively compared to other cities, have moved down).
As silly as it sounds, my favorite metric is "Cost of Drinking". Find the fancy cocktail bars in any city's downtown. In Austin, nothing on the menu is above $12 at Midnight Cowboy or The Garage. Now compare that to the other cities on this list.
I am not sure you are fully connected into the situation anymore. Rents have increased around 40% over 5 years on average and that includes the outlying areas that aren't really even Austin anymore. Home prices are skyrocketing and out of control, e.g., Mueller development is in the $800,000 range for 3/3 on what looks to be about a 1/8 acre lot where you have a car sized back yard and you're paying around 2% property taxes per year. Then there's also the Fitch assessment that Austin home prices are the most overvalued IN THE COUNTRY http://www.bizjournals.com/austin/blog/real-estate/2014/12/a...
There is absolutely not way that the data is accurate, just alone the velocity of the Austin market guarantees that the data is inaccurate.
Eastside Showroom will be happy to serve you a $16 cocktail, and drink prices have climbed everywhere I frequent. It used to be easy to find $2-$3 decent beers in Austin... $4.50 is what Shiner costs these days.
By any metric I can think of, Austin costs more than it did even three years ago. All of my favorite restaurants are $2-$3 more for an entree than they were when I lived here in the past. And some have been priced out of downtown. Thai Passion (my favorite Thai restaurant anywhere which used the have a $5.75 lunch special) closed recently, and they aren't alone.
Again, it isn't California expensive but it's no longer Texas cheap either.
Sometimes we're provincially biased, though. What you describe is not all that unusual nationwide.
And not to point out the obvious, but five years ago was rock bottom for this nation's economy (and housing market). I don't think that's a fair comparison, even if it is Mountain View v. Austin.
I have the same problem in Austin. Prices are going up faster than I can save, even accounting for the downpayment leverage. There's no way that I can compete with the all-cash offers that are $10k and $20k above asking price that are being made by investors and people from California and overseas. Knowing that it's a bubble, I think I'm going to have to wait until it pops, and just keep renting until then. Because commuting from Buda or Georgetown isn't attractive to me.
Austin's metro economy is currently insufficiently developed (that is, it hasn't found a way yet to geographically lock in any desirable, large-scale economic network effects) to support the kind of globally-unique signature metro economy associated with the metro areas like NYC, London, Tokyo, Singapore, Shanghai, etc. Those signature economies can support the kinds of incomes it takes to regularly yield six-figure bidding gaps.
The life hack to actually come out ahead is to avoid these places and find a good opportunity in a cheaper place. I don't know a lot about Austin, but I'm familiar with NYC, and I think that example works too.
If you define the "cool" part of NYC as being in Manhattan, once you have a family it's irrelevant, because you can't live there... like 98% of everyone else, you end up in Jersey, the boroughs, or Long Island. Three hours north of NYC, a house costs 60-80% less, and you have the essentially the same access to NYC cool stuff without the hassle of NYC.
In my case, paying 7% of income for a mortgage on a nice big house that I will own in 15-20 years and banking savings is more appealing than some interest only loan on a $750k raised ranch in a big metro area. Barring building a successful business, a lottery-style liquidity event or selling your soul to some hedge fund, I don't see a reliable way to live in NYC, SFO, etc and coming out with any wealth.
Yea, NYC has a HUGE advantage because of the train system going into and out of the city. You can easily commute south to Jersey or north to Connecticut. Each stop going away from NYC drops ~$20K on comparable houses (with a few exceptions like Greenwich). I've heard in the bay area the train system is terrible.
Three hours, seriously? That is no longer within the metro area of NY, not even close. If you're talking about suburban commuting, houses upstate in Westchester are still $1 million with a fat 3% property tax bill. The trains suck and have a history of safety issues and you have to spend 2 hours a day on one. No thanks.
Don't try to settle in the NY metro w/ a family unless you are in finance, your quality of life will suck. If you aren't living in the city there's no point to being here, I would much rather be somewhere like Utah, California, Wash state.
I live and work in Albany. I drive 5 minutes to work.
My family gets to hop on the Amtrak and enjoy the cultural advantages of NYC about once a month. We drive to places like the Bronx Zoo and Boston for various things.
When I was a kid in Queens, getting to Manhattan via transit easily took 2 hours. My son gets all of the benefits of not living in NYC, and many of the advantages.
There are basically five jobs in all of Albany outside of state government. Yes, many of us would love to live in quaint smaller/medium towns within sight of a major global city but there tends not to be much career opportunity there
It's within range to work remotely and come in a couple days every couple weeks, while living in a lovely village in the mountains, and to take relatively easy weekend trips to the city, while paying Midwest-level real estate prices on lovely old houses.
Not everyone's choice of lifestyle, but it's certainly a nice one.
The other life hack people do is to move to SF or NYC out of college, try to "make it", live like a grad student, bank a large savings cushion, and then retire to a cheaper place with a high quality of life when they want to have a family.
I have a few friends at Google who, after working there for close to 10 years, now are thinking about retiring to Portland, or Vermont, or North Carolina. The idea has certainly crossed my mind, that if I wanted to live in a rural area I could buy a house free & clear and be set for the rest of my life. I met an innkeeper in Alaska once that had worked in tech for 20 years, lived like a grad student, and when his kid was a teenager, bought a sailboat, sailed around the world, and came to settle in Seward, Alaska because they'd fallen in love with the town. I've heard it's pretty common in investment banking to have "your number", work for ~10 years until you hit it, and then retire to Fiji.
This is pretty much what I'm doing right now. When I moved to Seattle for a new development job I found roommates on Craigslist instead of paying about twice as much to rent a 1 BR. I'm now saving way more money than I otherwise would have, and I don't fall into the high spending trap because the people I spend most of my time with have more reasonable incomes that encourage frugality.
I don't have a target net worth or age for when I'll call it quits but the way I see it, I'm buying flexibility for the future without sacrificing any happiness today.
This is true if you're speaking of downtown Austin. Most tech companies are in north Austin, which is decidedly less cool and more strip mall-ish. You can still get a huge house for $200k if you look in Round Rock or Cedar Park -- both of which are within a 15-20 minute commute of the Braker/Metric area where most of the low-cost office space that attracts startups is. It's not super sexy, but cheap housing still exists in Austin if you're willing to drive a little bit.
>I was shopping for a house a few months ago, and was simply unable to buy one; those in my price range wouldn't accept my offer because it wasn't an all-cash offer
I don't understand this. If you're pre-qualified for a $500,000 dollar loan how is your offer worse than someone willing to pay $495,000 cash?
Deal velocity. An "all cash" offer at 1% less than asking is more attractive to the seller's agent (not necessarily the seller) than a loan-process-backed offer, because the agent wants to close quickly and move onto the next deal. The loan process adds days and weeks to the deal, while the "cash" offer can literally close tomorrow.
I'm scare quoting "cash" because what is really happening most of the time is the cash represents investor pools of already-fronted, already-loaned-out sums; it's only the minority of "all cash" offers that are actually an individual investor writing out unencumbered checks (and even then, that check is still somewhat encumbered by future flip profit expectations). Really what is happening is you are seeing competition between de facto loans already-made and turned into ready cash, and loan promises.
A quick tip for those in the market. If you're trying to beat out cash offers, there's a sweet spot in every market where after a certain price point, the cash buyers drop off.
My understanding of the Austin market (please correct me if you know otherwise, I was just an interested observer of the market so as to educate myself before pulling the trigger, not an active participant) is there are two such sweet spots: well below the Austin median (like the $150K area), and way into the stratosphere (like the $1.5M+ area).
Below the median, the fixed costs and time commitments per transaction eat up too much of the flipping profit. In the stratosphere, and their deal velocity slows down too much (plus there are issues with money management, i.e., left holding the bag when the bottom cycle arrives).
Neither of these sweet spots to avoid hordes of cash buyers are likely to appeal to the median HN reader trying to find a residence in Austin. Too low and either the school district is below acceptable performance and/or the commute distance too far (though Austin metro area has it easy commute time-wise compared to places like LA, SF, NYC, ORD, MIA). Too high and unless you are cashing out of an even greater asset-inflated area, you can't afford it.
Lots less stuff that can go wrong, too. If you're getting a loan, the bank will want at least an appraisal, plus pre-approved doesn't necessarily mean the cash will show up. It can often take a month or more to close a loan.
With a cash offer, once a title search is performed (a few days assuming no liens), the owners and buyers can swap keys and a check. If the seller wants cash sooner than later, this can be very attractive; for example, he or she may well be bidding on another house and need to make a deposit or down payment.
One's called an engineer, and the other is called a developer.
The difference is supposed to be that an engineer works more in the design of software than the developer, who works more on the implementation. In reality, the difference is rarely that concrete and generally the two are interchangeable for many people in the middle of the overall bell curve.
But precisely, that's the interesting part. For instance COL in Madrid and Barcelona are similar yet salaries in Barcelona are lower. It's kind of the point of the article, crossing COL data and salaries after taxes. COL alone in itself gives a hint but it's not enough.
I remember once meeting an old high school friend in NYC. He was hanging out at one of those non-descript but unfathomably loud bars. Some of his coworkers stopped by. The conversation switched to the car one of them had bought. A Lexus SC430 convertible. He was complaining about how he never got to get out of The City and drive it enough. They were all super-sharp CS graduates working for one of the most successful hedge funds in the world.
My point with this story is that if you are making way above the median salary in NYC ($200k+ range at the time, this was 10 years ago) - the world is just different. You are making enough money to enjoy one of the top cities in the world. With the $125k-$140k salaries some software developers report making, they are barely getting to "enjoy" living in NYC. Finance has distorted the baseline of what it means to be successful in NYC. I mean, my school friends' coworkers were 2-3 yrs out of Harvard and talking about the travails of $80k car ownership like it was an Accord.
Software salaries outside of Fintech and top-tier companies like Google and Facebook and a handful of others in globally attractive cities are the equivalent of middle class in the burbs. You're doing OK but you're not going to be relatively 'really doing well'. In a city like NYC, there are more than enough free events to overwhelm anyone. However, in San Jose, what do you do? Hang out on the Palo Alto main drag?
Check out the size of the dogs being walked near Central Park. Where do these people live?!
Meanwhile, living in the 'burbs' is the cultural equivalent of living in Siberia as far as I'm concerned. I spent < $20k last year and had a great time in New York.
San Jose is not hurting for nearby recreation oppurtunities, though you often need a car to access them. On the other hand, try a city with hot/humid southern weather like Atlanta or even Dallas or Huston...there is a reason they have high obesity rates.
That said, if you can bike or take transit to work, the cost of owning, maintaining, and insuring a $5000 used car to go hiking and surfing isn't very significant.
> Check out the size of the dogs being walked near Central Park. Where do these people live?!
True, it's NYC is an expensive place to try and mix in all of the creature comforts of suburban life. The big dog, the fancy car, lots of square footage of living space. And to young kids, just out of college, who've never known anything other than suburban living before moving to NYC, these may seem like "baseline necessities" that you have to sacrifice in order to live here.
Once you accept that the baselines of city living are different from the baselines of suburban life, things get a lot simpler (and cheaper).
If there are developers unable to "enjoy" living in NYC at a $125-$140k base salary, then that's on them. Plenty of single people love life here on salaries of $45-60k, and are even able to save money.
> Finance has distorted the baseline of what it means to be successful in NYC.
This is obviously only if you try to keep up with them and the other Joneses. There are too many people here. Nobody notices if you don't have a dog, or a car, or a big apartment.
I own a place in a nice neighborhood in Brooklyn, don't want for much, and provide for my family all on a way less than Google/Finance salary. I think that's a perfectly fine definition of success.
I took his point to be the opposite--that in expensive cities in general, the typical 'burbian metrics of success (big house, big dog, big car) are unattainable, but at least in NYC there is a lot of other things you can enjoy, much more so than in SJ.
>> "Plenty of single people love life here on salaries of $45-60k, and are even able to save money."
Here's some anecdata: I lived like a king on my $30,000 grad student stipend for years in Manhattan. And maxed out my IRA every year at the same time. The trick is just to get an apartment somewhere uncool, then you're rich.
Yup, Hamilton Heights in fact. Price per square foot as a function of latitude is a pretty flat curve for a long distance north of 125th, so there's no reason to go into the extra deep boonies to save money. I was on 139th on the West side.
While the anecdote is interesting, for a couple of years I was happy living in New York while earning around $45K. If I'd played the finance game (I also have degree from a top-ranking CS program) I could have earned five times that. But I also know myself enough to know that route would have left me much less happy.
It sounds like they were trying to enjoy suburbia in NYC. Why in the world would you buy a luxury car here? As the anecdote points out, you're never going to drive the damn thing anywhere fun.
Most of the cost is from rent or housing. If you lower that cost by living more minimally, San Jose may still be the best place overall in terms of discretionary spending.
You could say the same about Austin. If you lower you costs in housing, in Texas you'd pay less in property taxes, so you save twice (more discretionary plus a lower tax bill) In San Jose, it doesn't matter how cheaply you live, your income is still taxed at the same rate and things still cost the same. And the cheapest San Jose place would still be far more expensive than the cheapest Austin place.
Except cities aren't really fungible. If you like big cities, then NYC may be the best place to live regardless of salary. If you like the outdoors, then maybe another city. If you are raising a family, then maybe you want to be in a quieter area with good schools. If you want to be in a tech hub, then you should be in Silicon Valley. And if you have a spouse, that is all adjusted by their needs and the industry they work in.
On a software developer's salary, you'll get by regardless of what city you live in, so you should be choosing the city which suits your personality and your stage of life.
Cities aren't fungible, but on the other hand, it can pay benefits to live in a city where there is a plethora of opportunities just in case you need to find a new job.
One thing I have noticed during a recent job search - I used the cost of living calculator from bankrate.com[1], relocation from city A to city B from wolframalpha [2] and the salary information available on websites like glassdoor, indeed and salary.com to get an estimate of a par salary at different locations for a particular position. In these websites, I noticed that indeed.com has extremely optimistic estimates of the salaries for most positions when compared to glassdoor or salary.com, so much so that I stopped using data from indeed.com e.g. here are the salaries for a software engineer in Chicago, IL
- glassdoor.com ( avg $74,426 ) [3]
- salary.com ( median $62,257 ) [4]
- indeed.com ( avg $114,000 ) [5]
Even when verified by converting the par salaries from 2 different locations using bankrate or wolframalpha the indeed estimates were quite high. Since, the author used data from glassdoor and indeed, I wonder how accurate the analysis is considering the underlying data from indeed isn't necessarily accurate.
There's probably a huge difference in salary ranges for someone with minimal experience and someone with lots of experience, and this isn't even counting if you're really good or just mediocre.
Personally, with 10 years of experience, if I was to move to Chicago right now, I would expect to make more than $114k due to the highish cost of living. There's no way in hell I'd move anywhere to make $74k, let alone $62k per year.
I’m curious how Europe’s tech hubs (specifically London, Paris, and Berlin) compare to U.S. cities.
I suspect Berlin would compare quite favorably, despite the relatively high German tax rate. I moved there 18 months ago and currently pay €500 ($565) for a one-bedroom apartment in a nice part of town (Prenzlauer Berg). In San Francisco, I paid 5X that for a studio apartment in Hayes Valley.
I would say Berlin would look good, cost of living there is decent mainly due to the reasonable rental costs and good transport, and the demand and job mobility that has improved a lot there. Dublin also wouldn't rate too badly. London would probably look more like New York.
Glassdoor suggests "software developers" or "software engineers" in London earn around $60k, which would put it far below the salaries listed here.
In the absence of the COL index for the UK we can use the "London living wage" - supposedly a baseline for a minimum acceptable standard of living[1] which translates to £18k (a little under $30k).
The tax paid on the amount earned in excess of this living wage is around £7k (<$11k)
That would leave around $19k of savings or "discretionary spending", actually slightly better than NYC and Portland despite the low salary, but based on what is almost certainly a much less generous view of essential costs of living.
[1]Since it assumes dependents it's quite a generous minimum standard; indeed excluding tax payments from the equation I've never spent more than it whilst living in London on substantially higher income. But it's also almost certainly less generous than the COL assumptions for the US cities.
Interesting, average rent in London is around £1000/month, plus £44 council tax (e.g. Wandsworth), plus monthly travelcard £120, gas and electricity £45, broadband/phone £16, mobile phone £15. Leaves about £60/week for food, clothes, etc. If you do manage to find a studio flat for £700/month then that brings it up to £130/week, so you could actually go to a pub sometimes.
I'd pay 65 quid for a mothly bus pass (I didn't have to use subway on a typical day), and the rent was £65 a week plus electricity (3rd zone just outside of the 2nd, Streatham Hill) - for a bedsit, kind of a shithole, but I've seen worse. It was around 2010.
I think the problem with Berlin is that salaries are low, while prices are growing pretty quickly.
From my experience, this is what makes Berlin less attractive than people think (at the financial level):
- low engineer / developer salaries compared to other German cities.
- rent prices are growing a LOT faster than salaries, my last appartment outside of the city center (the "Ring") cost almost 900€ a month, plus electricity.
- public transportation is not that good (especially in winter) and quite expensive relative to the avg. salary (about 80€ if you live in the AB zones, 100€ for ABC).
- high taxes, though this is a common problem in Germany.
- food is cheap, but not cheaper than in other German cities with better avg. salaries.
- if you own a car, prepare for extremely high insurance and taxes
Obviously, Berlin has its own perks, besides the known ones like night-life and openness of the people, it has a really huge demand for engineers and a vibrant startup scene.
London is phenomenally expensive. Rent, tax, national insurance and transport consume most people's disposable income - even in well-paid professional jobs.
Is this for the city proper, or does it take an average of the suburbs, too?
I live in a suburb of Portland, (Hillsboro) and I live a perfectly decent life making about $44,000 a year before taxes. I'm also young and don't have kids, but I would happily commute half an hour into Portland if I had a job in the city. It's not that bad of a drive as long as it isn't during rush hour.
You won't be pulling in any local income in those cities (all work would be remote, you would be dodging thai taxes on income taxed in a western country), so it wouldn't be a very realistic comparison.
Yes, but if your income is usa sourced but you are working in Chiangmai, both the thai and U.S. governments have first dibs on taxes, there is no tax treaty that can help you.
Decisions based on average (a/k/a "mean") salaries, however, are only relying on a small part of the picture. Personally I'd like to see standard deviations accounted for in here. I have the feeling that it is easier to make 1.5x to 2x these "averages" in some cities than in others, especially for people with experience.
The other data I'd like to see is distribution of non-salaried incomes -- bonuses and equity. I have the feeling that SF and SV are the only places where you have a realistic shot of working for a company for 4-6 years and coming away a millionaire.
In other places, it'd be base salary, maybe a bonus, and that's it. For life. And if you ever have ambitions to start your own startup, would you want to be in Atlanta?
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[ 3.1 ms ] story [ 277 ms ] threadReally? Last I looked self-reported numbers tend to be _inflated_ compared to govt collected figures (from tax returns and payroll reports). My intuitive understanding of this is that people being underpaid tend to not want to brag about it, even anonymously.
I guess the best way to know if you are underpaid is applying for other positions and see what kind of offers you get.
Let's take me as an example: I manage to live modestly but well on around 1000 CHF (1050 USD) in Zurich while making around 6400 CHF (6700 USD) in net-salary. I am a junior software engineer hacking on Python in a SMB.
(Full disclosure: My company is hiring; feel free to reach out to me at iwang{at}fastmail.net. Also, my experiences working in Switzerland can be found here: "Eight reasons why I moved to Switzerland to work in IT" http://goo.gl/EIX4UX)
Well it's a base to work from. If it costs, on average X for Y things, and you know you are happy with about half of Y, then it'll still be cheaper to live in Cyanide Springs, Oklahoma, than in central London.
Moved away from crowded Berlin, no regrets.
BTW, I think I saw that appartment in Adliswil. Switzerland is so small ;)
Anyone interested in a HN meetup in Zurich? Mail me plz (e-mail-address in my profile).
The idea of the average adjustments is to get a general idea of the cost of living.
If you insist on renting a nice 2bd aparment, you can do so for 2500 CHF in Zurich-city. If you move just slightly out of town, prices drop. I live on the southern end of town and my company is in the north. It takes me only 35 min to go through the whole city (Zurich is rather small).
In my opinion, cost-of-living averages give a misleading idea because people mentally give "cost of living" equal weight as to net-salary.
Although my life in Zurich costs more than my life in Munich, the ridiculous-high salaries and excellent working-conditions (I pay only 16% as taxes) make me feel that I win the lottery each and every month on pay-day. However, in case of sickness I would probably take a day off work and go to Germany (45 min trip) to go to the doctor there as doctors in Zurich also earn double as much.
My point being- I used to be able to save a tremendous amount of money; something like 65% of my after tax income, when I was single. Now that I'm married with two kids, I'm only able to save a much smaller 35%. I still live frugally, however, when you have young kids going to school, it's no longer possible to live like a monk. School is expensive, and kids are expensive to raise.
Cost of living is a very valid metric. At a minimum, it reflects the local property tax rates, which are basically the cost of schools and other government services.
What insurance do you buy? And do you live at home?
I have lived in Austin for a couple of years, and also lived here (and owned a house here) about 8 years ago. The cost of homes here has gone up tremendously since then. I was shopping for a house a few months ago, and was simply unable to buy one; those in my price range wouldn't accept my offer because it wasn't an all-cash offer (despite being $5000 or more over the asking price). Investors paying cash are buying aggressively here, driving up prices. Rental rates have risen at an even faster pace.
Certainly, it's cheaper here than in Silicon Valley. Five years ago, I was paying $2145 a month in rent for a house a couple of blocks from downtown Mountain View. Today I'm paying $1690 a month for a house quite far outside of downtown Austin and on the east side; renting in downtown is not an option, even at $2000+ a month. Apartments are somewhat cheaper, and buying a house is still notably cheaper than Silicon Valley, but the gap has been closing rapidly.
In short, Austin has grown incredibly fast in recent years, and the real estate market hasn't been able to absorb that growth in anything like a reasonable manner. So much so that I'd be shocked if the graphs in this article still reflect reality for Austin.
After 5 years, houses cost twice as much but salaries are only 40% higher. And to see those salary gains you have to switch companies and risk being labeled a "job hopper".
The game is rigged for developers in most of the tech hubs. There is a reason so many of us opt out of it by working remote in low cost areas.
If you consider sqft of home/land, amenities and distance to highly rated schools, Austin can be 10x less expensive, and it's easy to show examples of this.
Unlike SV though, if you go a few miles outside south Austin there are plenty of affordable homes in good neighborhoods. They may not be as hip or convenient, but at least they exist.
While Yes, housing costs have moved up, others have remained flat (so relatively compared to other cities, have moved down).
As silly as it sounds, my favorite metric is "Cost of Drinking". Find the fancy cocktail bars in any city's downtown. In Austin, nothing on the menu is above $12 at Midnight Cowboy or The Garage. Now compare that to the other cities on this list.
I dunno if that's a great metric - or maybe it is and Austin's more expensive than you and I think. Cocktails at Gramercy Tavern are $14.
That said, you can't get a $2 Shiner Bock here.
More seriously, it takes a happy hour. Doc's takes half off all Texas beers.
There is absolutely not way that the data is accurate, just alone the velocity of the Austin market guarantees that the data is inaccurate.
By any metric I can think of, Austin costs more than it did even three years ago. All of my favorite restaurants are $2-$3 more for an entree than they were when I lived here in the past. And some have been priced out of downtown. Thai Passion (my favorite Thai restaurant anywhere which used the have a $5.75 lunch special) closed recently, and they aren't alone.
Again, it isn't California expensive but it's no longer Texas cheap either.
And not to point out the obvious, but five years ago was rock bottom for this nation's economy (and housing market). I don't think that's a fair comparison, even if it is Mountain View v. Austin.
If you define the "cool" part of NYC as being in Manhattan, once you have a family it's irrelevant, because you can't live there... like 98% of everyone else, you end up in Jersey, the boroughs, or Long Island. Three hours north of NYC, a house costs 60-80% less, and you have the essentially the same access to NYC cool stuff without the hassle of NYC.
In my case, paying 7% of income for a mortgage on a nice big house that I will own in 15-20 years and banking savings is more appealing than some interest only loan on a $750k raised ranch in a big metro area. Barring building a successful business, a lottery-style liquidity event or selling your soul to some hedge fund, I don't see a reliable way to live in NYC, SFO, etc and coming out with any wealth.
You really don't need to go that far. In fact, you shouldn't. You'll hit Lake George and the prices will start to go back up.
An hour or two out and you'll be closer and the houses are just as cheap. You can also go West into NJ and you'll experience the same price drop.
The problem is that you'll be 30 min away driving from a decent grocery store. In fact, you'll be 30 min away driving from pretty much everything.
Don't try to settle in the NY metro w/ a family unless you are in finance, your quality of life will suck. If you aren't living in the city there's no point to being here, I would much rather be somewhere like Utah, California, Wash state.
My family gets to hop on the Amtrak and enjoy the cultural advantages of NYC about once a month. We drive to places like the Bronx Zoo and Boston for various things.
When I was a kid in Queens, getting to Manhattan via transit easily took 2 hours. My son gets all of the benefits of not living in NYC, and many of the advantages.
Not everyone's choice of lifestyle, but it's certainly a nice one.
I have a few friends at Google who, after working there for close to 10 years, now are thinking about retiring to Portland, or Vermont, or North Carolina. The idea has certainly crossed my mind, that if I wanted to live in a rural area I could buy a house free & clear and be set for the rest of my life. I met an innkeeper in Alaska once that had worked in tech for 20 years, lived like a grad student, and when his kid was a teenager, bought a sailboat, sailed around the world, and came to settle in Seward, Alaska because they'd fallen in love with the town. I've heard it's pretty common in investment banking to have "your number", work for ~10 years until you hit it, and then retire to Fiji.
I don't have a target net worth or age for when I'll call it quits but the way I see it, I'm buying flexibility for the future without sacrificing any happiness today.
I don't understand this. If you're pre-qualified for a $500,000 dollar loan how is your offer worse than someone willing to pay $495,000 cash?
I'm scare quoting "cash" because what is really happening most of the time is the cash represents investor pools of already-fronted, already-loaned-out sums; it's only the minority of "all cash" offers that are actually an individual investor writing out unencumbered checks (and even then, that check is still somewhat encumbered by future flip profit expectations). Really what is happening is you are seeing competition between de facto loans already-made and turned into ready cash, and loan promises.
Usually the seller too.
A quick tip for those in the market. If you're trying to beat out cash offers, there's a sweet spot in every market where after a certain price point, the cash buyers drop off.
Below the median, the fixed costs and time commitments per transaction eat up too much of the flipping profit. In the stratosphere, and their deal velocity slows down too much (plus there are issues with money management, i.e., left holding the bag when the bottom cycle arrives).
Neither of these sweet spots to avoid hordes of cash buyers are likely to appeal to the median HN reader trying to find a residence in Austin. Too low and either the school district is below acceptable performance and/or the commute distance too far (though Austin metro area has it easy commute time-wise compared to places like LA, SF, NYC, ORD, MIA). Too high and unless you are cashing out of an even greater asset-inflated area, you can't afford it.
With a cash offer, once a title search is performed (a few days assuming no liens), the owners and buyers can swap keys and a check. If the seller wants cash sooner than later, this can be very attractive; for example, he or she may well be bidding on another house and need to make a deposit or down payment.
The difference is supposed to be that an engineer works more in the design of software than the developer, who works more on the implementation. In reality, the difference is rarely that concrete and generally the two are interchangeable for many people in the middle of the overall bell curve.
My point with this story is that if you are making way above the median salary in NYC ($200k+ range at the time, this was 10 years ago) - the world is just different. You are making enough money to enjoy one of the top cities in the world. With the $125k-$140k salaries some software developers report making, they are barely getting to "enjoy" living in NYC. Finance has distorted the baseline of what it means to be successful in NYC. I mean, my school friends' coworkers were 2-3 yrs out of Harvard and talking about the travails of $80k car ownership like it was an Accord.
Software salaries outside of Fintech and top-tier companies like Google and Facebook and a handful of others in globally attractive cities are the equivalent of middle class in the burbs. You're doing OK but you're not going to be relatively 'really doing well'. In a city like NYC, there are more than enough free events to overwhelm anyone. However, in San Jose, what do you do? Hang out on the Palo Alto main drag?
Check out the size of the dogs being walked near Central Park. Where do these people live?!
Last time I was in the area my aunt took me to the Los Gatos creek trail.
Like someone else commented, cities are not fungible. Maybe Richard Florida is right.
http://en.wikipedia.org/wiki/Richard_Florida
True, it's NYC is an expensive place to try and mix in all of the creature comforts of suburban life. The big dog, the fancy car, lots of square footage of living space. And to young kids, just out of college, who've never known anything other than suburban living before moving to NYC, these may seem like "baseline necessities" that you have to sacrifice in order to live here.
Once you accept that the baselines of city living are different from the baselines of suburban life, things get a lot simpler (and cheaper).
If there are developers unable to "enjoy" living in NYC at a $125-$140k base salary, then that's on them. Plenty of single people love life here on salaries of $45-60k, and are even able to save money.
> Finance has distorted the baseline of what it means to be successful in NYC.
This is obviously only if you try to keep up with them and the other Joneses. There are too many people here. Nobody notices if you don't have a dog, or a car, or a big apartment.
I own a place in a nice neighborhood in Brooklyn, don't want for much, and provide for my family all on a way less than Google/Finance salary. I think that's a perfectly fine definition of success.
Here's some anecdata: I lived like a king on my $30,000 grad student stipend for years in Manhattan. And maxed out my IRA every year at the same time. The trick is just to get an apartment somewhere uncool, then you're rich.
I'm going to guess Washington Heights.
Really long and good article about Lin-Manuel Miranda who had a hit Broadway musical about Washington Heights.
http://www.newyorker.com/magazine/2015/02/09/hamiltons
This is laughable, have you ever lived in NYC?
On a software developer's salary, you'll get by regardless of what city you live in, so you should be choosing the city which suits your personality and your stage of life.
- glassdoor.com ( avg $74,426 ) [3]
- salary.com ( median $62,257 ) [4]
- indeed.com ( avg $114,000 ) [5]
Even when verified by converting the par salaries from 2 different locations using bankrate or wolframalpha the indeed estimates were quite high. Since, the author used data from glassdoor and indeed, I wonder how accurate the analysis is considering the underlying data from indeed isn't necessarily accurate.
[1] http://www.bankrate.com/calculators/savings/moving-cost-of-l...
[2] http://www.wolframalpha.com/input/?i=relocating+from+seattle...
[3] http://www.glassdoor.com/Salaries/chicago-software-engineer-...
[4] http://www1.salary.com/IL/Chicago/Software-Developer-I-salar...
[5] http://www.indeed.com/salary/q-Software-Engineer-l-Chicago,-...
Personally, with 10 years of experience, if I was to move to Chicago right now, I would expect to make more than $114k due to the highish cost of living. There's no way in hell I'd move anywhere to make $74k, let alone $62k per year.
I suspect Berlin would compare quite favorably, despite the relatively high German tax rate. I moved there 18 months ago and currently pay €500 ($565) for a one-bedroom apartment in a nice part of town (Prenzlauer Berg). In San Francisco, I paid 5X that for a studio apartment in Hayes Valley.
Anecdotally, salaries are lower and rent higher as compared with both NY and San Francisco. Taxes are obviously higher as well.
In the absence of the COL index for the UK we can use the "London living wage" - supposedly a baseline for a minimum acceptable standard of living[1] which translates to £18k (a little under $30k). The tax paid on the amount earned in excess of this living wage is around £7k (<$11k) That would leave around $19k of savings or "discretionary spending", actually slightly better than NYC and Portland despite the low salary, but based on what is almost certainly a much less generous view of essential costs of living.
[1]Since it assumes dependents it's quite a generous minimum standard; indeed excluding tax payments from the equation I've never spent more than it whilst living in London on substantially higher income. But it's also almost certainly less generous than the COL assumptions for the US cities.
https://s2.yimg.com/bt/api/res/1.2/626WvTKmFK2FRBFpBg9rNg--/...
This is for buyers but the rental market price rates have gone up in pretty much the same way.
From my experience, this is what makes Berlin less attractive than people think (at the financial level):
- low engineer / developer salaries compared to other German cities. - rent prices are growing a LOT faster than salaries, my last appartment outside of the city center (the "Ring") cost almost 900€ a month, plus electricity. - public transportation is not that good (especially in winter) and quite expensive relative to the avg. salary (about 80€ if you live in the AB zones, 100€ for ABC). - high taxes, though this is a common problem in Germany. - food is cheap, but not cheaper than in other German cities with better avg. salaries. - if you own a car, prepare for extremely high insurance and taxes
Obviously, Berlin has its own perks, besides the known ones like night-life and openness of the people, it has a really huge demand for engineers and a vibrant startup scene.
I live in a suburb of Portland, (Hillsboro) and I live a perfectly decent life making about $44,000 a year before taxes. I'm also young and don't have kids, but I would happily commute half an hour into Portland if I had a job in the city. It's not that bad of a drive as long as it isn't during rush hour.
Also there are many people who are permanent and pay Thai taxes.
The other data I'd like to see is distribution of non-salaried incomes -- bonuses and equity. I have the feeling that SF and SV are the only places where you have a realistic shot of working for a company for 4-6 years and coming away a millionaire.
In other places, it'd be base salary, maybe a bonus, and that's it. For life. And if you ever have ambitions to start your own startup, would you want to be in Atlanta?