
$31.71: The hourly pay it now takes to afford Silicon Valley rent - citizenkeys
http://www.bizjournals.com/sanjose/news/2014/03/26/31-71-the-hourly-pay-it-now-takes-to-afford.html
======
gkoberger
San Francisco is insanely expensive, and despite SF having a minimum wage
that's $3 higher than the federal minimum, minimum wage isn't meant to pay for
a two bedroom apartment in any major city. It never has been, and
unfortunately can't ever be.

Studio apartments, roommates, spouse, living outside the city limits, living
in a smaller apartment, aid (for single/low income parents), etc -- there's a
lot of options, and it's disingenuous to frame it like this.

Even if we did raise minimum wage to $30 (and for the record, I'm for raising
minimum wage to keep pace with inflation.. just not to $30), what does that
solve? Techies will just get a raise, too (why be a programmer when you can
make the same at a dead end job?), and we'll be back where we started.

~~~
allochthon
_there 's a lot of options, and it's disingenuous to frame it like this._

I do not think it's a disingenuous way to frame the challenge facing people
who live in the area. Two-bedroom apartments should not be the privilege of
those in a certain stratum of society and above. They should be something that
is within reach of nearly everyone. Nor should housing in the San Jose area
become the domain of a privileged minority.

~~~
toomuchtodo
Not sure why you're getting downvoted, its totally doable if not for crazy-
backwards zoning/building regulations.

Either buildings can go up, or prices. They're not making any more land.

~~~
ido
SF is actually pretty dense (2nd densest city in the US after NYC).

~~~
toomuchtodo
I'm not saying its not dense. I'm saying its typically difficult to build a
building taller than ~4 stories in SF.

------
capkutay
Actually San Francisco is building up; they will have thousands of new
apartments coming out in the next 5-10 years. There's a ton of high rise
development going on in SOMA[0] (the business/metropolitan area) along with
less commercial areas like hayes valley.

The problem is that those units will probably still be ridiculously expensive.
The best solution is fixing public transportation between SF and the cheaper
suburbs to the south. Right now commuting to San Francisco is a nightmare just
because getting in out of the city by car is a huge bottleneck. Also, the
train only goes about half a mile into the most southern part of the city..
[1]

0: [http://vimeo.com/70447799](http://vimeo.com/70447799)

1:
[https://www.google.com/maps/search/san+francisco+cal+train/@...](https://www.google.com/maps/search/san+francisco+cal+train/@37.7671085,-122.3940995,15z/data=!3m1!4b1)

~~~
usaar333
1\. The population of reasonably close southern suburbs (let's say the entire
San Mateo County) is actually less than that of San Francisco proper by ~100k
people.

2\. Caltrain is linked to Muni metro at 4th/King as well as many bus lines. It
isn't that hard to get in.

3\. Bart goes straight into downtown and offers stations closer than Caltrain
for at least a third of San Mateo County's people.

4\. The southern and western parts of San Francisco are just as cheap, if not
cheaper, than San Mateo county's average. (indeed if you check padmapper, you
can see that there is more "cheap housing" available in SF than in San Mateo
County.

5\. The density of much of San Francisco, especially the outer Western and
Southern areas remains low. (somewhere between San Mateo County suburban
cities and Brooklyn)

~~~
capkutay
"2\. Caltrain is linked to Muni metro at 4th/King as well as many bus lines.
It isn't that hard to get in"

I've never heard anyone defend Bay Area public transportation before. I'd say
the amount of busses going from SF to silicon valley/the peninsula are
evidence that going in and out of san francisco is NOT easy. I've lived in
both the peninsula and SF for years and the consensus is that you're better
off living in SF if you work in SF and living in the peninsula if you work in
the peninsula (unless you work for a company that busses their employees). I
myself drive from SF to the Peninsula. I don't recommend it. Public
transportation is not an option for most people purely because of the lack of
geographical coverage they offer. For instance, I can't use caltrain or bart
because I don't live downtown and it takes 40-50 minutes to get to the train
by bus. The fact that caltrain is situated at the most southern point of the
city doesn't make it any better when a 2-3 mile muni metro line goes along the
most western point of the city where few people live.

------
conanbatt
The collective delusion on this problem is not only that the rent is
expensive, its that the housing you get is of low quality. For all the "High
salaries" in tech, it's insane to see people in their 30's sharing apartments
like if it were a college dorm.

------
yetanotherphd
Nerds were cute when they started getting big paychecks. Now they are using
their money to buy things that other people want. That's not fair!

~~~
thaumasiotes
My mother will every so often remark to me how people seem to think rich
people should be kept from unfairly buying things with their money. It's all
right for them to _have_ money as long as it's never used for any purpose, I
guess.

------
mmasashi
In Cupertino I have seen the minimum wage which is actually $8/hour for the
part time job like a cacher in the store. The the rent average is $2,000 for
one bedroom apartment there. It's totally unfair to low income people. They
sacrifice the time to stay with their family and have to work even weekend for
bills.

------
fasteddie31003
Two words. "Build Up". San Francisco needs high rise apartments.

~~~
manojlds
Not when it is in a high risk zone with respect to earthquakes.

~~~
rtpg
Tokyo's been doing it for a while

~~~
usaar333
I've never thought of Tokyo as a tall city. The city-scape is generally max 6
story buildings. The tallest building in Tokyo is shorter than the tallest in
San Francisco!

~~~
WildUtah
Tokyo achieves more density than San Francisco because the average street
width is about 14 feet. San Francisco's is about 90 feet. That creates a lot
more buildable land per block and less traffic.

The average building height is also about 3 stories instead of just over two
in SF. The majority of housing is single family houses and owner occupied. And
Toyko has much, much less parking.

The result is a comfortable, walkable city at double the density of SF without
high-rises and with less traffic.

The key difference is that SF is planned, laid out, regulated, permitted, and
platted very badly and Tokyo is planned well.

Also, the peninsula cities are required by law to sprawl at low density,
constricting SF's ability to spread medium-density growth that would keep
housing affordable. Any upzoning, even around transit stops, is blocked and
housing supply remains severely limited.

~~~
rtpg
>Also, the peninsula cities are required by law to sprawl at low density

Why is that? To protect people's vacation homes on the beach?

------
waterlesscloud
For a two bedroom apartment. Which implies at least two residents.

~~~
ntietz
Two bedrooms does not imply two residents, and certainly not "at least two."
Perhaps the title could be improved (by stating "to afford a two-bedroom
apartment").

One cool thing about putting it in $/hour like this is that we can easily say
what two people would have to make to afford the same apartment. They would
each need to make about $16/hour. It's feasible, but there are a lot of
careers that don't pay that or that would cut it close.

~~~
smm2000
The only reason to live in San Francisco on minimum wage is if you want to
break into some line of work that only exist in SF and pays minimum wage for
entry level position with significant increase expected in near future. In
this case you can live 2 person per room and consider it extension of college
experience. Really nothing bad about it and minimum wage can pay for it.

Otherwise you are insane to continue living in one of the most expensive
cities on minimum wage. Complaining about it is like complaining that minimum
wage does not pay for black caviar.

~~~
cdcarter
What's your plan when all the minimum wage workers leave SF, because nobody in
their right mind should live there for minimum wage? Who will clean your
office building's bathrooms? Who will wash dishes at the restaurants? Seems to
get those workers back...you'll have to pay more?

~~~
klipt
Presumably the free market will find a wage for which those workers will
either live in SF, or be happy to commute into SF.

------
goombastic
Rent seekers are sucking every last spendable dollar out of people. This
situation is the same in almost every large IT hub. I wonder what stops
companies from allowing distributed working environments and just bypass these
guys altogether. I'd rather pay for a couple of days hotel charges for
face2face time than pay these extortionate rents.

It's time to re-evaluate our work style.

~~~
toomuchtodo
> I wonder what stops companies from allowing distributed working environments
> and just bypass these guys altogether.

Poor management.

------
jw2013
monthly_wage_to_break_even_by_article = $37.62 * work_hours_per_day *
weekdays_per_week * weeks_per_month = $37.62 * 9 * 5 * (52 / 12) = $7335.9.
Let assume the tax is 35% of wage. monthly_rent_by_article = $7335.9 * (1 -
35%) = $4768.335

Wow... that is prohibiting. So you have to earn $7335.9 * 12 / 2 = $88030.8 /
2 = $44015.4 a year to break even if you are sharing a 2br apartment... Are
rent price in some less urban area of SF much cheaper (say 20 minutes drive
from Pacific Heights)?

Could a solution to rising rent price be some brave enough founders migrating
tech startups to a new growing area, say rtp? Just like what Eventbrite did
when hot startups were all in valley but Eventbrtie chose SF at then.

~~~
mattdeboard
Pro tip. You can ballpark hourly wage to an annual income by multiplying by
2,000 (or doubling then multiplying by 1000).

So $37.62/hr works out roughly to about 75k/year, pre-tax. Not exact, just a
rule of thumb. Works out to within a few % usually.

~~~
thaumasiotes
It's a fairly precise "rule of thumb", on the theory that you work 40 hours a
week, 50 weeks a year. Parent comment inflates the salary by assuming 45 hours
a week 52 weeks a year.

------
nickonline
What's FMR?

"Housing wage for two bedroom FMR"

Also what does this all mean? What percentage of their income is this
representing to afford this house?

The article was surprisingly short of this information even though it was 4
pages long.

~~~
jacobolus
The linked PDF has a detailed explanation of their definitions in the appendix
at the back:
[http://nlihc.org/sites/default/files/oor/OOR2014.pdf](http://nlihc.org/sites/default/files/oor/OOR2014.pdf)

The number for “fair market rent” in each market is provided by the US Dept of
Housing and Urban Development, and:

> _Out of Reach is consistent with federal housing policy in the assumption
> that no more than 30% of a household’s gross income should be consumed by
> gross housing costs. Spending more than 30% of income on housing is
> considered “unaffordable.”_

~~~
sliverstorm
Which, in this tax bracket, corresponds to roughly 40% of net income

------
64mb
Silicon Valley seems cheap compared to London

~~~
rdl
London's affordability problems seem primarily due to rich people from non-UK
buying property there (due to stability and ~zero property tax, tiny fixed
council tax) to park assets, potentially of dubious origin. They often are
left vacant.

That's fairly distinct from SF's problem (lots of people wanting to live
there, but artificially constrained supply, both construction limits and rent
control)

~~~
martinald
Aryuably so but the equivalent of entire San Francisco has moved/is moving
into London in a decade. It's a very rapidly growing city.

While I'm sure a ridiculous proportion of the v high wealth areas are laying
vacant, in areas like Hackney (which are the fastest growing) I very much
doubt that is the case. These flats don't make up much of the London housing
stock, %age wise.

------
aaron695
Two bed rooms for one person down town in a major city else it's an outrage.

WTF is wrong with western society.

Most of the world lives multiple people to a room.

------
emeidi
I find the article lacking the most important piece of information: Is this
calculation based on a 4, 20, 40 or 60 hour work week?

------
hydralist
honestly if you cant afford it, get the fuck on the bart and live farther out.
coming from a city with no subway, everyone here should be thankful for the
bart and how far it reaches.

its a tiny 7x7 grid, this isn't some shelter, you pay to stay. take it as
motivation to make more money

------
D9u
Hawaii resident here...

In 1996 I was making $27.95 per hour.

I'm not going to say what I earn now, but it's not that great.

------
grecy
> _2014, the NLIHC pegged the average two-bedroom rent in Santa Clara County
> at $1,649_

$1,649 / 4 = $413/wk

$413 / 40 = $10.30/hr of your income going to rent.

So they're saying you need to make $31.71, which means they're saying you
spend $20/hr of your income on things other than rent. Absurd does not cover
it.

Obviously I'm not accounting for tax, but I'm also not counting that a two
bedroom apartment means two people paying rent. If you only have one person,
then rent a one bedroom apartment. It's 2014, not 1964.

~~~
gamblor956
Tax is pretty important--even at the 15% bracket it's still $3000 a year, not
including FICA withholding or state (or for the Bay Area, local) taxes which
are easily another $1-2000 more. For someone making $100k a year, that's not
much. For someone making $20,000 a year (rounded up) it's a big bite and it
definitely changes the affordability calculation.

~~~
encoderer
"For someone making $100k a year, that's not much. For someone making $20,000
a year (rounded up) it's a big bite and it definitely changes the
affordability calculation."

Taxes don't work like that of course. The $100k a year person is paying a
higher percentage than the low income person. That $20k earner you mention
will probably have a very low nominal tax rate after calculating down to their
AGI.

