
San Fran is so expensive, some tech companies can't convince employees to move - moonka
http://www.cnbc.com/2017/04/06/san-francisco-cost-of-living-pricing-out-tech-companies-workers.html
======
drawkbox
Costs indicate it is full. Going there is like going to Disneyland when it is
over occupancy, too expensive and not enough efficiency at that scale to have
a good time. The housing/rental market of SF is screaming "get out", unless of
course if you own real estate property.

All SF tech companies promote how with technology you can be anywhere, but
apparently there is a single point of failure on physical work locations, or
on the flip a nice real estate funnel for above market rates. SF is part tech
play part real estate, the smartest investors are investing and collecting the
rents of those investments and salaries.

~~~
kevinburke
> Costs indicate it is full

The city of SF is half as dense as Brooklyn and there are a lot of empty lots
here. There is a lot more room for development. The problem is that the
current political situation makes it easy for people to block new housing.

As an example - there is a 600-acre empty lot near the Bayshore Caltrain
station. The developer wants to build 4400 units. The city wants to build 0
units and build an office park instead. Which will get built? It's not clear -
the 5 people voting on it will probably be swayed by how many people show up
to the meetings and advocate one position or another. I showed up last
Thursday and one city resident said we should not build housing there because
an earthquake may cause the buildings to fall over.

You have agency in this situation.

I wrote about this a little more here: [https://kev.inburke.com/kevin/sf-
housing-politics/](https://kev.inburke.com/kevin/sf-housing-politics/)

~~~
cwyers
The cost signal is what, not why. From the perspective of a potential
buyer/renter, it doesn't matter if the cause is "density" or "politics."

~~~
kevinburke
"Full" is a really meaningless term. It would be pretty easy for rents to rise
a further 20%.

I am just pointing out that tech workers are generally apathetic about the
housing supply and the local politics, because we can outbid everyone.

At some point the high prices will become a problem for the tech industry as a
whole. It's already a problem for me.

I also want to point out that we have agency in this situation; we can lobby
for SF supervisors and city council members and state senators that will
implement more pro-housing legislation, and we can show up to the meetings
where new housing gets denied and lobby for it.

------
kprybol
Zero incentive to move to SF. The cost of living has reached a point where I'd
end up taking home less disposable income even with a significant increase
over my current base salary and signing bonuses get eaten up by moving
expenses. Barely escaped the housing bubble crash in south Florida a few years
back. No way I'd want to run the risk of experiencing another market
adjustment.

~~~
hermitdev
Around 2005 or 2006, I got a call from a headhunter that wanted to shop me out
in finance in NYC. Told him I wasn't interested, but he persisted and inquired
what it'd take for me to relocate (from Chicago suburbs) and it was simple:
triple my salary. I'm not a city person; I like the outdoors (I prefer real
wilderness, but plentiful forest preserves around Chicago suffice). I figure
3x was a reasonable figure to do one of two things: either sacrifice my
lifestyle to have a reasonable commute or put up with an absurdly long commute
to have the lifestyle I wanted. That was the last I heard from that recruiter.
I'm not disappointed.

------
duren
I love living in San Francisco. For me, it's a near-perfect city and climate.
Obviously it is expensive but I find it completely worth it.

~~~
kevinburke
Please consider joining YIMBY Action, SFHAC, or other pro-housing groups to
try to make/keep housing less expensive.

[https://kev.inburke.com/kevin/sf-housing-
politics/](https://kev.inburke.com/kevin/sf-housing-politics/)

~~~
sverige
It may be that one of the things about SF that makes it attractive for OP is
that it is expensive. Keeps the riff-raff out. Not that anyone in SF would
ever admit that publicly.

~~~
kevinburke
> It may be that one of the things about SF that makes it attractive for OP is
> that it is expensive. Keeps the riff-raff out. Not that anyone in SF would
> ever admit that publicly.

This is really inaccurate, and especially discouraging on a message board for
"entrepreneurs", who should really be in favor of cheaper housing close to
venture capital, so new businesses are more viable.

[https://kev.inburke.com/kevin/sf-housing-
politics/](https://kev.inburke.com/kevin/sf-housing-politics/)

~~~
cjlars
Is housing in tier 1 cities like SF a giffen good (where demand rises with
price)? Possibly [1]. That said, it wouldn't be unique to SF if true and
wouldn't detract from your other policy points.

[1]
[http://www.businessandeconomics.mq.edu.au/our_departments/Ec...](http://www.businessandeconomics.mq.edu.au/our_departments/Economics/Econ_docs/research_seminars/2008_research_seminars/Onur-
CapitalGainsHousingQuasi-giffenGood.pdf)

~~~
kevinburke
No, it's not. A ton of supply came on the market in 2016 and rents fell 5%.

------
tn135
> some tech companies can't convince employees to move

I have outright blacklisted San Fransisco for potential employers. I would
avoid travelling to SF even for consulting work for limited duration. I am
surprised why tech companies want to setup shop there in first place.

~~~
capkutay
Not going to SF even for a limited time sounds a bit extreme. You can rent a
cheap AirBnB and buy groceries from Safeway if you really want to control your
costs. If its the homeless issue that bothers you, don't stay in SoMa or the
Mission. You can actually get around the city for cheap using MUNI. Uber Pool
and Lyft are also affordable options.

~~~
tn135
I think it is mostly because of traffic, lack of free parking space and bad
roads. I like to drive myself and also have eating habits that require me to
visit specific places only.

------
kgc
If money is the issue, couldn't they convince them with more money?

~~~
bichiliad
I know your comment is probably tongue-in-cheek, but that answer sounds like a
band-aid at best. More seriously, people who aren't used to spending $15 for a
quick lunch and whatever a month on rent aren't going to jump at that
opportunity. I moved to New York from Pittsburgh, and paying 3x for rent
really took a while to get used to, despite an increase in income that
afforded me rent in New York.

~~~
ChuckMcM
I don't know if it is a band-aid, rather it is part of the system.

Specifically you're a company and you're trying to hire people to fill roles.
If they are are required to be at the company you have to pay them enough that
they can live near you.

You set up a series of constraints on hiring:

1) Compensate[0] enough so that someone from outside can enter the local
economy effectively.

2) Compensate enough to convince someone who is already in the local economy
to change from where they work to working for you.

3) Compensate enough that someone working for you won't go work somewhere
else.

Within that system to have to operate a business model where the value you
capture in the market has to cover not only your operating costs (which
include compensation for the employees creating that value) but allows for you
to fund maintenance, depreciation, and some R&D efforts for new product
development.

If you can't find a solution set that works you have to improve the business
model (generally add revenue or cut costs). Not really rocket science of
course.

I keep watching to see if some large presence in SF ends up moving to the east
bay or even Reno as a way of changing the cost parameters. If you look at job
changing as brownian motion you can watch an environment parameters start to
change which results in people (the particles in this case) start changing
where they are likely to be.

Personally I would love some quantitative data collection that helped map out
the weights of the various factors. It would help predict the next 10 years.

[0] Compensation is also a complex thing, more than just dollars per
week/month/year there are things like free food, bus rides, and other services
in addition to environmental plusses and minuses and work demands.

~~~
econner
I think the other complicating piece of compensation is the potential for
equity to be worth something someday. It seems to me people in SF are here to
take a shot on the startup lottery much more so than other places. It's also a
city where you can easily play a few lottery tickets over a few years, which
is not the same elsewhere.

~~~
ChuckMcM
Absolutely. Although in my experience it is a better deal in an already public
company than a startup. Even when the stock is going down if you have an
employee stock purchase plan where you can set aside money that will buy stock
at fixed times for a percentage discount it can be huge win.

------
cddotdotslash
I live in NYC right now, but you couldn't pay me 5 times the salary to move to
SF. NYC knows how to build housing. While it can be expensive in the newest
buildings in the most convenient areas, if you go to the outer boroughs, you
can find plenty of spacious housing for decent costs and a 30 min subway ride
to Midtown. SF needs density, and fast or they could keep driving out the
average citizens. But tech workers probably don't make good firefighters,
police, or trash collectors.

------
ryanmarsh
I was thinking, "no way I'm going to try to move a 5 person single income
family to SF on a raise that doesn't cover the difference in cost of living"

Then I realized, I'm almost 40, no startup wants to hire my geriatric ass.

------
mbleigh
I (barely) tolerate the bay area to get to do the work I love. It's a
permanent game of weighing pros and cons and doesn't feel sustainable long-
term even working at one of the best-compensating companies on the planet.

When 40% of the people in your city want to move away, you know there's a
problem.

------
dcre
I don't know about the other cities in the table, but a studio apartment in
Chicago does not cost $1490 a month. Even downtown you can find a few studios
for around $1200, and in the rest of the city it's more like $1000, maybe even
less. I live in a 2-bedroom for less than $1490.

~~~
jostmey
I lived in Chicago for 8 years. The best decision I ever made was to leave. I
moved to Dallas and Chicago is a dump by comparison. San Francisco may be
expensive but there are better alternatives (San Diego, Austin, Seattle...)

~~~
nunez
Agreed Dallas is amazing especially with a NYC salary

------
aabajian
I almost purchased a condo in East Palo Alto back in 2013 for $300K. That same
1-bedroom is now selling for $680K; biggest missed opportunity of my life.
Here it is on Zillow:

[https://www.zillow.com/homes/for_sale/East-Palo-Alto-
CA/cond...](https://www.zillow.com/homes/for_sale/East-Palo-Alto-
CA/condo_type/15636176_zpid/11228_rid/1-_beds/100000-_price/375-_mp/globalrelevanceex_sort/37.491034,-122.104841,37.444982,-122.166639_rect/13_zm/)

There are _no_ 1 bedrooms from Santa Clara to Burlingame for < $350K, and only
one two-bedroom for less than $500K.

~~~
nunez
$300k list or $300k all in?

Either way, consider that between buying costs, potential upkeep, selling
costs, __property taxes __and capital gains taxes, you probably would not have
made out with very much.

------
smaili
> And while employees complain about San Francisco's high housing costs, the
> city's casual culture means they don't have to spend as much on clothing.

That's...interesting? I always figured this was an industry phenomenon - not a
city one.

------
ld00d
Why is it San Diego never makes these lists? Proximity to LA? Oakland's on
there, and it's a lot closer to SF. Doesn't have a thriving tech scene like
all of the others? Like Miami?

~~~
bsder
Poorer salaries relative to cost of living. San Diego has what we refer to as
the "sunshine tax" so employers feel that they can get away with paying less.

The startup scene is pretty much moribund for the 20-something:

The dynamic people left Qualcomm years ago--it currently resembles DEC or IBM
of old.

Med/biotech is long term--if you're a 20-something who wants to get rich that
isn't a great path. (Side note; biotech salaries seem to suck--it's part of
the reasons why we have so many microbreweries--if you're going to be
underpaid doing microbiology anyway, you might as well brew beer. LOL.)

Culturally San Diego is kind of a suburban wasteland--that means very little
"Social Network Foo Yahooglezonsoft(tm) Buyout Bait". The "cool kids" are
going to want to be in NYC, SF, or Austin with possibilities in LA or Chicago.

~~~
JBlue42
Kind of sad given that it's a pretty nice, clean place with some fun stuff to
do downtown. Maybe it's a lack of vision given that it's a bit more, as
stated, on the conservative, suburban side. The company I work for is helping
redesign some office space just outside of town. The "branding" efforts are
trying to tout it as a tech-friendly building with stereotypical signposts -
yoga, cycling, etc. At the end of the day, it's a suburban office campus, with
little to no good access to public transit, and not near anything walkable
when you want to get outside the buildings.

I don't know if anyone has studied the benefits of this but I have to say it's
so nice to just be able to walk out the door of the office at lunch and wander
around, sit on a bench, etc. Escape for 45 min - 1 hr and be refreshed. I
think that's the appeal in more 'happening' city areas, even if we don't
acknowledge or necessarily know it consciously.

------
Arubis
I love where I live (CO) and, factoring in the cost of living difference
despite higher market salaries, moving to SF would be a significant pay cut--
and I'm far from the only one.

------
gorkemyurt
People have different lifestyles and they should choose where they move
according to that. Lots of people move to SF from smaller cities and expect to
continue living a suburban life.

------
sverige
I got out of Seattle 25 years ago when I saw the writing on the wall. I don't
regret it. SF has always been worse in terms of cost, density, self-
importance, etc.

------
mattbillenstein
SF or The City please -- never call it "San Fran"

~~~
tradersam
The City is way too generic of a name. Bay Area people would only recognize
this as SF--here in O.C., "The City" means Los Angeles. In NY, "The City"
means NYC, so on and so on.

~~~
stan_rogers
...and most of the world would assume the City of London (the Square Mile, as
opposed to Metropolitan London).

~~~
tradersam
...No, the point is the most of the world would assume "The City" to be
whatever major city they are closest to.

