Silicon Valley: Where highly paid ($100-$200k+) engineers sleep in cars to save money on obscenely expensive rent.
Honestly, recently moving to Seattle has been refreshing to me in this regard. I find Seattle tech industry pay no less than SF, plus no state income tax, and for the same rent as SF you can practically live like a king/queen here.
I wonder how long the housing situation in SV can keep up until everything collapses under its own weight?
Don't extrapolate based on one sensationalistic article.
Most engineers employed at Google (or any other company) in Silicon Valley have enough to rent or even buy houses. Actually, a lot of other workers who make one half (or even less) that salary manage as well.
People who choose to live in cars or on campus have something else going on with them. It's not just about money, most of us will always choose to have their own place, no matter how small, than living this kind of life.
I don't doubt what the Quora discussion describes happens, I'm just claiming these are very few and far between exceptions.
As someone who lives and works in the bay area, you cannot buy a house with a software engineer's salary, not unless it is a very poor neighborhood, in which case you're contributing to gentrification, or you want to drive 2 hours from Pleasanton. I say that as a software engineer home owner who bought a house before the prices sky rocketed again in 2011. I wouldn't be able to afford my own house right now.
If you are an entry level software engineer, living alone, you could buy and afford a condo. I agree house prices are out of reach now unless you're a sr. software engineer. All I can say is rent a room for as long as you can (~800 a month or less) for now, and save every penny you can. Once the next housing market crash takes place you will have a downpayment ready. It worked for me.
The median home value in Pleasanton is 850k. 100k more than San Jose. If you are trying to save money, that's probably not the place to do it. Really you are looking at Antioch/Concord up 680 or over the Altamont on 580 to Tracy if you want to get significantly more affordable. Both are heinous commutes though.
As a kid, I had a parent that worked at the Almaden IBM campus. The commute from the Livermore/Pleasanton area was about 40-50 minutes going over 84. Crazy how much worse traffic is now, I can't imagine making that drive daily now. They've been working on the the 237/Mission exits on 680 for nearly 20 years and it has only gotten worse.
Yeah, I also don't understand how buying a house within one's own means is gentrification. Is the definition of "afford" different between your "very poor" neighbors and you, the "software engineer"?
OK, I guess maybe the original point was that there are super-cheap and super-expensive houses, and software engineers could afford something in between. They have to choose a poor neighborhood where they are wealthier, or a reasonably-priced but distant suburb.
I've been living in the Bay Area since the dotcom days and they've been asking the same question since I've been around. Until people in tech stop making money, I doubt SV will collapse, but it will go through boom and bust cycles. But the booms tend to be huge and the busts tend to be not as bad.
I had the opportunity to get a job in Seattle at Amazon about 10 years ago. I would have taken a paycut, but with the 0% state income tax and with the generous signing bonus it would have more than made up the difference. (I'm pretty sure property taxes are higher though.)
But then I had to contemplate exchanging 300 days of sunshine for 200 days of rain. At the time, I was playing rollerhockey outdoors at 8pm and came to the conclusion that I just couldn't do it because of the weather. And I grew up in Vancouver, BC so the rain didn't bother me as much, but I just got too spoiled by the amazing Bay Area weather. If you're not used to it, the rain in the Pacific Northwest truly is relentless, so it takes getting used to.
Mind you that was during the time when rent prices were high but not as ludicrous like they are now. Even during the dotcom boom there were similar stories of people living in their vans, so it's not really a new story.
But my friend was charged 5100/month for a 2 bedroom at mission bay, which doesn't make sense. If I had to make the same choice now, it would be a lot harder to make and Seattle is definitely compelling if you can get past the 200 days of rain.
I'm curious why the weather argument comes up so often. Aren't we, as "software people", under a roof and in front of a screen most of the time anyways?
Then again, I'm "deep inside" Europe, so I have no idea how bad the weather over there really is.
The weather in the Bay Area is essentially perfect. The scenery is beautiful, and you can see the ocean, the desert, magnificent forests and the mountains all in the same day. It doesn't get too hot, it doesn't get too cold, it rains only for a few months out of the year, and it never gets very humid. Living in the Bay Area makes you spoiled and lazy because it is too comfortable. As the piece [1] by Mary Schmich (and again by Baz Luhrmann) says, "Live in Northern California once, but leave before it makes you soft."
It's strange. I grew up in the Bay Area (Santa Cruz and South San Jose) and am weather-neutral. I've had stints in Sweden, Portland and Arizona (all pretty extreme) and none of the climates really affected my life too much. Most of my friends are the same way. Anecdotal, but maybe the weather effect is more pronounced on transplants who don't take it for granted?
The reason I chose to move back has more to do with the sheer amount of stuff to do. And the good food :)
I wish I had your weather neutrality. I grew up in the bay (Los Gatos, Santa Clara, Tri-Valley) and spent a couple years in Portland, OR. I liked the city a lot and tried to get used to the weather but just couldn't. The rain wasn't the problem, the constant darkness was. I like the rain and loved how green everything was up there, but even when it wasn't raining, it was dark. Came back to CA and will put up with its faults in exchange for the climate and activities.
Even if you are indoors most of the day, the weather outside can make a huge difference on your mood.
It also encourages getting up and taking walks every now and then, which has various benefits (both mental and physical).
I lived in Seattle for six years. The environment is gorgeous. Lots of trails for hiking, ton of greenery... the thing is though, the weather made me not want to go out. And that can be horribly depressing.
Yeah, we're in front of a screen... when we're at work. The Bay Area has a big culture of outdoor sports, though, including for tech workers. Lots of bikers, lots of hikers, lots of lots of plain old hanging out in public parks.
And many of those "indoor" work spaces try as hard as possible to have natural light.
Global warming (maybe?) could be changing this. It's been depressingly hot this year in Seattle. I moved here from the Bay Area (well, Pleasant Hill) to get away from the heat. Ugh.
Rent in central cities is one of the unintuitive outcomes of the modern economy. SV might be an extreme example, but it isn't the only one. The world is far more globalized. People work with clients, customers, and coworkers mostly through the internet, even if they are in the same building or city.
Google's a good example. They have offices all over. They have clients everywhere.
Common sense would dictate that employees would be easier to hire for the same cost elsewhere where that salary affords a better lifestyle. With all due respect to SF (last time I visited I was 12), there are lots of places where a $140k salary will get you the best schools for kids, entertainment for the adults and palatial digs. It is quite literally like doubling you salary to take it someplace else, even within the US.
I wonder what the reasons are. Obviously clusters matter. There's the tautology that everyone wants what everyone wants. Being someplace vibrant and affluent is valuable to the resident & employees (or resident-employees). I also think that nominal salaries are important to people's decision making. A 25% pay cut from relocation resulting in a 10% cut in after tax salary but a real measurable and provable increase in purchasing power still feels like a 25% pay cut.
The cities where a $140k salary exist in the same quantity as in the bay area are roughly equivalent with respect to the cost to live there. A job in SF that pays $140k might fetch $60-$90k in most of the rest of the US, with higher salaries being more rare. So while there are lots of places where $140k is practically king-like, the number of positions with that salary are both hotly competed for and far fewer in number.
This is the paradox. You can phrase it as a question: Why don't blubsoft or blub.ly open offices in city X and continue to pay the same salaries there. Relocated employees would be richer and blub.ly should have an easier time hiring.
Obvious'y this doesn't happen even though a simple common sense "story" suggests that it should. Hence unintuitive.
I'm not saying that individuals don't have their reasons for doing what they do, that's not the interesting part. It's interesting that we don't see digitization and globalization take the pressure off high rent areas and encourage a migration of firms and employees to lower rent (for equivalent of better quality of life) areas at a systemic level.
High rents is an effect of bigger corporate dynamics, not the cause.
Corporations generally locate the highest-priority projects in the head office to minimize communication costs. The executives are at the head offices, the largest concentration of staff is there, and you can pick the top employees from a larger pool. That means that if you're an ambitious young professional, you go to where the highest-priority projects are, because they will benefit your career the most in the future. This further reinforces the need to locate high-priority projects at headquarters.
I saw this play out at Google. The most ambitious, career-oriented young employees would move from NYC, Pittsburgh, or Boston to work in Mountain View, where they could have their pick of projects. Meanwhile, more family-oriented employees would move from Mountain View to Pittsburgh, Michigan, etc. to enjoy a higher standard of living and be closer to family. Who gets promoted with a big raise? The folks who work on the highest-priority projects. What does that do to area rents? It makes them rise in line with the highest-paid employees in that area.
You might ask why corporations don't move their whole headquarters to another location. Some do - Wells Fargo moved most of its operations from San Francisco to Minneapolis in search of cheaper labor. However, the same dynamic between employees within a company also plays out between companies within an industry. Google can't move its headquarters and operations because most of the interesting developments in the tech industry - startups to buy, startups to fund, new technologies to keep up with, key employees to hire - are in the Bay Area, and moving to say, Detroit means that they'll miss out on the cross-pollination of ideas that keeps them relevant in their industry. Note that this is not a serious issue for Wells Fargo, whose entire brand is based on "We're stolid and conservative, and we may not be in the forefront of financial innovation, but we will keep your money safe."
This dynamic played out a hundred years ago too - Detroit became Motown, USA because everyone involved in automobile manufacture was incentivized to move there, Hollywood became Hollywood because everyone in the film industry was incentivized to move there, etc. When those industries were vital and growing, they faced the same pressure on rents and economics as the Bay Area does today.
Doesn't Google do that? I'm pretty sure salaries at their Pittsburgh office are pretty much on par with their NYC office despite Pittsburgh being half as expensive (or less).
Not sure why Google insists on staying in such an expensive place, rather than moving. Some possibilities:
1. There are synergies to having much of the staff working together at the same place. And the only place an employer the size of Google can find enough staff who are up to Google standards is the Valley.
2. Once you get to the Valley, anywhere else is cottage country. Google is by necessity somewhat geographically distributed, but its senior management is completely centralized. Last I checked, all the SVPs were in Mountain View. It's easy to mistake the best place for the only place.
3. Google started in the Valley and grew up there. Moving their main operation anywhere else would be very disruptive. Getting employees to move is hard at the best of times; getting highly sought-after engineers to move away from the center of their profession, where they have many many options should they decide to stay, would be brutal.
> Why don't blubsoft or blub.ly open offices in city X and continue to pay the same salaries there.
Because they could open offices in city X and pay smaller salaries in absolute value, though equivalent relative to living costs, and get the same hires for less money. I don't see the paradox here; you could phrase it as a question: why should blubsoft or blub.ly pay more for something, when they can pay less and still get it.
They don't have to be in silicon valley. The only reason for Google to be anywhere is employees and to a lesser extent investors, lawyers and other service providers of the cluster. It's mostly employees though.
Why are they there, paying high salaries if they could be getting the same for less elsewhere?
Or, what might they be getting (or think they're getting) that they wouldn't (think that they would) be able to get elsewhere?
Maybe they're concerned about lead times for hiring new people (stealing someone from a competitor vs all new employees needing to move first)?
Supposedly one of the reasons that Silicon Valley did so well, is that California doesn't allow non-compete agreements. Perhaps there's actually some benefit to exchanging employees with your competitors more often? (But then, what about the no-poaching agreements that companies were getting sued over recently?)
Maybe they're concerned that being the only shop in town would make managers more reluctant to fire people who need it (does corporate location preference correlate to corporate culture regarding expected length of service)?
Maybe having offices in less expensive locations hurts the company image (for customers, or potential employees, or both) enough that the extra salary cost is worth it?
There's a benefit to everyone in the industry for exchanging employees with your competitors often, but there's a cost to your company. Hence, geographical areas where that happens do well overall, but the individual companies involved hate it and want it to stop. It's very much a prisoner's dilemma situation.
Similarly, technological developments that benefit everyone in the industry are good for the industry as a whole, but bad for each individual firm in the industry, which now face increased competition. That's why big companies often try to spread FUD around "open" alternatives to their core business.
They could if they were willing to leave the CS chauvinism behind. There are plenty of non-CS engineers, mathematicians, scientists and even non-STEM liberal arts majors who are not just capable, but competent or very competent computer programmers and software developers.
Granted the concentration is likely to be higher in the Valley, but it's not that much higher. Then there is the argument that "if you build it, they will come."
Obviously there are examples of companies and individuals doing all sorts of things. But there is still a huge spread in cost of living between places. The reasons for that spread existing are diminishing. Meanwhile, the spread is growing, not shrinking.
There are companies that hire in the top-20 (as opposed to top-5) markets. They usually have their own idiosyncrasies (like taking 3 weeks to schedule an onsite interview), but they are out there.
I'm on the job hunt now and hiring is still a huge mess as it ever was.
Because proximity to other people still matters a lot, especially in terms of "cross-pollination", in the sense of more random interactions than you might get if you just hired a few people to work remotely on a specific project. You could even call it an 'ecosystem' despite the word's abuse.
It's been a while since I read it, but I didn't think it was all that revolutionary... it just mostly made sense.
> Silicon Valley: Where highly paid ($100-$200k+) engineers sleep in cars to save money on obscenely expensive rent.
I've known quite a few people who have lived exactly like this for a while. You know what? None are from Silicon Valley and are all from different walks of life. You have your people who ended up in difficult situations, people strapped for cash, people who were ultra minimalist, people who were looking for adventure, people who didn't want to be tied down, people looking to save up money for a couple years. None had Google's perks/free meals. All different motivations. Some by choice, some not.
To generalize that Silicon Valley is somehow responsible from one article about one subset of people is disingenuous.
Well first you'd need NY to collapse to prove that dynamic work locations collapse under their own weight. Young people (fresh out of school) really have few needs and so will put up with a lot for the experience of working with great people for great companies. It doesn't hurt that the weather is also fantastic (weather crushes NY but culturally NY has so much more to offer). It's only when they hit their 30's and (if they do) start thinking about children that broader quality of life issues come into play. Those that are very successful can afford to stay there. Those that aren't will move on to cheaper metros or somewhere else. Many that are successful will still realize there are other options (the realization that Tahoe never is closer than a 6 hour commute unless you leave at 4am or 10pm) and move away (making way for the next generation).
There's a reason those trains to CT are so full of people every night.
It's weird. There has always been some water-cooler talk among the engineers about how it would be possible to live on campus. But these journalists actually found people who've done it. And they're engineers; most of our speculation focused on interns.
BusinessInsider seems to be taking the BuzzFeed "news" sourcing approach. They are certainly good at getting their links onto aggregation services. It's a very annoying combination.
I don't disagree, but the upside is that it eventually finds its way to HN and generates interesting discussion. This saves me from having to visit quora, businessinsider or yahoo news.
Back in '98 was my first visit to the valley, and I had dinner with a tech writer from Netscape. She told me about an engineer that had just been fired after they'd found he lived in the office. I think you'll every now and again find the odd case at many larger companies; especially companies that offers amenities that makes it easy, and campuses large enough that it becomes easy to avoid standing out too much.
It's coming to Seattle too. I moved away from SEA 3 years ago and the rent on my old apartment has gone up by 50%. If you want to stick around, consider buying.
Anecdotally I've been hearing more Valley-style anti-tech sentiment coming out of Seattle lately. If not careful Seattle can just as easily turn into the same us vs. them, haves vs. have-nots story of San Francisco.
It'll just be the MS Connector instead of the Google Bus instead.
Isn't a huge part of the housing issue in SV the zoning? I recall reading about how large swathes of land have been zoned away from residential, largely because of the influence of the wealthy who live in and near the area. Never underestimate the politics!
And that is the paradox. In order to make cheap housing you'd have to destroy all the open space and low density zoning that made all the tech and VC people want to live here in the first place. Besides the current economy isn't permanent at all. The tech bubble will bust and this will all go back to normal in a few years. People who are living here for the long haul, and not just for the gold rush don't want it to get overbuilt and spoiled. The funny thing about the bay area is that people are not really impressed by the economic benefits of further development because collectively people have an enormous amount of money in the wealthier bay area cities and no amount of money being waved in their faces will make them give up their quality of life.
I don't think it's really true. Do you think all those parking lots and single story buildings in downtown Mountain View are the attraction for tech workers and entrepreneurs? I think replacing all that junk on the Caltrain corridor with 3 or 5 story apartments and townhouses would solve the housing problem without consuming any more open space.
It would solve the problem for tech workers and entrepreneurs. It would piss off a number of retirees who have been in Mountain View since it was fruit orchards and like it because it's not SF. The latter group currently holds a lock on the city council.
Well, I think you're oversimplifying quite a bit. There are more options than {develop nothing, develop EVERYTHING}. Through politics, the former options has been selected. But perhaps a better options lies somewhere in-between.
You should have seen it in 2002. The freeways were nice and empty and rents were cheap. Even as recent as early 2009 office rents were much much lower than they are now.
That is a silly generalization, I'm not going to generalize about people in Seattle who live on boats even though I know a couple of folks who do that.
There is a push afoot to get Google (and then by reaction everyone) to treat the perks they give as taxable income. I expect it is being "encouraged" by companies that don't want to pay for that kind of thing as a way of killing it. Unfortunately if they are successful I expect it to backfire, Google to continue to do it and to cover the tax aspects and the other companies being forced to follow suit.
No matter how high the income, you will find an obsessively frugal person given large enough group. Whether he/she will end up sleeping in car is more function of local security, available free facilities (toilette, shower) around and how much is his/her job image dependent.
>I wonder how long the housing situation in SV can keep up until everything collapses under its own weight?
it has already couple times at least during my time here - since 2000 - only to emerge with higher rents and higher real estate prices. Buying is the best solution for your own housing - it moves your onto the other side of the wave where you just enjoy the ride (and yes, i've been under water, didn't care as i bought to live in it, not to speculate)
From the household perspective, if the partner also works in tech, their disposable income for a house would be about (200k to 400K). I could imagine that would rent you a nice house/flat for that money.
Is the problem mentioned in the post, typically, relevant to singles?
Honestly, recently moving to Seattle has been refreshing to me in this regard. I find Seattle tech industry pay no less than SF, plus no state income tax, and for the same rent as SF you can practically live like a king/queen here.
I wonder how long the housing situation in SV can keep up until everything collapses under its own weight?