Silicon Valley is still the tech capital of the world, but is that gold standard worth the region’s spiraling costs of living? In 2016, SmartAsset.com found that you need a $216,129 annual salary just to rent out a two-bedroom apartment. While tech employees of Fortune 500 companies earn an average of over $100,000 a year, headlines continue to emerge of these six-figure engineers living out of their cars in the company parking lot. Even companies as big as Facebook are encountering these problems, with employees having no choice but to ask CEO Mark Zuckerberg for housing subsidies.
With costs of living reaching record highs in Silicon Valley, it may be time for IT professionals to consider taking their skills to less saturated markets. Luckily, cities like San Diego, Seattle, and Denver are now home to well-established tech companies that are ready to accept this new influx of talent with open arms.
A Look at Tech Salaries, Adjusted for Regional Housing Costs
We’ve compiled a 20-city comparison of average tech salaries side-by-side with average rent…and the results are eye-opening. Take, for instance, a comparison between San Francisco and San Diego. San Francisco’s average tech salary is $20K higher than tech salaries in San Diego, however once adjusted for housing costs each worker’s take-home pay becomes nearly identical. What’s more surprising is that these aren’t even the highest adjusted salaries within our analysis. San Jose, Sacramento, and Baltimore–albeit less cosmopolitan–can provide nearly $10,000 more in adjusted salary.
While disposable income is certainly not the only criteria to finding that ideal job, it is certainly a factor that has to be considered. Many of these alternative tech hubs provide the aesthetic appeal of San Francisco without the expensive costs of living, allowing workers to stay at ease while investing more into their future.
Long-Term Benefits of Working Outside of Silicon Valley
In your job search, it’s worth considering the positive correlation emerging tech markets have on housing prices. Looking at the infographic above, real estate values have significantly increased in almost every up-and-coming tech hub in the United States, with increases reaching as high as 50% in areas like Denver over the past five years. One of the best ways to attain financial security is to purchase a home, and the higher levels of disposable income in these areas prove to be conducive to exactly these types of investments. Furthermore, the housing prices in these markets are poised to rise over the long term as tech companies and startups continue to headquarter in these locations, allowing for an ideal return on investment for the IT professionals who decide to capitalize on this opportunity early in these markets’ development processes.
Staying Ahead of the Curve
While Silicon Valley income levels are high, these long-term benefits are virtually impossible for IT professionals to take advantage of in the over-saturated markets of Northern California. Take the average salary of an app developer in San Francisco. According to Indeed salary data, that individual would earn around $108,000 a year, with $3,270 of that going towards rent each month. Even if that developer managed to save enough money to purchase real estate, the price of the house would be more likely to decrease rather than increase over the long term due to the region’s current housing bubble. In Austin by contrast, app developers earn $87,700 annually but pay a much lower rental cost of $1693 per month. With this housing expense amounting to only 23% of that app developer’s income, this alternative offers tech workers the ability to quickly purchase property at a rate that yields a solid return in the long run.
Silicon Valley is still home to tech giants like Facebook and Google, but that shouldn’t equate to an assumption that its alternatives lack major industry players. Companies like Oracle, Qualcomm, and Bose are already headquartered in these emerging markets, with many larger companies likely to follow suit in the near future. There is no doubt that Northern California is an amazing environment to immerse yourself in, but just be sure not to discount the many long-term benefits the newer tech scenes have to offer.
References
Salary data provided by Indeed.com Cost of Living Adjusted Salaries Report 2016 https://offers.indeed.com/rs/699-SXJ-715/images/Tech%20Salary%20Report%20eBook.pdf
Additional salary data provided by Dice Tech Salary Report 2016 https://marketing.dice.com/pdf/Dice_TechSalarySurvey_2016.pdf
Rental data cited from zumper.com. Numbers based on average cost per month for a one-bedroom apartment.
Bloom, Esther. “Facebook engineers struggling sky-high rents ask Mark Zuckerberg for help” CNBC.com. 3 March 2017 https://www.cnbc.com/2017/03/03/facebook-engineers-struggling-with-rents-ask-mark-zuckerberg-for-help.html
Vekshin, Alison. “San Francisco Tech Firms See Workers Flee From $4,500 Rents” Bloomberg. 5 April 2016 https://www.bloomberg.com/news/articles/2016-04-05/san-francisco-tech-firms-see-workers-flee-from-4-500-rents
Richey, Emily. “Homes.com New Tech City Index 2016” Homes.com. 12 May 2016
https://www.homes.com/blog/2016/05/homes-com-new-tech-city-index-2016/