Cost of Living Making Recruitment Difficult? (San Francisco, Alameda: sales, apartments, to rent)

[mr_critical]

Is there any evidence yet that the cost of living (especially the recent rise in home prices) is making corporate hiring more difficult for companies in the Bay Area?

It seems that, especially in the past 2 years, cost of living has far out paced wage growth, no?

Are silicon valley corporations concerned at all about the housing situation? Is there increasing talk of moving some of their operations to lower cost areas? Or do the tech companies not care about cost of living, because they can fill their roles with H1B visa holders who are accustomed to a much more minimal standard of living?

[ccm123]

If it's been occurring, I haven't seen it. Many companies "poach" local talent that are already familiar with the cost of living.
I have only seen that certain roles can be filled by H1B holders, usually engineering roles (software engineer, hardware engineer, etc). You would not typically see Sales and Marketing roles filled by H1B holders.

[Teckeeee]

I had a couple of companies interested in me, when they told me the OTE I said no thanks, not with that COL. One of them was Comcast with an OTE of 80k no way not in the city. I could make that in Denver, and definitely OC.

Most of them though have paid in line with COL.

[roadwarrior101]

While it is true that many people would not move to the Bay Area due to the high COL, the sheer number of folks interested makes recruiting easy. If you think about it, pretty much all of the brand name tech companies are here. In addition to the H1B situation mentioned earlier, you have many people who just graduated college, who are intrigued by the names of Apple, Google, Facebook, etc. Many others have moved out here and get used to all the amenities, nice weather, etc. and thus put up with the lower standard of living. In terms of sheer numbers, I think those that are turned off by the high COL pales in comparison to the number of folks who still want to move here.

What will be interesting is whether this trend continues in the coming years. The high COL has really accelerated to where its even less affordable than before. At the same time, the population growth here has made the traffic/commuting situation horrible and other cities around the country are building up their tech centers. I would bet that we may be nearing a tipping point.

[fashionguy]

The rent for a 1 bedroom apartment is around 1k$ more per month compared to most other places that have high tech jobs. To cover that you need 20k$ more income (assuming tax rate 40%). More companies means more bargaining power. If you are not getting that much more in the beginning, you can get it in a year or two by moving to another company and negotiate the salary. So for people fresh out of school, I don't think it is a huge deal as long as you are good at what you do.

When I graduated, I had two offers which I seriously considered, one in Austin and one in Silicon Valley. Their pay are very similar. However I came here nevertheless. I changed job after 1.5 years and I don't think in Austin I can find something similar and I don't regret my decision coming here.

However, situations could change when I have family, etc. so who knows. One thing also in favor of Bay area is that after living here for a few years, I look at other places, be it Seattle or Austin, they are just so inexpensive. I can move to those places whenever I want to provided there is job opportunity, without worrying about adjusting my lifestyle. The reverse can't be said if I lose a job in Austin and had to come to the Bay area for new employment.

Originally Posted by mr_critical

Is there any evidence yet that the cost of living (especially the recent rise in home prices) is making corporate hiring more difficult for companies in the Bay Area?

It seems that, especially in the past 2 years, cost of living has far out paced wage growth, no?

Are silicon valley corporations concerned at all about the housing situation? Is there increasing talk of moving some of their operations to lower cost areas? Or do the tech companies not care about cost of living, because they can fill their roles with H1B visa holders who are accustomed to a much more minimal standard of living?

[ilkhd2]

For a really good engineers (and I am myself just average, Silicon Valley is too competitive and expensive for me) Bay Area is still a better choice then many other places, financially. If I get a job in in San Francisco and choose to live in Walnut Creek or Alameda I'll still be better off then in say Portland Area or in Midwest; not sure about Seattle though.

[SportyandMisty]

It is easily solved by just making a job offer with more money.

[Azmordean]

I think the relatively young skew of the tech workforce plays in as well - for several reasons.

1. Most younger single folks tend to rent, and tend to be interested in apartments. While apartment rent is crazy high here, at the end of the day, the premium is $1000 - $1500 per month, depending on where you are relocating from. While that's a big variance, in total yearly terms, it's a fairly easy variance to overcome through higher salaries, and indeed in my case (and I'm sure many others) the higher salary more than offset the rent difference.

Buying is a starkly different picture, particularly when one wants anything more than 2br, and in many cases is flat unaffordable for even tech workers. But most younger employees aren't really looking at buying.

2. Younger folks, especially those recently out of college, are generally used to living with roommates. They don't have the cognitive dissonance in making 6 figures and having to live with a bunch of roommates that many slightly older workers (myself included) tend to have. Put another way, they don't have a preconceived notion of what a certain salary "means." To most people in the workforce for a while, 6 figures "means" a nice home that you own, often a detached SFH. So when these folks look at the Bay Area, it looks pretty unattractive. For younger workers though, that perception isn't necessarily there yet.

I suspect as they get older, particularly if they have families, many of the workers will either (1) have "hit the lottery" and/or saved and built up funds sufficient to actually buy here or (2) will filter out of the area to somewhere more on earth in terms of COL, taking any savings and their now strong resumes to a lower cost area. But at the end of the day, any attrition is overcome by the massive number of people wanting to get into tech.

What strikes me as strange is why more companies don't look at having larger remote offices. There's lots of places - nice places - like Denver, Phoenix, Austin, Dallas, Albuquerque, Seattle, Portland, Northern Virginia, Virginia Beach, etc - that are *vastly* cheaper than the Bay Area. I know a lot of people would be willing to take quite a pay cut to relocate to these areas. It seems like a win/win for the companies - employee retention for those who want lower COL, and some savings on salaries for the tech companies. I guess the founders value the "Valley Magic" enough to overlook these business possibilities, but I wonder if that will remain the case in the coming years. Personally, I think all the HQs will remain here, but I would like to see more options for tech workers in terms of location - especially for big company tech workers, where the whole "startup ecosystem" isn't part of their job.

[oldtrader]

For the past few years, there has been a out migration. Meaning more people are moving to other states than are moving from other states into California. This includes such places like the Silicon Valley. Majority of those leaving, are middle class families. The only thing that has kept the number of people up and even show an increase, it the legal and illegal immigration to California, plus the higher birth rate of the immigrants.

What strikes me as strange is why more companies don't look at having larger remote offices. There's lots of places - nice places - like Denver, Phoenix, Austin, Dallas, Albuquerque, Seattle, Portland, Northern Virginia, Virginia Beach, etc - that are *vastly* cheaper than the Bay Area. I know a lot of people would be willing to take quite a pay cut to relocate to these areas. It seems like a win/win for the companies - employee retention for those who want lower COL, and some savings on salaries for the tech companies.

Taking facilities to other states where the COL is much lower is the cause of the out migration from California. People follow the jobs. Good example is Apple which is going to be making computers in the U.S. again. They are not opening the facility in the Silicon Valley, but are putting a billion dollar plus facility in Texas to build them there. They are also setting up two of their newer facilities in Oregon and another in Reno. The cost of living is not the only thing to consider. Consider it averages 40% less cost of doing business in many other places, and much lower tax rates, and that is why factories, etc., are being put in other states. Just think of the advantages to the workers, when the cost of living is so much lower, at the same time the wages are often lower than California, however the buying power of the salaries in the other states is higher due to the cost of living decline, the salary is not enough less to make up for the lower cost of living. The people leaving California, actually have a higher disposable income in the other state.

[otterprods]

SV is still the best place in the world to get a high-tech career rolling, so plenty of college grads or people coming from other fields will still be willing to take jobs there for that reason. But I do believe most really experienced people will either move from company to company for more lucrative jobs or will take their experience and run. I did the latter and was able to bring my bay area job with me, thanks to the modern communications technology. It's the best of both worlds for me, but there are still drawbacks.

But to answer the question more broadly, I do believe that a disproportionally high cost of living compared to what employers can offer would be a significant recruiting factor.