Why do Salaries in SV Suck So Much? (wages, taxes)

[oldtrader]

Question is: what gives? If these companies are swimming in billions in profits right now, why don't they at least pay enough to match the cost of living? And why don't they compensate you extra for not being able to build your professional reputation?

There is a problem. Companies in the SV are in direct competition with the rest of the nation and world. They pay more, but they cannot afford to pay you and others what would be equal to the same wage adjusted for cost of living. It is better to locate in another party of the country. A often quoted example: A company can leave LA and move to some of the other hot spots in the nation, and reduce the entire companies cost to be in business by 40%. That is why California companies like Apple put their new computer plant in Texas. They cannot afford to build them in the SV because the cost to build them in California would about double the price to the consumer, and they would not be competitive.

If you want to work in the Silicon Valley, then you have to be willing to work for a lower standard of living. If you want the standard of living you desire, then you move to where your salary will give you what you want.

I am a native Californian by 3rd generation on both sides, and I am 85 years old. I raised my children when they were young in Cupertino and Saratoga areas. We now live in the mildest part of Montana. Our home is 3,700 sq. ft. luxury home on 5 acres across the road from the best part of the town. We own it Free and Clear. The same home would cost us at least $3.5M in the SV if you could even find such a place. Frankly I could not afford the mortgage I would have to have on the home to live there.

The cost of living and jobs leaving California is the reason for several years, more California residents have moved to other states, than people moving from other states to California. The high cost of living, and lowered opportunities, along with jobs moving from the state is what has driven the exodus.

If it was not for immigrants from other countries and births, California would be losing population. But due to all the immigration, the population keeps surging up, up, and away. The big gain in population is from immigrants moving to California from south of the border, and from Asia. Hispanics are now the largest ethnic group in California and shortly will be over half the population of California.

[DamienThed]

Originally Posted by buenos

Way too many H1Bs come here from Asia through their family members or family friends hiring them. If anyone is hired for other reasons than merit, then the workers pool will be underqualified for the jobs they are hired for. It is far more typical for Asians to hire based on nepotism than local Americans. The more nepotism in a group, the less merit and expertise.
I am an immigrant engineer form Europe. We dont hire friends and relatives. Americans dont do it either. Generalizations always have a common experience basis. Spend a few years in the real world, and everyone can see it, unless wearing rose tinted glasses.

Yes, hiring based on nepotism is bad. I agree with you. I'm an immigrant from China, and 90% of my Chinese friends hold PhD and invited to the top companies in the bay area to work on their specialty areas. I've never heard of anyone among us recommended incompetent candidates, just because he/she is a family member or friend, into our companies. And most of the unemployed spouses, which hold H4 visa, are not allowed to work. I didn't realize too much nepotism out there actually and maybe you are talking about a different group, or my sample size was small so my observation was biased.

[Wintermomma]

Originally Posted by oldtrader

There is a problem. Companies in the SV are in direct competition with the rest of the nation and world. They pay more, but they cannot afford to pay you and others what would be equal to the same wage adjusted for cost of living. <<snipped>>
If you want to work in the Silicon Valley, then you have to be willing to work for a lower standard of living. If you want the standard of living you desire, then you move to where your salary will give you what you want.

I am finding this to be true. I keep asking Dh how they can be so heartless at his company, in terms of increases based upon formulas and not people, and he says they are public and have to answer to stockholders. It doesn't matter that the company is doing well.

My advice is negotiate the very most you can upon hire and don't live up to that level b/c each year as COL goes up and your income doesn't you are effectively making less money. Don't always expect fat raises each year. Maybe you can get options which well eventually pay off, maybe you can company-hop to keep increasing, but maybe not.

[SageCats]

Originally Posted by mysticaltyger

Bottom line: People are willing to live here on salaries that don't make up for the higher cost of living. If people demand salaries that are deemed too high by these companies, they simply import HB-1 visa holders or move the jobs somewhere else.

EXACTLY. I see this where I work and in the town where I live. An overwhelming number of H1-Bers who work these jobs for a lesser salary than an American worker.
What they pay in the SV isn't commensurate with the cost of living in this area, that's for sure. If it was, we'd all be making over $300K / year

[SageCats]

Originally Posted by Wintermomma

I am finding this to be true. I keep asking Dh how they can be so heartless at his company, in terms of increases based upon formulas and not people, and he says they are public and have to answer to stockholders. It doesn't matter that the company is doing well.

My advice is negotiate the very most you can upon hire and don't live up to that level b/c each year as COL goes up and your income doesn't you are effectively making less money. Don't always expect fat raises each year. Maybe you can get options which well eventually pay off, maybe you can company-hop to keep increasing, but maybe not.

This year at my company (one of the high tech companies in the SV), none of us got our annual bonus.
Never mind that the CEO and people at the top make millions and the company is doing pretty well.

[SageCats]

Originally Posted by oldtrader

If it was not for immigrants from other countries and births, California would be losing population. But due to all the immigration, the population keeps surging up, up, and away. The big gain in population is from immigrants moving to California from south of the border, and from Asia. Hispanics are now the largest ethnic group in California and shortly will be over half the population of California.

Where I live, the population must be close to 85% Indian. The majority of the population are H1-B visa holders working in high tech. (Put it this way, right after I moved here, I was called for Jury Duty.. this means that there aren't many citizens here.)
The population boomed and rent prices soared. In my company, H1-B workers make less than their American counterparts. So, how do they afford it? I noticed that in some of the 2 bedroom 2 bathroom units in my apartment complex, there are 5 or 6+ people living there. This would also explain why the parking spots are always taken even though there's supposed to be an equal ratio of apartments to parking spots. When someone moves out after rent is increased, someone else moves in willing to pay that price - especially when it's split among many people.

[tehsquishmeister]

Originally Posted by SkySofiaLila

This year at my company (one of the high tech companies in the SV), none of us got our annual bonus.
Never mind that the CEO and people at the top make millions and the company is doing pretty well.

This happened at a previous company of mine as well. The company did well, execs got their bonuses but the employees doing the actual work got nothing.

I started leaving on Fridays after lunch. In essence, I gave myself a 10% raise. Thank me very much.

[BicoastalAnn]

Originally Posted by tehsquishmeister

This happened at a previous company of mine as well. The company did well, execs got their bonuses but the employees doing the actual work got nothing.

I started leaving on Fridays after lunch. In essence, I gave myself a 10% raise. Thank me very much.

This comment made me LOL but that is rough. wtf. Isn't the whole point of working at a tech company the non-salary perks (like bonus, stock, whatever)? What was the rationale they gave?

[SageCats]

Originally Posted by tehsquishmeister

This happened at a previous company of mine as well. The company did well, execs got their bonuses but the employees doing the actual work got nothing.

I started leaving on Fridays after lunch. In essence, I gave myself a 10% raise. Thank me very much.

Originally Posted by BicoastalAnn

This comment made me LOL but that is rough. wtf. Isn't the whole point of working at a tech company the non-salary perks (like bonus, stock, whatever)? What was the rationale they gave?

That comment made me lol as well
But we don't get all of those fancy perks that places like Google and Facebook give their employees.
Our coffee aint even free

[MediocreButArrogant]

Originally Posted by SkySofiaLila

That comment made me lol as well
But we don't get all of those fancy perks that places like Google and Facebook give their employees.
Our coffee aint even free

That's the behavior of a company that doesn't value its employees. Why don't you quit?

There is enough competition for good employees here that people can get paid what they're worth. If no one will pay you what you think you're worth, then you aren't worth as much as you think you are.

Not every job is hard (most aren't) and not every position requires filling with an elite performer (most don't). It would be irresponsible to pay $300k for a job that an average performer could perform. It's a disservice to the shareholders, and a disservice to the other employees, especially the high performers. That's wasted expense that could be used for better purposes, or boost the bottom line.