The San Francisco Bay Area pays the highest median tech wage, at $123,497, but comes with higher taxes and housing costs, according to data assembled by Good April, an online tax-planning startup based in SF.
Despite the significant gap in wages and costs between the Bay Area and other tech hubs, it doesn’t look like it’s causing a significant talent exodus yet.
The median wage for tech workers in San Francisco, Marin, and San Mateo counties is nearly 21 percent higher than the second highest, Boston, at $102,230. However, while this wage is good for top-flight engineers, it leads to significantly higher costs for entrepreneurs.
Good April found that salaries for a 10-person team, on average, would total $1,234,970 in San Francisco, but only $932,490 in Austin, Texas. The difference in how much equity a founder has to give up can be substantial. If you were raising capital at a $5 million valuation to run your company for one year, you would have to give up 27 percent equity to hire the hypothetical San Francisco team versus only 20 percent for the Austin team.
The high taxes and pricey housing market in San Francisco can hurt both entrepreneurs and employees. Good April co-founder Mitchell Fox argues that companies have to pay a higher salary in order to offset the higher cost of living in the Bay Area; then those higher salaries lead to a higher willingness to pay for a house or apartment.
The cost of buying a home in San Francisco dwarfs other tech hubs, according to median sale prices from Zillow. San Francisco’s houses went for $805,500, a 50 percent increase over New York’s $535,900, and nearly four times the median sale price in Austin, $206,600. The rental market isn’t any better, with the median rental price for an apartment in San Francisco reaching $3,295 in June.
Fox says he recently met an entrepreneur who’s moving his business to Austin, saying, “The business case to move is just too compelling. Austin has everything we need at a much lower cost.”
Matt Mickiewicz, the co-founder of DeveloperAuction, a startup that enables startups to bid on engineers and designers, says data from the platform shows “nobody is leaving SF because of the high costs so far.” He adds that 87 percent of the developers on the site end up taking jobs with a company that did not make them the highest salary offer.
Map via GoodApril.