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First world problems. Analyzed.
May 27, 2013 11:30 AM   Subscribe

The high salaries of the Silicon Valley are not enough to send your children to college, buy a house, and retire when looked at alongside living expenses. You need to play the equity game.

Overview of recent rental prices in San Francisco

"The $510,000 median for the nine-county Bay Area represents a jump of 30.8 percent from a year ago"
posted by straight_razor (212 comments total) 30 users marked this as a favorite

 
*immediately stops looking at job openings in SF*
posted by Doleful Creature at 11:35 AM on May 27, 2013 [8 favorites]


To do our analysis we had to make a number of assumptions about a young, professional Silicon Valley couple[1]. We started with 30 year olds. We assumed they earn a generous $250,000 per year

Fffffffffuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuck this noise
posted by samofidelis at 11:36 AM on May 27, 2013 [27 favorites]


250k per year for a couple in Silicon Valley isn't completely unrealistic though, is it?
posted by montag2k at 11:40 AM on May 27, 2013 [2 favorites]


Unfortunately, families that currently earn $250,000 per year do not qualify for financial aid at most universities.)

HAHAHAHAHAHHAHAHAHAHAHAHA no seriously though go away.

Maybe it isn't unrealistic? Idunno? But there seems to be a lot of homeless people in SF and maybe worrying about people making this kind of loot just isn't on my radar.
posted by samofidelis at 11:42 AM on May 27, 2013 [4 favorites]


At 250k a year how will they ever afford to buy Google Glass for their Labradoodles?!
posted by cloeburner at 11:43 AM on May 27, 2013 [71 favorites]


and every one of them a little louis or marie antionette. they won't even understand why the crowd wants their heads.
posted by ennui.bz at 11:44 AM on May 27, 2013 [9 favorites]


Oh no the NYT Sunday Magazine has managed to get onto the Internet!

There's a couple of crazy assumptions:

1. That putting equity into a house in one of the most expensive real estate markets in the world is a necessity. I'd much rather lease, invest that $200k down payment in nearly anything.

2. That assuming you'd pay total college costs for a "good" university and leave the children with no debt. This fallacy is probably what is, in part, causing the exorbitant higher education costs.

3. That total expenses are around $60k a year, and when you take out the gardener and house keeper line items you save yourself instantly 10% of your yearly expenses. This isn't even touching on the other expenses of vacations and cars which could probably be cut significantly if the author is assuming mid-level BMW and Four Seasons Maui over Christmas.

What this basically comes down to is, Silicon Valley isn't as lucrative and cash heavy as their London/NYC high finance counterparts unless you hit it big in an IPO payday.

Oh and if you have want to maintain a very nice lifestyle on $250k, it is also hard to buy a $1mil while saving up for USC all expenses paid for two kids.

There's a lot of "duh" here if you pick it apart.
posted by geoff. at 11:47 AM on May 27, 2013 [14 favorites]


When I got to the part about them paying 45% in state and Federal taxes I thought "These people need to get a better accountant."

Which seemed a touch ironic considering that's what the author does.

Even more ironic, while wandering their site I was served an ad for "automated tax-loss harvesting" aka "lowering your taxes through creative accounting".
posted by fiercekitten at 11:47 AM on May 27, 2013 [1 favorite]


The first link is a scare-piece written by a financial advisor, who is presumably using said scare-piece to drum up business. A cursory online search yields many homes in the Silicon Valley area that are perfectly serviceable for a family of 4 and cost $700,000 or less. (I admit I don't know the area that well, but I did quick search for Mountain View. Feel free to correct me if I'm off-base.)

Also, what geoff said.
posted by Guernsey Halleck at 11:49 AM on May 27, 2013 [1 favorite]


They buy a house when they turn 30 for $1 million financed with a $200,000 down payment

Aaaaand that's where I stopped reading, because if I want to read a fantasy about what my life could have been like, I always have Tolkein.
posted by Cool Papa Bell at 11:51 AM on May 27, 2013 [64 favorites]


Over 20 years you should have at least five shots at a big outcome. Managed well, one or more of your equity stakes should be able to address the shortfall required to retire comfortably.

I would steer clear of anyone whose investment advice is in essence "Win the lottery."
posted by Horace Rumpole at 11:52 AM on May 27, 2013 [35 favorites]


250k per year for a couple in Silicon Valley isn't completely unrealistic though, is it?

No it's not. The article is pointing out that that's not insane.

45% federal income tax, very real. Doesn't matter who your accountant is. Look up Alternative Minimum Tax.

For me, if you pull the numbers away and look at it as percentages it's not that far off from living ratios in other places. If you made 250k a year in a less expensive place, you'd be doing amazing.

Maybe give Seattle a shot.
posted by straight_razor at 11:59 AM on May 27, 2013 [8 favorites]


If you work in silicon valley, how many opportunities are there to have an equity stake in a high tech company? I mean is this a common thing for the average college grad who gets hired to write code? Or is that advice good for like 100 people. I am trying to figure out what that high tech economy looks like. Is it highly layered, with the average coder working their ass off making a decent, but not extraordinary income, with the real riches reserved for a vastly smaller group who owns the company and has venture capital behind them?
posted by Seymour Zamboni at 12:00 PM on May 27, 2013 [1 favorite]


The Wealthfront article is advice for a very particular audience, and I wish they'd characterized it as such. It's basically a group of people for whom Geoff's crazy assumptions aren't crazy. Young professionals in tech, especially couples who both work in the industry, who wish to have all the "normal" trappings of nice-but-not-actually-palatial suburban living in Mountain View / Los Altos / Sunnyvale, and send their kids to Stanford or whatever. Yeah, for those folks (and I know some of them), the numbers can easily look like that.

But of course that's not most people, and not even most people who work in tech in Silicon Valley. I rent in a (relatively) cheap area of San Francisco, we have only one tech-world income, and I'm figuring my kids will be going to public colleges. That makes the math very different, although the rent part is still pretty daunting.
posted by feckless at 12:01 PM on May 27, 2013 [6 favorites]


Guernsey, you’re absolutely right. Just switching to the east side of Lake Merritt in Oakland can bring housing prices down substantially, still within 30 minutes public transit commuting distance of SF’s core. I second the scare-piece nature of the first link, aimed at double income couples currently enjoying tech PM jobs and life in San Francisco’s Brunch Zone but potentially spooked by the cost of children.
posted by migurski at 12:02 PM on May 27, 2013 [3 favorites]


If you work in silicon valley, how many opportunities are there to have an equity stake in a high tech company?

Every single one from a 5 person startup to Google gives equity. Always part of the deal. The sales ploy is the lottery. There's a lot of strategy on how much and when in the life of pre-IPO startup is the best time to maximize the benefits of equity.

The general rule of thumb is the join very early, before their first round of investment. Or to join when it's a rocket ship destined for IPO or acquisition.
posted by straight_razor at 12:03 PM on May 27, 2013


>Is it highly layered, with the average coder working their ass off making a decent, but not extraordinary income, with the real riches reserved for a vastly smaller group who owns the company and has venture capital behind them?

Yes. Only the first 10-20 employees - if they're lucky - will get anything other than a "nice bonus" in the case of an IPO or a buyout. The real trick is to get "founder equity: by playing the game yourself.
posted by pmv at 12:04 PM on May 27, 2013 [1 favorite]


Young professionals in tech, especially couples who both work in the industry, who wish to have all the "normal" trappings of nice-but-not-actually-palatial suburban living in Mountain View / Los Altos / Sunnyvale, and send their kids to Stanford or whatever.

I suggest they find savings in their food budget by eating the cadavers of those who starved earning only $190k a year.
posted by samofidelis at 12:05 PM on May 27, 2013 [17 favorites]


Seymour Zamboni, small equity stakes are extremely common, and arguably a "normal" part of any hiring package for a tech company. Heck, I even had an eensy one for my admin job at a non-tech recruiting company. (That paid for an engagement ring at a time when I had basically no money. I was very pleased.)

The kind of equity stakes that make a difference in this context? Less common. If you're already working in the Bay Area tech world (this is a big if), it's not lottery rare. You can think carefully about where you work and probably count on one or two decent payouts that will help you put a down payment on a house or something.
posted by feckless at 12:05 PM on May 27, 2013


The wealth front advice is for stupid people, because it assumes that the couple will prioritize giving their kids a full ride through college higher than saving for retirement.
posted by jacalata at 12:06 PM on May 27, 2013 [4 favorites]


I've wondered why some high-status-but-low-profile tech executives were telecommuting from homes here in the San Luis Obispo area. Besides the fact that it's a nice place to live and very oddness-tolerant (see Weird Al and the Madonna Inn). When I moved here on a fixed income, I didn't think the cost of living was that much lower than Los Angeles, but for those on the High End, dayum, you can get yourself some bargains... which I hope stays that way (but fear it will not).
posted by oneswellfoop at 12:07 PM on May 27, 2013


It's important to realize that this is news because the rich not being able to get everything they want is a recent phenomenon as compared to the poor not being able to get everything they need.
posted by ishrinkmajeans at 12:07 PM on May 27, 2013 [58 favorites]


I guess what I'm saying is that if this financial document is intended only for a very small audience, then I also have some remarks I would like to target at that same demographic, depending heavily on the twin themes of how they can go fuck themselves & my unbounded optimism about eating their livers as pate.
posted by samofidelis at 12:07 PM on May 27, 2013 [7 favorites]


In a way, I'm grateful everywhere I worked when I was younger pulled the "Oh yeah, we're TOTALLY going to have a stock options package and we're going to tell you all about it at this meeting we're having vaguely in the future sometime", because I learned that options are more or less an excuse to pay you less in exchange for lottery tickets that aren't even as good as actual lottery tickets. I've got friends still chasing the startup gold long after I'm out of that scene convinced THIS time they'll have that meeting and THIS time they'll be the rich ones.
posted by Ghostride The Whip at 12:13 PM on May 27, 2013 [7 favorites]


Yeah this is like the size zero girl everybody knows going "oh Cindy I'm soooo fat". No Sarah you're not fat, you have an eating disorder.

Except it's a money hoarding disorder and no one feels sorry for these people. Mostly because they suck.
posted by ishrinkmajeans at 12:14 PM on May 27, 2013 [10 favorites]


Bleh. Panic pieces like this always make me roll my eyes a little. Yeah, it's very true, renting out here sucks right now. My partner and I paid rent almost as high as a mortgage payment this year for the privilege of living downtown close to his office. I commuted 1.5 hours to the peninsula. But 2000+ new units are going up in the city this year, and that will alleviate the pressure quite a bit.

For a 30ish dual income couple who both work in tech, $250k is not unreasonable. That number sounds HUGE. I know. But the thing is, if you live here, you just have to accept and understand that $200k+ is maybe upper middle class. Have kids and you become pretty much middle middle class. Lose the dual income and you're now lower middle class. (Also, no one I know has that kind of down payment socked away unless they work for APPL or GOOG and are cashing out stock.)

On income like that, you do not buy a house. You do not have a gardener and a housekeeper. You probably have one, economical car. You live in a place that's probably a little too small and a little too far from work. You look for sales at the grocery store. You live basically the way any other middle class family in America does.

So the premise of the article is totally bogus, and I also kinda resent the people who are like "OMG these people make a quarter of a million dollars?? off with their heads!!" We're here because the jobs are here, the local economy is strong, and the weather is nice. Contrary to what the press would have you believe, we're not bathing in champagne (well, most of us anyway).
posted by annekate at 12:15 PM on May 27, 2013 [44 favorites]


That nice bonus can be a few hundred thousand if your company does well, but you do have to put in the time. Typically your options are structured over multiple years, so you really need to keep at it to realize any value at the end. If you go to work for a much larger firm like Apple, you might seen an annual RSU of company stock granted to you directly depending on how worried they are to see you go someplace else.

I just completed a lengthy, wide-ranging job hunt last month and talked to a variety of very large companies, just-funded startup companies, rocket-ship companies and well-established companies. Many of the equity offers were at a scale that might pay for half-a-house at some point in the next half decade, assuming that things stay roughly on track. The larger ones always had a degree of associated uncertainty attached, and none of them felt like winning the lottery. I also had the incredibly good fortune to be interviewing with a few companies who put me in meetings with actual finance people who knew things so I could ask informed questions and get answers. One of the recruiters I was talking to has been working on a options calculator codebase to make this easier to communicate to future candidates.

In the end, more fuck-yeah money than fuck-you money if I had decided to go that route.
posted by migurski at 12:16 PM on May 27, 2013 [4 favorites]


I think people have no idea what middle-class means.
posted by 2bucksplus at 12:18 PM on May 27, 2013 [32 favorites]


My big problem with the first article, which is totally a flimsy piece of scare-mongering, is that it's treating a basic tenet of accounting as if they just discovered it. Newsflash: balance sheet and income statement are not the same thing. Equity trumps income, always. Wow! Color me shocked.

Also it leaves out housing as a big factor in the equity calculation. That house the hypothetical couple paid $1million for at age 30 will be worth a shitload more by the time their kids will graduate from college. And thanks to the incredible selfishness of previous generations of Californians (I'm looking at you, Howard Jarvis) that hypothetical couple can port their reduced property tax burden to a new house when they downsize after the kids move out. That's a big hole in their calculations.

But that article was aimed at idiots.
posted by ambrosia at 12:19 PM on May 27, 2013 [1 favorite]


if you live here, you just have to accept and understand that $200k+ is maybe upper middle class. Have kids and you become pretty much middle middle class.

New advances in molecular engineering led to the development of breakthrough new tiny buckets appropriate for the volume of tears the rest of us finna shed.
posted by samofidelis at 12:20 PM on May 27, 2013 [15 favorites]


Of course, one thing that was overlooked: if you live in that game til you retire, you can sell the million-dollar house, move where housing is less insane, buy something really nice for 200k, and live off the rest as upper-middle-class here with the rest of us plebs in flyover country.
posted by notsnot at 12:20 PM on May 27, 2013 [4 favorites]


Wealthfront is startup that wants 0.25% of your investments assets per year, every year, in return for cookie-cutter advice that basically says "Buy some ETFs"

If this couple invests $20,000/yr from age 22-65, earns an 8% return, and uses WealthFront, they'll pay more than $500,000 in fees before they retire, and they'll keep paying after they retire.

That's enough dough to cover several of these imaginary problems.

I'm not particularly opposed to their business (though I think it's overpriced), but I'm deeply opposed to smart people who know better conflating marginal tax rates with effective tax rates so they can create fake dilemmas.
posted by grudgebgon at 12:24 PM on May 27, 2013 [12 favorites]


I also kinda resent the people who are like "OMG these people make a quarter of a million dollars?? off with their heads!!" We're here because the jobs are here, the local economy is strong, and the weather is nice. Contrary to what the press would have you believe, we're not bathing in champagne (well, most of us anyway).

Exactly. I was born here. I'm here because it's my home, and my family are here. My parents came here before all this insanity started and the Silicon Valley didn't have a name and was a college town for a college that didn't always cost a limb and a suburb that no one had ever heard of. It's really lame when your home becomes so expensive that your family has to leave.
posted by straight_razor at 12:25 PM on May 27, 2013 [7 favorites]


On income like that, you do not buy a house. You do not have a gardener and a housekeeper.

But surely you have a butler and a chauffeur? We're not animals.

(clutches pearls)
posted by Justinian at 12:25 PM on May 27, 2013 [6 favorites]


samofidelis, it’s pretty normal to take local cost of living into account when gauging the relative magnitude of amounts of money, no need to be sarcastic. $200k/year does in fact buy a lot less in parts of the world where normal humans would have access to jobs that pay those amounts. “Middle” is a relative concept, and on the Peninsula all dollar amounts are calibrated upward unless you want to commute along a price gradient.
posted by migurski at 12:25 PM on May 27, 2013 [2 favorites]


The thing is; it's true that cost of living on the Peninsula is very high. But you don't actually have to live on the Peninsula even if you work there! So these are just crocodile tears.
posted by Justinian at 12:27 PM on May 27, 2013 [1 favorite]


I think people have no idea what middle-class means.

This is the weird thing about living in relatively expensive areas. You can quite legitimately feel middle class while having a relatively high income and not being actually middle class because all the trappings are traditionally middle class-ish. (Your house or apartment is smallish. Your car is not fancy, and you have only one. Your kids go to a public school. You worry about money.)

I think the right way to think about it is to treat location itself as a luxury that you are paying for, and that other people (who live in cheaper areas) can't afford. But that's a hard thing to keep in mind.
posted by feckless at 12:27 PM on May 27, 2013 [32 favorites]


Their idea of "comfortable" here is the part that I keep coming back to. Most of it is totally sensible. If you want to retire rich, you have to be both lucky and smart. Okay, that's fine. But if you want to retire comfortable? You know, most of the world defines 'comfortable' as 'with a roof over your head and food to eat', not as 'able to completely pay for an Ivy League education for several children'. Of course a dollar doesn't buy as many square feet in SF (or NYC or London) as it does in Nowhere, Idaho, but partly because it's buying the experience of living in that city. Living in that city is optional.

You don't count as the struggling middle class with a quarter million dollars a year coming in just because you're slightly poorer than the super-duper-rich people you choose to be neighbors with. If you don't like feeling poorer than them, move.
posted by Sequence at 12:27 PM on May 27, 2013 [5 favorites]


I think the right way to think about it is to treat location itself as a luxury that you are paying for

That's an excellent way to put it and much better than what I said.

Living on the Peninsula is a luxury, same as a gardener or a housekeeper or a $100,000 car.
posted by Justinian at 12:28 PM on May 27, 2013 [5 favorites]


If you work in silicon valley, how many opportunities are there to have an equity stake in a high tech company? I mean is this a common thing for the average college grad who gets hired to write code? Or is that advice good for like 100 people. I am trying to figure out what that high tech economy looks like. Is it highly layered, with the average coder working their ass off making a decent, but not extraordinary income, with the real riches reserved for a vastly smaller group who owns the company and has venture capital behind them?
That's a pretty decent summary.

There's also a huge difference between working for a software company in the Bay Area and working for a true "start up" in the sense that a "start up" company not only doesn't make money, it often doesn't have a plan for how to make money in the future. The closer you get to scratching your head and going, "Huh, what is it you guys sell again?", the higher the possible returns for early employees if the company gets bought out by Google or Facebook. Employees get sold on this gamble as part of recruitment, forfeiting a better salary and less taxing work elsewhere, in exchange for this vague promise of a giant payoff that might come someday, after the company draws attention from the tech media and investors.
posted by deathpanels at 12:33 PM on May 27, 2013 [2 favorites]


Hey, migurski, what about this figure:


Per capita money income in the past 12 months (2011 dollars), 2007-2011 $46,777 $29,634


where the first figure is for San Francisco, and the second is for California? It's from US Census data. It's almost like you're wrong!
posted by samofidelis at 12:35 PM on May 27, 2013


Oh no, some people want to work in challenging fields, have a nice house, send their kids to college, and retire comfortably

Better take this opportunity to shore up my leftist bona-fides by making "eat the rich" jokes!
posted by downing street memo at 12:35 PM on May 27, 2013 [23 favorites]


Also factor in that San Francisco is like New York in that it's less a "real" place anymore and more a city-sized advertisement for how great your life could be if you just earned another $50-100k. When you have whole neighborhoods full of $250k salary earners, well, you don't quite get the same spread of socioeconomic groups that you get in cities not centrally dominated by a speculative industry fueled by the dying gasps of late capitalism.
posted by deathpanels at 12:39 PM on May 27, 2013 [3 favorites]


You want to include a citation for that figure to give it some context? The SF one is already 60% over the CA average, and that doesn’t even factor in things like school districts or socioeconomic cohorts.
posted by migurski at 12:39 PM on May 27, 2013


Oh no, some people want to work in challenging fields, have a nice house, send their kids to college, and retire comfortably

Send their kids to private colleges with no loans, have a nice house in an expensive city, and spend 12k/year on cars and 3k/year on vacations and 4k/year on a housekeeper and 6k/year on clothing -- all before you include the expenses that your two kids have.

I mean, sure, I want to be able to afford everything I want without sacrifice, but I don't think it's some sort of disaster that I need to choose between discretionary spending options.
posted by jeather at 12:39 PM on May 27, 2013 [4 favorites]


Just as an aside:

Young professionals in tech, especially couples who both work in the industry, who wish to have all the "normal" trappings of nice-but-not-actually-palatial suburban living in Mountain View / Los Altos / Sunnyvale, and send their kids to Stanford or whatever.

Los Altos is pretty damn palatial.

Also consider that a couple who are not looking to have kids, purchased a reasonably priced home in Oakland and earn over 200k are not insanely rich in the Bay Area.
posted by waitangi at 12:40 PM on May 27, 2013


CITATION

http://quickfacts.census.gov/qfd/states/06/06075.html


so yeah you're still wildly mistaken about the incomes that most people make.
posted by samofidelis at 12:40 PM on May 27, 2013 [1 favorite]


Yeah downing street it is entirely possible to do all those things on less than a six figure income. People who claim the contrary are trying to twist facts to justify squeezing the poor.
posted by ishrinkmajeans at 12:41 PM on May 27, 2013


Yeah downing street it is entirely possible to do all those things on less than a six figure income.

That really depends on where you live. In some cities, it's definitely not possible.
posted by Dasein at 12:44 PM on May 27, 2013


Send their kids to private colleges with no loans, have a nice house in an expensive city, and spend 12k/year on cars and 3k/year on vacations and 4k/year on a housekeeper and 6k/year on clothing -- all before you include the expenses that your two kids have.

Without quibbling on specific line items, all of those things - the ability to educate your kids without going into debt, the ability to have a nice house, money for transportation, travel, and personal care - strike me as things everyone should have. Expensive cities are expensive for a reason - because they're nice places to live! More people should be able to live in places that are nice. Private colleges, like Stanford, are often really good! They should be available to everyone.

I'm no big fan of Silicon Valley and its mindset, far from it. But we're not talking about Masters of the Universe here. They're not asking for an annual cabin at Davos and a jet share. They're well-paid specialists and sitting here quibbling about their salaries, lifestyles, and expectations strikes me as eerily similar to when conservatives bitch about well-paid union workers.
posted by downing street memo at 12:48 PM on May 27, 2013 [39 favorites]


We’re not talking about most people here, though, are we? We’re talking about the boundaries between fuzzy concepts like “middle” and “upper-middle,” which must factor in class markers like college tuition (for the right kind of college), retirement expectations, and how you’re viewed by your kids’ friends’ parents. Knowing the per capita income is not useful in that context. Median (already $72,947), for selected census tracts is a more-useful way to determine what what we mean we talk about class. I mean, the lead link in this post is for a scare-piece from a financial service called “Wealthfront” FFS.
posted by migurski at 12:48 PM on May 27, 2013


I think the right way to think about it is to treat location itself as a luxury that you are paying for

This. Exactly this.

Zillow puts my house at about 750K (I paid quite a bit more), while my home owner's policy puts the replacement value of my dwelling about about $200K.

That means I live on a 5,000 sqft piece of land valued about about $500,000. That's a luxury, and one I'm willing to and can pay for.

Am I 'middle-class?' Nope, not by a long shot. I know that.

But most of the rest of my life is squarely middle class, because that's what we can afford: 2 kids in public school, 2 Hondas (both pre-2008), we buy most of our clothes at Target, and so on.

In many ways, it's a surreal existence.
posted by Frayed Knot at 12:48 PM on May 27, 2013 [4 favorites]


Since they let you download the spreadsheets and play around with them, I found out that if I fire their gardener, have them take a "staycation" instead of a vacation very other year, and make due with a new Prius every three years, my couple will have more than 10 million when they retire. I should try to poach some of Wealthfront's clients and start making a living as a financial advisor.
posted by layceepee at 12:48 PM on May 27, 2013 [17 favorites]


Of course, one thing that was overlooked: if you live in that game til you retire, you can sell the million-dollar house, move where housing is less insane, buy something really nice for 200k, and live off the rest as upper-middle-class here with the rest of us plebs in flyover country.
posted by notsnot at 2:20 PM on May 27


This is something I keep coming back to in my own thoughts about distributive justice. It seems unfair to me that our economic system is set up so that, purely by accident of location, some people end up with substantial wealth just because of the hot real estate market they live in, while people in "flyover" country are upside-down on their mortgages or their houses have barely appreciated or have to sell at a loss. (And those people in the "hot" areas likely got established there with government assistance such as FHA loans and mortgage interest deductions). Combine that with the fact that some people accrue wealth through what is essentially a lottery (the venture capital/startup/IPO thing) while people not in those fields have no similar opportunity but have just as much merit and value to society ...

We need more redistribution.
posted by Unified Theory at 12:50 PM on May 27, 2013 [2 favorites]


Living on the Peninsula is a luxury, same as a gardener or a housekeeper or a $100,000 car.

Hardly. I work on one end of the peninsula, my wife on the other. Living on the peninsula is a requirement if we want a commute less than 40 minutes one way and to reduce our carbon footprint.

It is certainly not feasible to purchase a home in this area. And the salaries do not make up for the extreme cost of living in this area. And if you think people making $250k per annum being unable to afford a home is insufficiently compelling for any sympathy, think of the people who work in restaurants and gas stations and groceries stores on the peninsula, and what the rents on their apartments (or, conversely, the lengths of their commutes) must be.

But, y'know, it's more fun to crack jokes about world's tiniest violins and liver pate and crocodile tears.
posted by Existential Dread at 12:51 PM on May 27, 2013 [16 favorites]


Dasein

As has been already mentioned if you live in a high income coastal city retirement is much easier if you move. In fact everything is cheaper except housing because you have a higher income but live in a dense area. If I make 200k I might not be able to afford a McMansion in the bay area but cars are no more expensive than they are in Dallas or st. Lois and the same with college costs. So yeah you might have to live in a condo and forego a yard if you live in NYC, even if you're insanely wealthy by normal people standards. Cry me a river.
posted by ishrinkmajeans at 12:51 PM on May 27, 2013 [1 favorite]


Hate to interrupt the eat-the-rich hatefest, but it bears mentioning that at $250K a year, they can still proudly shout "we are the 99 percent" with the rest of us. Pitting the middle-middle class against the upper-middle class is a great distraction from the way the game is stacked in favor of the actual upper class.
posted by Daily Alice at 12:55 PM on May 27, 2013 [77 favorites]


Without quibbling on specific line items, all of those things - the ability to educate your kids without going into debt, the ability to have a nice house, money for transportation, travel, and personal care - strike me as things everyone should have.

But without looking at the line items, then it's meaningless. Absolutely you should be able to go to school without going into debt -- but does that really need to be a private one? Sure, you should be able to have transportation and travel and clothing -- but as much of all of them as you want? No. Being middle class is not the same as never having to budget or make choices. They're spending >100k per year for a family of four before housing costs.
posted by jeather at 12:56 PM on May 27, 2013 [1 favorite]


"When you play the game of equities, you win or you die."
posted by TheWhiteSkull at 12:57 PM on May 27, 2013 [2 favorites]


I don't hate people who make six figures plus, I just get tired of the woe is my lot bitchery. Suck it up and stop being such a cretin.
posted by ishrinkmajeans at 12:58 PM on May 27, 2013 [16 favorites]


It is certainly not feasible to purchase a home in this area. And the salaries do not make up for the extreme cost of living in this area.

Looking at the statistics, it looks like the average rate of increase in home prices has been about 5% per annum since 2000. The highest inflation has been in that period is 3.8%. With a median home price of $800,000 and a median income of just over $70,000, these numbers start to make it look like there's a bubble.
posted by one more dead town's last parade at 12:59 PM on May 27, 2013


they can still proudly shout "we are the 99 percent" with the rest of us.

There's no magical reason to believe that 1%/99% is the demarcation line that matters here. I think that people earning in the 96th percentile are also worth eating. I'm rather egalitarian.

It's hilarious when the surface of some fraction of Metafilter's pseudo-lefty politics gets scraped off and people start justifying their own privileged positions. Wait, hilarious, I meant gross.
posted by samofidelis at 12:59 PM on May 27, 2013 [6 favorites]


More worth-posting numbers from the census forms, picking out median incomes from a variety of peninsula cities, some home to big name tech companies:

$151,856 Los Altos
$124,825 Cupertino
$122,532 Palo Alto
$93,292 Sunnyvale
$91,446 Mountain View
$89,004 Santa Clara
$80,764 San Jose
$72,947 San Francisco
$61,632 California
$51,144 Oakland
$50,137 East Palo Alto
posted by migurski at 12:59 PM on May 27, 2013 [2 favorites]


but cars are no more expensive than they are in Dallas or st. Lois and the same with college costs.

That's true. Until you put fuel in the car. You know. That thing that will cost you hundreds if not thousands more a year living in San Jose than St Louis or Dallas.
posted by Talez at 1:01 PM on May 27, 2013 [3 favorites]


I don't hate people who make six figures plus, I just get tired of the woe is my lot bitchery. Suck it up and stop being such a cretin.

I don't think there's a been a lot of bitching. I live here and I think it's totally insane. What's our recourse? Hand out cash to the poor, ask my employer for a paycut, move because it's morally irresponsible to live here?

The bay area is one of the largest contributors to political rights, medical research, and then some. I'm open to suggestions, but I think you might find the locals (be them transplants or natives) to be quite reasonable people.
posted by straight_razor at 1:03 PM on May 27, 2013 [15 favorites]


Straight razor

My comment was aimed more at the article and similar than all people who live in the bay area.
posted by ishrinkmajeans at 1:05 PM on May 27, 2013 [1 favorite]


I'm reminded of this comic.

It's lately been my experience that what level of 'the middle class' you're a part of is largely determined by how much the banks will permit you to borrow; in that sense, it seems anger is better directed at those who have always stood to gain from the financial madness we participate in.
posted by Mooski at 1:08 PM on May 27, 2013 [3 favorites]


It's hilarious when the surface of some fraction of Metafilter's pseudo-lefty politics gets scraped off and people start justifying their own privileged positions.

Wait, who has justified anything? The argument, it appears to me, is that housing costs in the Bay Area are insane enough as to render people with very high salaries functionally middle-class. People actually living that, experiencing it, are telling you that it's true; maybe this isn't an issue that's capable of being analyzed by easy political snark and guillotine jokes?
posted by downing street memo at 1:10 PM on May 27, 2013 [23 favorites]


Who's joking? People are telling me that it's true, but that does not mean that it is. There is something very ugly about people complaining that at their (clearly privileged) position in life it is impossible to get by, and claiming for themselves the mantle of the oppressed, when they are in fact so many standard deviations away from the mean that they don't even really know what it looks like.
posted by samofidelis at 1:12 PM on May 27, 2013 [4 favorites]


There is something very ugly about people complaining that at their (clearly privileged) position in life it is impossible to get by, and claiming for themselves the mantle of the oppressed, when they are in fact so many standard deviations away from the mean that they don't even really know what it looks like.

Well, luckily we have you to enlighten us.
posted by Existential Dread at 1:14 PM on May 27, 2013 [6 favorites]


You're right; far better we all agree to bemoan the sorry lot of the rich.
posted by samofidelis at 1:14 PM on May 27, 2013 [3 favorites]


There is something very ugly about people complaining that at their (clearly privileged) position in life it is impossible to get by, and claiming for themselves the mantle of the oppressed

Can you cite someone in this thread who has done this?
posted by downing street memo at 1:14 PM on May 27, 2013 [3 favorites]


Absolutely you should be able to go to school without going into debt -- but does that really need to be a private one?

I was going to quibble with that myself, but after thinking about it, it's probably a reasonable pessimistic target. If you shoot to save for private college tuition and miss, you might still have a enough for public college tuition (if there's any different between the two in 20 years time).
posted by cosmic.osmo at 1:15 PM on May 27, 2013


$61,632 California
$51,144 Oakland
$50,137 East Palo Alto


To folks that don't know and to put it in context, [parts of] Oakland are fairly dangerous place to live and for sure not placed you'd want to walk outside at night.

That same salary, 55k, in my hometown of "Dogpatch, IL" would be what a career person is making at around age 55-60.
posted by wcfields at 1:16 PM on May 27, 2013


My own hope for a recourse is to pass a couple more Propositions 30, which by all accounts has helped staunch the bleeding suffered by the state. More of these companies that benefit from the unique confluence of factors the Bay Area offers need to be paying their fair share in taxes (currently a meagre 21% for tech + federal) so that California public schools can support improved class mobility and Bay Area public transit can support improved physical mobility. I don’t have particularly strong feelings about where we draw the line for middle vs. upper class, but I would love to see that division a lot less lop-sided and impassable.
posted by migurski at 1:18 PM on May 27, 2013 [2 favorites]


Hardly. I work on one end of the peninsula, my wife on the other. Living on the peninsula is a requirement if we want a commute less than 40 minutes one way and to reduce our carbon footprint.

You don't think that counts as a luxury? I think it clearly does.
posted by Justinian at 1:19 PM on May 27, 2013 [7 favorites]


As has been already mentioned if you live in a high income coastal city retirement is much easier if you move.

This is really getting into the territory of telling people how to live their lives so that you can tell them they are rich whiners. It's expensive to live in dense cities. People who do it may make incomes that seem exorbitant to people who live where land is cheap, but they don't have oodles of disposable income. Then, when they retire, they may not want to move away from their children and grandchildrena and retire to a little country property. But you're not interested in considering that perspective, so you've decided that it's incumbent upon them to move somewhere cheap when they retire. How thoughtful of you.

Progressives are so empathetic, unless you make more than $100k a year, in which case, fuck you, if you have trouble making ends meet it's your own fault for not wanting to spend your life in a car.
posted by Dasein at 1:19 PM on May 27, 2013 [5 favorites]


downing street memo -- The fundamental thesis of the linked article is that persons earning $250k in income a year will not be able to make it in San Francisco. It does not, as far as I remember from lunch, mention once what those who earn less than that are expected to do. Several persons in this thread have made similar remarks about how that income level is barely sufficient to enjoy a modest, meager life in the Yay; I am not going to name names because someone upthread made a remark about how he or she & his or her partner drove two import cars NEARLY FIVE YEARS OLD as a marker of their humble lifestyle and my PEASANT retort got deleted quick-fast.


wcfields --
$61,632 California
$51,144 Oakland
$50,137 East Palo Alto

To folks that don't know and to put it in context, [parts of] Oakland are fairly dangerous place to live and for sure not placed you'd want to walk outside at night.
Oh I know. I mean it's a good thing no one would have to live there, in those dangerous parts. Except, you know. The people? Who live there?
posted by samofidelis at 1:19 PM on May 27, 2013 [4 favorites]


Let me put the argument in another way: think back to the presidential debates in 2008. Recall the great lengths at which the struggles of the middle class were discussed?

Weird how no one talked about the poor. Huh.
posted by samofidelis at 1:20 PM on May 27, 2013 [2 favorites]


There is something very ugly about people complaining that at their (clearly privileged) position in life it is impossible to get by, and claiming for themselves the mantle of the oppressed

If you read what I posted as a complaint, you need to re-read it.

I love where I live. I pay a premium for that. That is not a complaint.
posted by Frayed Knot at 1:20 PM on May 27, 2013 [2 favorites]


samofidelis, “the mean” does not mean what you think it means.

You’re providing county-wide and state-wide numbers, but people judge their economic situations by what they can see with their eyes, which means neighbors, coworkers, or someone at the next gas pump over. I live in Oakland myself, but I have a lot of friends in SF who can barely bring themselves to cross the bay because they half-believe they will be killed/robbed here; their local context is totally different. The census place based numbers I posted are closer to a truth (don’t forget to double them for couples), but would be better still if run for selected tracts or ZCTA’s.
posted by migurski at 1:22 PM on May 27, 2013


Frayed Knot, I wasn't responding to you at all. I'm taking issue with the people who blithely assert that a certain level of income is the bare minimum to survive at a reasonable, humane standard of living, while ignoring that the great majority of people in their own communities -- Dasein, I'm not talking about mooks like me in flyover country, I'm talking about your neighbours -- earn nothing close to that income.

migurski, if you'd like to have a discussion at length about statistics, please feel free to send me a Mefi mail; I have a PhD in physics, but maybe you can help me to learn what this -- what did you call it? The mean? -- what the mean is.
posted by samofidelis at 1:24 PM on May 27, 2013 [1 favorite]


Oh, migurski, by the way, you posted household mean income numbers, which means you DO NOT DOUBLE THEM FOR A COUPLE. I posted per capita cash income, which means you consider every member of a household. But, yeah, mean. Teach me, please.
posted by samofidelis at 1:26 PM on May 27, 2013


someone upthread made a remark about how he or she & his or her partner drove two import cars NEARLY FIVE YEARS OLD as a marker of their humble lifestyle

Nope, not what I said.

I'm rich. I ain't 1% rich, but I'm rich.

But because of where I choose to live, most of my riches go into the land under my house.

Once again, that's not a complaint.

And the comment you posted that got deleted was in direct response to mine. So, yeah, you're responding to me.
posted by Frayed Knot at 1:26 PM on May 27, 2013 [1 favorite]


Ah good point, about the doubling, thanks. I misread that.
posted by migurski at 1:27 PM on May 27, 2013


Metafilter: How dare people live anywhere but flyover country.

Believe me, I have very little sympathy for people who have a dual income that nearly four times the amount the single income my husband and I live off of, but at the same time, I realize that large salaries do not go as far in more expensive cities than others. While I can bemoan it, I'm certainly not going to be mean to people who have those problems. I would LOVE to have those problems. Maybe. Hmm.
posted by Kitteh at 1:29 PM on May 27, 2013


[Comment removed, more with the constructive discussion and less with the interuser snarkiness stuff or go do something else.]
posted by cortex at 1:29 PM on May 27, 2013 [2 favorites]


Anyone who makes more than 100k a year and ends up sleeping in their car is an idiot.
posted by ishrinkmajeans at 1:30 PM on May 27, 2013 [2 favorites]


I have no doubt your physics PhD qualifies you to know what the mathematical definition of the mean is. I just don’t think you have a leg to stand on when it comes to discussing self-perception of class and the individual stories about income and future possibilities offered here. Mostly you seem to be interested in throwing elbows, I guess?
posted by migurski at 1:31 PM on May 27, 2013 [2 favorites]


Yeah, obviously I don't give a shit about these Silicon Valley douchebags, but the implication for those of us living in the Bay Area who don't work for google are pretty terrible.

I'm a single mom living in East Oakland. There were two shootings on my block in the last 12 months and I had my house broken into and two of three items of value I own (my bike, my daughter's camera) were stolen. It's not what you'd call a safe and desirable neighborhood although it's quite clean, well maintained, more family oriented, and much less crime and violence filled compared to many other parts of my city. I pay $1600 for a 2+ bedroom. My landlord just put my place on the market due to this new crazy bubble and doubling housing prices and now my future is uncertain. I can't afford to buy (ha ha ha!!) and probably won't be able to afford the updated rents if I have to move.

I have what should be a "good job". I'm an RN. But the only work available to a fairly new grad like myself is per diem - no benefits, retirement, or even reliable minimum number of hours a week - and the pay is at the bottom of the admittedly fairly good Bay Area salary scale for my field. And I cannot get another job at another institution at this point because the economy still sucks despite the crazy housing prices.

I could move, and I've considered it, but I grew up here in Oakland and so did my daughter. Moving would be a huge emotional and physical upheaval, separating us from our community who we consider family. Not to mention, as a single parent, I rely on my community of friends for childcare. Also, I'm a queer weirdo, and that's what keeps a lot of us here - there is literally not another place on earth where I can be as assured of finding community, legal protection, and generally be treated with respect despite my obvious gender weirdness and queerness etc. I also deeply value art, literature, nature, and the other things that are still readily available here in ways that they aren't available elsewhere. I could live without these things, but it would not be the kind of life I want.

If a couple making 250 K can't retire in the style they're used to I don't really care, but our entire extended community of half a dozen cities in the greater Bay Area is impacted by this, and it sucks.
posted by latkes at 1:32 PM on May 27, 2013 [62 favorites]


but people judge their economic situations by what they can see with their eyes, which means neighbors, coworkers, or someone at the next gas pump over.

Well, that's just dumb.
posted by junco at 1:33 PM on May 27, 2013 [2 favorites]


The fundamental thesis of the linked article is that persons earning $250k in income a year will not be able to make it in San Francisco.

In fact, that is not the "fundamental thesis"; the article makes very specific claims about things that families at that income level will not be able to do absent performing equity stakes in tech companies. Lots of people have fairly quibbled with these claims; I don't live in the Bay Area and am not qualified to judge. Nowhere - here or in the linked articles - have claimed anything about the ability of well-paid workers to "get by", which to me reads "put food on the table; survive".

It does not, as far as I remember from lunch, mention once what those who earn less than that are expected to do.

As it was written by a company that caters to those with high incomes, those who earn less than those high salaries were not likely in the intended audience. That is not to say that those who earn less money/are lower-class do not have very, urgently, essentially important needs; but it is a big internet and we can talk about lots of things at once.

Several persons in this thread have made similar remarks about how that income level is barely sufficient to enjoy a modest, meager life in the Yay; I am not going to name names because someone upthread made a remark about how he or she & his or her partner drove two import cars NEARLY FIVE YEARS OLD as a marker of their humble lifestyle and my PEASANT retort got deleted quick-fast.

No one has suggested that that income level puts them in "meager" territory. I think the idea is that, for as nominally high as that salary level sounds, structural elements of life in the Bay Area - the cost of housing, mostly - make it not all that terribly high.

As to the car comment, I don't want to put words into that person's mouth, but I'm guessing that the point isn't to engender direct comparisons to you. I'm sure you live an unimpeachable proletarian lifestyle, and the idea of a 6+ year old Honda is the height in luxury. If I had to venture a guess, I'd say the point of the car comment is that, hey, we're not extravagant (and, indeed, 6+ year old Hondas do not strike me as extravagant in the least).

Your brand of leftism is a strange one to say the least. Your analysis solely involves the personal choices of those you deem "rich" without thinking even a little bit about the structural factors - the price of land, which is the direct result of the deliberate choices of policymaking regimes - that are the source of the complaint.
posted by downing street memo at 1:34 PM on May 27, 2013 [18 favorites]


migurski, your thesis keeps changing so it's hard to keep up, but presently (please check me on this) you're arguing that people are cursed to earn so much wealth that they must move to a wealthier neighbourhood, where they shall feel comparatively poor, and that the depression that is one effect of this relative (but real! and dire!) mediocrity will cause them to no longer be able to get by at that income. Is that more or less accurate?
posted by samofidelis at 1:36 PM on May 27, 2013


Rich people don't feel rich enough. News at eleven.
posted by fishmasta at 1:39 PM on May 27, 2013 [2 favorites]


Where are you getting all that from? Jesus. Downing Street Memo just wrote everything I would have wanted to, but I should also point out I’m not here to argue a thesis, I’m just trying to participate in a conversation that you keep catshitting all over.
posted by migurski at 1:42 PM on May 27, 2013 [1 favorite]


How are we defining rich? A lot of people here are basically saying, yeah, I make a lot of money (say $150K) but I have no net worth and I pretty much live pay check to pay check because my basic living needs here are super expensive. That could also be the case if you own a house. It might be worth 750K, but if you've got no equity, that house doesn't make you rich. It could make you look rich, but on paper, not so much. Somebody making 60K in a different part of the country might have a higher net worth. They save, save, save, and have a more modest standard of living. Who is richer?
posted by Seymour Zamboni at 1:45 PM on May 27, 2013 [1 favorite]


Also, I'm a queer weirdo, and that's what keeps a lot of us here - there is literally not another place on earth where I can be as assured of finding community, legal protection, and generally be treated with respect despite my obvious gender weirdness and queerness etc.

...apart from most other major cities in the US. Many of the ones not in California will even allow you to marry someone of the same sex.
posted by ROU_Xenophobe at 1:47 PM on May 27, 2013 [1 favorite]


there is literally not another place on earth where I can be as assured of finding community, legal protection, and generally be treated with respect despite my obvious gender weirdness and queerness etc.

This is not true.
posted by Seymour Zamboni at 1:48 PM on May 27, 2013 [2 favorites]


[Seriously, samofidelis, cut it out.]
posted by cortex at 1:50 PM on May 27, 2013 [1 favorite]


Seymour

An inability to save doesn't make you poor, it means you're buying outside of youre income. You still enjoy a much higher standard of living than someone else. This should be obvious.
posted by ishrinkmajeans at 1:52 PM on May 27, 2013 [1 favorite]


Is there a particular reason why people in the tech-industry:

1) have to live in San Francisco or neighboring areas?
2) can't telecommute?

It seems like telecommuting should be prevalent in the tech industry, especially if you're just working on code.

Where I live (in flyover country), I constantly see high-paying jobs for people with programming/tech skills. The idea that possessing the luxury to choose where you live and work isn't a distinction that makes you at least sort of rich seems ludicrous to this observer. But then again, there's no ocean where I live, and it snows a lot, so my opinion isn't really that valuable.
posted by MetalFingerz at 1:52 PM on May 27, 2013


straight_razor: 45% federal income tax, very real. Doesn't matter who your accountant is. Look up Alternative Minimum Tax.

Uh, the AMT is 28% and includes a deduction of $50,000 at $250,000 income which results in an effective federal tax rate of 22%.

Note that they can contribute $35,000 to their 401(k)s tax-free which would reduce their effective tax rate to 18%.

As you said, look it up.
posted by JackFlash at 1:55 PM on May 27, 2013 [2 favorites]


The "wealthfront" article is completely stupid from the get-go, because you can't afford a $1,000,000 house on a $250k income. I guess they're counting on their target audience not to understand that. (holy shit I just looked at the spreadsheet and their "spending model" of $60K a year DOESN'T include mortgage payments?)

I just did a real estate search for SF real estate, and there are plenty of luxury condos, townhouses, and modest detached houses in SF proper for under $750K (a lot more reasonable), so it looks to me like the hypothetical household should be just fine, and then they'll even be able to continue spending $12K on car payments every year and hoping they win that equity lottery. ($12K invested annual over 30 years at, let's say, 5% average return is ~$815K, which is, I'm willing to bet, a lot more than almost everyone who works at a tech company gets in equity. Please correct me if I'm wrong.)
posted by junco at 1:56 PM on May 27, 2013


I have no anger over any of this. I do hope the amount of wealth and material and human effort that gets consumed is worth it to the people who have it, because it certainly would be worth it to the people who don't. I don't make this kind of money, but I am white and educated and own a house, and I feel a lot of gratitude for what is really luck. To take a gift like that and work and strive and ultimately end up with unhappiness and stress would really be a shame, and too often that seems like what happens. And I feel like it you are making an amount of money that is probably enjoyed by a number of people who in a global census would be swallowed by a rounding error, and you are stressed about your rent, you could be doing it wrong.

I guess what I'm saying is that I think the most important responsibility the wealthy have, beyond generosity, is to examine their life. You have only one shot at this; you've been given a hell of a starting position; make sure it's worth it.
posted by selfnoise at 1:57 PM on May 27, 2013 [6 favorites]


> 2) can't telecommute?

It's pretty common for the odd 40-something who's got a solid gig to work out with his or her bosses a deal that will let them telecommute but it usually means they won't advance in the company. It's also hard to get another good-paying job if you're living in Oklahoma or something and your SF company lays you off.
posted by Space Coyote at 1:58 PM on May 27, 2013 [3 favorites]


Is there a particular reason why people in the tech-industry:

1) have to live in San Francisco or neighboring areas?
2) can't telecommute?

It seems like telecommuting should be prevalent in the tech industry, especially if you're just working on code.


The basic way to answer this question is by reference to the work that won Paul Krugman the Nobel Prize, before he was the bane of every conservative everywhere. Basically, regions of the world where a particular thing gets done tend to do even more of that thing over time. In other words, geographic areas specialize in certain kinds of production. The Bay Area is probably the world's preeminent place where technology is produced, and as such, there are significant returns to producing technology in the Bay Area.

Change the nouns and it probably makes more sense; one can produce art anywhere, right? So why go to New York to do it? The answer is obvious; the presence of other artists, of a support network (galleries, buyers, studios, etc.), of lots and lots of inspiration. The Bay Area is no different.
posted by downing street memo at 1:59 PM on May 27, 2013 [16 favorites]


Is there a particular reason why people in the tech-industry:

1) have to live in San Francisco or neighboring areas?
2) can't telecommute?


SF has always been a tech hub, for many reasons -- Cal, Stanford, the Livermore labs, Bell Labs, Hewlett-Packard, Xerox PARC. They fed on each other and grew.

Telecommuting has only been really viable on a wide scale for the past 10 years or so. Now you're fighting inertia more than anything else. Moreover, there are things you just can't get from telecommuting. You can't take a co-worker to lunch over the Internet.
posted by Cool Papa Bell at 1:59 PM on May 27, 2013


Max contribution to a 401k for someone under 50 is $15,500. The 35k is, IIRC, the max that can go in the 401k from both employer and employee. And if we're calculating preretirement cash flow, the 401k contribution doesn't even matter a whole lot.

The 45% rate is probably close to the mark for marginal rate (if, say, they were getting a big tranche of restricted stock, we'd take 45% off the top). As a total effective rate for someone making 250k, its probably a half or third too high.
posted by jpe at 2:01 PM on May 27, 2013 [1 favorite]


An inability to save doesn't make you poor,

Yes. I agree. I didn't mean to imply that living pay check to pay check makes you poor. In my comparison I was asking who is richer.
posted by Seymour Zamboni at 2:01 PM on May 27, 2013


Trust me that there is not another place where I would feel as comfortable in my queer, queer, genderqueer, butch, kinky, non-HRC-supporting style dyke ways. But in any case, the point is this is my home.

Perhaps suggesting I move would be sound advice, but what I'm saying is it would be very challenging for me and would make an enormous negative change in my life and my daughter's life, and it's also not realistic to expect the literally hundreds of thousands of non-millionaires who live here to just up and move.
posted by latkes at 2:02 PM on May 27, 2013


The guy who makes more money. I take claims that difference in purchasing power parity makes you poor as similar to claims that hormone imbalances make you fat. It's conceivable but usually not applicable to the vast majority of cases.
posted by ishrinkmajeans at 2:04 PM on May 27, 2013 [1 favorite]


hey jack_flash

I'm not accountant so I can't properly explain the AMT. But it's notoriously complex and not as simple a straight % rate as you're presenting. I do know that one of the big differences is that it imposes taxes on a much larger portion of your income. If you have to pay the AMT you are paying higher taxes, I promise.

Good read.
http://money.cnn.com/magazines/moneymag/money101/lesson18/index7.htm
posted by straight_razor at 2:11 PM on May 27, 2013 [1 favorite]


Gak--someone please give me these problems. As it stands, my kids wil be lucky if we've paid off even half our own college debts before it's time for them to get to college. Some of our better-off friends were recently discussing the comparative advantages of different college prepay programs for their kids around us, and I swear to glob I have never felt so close to suicidally depressed in my life (don't misunderstand--I don't mean to say I actually felt suicidal, only that I could almost imagine what that must feel like) as I did then, reflecting on how completely and utterly out of reach such privileges are for my family despite how hard I work. (And I make a decent wage for my market.)
posted by saulgoodman at 2:12 PM on May 27, 2013 [3 favorites]


jpe: Max contribution to a 401k for someone under 50 is $15,500.

Uh, no. Maximum contribution is $17,500 -- each. For a dual income household that is a $35,000 per year tax deduction.
posted by JackFlash at 2:12 PM on May 27, 2013


Ah, I see jackflash. Thanks.
posted by jpe at 2:13 PM on May 27, 2013


I'm not accountant so I can't properly explain the AMT. But it's notoriously complex and not as simple a straight % rate as you're presenting. I do know that one of the big differences is that it imposes taxes on a much larger portion of your income. If you have to pay the AMT you are paying higher taxes, I promise.

If you confess that you don't understand the AMT then why do you persist in making ignorant statements about it. The AMT rate is 28%. As I explained, at the $250,000 level they have a $50,000 deduction so that their effective rate is about 22%. There are other new taxes, but they kick in above $250,000.
posted by JackFlash at 2:21 PM on May 27, 2013 [2 favorites]


jack_flash

I paid 42% of my income this past tax year. I'll pay you to call my accountant if you can tell him how to save me nearly half of that.
posted by straight_razor at 2:26 PM on May 27, 2013 [2 favorites]


Uh, state taxes? Payroll tax?
posted by Justinian at 2:33 PM on May 27, 2013


I paid 42% of my income this past tax year.

Three possibilities:
1. You made significantly more than $250,000 last year in earned income.
2. Your accountant is an idiot.
3. You really don't know your real tax rate. Very few people do. Most vastly over-estimate.

Number 3 is most likely.
posted by JackFlash at 2:34 PM on May 27, 2013 [4 favorites]


I have to agree with JackFlash, though, 42% seems very high even taking other taxes into account. Something isn't adding up and I don't think it is the AMT.
posted by Justinian at 2:41 PM on May 27, 2013 [1 favorite]


From the comment #2:

This is a classic example of living beyond your means, and nothing more! By simply reducing yearly spending from $60k to $50k, the example couple never goes into debt. Period. A straight-forward way might be to cut the $2,400 gardener and the $4,160 housekeeper, and reduce the $6,000/year on clothing to $2,400/year (still a reasonable $200/month), and debt never happens.

The people who fork money over to this financial planner would be better served watching the Steve Martin on SNL skit about don't buy it unless you already have the money to pay for it.
posted by bukvich at 2:41 PM on May 27, 2013


Many many many normal middle class homes in Vancouver and Victoria BC Canada that sell for a million bucks. It's been a terrible ten years.
posted by KokuRyu at 2:55 PM on May 27, 2013


Is there a particular reason why people in the tech-industry:

1) have to live in San Francisco or neighboring areas?
2) can't telecommute?

It seems like telecommuting should be prevalent in the tech industry, especially if you're just working on code.


Part of the benefit of being in San Francisco or any tech hub is you have access to a network of talent, especially in the startup scene, which means you've got people you've worked with that like you and will recruit you for their new ventures before there's ever even an ad placed (which you might get the kind of equity that's worth something) and even if you're not getting classic full-time work, you can get consulting work or contract gigs from the people you know in other companies or startups just getting funded.

For example, I live in Austin and spent a good chunk of last year doing one-off freelance gigs for a friend's startup that was still dudes working out of their homes rather than anything with office space, and that's when you can get the kind of equity and options that actually turn into something more than playin' around money.

By contrast, I was wooed to Alabama at one point by a small company that figured they'd do just what you're roundaboutly suggesting--setup in flyover country, pay good salaries but still a lot less than they'd have to pay in SF/LA/Seattle/Austin/etc., reap the presumable harvest of talent--and the problem was the talent pool simply wasn't there for that sort of thing. I mean, there were, say, programmers, but if you were a superstar programmer willing to work the startup lifestyle, you'd already moved to SF/LA/Seattle/Austin/etc., you know? Recruiting outside talent was impossible, because if you were a superstar programmer willing to work the startup lifestyle, you're probably not the sort of person that'd want to live in an Alabama town where the most exciting thing to do is hang out in the Wal-Mart parking lot on Saturday night even if you could live in a literal mansion for what you'd pay in rent in San Francisco. (I'm not joking when I say that, the wife and I had an enormous 2 bedroom condo and I turned the living room into a pretty nice gym and we just used the second bedroom as the living room because we didn't have nearly enough stuff to fill the place and I was still paying half what I paid in San Francisco).

What that means is if you're a coder that tries what you're saying, when you inevitably get let go from that company, you have no tech industry or local contacts because that doesn't exist. One of the big benefits, like I said, to living in a tech hub is your network of people who can get you jobs. When I got laid off in Alabama, there was nowhere else I could work, because people outside those scenes don't understand that it can be perfectly normal to work jobs for 6 months and get laid off and have that happen for several years, so they assume you're weird or a bad employee or something. Using myself as an example again, if my gigs here in Austin fall through, I wouldn't say I'm guaranteed a job, but our combination of a still-booming tech sector and low unemployment, as well as my network of local contacts, pretty much guarantees I could at least get some good interviews.

As for telecommuting, even very progressive highly technical shops are still very suspicious that you're not going to be doing work if they can't see you, especially bad managers, and 22-25 year olds starting their first company are pretty much all bad managers by definition. Many startups and small companies also put a tremendous value on their "culture" (which frankly means working ridiculous hours most of the time) and everyone being in the same room, to the point that I've had companies try to recruit me with much less than I make now "but we have a great culture here!" So even though you could theoretically do everything remotely and just talk to people on Skype, they still want you in the same room.

It's like online degree programs. Even if you're doing one from a major school and even if the curriculum is the same and you do the same work, people are still suspicious you were slacking or not doing everything if you weren't sitting in the room while it happened.
posted by Ghostride The Whip at 3:04 PM on May 27, 2013 [25 favorites]


Moving to a "low-cost-of-living" area makes even less sense if both of you work in tech and need to find jobs in the same small town.

What all of this means is not that we should feel sorry for these people, but that these OMGlavish tech salaries we keep hearing about aren't really that amazing, and just maybe there isn't actually a "skills shortage." Also, remote work may be fine for education, with the wonderful new world of MOOCs, but for anything we actually care about (business, athletics), you need to be there in person.
posted by Ralston McTodd at 3:17 PM on May 27, 2013


In terms of wages, 50% of Americans live in poverty (average $18,000 per year for the bottom 50%, more if you include their food stamps) and 75% live near poverty (average $31,000 per year). But those people are by and large not on Metafilter.
posted by hydropsyche at 3:19 PM on May 27, 2013 [4 favorites]


Telecommuting is overrated and not a panacea. I work in the tech industry and I have worked with the same team from work and from a different site. The difference in productivity/communications/belonging is stark and hard to verbalize. Being with a team does make a huge difference. There are so many things that one just takes for granted. Yes, I did work & deliver my objectives by the deadlines even when I was away but I really did not feel like I had grown much at all... YMMV.
posted by asra at 3:20 PM on May 27, 2013 [2 favorites]


how will they ever afford to buy Google Glass for their Labradoodles

google labs
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 3:28 PM on May 27, 2013 [13 favorites]


I paid 42% of my income this past tax year.
Three possibilities:
1. You made significantly more than $250,000 last year in earned income.
2. Your accountant is an idiot.
3. You really don't know your real tax rate. Very few people do. Most vastly over-estimate.


4. You are counting every tax possible: payroll tax, sales tax, property tax, etc.
posted by one more dead town's last parade at 3:38 PM on May 27, 2013 [5 favorites]


4. You are counting every tax possible: payroll tax, sales tax, property tax, etc.

Don't forget to factor in health insurance.
posted by KokuRyu at 3:49 PM on May 27, 2013


On the issue of within class attacks this was just posted by Chris Dillow today on his stumbling and mumbling blog.
posted by srboisvert at 3:50 PM on May 27, 2013 [4 favorites]


I work in tech in Minneapolis. I probably make 25% less than I would in the Bay Area, but I have an easier life in many ways -- 10 minute commute, my house isn't even 1 year of my income, I can walk or bike most places (other than work). Still I'm not sure it's a great career move since the selection of companies is so limited. I've always wanted to get involved in the startup world but there is almost none of that here.
posted by miyabo at 3:59 PM on May 27, 2013 [3 favorites]


Nthing the idea that if your big plan is to win the lottery, it's a bad plan.

If you look not at a dinky flyover town, but a reasonable sized city which just doesn't have the tech reputation, there will be businesses which need your skills. No there won't be startups and IPO's but there might be opportunities to earn steadily and reliably for the length of a career and places to jump to if something happens to your original gig.

I make in the high five figures and enjoy a very satisfactory lifestyle. I have health and life insurance through the company where I've worked for nearly 30 years. If anything ever happened to them (which is very unlikely) there are many people who know of my work who would be willing to hire me, either full time or to consult doing what I'm doing now. My house is assessed in the $130's, but would easily be $700K+ in the Bay area. It was fully paid for when I was 40 (though the casino industry and not having kids helped a lot with that). I have no debt at all today. I believe I'd need to be making at least $200K and probably $250K to enjoy this same lifestyle in the Bay area.

There is no hope of an IPO lottery in my future but neither am I starting over from scratch every few years hoping for the wheel to hit, a strategy which gets more and more depressing the more times you miss and the fewer chances you know remain.

New Orleans has a world class zoo, world-class restaurants, a decent collection of museums, theatre and opera, and of course the famous local things like Jazzfest and Mardi Gras. Almost everything is far cheaper than in California. (Oddly one exception is food; I was surprised that San Francisco seems to be one of the few places which really competes with NOLA in cuisine. No doubt a shared port city legacy.)

Houston, San Antonio, Austin, Memphis, Atanta, Birmingham, Mobile, and other larger and similar sized burgs offer a similar level of opportunity. Not tech utopias but you can be a big fish in a medium sized pond which is still large enough to support fish.
posted by localroger at 4:03 PM on May 27, 2013 [4 favorites]


I've had a seven figure year in my past - last year was very low five figures (mostly by choice but still). "I've looked at life from both sides now." So I have some perspective on this from both sides.

I think that what people are reacting badly to is:

> The high salaries of the Silicon Valley are not enough to send your children to college, buy a house, and retire when looked at alongside living expenses.

and that $250k number.

Even if you live in Silicon Valley, if your family income is $250k you have absolutely no basis to complain - and the complaints are what people are reacting badly to.

It's certainly the case that $250k isn't enough to do all these things "deluxe" - but that's no reason to complain!

For one thing, I zero in on the "must buy million dollar house". Must you? Considering the prices of real estate around there, aren't you engaging in speculation by buying at what are close to record highs?

Despite what you might believe, there are actually rental apartments around there - and by New York City standards at least, quite cheap, because everyone wants to buy that big house.

Do you really need two cars? Do you really need the nanny?

There is actually public transportation around there, even some light rail - if you're married, is it really impossible to arrange it so that at least one partner is taking public transportation to work every day?

Remember, you are living in an area that most Americans think is the pinnacle of existence - a place with all the malls you could ever want, miles of clean fresh highway, and chain stores everywhere! (I've had several opportunities to move there - I'd personally rather cut the soles off my shoes, sit in a tree, and learn to play the flute - but I'm not ignorant as to what people really like...)

And also recall that these people are complaining that they can't send their kids to the very best schools and afford a vacation every year when systematic unemployment seems to have settled in to stay in many areas of the United States.

As for "the lower middle class attacking the upper middle class and avoiding the real enemy" it's precisely the "upper middle class" that has given us this series of governments that have robbed from the poor to give to the rich. The upper middle class is not at all the friend of the poor, and there's every reason for people who don't have so much to look at this large class of entitled whiney people and say, "Fuck them."

Particularly, as I have said, when they complain about living on $250k a year.

The last time I ever complained to anyone about what I made is when I made $21K when I first came to New York. I see homeless people every day I leave the house...
posted by lupus_yonderboy at 4:09 PM on May 27, 2013 [10 favorites]


This is just going to fuel the SF/NY exodus into Austin.
posted by Apocryphon at 4:18 PM on May 27, 2013 [1 favorite]


Many many many normal middle class homes in Vancouver and Victoria BC Canada that sell for a million bucks. It's been a terrible ten years.

Though the turnaround has begun, it is indeed still dire in Vancouver (which has become one of the most expensive cities in the world for real estate). And the 'normal middle class homes' KokuRyu mentions are often... unimpressive, to say the least.
In Vancouver the average household income is $83,330. The average bungalow costs $1,013,750. To buy it and not pay high-ratio mortgage insurance requires $223,025 in cash, and a mortgage of $811,000. At 3% that eats $3,850 a month. With insurance, property tax and a little maintenance, the nut climbs to about $4,500.

So, to buy the average Van bung with conventional financing you need a quarter million in cash, and then $54,000 a year. After-tax, an income of $83,330 in BC yields $64,568. This means the average family buying the average bungalow is left with $830 a month for food, clothing, transportation, utilities, medical expenses and as much alcohol as possible. There’s no money left for investing, retirement or saving. Which probably means the average family could never save $223,025 for a down payment.
posted by stavrosthewonderchicken at 4:19 PM on May 27, 2013 [4 favorites]


The top 10 cities for tech start-ups, as of 1 year ago, according to National Venture Capital Association.....for those of you who want to relocate. Are any of these places really cheap to live in? Maybe Chicago?

1) San Francisco
2) Boston
3) New York
4) Los Angeles
5) Washigton DC
6) San Diego
7) Chicago
8) Austin
9) Boulder/Denver
10) Seattle
posted by Seymour Zamboni at 4:25 PM on May 27, 2013 [1 favorite]


This isn't about "complaining." There are two reasons we should care about this: posted by Ralston McTodd at 4:28 PM on May 27, 2013 [3 favorites]


I've had several opportunities to move there - I'd personally rather cut the soles off my shoes, sit in a tree, and learn to play the flute

Ha Ha......nobody on MF has ever made the point better that what we like is totally personal and subjective. Nicely done.
posted by Seymour Zamboni at 4:36 PM on May 27, 2013 [1 favorite]


If you are talking about salary and careers, you aren't talking about people who are actually wealthy.
posted by benzenedream at 4:39 PM on May 27, 2013 [8 favorites]


Misc. bulk comments.

A cursory online search yields many homes in the Silicon Valley area that are perfectly serviceable for a family of 4 and cost $700,000 or less ... Mountain View

What is a serviceable house for a family of four in your mind? 2 bedroom, 1 bath condo? Just wondering. Redfin/etc. are somewhat deceptive as many of the listings really need $20k+ of work (lots of them need new roofs; I've been looking).

If you work in silicon valley, how many opportunities are there to have an equity stake in a high tech company? I mean is this a common thing for the average college grad who gets hired to write code?

Equity is a funny thing. If you are in the first 30 employees you are most likely getting 0.25% or 0.1% than you are to get much more (1%, .5% for critical employees - anyone asking this question isn't in that category).

Let's take 0.10% series A equity. This means you were early, senior and important enough to be given 1/300th of the total equity of the company (30% employee pool, not atypical).

0.10% series A options become 0.07% after a series B round with 30% dilution, which is not uncommon, and 0.06% after the 20% dilution of the series C. Dilution slows down with each round but is very significant early on.

Let's say your startup sells (later) for $300M. That usually comes around the time of the series C; very few companies hit that kind of value before a few years have elapsed, which means multiple rounds. Companies like Palo Alto Networks, Box.net, etc. went much past C - go look'em up on Crunchbase.

At this point, over 4 years, your pre-tax share of the $300M is $168,000, or an extra $42,000 per year. You probably took a pay cut approximately equal to this to do the startup, at least for the first two or three years. The main difference where you can make money, if you have capital, is to have done an a Form 83b election - early exercise - where you buy your options up front for personal cash. If the company goes well and you last > 2 years, you will be able to pay long term capital gains on the profit from the shares, if they have any value at all.

This analysis assumes there are no liquidation preferences that unfavorably cash out employees. It is not at all unusual for the venture investors to have a preference in cash out - meaning a 2x multiplier of their share, for example. So it's possible the company sees a $500M exit but the employees see $0.00.

Can you do better? Of course. FB, GOOG, PAN, etc. employees all did better. But a lot more people got the more likely return: $0.

There's also a huge difference between working for a software company in the Bay Area and working for a true "start up" in the sense that a "start up" company not only doesn't make money, it often doesn't have a plan for how to make money in the future. The closer you get to scratching your head and going, "Huh, what is it you guys sell again?"

Lots and lots of startups in the bay area are not bullshit websites that get their exit through hype and either stupid panic buys or talent acquisitions. The majority, even.
posted by rr at 4:54 PM on May 27, 2013 [10 favorites]


i love the metafilter hate-on for anyone who isn't a childless poor whose retirement plans consist of some combination of dying early, a socialist revolution and magic. grr! someone has a little more money than me! how dare they have problems! grr!
posted by planet at 5:04 PM on May 27, 2013 [15 favorites]


Considering the prices of real estate around there, aren't you engaging in speculation by buying at what are close to record highs?

In the '70s I couldn't believe people had to pay $50,000 for a nice tract house in a good Bay Area neighborhood. When the prices doubled, I was sure that was unsustainable. When they doubled again, that HAD to be as far as it could go. Then they doubled again, which made me shake my head at the buyers setting themselves up for disaster. Since that time the prices have doubled again.

In between, there were troughs, soft markets and crashes. Not every neighborhood or city has appreciated equally. Some people had to move during a down market and take a financial hit. But record high prices have been a very common theme in the Bay Area for a very long time.
posted by Longtime Listener at 5:19 PM on May 27, 2013 [1 favorite]


how dare they have problems!

It's really more a matter of them not actually having problems, but being too entitled to realize it. Kinda like how, when I curse god because I can't find a nearby parking spot, I'm being an asshole in relation to all of the people who starved to death this afternoon.

Dozens of them, at minimum. Meanwhile, I'm pissed that my "smart" TV has to update itself yet again and now I've missed the opening segment of my show.

Life sucks that way. Goddamn you lord, why must I suffer so? Fucking god, jesus, buddha, muhammad, you're all bastards, I missed the opening monologue.

Someone pass the chips.
posted by aramaic at 5:21 PM on May 27, 2013 [1 favorite]


> If software engineers at the absolute top of their field can't afford houses or college educations,

But that is flat out completely wrong.

Software engineers at the absolutely top of their field often make seven figures. You can certainly have a nice house and send your kids to college for a million.

The original article was not talking about "software engineers at the absolute top of their field" but average tech workers, a family making "only" $250k.

But you can afford a house and a college education for your kids on $250k. I know this for an absolute fact and I can introduce you to plenty of people who are doing just that, in Manhattan or in California.

I mean, look at the categories on the spreadsheet. Gardener? Housekeeper? Almost $15K a year on cars (in three different categories)? $500 a month on utilities? How do you possibly spend that in Silicon Valley, a place you really don't need central heating, unless you have a big house where the air conditioning is constantly running throughout the summer?

Seriously - lose the second car, lose the gardener and housekeeper, get a smaller house, you'll be absolutely fine.

(The spreadsheet is pretty weird. Why include the $0 for charity? Want to rub in the fact that these people feel hard done by? Why include the $0 for "home security"?)
posted by lupus_yonderboy at 5:56 PM on May 27, 2013 [1 favorite]


Who's joking? People are telling me that it's true, but that does not mean that it is. There is something very ugly about people complaining that at their (clearly privileged) position in life it is impossible to get by, and claiming for themselves the mantle of the oppressed, when they are in fact so many standard deviations away from the mean that they don't even really know what it looks like.

I think you are addressing a caricature of the concern, while imagining a caricature of the people involved.

For starters, a lot of us (most of us?) didn't come from here. You seem to think we can't have known what middle-class is - or poverty - because we have a high income today?! You sound like you subconsciously subscribe to some kind of static class system, assigned at birth. The reality is that a lot of our lives don't follow a path that fits within that simple worldview.

(My own experience is quite in line with what people are reporting: I was initially all "OMG! How can I be earning that?! That's CRAZY money!!" and a few weeks later, I realized that despite moving into a far smaller place miles from anywhere, and continuing to cut all my usual corners, my disposable income was less than before, despite the crazy income.)

I was like you - it didn't really register how substantial the differences were. I couldn't comprehend it.

As for "the mantle of the oppressed", that's your own hyperbole, but even if that was what was going on here, I'm not big on dismissing distress just because more distress could be found elsewhere. Distress doesn't need to be the Greatest Suffering in the History of Suffering to be worthy of being acknowledged or an eye kept out for ways to alleviate. I don't see it as a zero-sum game where conceding that someone is having a hard time means that someone else's plight is somehow slighted. That way lies mocking the homeless because "they don't know how good they've got it". That's ugly to me.
posted by anonymisc at 6:18 PM on May 27, 2013 [8 favorites]


In the late 1990's Weigh-Tronix, a company based in the dipsy little burg of Fairmont, MN about 2.5 hours south-something of Minneapolis, bought NCI, a 70's-era Bay area startup which had produced the world's first microprocessor-controlled scale indicator. In 1978.

Naturally, the Fairmont people weren't keen on supporting more than the most minimal operations in the far more expensive California area, so they announced to the horror of most of the SF employees that they were consolidating their engineering operations in Minnesota. Move or move along.

But they did pay for all of those people to fly to Fairmont and visit the facility -- and the local real estate market. And while a fair number of them balked at the weather and isolation, more saw the opportunity to own a mansion with acreage, horses, and a tractor to mow the lawn for what they had been paying for a three bedroom condo. I have met a lot of those guys and most of them are ecstatic at their good fortune.
posted by localroger at 6:24 PM on May 27, 2013 [2 favorites]


> I'm not big on dismissing distress just because more distress could be found elsewhere.

We're not talking about people working at minimum wage to make ends meet - we're talking about people sufficiently rich that they have a gardener AND a housekeeper...

If they are experiencing "financial distress" it's because they are mismanaging their money, not because it's impossible to live a middle-class life on $250k in Silicon Valley.

Even taking the weird numbers from that spreadsheet, they have $60K in expenses, say $90K in taxes - this leaves them $100K a year NET to spend on a place to live. You can find a really nice four-bedroom house in frigging Mountain View for $5K a month - $60K a year - that still leaves you the ability to save $40K a year - or $50K if you lose the gardener and house keeper.

In other words, it seems to me that you could save every year as much as the median American family grosses in a year (source) with little trouble at all...
posted by lupus_yonderboy at 6:33 PM on May 27, 2013 [2 favorites]


Nowhere - here or in the linked articles - have claimed anything about the ability of well-paid workers to "get by", which to me reads "put food on the table; survive".

Well, the headline of the linked article, repeated in the text of the article itself, is "You need equity to live in Silicon Valley." Not "You need equity to live in Silicon Valley if you want to have household employees and send multiple kids to private colleges without taking out any loans."

I think the second thing is a perfectly good subject for an article, but then that should be the headline: "You need equity to live like a rich person in Silicon Valley."

And pointing that out doesn't mean you think the people pulling in six-figure incomes in SV are bad people, or should be eaten. I think they are mostly good people who build lots of good things and would probably taste terrible.
posted by escabeche at 6:43 PM on May 27, 2013 [2 favorites]


And you need equity to live like a rich person anywhere, not just in Silicon Valley. I'm guessing you don't live like a rich person, escabeche, even in flyover country. And you have a good job.
posted by madcaptenor at 6:58 PM on May 27, 2013


Also factor in that San Francisco is like New York in that it's less a "real" place anymore and more a city-sized advertisement for how great your life could be if you just earned another $50-100k. When you have whole neighborhoods full of $250k salary earners, well, you don't quite get the same spread of socioeconomic groups that you get in cities not centrally dominated by a speculative industry fueled by the dying gasps of late capitalism.

You know, looking in on this, i don't have the same sudden vitriol that a huge majority of people in this thread seem to have.

I'm not rich, i'm not wealthy, i don't even make very good money. I made 22k last year, although i work in a tech field where if i hustled(which i plan on doing soon after i get my life in order) i could be making a lot more. Still, i'm not going to be making 250k any time soon, much less even 100k. Hopefully 50 at some point in the next couple years... maybe

That said, i think that people are looking at this as "lol you make that much money and you're complaining? go cry in your caviar asshat" are missing the goddamn point..

I'm up in seattle, and the same thing is happening here that's happening to as far as i can tell all of the cities in that tech startup list that Seymour Zamboni posted above. The house my friend grew up in, in a normal but not super nice part of town, that isn't super huge or fancy or anything is worth about a million dollars now. Several shithole rental houses i've lived in are worth an appalling amount for where and what they are too. And list prices for houses are starting to be constantly more of just ebay auction starting price type things, where people will outbid eachother and make massively over-list offers on houses.

Meanwhile, the rental market is getting completely fucked. My uncle owns a few rental houses he bought trashed when they were cheap and fixed up, and every time someones moves out he ends up checking the market in the area and basically doubling the rent. The people moving in? New amazon/other tech company workers pulling in huge dual income who just want somewhere to live while they go house shopping. On the lower end of things, apartments in general have reached a point that anyone working any retail/foodservice job has 3-4 roommates and probably still lives far down the bus lines/lightrail from where they work. There aren't really any places in town that aren't SRO shitholes that i could rent even a studio apartment by myself anymore, and most wouldn't rent to me anyways since there's "your income must be 3x the rent" rules. Most people in their first Real Job™ in their career they pick up will only be able to afford a shithole apartment, or one in a weird area. Or they'll be living pretty frugally in a shitty way.

On another side, cash for clunkers a few years back killed the used car market here. I remember hearing an interesting(NPR maybe?) piece on how effectively it ruined the market, but there are no decent cheap used cars if you're kinda poor anymore. This caused a shakedown through the entire market, and as people are moving in to town and buying up the mid-range(IE around 5-10k, decent) used cars prices are slowly creeping up, and there's no bottom rung of the ladder there anymore.

I could go on, but everywhere i look it isn't just that the bottom rung is being kicked off the ladder, the entire thing is being pulled upwards. And this is stark, because when i was getting out of highschool rent was cheap as hell and i was thinking "oh man, i'm gonna get out of college and buy an awesome car and rent a sweet apartment and be living the life even on 40k or less". And in just the time it took me to get through that, work a few years at my first job, etc the entire landscape has changed.

So yea, i get that it's complete crocodile tears for these people, and i get why everyone is acting that way. But shouldn't we be taking the fact that even they are starting to feel the squeeze to be a serious air raid siren of "DANGER, WARNING, SHIT IS GETTING REALLY FUCKED UP LIKE WAY MORE THAN IT HAS BEEN EVER BEFORE"?

I also think a lot of people on here think that someone making 100-200k is living the pimp life are seeing it a bit unrealistically. lupus_yonderboy's post above highlights a bunch of "luxuries" you don't really need, but this just reminds me oddly of the also extremely disdainful armchair quarterbacking responses to this thread. I know that picking apart peoples hypothetical lives like this is a favorite magnet, but seriously.

So we're talking about a family with two kids here.

First there's taxes.

Then they need probably a 3 bedroom house, not too far of a commute from work, in a decent "family" area. It's easy to hit 1m in seattle doing that now. the market below that is extremely competitive too, from everything i've seen and heard. People are making cash offers on 1m houses fairly often i've heard.

Living in an apartment with kids sucks. I grew up in an apartment with my family, i know. I think it's not some bourgeois explanation to say you're getting a house. It's not some insane luxury, as some people looking at the current fucking living situations seem to think. Didn't it used to be a basic, standard tenet of "growing up and having a family?" jesus christ.

A lot of families need two cars to make shit work. What if both people work in opposite directions? What if it's a 30 minute commute to drive but 1:15 or more to take public transit? saying that they want to spend less time commuting is once again, not some ridiculous bourgeois thing especially when a lot of people are moving further out just to be able to afford a place.

If both parents work, and the kids are under a certain age maybe you need a nanny, or daycare(which is expensive), or afterschool care, etc.

And to revisit the public transportation point, this varies WILDLY depending on where you live, where you work, and how those two places relate even just in the city i live in. the SF bay seems to be a lot more spread out in that sense. It might be possible, but it might also mean that one of the two people gets home way later than the other one each day and barely gets to see their family.

I mean you can "boo fuckity hoo" to people making a lot of money if you want, but my point is more that it's really easy to live a decidedly middle class existence where no one is driving a mercedes, or living in a ridiculous house or anything and pretty much still be throwing basically all your money away on existing. This is a lot more true around 100k total income for the family than higher, but to pretend the middle class isn't being seriously eroded in these "tech boom" areas just feels like inventing excuses to hate on "rich" people instead of recognizing that everyone is getting fucked here, not just the guys working at starbucks.
posted by emptythought at 7:11 PM on May 27, 2013 [40 favorites]


I think the second thing is a perfectly good subject for an article, but then that should be the headline: "You need equity to live like a rich person in Silicon Valley."

The thread should be closed at this. Class warfare aside, I think we all agree that the article is poorly framed and mostly bullshit. Those of us living it are basically saying we don't and can't live the way this fictional family does.

The people I know living the life of Riley are indeed the people who drew the winning lottery ticket and they have salaries of zero dollars because they live off the interest on their millions.
posted by annekate at 7:13 PM on May 27, 2013


Then they need probably a 3 bedroom house, not too far of a commute from work, in a decent "family" area.

But that's the thing. They manifestly don't need a lot of the stuff you mention. They may well want it. It may be understandable that they want it. But it isn't something they need and it is a luxury they choose to pay for.

Living in an apartment with kids may have sucked for you; but there are millions upon millions of people who make it work just fine in these markets. Not to around the world. The idea that people with kids require at least a three bedroom house is bad for everyone. And the planet.
posted by Justinian at 7:29 PM on May 27, 2013 [4 favorites]


I'll acknowledge that, but i'm saying it's a pretty basic standard of living being described here that doesn't get attacked elsewhere in the country where people are doing it for less money.
posted by emptythought at 7:51 PM on May 27, 2013 [3 favorites]


I'll acknowledge that, but i'm saying it's a pretty basic standard of living being described here that doesn't get attacked elsewhere in the country where people are doing it for less money.

A discussion I find interesting is when I talk to fellow Bay Areans about why we stay.

There are lots of interesting answers: "This is the only place with jobs", "this is where I can make more money", "I want to do startups [to make money, to have a fun interesting lifestyle, to have the possibility that something they do actually matters]", "this is the only place I've ever felt a cultural fit", "if I leave, I'll never be able to afford to come back", etc.

It just gets harder to leave as you get older.

Anyone want to set up a Bay Area expat compound in Austin? The guys I know there are *constantly* complaining about the lack of tier1 talent. And it's 73 degrees there this evening instead of overcast and crappy like it is right now in Mountain View.
posted by rr at 7:56 PM on May 27, 2013 [1 favorite]


samofidelis, it’s pretty normal to take local cost of living into account when gauging the relative magnitude of amounts of money, no need to be sarcastic. $200k/year does in fact buy a lot less in parts of the world where normal humans would have access to jobs that pay those amounts.
Yeah, but that's such a copout, when you're talking about places that charge $3k for a one bedroom apartment. If you're paying that much it's not because you need too, but because the marginal utility for you personally living in that particular area is worth $2.5-$2k to you. You could easily live somewhere else and commute. It really needs to be looked at as the cost of living within commuting distance to your job.
Oh no, some people want to work in challenging fields, have a nice house, send their kids to college, and retire comfortably
And they want to do all those things living in vastly over-priced neighborhood, and then whine about how poor they are.
Without quibbling on specific line items, all of those things - the ability to educate your kids without going into debt, the ability to have a nice house, money for transportation, travel, and personal care - strike me as things everyone should have.
The question is whether or not you're entitled to those things without a commute. While those things are all trappings of the traditional middle class American lifestyle, so is an annoying commute, unfortunately. And in a few years we'll have self-driving cars so it will be even less of an issue.
Hardly. I work on one end of the peninsula, my wife on the other. Living on the peninsula is a requirement if we want a commute less than 40 minutes one way and to reduce our carbon footprint.
Buy an electric car. And don't act like commuting more then 40 minutes is some enormous, unthinkable sacrifice here.
That's true. Until you put fuel in the car. You know. That thing that will cost you hundreds if not thousands more a year living in San Jose than St Louis or Dallas.
What are you talking about? A gallon of gas is $4.01 in CA right now, and $3.38 in Texas. And how much gas are you buying if you don't have a long commute? I would guess people who live in the DFW area probably spends a lot more on gas then someone living in the expensive areas of S.F.
Metafilter: How dare people live anywhere but flyover country.
it's not "flyover country vs. SF" it's "living in S.F vs. commuting to work"
I just don’t think you have a leg to stand on when it comes to discussing self-perception of class
People's 'self-perception's are totally out of whack. The question is what is their actual situation. If you're making $250k and feel like you're living a typical middle class life in America, you need to get over yourself.
I'll acknowledge that, but i'm saying it's a pretty basic standard of living being described here that doesn't get attacked elsewhere in the country where people are doing it for less money.
So what? You can live somewhere else and have that, or you can live in the S.F. bay area and not have that. If you want to raise kids instead and live a traditional middle class life there are plenty of high paying tech jobs around the country. It wouldn't even be geometrically possible for everyone in places like SF or Manhattan to live like that. There just isn't physically enough space.

If cities allowed more apartment buildings to go up then you'd have much lower rents, and much more affordability. But if you only want one family living on a piece of land instead of 20 stacked on to top of each other then it's just can't physically happen.

In fact this ridiculous aversion to living in an apartment building is a huge reason why "the rent is too damn high". Cities pass ordinances that ban construction of high density living areas.
posted by delmoi at 8:38 PM on May 27, 2013 [5 favorites]


I haven't heard anyone talk excitedly about tech in 10 years.

They do excitedly talk about money, though. All the time.
posted by dglynn at 8:43 PM on May 27, 2013 [3 favorites]


The article and the numbers it cites are risible, but it's interesting to think what the actual numbers should be. In particular, for housing, link #2 cites average rents between 2 and 3k per month, and the article lists a mortgage on a $1 million house as 44K. So the total housing costs for the year are between 24K and 44K. If the income is 250K, and total tax is about 110K, that leaves roughly 250-110-40 = 100K for the rest. The cost of groceries, cars, appliances, clothing, public transportation, gas, etc, is perhaps 20% more in SF than in the average location in the US. So the remaining income comes down to 80K, in purchasing power parity.

So even the ppp-deflated, post-housing, post-tax income is greater than the mean income in the US, or even the gross median income in SF. In fact, to have 80K in post-housing, post-tax income in middle-USA, your income would have to be about 150K, by my rough calculation. That puts you in the 91st percentile, nationally. So 250K income in SF, including housing, taxes, and cost-of-living, definitely puts you in the 99%, but if we define "middle class" in terms of where you are in the effective disposable income distribution, the 91st percentile is arguably a bit far out on the tail to be called part of the middle.

(Although that is just by the numbers. None of this changes the fact that the kind of life that defined the middle class in the 50s-70s, which was possible for vast swathes of America then, may not be possible even for the relatively rich in America today.)
posted by chortly at 8:43 PM on May 27, 2013


None of this changes the fact that the kind of life that defined the middle class in the 50s-70s, which was possible for vast swathes of America then, may not be possible even for the relatively rich in America today.

Worth mentioning that a typical house size in 1960 was maybe 1200 square feet; it is certainly possible for the "relatively rich" in America to get 1200 square feet to live in today. But most people want much more space and much more stuff than middle-class people in the 50s-70s did. Not saying that's bad. But it does matter for the computation you're making.
posted by escabeche at 8:54 PM on May 27, 2013 [2 favorites]


It's also worth bearing in mind that in order to earn this $250k (or even $30k for many families), neither parent is able to be home for the kids, which brings its own costs and externalities that few seem to be factoring. It's definitely not the 50s-70s situation where there could be expected to be both an income and someone dedicated full-time to maintaining and bettering the family and household.
posted by anonymisc at 9:16 PM on May 27, 2013 [4 favorites]


True -- though with 80K in effective disposable income, you can pay 20K for full-time day care and still have more disposable income than the average gross income in the US. (Though that doesn't affect the fact that some parents may prefer to stay home with their children if they could afford it.)

But it does matter for the computation you're making.

The computation was only about comparing incomes in SF to the rest of the USA in the present day. Certainly comparisons to the past would entail much more complex computations, if that's even possible.
posted by chortly at 9:41 PM on May 27, 2013


I think the lesson here is that we would all be better off if we'd focus our efforts on ensuring a wide gap between our disposable and our discretionary incomes, rather than how much disposable income we have. A person making $x may or may not have more discretionary income than a person making 4 times $x.

It depends on the opportunities we have and the choices we make, and where one person might spend a large portion of their disposable income on lottery tickets, and another might move to an expensive area with lots of employment opportunity and good public schools, and another might buy a franchise or local store, and another might hunker down and do the best they can selling and raking in commissions and investing it, and...well, you get the idea. There are a multitude of perfectly legitimate choices we can make, and just because someone's choices makes them more disposable income, it doesn't mean they have more discretionary income.

Of course, one can argue that some people can be making poor choices that reduce their disposable income, but you can argue that at any/all income levels, and in any geographical location. Articles like this are somewhat annoying because they come off as "oh rich people aren't that rich", but what I take them as is "oh significant disposable income doesn't guarantee significant discretionary income", and that's actually a really good message to send people who are considering a choice that puts them in the significant disposable income category.

In short: we'll all do better if we take away the lesson that you will be better off, regardless of income level, if you strive to maximize the gap between disposable and discretionary income, by whatever means you have at your disposal.

which is why I am one of very few in my neighborhood who doesn't have a gardener, and which is also why my lawn looks like crap, but $80 a month is $80 a month no matter how you slice it
posted by davejay at 9:58 PM on May 27, 2013 [1 favorite]


I live on a single Silicon Valley engineering salary of substantially less than $250,000. I am a full-time single parent. I own a home, a purely-for-fun convertible, a sailboat, and contribute about $1,000/month to a 401k account. My daughter also has a full-time nanny watching her while I'm working. I have no debt other than the mortgage and enough money left over to go on vacation, and have fun. At some point every day I think about how incredibly fortunate I've been to be as well-off as I am, even in such an expensive part of the world.

So, excuse me when I roll my eyes.
posted by tylerkaraszewski at 10:19 PM on May 27, 2013 [7 favorites]


Not too long ago, I received two job offers, one in Pasadena, one in San Francisco. The SF offer was in the low six figures, and exceeded the offer in Pasadena by about 40k. Obvious choice, right?

I compared the two offers post-tax: the 40k advantage narrowed to a 22k advantage.

Then I did some cost of living estimates. The LA metro area isn't exactly cheap, and there are definitely some more economical options depending on where you look in the Bay Area, but it seemed likely enough to cost me 7-10k more per year to live in comparable space within comparable commuting time from work.

So... what looked like a 40k advantage at first glance started to look more like a 12k -- maybe 15k -- advantage on closer scrutiny.

Still a substantial advantage, I guess. And as someone who has recently lived on an annual income smaller than that adjusted difference between the two offers, I understand why some people find it difficult to sympathize with anybody who's making high five figures, let alone six.

But it was definitely was an eye opener for me on how what looks like a lot of money from a distance can turn out to be significantly less when you get up close.
posted by weston at 1:14 AM on May 28, 2013 [1 favorite]


It's interesting to me that you would peg the cost of living difference between LA and SF to be 7-10k. AAA's reported cost of maintaining a car is $9k a year. If living in SF is what allows a family to maintain their standard of living with one fewer car, the cost difference can become moot.

If anything is able to sustain high housing prices in the medium and long term, it's that. People who know they're paying a premium, but who can't save any money by leaving, because leaving would involve increasing their transportation expenses.
posted by alexei at 2:26 AM on May 28, 2013 [1 favorite]


Looks like we are almost there

First they ignore you, then they laugh at you, then they fight you, then...
posted by any major dude at 5:54 AM on May 28, 2013


samofidelis: "if you live here, you just have to accept and understand that $200k+ is maybe upper middle class. Have kids and you become pretty much middle middle class.

New advances in molecular engineering led to the development of breakthrough new tiny buckets appropriate for the volume of tears the rest of us finna shed.
"

Old news - You need to check out the new nano-violins.
posted by Samizdata at 6:11 AM on May 28, 2013


samofidelis: "You're right; far better we all agree to bemoan the sorry lot of the rich."

As a wise person once said, "Money can't buy you happiness, but it does give you your choice of misery."
posted by Samizdata at 6:14 AM on May 28, 2013


This thread should be bombed from orbit.

Metafilter: we're great at being considerate, except when mention comes of people richer than ourselves. Fuck those guys.
posted by corb at 8:02 AM on May 28, 2013 [1 favorite]


[Meta-discussion, as you know, goes in MetaTalk.]
posted by goodnewsfortheinsane at 8:07 AM on May 28, 2013


Sorry, goodnewsfortheinsane, MeTa now open.
posted by corb at 8:55 AM on May 28, 2013


The Billfold has been doing a really interesting series of interviews, Ask A Rich Person, which seems germane to the topic at hand. These include: On the other side of the spectrum, they've also had: posted by ChuraChura at 9:51 AM on May 28, 2013 [16 favorites]


So this "analysis" is basically my life. And I have a lot to say but I really ought to do work instead, so I'll say a few things.

One, no one is complaining in the linked article. It's an analysis done by a wealth management firm to drum up business. These hypothetical people aren't looking for your sympathy because they don't exist.

Two, this analysis is, as others have pointed out, completely full of shit. It makes all sorts of insane assumptions. My opinion is that two cars is not actually unrealistic - and having lived in the silicon valley 'burbs with one car for 4 years, having only one car for a family of four is borderline unrealistic. It's actually a real challenge. But you can keep a car for 10+ years, ffs. But the vacation, discretionary spending and basically all the spending assumptions are dumb.

Three, housing in silicon valley is indeed really expensive. It is legitimately hard for everyone to afford their first home. I know these $250K dual-income couples and house buying is a real, honest struggle. Saving $200K while paying silicon valley rents is hard. It takes years. An $800K mortgage is about $3600 per month for a 3.5% mortgage, excluding points, fees, etc. Property tax is about another $1000 a month. (seriously, fuck proposition 13). Throw in water, heat and electricity and you're at $5000 per month for housing. That's a serious challenge even for people with big salaries. And silicon valley is not alone here - the two other cities I'm most familiar with, Toronto and Vancouver are the same way. If you don't have a high income or assets coming in from elsewhere (e.g. parents) you just can't buy a house. And I think that's problematic. Clearly renting is a better option for some people, but when a large proportion of the population can only afford to rent I think it's a symptom of a broader gap between the asset-rich and the asset-poor, even when the asset-poor may have high incomes. Because if high earners can't accumulate assets, it sure doesn't bode well for poorer people.

Finally, yes, you can make $250K and be middle class. These are normal people who take orders and have to go to work every day. "Class" is not ranking people by income. Many, many upper-class people have little to no incomes. Besides, that basic discrepancy is hardly news - Toronto Life was running articles 10+ years ago about the "poor rich" who drive BMWs and live in wealthy neighbourhoods and who basically live paycheque to paycheque. Now, I agree, many of those people are idiots who overspend, but while lofty aspirations and poor impulse control are a sign of the upper classes, simply ignoring your budget doesn't make you upper-class.
posted by GuyZero at 9:51 AM on May 28, 2013 [9 favorites]


In fact this ridiculous aversion to living in an apartment building is a huge reason why "the rent is too damn high". Cities pass ordinances that ban construction of high density living areas.

This is a particularly San Francisco-specific idiosyncrasy which I am at a loss to explain. SF hates density which is indeed crazy for such a tiny little city on a peninsula. That said, I'm not sure if things would be better if SF looked like Vancouver which is rapidly approaching becoming an arcology.
posted by GuyZero at 9:55 AM on May 28, 2013 [2 favorites]


And silicon valley is not alone here - the two other cities I'm most familiar with, Toronto and Vancouver are the same way.

Toronto and Vancouver are in the midst of a rather large real-estate bubble, and from the similarity of the numbers, San Francisco might be in bubble territory as well.
posted by one more dead town's last parade at 10:09 AM on May 28, 2013


Vancouver has been in a bubble for nearly 20 years which I think moves it beyond bubble into actual long-term price inflation that isn;t going to go away (baring armageddon of some sort)
posted by GuyZero at 10:14 AM on May 28, 2013


Vancouver has been in a bubble for nearly 20 years

Prices were roughly flat from 1992 to 2002. It's shortly after that that housing prices decoupled from economic fundamentals like inflation and wages.
posted by one more dead town's last parade at 10:20 AM on May 28, 2013


ChuraChura, those are really interesting articles, thanks.
posted by corb at 10:21 AM on May 28, 2013


GuyZero: "Finally, yes, you can make $250K and be middle class.
...
Three, housing in silicon valley is indeed really expensive. It is legitimately hard for everyone to afford their first home.
"

The U.S. Cities With the Most Leftover to Spend ... After Paying for Housing
A number of folks brought up the issue of cost of living. "Does your index take into account the high cost of living in some of the metro areas that top this list," one commenter asked. "The amount of money people have to buy presents is diminished when they're paying over a third of their income on housing."

In many cases, it is a quite a bit more than that. With the help of Charlotta Mellander, I took a look at the amount of money people in different cities have left over after they paid for housing.

With just a few exceptions, the places at the top of this list have among the most expensive housing in the country. But average wages and salaries are substantially higher, enabling them to more than compensate.
posted by tonycpsu at 10:53 AM on May 28, 2013 [1 favorite]


Huh. I'd assert that because of crazy housing prices that first-time home buyers are paying considerably more than the average for housing costs. But certainly no one is forced to buy a home and rents, while expensive, are indeed not bankrupting people.
posted by GuyZero at 10:57 AM on May 28, 2013


^ In terms of wages, 50% of Americans live in poverty (average $18,000 per year for the bottom 50%, more if you include their food stamps) and 75% live near poverty (average $31,000 per year). But those people are by and large not on Metafilter.
If you move into the rest of the world ( I know that is difficult for a lot of you) it will be seen that a single person on $39,000 is on the 1% border. Makes me reflect a bit about it all in the big picture.
posted by adamvasco at 11:08 AM on May 28, 2013 [1 favorite]


GuyZero: "Huh. I'd assert that because of crazy housing prices that first-time home buyers are paying considerably more than the average for housing costs. But certainly no one is forced to buy a home and rents, while expensive, are indeed not bankrupting people."

Presumably, though, a lot of those first-time buyers are moving into smaller starter houses, perhaps older ones, and perhaps ones not in the best neighborhoods, which is what middle class people often do to bootstrap themselves into home ownership. I don't have an empirical case for that, though, so I'll accept your point that the jump to home ownership in overcrowded real-estate markets may not be as easy as it is for someone who picks up their things and moves to suburban areas of Houston or Kansas City or Huntsville. But it's not like owning real estate is a god-given right that any middle class person should be able to afford in any city they want to live in, though it's been sold that way as part of the "American Dream" for a long time now.
posted by tonycpsu at 11:10 AM on May 28, 2013


With just a few exceptions, the places at the top of this list have among the most expensive housing in the country. But average wages and salaries are substantially higher, enabling them to more than compensate.

I'd like to see those numbers adjusted for other cost-of-living factors. San Francisco may be 4th on that list, but I bet it goes down if you factor in that everything seems to cost more here.
posted by madcaptenor at 11:10 AM on May 28, 2013


But it's not like owning real estate is a god-given right that any middle class person should be able to afford in any city they want

Sure. I think it's problematic, but it's not a right.

Interestingly, if you want real rich people problems: 'Iceberg homes' make for irate neighbours in London:

"Driven by soaring house prices and tight regulations on above-ground construction, the super-rich here have taken to spending millions of dollars digging deep to increase their square footage and boost property values. And these subterranean enclaves have become more and more elaborate – housing everything from tennis courts to bowling alleys, theatres and even a car museum."
posted by GuyZero at 11:15 AM on May 28, 2013 [1 favorite]


Many many many normal middle class homes in Vancouver and Victoria BC Canada that sell for a million bucks. It's been a terrible ten years.

No-one making middle class income in Vancouver should be expecting to live in a single family home. It's looney to expect that. Like was mentioned up thread people should treat that kind of living situation as a luxury on par with drving a Lexus instead of Honda. Whatever the appeal of Vancouver (and I don't get it myself which is why I don't live there) a lot of people also value the appeal and that means one should expect densification.

Which probably is the root of the issue. If you choose to work in the kind of place where single family homes go for seven figures then you might be forced to consider that a luxury.
posted by Mitheral at 11:17 AM on May 28, 2013


So glad I left the bay area 10 years ago.
posted by joseppi7 at 12:07 PM on May 28, 2013


From one of ChuraChura's excellent links:
I feel like being poor often means all of your stuff is half broken, and I would prefer to be able to fix the big important stuff without using my credit card.

This totally sums it up. And make sure you consider your teeth, your mental health, your clothes, your car in the list of things that are all "half broken."
posted by fiercecupcake at 12:08 PM on May 28, 2013 [3 favorites]


Also, I'm a queer weirdo, and that's what keeps a lot of us here - there is literally not another place on earth where I can be as assured of finding community, legal protection, and generally be treated with respect despite my obvious gender weirdness and queerness etc.

...apart from most other major cities in the US. Many of the ones not in California will even allow you to marry someone of the same sex.
posted by ROU_Xenophobe at 3:47 PM on May 27 [+] [!]

there is literally not another place on earth where I can be as assured of finding community, legal protection, and generally be treated with respect despite my obvious gender weirdness and queerness etc.

This is not true.
posted by Seymour Zamboni at 3:48 PM on May 27 [2 favorites +] [!]

Are you both queer? Gender non-conforming? Whether or not the answer to those questions is yes (and I have a feeling it's not), you should probably speak from your own experience and not dismiss latke's experience with hetero/cis-sexism because it is not the same as your own.
posted by kylej at 12:14 PM on May 28, 2013 [1 favorite]


(seriously, fuck proposition 13).

Seriously. One consequence of Prop 13 is that it creates a real disincentive to move within California, making the property market that much tighter and more expensive for newcomers. People outside California may not grok how big the difference is, but the longer you own, the better off you are. (Once again, the Baby Boomers fucked everyone coming along after them.) So our next door neighbors pay less than half the property taxes we pay, for a roughly similar house on the same size lot. Because they have been here for 20 years. The guy three houses down the street, who bought before 1978, pays one-fifteenth what we pay. If you have been in a house for more than ten years, and you are contemplating a move, property taxes are going to be a factor in the decision making process. I know people who have turned down job offers because of the property tax hit. Or undertake thorny renovations when they would have preferred to move, again because of the property tax factor. This limits supply.

I was at a city council meeting earlier this year and learned the city keeps a map of all the houses that have not been sold since 1978, with an eye to potential future tax revenues, because the property tax situation is that crazy.
posted by ambrosia at 12:25 PM on May 28, 2013 [3 favorites]


but the longer you own, the better off you are.

My house was built in 1963. I am the second owner, having purchased it in 2008.

My property taxes ar about $10,000 annually.

The nice lady I bought the house from was paying $900. Annually.

People who inherit houses in our neighbourhood from their parents do not sell them - they rent them out as they have a structural advantage in their ability to offer lower rents and/or retain much more of the rent as income. This is one reason that the housing supply is so tight - in normal cities long-term owners who are house-rich but income-poor eventually have to move. Which sounds sort of unjust, but honestly my personal experience is that it works much better for communities when people pay a reasonable, fair property tax. Prop 13 is terrible.
posted by GuyZero at 12:55 PM on May 28, 2013 [1 favorite]


ambrosia: Seriously, fuck proposition 13. Once again, the Baby Boomers fucked everyone coming along after them.

I realize that knee-jerk boomer bashing is quite fashionable these days, but this is just wrong. Prop 13 was passed by voter initiative in 1978. Many boomers were not even old enough to vote and the rest were in their twenties, not exactly a big property owning or voting demographic. The two prominent sponsors of Prop 13 were Howard Jarvis (born 1903) and Paul Gann (born 1912). The Greatest Generation was running the show in those days. Jerry Brown, born before WWII, was governor. Jimmy Carter, WWII vet, was president at the time. Ronald Reagan, WWII vet, was elected president two years later.
posted by JackFlash at 1:06 PM on May 28, 2013 [5 favorites]


Are you both queer? Gender non-conforming?

Nope.

Has latkes lived in NYC? DC? Boston? Minneapolis? Miami? Seattle? Portland? Other Portland? Burlington? Houston? Dallas? Atlanta? Denver? Baltimore? Pittsburgh? Charlotte? Columbus? Raleigh-Durham? Austin? Asheville? New Orleans? Tampa? Chicago?
posted by ROU_Xenophobe at 1:31 PM on May 28, 2013


NYC might not be such an awesome example these days. More to the point though, it is also an expensive location, like most of the places on that list.
posted by en forme de poire at 2:08 PM on May 28, 2013 [1 favorite]


I realize that knee-jerk boomer bashing is quite fashionable these days, but this is just wrong.

You're right. Prop 13 wasn't the Boomers screwing over everyone younger, it was old white people voting to screw everyone younger and less white. But the Boomers have consistently refused to consider repealing it so they certainly bear their fair share of blame for maintaining the status quo.

Prop 13 is the single worst piece of policy I am aware of in California right now. There are worse things but they are on such a smaller scale that the impact is less. Prop 13 is a disaster of truly monumental proportions. I don't think people unfamiliar with California (or even many Californians) are aware of just how awful it is.
posted by Justinian at 2:16 PM on May 28, 2013 [4 favorites]


So many bad state government policies to choose from in California. I'm still trying top figure out whether government ineptitude in California is the cause or effect of the widespread distrust of government around here.
posted by GuyZero at 2:20 PM on May 28, 2013


Justinian: You're right. Prop 13 wasn't the Boomers screwing over everyone younger, it was old white people voting to screw everyone younger and less white.

White non-hispanics make up 42% of California. About a quarter of those are over age 50. So your old white people make up about 10% of the population. You might have to cast your anger net just a little bit wider.
posted by JackFlash at 3:11 PM on May 28, 2013 [1 favorite]


The CA voting population, like most of the US, skews whiter and older than general population demographics. Prop 13 was basically giving existing homeowners a break at the expenses of future homeowners. It's the fault of anyone that voted for it.

Personally, I'm content hating the law as opposed to its backers.
posted by GuyZero at 3:32 PM on May 28, 2013


White non-hispanics make up 42% of California.

To be fair, it was just under 70% in 1978. And for the median-age poster on MetaFilter, "old" probably means more like "40 and over" than "50 and over."

I also want to say that, if I am characteristic of non-Californians, non-Californians have no idea how Prop 13 actually works, and just ... wow? Really?
posted by escabeche at 3:32 PM on May 28, 2013


Are you both queer? Gender non-conforming?

Nope.

Has latkes lived in NYC? DC? Boston? Minneapolis? Miami? Seattle? Portland? Other Portland? Burlington? Houston? Dallas? Atlanta? Denver? Baltimore? Pittsburgh? Charlotte? Columbus? Raleigh-Durham? Austin? Asheville? New Orleans? Tampa? Chicago?
posted by ROU_Xenophobe at 1:31 PM on May 28 [+] [!]


Like I said, this is where I feel most comfortable (having travelled and visited other places, and talked to queers from around the world). And as Kylej said, as a non-queer person you are actually not qualified to evaluate the queer-friendliness of anywhere. But what's your point anyway? That every poor queer (or other person who makes less than 200k/year) in California should move to Columbus? It's not a realistic plan. There is a real problem that middle class and poor people are being completely priced out of the Bay Area. There are literally hundreds of thousands of us. We should all move?
posted by latkes at 3:52 PM on May 28, 2013 [6 favorites]


This thread is interesting to me since I keep having these discussions with people about the bay area.

Everyone I know outside the bay area has an offer from a bay area company and is pondering coming. They currently own houses (I don't), etc. and are asking where to move. Each time I point them at a place that's near their proposed workplace (earth to Google and others: choosing mid-peninsula locations is doing no one any favors) they freak and tell me not to point them to where the rich people live. Like Mountain View or Sunnyvale. Then they look for houses comparable to theirs, by crime or by walk score or by size, and they freak again.

It is true that you can buy cheaply (cheaply meaning 700k) if you go the townhouse route, or if you're willing to go to Morgan Hill, South San Jose (oh boy, Tully road - check out the violent and non-violent crime stats), or what have you. For most of these people, who are getting on into childbearing years, these are crap options.

I happen to be looking for housing for my wife and I right now, and it is brutal. Places within 30 minutes of work in a non-sketchy neighborhood are $3000 to $5100 a month (complexes and private owners alike) for a 2BR/2BA (my wife works at home; we need a second room for an office -- the kitchen is my office now). Sure, non-sketchy is a luxury, but it's a non-negotiable for us, so whatever.

It's particularly brutal because I (recently, about 4 months ago) took a 70+% paycut to switch from big company stuff to something I actually want to do. I still make a reasonable amount but the prospect of spending > 60% of post-tax takehome on housing is both terrifying and maddening.

And the properties. Barely maintained stucco shitboxes with dirty carpets and asbestos are the outcome of prop13. It's incredibly how shoddy and awful the housing stock is, but also unsurprising.
posted by rr at 6:41 PM on May 28, 2013 [2 favorites]


So just to be clear, everyone against Proposition 13 is... in favor of having older people put out of their homes because of increases in property taxes they no longer can afford?
posted by corb at 9:41 PM on May 28, 2013


So just to be clear, everyone against Proposition 13 is... in favor of having older people put out of their homes because of increases in property taxes they no longer can afford?

There have been many, many proposals on what to do about that problem, and unfortunately only the ones that benefit the landed actually got voted in.

First of all, if not evicting grandma is the issue, then why does prop13 tax basis transfer to children (Proposition 58: Reassessment Exclusion for Real Property Transfers Between Parents and Children based on Prop13 tax basis)? This is ___explicitly___ the single largest factor in the crap rent market in the bay area because it effectively creates a special kind of trust asset that the holder is encouraged to keep but put minimal effort into maintaining.

Look, this is just wrong: Proposition 58 provides for an exclusion from reassessment real property transfers between parents and children. Proposition 193 expands this tax relief to include certain transfers from grandparents to their grandchildren (transfers from grandchildren to grandparents are not eligible). Specific requirements must be met.

Why? Why are inheritors given a special time based tax benefit?

Second, proposals have been made to accrue the taxation and apply it to the estate at the time of transfer. No old people getting kicked out, much fairer taxation. Lest you think that grandma is going to be driven to sell by some resulting cost-of-living increases, California has you covered:

Propositions 60 and 90 allow senior citizens to transfer the adjusted base year value from their current home to a replacement dwelling. Certain requirements must be met.

This "you are OK with evicting grandma" thing was used to sell prop13. And then prop13 and related propositions created a situation that benefits the (primarily generally wealthy) existing landed residents at a cost to, well, pretty much everyone else.
posted by rr at 9:59 PM on May 28, 2013 [5 favorites]


"I realize that knee-jerk boomer bashing is quite fashionable these days"

To be fair, they are The Worst Generation.
posted by Eideteker at 10:39 PM on May 28, 2013 [1 favorite]


But what's your point anyway?

I'm sorry to have misread you, but your original post read to me as "The bay area is the only place queer people can be respected, and I know that because I've always lived here." That sort of parochialism, which I mistakenly applied to your comment, has always bugged me more or less irrespective of what it was being parochial about.
posted by ROU_Xenophobe at 11:23 PM on May 28, 2013


So just to be clear, everyone against Proposition 13 is... in favor of having older people put out of their homes because of increases in property taxes they no longer can afford?

So that neighbor who lives three houses down the street and pays a tiny fraction of what we pay, no, I do not want to put him out of him home. He's a lovely man with a yard full of roses who hands them out to people passing by.

But I would start with eliminating Prop 13 protection on commercial real estate. Chevron, Google, PG&E and Warner Brothers do not need it.

I would also limit the Prop 13 protection to primary residences, because if you can afford two houses, you can afford to pay your fair share. But that's my inner socialist talking.
posted by ambrosia at 7:23 AM on May 29, 2013 [3 favorites]


But I would start with eliminating Prop 13 protection on commercial real estate. Chevron, Google, PG&E and Warner Brothers do not need it.

Oh, yeah, it applies to commercial real estate? Hell with that. Was that an unintentional side effect of the law, or was that the carrot they dangled to get the corporations to support them?
posted by corb at 9:14 AM on May 29, 2013


So just to be clear, everyone against Proposition 13 is... in favor of having older people put out of their homes because of increases in property taxes they no longer can afford?

Yes. This is what happens in every other jurisdiction in both the US and Canada and there are not legions of starving seniors sleeping under bridges. The majority of retired seniors do not need a 1400+ square foot single-family home. They're certainly welcome to have it as long as they want, but I don't see why I should be effectively subsidizing them to stay in it. And I certainly don't see why people who inherit a house from deceased parents should continue to pay pennies on dollar in property taxes.
posted by GuyZero at 9:34 AM on May 29, 2013 [4 favorites]


Is there any sense that Prop 13 could ever be repealed? Or is it too popular even with Democrats?
posted by en forme de poire at 9:58 AM on May 29, 2013


($12K invested annual over 30 years at, let's say, 5% average return is ~$815K, which is, I'm willing to bet, a lot more than almost everyone who works at a tech company gets in equity. Please correct me if I'm wrong.)

It's quite common to get ~$30k/ year in equity. Which can then be invested at 5% or whatever return you actually get.
posted by zeikka at 10:15 AM on May 29, 2013


The whole "Grandma will be thrown out in the street!" is a ridiculous strawman which has been used to justify the gutting of California's tax base.
posted by Justinian at 12:25 PM on May 29, 2013


That said, I'm absolutely in favor of people who cannot afford property taxes moving into a smaller home. They don't end up in the street they just have to sell their million dollar house.
posted by Justinian at 12:28 PM on May 29, 2013


non-sketchy is a luxury, but it's a non-negotiable for us, so whatever.

But it didn't used to be unless you were like, hand to mouth poor. Anyone who legitimately argues that living in a somewhat safe area(and I'm not making any concessions to "I don't want to live in an area with too many brown people!" Types here) is a "luxury" is an asshole trying to push some weird agenda or make the same tired point with relation to this article that people need to stop whining and expect "more than their fair share of the pie" or something.

When you can't even rent a 2 bedroom apartment with two people somewhere that isn't a complete shit area, something is wrong.(haha I can already hear the incoming "a 2 bedroom is a luxury, why should they really think they deserve more than a one bedroom?" People) don't think you're being entitled here, this used to be a really basic expectation that's only now being called in to question by people trying to steer the discussion from things being fucked over to people being entitled.

Reminds me of a couple of my friends talking about how they finally found a house they could rent together(with 4-5 people total) that was cheap enough. They were having a small BBQ/party and drinking some beers. A couple guys from the area showed up, got in an argument, and pulled guns on each other. The house next door has been condemned since then.

That's the only area those guys could afford the rent in. And they're decidedly "middle class" kids, just working their first post school jobs.

And yet time and time again people are like "move somewhere else" or just "shovel harder". Both to them, and to the middle class adults hoping they can rent what 10 or a few more years ago was either an apartment for poor people, or college kids. What the fuck?

I guess it just bugs me that even expectations of living like someone at your income would ten years ago(for fun:adjust for inflation if you like even!) is seen as entitlement. It's crap, and reframes the discussion in to something worthless.
posted by emptythought at 1:52 PM on May 29, 2013 [2 favorites]


Oh, yeah, it applies to commercial real estate? Hell with that. Was that an unintentional side effect of the law, or was that the carrot they dangled to get the corporations to support them?

When you are allowing voters to vote themselves a huge subsidy and drape it as reigning I government spending (which, honestly, was pretty screwed up), you can quietly write in an equally huge subsidy for businesses without anyone batting an eye.

Larry Ellison and Michael Dell thank you for your support: grannies getting evicted indeed.
posted by rr at 1:54 PM on May 29, 2013 [2 favorites]


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