Despite tech salary increases this year, many employees feel their pay does not reflect increased costs of living and inflation rates according to Hired’s 2023 State of Tech Salaries report. Many have explored relocation already. So, if you’re a tech professional, should you stay or should you go?How far does a San Francisco tech salary take you?
Let’s say you’re a software engineer living in the San Francisco Bay Area and earning an average tech salary of $178,000. Seems solid, right? Then you take into account the cost of living (COL) there and things take a turn.
After adjusting average salaries on the Cost of Living Index, we find earning that same salary in San Francisco is equal to making $227,000 in Atlanta. Relocation becomes an attractive option when earning power is clearly different across markets. If you move to Atlanta, it’s like getting a raise!
Perhaps you’ll consider Texas, where there’s the highest average salary market in 2022, after adjustment for COL – Houston. Your San Francisco salary is the equivalent of making $228,000 in Houston.
Based on a study of US Census and IPUMS data, the most popular 2021 interstate move in the country was from California to Texas. Approximately 300 people a day chose a lower cost of living, no state income tax, more affordable housing, and job opportunities in the tech and energy industries.
Up 36% from 2016, and up 80% from 2012, Californians chose to put down new roots in the Lone Star state. According to California Taxpayers Association, California has some of the highest sales, gas, personal income, and corporate tax rates in the US.
In contrast, if you consider relocating from the West Coast to the East Coast in a big move to New York, your San Francisco salary won’t take you as far. New York City had the highest COL in US markets. This means your San Francisco salary would be the same as earning $156K in the Big Apple – or over $22,000 less.
So, will you stay or will you go?
If you’re considering settling in a traditional tech hub like New York or San Francisco, know your earning power will go farther in smaller, second-tier cities.
Thanks to remote work, tech jobseekers are increasingly based in lower-cost-of-living cities, such as Houston, Phoenix, Atlanta, and Philadelphia. Positions based in lower cost-of-living markets more than quadrupled from 2% in 2020 to 9% in the first half of 2023. Conversely, tech jobseekers in higher-cost-of-living cities declined from 78% in 2020 to 68% in 2022 and 59% in the first half of 2023. This points to an exodus from major tech hubs.
Tech workers are increasingly distributed across the country thanks to remote work. A study from Brookings Institute found tech “superstars” like Seattle and San Francisco metropolises are seeing slower employment growth compared to “rising stars” like Atlanta and Dallas. As for “the rest,” or the other 83 metro locations studied, these areas saw tech employment grow faster in 2020 throughout the pandemic.Inflation grows no matter your relocation plans
In addition to the cost of living, many feel their salaries fall behind with inflation too. 54% of tech workers surveyed feel their salaries have not matched the pace of rising inflation.
Since the pandemic dramatically increased the ability to work from home (or anywhere), tech workers moved away from higher cost-of-living areas. In some cases it was practical. There was no longer a need to live in a higher cost of living area or they wanted a larger home to accommodate sometimes multiple home office spaces. Others moved to be closer to family, or simply because they could live in places they’d always wanted to.
Between growing costs of living and higher inflation rates, tech professionals may want to explore relocation. Shedding light on how far salaries can take you across locations does offer some guidance in knowing whether you should stay or go.Check out the new State of Tech Salaries Report for more insights into location trends and the current hiring environment in tech.
Originally written in September 2022, this blog was updated on September 26, 2023.
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