A friend has moved from the Midwest to Silicon Valley to work for one of the dinosaurs.
Back in the Midwest he was a passionate liberal, spending a lot of Facebook ink denouncing Scott Walker and his attacks on unionized government workers, etc.
He is making more than double his previous salary, but his standard of living hasn’t improved. He can’t afford an apartment on his tech job salary so he stays in a “hacker hostel in San Jose” for $900/month: ” I understand supply and demand and the invisible hand on some level- but the idea of making 3x the average household income and spending 50 percent on rent for a place I don’t even like irritates me to no end. So many people make these inane salaries and buy a $120k car and pay $2500 for rent. I really would love an Audi R8, but I’ll buy it cash- unlike a lot of other people here.” As with many 19th century immigrant labor camps, the hacker hostel is a cramped all-male environment: “One room has 4 bunk beds; 8 people in it. Usually it is two bunk beds per room if it’s a small room and 3 rooms per house. One room is filled with Nigerian people doing a startup. The whole company lives and work together.” How does one locate such an abode? “You can see the places listed on Airbnb.”
[In other words, techies who earn over $100,000 per year are living in conditions that would be illegal for federal and state governments to supply to citizens who have never worked. (regulations require no more than two people per bedroom)]
A few weeks later we had another exchange: “Have you ever given, or do you know anyone who does give serious thought to leaving the USA for a period of time to save on taxes? So lets, say that at [the big company] I make $140k/year with little hope of raises or promotions in spite of working really hard and living in an overgrown dorm. (They promise I’ll learn to relax and drop that whole ambition disease) I pay about 28% federal taxes, and 10% California taxes. I think if I go to one or more of many islands that are income tax free, my first 100k is income tax free. So if I’m trying to take my net worth from zero to 500k in 5 years, and don’t have the skills to build a wildly succesful startup…this…seems like a good option, but whats the catch? Maybe John Mcafee will shoot me? Maybe they don’t have internet in the islands? Dysentery?”
[I responded that it was easier to move to Texas and simultaneously (a) escape state income tax, and (b) reduce one’s cost of living.]
15 thoughts on “A conservative is a liberal who has been mugged, Silicon Valley edition”
Unless the person renounces their US citizenship, moving to ‘one or more of many islands that are income tax free’ makes no difference at all to Federal tax. So unless they are not planning on returning to the US, this is not a viable option.
Actually, there is the foreign earned income exclusion, which I had thought had been eliminated a few years ago, but appears to currently exist:
As a person who worked in Bermuda for a US company for 5 years, I can attest it made a huge difference in how much money I made, in spite of living in a country where it was ridiculously expensive to live.
He is making more than double his previous salary, but his standard of living hasn’t improved
I live in NYC, and that’s why I want to move to Austin.
Stories like this make me even happier to stay in tech in the Midwest. I’ll never work for the startup that goes huge, but I’ll always make enough to own a nice house with a yard.
A lot of Eastern Europeans in the Bay Area will rent out a room or two of their house when their kids are grown, because that is common in their home countries, and it would cost your friend just $100-$200 more per month (cash only, of course). Much nicer than a garage conversion or hacker hostel, and easy street parking close to the house. Just ask Eastern Europeans at the office if they know anybody who wants to rent out a room because those sorts of things are not on CL or airbnb.
I’ve read many good reasons why it’s important for founders and executives to reside in Silicon Valley, but how is it worthwhile to pay programmers up to $100,000 *more* than what they’d make elsewhere to reside in SV? There’s obviously a good reason, I just can’t imagine what it could be.
Why would anyone accept such an offer working for a Big Company that all they see in you is the cost of operation?
If this was a startup, with potential of hitting it big, and I’m young or unmarried, I would take the risk and working condition. Your friend has made an unwise decision  or there is something missing from his story we are not being told.
 But yet, I see him wise enough not wanting to buy an expansive car by getting into depth (his cash payment comment).
I’m not that familiar with the geography of the Bay Area but are the rents uniformly high or is this a case of hipsters wanting to cluster together in some hipster heaven? How do the blue collar workers of SV afford to live there? I assume that SV has supermarkets & gas stations & so on – where do those employees live?
Most of my generation only stayed in Silicon Valley for a few years to build experience, then left to find their wives & start families, but they had to shift to much more boring jobs. The cost of rent & cars is due to interest free credit. College students are flush with cash from interest free loans & interest free cars.
I just saw on twitter before reading this that the high cost of living typical of San Francisco has overtaken the entire Bay Area. 14 of top-30 most expensive US markets.. https://twitter.com/RosenbergMerc/status/661675094415032320
One problem with this, as a conservative, is that refugees from liberal areas move to conservative areas, then precede to vote for the Democrats!
Philip, was that a friend, or a Facebook friend…? I understand the distinction, but am confused anyway.
What I do not understand, however, is how anybody could ever contemplate to change jobs for higher pay well aware that he won’t be able to afford the same standard of living. Move to the Bay, stay under a bridge? It’s eyes-wide-shut slavery. No pay slip with zeros can compensate for that… life happens while one is making other plans (John Lennon).
[Paraphrased] A conservative expresses concern over “refugees from liberal areas” moving to “conservative areas, then proceeding to vote for the Democrats!”
I don’t see what would be the problem, conservatives could always move en masse to liberal areas in revenge, and start voting Republican! Or am I missing something?
Incidentally, where’s the promised mugging of that/ a liberal?
I must’ve missed it, because whatever happened to your (possibly only Facebukkake) friend, he did it all by himself, a true DIY “mugging,” or however you call it.
I am in Palo Alto right now and I find it the most baffling post-urban environment I have been in.
I grew up in Southern New Hampshire where vast areas of housing and industry, and even sometimes commerce, are built into disconnected pods that hang off secondary roads that serve the crowded freeways. There you can walk for miles and find nothing at all thanks to the way things are organized.
Palo Alto has something that looks like a street grid but the pattern defeats my terrain reading instincts so even though connectivity is good on paper it is amazing how far I can walk and not see anything. Even though L.A. has a car-centric reputation, walking in L.A. is a lot of fun and you will always come across convenience stores, pizza shops and other amenities. Palo Alto is the first place I’ve been in a long time where I regret that I didn’t rent a car.
The craziest thing is the endless rows of expensive single family homes. If you knocked down 1/8 of them and put in 8 story apartment towers you could double available square feet and the neighborhoods would be pleasant, a lot like nice residential neighborhoods in Sao Paulo. It doesn’t happen though, for reasons that come both the left and the right, particularly the results of Prop 13 and other California laws that mean the only way you can fight the public sector unions is to refuse to build new residences.
The friend may have an unfortunate attachment to saving an excessively large portion of his income. The correct and really only mind set is that the high cost of living is simply the cost of doing business here. Besides, even if he spends somewhat more to maintain a normal (for his income) standard of living, it’s very likely that he’ll save more over time than he would in Peoria. Plus, if he is lucky, he can make some extra money in a startup down the road. That is a lot harder to do being based in Peoria.
The perception is that the towers would mean more supply, less demand, and lower prices, so everybody fortunate to be on the supply side (i.e. current home owners) opposes it regardless of macro-political leanings. Home ownership in this area is sort of like gang membership: you have to pay your dues to join, and then it’s basically fuck everybody else.
I agree about walking in Palo Alto (I formerly lived at Charleston & Middlefield). You have to be pretty in to it. I recommend cycling, and lights, this time of year.
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