6 ms·

For the bay area, I think compensation drop will be far worse. The base salary of bay area companies has never been that impressive. Even the big tech companies

For the bay area, I think compensation drop will be far worse. The base salary of bay area companies has never been that impressive. Even the big tech companies like Google and Facebook, base salary is not much more than other regions. The impressive compensation numbers are always because of bonus+RSU. These will probably be massively reduced or even eliminated completely if the tech downturn gets bad enough.

ryanSrich 11y ago
Tech employees making $200k+ are the only ones who can afford a $4k per month apartment in SF. If salaries drop then rent drops. I don't see this being a bad thing.
- twblalock 11y ago
  Two engineers with average compensation could split at apartment at that price, and many do. So do married couples with dual incomes.
  - alanh 11y ago
    You may be missing the point. Say most tech engineers double up (as if they aren’t often doing this already). Guess what? You just significantly reduced demand for high-rent apartments
  - nly 11y ago
    Yeah, at the cost of increased volatility. If two engineers, each with a 10% chance of losing their job in the next 2 years, do this then they both are much more likely (19% chance) to face uncertainty in that time.
    - calinet6 11y ago
      They're all young. They don't think like that.
  - nascentmind 11y ago
    Renters will increase the price knowing full well that people will double up. Also if the renters are ruthless they would directly tell you to have more people packed in an apartment to pay their price and if people are helpless they would have to cough up or find some other job in another state where you can live decently with lesser pay. Also a lot of shitty apartments will increase their rents which puts more pressure. This I feel is simple price discovery at work. This is why it is better for the company to spread itself in different places rather than hole up in a single place and pay very salaries which are not sustainable. I really don't understand start ups which are supposed to be tight on cash sitting on one of the costliest real estate and expect to be profitable.
- edgyswingset 11y ago
  > If salaries drop then rent drops. I don't see this being a bad thing. Maybe I'm being irrational, but I suspect that the drops won't be proportional and the housing isse in SF will just get worse.
  - cmurf 11y ago
    Probably not, because people don't ask. In 2008 when I was living in NYC, I asked and received 10-15% year over year decreases in rent (3 years). Long time NYers thought I was crazy to even ask. Incredulous I got it. And this was in Manhattan, doorman building, a few blocks from Lehman Bros. So yeah ask. And be prepared to move. If you aren't prepared to move, you're not ready to save.
    - gech 11y ago
      Just that simple folks.
    - pm90 11y ago
      Just curious, what do you mean, be prepared to move? Did you tell the landlord, "I will move if you don't give me a 10% decrease in rent"? I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. It also depends on the kind of property taxes prevalent in the states. e.g. in California, property taxes are set at the time of purchase, while in Texas they are reassessed every year. So, my landlord (in Texas) basically increases the rent to cover for the increase in property taxes.
      - klean92 11y ago
        2008 is the keyword here. Lehman B going bankrupt. Fear.
      - ethagnawl 11y ago
        > I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. I was able to do the same thing when re-signing the lease for my NYC (East Village) apartment in June 2009. My roommates and I drafted a letter requesting a 10% reduction, citing decreased rents 1) in the neighborhood and 2) in the rest of the city - specifically in the financial district where "luxury" buildings were giving away multiple months of free rent as a signing bonus - and the management company accepted it without a word.
- Swizec 11y ago
  Eh, you exaggerate. Me and my girlfriend make about $160k together and we can afford[1] a $3.5k apartment in SF. If we made $200k+ each, or if even just one of us did, $4k wouldn't even be worth thinking about. [1] by "afford" I mean that there is money left at the end of the month.
  - ryanSrich 11y ago
    You're spending 50% of your monthly post tax income on rent. That's not what I would call affordable.
    - Swizec 11y ago
      Closer to 45% really. But it's still cheaper than paying less rent and owning a car. Not having any dependents is also pretty handy in keeping money piling around instead of spending it. We also save a lot (and are healthier and save time) by cooking at home instead of going out to eat. So, really, we get to both live in downtown SF, and travel pretty much whenever we feel like it.
      - toomuchtodo 11y ago
        What's your reason for living in SF and still traveling frequently? Access to work in SF? I ask because I'm a remote worker for an SF startup, home base in a low cost of living area, but I travel frequently as well (but the home was purchased somewhere where the house is paid in full already and the monthly upkeep is ~$500/month).
        Swizec 11y ago
        Access to work is about the same as remote with social network in SF. Two reasons why I choose to stay here: 1) building said network so I can go back to proper nomading easier, and 2) access to the startup lottery; nobody gives shares/options to remote workers and/or independent consultants/freelancers Lottery is a nice potential upside with next to zero downside as an engineer
- czep 11y ago
  This is a huge misconception: tech is actually a small percentage of SF employment, especially at the high end. Those $4k+ rents are being paid by bankers and lawyers. It's still called the "Financial District" for a reason. The finance sector laughs at our $200k salaries. They are the ones inflating the rental market because a few k per month is a rounding error.
  - cplease 11y ago
    Ahem. I know a thing about tech, lawyers, and banking. You're talking about misconceptions about tech while feeding misconceptions about law and banking. In reality, most people in all three industries don't make $200K salaries. A big chunk (but by no means all) of Bay-area FANG engineers, New York bankers and Biglaw lawyers get this type of remuneration. Should be said too that most (not all) of these are pulling off insane, crazy-making hours as well. If you think lawyers are rolling in it you have not been paying attention to what's happened to the profession over the past decade. Simply anachronistic. If you're going to generalize, it's a much better time to be an engineer than a lawyer in 2016. All three of these professions have massive disparities in remuneration.
    - singlow 11y ago
      He said that (most of) the 4k rents are paid by bankers and lawyers. He did not say that most bankers and lawyers pay 4k rent.
      - cplease 11y ago
        I doubt there are more lawyers than engineers paying $4K rent in SF. But whatevs.
        DannyBee 11y ago
        +1 For all this talk about how engineers "might" get laid off, this completely ignores the massive contraction of the legal market that has already happened. Outside of a few specific areas of law, and a few high powered law firms, lawyers don't make that much money. My ex, a nationally renowned family lawyer in literally the richest area of the country doesn't make more money than i do (and she runs her own firm, so it's not like she is being kept down by partners).
- nilkn 11y ago
  The parent poster was suggesting that compensation would drop, but not necessarily salary. In other words, the $200k engineer might be making $120k in salary and $80k in other forms of deferred pay. That $80k will be gone in this example, but the $120k will remain. People pay rent out of their actual cash income, not out of unvested stock options.
- deleted 11y ago
  [deleted]

ryanSrich 11y ago

Tech employees making $200k+ are the only ones who can afford a $4k per month apartment in SF. If salaries drop then rent drops. I don't see this being a bad thing.

twblalock 11y ago
Two engineers with average compensation could split at apartment at that price, and many do. So do married couples with dual incomes.
- alanh 11y ago
  You may be missing the point. Say most tech engineers double up (as if they aren’t often doing this already). Guess what? You just significantly reduced demand for high-rent apartments
- nly 11y ago
  Yeah, at the cost of increased volatility. If two engineers, each with a 10% chance of losing their job in the next 2 years, do this then they both are much more likely (19% chance) to face uncertainty in that time.
  - calinet6 11y ago
    They're all young. They don't think like that.
- nascentmind 11y ago
  Renters will increase the price knowing full well that people will double up. Also if the renters are ruthless they would directly tell you to have more people packed in an apartment to pay their price and if people are helpless they would have to cough up or find some other job in another state where you can live decently with lesser pay. Also a lot of shitty apartments will increase their rents which puts more pressure. This I feel is simple price discovery at work. This is why it is better for the company to spread itself in different places rather than hole up in a single place and pay very salaries which are not sustainable. I really don't understand start ups which are supposed to be tight on cash sitting on one of the costliest real estate and expect to be profitable.
edgyswingset 11y ago
> If salaries drop then rent drops. I don't see this being a bad thing. Maybe I'm being irrational, but I suspect that the drops won't be proportional and the housing isse in SF will just get worse.
- cmurf 11y ago
  Probably not, because people don't ask. In 2008 when I was living in NYC, I asked and received 10-15% year over year decreases in rent (3 years). Long time NYers thought I was crazy to even ask. Incredulous I got it. And this was in Manhattan, doorman building, a few blocks from Lehman Bros. So yeah ask. And be prepared to move. If you aren't prepared to move, you're not ready to save.
  - gech 11y ago
    Just that simple folks.
  - pm90 11y ago
    Just curious, what do you mean, be prepared to move? Did you tell the landlord, "I will move if you don't give me a 10% decrease in rent"? I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. It also depends on the kind of property taxes prevalent in the states. e.g. in California, property taxes are set at the time of purchase, while in Texas they are reassessed every year. So, my landlord (in Texas) basically increases the rent to cover for the increase in property taxes.
    - klean92 11y ago
      2008 is the keyword here. Lehman B going bankrupt. Fear.
    - ethagnawl 11y ago
      > I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. I was able to do the same thing when re-signing the lease for my NYC (East Village) apartment in June 2009. My roommates and I drafted a letter requesting a 10% reduction, citing decreased rents 1) in the neighborhood and 2) in the rest of the city - specifically in the financial district where "luxury" buildings were giving away multiple months of free rent as a signing bonus - and the management company accepted it without a word.
Swizec 11y ago
Eh, you exaggerate. Me and my girlfriend make about $160k together and we can afford[1] a $3.5k apartment in SF. If we made $200k+ each, or if even just one of us did, $4k wouldn't even be worth thinking about. [1] by "afford" I mean that there is money left at the end of the month.
- ryanSrich 11y ago
  You're spending 50% of your monthly post tax income on rent. That's not what I would call affordable.
  - Swizec 11y ago
    Closer to 45% really. But it's still cheaper than paying less rent and owning a car. Not having any dependents is also pretty handy in keeping money piling around instead of spending it. We also save a lot (and are healthier and save time) by cooking at home instead of going out to eat. So, really, we get to both live in downtown SF, and travel pretty much whenever we feel like it.
    - toomuchtodo 11y ago
      What's your reason for living in SF and still traveling frequently? Access to work in SF? I ask because I'm a remote worker for an SF startup, home base in a low cost of living area, but I travel frequently as well (but the home was purchased somewhere where the house is paid in full already and the monthly upkeep is ~$500/month).
      - Swizec 11y ago
        Access to work is about the same as remote with social network in SF. Two reasons why I choose to stay here: 1) building said network so I can go back to proper nomading easier, and 2) access to the startup lottery; nobody gives shares/options to remote workers and/or independent consultants/freelancers Lottery is a nice potential upside with next to zero downside as an engineer
czep 11y ago
This is a huge misconception: tech is actually a small percentage of SF employment, especially at the high end. Those $4k+ rents are being paid by bankers and lawyers. It's still called the "Financial District" for a reason. The finance sector laughs at our $200k salaries. They are the ones inflating the rental market because a few k per month is a rounding error.
- cplease 11y ago
  Ahem. I know a thing about tech, lawyers, and banking. You're talking about misconceptions about tech while feeding misconceptions about law and banking. In reality, most people in all three industries don't make $200K salaries. A big chunk (but by no means all) of Bay-area FANG engineers, New York bankers and Biglaw lawyers get this type of remuneration. Should be said too that most (not all) of these are pulling off insane, crazy-making hours as well. If you think lawyers are rolling in it you have not been paying attention to what's happened to the profession over the past decade. Simply anachronistic. If you're going to generalize, it's a much better time to be an engineer than a lawyer in 2016. All three of these professions have massive disparities in remuneration.
  - singlow 11y ago
    He said that (most of) the 4k rents are paid by bankers and lawyers. He did not say that most bankers and lawyers pay 4k rent.
    - cplease 11y ago
      I doubt there are more lawyers than engineers paying $4K rent in SF. But whatevs.
      - DannyBee 11y ago
        +1 For all this talk about how engineers "might" get laid off, this completely ignores the massive contraction of the legal market that has already happened. Outside of a few specific areas of law, and a few high powered law firms, lawyers don't make that much money. My ex, a nationally renowned family lawyer in literally the richest area of the country doesn't make more money than i do (and she runs her own firm, so it's not like she is being kept down by partners).
nilkn 11y ago
The parent poster was suggesting that compensation would drop, but not necessarily salary. In other words, the $200k engineer might be making $120k in salary and $80k in other forms of deferred pay. That $80k will be gone in this example, but the $120k will remain. People pay rent out of their actual cash income, not out of unvested stock options.
deleted 11y ago
[deleted]