Do you get "paid" to live in high cost of living areas?

[wildcat]

Just a thought and a question for you all and it kind of stems from a few comments made by SG, cute and fuzzy bunny and Ha. I have never lived in a high cost of living area so I don't really know the answer to this one. OK we all know how much it costs to live in places like LA, San Diego, San Fran, Seattle, NYC, DC and other expensive cities etc. We all talk about how it can be a drain on the pocket book. But do you get "paid" by being in a place with more opportunities to create wealth - whether it be real estate, opportunity to work for some start-up company, high paying jobs? What do you think?

 

[Howard]

I have never worked for a corporation that discriminated by local Geography, salaries were set nationally.

Urban Centres many present opportunities, rural centres let you save.

 

[grumpy]

I worked for Uncle Sam my whole career in the D.C. area. Clearly the pay was higher here. Not only were there cost of living adjustments to the basic pay tables but also the General Schedule grade levels were higher at agency headquarters (almost always in the D.C. area) than for the same type of work at a field location. However, I don't think these factors fully offset the high costs of housing in the metro area. I spent alot of time working with folks from the Marshall Space Flight Center in Huntsville, Ala. Even those at a grade lower than mine seemed to have a more affluent lifestyle. Of course Huntsville can't compare to D.C. when it comes to cultural, entertainment, and educational opportunities. D.C. also comes with horrendous traffic and crime problems that are not so prevalent in many lower cost areas. Clearly, if I were to sell my house in this area and move to a lower cost area I could either buy a much more upscale home or buy a similar home and have a couple hundred thousand dollars left over. As I am just not cut out for rural or small town life, I will stay where I am.

Grumpy

 

[LOL!]

One way to get paid is to have a skill-set that no one else has.  My job is a relatively rare one and thus well-paid.  If there are limited applicants for a job (by limited, I mean 0 to 2 people apply for the job), then you can try to negotiate a decent salary.   If you are movable, then opportunities open up as well.

When I worked on Long Island, my company rented to me company housing at a reasonable price.   That reduced my cost of living considerably, especially commute costs which went to zero.   "Water view" did not do justice to describe where I lived.

But I'm trying to understand the gist of your post. High cost-of-living areas often provide non-job amenities in terms of culture, education, convenience, mountains, beaches, etc.  And companies know this when they set salaries.  Companies know quite well what other employers pay in their area for given jobs.  So yes, folks consider themselves "paid" to live on a ski slope if they like skiing or at the shore if they like sailing.

Wealth building through stock investments is pretty easy and guaranteed given money and time.  And it can be done from anywhere with an internet connection.

 

[wildcat]

LOL! -

I suppose what I am saying is that - I don't believe that most really affluent people make their money via salary. Maybe I am talking about those people in the upper realms of ER assets. Yes, you can retire and be comfortable any place in the US and sure, employers raise salaries to comp you for the cost of living but I doubt it totally covers the spectrum of costs. But it seems the young ERs who retire with plenty have made it from A) being smart and taking advantage of opportunities B) LBYM and investing but also C) being in a place with a lot of opportunity. I suppose you will say - opportunity is everywhere and I agree but it seems to be more so in certain places, i.e. getting "paid." That is the gist - I think - of my post.

 

[Nords]

High cost-of-living areas often provide non-job amenities in terms of culture, education, convenience, mountains, beaches, etc.  And companies know this when they set salaries.  Companies know quite well what other employers pay in their area for given jobs.  So yes, folks consider themselves "paid" to live on a ski slope if they like skiing or at the shore if they like sailing.

The "paradise tax"...

 

[cute fuzzy bunny]

Not in my experience. A couple of my companies offered a cost of living adjustment for certain low end pay grades if you lived in certain areas, but it was pathetically small compared to the cost of living differential.

We sometimes offered a little more to new hires in a high cost area to compensate for competitive salary offers.

We occasionally increased a salary of someone when moving them to a higher cost area to sweeten the deal.

Generally though, I could hire into a Bay Area location, then a year later transfer to New Mexico or Oregon and keep the same salary.

 

[LOL!]

Generally though, I could hire into a Bay Area location, then a year later transfer to New Mexico or Oregon and keep the same salary.

They had to pay me 25% more to get me to move to Texas even though the cost-of-living is a little more than half that of Long Island.

 

[cute fuzzy bunny]

They had to pay me extra to move from the SF Bay Area to Sacramento too. I remember the tumbleweed that blew across my street one morning. And becoming spontaneously excited a year later when a "Target" store announced they were going to be opening near my house. Doh!

 

[wildcat]

So TH, given that you have spent some time in the Bay Area, would you agree with my premise?

 

[Helen]

I relocated from Boston to Portland, Or while working at Digital Equipment Corp. They continued to pay me my Boston salary. I had a zero net worth at that point. That was 14 years ago, in 7 more years I should be able to comfortably retire.

For me, in my salary range at the time, it made a huge difference to relo to an inexpensive area.

-helen

 

[dory36]

In my last job, for an overseas oil company, they did some sort of a reverse gainer with a half twist on this theme.

Everyone's pay consisted of base pay, an overseas premium, and a cost of living adjustment.

An engineer would get his (never her -- this was the Middle East) base pay that was supposed to match the typical salary for a similarly qualiffied engineer in the country from which the engineer came.

As a result, an engineer hired from the US might get 25% more than an otherwise equally qualified engineer from, say, Ireland, and several times as much as the engineer from India.

Just to confuse things, if the US tax rate went up, our pay was reduced by that amount, even though we didn't have to pay taxes. The company called this reduction in our pay "hypothetical tax", and there was nothing hyopthetical about it.

 

[cute fuzzy bunny]

So TH, given that you have spent some time in the Bay Area, would you agree with my premise?

Proximity to opportunity is a potential benefit. Proximity to a lot of opportunity is a better one.

Finding the right opportunity and making the most of it is the tricky part. You can do that with one available opp or with a thousand. Might be less competition for that one opp in an out of the way place than against tens of thousands in a high opp area.

I know where I'd want to be if I suddenly found myself out of a job or got good and tired of the one I was working for.

So Helen, were you suctioned into Intel or Compaq when Digital broke up? A lot of really smart people came over to Intel from Digital. Wish a lot more people paid them a lot more attention. Most of them actually knew something

 

[cute fuzzy bunny]

The company called this reduction in our pay "hypothetical tax"

Thats a good one. Should something horrifying happen and i end up working again, I'll have to remember this.

"Here's your hypothetical raise...".

 

[cube_rat]

Just a thought and a question for you all and it kind of stems from a few comments made by SG, cute and fuzzy bunny and Ha. I have never lived in a high cost of living area so I don't really know the answer to this one. OK we all know how much it costs to live in places like LA, San Diego, San Fran, Seattle, NYC, DC and other expensive cities etc. We all talk about how it can be a drain on the pocket book. But do you get "paid" by being in a place with more opportunities to create wealth - whether it be real estate, opportunity to work for some start-up company, high paying jobs? What do you think?

I make a decent living here in the SF Bay Area but find it diffcult to build up my investments at a more quicker pace. We're pretty frugal too. I would have to agree with Helen that relocating with a high salary from an expensive area to an inexpensive one is the way to go.

 

[cute fuzzy bunny]

That was pretty much how the dice rolled for me. Went to work in the bay area, ran up the salary, bonuses and stock options, then relo'd with the same company to the el cheapo area, bought an underpriced house, dumped the stock and the homes when the prices made me scrunch up my face and say "thats stupid!".

 

[BunsGettingFirm]

I worked for Uncle Sam my whole career in the D.C. area. Clearly the pay was higher here. Not only were there cost of living adjustments to the basic pay tables but also the General Schedule grade levels were higher at agency headquarters (almost always in the D.C. area) than for the same type of work at a field location. However, I don't think these factors fully offset the high costs of housing in the metro area. I spent alot of time working with folks from the Marshall Space Flight Center in Huntsville, Ala. Even those at a grade lower than mine seemed to have a more affluent lifestyle. Of course Huntsville can't compare to D.C. when it comes to cultural, entertainment, and educational opportunities. D.C. also comes with horrendous traffic and crime problems that are not so prevalent in many lower cost areas. Clearly, if I were to sell my house in this area and move to a lower cost area I could either buy a much more upscale home or buy a similar home and have a couple hundred thousand dollars left over. As I am just not cut out for rural or small town life, I will stay where I am.

Grumpy

Grumpy, you forgot to mention that DC has the highest concentration of single, educated women. I never get tired of visiting my buddy's apartment in DC because the building's roof always has a few hotties sunbathing topless, and you get to run into them later at the building's business center or while taking the elevator. There are also plenty of babes scoping out guys at the Smithsonian. None of these you'll get living in the boonies. With that said, though, my buddy did almost get robbed walking home from work (but it was at 11:30 PM), so living in DC isn't all peaches and cream.

 

[Nords]

With that said, though, my buddy did almost get robbed walking home from work (but it was at 11:30 PM), so living  in DC isn't all peaches and cream.

That depends. Was the robber an educated topless single hottie?

 

[Helen]

<<<So Helen, were you suctioned into Intel or Compaq when Digital broke up?>>>

Nope, I went for the Federal Governement.

Since I did consulting and presales work for Digital in Portland, it was a great job to get inside companies and get to know people. I really liked Portland General Electric (later bought out by Enron - ouch !), but decided to go with the Feds.

14 years later, I don't regret the decision. Interesting work with mobility to change jobs, good pay, good pension and retiree health care.

I do miss the glory days of DEC in Maynard, MA. It was a great place to work, great management and coworkers.

-helen

 

[ats5g]

Grumpy, you forgot to mention that DC has the highest concentration of single, educated women.

Most definitely.. I married one of those. O0 Nothing like some drunk Hill staffers on the Metro. "Like, Oh my god..."

One of the problems with the DC area is that all those gov't employees bring down the average salary, which our HR dept bases our salaries on. But that's okay since our raises and promotions are based on our performance [how many bad guys we catch].

- Alec

 

[free4now]

While it is true that you do get higher salaries in higher COL areas, I think it is likely that will become less true over time. In the Silicon Valley we are already seeing the programming jobs drying up as better electronic connections allow the work to be done in other cities or even over in India where they can hire 4 (used to be 5-6) Indians for the price of one SiliValley engineer.

On the other hand it seems like the very top "movers and shakers" will always live in the more desirable areas partially because they can work in person with other top people and also just because they like the area more. So like everything else I see things stratifying more over time. The desirable areas will probably pay the top people more while the medium-skilled workers get paid closer to national averages. The lower skilled service workers (e.g. restaurant employees) will have to be paid more in the desirable areas just to be able to afford to live nearby, but probably not enough to get ahead.

 

[dougdo]

NYC Employers definitely need to pay more than other places to account for the cost of living and competitive salary environment.

I had a great tactic--i got the job in NY and then decided I didn't want to live in NY and negotiated to work out of Seattle where my cost of living was much less but I kept my NYC salary.

 

[grumpy]

Grumpy, you forgot to mention that DC has the highest concentration of single, educated women. I never get tired of visiting my buddy's apartment in DC because the building's roof always has a few hotties sunbathing topless, and you get to run into them later at the building's business center or while taking the elevator. There are also plenty of babes scoping out guys at the Smithsonian. None of these you'll get living in the boonies.

Well, Buns, having been married 36 years and having reached the age when libido is not what it once was, those advantages just didn't occur to me.

Grumpy

 

[BunsGettingFirm]

That depends. Was the robber an educated topless single hottie?

Ah, since when have educated, single, topless hotties need to stick up guys for anything? Hence the threat, "Stop, or I'll blind you with my headlights" has never attained any level of popularity among would be muggers.

 

[cute fuzzy bunny]

I've been "stuck up" by educated, single, topless hotties on a number of occasions.