Wednesday, October 19, 2016

What's more expensive, Boston or San Francisco?

A cherished friend of the blog writes in with the following question; it has been [redacted] for privacy: 
I am trying to gauge the growth of the biotech/pharma sector in the Bay Area over the last few years: as you know, Boston is still the top destination, so my main concern is whether I will find other jobs if [things don't work out].  
[Also], I was wondering what a “good” salary is for the Bay Area. Currently [my spouse] is finishing grad school so we are pretty much a single income family, but [they] are getting [their advanced degree in tech] so we’re hoping that [they] will be making a decent amount of money soon. Any sources which can help me compare, for instance, what the equivalent of say a 120K salary in Boston would be for SF would be immensely helpful.
This is a good question, and one that I don't really have a strong sense of. It seems to me that San Francisco will continue to play "1A" to Boston's "1" for the foreseeable future. Absent some sort of bizarre catastrophe that strikes Silicon Valley, Stanford and UC-Berkeley (a series of huge earthquakes and fires?), it's hard for me to imagine that the science and financial ecosystem of the Bay Area will lose its relative position in the biopharma world, either nationally or internationally.

A brief look at median incomes and household income percentiles may be instructive, regarding pay scales. There are plenty of websites that compare cost of living, and I don't really know if any of them are better than others. I invite reader suggestions on that one.

However, I think one of the main drivers of high cost of living is the relative number of people with high incomes (I note here that I have read exactly none of the relevant social science around this.) So, a comparison of San Francisco County and Suffolk County, Massachusetts (using the Census Bureau's 2014 American Community Survey):

Suffolk County, MA: median income of $54,169, 26.9% earn more than $100,000
San Francisco County, CA: median income of $78,378, 40.9% earn more than $100,000

Nearby counties:

Middlesex County, MA: median income of $83,488, 42% earn more than $100,000
Norfolk County, MA: median income of $86,469, 43.6% earn more than $100,000
San Mateo County, CA: median income of $91,421, 46.2% earn more than $100,000 
Marin County, CA: median income of $91,529, 58.2% earn more than $100,000

This suggests to me that one would have to earn significantly more than $120,000 ($174,000?) in order to keep the same lifestyle.* That is, of course, likely a ridiculous wild guess. Readers, please tell me how wrong I am.

UPDATE: Thanks to Joe Q., I've decided to add some of the adjoining counties. 

*Or, likely, that's how much you would have to earn to stay in the immediate metro area of the city, and not have a longer commute? 


  1. I don't live there, but I assume that there are more readily available options for living outside the city in Boston than in SF. There's a lot more room for suburbs, and even in LA people have looong commutes.

  2. I live in the bay area, and I'm currently part of a postdoc couple. Because of the whole "two body" situation, we focused on these two metro areas for our postdoc search, so I did some comparisons of the COL. Housing (and childcare, if you have kids) is what really eat up money when you live in expensive areas. Both states tend to be higher tax, so that's not really a factor either. The other differences that make up day to day expenses like groceries are really a minor contributor. I think as a postdoc or as a couple of DINKS, the cost of living for a typically lifestyle are actually pretty similar. You'll probably pay a large portion of your salary to live in a 1 bedroom apartment (we pay 2200/month to live in a 1 bedroom in a town that borders Berkeley on a combined income of ~95K, which seems pretty similar to what we might pay to live someplace near Cambridge).

    Where things really start to differ is the cost of housing for a family. The real differences in cost of living is the cost of buying/renting a single family house/townhouse/2-3 bedroom condo in a town that has public schools with a good reputation that is in reasonable commuting distance from employment centers. On that account, you clearly have more options for housing on a lower budget that meets all these criteria in the Boston metro area compared to the bay area. The other thing to consider is that the bay area employment centers are more diffuse than Boston, where the majority of startups are in Cambridge. There's several companies along the pennisula, all the way from South San Francisco to Palo Alto, a few companies are around the Mission Bay area in SF, some are in San Jose, and some are in the East Bay (around Emeryville and West Berkeley, mainly) with more sprinkled in other towns along the region. So, in a sector where there is a lot of job hopping, it's really hard to find someplace to put down roots (buy a house, commit to one town to send your kids to school, etc.) that does not have the potential to seriously limit one's employment options without a disastrous commute at some later point in the future. The towns that are relatively easier to commute to various employment centers (and have other amenities like decent public schools) tend to be the most prohibitively expensive. Part of this also has to do with geography and the potential for a commute that uses a bridge, where things tend to get really backed up. Part of it has to do with poor public transit options to these biotech "hub" areas.

    Anyway, this post is long, but I think the answer is it really depends on what stage in life you are in and what kind of housing you are looking for.

    1. Having lived in both areas, I think this analysis is correct. Long-term, it is easier to be able to afford a house in the Boston area.

    2. Good discussion, but I disagree that the taxes are similar. Taxes in CA are significantly higher for top earners. For folks near the median it's probably not a big difference.

    3. I guess it doesn't affect me much, as I'm closer to the median than a top earner, but I suppose that's true. Conversely, if you are able to break into the insane housing market, your property tax bill will probably be lower in California, and the longer you have the house the lower it will be compared to market value due to Prop 13

  3. One thing to note is that the Boston area is divided among three counties. Boston itself is in Suffolk County, but Cambridge and the very nice town of Newton are in Middlesex County, and Brookline is in Norfolk County.

    The median income in Middlesex County is in the low $80k range, close to San Francisco.

    1. Likewise, the bay area is really divided among at least seven counties. San Francisco, San Mateo, Santa Clara, Alameda, Marin, Contra Costa, and Solano.

      Probably San Mateo county is the best proxy for the largest clustering of biotech companies. The median income in San Mateo county is ~97K.

  4. Resident of both areas, I'll add some stuff to Anon8:39's assessment.

    I agree with the areas in the Bay area being a bit more spread out than Boston. However, the cost of lab space in Cambridge has skyrocketed and there's a spreading happening in Boston too. Waltham, Lexington, and even Woburn are becoming more common places to find jobs. Apartments in the Cambridge area are pricey and similar to the Bay, lots of people end up living on the outskirts and commuting in. The commute isn't as bad as 101 or 280, but it can be bad. However, "outskirts" is much more reasonable than what it is in the Bay.

    Something that people don't consider is utilities, and this can be a huge difference. When I lived in the Bay I'd see a bit of a spike in my utilities in winter, typically on the order of $10-20/mo for a 1BR apt (I didn't live in high end apts with central air). Summertime you suffer through the unusually hot days, but they're rarely so bad you can't sleep at night. Boston area you will pay hundreds of dollars in the winter to keep the heat on, whether you're using gas, oil, or whatever. You'll see a similar spike in the summer to run the AC, because it can get real hot and humid. My first winter I spent $600 to fill my oil tank twice, I ran the heat from late Oct to early Apr (basically $100/mo). Cooling my place off in the summer was nearly as much of a hit to my utilities, but slightly less since I didn't run it while I was at work.

    $120K will probably net you similar things in each area, but what your specific needs/tastes are will dictate a lot. Just like "Bay Area" encompasses a swath of diverse areas like SF, Oakland, and Silicon Valley, "Boston" is a huge range of things like Back Bay, Waltham, or Allston.

    1. "Something that people don't consider is utilities, and this can be a huge difference."

      Made that very costly mistake once in Boston. The second apartment *had* to have heating included - advice I would give anyone moving to Boston who are perhaps not familiar with freezing temperatures.

  5. You can also conceivably buy a house in NH if cost of living is a bigger issue for you in Boston (though be prepared to leave home before 5 AM). Plus with many of the jobs in Cambridge, you can drive to a commuter rail or T station and take the T in. Massachusetts is at least *trying* to deal with its housing crunch by building a bit more, while the Bay Area has mayors actively discouraging companies from bringing more jobs to the area because people can't afford to live there. You'd have to move out to Stockton/Tracy to find something remotely affordable and, uh, that's not the Bay Area anymore.

    Really, the biggest draw for the Bay Area is the weather. Boston is at least comparable on culture/food/sports etc. If you can deal with eight months of cold and the occasional winter of 100" of snow, that should be your top choice.

  6. Having spent 6 years in Boston and 9 years in the Bay Area.... San Francisco is more expensive.

    It really comes down to housing costs, especially buying a house. To buy a place in the Bay area (within an hour's commute of South SF or Foster City, where Genentech and Gilead are based) will cost you $800K plus for a decent size place. Again, within an hour of Cambrige, MA you're looking at closer to $400K minimum. Zillow shows this well with the correct filters ($600K price, 2000+ square feet)

    Rents tend to be closer together between the two metro areas, although SF proper rents are through the'd need to WANT to live in the SF proper to pay those rents. Utilities are higher in Boston. Certain foods are cheaper in SF.

  7. I find it odd that you chose Marin county as one of the other counties to demonstrate the overall price of the bay area, because it is pretty far from most biotech jobs.

    1. Now that you mention it, you're right, that's a fair critique. As you can tell, I don't know much about the Bay Area. I chose the two counties north and south of San Francisco County. (headslap)

      I'll revisit this, and see if I can get some better numbers.

    2. Genentech runs buses from there (and from places in eastern Alameda county like Dublin/Pleasanton). Which tells you something about the cost of housing....

  8. "[Also], I was wondering what a 'good' salary is for the Bay Area. Currently [my spouse] is finishing grad school so we are pretty much a single income family, but [they] are getting [their advanced degree in tech] so we’re hoping that [they] will be making a decent amount of money soon. Any sources which can help me compare, for instance, what the equivalent of say a 120K salary in Boston would be for SF would be immensely helpful."

    I'll add my data point as a first-year postdoc who just went through similar questions as I moved to the Bay Area.

    I can't comment too much on industry salaries, and the assumption that [spouse] "will be making a decent amount of money soon" definitely means [spouse] is not seeking a postdoc position, but I will still note that the baseline postdoc salaries for UC Berkeley ($44K) and Stanford ($52K) can be found on their respective websites.

    In terms of living costs, I was referred to a 'Info for Incoming Postdocs' page when I was hired, and this site provided links to two outside sources for getting a rough idea for budgeting: a Cost-of-living Equivalence Calculator by CNN Money and a Family Budget Calculator by the Economic Policy Institute (both can be easily found with a quick internet search). In my six months of experience, I would review these two websites as follows:

    -- The Equivalence Calculator seems to underestimate how far my money goes in the Bay Area, though this could be just as much of an overestimation of the value of my money at my last metropolitan of residence. I say this because I live more uncomfortably here in the Bay Area than I did in grad school, even though the calculated Bay Area wage "equivalent" to my grad student salary is a bit lower than what I'm being paid now as a postdoc. This may also be due to the calculator's seeming neglect of two large expenditures: taxes and childcare. I would be curious if any readers here, especially those commenters who have lived in multiple areas, could chime in with their own assessment of the algorithm?

    -- The Family Budget Calculator seems at least order-of-magnitude accurate. This tool estimates many different categories, each of which I list hereafter along with their rough accuracy compared to my own expenses (expressed as 1-((est. cost)/(real cost)), i.e. negative percentages are good/overestimates, positive percentages are bad/underestimates) over the last several months: housing (+10%), food (-120%), child care (+40%), transportation (-100%), health care (-100%), other necessities (varies), and taxes (depends on your salary). In total, the calculated monthly cost overestimates my required expenses by ~50%. (Full disclaimer: I live a bare-bones kind of lifestyle, as it's the only way a widowed single parent of a pre-schooler can get even close to surviving on a postdoc salary in the Bay Area, so my demographic/financial situation does not lend itself well to comparison.)

    Good luck!