Where Tech Salaries Go Furthest, 2017
Indeed Chief Economist Jed Kolko provides insight into where your tech salaries will go the furthest in the U.S. cities.
It’s the dilemma that tech workers face: the jobs pay well, but tech hubs are pricey. The Bay Area, where the mix of tech opportunities is richest, jostles with New York and Honolulu for the title of the nation’s most expensive metro. Many other tech hubs, like Boston and Seattle, are no bargain either. So, are Silicon Valley and other expensive tech hubs worth it for tech workers trying to make their paychecks stretch as far as possible?
In fact, the answer is yes. Even after adjusting for the local cost of living, tech salaries in Silicon Valley and San Francisco are some of the highest in the country among large metros, alongside Austin and Seattle. But these four tech hubs don’t top the list of good deals for tech workers. Two Southern metros that are not top-tier tech hubs—Charlotte and Atlanta—offer even higher tech salaries, adjusted for living costs.
Not all tech hubs are high paying. Adjusted tech salaries are at the low end in Washington, DC, even though it’s one of the nation’s tech-job centers. But the general rule is that tech salaries are higher where tech opportunities are more plentiful. And larger metros are as good a deal as smaller metros for tech jobs—even though, outside of tech, jobs in smaller metros pay higher adjusted salaries.
Charlotte and Atlanta Tech Salaries Edge Out Top Tech Hubs
For tech jobs, cost-of-living differences are especially important. Silicon Valley and the rest of the Bay Area have just about the highest living costs in the country, and other tech hubs, like metro Washington, DC, and Baltimore, are expensive too. By contrast, Austin and Raleigh, NC, are significantly cheaper. That $100,000 tech job will get you more bedrooms, avocado toasts, and climbing-gym memberships in central Texas than in coastal California.
To find where tech salaries go furthest, we calculated the average salary for all tech jobs using annual salary information posted on Indeed between August 2016 and July 2017 in 25 metro areas, including the largest markets plus key tech hubs. We then adjusted for each metro’s cost of living.
Adjusted tech jobs salaries are highest in Charlotte and Atlanta. In these metros, the actual posted tech salaries aren’t especially high—they’re below those in Chicago, Baltimore and Austin. But living costs in Charlotte and Atlanta are below the national average and far below the typical tech hub. That pushes what might seem like ho-hum paychecks to the top in adjusted tech salaries.
After Charlotte and Atlanta, four leading tech hubs—Austin, San Francisco, Seattle and San Jose—follow in a near tie for adjusted tech salaries. That means that the premiums in those eye-popping San Francisco and Silicon Valley paychecks get entirely wiped out relative to Austin and Seattle when the Bay Area’s high living costs are factored in.
But while San Francisco may not be ahead of Austin and Seattle, it still ranks fourth out of 25 tech markets. The surprise is that San Francisco tech salaries go as far as they do. After all, the median rent for a two-bedroom apartment is more than $3200 in San Francisco versus around $1500 in Dallas and $1200 in Phoenix, according to Zillow. But housing accounts for only a third of the typical American’s total expenses and metro differences in the prices of other goods and services are much smaller than the gaps in housing costs. The government estimates that housing is 86% more expensive in metro San Francisco than the US average, but the overall cost of living in San Francisco, taking all expenses into account, is just 22% above the national average.
Where to Get Top Dollar for Specialized Tech Jobs
Charlotte and Atlanta may have the highest adjusted average tech salaries, but, for a specialized tech job, the best-paying city might be elsewhere. Tech salaries go furthest for software architects in Sacramento, back end developers in Seattle and data scientists in Dallas. And, for some job titles, the metro with the highest adjusted salary isn’t a large metro or major tech hub. For example, for software engineers, Huntsville, AL, comes out on top.
Tech Salaries are Higher Where Tech Jobs are Most Plentiful
If, on average, tech jobs have higher adjusted salaries in Charlotte, Atlanta and Huntsville than the Bay Area, Austin and Seattle, should job seekers skip the big tech hubs for better money elsewhere? Maybe not. Here are two good rules of thumb about tech salaries if you don’t have a calculator and cost-of-living data at your fingertips.
First, metros with higher posted job salaries still tend to be better deals, even after taking living costs into account. It’s true that metros where unadjusted tech salaries are higher also tend to have higher living costs. But the cost gaps typically don’t fully offset the unadjusted tech salary differences. In other words, that higher tech job paycheck in Metro A will probably still be higher than a paycheck for a tech job in Metro B, even after adjusting for Metro A’s higher living costs. In this way, tech jobs are different from jobs in the general labor market, where living costs more than offset local differences in salaries. And, of course, tech jobs pay well to begin with. In the Bay Area, for instance, tech salaries are a third above the average for all jobs.
Second, metros where tech is a bigger part of the local economy tend to have higher adjusted tech salaries. In other words, tech hubs pay more, even when accounting for their higher living costs. In research on tech hubs, we found these hubs are both where there are more tech jobs and where the mixes of jobs are skewed toward specialized, cutting-edge titles. It turns out that these hubs also offer higher salaries for similar job titles, even after adjusting for their generally higher local costs. Charlotte and Atlanta are the exceptions. Your tech salary will go furthest in those metros. But, in the Bay Area, Austin and Seattle you’ll get a richer selection of tech jobs to choose from, with salaries that will stretch nicely.
Salary data are from all job postings in 158 tech-related occupations with annual salaries on Indeed between August 2016 and July 2017. Unadjusted average salaries are based on a fixed-effects regression model that accounts for the different mix of job titles across metros in order to make an apples-to-apples comparison of unadjusted salaries.
Local cost-of-living data are from the U.S. Bureau of Economic Analysis regional price parities for 2015, released in June 2017. These cost-of-living data reflect local differences in the price of housing, other services and physical goods.
For the analysis of specific job titles, we compared all metros with at least 250,000 people that met a minimum threshold of job postings with salaries for a given title. Different sets of metros were compared for different specific job titles.
Jed Kolko is Chief Economist at the Indeed Hiring Lab. Previously he was Chief Economist and VP of Analytics at Trulia, the online real estate marketplace. He has also led research teams at the Public Policy Institute of California and at Forrester Research. Jed specializes in using large-scale proprietary and publicly available datasets to uncover insights about labor markets, the future of work, demographics, housing markets, and urban trends. He earned his B.A. in social studies and his Ph.D. in economics at Harvard University.