Even the affluent techies credited with driving up the cost of rent in San Francisco are spending a disproportionate amount of their incomes to live near their employers, concludes a recent study by Los Angeles-based apartment listings startup RadPad and career networking startup Anthology.
Employees of several “unicorn” startups--valued at $1 billion or more--and major tech companies seeking to live within a half a mile of their San Francisco workplaces are paying as much as 54 percent of their incomes to do so.
Granted, typical renters these days tend to disregard the rule of thumb that you should spend no more than about a third of your monthly salary on rent. But we aren’t talking typical renters--these are mid- to senior-level software engineers, making average annual salaries ranging from $115,000 (Square) to $160,000 (Google), paying roughly half their monthly take-home to live in $2,700 to $3,500 one-bedroom apartments located near work. (The median household income in San Francisco is in the range of $75,000, according to the U.S. Census Bureau.)
“The local SF tech scene and the economy are, of course, still thriving, so we can’t exactly call this a tech exodus from San Francisco,” reads a blog post about the study on RadPad’s website.
Here’s how some tech companies stack up on ratio of rent to monthly take-home (i.e., post-tax) salary. Percentages are based on the RadPad data for the median monthly rent of one-bedroom apartments within a half-mile radius of each company's headquarters, and data from Anthology on the average salary of mid- to senior-level software engineers at each company.
- Airbnb: 53.8 percent of average monthly take-home income to rent a single bedroom apartment within a half-mile radius of work
- Square: 53.7 percent
- Stripe: 52.1 percent
- Uber: 48.3 percent
- Twitter: 43 percent
- Slack: 42.1 percent
Building more housing in San Francisco and the surrounding area would release pressure in a housing market that is in crisis mode. Los Angeles-based RadPad has raised the question of whether startups should consider moving for their own convenience. The apartment listings site advocates businesses consider establishing themselves in the area of Silicon Beach. While not known to be cheap, L.A. is still more affordable than S.F., RadPad notes.
"With Tesla and SpaceX, the country’s most innovative private space company, valued at a reported $12 billion, and the early success of startups like Snapchat and Tinder, Los Angeles is definitely a counter-option," reads the blog post.