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San Francisco: Where $65,000/Year Is Actually Only $53,500

Note: the IRS remains unmoved by this argument

We’ve got between 9,000 and 13,000 new residents migrating to San Francisco every year (depending on who you ask), and it’s no secret why they’re coming. More than the views, the food, and the beautiful homes, they’re here for high-paying jobs at hot companies.

But of course, those fat paychecks are immediately knocked for a loop by the high cost of living. Is a move to San Francisco or Silicon Valley actually worth it, monetarily speaking?

Well, the answer is probably yes no matter what the numbers end up saying, because a job at a hot company pays dividends beyond just a paycheck. Still, it’s worth knowing that the Bureau of Labor Statistics estimates that the San Francisco and San Jose regions have some of the most punishing regional price parities in the country.

RPP is the formula that the feds use to calculate the extra economic pain of living in a pricy city. An RPP of 100 means that everything in your town costs precisely the national median. The RPP for the Bay Area (minus the South Bay) is 121.3. The South Bay’s is even worse: 122 even.

That means that, although the average Bay Area worker tows home a bigger check than workers in cities like Seattle, Washington DC, Boston, Springfield (Illinois), and Trenton (New Jersey), someone with the same job in any of those places is effectively more wealthy at the end of the month. Oh, the indignity.

A local median wage of nearly $65,000 is really only worth about $53,500 when you factor in the cost of, well, the city. And $75,700/year in San Jose is actually more like $62,100.

The good news (assuming you happen to be one of those relatively highly paid workers), is that it might not matter so much in the end. San Francisco still ranks number ten nationwide in terms of purchasing power.


Amazingly, San Jose is not only number one in dollars paid, but also number one in purchasing power, even with that punishing RPP. It’s probably no surprise that the cities with the greatest purchasing power tend to be tech and energy hubs.

BLS was also working off of wage figures from 2014, and factoring in Oakland and Fremont with San Francisco’s averages as well. (The census tends to lumps us all together.) If you isolate just the city, and bump the timeline up to the present, the San Francisco Health Improvement Partnership pegs citywide income at $84,000.

That’s the equivalent of about $70,000 most other places, as BLS would reckon it. This compared to a nationwide median income that’s probably about $57,000 means the move is likely worth it.

How far that $84,000 goes toward your rent after taxes, of course, is a whole other mess. Still, it’s nice to know what the numbers are.