# Compare Salary by City for Software Engineers

Compare Salary By City for Software Engineers

It should be no surprise that most software engineering jobs with the highest salaries are in Silicon Valley today. However, since the cost of living is high, did you know you may be better off accepting a lower salary in a different city?

If you are an engineer and want to move but do not know which city you should go to, this article is for you!

# Pandemic times

First up, let's acknowledge that most of the United States are still battling the pandemic in some form or another.

This means that many tech companies may hire fully remote or temporarily remote roles until a general Return To Office is mandatory.

This means that if your timeframe is only for the next 1 - 6 months, you can select any city in the U.S. as your home base for many companies.

For anything past that timeline, carry on through this article, dear reader.

# How to compare salaries

It can be hard to know where to start when comparing salaries.

Suppose you've read some of our previous articles touching on RSUs / ISOs and the equity components of compensation. In that case, you'll know that salary is only one component - and not even the majority of your compensation, particularly at more senior engineering levels.

Therefore, especially if you are at the Senior Engineer level and above, you may be better off finding the companies which provide the highest equity components - and then only consider the cities where these companies have offices.

Here's a small sample of companies that often provide the highest equity components, sourced from levels.fyi (opens new window).

Note: all equity numbers are based on the annual value of a 4-year grant value on the hire date.

# Facebook

Level Base Salary Median Annual Equity
E3 $123k $44k
E4 $164k $88k
E5 $198k $160k
E6 $235k $310k

# Snap

Level Base Salary Median Annual Equity
L3 $130k $52k
L4 $181k $177k
L5 $209k $311k
L6 $222k $367k

# Stripe

Level Base Salary Median Annual Equity
L1 $128k $72k
L2 $173k $115k
L3 $210k $209k
L4 $241k $300k

Beware: Stripe recently changed their offers to only include 1 year of equity (opens new window), limiting any potential upside.

# Shortlist your preferred companies before selecting cities

What can you take away from considering just these three companies as an example?

Let's break it down:

  • If you are a new grad, especially if you intend to stay only 1-2 years, Stripe provides the highest compensation. So, you might start your search by only the locations where Stripe has an engineering office (for the U.S., currently San Francisco, New York, Seattle, Chicago, and some remote teams).
  • However, if you are a little more experienced, Snap currently provides the highest equity - so start looking at Los Angeles, Mountain View, Seattle, San Francisco, New York, and Austin.

So - to maximize your compensation, find the companies you are interested in for your level and then consider the cities they are located in before you start your salary compare exercise.

# Equity grants can vary more than base salary

Equity arguably plays a more significant role when you compare compensation than just the base salary.

Many companies adjust RSU / ISO grants for different cities and states even more than they change for base pay.

Let's revisit that Facebook comparison, but this time only looking at the E5 / Senior level for different cities.

# Facebook E5

Level Base Salary Median Annual Equity
San Francisco (opens new window) $201k $164k
Boston (opens new window) $190k $134k

You can see that while the base salary is only $11k lower, the annual equity component is a whopping $30k lower.

How about another top tech company, like AirBnB? Similar story for their L5 / G9 / Senior level:

# AirBnB E5

Level Base Salary Median Annual Equity
San Francisco (opens new window) $209k $214k
Seattle (opens new window) $211k $176k

The base salary goes up this time, but the RSU grant is $38k lower per year!

# Compare City Costs with Salaries

How do you know if the reduced salary or equity on offer is worth making a move for? You need to understand the cost of living in each city - that's where a cost of living calculator comes in.

I recommend the BestPlaces Cost of Living Calculator (opens new window) because it allows you to enter your current city and your target city, and it then breaks down the costs into several dimensions like housing, food, transportation, and so on.

Let's return to our hypothetical Senior Engineer working at AirBnB in San Francisco for a $209k base salary and $214k in annual RSU value. Is moving to Seattle for a $38k reduction in annual equity worth it?

If you look at the baseline comparison between these two cities (opens new window), Seattle is estimated at ~31% lower cost of living than San Francisco.

This means that the $413k compensation in SF is comparable to $283k in Seattle, and this relocation is worthwhile.

# Don't forget to compare tax rates

However, there are two nuances which the baseline comparison does not cover.

Firstly, the primary factor for the cost of living adjustment is housing. More specifically, the median home cost. If you do not intend to purchase a home, the rental market may not differ as much between these cities.

Secondly, this comparison has not factored in taxes at all. The two taxes that will most affect the amount you get to keep are state income taxes and property taxes (if you purchase real estate).

Let's add this to our consideration.

Washington State has no income tax, while California has a state tax rate of up to 13.3% (see the tax rate comparison (opens new window) here). Once you factor this in, our AirBnB engineer is ahead by ~$36k just from not having to pay California's state income tax - that equity reduction doesn't seem so bad after all!

Now when you look at property taxes, the property tax rates in Seattle (opens new window) are slightly higher (~0.9% of property value) as compared to San Francisco's 0.64% rate. By and large, however, the higher median property value in SF negates this higher rate.

# Case Study: Cities in the U.S. with the Highest Salaries for Software Engineers (San Francisco, Seattle, New York)

So how do you make this decision to move or not in real life? Here's a feasible approach for evaluation.

Assume you are a Senior Engineer currently in San Francisco.

Step 1: Draw up a shortlist of companies you are interested in working for in your target compensation range. For simplicity, let's say this is just AirBnB and Snap.

Step 2: Find the cities where these tech giants have engineering offices. Namely, SF / Seattle for AirBnB and LA / SF / Mountain View / Seattle / New York / Austin for Snap.

Step 3: Estimate the offers for base salary and equity in each of these locations. You can confirm with recruiter guidance or actual offers later.

Step 4: Match these expected offers with the cost of living comparisons in each city. Don't forget to include taxes.

Step 5: Compare your findings to see which city best suits you, at least from a compensation perspective.

Step 6: You should adjust up or down what you think living in a particular city is "worth" to you for less quantifiable factors like climate, nightlife, proximity to family, and any other criteria which may be necessary to you.

Having this laid out for you will at least give you an idea of whether you should or should not relocate, with a clear understanding of what you may potentially be giving up.

# Final Considerations Before Moving

Be honest with yourself. If you consider moving to another city, it's crucial to consider your family situation, relationships, and the job market.

For instance, if your partner is unwilling to move with you or doesn't want to, you might want to reconsider.

In conclusion, there is a significant difference in the salaries compensation across the United States. The cities with the highest salaries are usually San Francisco Bay Area, Seattle, and New York.

Last Updated: 11/21/2021, 9:50:52 PM