There are many tech hubs in the United States (which this article will cover exclusively, sorry) but which ones are able to maintain low costs of living while also having high average salary for software developers? This post will address that question using a few calculations and data sourced from publicly available websites (see bottom of post for references).
Cities being evaluated:
- San Jose (Bay Area), CA
- Seattle, WA
- Portland, OR
- Austin, TX
- New York City, NY
- Raleigh, NC
- Chicago, IL
- Denver, CO
- Las Vegas, NV
The first chart below represents all salary data-points collected and the second shows a computed average salary. This average salary will be used as the city’s average salary figure going forward.
No real surprises here. As we can see from the charts, San Jose (aka the Bay Area and Silicon Valley) is the area with the highest average salary at $119,551 with New York City following closely behind. It is important to note that both of these cities have much higher than average COL (cost of living). We’ll see that start to become a factor later on.
Before we get too enthused by our fancy new salaries, we should first take a sobering look at what taxes are going to do to our paychecks in these cities. Some state’s taxes will be very different than others. For example: Nevada, Texas, and Washington do not have state income taxes.
Note: Taxes were calculated filing as “Single” and having 0 federal exemptions.
After taxes, San Jose barely secures the top spot with $74,548.11. It is important to remember that your own tax situation may be different from those calculated here and that may affect your personal outcome.
Moving on, we now need to accommodate for cost of living differences between cities. In order to normalize/adjust the salary averages, we need to choose a good base-line city to compare other cities to. I’ve chosen to use Las Vegas, NV for this. This is because Las Vegas’s COL is very close to the national average but also because I live there myself (which makes the resulting numbers easier for me to understand). Regardless, the salaries in the chart below could be adjusted to any city and still apply. All that matters here is that bigger numbers are better.
Things just got interesting! In a come-from-behind victory, Austin, TX has the highest adjusted income at $70,179 followed closely by Raleigh, NC! It would seem that for those wanting to have a large COL-adjusted salary might want to look at places other than Silicon Valley after all.
But wait! There are other considerations to look at. If you are the type of person to spend a large percentage of their income, then you can safely stop reading here. Otherwise, there are some additional calculations to be done. We need to see what the numbers look like if we optimize for net “leftover” income instead of adjusted “total” income. For this calculation, let’s assume that we live in Las Vegas (our base-line city) on $35,000 per year. We can adjust that number based on cost of living and mark the leftover as “extra” discretionary income. Let’s see what that looks like. Hint: bigger red bars are better.
Note: “Adjusted Essential Spending” represents the $35,000 per year from Las Vegas, adjusted to each individual city’s COL. “Extra Discretionary” represents the money you would have left over unadjusted (this is what we care about). The two bars for each city add up to the average unadjusted salary (after taxes) that we saw earlier.
Wow. Looks like software developers in Austin, TX are putting away the most into their savings account with a final discretionary income total of $31,388! Seattle, WA is also close behind with a not-unimpressive $28,938. The biggest losers are Portland, OR and New York City, NY with $16,449 and $16,296 leftover discretionary income, respectively.
Hopefully this has been as informative for you as it has been eye-opening for me. Sorry if your favorite city was left out, I tried to evaluate large tech hubs but also threw in a few cities I was personally evaluating. If you have any questions/comments about the methods of calculations, please post them below.
Notes about data in this blog post: Salary data from Glassdoor.com and Indeed.com is used in order to get a good approximation for the going-rate for software engineers and software developers. Both titles have been used (engineer AND developer) in order to account for differences salary ranges and to hopefully give a better overall approximation of what an average “software worker” might be earning in various cities. Cost of living calculations were completed using CNN.com’s COL calculator. Tax calculations were done using ADP’s paycheck tax calculator.