Today is June 9, 2020 and this is part 2 of our post on comparing two exceptional metropolitan areas – Austin–Round Rock (or Greater Austin) and San Francisco–Oakland–Berkeley. Part 1 of this post can be found here and discussed the setup for comparing two major cities in the USA – Austin, TX and San Francisco Bay Area, CA. The respective states have been in the news lately due to their varying response to the COVID-19 pandemic and with remote work becoming a real possibility for a lot of technology employees, we decided to do a data driven comparison of living and working there. This part (2) of the series will discuss major data points that were used in this evaluation.  

Taxes – “’Tis impossible to be sure of any thing but Death and Taxes” wrote Christopher Bullock in 1716. Even with the certainty of having to pay them and the fact that federal and FICA taxes dominate one’s tax deductions, the effects of state taxes on one’s savings and lifestyle can be easy to ignore. Nowhere is this difference more obvious than in the comparison between Texas with 0% income tax and California with effective tax rate of approximately 6.5% (based on average salary for this opening and married filing status). For a $100k job, that difference accounts for $6,500 in savings per year. The sales tax on purchases is 9.75% in Redwood City, CA and 8.25% in Austin, TX. Groceries and prescription drugs are exempt from sales tax at both locations ( 

Housing – On average an individual or household in the USA spends approximately 30% of their income on housing expenses. The issue with comparing two location with just this information is this — What happens if for the same amount of money, you can get a much bigger house at one location than the other? Do you get the same size house because that fits your need and thus spend less on housing or do you get a bigger house because you can afford it for similar costs? For example, let us assume the individual (or household) is interested in two-bedroom apartment/condo within 30-45 minutes one-way driving distance from the place of work. In Redwood City, CA these apartments are between $3,250-$4,800 for an average price of approximately $4,000 per months. In Austin, TX these apartments are available for between $1,800-$2,500 for an average price of approximately $2,100 per month for a savings of approximately $1,900 per month. 

Transportation – Looking at the data from the Center for Neighborhood Technology, an average individual spends approximately 20% of their income on various forms of transportation. These include cars, transit passes, ride sharing services etc. Individuals or households generally tend to own multiple cars at locations where the transit service is infrequent or not available to cover a wide variety of household activities. Both locations have reasonable transit service and approximately 1.70-1.75 autos per household. There are differences in prices of a new car and transit pass at these locations but those are not substantial. 

Food – An average household spends approximately 15% of their income on groceries and restaurants. Comparing prices for food items ordered from the same food chain at these two locations, it was observed that Redwood City, CA was approximately 25-30% more expensive than Austin, TX. If a household was to keep the consumption habits the same across regions and were spending $1,000 in Austin, TX, they would spend $1,250 in Redwood, CA for a savings of $250 per month at the former. 

Health – An average household spends approximately 10% of their income on health-related items. This primarily consists of health insurance premiums. Since these premiums are tax deductible and are purchased from central exchanges or are employer sponsored, the cost for these are very similar across regions. Preliminary comparison of these suggested no significant differences in prices across Austin and Redwood City. 

We want to ensure that every job opportunity gets in front of individuals who are most qualified for it and to give those individuals tools to compare their current position with the new opportunity considering not just the base salary, but also future growth, taxes, expenses, and standard of living.

Security – An average household spends approximately 15% of their income on security and insurance. We include social security taxes in security expense instead of taxes because while FICA tax rate is dependent on household income and is lower for higher income households, those households usually purchase higher priced complimentary insurances from the open market. These include insurance for more expensive houses, cars, dental and vision plans, and life insurance. These additional expenses make the net percentage of income spent on security flatter across households. Since most of these premiums are also tax deductible or are tax exempt and are purchased from centralized exchanges, the prices were observed to be very similar across these regions. 

Income and Savings – While it is well known that starting salaries for similar occupations and skill levels vary by geographic location, it is not common knowledge that average annual wage growth rate at these jobs is also geography dependent. Analysis done using the Bureau of Labor Statistics (BLS) annual average wage data by occupation and location reveals that between 2013 and 2018, average wages for a Software Applications Developer grew by 2.2% in Austin, TX and by 5.1% in Redwood City, CA. Some of this can be explained by regional influence on wages due to talent and skill demands, cost of living adjustments,  etc. In addition, majority of large and small software and tech companies, including Apple, Facebook, and Google, have large offices in the San Francisco Bay area. Figure below demonstrates how wages for two individuals starting at annual compensation of $100k would change due to this regional growth rate over a span of eight years. In 2028, the individual would earn approximately $150k in Redwood City, CA versus $120k in Austin, TX, a staggering difference of $30k per year or $2,500 per month.

Average starting wage or its growth rate is the primary data most individuals look at when making career or location choices. In this case, they would assume that working in Redwood City, CA in smarter than living and working in Austin, TX. Our goal is to complete this analysis with data for everything else that plays a role in not just the raw wages but what an individual has left over once all mandatory (taxes) and essential lifestyle expenses have been deducted. 

This brings us to the main topic of discussion — Why are so many now considering moving to Texas from California and is this a good move for salaried individuals given this large discrepancy in annual wage growth and its compounding effect? For anyone not living under a rock (and social-distancing), it is known that due to COVID-19 and government restrictions, most non-essential employees have had the opportunity to demonstrate that they can work effectively and efficiently from remote locations such as their home. Some companies have announced that their employees are free to work from remote locations for as long as they desire. 

This shift in work culture will present an opportunity to individuals considering moving to remote work locations away from their offices in order to be closer to family, live in a less crowded space, move to locations that are perceived to be safer, etc. and still continue to work for their current employers. Job seeker would also have an opportunity to search and apply for employers that previously did not but now do operate distributed and remote teams. Some companies have proactively announced that if employees were to exercise the option of remote work, their salaries would be adjusted to reflect the local cost of living of their new home office. This would invariably be a downwards adjustment in wages at least for a vast majority of the employees but should that dissuade the individuals from exploring these opportunities even if it was totally for a financial reason? 

To answer this vital question with significant health and financial implication, we have put together tools that collect, verify and analyze all this essential data from various sources in a concise form and tailor that to the individual’s circumstances. Just like large corporation, we want individuals and households to make decisions that are entirely data driven (it is in our name) and feel confident in their choices. We also provide tools to monitor and alert users when opportunities arise in occupations or at locations that are a significantly better fit than their current occupation or profile. Maybe you always wanted to live close to your friends or are looking to move to the next level in your career but don’t have the time to swift through 100s of job posts at several locations to find the one that is better than your current position. We have the tools to make all those searches effortless by only alerting the user when the new job post is a significant improvement based on user provided profile settings. 

Let us use one of those tools to analyze our current predicament – should an individual move from San Francisco Bay area to Austin or if both opportunities were available which should be preferred. We will leave a subjective comparison between the two for our readers, but from financial standpoint the income growth shown above provides an incorrect picture. Figure below shows that once all mandatory (taxes) and essential lifestyle expenses have been deducted, Austin, TX is a far better option for maximizing savings and discretionary income. Cumulatively over the eight years, individual in Austin, TX would save $163k more than in Redwood City, CA even though the salaries in Austin were substantially lower than in Redwood City at the end of that period.

Identification of this staggering difference in real savings for jobs that are almost identical to each other and where starting wages and its growth rates would highlight the incorrect choice, is so important that we have decided to develop and launch a beta version of this tool as our WebApp. The beta version is available free if you are willing to provide us feedback on how we can improve the product. The tool is also currently available free to all students with an active .edu email account. Please use the signup page here or visit our WebApp. We welcome all feedback (positive or negative) of our analysis and tools. 


Team YD3

The goal was to compare living and working in Texas vs California in the age of remote work.

Part 1 focused on setting the stage why this comparison is most relevant now and what is our approach for tackling this comparison. We decided to select similar jobs across these geographies and described them here. Part 2 focuses on decision factors and results of this comparative analysis. Tools for similar analysis are available at our WebApp.