To make the most money working in tech, live in San Francisco
- The pandemic created lenient work policies and tech employees fled the Bay Area for smaller locales.
- Pay in cities like Austin, Portland, and Denver increased during this time. It's since dropped.
- San Francisco tech pay is now up the most. The city's population grew, too, new data shows.
Even as pay in tech took a hit the last two years from layoffs and industry-wide belt-tightening, compensation for workers based in San Francisco rose this year more than in any other city.
Median compensation for tech workers based in San Francisco hit $249,000 this year, according to data from 200,000 employees compiled by levels.fyi, a platform that tracks and advises on pay in tech. That's a 6% increase in pay in the city from 2022 when widespread layoffs hit the industry, and an almost 4% increase from 2021, when hiring in tech was still extremely competitive.
The median tech worker in San Francisco is earning 11% more than their closest rivals in Seattle, another long-standing tech hub, where the median this year hit $225,000, the data showed. New York City is a distant third place with a median pay of $185,000. That's 35% lower than San Francisco, despite the cities having a similar cost of living. The median pay for tech workers in New York dropped by 1% this year, levels.fyi found.
Zuhyaeer Musa, founder of levels.fyi, noted that one cause for the increase in median pay in San Francisco is that, when companies did start to hire again after mass layoffs it was selective and "skewed to senior level candidates" who earn more. Then, tech leaders and executives suddenly fell out of favor with employees working from home.
"There has generally been a lot of RTO programs bringing people back to the Bay Area," Musa said.
RTO (return to office) mandates seem to have played a role in tech pay dropping this year in several cities like Austin, Portland, and Denver, which were often seen as emerging hubs for tech workers amid the pandemic. All of those cities saw the median pay for tech workers fall this year, after rising during the previous two years. Pay in Austin fell 1%; pay in Portland fell 3%; pay in Denver fell 2.5%. Sacramento fell out of the top 10 for tech pay entirely, after being in ninth place in 2022 with a median pay of $149,000. Cities like Miami and the "Silicon Slopes" around Lehi, Utah, have never made the levels.fyi Top 10 list for tech pay.
Meanwhile, San Francisco, this year saw one of the biggest bumps to population among all of California's counties, according to the San Francisco Standard in a report based on new state government data. After losing roughly 30,000 residents during the peak pandemic years of 2020 and 2021, the city last year added almost 5,000 net new residents. Nearby Alameda County, which includes popular cities like Oakland, Berkeley, and Fremont, also grew by over 6,000 net new residents, after pandemic-era declines. Santa Clara County, too, which includes tech hubs like Palo Alto, San Jose, and Mountain View, added 8,500 net new residents after a preceding decline, the data shows.
Another driver of San Francisco's reemergence as a vital tech capital is the ongoing industry craze around artificial intelligence and generative AI. Musa said AI companies are competing for talent in a way that other tech companies are not at the moment, and it's "attracted a lot of engineers to consider startups and new opportunities." OpenAI, the company behind ChatGPT, has become known among tech workers for having an enviable pay package.
Garry Tan, CEO of Y Combinator, said much the same in October about AI being a driver of San Francisco's comeback with workers.
"You need to be around lots and lots of people in order to be successful," Tan told Marketplace. "And that's extra true right now because AI is such a brand-new field… the best companies that are creating the platforms right now, like OpenAI, Anthropic, they're right here. And so San Francisco is mecca."
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