In San Francisco, even US$180,000 tech salaries are no longer enough

[SAN FRANCISCO] Katrine Razniak, 27, arrived in San Francisco in 2022 as a recruiter at LinkedIn, earning US$70,000 a year. Her annual salary soared to US$180,000 when she joined the software company Rippling to lead a team of account managers. Her partner, Adam Woodbury, 39, moved to the city in 2021 and earns US$185,000 as a software engineer.

These days, even those six-figure salaries are no longer enough in San Francisco.

When Razniak and Woodbury tried to find a one-bedroom apartment for less than US$5,000 a month this spring, they struck out. They looked at about 30 properties over three months, but all were too expensive and too in demand. At one listing for US$5,200 a month, they found 30 people had added their names to a sign-up sheet within an hour of the open house.

They ended the search. But even if they had found a place, a question lingered: whether a city where groceries and dinner with friends had become sources of financial concern was somewhere they could build a future.

“I don’t feel completely hopeless, but I don’t think I can stay in SF,” Razniak said.

Woodbury added, “At some point, there was a slow transition where we both realised it just didn’t make any sense.”

Razniak and Woodbury are not struggling by any conventional measure. But as a wave of artificial intelligence wealth is set to deluge San Francisco, even young tech workers who came to the city chasing the Silicon Valley dream have started to say an affordable future feels increasingly out of reach.

That’s because as AI companies OpenAI and Anthropic – both with headquarters in San Francisco and valued at nearly US$1 trillion – prepare to go public, an AI elite has emerged that can outspend other tech workers.

The two companies, along with Elon Musk’s newly public SpaceX, could mint more than 20 new billionaires among current and former employees, according to an analysis by Sacra, a private markets research firm.

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“I feel a little bit like I’m not good enough to live here anymore because I don’t work at an AI company,” Woodbury said, even though his salary puts him roughly in the top 20 per cent of American households, according to Census Bureau data.

Woodbury recently moved to Carnelian Bay, on Lake Tahoe, California, which is less expensive. Razniak remains in an apartment in San Francisco’s Haight-Ashbury neighbourhood, which she shares with two roommates and for which she pays US$1,650 a month. They’re making the long-distance relationship work.

San Francisco has long wrestled with affordability, but the issue has been magnified as OpenAI, Anthropic and other startups have attracted a flood of AI workers. The overall cost of living in the city sits 65.6 per cent higher than the national average, according to the latest data from the Cost of Living Index by the Council for Community and Economic Research.

Housing leads the markup. San Francisco’s median home price topped US$1.7 million in April, according to a report by Redfin, far above the national median of around US$450,000. And in the last few months, the city’s average apartment rent surpassed New York City’s to be the nation’s most expensive, reaching US$3,827 a month, according to the real estate data firm CoStar.

“It’s a pressure cooker, and it’s heated up really fast,” said Nigel Hughes, a senior researcher at CoStar. The apartment vacancy rate in some of the city’s most sought-after neighbourhoods has fallen to roughly 3 per cent, down from about 13 per cent in 2020, according to CoStar data. New construction has stalled.

Rising property prices are compounded by other factors. Utilities cost about 41 per cent more in San Francisco than the national baseline, transportation runs roughly 43 per cent higher and groceries cost about 19 per cent more than in the rest of the country, according to the Cost of Living Index.

And it is increasingly hard to keep up with the Joneses – or in this case, Sam Altman, the CEO of OpenAI, and Dario Amodei, the CEO of Anthropic. The mean annual pay in San Francisco was US$196,365 last year, up from US$153,359 in 2020, according to the Bureau of Labor Statistics.

Ted Egan, the City of San Francisco’s chief economist, said that high earners had always weighed whether to accept the city’s trade-offs or leave for somewhere with a yard and garage. What’s new is the scale, he said. When Uber went public in 2019, its valuation was about US$82 billion. “OpenAI and Anthropic are estimated to be more than 10 times that,” Egan said.

Daniel Lurie, the mayor, said in a statement that his administration was working to reduce costs through access to childcare, a new family housing zoning plan and transit improvements. He did not specifically address the concerns of six-figure earners.

(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to AI systems. The companies have denied the claims.)

Jolie Gan, 23, moved to San Francisco in January after completing a Fulbright fellowship at the Massachusetts Institute of Technology. She now has two jobs: working at venture capital firm Andreessen Horowitz and writing for Core Memory, a technology and science publication, earning about US$250,000 a year.

She and her roommate have already moved three times in two months – in one case, they left an apartment that was misrepresented as a two-bedroom; another time, they departed a building that had black mould and rats.

At US$250,000 a year, and with no student loan debt, Gan said she felt she could manage, even saving for retirement. But she said she saw the strain on friends who were earning less than US$200,000, for whom rent, utilities and groceries consume nearly everything that comes in.

Gan said that she was determined to stay in San Francisco for the next several years because of the career opportunities, the energy of the city and the community she had built. “As silly as this housing situation is, and as expensive as it gets, I think that all these intangibles are still worth it for me,” she noted.

Razniak and Woodbury have started thinking about Seattle. The life Razniak imagines there is one she cannot picture affording in San Francisco, even on a combined income that would be remarkable almost anywhere else in the country. “We want a house, we want a garage, we want storage,” she said. “And that just doesn’t feel attainable here.” NYTIMES