California, what’s the big deal?

[This is a post I started 6 or 8 weeks ago and then didn’t finish. I just finished it up today.]
Most of the grad students from the AI Lab were in San Jose, CA, in July for AAAI-04, and I was astonished at how expensive it is there. Pat and I both thought we must have dropped some money, because I got $100 out of the ATM and it was gone seemingly the next day. And of course, we were just spending our cash on food and other conference expenses. Other things are even more expensive. Owning a house, for example is astronomically expensive. I don’t understand why. Seriously.

I know I was griping about this ad nauseum while I was there, but I still don’t get it. When I asked people why they were willing to spend so much to live there, they looked at me like I was from Mars. But seriously, what’s the big deal with California? The nearest thing I got to an answer was a kind of California-uber-alles attitude: Why wouldn’t you want to live here? Well, sure it’s nice there, but it’s not so nice that I’d be willing to forego owning a house indefinitely in order to live there. It’s not five times as nice as Austin, but homes cost at least five times as much. Also taxes are higher, and gas and food cost more – pretty much everything is more expensive. I think I can understand why it would be so expensive to live in the city of San Francsico, because you’re paying in large part for the convenience of living in the city, where so many cool things are practically right outside your door, plus SF has a gigantic coolness factor that’s gotta count for something. The attraction of Sillicon Valley, on the other hand, is a total mystery. It’s basically just a big suburb. It took about a day for me to get bored there. Sure there’s nice weather, and you’re near the ocean and the bay, but I dunno, it just doesn’t seem to balance out against the idea that a modest, affordable home anywhere else would cost a million dollars there.

I know they pay you more to work there, but the increase can’t possibly be proportional to the increased cost of living. As far as I can tell, a job that would pay, say $70k in, say, Austin, would pay $100k in the Valley, but a home that would be easily affordable on $70k in Austin would a total pipe dream in the Bay Area, even for someone making twice as much.
Frankly, that’s the biggest mystery at all, because it means that people are effectively taking a pay cut to live there. Or, to turn it around, living somewhere with a low cost of living is like getting free money.

Here’s my hypothesis. Some people are there be cause they grew up there and don’t really know any different, so it seems normal. Some people moved there during the internet gold rush hoping to get rich on stock options. Presumably, these people either got rich and used their money to bid home values up to preposterous values, or by now they’ve returned to Peoria with a wheelbarrow full of worthless options.

I think the people who move there (those who aren’t aready rich) must fall into one (or both) of two categories:

  1. Young people just out of college who (a) have bought the California hype, and (b) are inured to being poor and really don’t have any experience to compare it to. These kids get jobs, and rent apartments. After rent, taxes, car payments, gasoline, etc, they maybe have a little disposable income, and they spend their 20s effectively poor but blissful in their ignorance. When they hit their 30’s and/or start thinking about having kids, they have no home equity and little if any savings to speak of.
  2. People who really were unable to get any kind of job anywhere else. I don’t know how many of these people there are, but I think they’re basically fucked.

Note that I’m not counting people who grew up in California. They’re a special case because they probably think that the whacked-out home ownership situation in California is normal, or they simply grew up constantly hearing the California is the greatest place on Earth, and so they believe it despite any evidence to the contrary. Even if neither of those things are true they likely have an emotional bond with the area that could trump economic concerns.

So, if anyone can tell me what it is about California in general and Silicon Valley in particular that makes it worth living there despite all the costs I’d like to hear it in the comments.


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