Salaries For Software Engineers In Usa – From a salary perspective, Silicon Valley is the clear winner with a median salary of $110,554 per year, according to Glassdoor data. But even with six-figure salaries, many developers find it difficult to afford the Bay Area’s high rents.
For a more complete analysis, we compared the real-world earnings of software developers in 43 cities around the world. Actual earnings are calculated as follows:
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Real Earnings = Income – Taxes – Social Security – Cost of Living – Rent A brief summary of our results
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Seattle is the clear winner, with wages close to Silicon Valley, but significantly lower rental costs. Also, with few exceptions, cities in the United States have consistently outperformed international cities. Interestingly, San Jose (our proxy for Silicon Valley) still ranks 3rd out of 21 cities in the US, while San Francisco is back at 19th due to rent differences.
On the East Coast, New York and Washington, D.C. was worse and occupied the last two positions. Phoenix finished second, and Austin and Houston rounded out the top five. Internationally, our recommendations are cities in Tel Aviv, Canada and Berlin. Contrary to what you might expect, our data suggests avoiding London, Singapore and China.
Glassdoor previously listed the “25 Highest Paying Cities for Software Developers” in the US and calculated the “real adjusted salary” by scaling the salary with the cost of living. Her model, contrary to anecdotal evidence, places San Jose and San Francisco at #2 and #3, respectively, on her list. It’s worth noting that they suggest San Jose has a higher cost of living than San Francisco, but our data shows you why the exact opposite is true.
What is “cost of living income”? This is a way to equalize all cities with different cost of living. Here’s the Glassdoor principle:
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However, scaling income with cost of living is not the most accurate way to compare cities. People want to know how much money they will have in their pocket at the end of each year.
Instead of scaling income like Glassdoor, we used our actual income formula to calculate the income of an average software developer living alone in a city and used that as the ranking metric. This leads to very different results.
Since taxes take up a significant portion of every paycheck and vary by region, we used the same Glassdoor base salary numbers to calculate after-tax income for each city, then subtracted the average annual cost of living and rent based on data from Numbeo. You don’t want to go to a city with a few vacancies, so we’ve picked cities with a large number of vacancies and expanded our reach globally.
Cities in the United States beat out almost all international cities, and we’ve split the two into separate rankings to make things easier. From now on, we will refer to cities outside the US as “international” cities.
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Although wages are lower abroad, many people think that the lower cost of living is more than enough to compensate for this. With a lower base salary, your real income will be lower, but even relative to the cost of living, wages abroad are generally not competitive with the United States. See our affordability section below for more information.
Our data confirms the findings of similar reports and suggests that Seattle is currently the best place for a software developer. Companies like Amazon and Microsoft are driving average wages closer to Silicon Valley; However, lower rent means more money in your pocket each month.
Phoenix, Austin, and Houston all seem like good options, too, with real incomes above $30,000. However, these markets are still growing and are at the bottom of our list for number of vacancies. Raleigh, North Carolina ranks 6th behind Houston, but again the job market is much weaker.
From the table above, you may have noticed the difference between San Jose at #3 and San Francisco at #19. These two cities are often grouped under the same “Bay Area” category. Why do regions with similar markets and geographical proximity have such different real incomes?
The Average Software Developer Salary In Different Us States (2016) [infographic]
Our data indicates that salary and cost of living are about the same, but low rent in San Jose makes all the difference.
Cost of living does not vary significantly between cities, but rents do. For example, Phoenix ranks third with an average rent of $972 per month, while San Francisco ranks 19th with an average rent of $3272 per month.
Washington D.C., New York and Boston have the largest software developer job markets outside the Bay Area, but sky-high rents push them to the bottom of the list. Washington DC has the most vacancies in our analysis, but it’s the worst choice among major US cities with below-average pay and high costs.
In addition to cities in the USA, we also wanted to know more about international cities. We selected cities mentioned in similar reports as established or ’emerging’ technology hubs and compiled the numbers for them. Note that almost all of the cities listed below outperform their US counterparts in both real income and job vacancies.
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Oslo tops the list in terms of profitability, but we didn’t mention it earlier because the job market is the smallest of the 43 cities we analyzed in this report. Compare his 106 job openings to New York City’s 22,554.
Your best bet is Tel Aviv. It is a very mature tech hub with the second highest real revenues and a reasonably sized technology market. Additionally, there are tax breaks for recent immigrants to the country that are not included in our tax calculation.
Canada is also doing well. Toronto, Montreal and Vancouver are 3rd, 4th and 5th on our list for real wins. All three cities’ job markets have also outperformed Tel Aviv. Berlin, often referred to as the strongest European technology hub, is not far behind in 6th place.
Bangalore should also be mentioned. It has one of the world’s largest job vacancies for software developers, surpassing San Francisco and San Jose and New York and Washington D.C. Just less. Conversely, it has the lowest median pre-tax income in US dollars of any city we look at.
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In most cases, the cost of living internationally is significantly lower than in the US, but not low enough to offset the drop in wages.
According to our data, real incomes in London are lower than the international average and significantly lower than cities in the United States. Another city that will surprise you is Beijing. Many are excited about the technological innovations out there, and local startups have unique access to a huge but unique domestic market. However, our data suggests that there are better options from a purely economic perspective.
Singapore and Hong Kong have real income values close to zero. Warsaw and Moscow are even lower, to the point where we calculate a negative value for real earnings. This means that as a software developer earning an average salary in any of these three cities, you cannot afford to rent a single apartment in the city center.
Low wages are generally associated with lower incomes and a lower cost of living internationally. Perhaps it is more important to look at income and expenses. We calculated an “affordability ratio” for international cities, which is after-tax income divided by expenses, and then indexed it to San Francisco. For example, San Francisco’s “affordability” is defined as 100, and a score of 150 means that the city in question is 50% more “affordable” than San Francisco.
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Revenue Multiplier = (Revenue/After Tax Expenses) City A = 100 * (Revenue Multiplier of City A)/(Revenue Multiplier of SF)
For the most part, it gives a ranking similar to real earnings. San Francisco’s location is even more interesting. While San Francisco isn’t particularly affordable (most U.S. cities have scores above 100), half of international cities have a lower ratio. So even when looking at revenues and costs, international cities struggle to compete.
To provide a non-financial context for each city, we cite the Numbeo Quality of Life Index, a weighted index based on several factors:
This figure is not indexed and is for comparison only. Because there is little difference between US and international cities, we include all global cities below except for Baltimore and Detroit, where there is insufficient data to calculate the index.
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Many international cities outnumber the largest US cities. Consider, for example, that 13 of the 22 international cities outrank New York. Aside from Melbourne, 10 of the top 11 are all small American cities. Take these results as you will; Some claim it is more than pollution.
Our model assumes that you are a software engineer living alone in a city with an average software engineer salary. Although your personal “actual earnings” may vary greatly depending on your professional role,
