The cost of living in Austin might be going up, but local tech workers still see their salaries go further in Central Texas than they would in most of the nation’s other tech hubs, according to a study released Wednesday by job search site Indeed.com.
Austin area’s tech workers, Indeed reports, earn some of the highest wages in the nation when comparing the area’s cost of living to other tech hubs, giving the capitol city an advantage business leaders here say bolsters Austin's recruitment of tech workers and companies.
Indeed’s economists looked at the average salaries for tech postings on Indeed.com in 25 U.S. cities they deemed to be key tech hubs, then adjusted those salaries for cost of living.
The actual average salaries for tech jobs in Austin was $103,394, ranking 10th among the tech hubs. But when adjusted for cost of living, that number rose to $103,914, putting Austin third among the nation’s tech hubs, behind only the Atlanta and Charlotte, N.C., metro areas.
This means Austin's already strong tech ecosystem has another selling point for tech companies and employees, said Drew Scheberle, a senior vice president at the Greater Austin Chamber of Commerce.
"Companies want to go where the talent is," Scheberle said. "Austin has well-versed selling points on quality of life, work life balance and opportunity. A good part of the market here has been the lower cost of livability (for) talent. Indeed's research reinforces those key points."
While tech workers earn thousands more on average in places such as San Jose ($126,937), San Francisco ($125,233) and Los Angeles ($111,145), their salaries don’t stretch as far in those locations due to the higher cost of living. The New York City area, for example, has an average tech salary of $112,101, but when adjusted for cost of living, that figure drops to $91,961, according to Indeed.
“As housing prices are on the rise again after a few years of relative affordability, people are thinking about how much housing to afford,” said Jed Kolko, chief economist for Indeed. “It’s especially important for people thinking about tech jobs because, on average, tech hubs are more expensive than other metros are.”
To create its database, Indeed analyzed annual salaries between Aug. 2016 and July 2017 on job postings from 158 tech-related occupations, as well as cost of living data from the U.S. Bureau of Economic Analysis that reflects local prices of housing, services and physical goods.
“Austin builds a lot of housing compared to the (San Francisco) bay area, or New York or Boston,” Kolko said, “Those other metros are all places where less housing is built compared to the rate of growth. More housing construction in the Austin area serves as an escape valve. It keeps prices from rising even more than they are now. Austin also has the advantage of not being up against an Ocean, which takes away some room to build out.”
Tech workers here should also be encouraged by signs that show Austin sustaining its growth, such as rent prices that have recently lowered throughout the city and investment into widening projects on MoPac Boulevard (Loop 1) and Interstate 35, Scheberle said.
"It's about planning for (growth), not stopping it," he said.
Indeed’s data fond that the highest-paying tech positions in the Austin area — when adjusted for cost of living — are front-end developers, who make an effective wage of $115,578 annually.
But it’s not just tech workers that are on staff here who earn some of the best adjusted tech wages.
The average tech contractor in Austin has the best standard of living among tech hubs in the U.S., according to data also released Wednesday from job-search site Hired. The site ranked standard of living among tech contractors in different cities by comparing the value of salaries for each city to what that value would have to be in the high-costing San Francisco area in order to maintain the same living standard.
Tech contractors here earn an average yearly salary of $147,680, which would need to equate to $269,521 in San Francisco to maintain the same living standard, Hired reported. The site used more than 175,000 interview requests and job offers from the past year from almost 10,000 companies and 1.5 million job seekers to draw their conclusions.
A recent report from Indeed also showed that high-paying tech jobs are increasingly more concentrated in Austin. According to that data, which analyzed Indeed job postings for 158 tech-related titles, Austin, with 40 percent of local job postings in the high-wage category, trailed only the San Jose and San Francisco metros by that measure.
It remains to be seen how long Austin can maintain its status as a bargain for tech workers. Spiraling into an extreme cost of living situation could be determined by the housing market, as well as employers’ tolerance to pay more, among other factors, Kolko said.
“It depends on whether it’s worth it for employers to continue to pay enough to workers to offset living rise costs,” he said. “We could reach a point where if there’s not enough construction to keep up with demand - that employers decide they can pay someone a lot less and hire people in more affordable places elsewhere.”