A surprise takeaway from my geo-tier analysis of California compensation
In late 2024, the rest of California talent market became equally expensive as the Bay Area:
This chart shows base salary trends for a P3 Software Engineer, a high volume role with thousands of offers in Compa, from 2022 to 2024 in:
SF Bay Area
All California excluding the SF Bay Area (“Other California”)
A basket of typical Tier 2 cities for reference: Austin, Chicago, DC Area, Denver, Portland, and Salt Lake City
Check out the slopes: while SF salaries rose 4.3%, Other California rose a staggering 10.7% over the three year period. Meanwhile, Tier 2 cities barely increase 1.7%. Note you can stress test the generality of this finding by looking at different percentiles, levels, roles, and pay elements.
Expressing this shift in geo tier terms shows Other California as a percent of the SF Bay Area exiting 2024 at 100%.
You can see a similar trend in new hire grants:
Other California new hire grants caught up to the SF Bay Area in 2024, departing from Tier 2 cities that continued to languish in 2024.
What’s going on?
I moved to Newport Beach in 2020 and expected the cost of living to be lower — but my hipster-certified, single-origin drip coffee (favorite spot) costs minimum $5, and easily $7 for pour-over, just like San Francisco. ☕
As people moved from SF to places like Los Angeles, San Diego, and Orange County, they brought increased demand for expensive lifestyles, fueled by their SF-level wages.
Tech companies no longer offer less to technical talent in Los Angeles than San Francisco; pay has equalized.
If you still have Los Angeles and rest of California in Tier 2, you’re probably observing higher exception rate and compa-ratios.
Analyze this yourself in Compa
I built this analysis in Compa using the new geo tiers feature we launched last week.
You can group cities into tiers as you’d expect, but the best part is you can mix cities with states and create exclusions, like building a tier that includes all of California except the SF Bay Area.
Check it out — it’s a useful feature to pressure test changes to your geo tiers, and discover when a talent market shifts.
Not a Compa customer? Get started here.
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Thanks for sharing this analysis, Charlie. Interesting to see how fast this gap closed.
Great analysis Charlie and team. I've been seeing similar moves over the years in our research and advisory. I'm curious what your data shows about the Seattle vs SFBA differential.