Greater flexibility to work remotely during the COVID pandemic has caused some tech workers to consider relocating from major tech hubs on the West and East coasts to lower-cost markets. For those contemplating such a move, there are both financial and non-financial implications to consider.
CBRE has conducted a financial analysis that evaluates market-based wage and cost-of-living differentials for a software developer considering relocation from a major tech hub to a lower-cost market. Based on data from CBRE’s 2020 Scoring Tech Talent report, annual average wages in five major tech hubs were adjusted to market-based wages in a dozen lower-cost locations where tech firms are clustering. The relative costs of living were determined using the Economic Research Institute Cost of Living Calculator. The net difference between the reduced wages and reduced cost of living determine whether a software developer would be better or worse off moving away from a major tech hub.
The results show that Charlotte, Phoenix and Tampa offered the greatest financial benefits when relocating from higher-cost markets, while Chicago, Pittsburgh and Portland were the least financially beneficial. Tech workers based in New York, Boston and Washington, D.C. stand to realize the greatest overall financial benefit from relocating to lower-cost markets. Relocating from the San Francisco Bay Area also is financially beneficial but could result in the greatest loss in wages. Seattle showed the least financial benefit from such a relocation.
While short-term financial benefits may seem compelling, the following three non-financial factors may prove more important in the long run and should be considered when contemplating a move away from a major tech hub:
- Career Development: Job opportunities, career advancement and building a professional network may suffer if locating away from a major tech hub or working remotely full-time.
- Professional Skills: Productivity and knowledge building may decline when one is physically away from other key team members and management mentorship. Innovation and problem-solving are best performed in-person.
- Work Content: Selection to work on certain projects and teams may be impacted if others are in a major hub and available for in-person team meetings and events.
When considering relocation, the financial factors are probably the clearest indicator as to whether it will make a worker better off. It’s the non-financial factors that are more difficult to assess as they vary by career level, time at a company and specific role or projects one is working on. This analysis represents a roadmap or checklist when considering relocation.
Are You Better Off Leaving Major Tech Hubs for Lower-cost Locations?
Software Developer Wage Equivalent in Non-Tech Hubs and Cost of Living-to-Wage Differential
Source: CBRE 2020 Scoring Tech Talent, CBRE Tech Insights Center and Economic Research Institute Cost of Living Calculator, December 2020.