But that's just rent. The apartments 2.4x mine appeared to be in worse neighborhoods with higher crime, worse schools, etc. than my current neighborhood.

And commuting is expensive. I have a 10 minute bike ride right now, there's no way I could afford to live close enough to SV to bike to work. It's almost enough to erase the rest of the cost difference. http://www.niallkennedy.com/blog/2006/03/silicon-valley-comm...

I'm not saying "Bay Area is still definitely better because, hey, look at my math". I'm just saying that a 1.3-1.5x salary increase can more than offset a 2.4x rent increase. Obviously there are other factors that are too numerous to list such as commuting costs.

They don't pay taxes in Bay Area?

   $100K/year - 35% - $1K/month = $53K/year
   $100K/year - 35% - $2.4K/month = $36.2K/year
   $130K/year - 35% - $2.4K/month = $55.7K/year

You aren't taking marginal tax rates into account. The tax rate you pay on the incremental 30k is higher than the average tax rate of the first 100k, which makes a significant difference.

Yeah, necessarily: a $1k rent on $8,333 a month ($100k a year) is 12% of gross income. A $2.4k rent on $10,833 a month ($130k a year) is 22% of gross.

The guy living in the $1k apartment land has a better financial life. (Also, good luck finding a place for $2,400 in SF right now that matches what you can get for $1k in most other parts of the country.)

Not necessarily. Many big-ticket costs do not depend on location. Student loan payments, car payments, health care, etc. tend to cost the same whether you make 3X or 5X your rent. You're going to pay them off faster in a high-cost, high-salary area than in a low-cost, low-salary area.

Wanna bet? Health care is more expensive here. Cars are more expensive here (to purchase, but more importantly, to maintain). Food and alcohol are dramatically more expensive here.

In fact, pretty much everything you'll spend money on as a normal adult is more expensive here. I actually can't think of anything that wouldn't be more expensive, unless it's something that's already an obscene luxury good, like a Ferrari.

Your only argument here seems to be that you can make a calculated bet to pay off student loans, because 78% of $130k ($101k) is larger than 88% of 100k ($88k). Maybe, but good luck with that: I think you'll find that the cost of living easily consumes the difference.

My assumption is that student loan payments are much higher than (or close to) your housing costs for most young adults. Compare:

$2000 student loan payment + $1000 rent, at $70,000 salary would be tough.

$2000 student loan payment + $2500 rent, at $140,000 salary is do-able.

I agree about the smaller "cost of living" items though.

Your example doesn't demonstrate that having a 1.3x increase in salary with a 2.4x increase in rent is necessarily a losing deal. And of course you can find a place for $2,400 in SF right now. Maybe you have to have roommates which is fine to many people.

No, because the absolute amount of money also matters.