If you don't need a lot of space, i.e. you don't have kids and you can handle having roommates, then it doesn't really cost more to live in a big city. Sure, the rent is more, but not having to pay for an auto loan/gasoline/insurance saves a good amount too.

Source: I moved from the suburbs of DC in MD to Manhattan, I track my spending pretty religiously on Mint, and my spending only went up a few $K per year -- which is way, way less than my salary did from the move.

I work on Manhattan and live in Brooklyn, with family and kids. I still reap most of the benefits of a dense city (subway, nearly everything within walking distance, variety of options in food, etc), while spending < 20% of my income on rent.

Are you saying the engineering / dev salaries in NYC are outpacing DC?

I see DC creeping up to $160K-$170K or so for senior devs that can negotiate.

What are you seeing in Manhattan?

I'm earning over double that in Manhattan as a senior SWE (at the big G). We have no real eng presence in DC.