The San Francisco-Oakland-Hayward MSA is home to some of the largest businesses and tech startups in the country. In this metropolitan area, weather, job availability and higher salaries are just a few reasons why people flood to this area, but high wages are routinely interrupted by sharp increases in cost of living.
ThinkWhy offers a quick examination of the area's economy.
Insight into The San Francisco-Oakland-Hayward MSA
The professional and business services industry, which includes tech-jobs, brings in the majority share of employment at 20 percent; followed by Education and Health at 15 percent; and Leisure and Hospitality at 11 percent.
The top three salaries across all industries in the area belong to Medical (Psychiatrists), Transportation (Pilots, Co-Pilots and Flight Engineers), and Chief Executives at annual mean wages of $278,000; $247,000; and $246,000 respectively.
The top three salaries across the tech industry (which the Bureau of Labor Statistics classifies as computer and mathematical occupations) includes Software Application Developers, Computer and Information Research Scientists and Software System Developers at annual mean wages of $144,000, $140,000, and $137,000 respectively.
The joblessness rate has been on a slow decline since it peaked at 10 percent in the first quarter of 2010. From there, the rate plummeted down to 3 percent in the third quarter of 2018. With the drop-in unemployment, there will be a rise in wage growth. The two relate to each other in a supply and demand world. The more people in the labor force, the more employers will have to pay to attract potential employees.
Wage and Inflation
Higher wages will draw more people in; however, if inflation rises higher than the amount of income individuals bring in, then increased paychecks will become meaningless. For example, $50,000 annually is enough to afford a house and live in a middle-class area in the Midwest, but, with the same paycheck in another part of the country, rent alone may be barely affordable due to inflation. For a clearer example, registered nurses make an average of $106,000, but when adjusted to the cost of living, that number is reduced to $65,000 a year. As the saying goes, “you pay for the view” ….and the Bay area has many of them. Physician assistants in the Bay Area earn an average of $132,000 per year, $28,000 more than the average national base salary of $104,000 so wages are clearly high but may not be high enough to compensate for the cost of living in the Golden Gate City.
The inflation rate for the Bay area has remained on a consistent increase from the first quarter of 2011 while wages dipped to .04 percent during the great recession but hopped up to its peak at .06 percent in the third quarter of 2017. In the first quarter of 2019, inflation and wage growths are neck and neck at .03 percent. So, the increase in pay is just enough to keep heads above water in the area as inflation, overall, maintains a steady rise.