CHICAGO | Economic & Business Development

[emathias]

Originally Posted by RedCorsair87

Simple answer: No. If our tech sector continues expanding at this rate, we will be in a few years.

I'll take more than just engineering jobs to get solidly into a tier 2 status. What makes the best tech cities is the number of successful startups turning into highly valued companies, not just a lot of jobs. One could argue that having the jobs will lead to that, but not necessarily. Chicago will need good startups AND they will need to adopt the West Coast model for engineer pay. Currently only a few companies in Chicago pay that way, even if they are in a position to. Hopefully that changes, but part of the reason it hasn't yet is a stodgy Midwestern attitude toward pay that is cultural and won't change easily.

[emathias]

Originally Posted by k1052

The chief argument against this that I hear is that because it's not next to the commuter rail terminals it's "bad planning". Metra ridership has fallen even as downtown employment steadily climbed for the last decade. The area is only transit poor if you totally ignore three CTA lines and two of the busier bus routes in the city.

Metra reliability has been worsening. They need to fix that. Also, wasn't there talk of putting Metra stops near Morgan? That would make sense, but maybe they want even more jobs first.

[moorhosj]

Originally Posted by emathias

I'll take more than just engineering jobs to get solidly into a tier 2 status. What makes the best tech cities is the number of successful startups turning into highly valued companies, not just a lot of jobs. One could argue that having the jobs will lead to that, but not necessarily. Chicago will need good startups AND they will need to adopt the West Coast model for engineer pay. Currently only a few companies in Chicago pay that way, even if they are in a position to. Hopefully that changes, but part of the reason it hasn't yet is a stodgy Midwestern attitude toward pay that is cultural and won't change easily.

A company can pay a worker 80% of the salary and the worker only has 60% of the expenses, so they both net out ahead. Paying the exact same wage would negate one of the selling points drawing them here in the first place.

[the urban politician]

Originally Posted by moorhosj

A company can pay a worker 80% of the salary and the worker only has 60% of the expenses, so they both net out ahead. Paying the exact same wage would negate one of the selling points drawing them here in the first place.

Couldn't agree more.

The obvious oversight in Emathias' post is the fact that a $1500 apartment in Chicago probably rents for $3000 in the Bay Area, Boston, or NYC because those places are so much more desirable

Point being--engineering talent here is a bargain for companies, and you can pretty much get the same results. I'm willing to bet that slowly, and gradually, companies are going to figure this out.

[Handro]

Originally Posted by emathias

they will need to adopt the West Coast model for engineer pay. Currently only a few companies in Chicago pay that way, even if they are in a position to. Hopefully that changes, but part of the reason it hasn't yet is a stodgy Midwestern attitude toward pay that is cultural and won't change easily.

You think its a matter of attitude and not just an economic reality? It's cheaper to live here so it costs less to retain talent, no?

[k1052]

Originally Posted by emathias

Metra reliability has been worsening. They need to fix that. Also, wasn't there talk of putting Metra stops near Morgan? That would make sense, but maybe they want even more jobs first.

Hopefully Metra will be able to improve their operations as new, more reliable, rolling stock becomes available.

A station closer to Ogden has been discussed but I think Metra wanted to wait until the issues at A2 were fixed.

[tjp]

Originally Posted by ardecila

This is just wrong... I work in the West Loop and many of my co-workers will walk form the Blue Line at Grand. Halsted isn't a very pleasant walk because of the hill, but you see tons of pedestrians walking up and down Green to the train...

Good to know. I may be overestimating the laziness of the average commuter.

What I really hope is that they create an actual connection between the Lake Red Line station and State / Lake L station. It would make commuting to the west loop from the north side seem like less of a hassle.

[marothisu]

Originally Posted by the urban politician

Couldn't agree more.

The obvious oversight in Emathias' post is the fact that a $1500 apartment in Chicago probably rents for $3000 in the Bay Area, Boston, or NYC because those places are so much more desirable

Point being--engineering talent here is a bargain for companies, and you can pretty much get the same results. I'm willing to bet that slowly, and gradually, companies are going to figure this out.

I mostly agree with this. When I moved to NYC and got my first offer, they upped my salary $30K. Sounds good, except when I did the calculation of how much I'd net after tax and rent, I'd still be having more disposable income on $30K less per year. I would have "lost" money by accepting that offer even when it was a bit more money on paper. Chicago is very attractive to both companies and people for these reasons. Companies can pay a little less, and people can still have better homes and save just as much if not more than the other places on less salary. It's a win win for many companies and people.

If you made $120K in Chicago, you could rent a luxury 1 bedroom downtown for $2500 and net over $4000/mo in disposable income after the rent, tax, 401K, and insurance. In NYC if you wanted to live in the same type of apartment, you'd be spending over $4500/mo in Manhattan and really not much less in Brooklyn. So even if you made $160K in NYC and rented similar, you'd actually have more disposable income in Chicago on much less on paper salary.

The part Emathias is more correct IMO is due to peoples' perceptions. You might be surprised as to how many people think Chicago is just as expensive as NYC/SF. Also, people are bad at calculating the true total costs of everything (i.e tax, rent, etc.). From a recruiting standpoint, it could be powerful to lure those who think Chicago is just as expensive. However, rental and property prices should speak for themselves, as well as income tax rate that's much lower than these places. Also, if I were hiring someone who is supposed to be smart, but they can't figure out price differences, I'm not sure I'd actually want to hire them.

As someone who has moved from Chicago to NYC and gone thru the whole calculating disposable income thing, I know that you can live better in Chicago and save more while still making tens of thousands less. Of course, pay more for truly senior people...

[emathias]

The model I'm referring to is equity. In large companies like Google and Amazon, it's relatively predictable what that will be worth, but it's still possible to make significantly more from equity if something unusual happens, and with smaller companies the potential upside can be significant. If seen equity offers from the West Coast and the Chicago ones are crap in comparison. So I'm not even talking about your budgeted savings, I'm talking about the potential upside of having actual, significant equity available for engineers.

[marothisu]

Originally Posted by emathias

The model I'm referring to is equity. In large companies like Google and Amazon, it's relatively predictable what that will be worth, but it's still possible to make significantly more from equity if something unusual happens, and with smaller companies the potential upside can be significant. If seen equity offers from the West Coast and the Chicago ones are crap in comparison. So I'm not even talking about your budgeted savings, I'm talking about the potential upside of having actual, significant equity available for engineers.

Okay. Then I'd have to agree with you on that aspect, apart from a salary. Equity is another story and yes, startups in Chicago should do better in this aspect.

[LouisVanDerWright]

My buddy works and Salesforce as a developer and gets pretty healthy stock warrants and options...

Another 1,000 of him would be a very healthy addition to the economy here...

[the urban politician]

Originally Posted by emathias

The model I'm referring to is equity. In large companies like Google and Amazon, it's relatively predictable what that will be worth, but it's still possible to make significantly more from equity if something unusual happens, and with smaller companies the potential upside can be significant. If seen equity offers from the West Coast and the Chicago ones are crap in comparison. So I'm not even talking about your budgeted savings, I'm talking about the potential upside of having actual, significant equity available for engineers.

You’re talking about startups

I’m talking about established tech companies and their wages.

I get the equity thing, but it’s a gamble from the beginning. I was cofounder of a healthcare startup in Chicago in 2015 and all the equity in the world meant nothing because it flopped.

[marothisu]

Originally Posted by the urban politician

You’re talking about startups

I’m talking about established tech companies and their wages.

I get the equity thing, but it’s a gamble from the beginning. I was cofounder of a healthcare startup in Chicago in 2015 and all the equity in the world meant nothing because it flopped.

But did you find it easier, harder, or about the same to recruit after offering equity? FYI I don't know what level of equity you were offering if you were to even know if this is a good question.

On the startup/equity front, I would agree with Emathias. However, as far as straight up salary goes, it only makes sense that the wages on average in Chicago are lower than Bay Area/NYC due to COL disparity.

[Investing In Chicago]

Originally Posted by marothisu

On the startup/equity front, I would agree with Emathias. However, as far as straight up salary goes, it only makes sense that the wages on average in Chicago are lower than Bay Area/NYC due to COL disparity.

Is this really how it is with engineer and other techie jobs? I work at oracle and my wife works at salesforce - granted we both lead sales orgs, but base salary is the same (within $15k or so depending on how badly we want somebody) regardless of where somebody lives. I have about 12 reps in California and 10 in Midwest (various cities) and there really isn’t any difference. I never even thought of COL as a factor for base salary.

[marothisu]

Originally Posted by Investing In Chicago

Is this really how it is with engineer and other techie jobs? I work at oracle and my wife works at salesforce - granted we both lead sales orgs, but base salary is the same (within $15k or so depending on how badly we want somebody) regardless of where somebody lives. I have about 12 reps in California and 10 in Midwest (various cities) and there really isn’t any difference. I never even thought of COL as a factor for base salary.

Yes, this is how it works for most non-sales jobs out there at large companies especially. Although I think in some states it's illegal to ask for previous salary, so the game might be changing. Regardless though, my organization in NYC might pay 15% more than the same org/division in Chicago for new joiners at my same level. For the record, I worked for IBM for a number of years and work for a very large corporation right now. I'm not necessarily a startup guy, though I've helped some startups on various things before not as an employee. I had a number of friends in sales org at IBM including a few who ran entire divisions with dozens of people under them. I know that the pay structure in sales orgs is a bit of a different game than everyone else. There are many jobs that are more sales related that pay less, but they rely on commission. My wife works in marketing and her salary just 5 years ago in NYC was only $35K which is ridiculously low. She quit though and the next job was only $50K, but they offer commission. Now at her new job which gets even more commission, she's above 6 figure base. We both realize that many smaller companies get away with paying their employees shit pay because of the hope of commission.

I'm guessing that you take in commission and the reps under you as well? If so, then I wouldn't think that base salary matters that much and it makes sense. When you're making software for a large company, you don't get commission. You might get a bonus once a year and how much that is depends on where you work (company and division). If you are going for a position in a new company, they're going to adjust for COL if they're allowed to ask your current salary (mine was allowed to - 2.5 years ago). However, at least at IBM and my current company if you transfer between locations, they have the option of not adjusting salary. I work with many people who transferred from NYC to Dallas and they kept their NYC salaries. It's important to note that the people who work in Dallas but didn't transfer would get paid a bit less than those at the same level who transferred from NYC.

So on the startup front, what emathias says is absolutely true and important. In SF, the equity structure on average is better than Chicago. People have more incentive to work hard to make their company successful. Why do you think there's so many young millionaires/multi millionaires there via startups? They offer better equity. Chicago is cheaper COL, so it's a win for companies and they can still pay employees good salaries to get them a luxury 1 bedroom downtown. However, if you want to attract even more talent, then startups have to start offering better equity in Chicago. This will help solidify Chicago in the future as tier 2.

[marothisu]

Well this is interesting. Although preliminary data for June 2019, the number of employed persons for the Chicago-Naperville-Arlington Heights Metropolitan Division jumped up over 71,000 persons in 1 month - from May to June. It is the highest number of employed persons in this Metropolitan Division of any month going back to January 1994 (data doesn't go back any further).

The civilian labor force in this same Metropolitan Division jumped up nearly 100,000 people in just a month from May to June as well That's a big jump and represents the 3rd highest civilian labor force population since August 2016 (only June and July 2017 were higher).


Talking about non-farm employees, the total number of employed persons for that jumped up just over 50,000 people in a month. This is the highest of any months since at least January 1990 (as far back as the data goes). The big changes came in the Business/Professional Services, Finance, Leisure/Hospitality, Trade/Transportation/Utilities, and Construction industries. This increase of employment in non farm was about the same as the NYC-Jersey City Metropolitan Division in total jobs, but over double the percent change. It was also much more than the Los Angeles-Long Beach Metropolitan Division and surprisingly more than the main MDs for Houston, Dallas, Austin, DC, Seattle, Boston, Miami (which had a decrease), Atlanta, etc

I know it's just the change from one month to another, but it's more than I've seen in a long time and kind of surprising..

[emathias]

Originally Posted by the urban politician

You’re talking about startups

I’m talking about established tech companies and their wages.

I get the equity thing, but it’s a gamble from the beginning. I was cofounder of a healthcare startup in Chicago in 2015 and all the equity in the world meant nothing because it flopped.

In Seattle and the Bay Area, even companies that shouldn't be considered startups anymore offer more equity than companies based in Chicago. I'm talking about companies like Airbnb, which is is over twelve years old - that's no longer a startup. Google, Facebook, and Amazon all grant significant equity, too, and they're all well past startup stage.

[the urban politician]

^ In concept, isn't that the same thing as offering stock options to employees?

[VivaLFuego]

Originally Posted by emathias

In Seattle and the Bay Area, even companies that shouldn't be considered startups anymore offer more equity than companies based in Chicago. I'm talking about companies like Airbnb, which is is over twelve years old - that's no longer a startup. Google, Facebook, and Amazon all grant significant equity, too, and they're all well past startup stage.

This is a bit of a tangent, but the long-term value of an equity stake in tech companies depends on one's faith that the current economic regime of fake money and exceedingly lax anti-trust and regulatory enforcement will enable the tech-finance complex to continue to collect rent from the rest of the economy. Of course, until that changes (i.e. at least in the near and medium terms), the equity stakes are tremendously valuable - but midwestern practicality endemic to the rust belt has generally struggled since the inflection point in the early 1970s, with the shift towards ever-faker money, race-to-the-bottom trade policy for manufactured goods, and regulatory capture by the banking and tech sectors.

Chicago is luckier than most of the rest of the rust belt in that we have a decent presence in these industries, but in the current economic regime we'll always be a regional capital/Tier 2, meaning less potential upside (equity stakes, salaries, etc.) than in the power centers of the Bay Area, New York, and to a slightly lesser extent DC.

[k1052]

Originally Posted by the urban politician

^ In concept, isn't that the same thing as offering stock options to employees?

Options are the ability to purchase at a certain price. The equity grants that are common in the industry are RSU (restricted stock units). The company gives these to you as part of a comp package and they vest on a schedule, typically over several years. When review season come around they reload people they want to retain. RSU is a major factor when skilled people decide what jobs to take.

This is SOP for west coast tech companies big and small. I hear wildly different things about elsewhere but generally far less equity is offered it seems (NYC an Boston being exceptions).