Leadership1 publisher3 min readPublished
San Francisco rents are pricing out a $120,000 project manager at a Fortune 500 retailer
Business Insider's tour of the city's squeezed cohort found a bakery owner who paid himself $40,000 last year and a project manager on about $120,000 who cut her internet package to $40 a month and moved into a shared apartment.
The Board Room · Leadership desk
What happened
- Kacie Barrett, 26, a project manager at a Fortune 500 retailer earning around $120,000 a year, has spent two years cutting her spending as San Francisco costs rose.
- After six months of searching for a rental in her price range without success, and with shared listings averaging $2,500, she is considering leaving the city.
- Tolgay Karabulut, who opened the bakery BaklavaStory in 2022, paid himself $40,000 last year and pays about $1,300 a month for a shared apartment with no closet.
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Why it matters
- contradiction The phrase Sam Altman dismissed describes technologists who miss the frontier labs, while the people Business Insider put on the record are a retailer's project manager and a baker, so the retention problem sits with employers who never competed for lab talent.
- cost At a quarter of gross pay for a room, the housing premium is paid first by the employee and only later by the employer, in the form of a resignation or a commute allowance.
- decision Any San Francisco offer below frontier pay is now negotiated against the same three alternatives Barrett is weighing. That sets a floor on cash that equity and title do not reach.
- exposure Owner-operators absorb the rent through their own draw, so a bakery's margin carries the city's housing cost.
Barrett's take-home can be worked out from the numbers she gave Business Insider. If a $2,500 shared listing is about half her monthly take-home, her net sits near $5,000 a month, roughly $60,000 a year against gross pay of about $120,000 [2][7][1]. On that basis the rent she cannot find is a quarter of gross and half of net [2]. Her last move, from a $2,000 studio in Russian Hill to an $1,850 room in Nob Hill, cut $150 a month, or $1,800 a year, and cost her the studio [5][6].
The label and the people carrying it do not match. "Permanent underclass" refers to technologists who do not make it into frontier AI labs and fall behind their peers financially and professionally [11]. Sam Altman called the phrase "so dumb" in a July interview, and Andreessen Horowitz partner Anish Acharya called it a "funny dark fantasy" in September [12][13]. The San Franciscans Business Insider found who say they are already living it are small-business owners and workers outside the tech sphere [14].
Tushar Kumar, cofounder of Twin Peaks Wealth Advisors, who works with clients at OpenAI and Anthropic, told Business Insider he sees little merit in the underclass idea and expects smaller companies and startups to build on emerging technologies and succeed in the long run [17]. He said the "real concern" was for people who do not work in AI or tech [18]. "So there will be some headwinds for people working in the non-tech sector because of that dynamic," Kumar told Business Insider [19].
Bill Law and his wife bid $1.3 million on a house in the Sunset District, $300,000 above asking, and were edged out by a winning offer of $1.86 million [20]. Asking was therefore $1 million, and the winner paid $860,000 over it, 86 percent [3].
For an owner-operator the housing cost lands on the draw. Tolgay Karabulut, 43, opened the bakery BaklavaStory in 2022 after living in San Francisco since 2009 [21]. He paid himself $40,000 last year and pays about $1,300 a month for a shared apartment [23][24]. That rent is $15,600 a year, 39 percent of what he took out of the business [4]. The day Business Insider spoke to him was a good one: about $2,600 from 68 trays of baklava, roughly $38 a tray [22][5]. His room has no closet. "I have a four-drawer unit that I put my stuff in," Karabulut said [25].
The record here is two people, plus one adviser's view. It leaves out engineers and product managers at AI-adjacent tech firms downsizing; the two people on the record work for a Fortune 500 retailer and run a bakery [2][21]. Business Insider reported that the looming IPOs of Anthropic and OpenAI will intensify the concentration of wealth in the city [16], but those are next year's numbers. Offers written this quarter are priced against a $2,500 listing, and against Barrett's three options: a studio too expensive for her salary, a commute, or better-paid work [7][9]. "That's if I can get a job," she said [10].
What to watch
- Whether the Anthropic and OpenAI IPOs price, and what the new payouts do to San Francisco asking prices and rents.
- Which of her three options Barrett takes, since a commute, a stretch studio and a new employer cost her current employer different amounts.
- Whether wage and rent data for non-tech white-collar work in San Francisco confirm what these two accounts describe.