Sunday, July 6, 2008

THE ILLUSION OF EMPLOYMENT: When it Costs Less to be Unemployed

As we slowly relax in laid-back Hilo, Hawaii, we are reflecting on what was so stressful about living in Silicon Valley and why it is so relaxing being unemployed in Hilo.

When we moved to Silicon Valley 10 years ago, we collected take-out menus from all the area restaurants which accidentally documented the increasing cost of living there. Over 10 years, as the prices increased, we crossed out the old prices and wrote in the new. In 1997, a burrito cost $1.75, then $2.75, then $3.75, and by 2007 the same burrito was $8.75.

In those same ten years our income rose by 50%. Using the Silicon Valley burrito index (comparing salary increase to burrito increases) our income increase was from $1.75 to $2.63, only 29% of the overall burrito increase over 10 years. This is a 69% drop in pay relative to the cost of a Silicon Valley burrito. We were met with similar high percentage cost increases in housing, rents, services, and food costs. So, though Silicon Valley salary increases seemed high, compared to the actual costs of living increases in Silicon Valley, our salary was effectively 69% less than when we arrived.

Over those same ten years the work environment changed dramatically in Silicon Valley. In 1997 it was all about new products, new technologies, and meeting deadlines. By 2005 the only question in Silicon Valley was how many engineers in Asia could be hired with your salary as engineering and operations were moved out of Silicon Valley. Bonuses, pay raises, and stock options disappeared as we struggled to cover our rising monthly costs. Stress and high expectations resulted in us spending more and more on eating out, entertainment, and trips out of town.

The cost of living in Silicon Valley exceeded our income so that we spent more money every month than we earned. The promise of wealth from our worthless stock options and stories of the many Silicon Valley high-tech millionaires fueled our continued drive to stay on. In the end, being laid off became the impetus for us to make good on our dream to live in Hawaii.

Eight months into our life in Hilo, one of our realizations is that it costs less for us to be unemployed in Hilo then it did for us to be employed in Silicon Valley.

Everything we like is cheaper in Hilo. Hawaiian papayas are one of our favorite foods; in Cupertino they were $3.95 each in contrast to Hilo where they are five for a dollar at Farmer’s market, 5% of the cost of Silicon Valley papaya. Fresh tuna ran $28 to $70 a pound depending on whether it was from Viet Nam, Thailand or Hawaii. In Hilo, fresh caught Hawaiian Albacore Tuna steaks are $5.50 a pound, 8% of the cost of tuna in Silicon Valley. Rent for our dumpy apartment in Cupertino between two major freeways with choking pollution and deafening traffic noise was $3000 a month versus the $1350 a month rent for our Hilo house with great views near the University of Hawaii.

We have time to cook which is cheaper than buying prepackaged foods and we rarely eat out. We have no commute and so we rarely fill our gas tanks. We have downsized our spending in every area, no longer needing to spend excessively to reduce our stress and preparing us for a future career with substantially lower salary requirements. Our monthly Silicon Valley paycheck withholding for Federal and State taxes, Medicare, social security, SDI, and benefits was more than we spend every month in Hilo for everything. And everything includes family medical coverage through Kaiser, life, car and rental insurance, in addition to our rent and living expenses.

There are priceless things that we have gained by living in Hilo: improved health, quiet and calmness, fresh air, sunlight, and time to think about things other than work or surviving the next lay off in Silicon Valley. Though we are spending savings to be in Hilo (we have chosen not to collect California unemployment), we have discovered that lowering our stress and improving the quality of our lives has resulted in us losing less money each month in Hilo then we did in while in Silicon Valley. We have gotten our lives back through gainful unemployment in Hilo, Hawaii.


larry said...

nothing beats hilo for a slower and more relaxed pace and reminding you that there is more to life than running around like rats in a cage :)

victoriahokulani said...

Local Bumper sticker saying:
Slowdown this ain't da Mainland!

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