Best Cities for Software Engineers 2021: A Data-Backed Analysis (2023)

The salary sounds big, but how much is really left in your pocket? We use data to find the best cities for developers, comparing 2021 with our previously studied years 2019 and 2017.

Best Cities for Software Engineers 2021: A Data-Backed Analysis (1)

San Francisco, New York, Seattle — home to some of the biggest names in the tech world — are often the first cities that come to mind when you think of where to kickstart your software engineering career. However, they’re also some of the most expensive cities to live in in the United States and worldwide.

In 2017 and 2019, we conducted studies (linked at bottom of the article) on what the best city in the world was for software engineers in terms of real earnings because we wanted to know whether San Francisco was still (or ever) the best choice, given its place in the heart of Silicon Valley.

We learned that Seattle was actually the best city to live in and New York the worst in terms of U.S. cities. We broadened our horizons to look globally and found that Oslo and Moscow were the best and worst cities to live in in 2017, while Berlin and Shanghai took the crown for best and worst international cities for software engineers in 2019.

Then, the world changed in 2020. After experiencing a global pandemic, we wanted to build on our previous analysis and see if our findings still held true. If we could work as software engineers from anywhere in the world in 2021, where should we go to live our best life to maximize our real earnings and standard of living?

To answer that question, we dusted off our tried and true real earnings formula and came up with a new ranking of software engineer real earnings in the United States and abroad. You can read more about the real earnings formula in the Methodology section below.

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Key Findings

Best Cities for Software Engineers 2021: A Data-Backed Analysis (2)

If you love spoilers, we’ll give you a quick summary here of our results: once again,Seattle is the big winnerfor the United States.

While a software engineer receives a higher salary in San Francisco, his or her counterpart in Seattle gets to keep a higher portion of their pay. This effectively gives them a higher salary because they not only retain a larger cut of their salary, but they also have significantly lower rent and cost of living.

Boston and New York were the lowest-ranked citiesin 2021 in terms of real earnings, while Houston, Phoenix, Austin, and Dallas ranked second to fifth.

Best Cities for Software Engineers 2021: A Data-Backed Analysis (3)

While U.S. cities typically accounted for the top 10 for real earnings globally in 2017 and 2019, in 2021, Berlin was at the top of the list of real earnings rankings overall. In fact, Berlin barely edged out Seattle to make an international city the top city for real earnings for the first time since we started this study.

In 2021, Beijing, Shanghai, Hong Kong, and Bangalore continued to perform poorly in terms of real earnings, and Seoul dropped one place to fall into the bottom five.

Methodology

In our previous studies (see the bottom of this post for links), we looked at the real earnings for software engineers in the United States and abroad. We wanted to take a look at our rankings from back then and see how they’ve changed (or not) in the last four years.

We used our real earnings formula to calculate the earnings of an average software engineer living alone in the city and used that as a ranking metric.

Real Earnings = Income – Taxes – Social Security – Living Costs – Rent

We used the same Glassdoor base-salary numbers to calculate the after-tax income for each city and subtracted average annual living and rent costs based on data from Numbeo. We also chose cities with a large number of job listings and expanded our scope globally to give you a bigger range of cities to consider when deciding where you might want to move.

However, there are some caveats that you should keep in mind when evaluating which city is right for you. While we discuss these more below, the summary is that our model makes general assumptions about where you might live, we’re not experts in international tax law, and there may be biases inherent in our data sources.

Read More: Good Developers Don’t Always Make Good *Freelance* Developers

Caveats

Caveat number one is that our model assumes that you are a software engineer living alone in the city center on an average software engineer salary. We wanted our model to serve as a proxy for as many software engineers as possible, so for “real earnings,” we assumed that if a software engineer is paid more in New York, then a web developer will also be paid higher in New York.

While this model may not account for software engineers with spouses, children, roommates, or significant others, those living outside the city, or those with below or above-average income, we wanted to be able to compare apples to apples so we chose a test case that would allow for comparison across all cities. If you’re a senior engineer who makes high six figures, is married, and lives in the suburbs, we’re aware that this model doesn’t match your specific case, but we hope it is helpful for a vast majority of software engineers.

Caveat number two is that we’re not CPAs and we’re not ruling out the possibility that our calculations may not have accounted for some deductions or extra taxes in the international tax code. We created this model under the assumption that you’re a resident of the country for a full tax year and are not double taxed by your home country if you’re an expatriate/digital nomad. When we calculated real earnings, we deducted income tax, local social security payments, and mandatory insurance contributions to the best of our knowledge.

Finally, there may be inherent biases in our data because of where we obtained our information.Glassdoorgave us our salary and job openings data, we turned toNumbeofor our cost of living, rent, and quality of life data, andIRS Calculatorsprovided us with tax calculations.

In terms of job openings data and salary, Glassdoor may not reflect the entire range of job opportunities for international cities because Glassdoor is based in the United States — therefore, not all employers abroad will advertise for jobs there and might use local jobs boards instead.

In terms of cost of living and rent, Numbeo draws from user-reported data, which could be provided by English-speaking users, whose tastes might be more expensive than local needs, therefore skewing the cost of living higher for international cities.

Read More: How to Create a Software Development Workflow for Freelance Hires

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US Cities: Findings

Seattle Remains on Top but Don’t Mess with Texas

Since 2017,Seattlehas consistently topped our list for real earnings. Amazon and Microsoft’s presence in Seattle means higher wages for software engineers while the lack of state income tax in Washington means that these same software engineers can keep more of their pay while enjoying lower rent.

That being said, in 2021, three out of the top five cities for real income earnings are in Texas.

Best Cities for Software Engineers 2021: A Data-Backed Analysis (4)

Even if you don’t work for either company, as a remote developer living in Seattle, you also enjoy the perks of a bigger paycheck. That being said, compared to 2019, real earnings income has fallen in Seattle, from $50,500 to $41,500, and the number of jobs has decreased by more than half, from 12,400 to 5,319.

From 2017 to 2021, Houston and Dallas have proven themselves as the cities to watch, always coming in in the top five in the last four years. For the first time since 2017, San Jose did not make the top five in 2021 while Austin and Phoenix returned into the top five and Baltimore dropped to tenth place.

In 2021, Washington DC continued to be the city with the most job openings, while Miami, new to our list, had the least number of job openings. That being said, the number of jobs in Washington DC fell from 32,000 to 14,000 to 12,000 from 2017 to 2019 to 2021.

Although San Jose has consistently had a thriving job market for software developers from 2017 until 2021, cities like Raleigh, Portland, and Houston continue to struggle with the number of available job openings.

Overall, however, we found that real earnings are lower in 2021 compared to 2019 and 2017, with after-tax wages lower than 2017 and 2019 numbers and cost of living and rent higher compared to 2017 (but not 2019).

We found lower income levels in 2021 compared to 2019 and 2017, which could be attributed to COVID-19 meaning decreased real income earnings across the board.

Rent Still Outweighs the Cost of Living

Best Cities for Software Engineers 2021: A Data-Backed Analysis (5)

We said in 2017 that rent makes a bigger difference in terms of real earnings than the cost of living and that still holds true today. Surprisingly, while rent prices rose dramatically from 2017 to 2019, rent has largely held steady or even decreased in some cities from 2019 to 2021.

That being said, the difference between the city with the lowest rent in 2021 (Phoenix) and the highest (San Francisco) is more than $2,000, almost 3 times as much, whereas the cost of living difference per month between San Francisco and Phoenix is a bit more than $300.

From 2019 to 2021, San Francisco, New York, and San Jose had the highest rents compared to 2017, where Boston, New York, and Washington DC took the cake, though these five cities are all in the top five still in 2021 in terms of rental costs. This exorbitant cost of rent (and the cost of living overall) is one reason why the Big Apple ranks last on our real earnings list.

Even though New York ranks third for the number of job openings in the United States, it also ranks second on the list of highest rent and first on the list of the cost of living. This bestows on New York the lowest real earnings score in 2019 and 2021, down from second to last in 2017.

Read More: How Francisco in Brazil Got Hired by a US Company – Remote Dev Stories

International Cities: Findings

Berlin is Number One

Best Cities for Software Engineers 2021: A Data-Backed Analysis (6)

In 2019 and 2021,Berlinwas number one in terms of real earnings. However, not much has changed from 2019 to 2021, with Tel Aviv, Montreal, Vancouver, and Sydney remaining in the top five. Although Amsterdam beat Paris for a spot in the top 10 in 2021, and Tokyo edged out Toronto by one ranking spot, cities like Tel Aviv, Toronto, Montreal, Tokyo, and Melbourne have been in the top 10 from 2017 to 2021.

Berlin has a lower cost of living than 15 U.S. cities, including Denver, Miami, and Minneapolis, and continues to have lower rent costs than all of the U.S. cities on the list in 2021, making it an attractive city to move to for remote developers and software engineers who like a low(er) cost of living and the idea of living in Europe.

Tel Avivhas been number two on the list since 2017 and Canada is still representing four years later, withMontrealandVancouverremaining third and fourth ranks on the real earnings list from 2019.

From 2017 to 2021,Bangalorecontinues to have by far the greatest number of job openings, behind only San Jose and Washington DC when compared to U.S. job openings. Four years later, it also retains the dubious honor of having the lowest after-tax income across all countries, even though it also has the lowest rent and cost of living across the board.

Before you cross Bangalore off your list, however, one thing to keep in mind is that our salary information is provided by Glassdoor, which may not have all of the salary information for international employers, so the income may not be as bad as you think.

Read More: How Arc Helped Civitas Scale Their Engineering Team With Global Talent

Low Salaries, Low Cost of Living

While the cost of living in the United States is certainly high, depending on where you live, your salary is also higher. Internationally, however, that may not always be the case. It’s possible that, while your cost of living abroad is lower, your local salary is also so much lower before or after taxes that you may not break even.

Best Cities for Software Engineers 2021: A Data-Backed Analysis (7)

One such case is the Chinese cities on our list. While Shanghai ranked 16th on the list in terms of living costs per month in 2017, in 2019 and 2021, Shanghai remained in last place while Beijing moved from second to last place in 2019 to fourth to last in 2021.

One reason is that Shanghai’s pre-tax income was already in the bottom five, which, compounded by high taxes and cost of living, gives Shanghai negative real earnings and pushes it to last place. In 2021, both Shanghai and Bangalore had negative real earnings.

When a city has negative real earnings, it means that a software engineer is losing money because their taxes and cost of living exceed their paycheck. This is based on numbers provided by Glassdoor — which may not have the most complete salary information from non-U.S. companies — a bias that we address in our caveats section.

In contrast, in 2019, Moscow and Warsaw turned their real earnings from negative to positive, with Warsaw coming in 14th overall and Moscow 20th on the list. In 2021, Moscow and Warsaw continue this positive trend, though both remain in the bottom ten in terms of real earnings.

When it comes to trends, from 2017 to 2021, São Paulo and Hong Kong have consistently ranked in the bottom ten in our real earnings list. While Singapore left the bottom ten from 2019 to 2021, Seoul began to drop in rank in terms of real earnings, from 11th place in 2017 to 17th place in 2019 and 18th place in 2021.

Read More: 20 Best Cities for Launching Tech Startups Outside of the United States

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Other Factors to Consider

Affordability

Although the cost of living can be lower for software engineers living outside of the United States, we’ve also established that wages may be lower too. If we want to know how “affordable” an international city really is, we should look at the ratio between income and expenses for software engineers living in the city.

To do that, we took after-tax income divided by expenses, indexed it to San Francisco, and came up with a method of comparison where the “affordability” of San Francisco is defined as 100, and a value of 150 means the city in question is 50% more “affordable” than San Francisco.

Why San Francisco? As the epicenter of Silicon Valley and as the standard for determining pay for tech companies like Buffer and Basecamp, we wanted to see how other cities compared to San Francisco in terms of real earnings. As a remote developer or software engineer living in an international city, how would your real earnings compare to your counterpart in the Bay Area?

Income Multiple= (After-tax Income/Expenses)Index Value of City A = 100 * (Income Multiple of City A)/(Income Multiple of SF)

As you can see, our affordability ranking list is pretty similar to the real earnings list for international cities. What is surprising is that San Francisco is near the middle of the pack for international cities when it comes to affordability, given that it ranked in the bottom third of U.S. cities in terms of real earnings.

Best Cities for Software Engineers 2021: A Data-Backed Analysis (8)

This means that some international cities, such as London, Bangalore, and Moscow, are even less affordable than San Francisco, which is widely considered the personification of unaffordability. While more than half of the cities on the list are more affordable than San Francisco, the rest of the list might need to step up their game to retain or attract software developers.

You should note that the Affordability rankings have changed significantly since 2017. While San Francisco ranked 10th four years ago, it ranked 13th in terms of affordability in 2019 and 15th in 2021. This means that as time goes on, San Francisco is becoming less and less affordable.

However, on the opposite end, Berlin jumped five places from 2017 to top the Affordability rankings in 2019 and 2021, meaning that Berlin is becoming more affordable over time (perhaps due to its lower-priced rent). On top of that, most of the top 10 ranked Affordable countries (including Montreal, Tel Aviv, and Vancouver) remained affordable from 2019 to 2021.

Read More: We Analyzed 7832 Words from Software Engineer Job Descriptions

Quality of Life

The data for this list was obtained fromNumbeo’s Quality of Life Index, a weighted index based on several factors:

  • cost of living and purchasing power
  • affordability of housing, pollution (including air, water, etc.)
  • crime rates, health system quality, and traffic (commute times)

Our Quality of Life numbers are not indexed to a particular city, so it is merely a way to compare cities overall. Because there isn’t a big difference between U.S. and international cities, we included every city we looked at on our list.

Best Cities for Software Engineers 2021: A Data-Backed Analysis (9)

As you can see, while many U.S. cities do enjoy a high quality of life, international cities are well represented on the list. Compared to 2017 and 2019, 12 out of 22 international cities have a higher Quality of Life score than New York and seven out of the top 10 are smaller U.S. cities.

There are definitely winners and losers compared to 2017 and 2019 when it comes to Quality of Life in 2021. While Melbourne has consistently ranked in the top 10 in terms of quality of life from 2017 to 2021, Sydney became the top international city for quality of life in 2021.

It’s worth noting that in 2021, Beijing once again comes in last while São Paulo is next to last, and Shanghai is third to last in 2021 compared to second to last in 2019. As in previous years, Raleigh has remained number one overall.

More importantly, however, the Quality of Life scores are higher across the board in 2021 than in 2017, but lower than in 2019. For example, in 2017, Raleigh’s Quality of Life score was 170 compared to 219 in 2019 and 201 in 2021. That being said, on the lower end of the list, Beijing’s Quality of Life score was almost the same in 2017 and 2021, with a score of 75 in both years and 66 in 2019.

Read More: Transparency in Tech Recruiting: Remote Companies Lead the Way

Let’s Talk about Miami

As 2020 was a year of change for the world, 2021 brings a new change to our list: the debut of Miami as an additional entrant for our real earnings comparison. We decided to add Miami to our list because Miami has been hailed as the trendy new place for tech in 2021 — we wanted to know just how well Miami could perform compared to tried and true places like Seattle and San Francisco.

We found that in terms of real earnings, Miami performed fairly well, coming in eighth on the list, between Raleigh and Baltimore. While Miami had by far the fewest number of job openings, it came in sixth in the monthly cost of living and the tenth most expensive in rent. Its affordability was a big factor in its position on the real earnings list given that it came in fifth for after-tax income, just behind New York and just ahead of Los Angeles.

When it comes to Quality of Life, Miami comes in 18th compared to other states, behind Chicago and ahead of Philadelphia. Internationally, Miami ranks 27th overall, between Chicago and Tel Aviv.

On Numbeo’s Quality of Life calculator, Miami scores high when it comes to the health care index and Very High when it comes to climate. In addition, Miami has relatively low pollution levels, low property price to income ratio, and offers moderate levels of purchasing power and safety.

Read More: Remote Developer Stats: Top Benefits and Perks Companies Offer in 2022

Conclusion

While money isn’t the only factor to consider when it comes to where you want to live, it’s undeniable that money is an important part of the equation. Hopefully, we gave you some food for thought in terms of where you’d like to live from the financial side of things.

Your personal preferences in terms of weather, culture, city size, and entertainment options will certainly play a role in your decision, but because knowledge is power, you can go in knowing where you can afford to live based on how much you take home.

From our model, if real earnings are important to you, the United States is still the best country to live in for a software engineer, although Berlin tops our list in 2021. While the top 10 cities for real earnings were all in the United States in 2017 and 2019, in 2021, only eight of the top 10 cities are in the United States.

Seattle, Houston, Phoenix, Dallas, and Austin are all excellent picks in terms of real earnings, while Raleigh, Austin, Dallas, San Diego, and Seattle top the Quality of Life rankings in 2021. It’s worth noting that Raleigh, San Diego, and Dallas have consistently topped the Quality of Life rankings from 2017 to 2021, coming in in the top five all three times we’ve run this study. If you’d like to maximize your earnings, however, keep avoiding Washington DC and New York.

If you’d like to work as a remote developer abroad, Berlin, Tel Aviv, Montreal, Vancouver, and Sydney continue to be great picks for cities with high real earnings in 2021. Montreal and Vancouver made the top five in 2017, 2019, and 2021 in terms of real earnings, and rank in the top five in terms of affordability in all three years as well. If the quality of life is more important, you might consider Melbourne, Sydney, Vancouver, Amsterdam, and Berlin while avoiding Moscow, Hong Kong, São Paulo, Shanghai, and Beijing.

Let us know in the comments which city is most attractive to you as a remote developer!

  • Archived PDF of the 2019 best developer cities report[LINK].
  • Archived PDF of the 2017 best developer cities report[LINK].

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