Texas pay vs everywhere else

I’m about to start my SA at a Houston BB. I have a few friends working at BB and EB in NYC. My comp for this summer is higher than there’s. Additionally, I’m from Houston so plan on living at home this summer. This way I get to pocket my relocation stipend. Although I do think it is unusual that a Houston SA stint pays more than one in NYC. My bank just happens to pay outrageously high SA salary.

At the end of the day, I think people in Houston austin or Dallas will always end up making more money than those in NYC or SF, because of the exact reasons you mentioned: cost of living and taxes. In my opinion Texas finance is paradise. To be fair, I do, in general, like Texas more than NY or Cali. But again, I am from here originally.

Better opportunities out of NYC/SF/CHI during early career.

Houston/Dallas/ATL/Charlotte is where you exit and build your life in my opinion.

The actual number on comp is kept in line with NYC base/bonus for BBs. Less sure about EBs but friends there are making amounts similar to what I've read on WSO threads about NYC.

Obviously with comp being equal, those in Texas are making much more with cost of living and taxes.

Biggest reason to choose a hub is because that's where you have the most exit opps.  In the past, everyone in your orbit would be in NY, and it was easy to lateral down from NY to a T2-3 city.  I think with COVID, this is less true, as you have a large number of people fleeing NY for places like Florida, and the network itself is geographically more disjointed.  That said, from a pure career perspective, you have the most optionality with NY/SF.  The biggest issue with Houston/Charlotte etc is that you get pigeonholed into specializing in one area, and its very hard to get out of that without starting over.  

Personally, I think NY is overrated.  It's great when you're in your early-mids 20s, when going out and socializing with a relatively large circle of people is great.  But after a while, the city grinds on you, and when you're 30 an no longer want to be out until 4am on a Friday, the city loses a lot of its appeal.  NY does a great job of marketing itself as a place people need to be, and it does offer a lot of unique experiences.  If it's worth the cost (both in dollars and in terms of your time) is totally a personal choice, and nobody can really tell you whether or not its worth it.  

Adding this: comp-wise as a junior your pay will be roughly the same.  Base is usually the same, and bonus is usually tiered at a firm level.  Worst case you might see a 10-20k difference in pre-tax bonus, which is going to be worth less than the COL difference.  Pay disparity grows at senior levels, so it's possible that you're leaving a lot of money on the table, by say, focusing on energy when banking there slows down dramatically in 10-15 years versus something like Tech (not saying this will happen, just be aware that your long term future comp is going to be more product dependent).  

I left Houston, TX for London and just going to re-quote this from above: "if you are used to living in a state that has more to offer than being cheap, you will hate it too."

It's very hard for me to imagine going back (at least in my current stage of life); it's a materially lesser quality of life in HTX. I'm sure there are way worse places, and it's not like I had a bad life there, but you just don't realize how bad a city like Houston is until you've left and lived somewhere where things like urban planning (and what goes with it, a la incredible public transport and walkability), vibrance, activities, etc. are accounted for. Uncoincidentally, every time this kind of debate pops up in my social circle, it's the Texas lifer trying to defend the place - go experience something else and come back to me.

As for OP/other commenters, not that this is a relevant decision for you right at this moment, you're just starting out, got your offer in hand (congrats!), etc. but my tip: if you're in your 20s, don't get trapped making big macro decisions like where you live based solely around COL - go see what's out there. You aren't earning real money in your 20s anyways, as long as you can cap your retirement contributions and save a little, you're doing just fine.

Also HTX > the other two only because of its amazing diversity in cultures and good food (none of this pretend "high end" restaurant nonsense plaguing Austin)... and because I lived there ha.

NYC is worth it.

Texas is a tough one for NYC to beat because the tax difference is so massive.  I don't even know the rate I pay in NYC because I'm too scared to look.  Seriously, it depresses me so I just don't think about it.  

In other cost-of-living threads, I defend NYC because (i) these are high-savings jobs so cost of living is only affecting a certain % of your salary and (ii) NYC offers a decent amount of value back for your money, in terms of a life better suited to young people etc.

But NYC vs a no-income tax state is a very tough battle for NYC to win.  And I know Texas has higher prop taxes and other things to compensate, but those are controllable by the individual.  No getting past the fact that zero income tax is huge.

Shitting on Texas is 'in' now so I'm not surprised it has hit WSO as well. Anyway, if you can't find something to do in Houston, you are the problem. Likely the people who 'can't find things to do' are people who never had a passion or an activity they enjoyed anyway. I played in numerous hockey leagues, was active at Skydive Spaceland Houston, added a few B's and A's to my BASE log. There is plenty to do there, you just have to like to do something. And even if you don't have that passion for something, people are always doing things and shit is always going on in that city.

I find it hard to believe the guy above me is actively pursuing opportunities to get out and about. I imagine the guy above me ranting and raving about leaving Houston/Texas will move to NYC and find that he pretty much just drinks and eats his way through that city as well.

I'll throw my perspective into the conversation, I think it's simultaneously uniquely suited to be helpful and useless for the OP.

I am an engineer for a PE backed portco born and raised in Texas with mostly Texan lifer friends, but I have a pretty significant connection to NY as well. My girlfriend is from New York, we met in the city, and she moved to Texas during COVID to escape the very real hell that is lockdown in a city like New York.

I used to love Texas. I used to believe in Texan exceptionalism and have great Texan pride. As I have gotten older, I am able to recognize the major flaws we have. It is flat. The weather can be brutal at times. Suburban sprawl is bad. But at the same time, owning and relying on a car provided me a hobby (working on cars), and living in a car-centric society has instilled in me a sense that I can go anywhere I want whenever I want, I just have to hop in the car and drive. I think about the differences between how my friends and I spent our 20s and how my girlfriend and her friends spent their 20s, and I can tell you I certainly went on more road trips than she did (she hadn't driven in about a decade when she came down here), but she had more 4 am nights at cool bars in the East Village. Which is better? Impossible to say. At times I feel jealous of her and I think at times she feels jealous of me.

I have had moments where I feel absolutely ashamed and despondent over the fact that I have never lived outside the borders of Texas. When I go to NYC, the energy and feeling of it is intoxicating for me. I will walk more in a weekend in New York than I will in a month in Texas, and what's crazier is I'll enjoy it. Part of it is the thrill of a short visit versus the grind that exists once you actually live in a place. I have had some tastes of this because we have spent some longer periods in New York. Dragging a piece of luggage from a subway station to your 3rd floor walkup in the summer sure takes some shine off the city...but it's still the greatest city on earth.

The income disparity is significant if you focus on it, but it's very easy to allow lifestyle creep to come into the picture. There are still "the Joneses" in Texas, and no shortage of ways to spend money. If amassing wealth is your primary purpose, you should probably take a job somewhere like Texas, but live in a shitty suburb and put up with the commute. If you want to have fun, live in the urban core, go on trips and not worry about things, I think the gap in cost of living shrinks somewhat.

My family is in Texas and it has been interesting to see multiple of my girlfriends' closest friends move to Austin over the last couple years, away from New York and DC, because of the job opportunities and cost of living. In some ways, it feels to me like all roads in my life will lead back to Texas. But I also need to experience living somewhere else to really know for sure.

I doubt that was helpful for you at all, but it has been helpful for me to write this.

Figured I'd chime in here - I've lived in NYC, OC/LA, Texas (Austin/Dallas)- and by lived I mean actually lived for 4-5 years, not just a summer internship or analyst program and ultimately I think it really just depends on your stage of life.

I don't think there is a better place to get your career started than in NYC (at least in finance) - there are multiple significant advantages:

• developing connections and polish from working around/learning from established professionals - IB/PE is still an apprenticeship business and tough to learn over Zoom 
• prestige from working on the biggest deals at the best firms (it really shouldn't matter, but it sadly sometimes does)
• more "cosmopolitan" experience and exposure to people from all backgrounds tends to make you more worldly/interesting/knowledgeable overall

But as you get older, those advantages on the margin become less valuable and the disadvantages to living in NYC start to become more apparent. High COL (shocker), city can be its own liberal bubble, raising kids is impossible without a nanny, need to always stress about getting your kids admitted into the right schools, crime, etc. People obsess about exit opps all the time here, the reality is once you have solid experience under your belt those opportunities are now built in - whether you stay in NYC or not. 

And so many people decide to leave NYC for one of the reasons I mentioned or others. Texas is definitely not the suburban wasteland that some are making it out to be. It has its own set of long-established social scenes, more family-friendly environments, unique character and history, cultural opportunities, the list goes on and on. Sure, NYC has world-class restaurants, the Met, etc. but let's be honest, as everyone who's had to juggle a busy NYC work and social schedule, day-to-day you ultimately don't get to enjoy all the amenities NYC has to offer anyway.

Would I choose to start my career in Austin or Dallas over NYC? Probably not if career trajectory was my ultimate goal - the experience you gain far outweighs what little you save on taxes on a basic analyst salary. But if you're already a few years into your career or post-MBA and can pivot into a senior level role with a lot of upside, the choice becomes pretty clear from an overall lifestyle perspective.

It seems like every other day I run into some HBS/Wharton post-MBA grad who had already done the NYC grind and was now taking a much bigger job here in Texas with more family/lifestyle balance long term, all while pocketing a ton more after taxes.

EDIT: Also golf in Texas > Chelsea Piers or taking the train out to CT/Long Island 

For what it's worth, Texas is only a low tax state if you don't own a home; once you factor in property taxes, Texas looks less attractive.

Also worth noting, I'm pretty sure that the SALT deductions will come back in a few years, which makes a lot of the tax issues moot.  As far as cost of living goes, it definitely is more expensive to be in NYC.  On the other hand, it means living in NYC, and not suburban Houston!  If you enjoy living in a city, then that's worth a lot.

Lots of good points. Houston bankers basically live like kings (no tax, same pay, low COL) but exits are not good from there unless you want to stay in energy. Most people have to lateral to a NYC group to land non-energy PE

IMO better to spend a few years "slumming it" in NY and get a great exit than have a great lifestyle but pay for it down the road

Dallas used to be a much better city 10-15 years ago. It expanded way too quickly and without much insight on city planners leading to an endless sprawl of suburbs. Even worse the corporate offices are way too spread out. Good luck trying to meet with up with your bros when one works near Legacy West, the other in Las Colinas, and you in Downtown. Bar scene is way too spread out (used to be confined to Uptown) and can often be sketchy / shootouts that happen. Public transportation is more or less a joke. Not the worst if that’s your only option but even Cleveland is much better planned imo. 

People change several times throughout their life.  NYC and Texas being the best place for someone can both be true.  Career and money aside.

In my 20s / early 30s, NYC = the be all end all.  Work hard, play hard, girls, diverse people all over the place, a billion different awesome bars and restaurants a walk or short ride away, the big city culture, just the raw energy of it all.  Simply can't beat that.  

As I move into my mid 30s and settle down, I like space, I like to touch grass, I like owning a house and having a yard, I like having a big dog that has plenty of space to be a dog, I like being invited out to ranches, I like how adequate the public schools are in Texas, I like having more free time, etc.

I'll take a few possums, coyotes and raccoons over rats and human feces everywhere 7 days a week and twice on Sunday. Yee haw 

Didn't read all the comments but I lived in Texas for about 7 years and agree with poster who wanted to leave. If your a young person with no family I can't argue with living there, especially in Austin if your an outdoor person and like the music/bar scene.  If your raising a family here is some more info.

Schools - School systems are terrible compared to other states. I lived in expensive suburb and school couldn't even get teachers for basic programs because schools are underfunded and teachers won't last. Couldn't even get teachers for foreign languages that are common in other states. They move money from more well to do school districts to less well off districts. (Called Robin Hood scheme) Because schools are under funded to start with the districts can't make it unless through tax levy which don't always get approved. So you probably want to plan for private school. We moved to another state that actually funds their school systems and it has made the world of difference with programs and teachers. It is a red state by the way.

Taxes - Don't be fooled by the no state taxes. Given we lived in an expensive suburb our property taxes are through the roof. I now live in a state with state taxes and we pay only slightly more in overall taxes with services that far exceed what we had in Texas. Our property taxes are about a third taking house value into consideration. You also pay high sales tax on everything except for the 2 days a year of sales taxes not being levied.

Weather - I personally like the hot weather but Houston has been hit with 3 huge storms in 10 years. I think it is something like 2 500 year storms and 1 100 year storm. Because of unfettered development there are no places where the water could drain and most of Houston was underwater. Gov Abbot had about 10B in emergency funds and did not release the funds.

I could go on but won't.

Young person? Go for it and have fun. If your raising a family I'd have second thoughts.

Starting out? NYC > Texas. BTW Houston is the pits. Dallas and Austin >> Houston, always. 

Older than 30? Texas. Tax benefits just vastly outweigh NYC and major metros (LA, Boston, Chicago, etc.) Once you hit 30, you have zero desire to be out and about after 1am. You choose tranquility + space over bar-hopping and girls. By 30, you've likely found a partner and want to move into a different phase of life of raising a family. Quite honestly, if by 30 you havent found a partner, good luck. Your window is shrinking to do so.

A lot of bad takes here from people lacking perspective on life, so feel like I should opine.  Everyone tends to think their situation is best, so will try to stay objective and steel man the view opposed to my opinion.

I grew up in ATX/DTX (park cities), went to school on east coast, lived in NYC (+ burbs) for ~15 years, now live in FL for work/taxes.  Have kids and family.

NYC is best for when you are in your 20s developing a network and dating (really hooking up), but as soon as you transition into the next stage of your life, it becomes extremely expensive and stressful quickly.  Very few on this board will ever make the money to make a lifestyle with a family even remotely possible, so really should be about NYC suburbs vs. TX....

1) i) Nanny (you need 2 if a competitive job) + Private schools are going to be 60k each+ starting in PK ii) Crime etc.  iii) Constant stress of getting anywhere especially with kids.  Try taking them on the cesspool subway or you need a driver iv) Constant one-up-manship and competition over meaningless things is stressful v) city is just not set up for kid friendly activities and families. vi) Have you ever met a well adjusted city kid who grew up at the right pace? drugs, clubs? The older I get the more selfish I view people who chose to raise a family in the city vs. moving to the burbs despite how depressing they are.

2) Yes NYC has world class museums, restaurants, etc but how often do you actually go to this stuff that you can't find similar elsewhere when you have a family?  I am offered at 1x a month, it's like a vacation.  People like to extract a lot of value from the idea of living somewhere with these amenities without actually using them... like the golf simulator in your overpriced apartment.

3) Suburbs of NYC are pretty unspectacular and very far away time wise given how bad the infrastructure is.  Hour commutes are just grinding when you can get a similar situation 10-15 minutes away from city center in TX.  I grew up in park cities partially and it is like if you turned central park into a rich suburb not part of NYC with it's own government and school system.  Places like Greenwich, Scarsdale, Summit are fine but not in the same league when all factors are considered.  How often are you really going to take your family an hour into NYC?  It's a complete disaster.  You either take a stroller on the train or have to deal with driving into the city and parking.  I've been there and it is absolutely terrible and you don't realize how terrible it is until you leave.  But post covid has helped this by splitting how often people need to commute into the city.

4) What is so spectacular in terms of natural amenities close to NYC?  When kids are in school, kid's activities (sports especially) tend to dominate your schedule.  You are not going out on crazy nature expeditions except when they are off school in the summer.  Most people in TX will get a summer home somewhere else (most prefer CO, MT, UT, WY) because the things to do outdoors and natural beauty knocks the socks off east coast - but if you want to go to somewhere geographically less impressive like Long Island or VT - you can do that too in the summer from TX when is the only time that you realistically have time to devote to this type of thing.

5) Weather generally sucks in NYC.  Weather sucks more in TX in the summer but is better otherwise - but as mentioned before if you have means at all you won't summer in either and will likely have a second home at some great mountain town.

6) Life in TX is just exponentially less stressful, less expensive, and everything is geared towards families.  This really can't be overstated on a day to day basis thinking about what actually matters for quality of life.  You have an affordable nanny that takes your kids to affordable private schools that compete on a national level, commutes are max 15 minutes if you have money, you can drive (don't have to worry about your kids on the subway next to a homeless guy jerking off), infinite and every after school and weekend activity for kids, centrally located with very efficient airports if you need to travel for work/vacation.

7) The tax comments are not correct.  I have owned in NYC + burb and paid about 2% of realistic value in property taxes which is about the same as Texas (2.2-2.5%) but the values are lower too for comparable homes.  The biggie is income tax.

8) There are so many things that I put up with for years in NYC just thinking that was just how people lived and got used to it.  After moving to Florida, I find so many of them just utter insanity and could never go back and now realize how much it grinded me down with unnecessary stress.  It's tough to articulate unless you have done similar.

Steel Man NYC (Really life after 30): There is really no alternative if work is your priority long term and you are in a relationship oriented business where you need to see clients etc multiple times a week.  The value of the city is in it's people with a higher percentage of top schools represented and the stress/taxes/etc are just a cost of doing business.  Also hook up culture in TX too risky with backwards abortion laws.  International diversity is also unparalleled in USA.

Steel Man TX (Really life in 20s): Sure the girls in NYC are fun to hook up with but would you honestly want any of them raising your kids?  You will have a lot of drunken meaningless hook ups but will struggle to find anyone who has the values that lead to longer term and ultimately more fulfilling happiness in your life.  NYC is just a constant competition with too many options while you can be top of the dating pool in TX with a good job.  Your EV in a mate is almost certainly higher working a similar job in TX.  Work is also changing with the migration south and no longer has the stigma of the past.

Also ATX/DTX are way better than HTX but ATX and DTX are very different places.

I'm pretty tight with my personal info so won't share my current state.

But..your right, the original question was comparing NYC to TX and I was comparing TX to other states, not New York, so was confusing topics.

My original post (scroll up) is about comparing TX to other states where I believe you get much more for the money than TX. So the comparisons of NY to TX aren't relevant for the points I was making, but does make your point that TX would be better than NYC in terms of $ if you agree with the lifestyle/culture/values of TX.

Regarding TX schools, the school district we lived was top 15 rated ISD and it was weak at best as it couldn't even get books for some classes and the principal is more interested in the football team than anything else. I did some research on Highland Park ISD where Park Cities resides. It is number 5 in TX and it did rate comparably with the schools my children attend. (if you believe US News or Niche rankings)

By your math you need to pay $2.5m for a Park Cities house to get into a comparable school district to my $550k house (I downsized from 4500 to 2700sf). So, if you have to pay $2.5m to get into a "good" school district then something is incredibly wrong with the state school system...wouldn't you say?

This is one factor in my opinion that TX is not a good state for families unless that $2.5m house is no big deal. Note, I know I'm cherry picking your data here.

Lastly, in terms of TX private school tuition, I have two HS aged children and when we looked at private schools several years ago the cost was around $22.5k per child in our city, so 45k for 2. It was actually one of the ones you mentioned so now it would be around 70k tuition + the other expenses.