« on: August 16, 2008, 11:55:57 PM »
Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
Philly firms pay first-years a salary of 145k, while the other aforementioned cities pay 160k. This 15k difference may seem minor until one reviews:
1. Base salaries for second- through eighth-year associates
2. Annual bonuses
3. City and state income tax rates
At its best (some of the top Philly biglaw firms pay less), Philly pays the following base salaries...
1st Year: $145k
2nd Year: $152k
3rd Year: $160k
4th Year: $170k
5th Year: $180k
6th Year: $190k
7th Year: $200k
8th Year: $210k
...while New York, Los Angeles, San Francisco, and San Diego pay the following:
1st Year: $160k
2nd Year: $170k
3rd Year: $185k
4th Year: $210k
5th Year: $230k
6th Year: $250k
7th Year: $265k
8th Year: $280k
And those are just the base salaries. In terms of bonuses, New York firms seem to pay $15k-$60k per year more than do Philly firms.
As for tax rates...
Philadelphia City Wage Tax: 4.5% (3.9127% if you live outside the city)
Pennsylvania State Income Tax: 3.07% (flat rate regardless of income)
New York City Income Tax: 3.648% (on income in excess of $50,000) + $1,706 [single filing status]
New York State Income Tax: 6.85% (if your income is more than $150,000)
Los Angeles/San Francisco/San Diego: No city income tax
California State Income Tax: 9.3% (maximum rate)
Without any deductions, credits, or pre-tax contributions, and without any local/state tax credits for federal taxes paid, the following is one's take-home pay (based on BASE SALARIES ONLY) after paying federal income tax, social security tax (6.2% on a maximum of $102,000), Medicare Tax (1.45%, no limit), state income tax, and city income/wage tax as a city resident [single filing status, where applicable, for all taxes]:
*** BASED ON BASE SALARIES ONLY ***
1st Year: $91k
2nd Year: $95k
3rd Year: $100k
4th Year: $106k
5th Year: $112k
6th Year: $118k
7th Year: $124k
8th Year: $130k
1st Year: $96k
2nd Year: $102k
3rd Year: $110k
4th Year: $124k
5th Year: $135k
6th Year: $146k
7th Year: $154k
8th Year: $162k
LOS ANGELES/SAN FRANCISCO/SAN DIEGO:
1st Year: $100k
2nd Year: $106k
3rd Year: $114k
4th Year: $128k
5th Year: $139k
6th Year: $151k
7th Year: $159k
8th Year: $168k
Remember that these calculations are based on base salaries only and do not include annual bonuses.
Now that you see the figures, do you think it's worth it to practice in Philadelphia over NY/LA/SF/SD based on...
- cost of living
- hours worked (I think it's safe to say that New York attorneys work more hours than their counterparts in other cities, but I am not sure how the other cities compare)
...assuming that a person is okay with living in any of the aforementioned cities?
I have been pondering this question myself, as I am a 3L and need to decide between two offers (one in Philly, and one in another aforementioned city) for a post-graduate associate position next year.
For anyone else weighing job offers between cities, and even within the same city, please remember to consider the following two factors:
1. The base salary for first- through eighth-year associates (not just the first-year pay!)
2. The annual bonus for first- through eighth-year associates (which can vary greatly among firms!)
I would love to hear everyone's comments on this issue. Thanks!