4 ms·

I think it basically comes down to practicality. If you don't adjust pay for location in a remote company, you either pay the market rate for the most expensive

by x1798DE 10y ago

I think it basically comes down to practicality. If you don't adjust pay for location in a remote company, you either pay the market rate for the most expensive market or you price yourself out of that market. If you pay the rates of the most expensive market everywhere, you are essentially leaving money on the table, since your competitors can potentially hire two people in Nashville, TN for every 1 person you hire (though you obviously get your pick of the litter by paying above-market rates) - or they can afford a bigger advertising buy, or any of the other competitive advantages you get by saving money. Not only that, but if you're not a remote-only company and are actually based in one of the expensive locations, you're basically offering your in-person staff a huge bonus if they leave and become remote. Honestly, anything other than paying market salaries +/- some relatively small error term is probably not sustainable in the long run.

imsofuture 10y ago
And like every other time people say this, it just breezes by the fact your remote employees can get other remote jobs. The market is not you-the-one-company-in-the-world-that-hires-remotely vs their-local-market.
- ghaff 10y ago
  Although adjusting pay based on location isn't exactly rare. And I suspect that a lot of companies with remote work are OK with missing out on some talent in Little Rock because they won't pay Silicon Valley rates to someone living there. (And/or they make exceptions for people they really want on a case by case basis.)
- x1798DE 10y ago
  True, but the fact of the matter is that even if you had no idea where your employees lived, the location adjustment would likely come out in a competitive market because people from other low-cost areas can bid down the price, and you'll only drop out of the bidding when it reaches below your cost-of-living adjusted salary. The only reason the expensive markets can compete at all is because a lot of the top talent is concentrated there.
jscheel 10y ago
You obviously haven't seen the Nashville real estate market lately. All joking aside, how does that factor into making local-market-based salary decisions for a remote company? Isn't it hard to estimate payroll when you run the risk of someone moving to a different market or the market substantially changing?
webmaven 10y ago
> you either pay the market rate for the most expensive market or you price yourself out of that market. There is absolutely nothing wrong with pricing yourself out of the most expensive market, unless attracting the most in-demand employees (who are concentrated in the most expensive markets) is an existential matter for your company. This actually would let you pay generously compared to tier-2 markets and attract employees that want to leave the most expensive market or who would not even consider relocating to that market. It is worth noting that the requirements for successfully working remotely preclude most of the lowest cost-of-living locations. eg. it is hard to get decent broadband in the boonies of the desert southwest, or in rural Appalachia.

by x1798DE 10y ago

imsofuture 10y ago

And like every other time people say this, it just breezes by the fact your remote employees can get other remote jobs. The market is not you-the-one-company-in-the-world-that-hires-remotely vs their-local-market.

ghaff 10y ago
Although adjusting pay based on location isn't exactly rare. And I suspect that a lot of companies with remote work are OK with missing out on some talent in Little Rock because they won't pay Silicon Valley rates to someone living there. (And/or they make exceptions for people they really want on a case by case basis.)
x1798DE 10y ago
True, but the fact of the matter is that even if you had no idea where your employees lived, the location adjustment would likely come out in a competitive market because people from other low-cost areas can bid down the price, and you'll only drop out of the bidding when it reaches below your cost-of-living adjusted salary. The only reason the expensive markets can compete at all is because a lot of the top talent is concentrated there.

jscheel 10y ago

You obviously haven't seen the Nashville real estate market lately. All joking aside, how does that factor into making local-market-based salary decisions for a remote company? Isn't it hard to estimate payroll when you run the risk of someone moving to a different market or the market substantially changing?

webmaven 10y ago

> you either pay the market rate for the most expensive market or you price yourself out of that market. There is absolutely nothing wrong with pricing yourself out of the most expensive market, unless attracting the most in-demand employees (who are concentrated in the most expensive markets) is an existential matter for your company. This actually would let you pay generously compared to tier-2 markets and attract employees that want to leave the most expensive market or who would not even consider relocating to that market. It is worth noting that the requirements for successfully working remotely preclude most of the lowest cost-of-living locations. eg. it is hard to get decent broadband in the boonies of the desert southwest, or in rural Appalachia.