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Why should an SF company worry if their hiring someone in Kenya with a wage proportionate to the value they receive raise the overall wages of the Kenya market

by jolmg 9y ago

Why should an SF company worry if their hiring someone in Kenya with a wage proportionate to the value they receive raise the overall wages of the Kenya market to stabilize with the SF market? It's better for Kenya overall if one of their markets increases in value, so don't worry, Kenya won't mind. ;)

crispyporkbites 9y ago
Probably more about golden handcuffs than anything else, if I’m getting paid 3x more than anyone else can pay me, I’ll never quit, even if I hate the job I’ll just do the bare minimum to get by
- pathseeker 9y ago
  This is the reason it's risky as an employer to overpay someone's market value too much. It removes all incentives for them to leave even when they are miserable, which is not good for you as an employer.
  - jkaplowitz 9y ago
    If they're miserable for a fixable reason, work with them to fix it. Otherwise, give them a gradual reduction in the above-local-market surcharge during a goodbye transition period.
TheCoelacanth 9y ago
Why would a SF company pay the employee in Kenya more than they need to? They aren't trying to help out Kenya. They are trying to get the best workers they can for the cheapest that they can. If they don't do some form of adjustment by location, they will either end up paying more than they need to for people in locations with low wages or they will get outbid when trying to hire people in locations with high wages.
- dragonwriter 9y ago
  > Why would a SF company pay the employee in Kenya more than they need to? Let's say an SF company limits max pay for Kenya remote employs to 10% of the maximum that Texas remote employees would get paid for the same duties, which is in turn 80% of the max that Bay Area remote employees would get. The the actual applicants, of equal ability, are a Kenya applicant who will accept a minimum of 10% of Bay Area pay, a Texas applicant who will accept 85% of Bay Area pay, and an Oakland applicant who will accept 100% of Bay Area pay. The first two don't get hired because a mutually acceptable salary can't be agreed, the last one is and the company pays 10× what it needed to. It makes some sense to scale offers based on factors that you think will shape what people will accept, except where this is prohibited by law (e.g., protected class), and location may fit within that [0]. But it doesn't make sense to adjust the limit of what you accept that way. Of course, if you try to have a consistent transparent salary methodology, you either have to give up location-based offers or accept the inefficiency of location-based pay limits. But the whole point of salary transparency is to avoid the perception that people are being paid differently for the same work based on non-germane factors as a way of exploiting people from disadvantaged backgrounds, so why you'd keep location-based limits with transparency is beyond me. [0] Or may not: location clearly correlates with various protected attributes, which may get you bit by disparate impact if location isn't measurably linked to value.
  - lamarpye 9y ago
    So the company adjusts the price it is willing to pay to the Kenyan and Texan employee and then they get hired. This happens all the time, paying the market price.
  - TheCoelacanth 9y ago
    Of course, but that is just a badly designed pay scale. Most companies intentionally avoid salary transparency because it makes them pay more than they need to in some situations and get outbid in other situations. Even companies that do have transparent pay scales usually build some wiggle room into the scale, e.g. you are hired as a Senior Developer instead of a Developer or a Lead Developer instead of Senior or you get a higher experience modifier or something like that.

by jolmg 9y ago

crispyporkbites 9y ago

Probably more about golden handcuffs than anything else, if I’m getting paid 3x more than anyone else can pay me, I’ll never quit, even if I hate the job I’ll just do the bare minimum to get by

pathseeker 9y ago
This is the reason it's risky as an employer to overpay someone's market value too much. It removes all incentives for them to leave even when they are miserable, which is not good for you as an employer.
- jkaplowitz 9y ago
  If they're miserable for a fixable reason, work with them to fix it. Otherwise, give them a gradual reduction in the above-local-market surcharge during a goodbye transition period.

TheCoelacanth 9y ago

Why would a SF company pay the employee in Kenya more than they need to? They aren't trying to help out Kenya. They are trying to get the best workers they can for the cheapest that they can. If they don't do some form of adjustment by location, they will either end up paying more than they need to for people in locations with low wages or they will get outbid when trying to hire people in locations with high wages.

dragonwriter 9y ago
> Why would a SF company pay the employee in Kenya more than they need to? Let's say an SF company limits max pay for Kenya remote employs to 10% of the maximum that Texas remote employees would get paid for the same duties, which is in turn 80% of the max that Bay Area remote employees would get. The the actual applicants, of equal ability, are a Kenya applicant who will accept a minimum of 10% of Bay Area pay, a Texas applicant who will accept 85% of Bay Area pay, and an Oakland applicant who will accept 100% of Bay Area pay. The first two don't get hired because a mutually acceptable salary can't be agreed, the last one is and the company pays 10× what it needed to. It makes some sense to scale offers based on factors that you think will shape what people will accept, except where this is prohibited by law (e.g., protected class), and location may fit within that [0]. But it doesn't make sense to adjust the limit of what you accept that way. Of course, if you try to have a consistent transparent salary methodology, you either have to give up location-based offers or accept the inefficiency of location-based pay limits. But the whole point of salary transparency is to avoid the perception that people are being paid differently for the same work based on non-germane factors as a way of exploiting people from disadvantaged backgrounds, so why you'd keep location-based limits with transparency is beyond me. [0] Or may not: location clearly correlates with various protected attributes, which may get you bit by disparate impact if location isn't measurably linked to value.
- lamarpye 9y ago
  So the company adjusts the price it is willing to pay to the Kenyan and Texan employee and then they get hired. This happens all the time, paying the market price.
- TheCoelacanth 9y ago
  Of course, but that is just a badly designed pay scale. Most companies intentionally avoid salary transparency because it makes them pay more than they need to in some situations and get outbid in other situations. Even companies that do have transparent pay scales usually build some wiggle room into the scale, e.g. you are hired as a Senior Developer instead of a Developer or a Lead Developer instead of Senior or you get a higher experience modifier or something like that.