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If everyone in SF all the sudden agreed to work for 1/2 the cost and your salary was cut in half as a result, would you feel that was wrong too? There's nothin

If everyone in SF all the sudden agreed to work for 1/2 the cost and your salary was cut in half as a result, would you feel that was wrong too? There's nothing wrong with paying people less in lower cost areas. If a worker can get the job done for half the price in Austin than SF, that's the market forces telling the company to get the heck out of SF. Ultimately it's not about the value you provide. You might work at Google and provide x10 value of your salary or you might work at a startup that has no chance of success (thus providing 0 long term value) and still earn a normal salary. It's about the supply of labor and demand for that labor. that's what dictates the cost.

jkaplowitz 8y ago
For consultants willing to serve a given area, nobody cares where they live when deciding whether to agree to their rate. Supply and demand shouldn't work differently from that for remote workers, unlike local workers where a constraint of the job is usually being in a office. (Even then, the residence address is only implicitly relevant through that constraint.) Yes, this does mean that a remote job might pay less than SF, but also that it shouldn't vary based on the exact location. One rate for the entire pool of qualified people willing to work during acceptable hours in locations where the company is willing to comply with the employment laws. That said, if the qualified people tend to live in expensive tech hubs, the rate will end up pretty close to tech hub rates, again due to standard supply and demand.
baddox 8y ago
It's true, of course, that the price of labor just comes down to whatever the employer and employee agree on (barring things like minimum wage and other "market distortions"). But it's also true that some people have ideas about fairness, and may be off-put by a pricing strategy they deem to be unfair. Thus, salary calculations like this, assuming they're known to potential employees, could definitely affect a potential employee's willingness to take a certain salary at a certain company.
- cameldrv 8y ago
  It’s a two sided market. The clearing price is going to be dependent on the employer’s alternatives and the employees alternatives, and each sides judgements about the other sides alternatives. The employer generally will try to pay just enough to prevent an employee from jumping ship, subject to bad feelings about unfairness reducing productivity. Part of the set of alternatives that an employee has are local jobs, which vary in pay somewhat based on cost of living.

jkaplowitz 8y ago

For consultants willing to serve a given area, nobody cares where they live when deciding whether to agree to their rate. Supply and demand shouldn't work differently from that for remote workers, unlike local workers where a constraint of the job is usually being in a office. (Even then, the residence address is only implicitly relevant through that constraint.) Yes, this does mean that a remote job might pay less than SF, but also that it shouldn't vary based on the exact location. One rate for the entire pool of qualified people willing to work during acceptable hours in locations where the company is willing to comply with the employment laws. That said, if the qualified people tend to live in expensive tech hubs, the rate will end up pretty close to tech hub rates, again due to standard supply and demand.

baddox 8y ago

It's true, of course, that the price of labor just comes down to whatever the employer and employee agree on (barring things like minimum wage and other "market distortions"). But it's also true that some people have ideas about fairness, and may be off-put by a pricing strategy they deem to be unfair. Thus, salary calculations like this, assuming they're known to potential employees, could definitely affect a potential employee's willingness to take a certain salary at a certain company.

cameldrv 8y ago
It’s a two sided market. The clearing price is going to be dependent on the employer’s alternatives and the employees alternatives, and each sides judgements about the other sides alternatives. The employer generally will try to pay just enough to prevent an employee from jumping ship, subject to bad feelings about unfairness reducing productivity. Part of the set of alternatives that an employee has are local jobs, which vary in pay somewhat based on cost of living.