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Is there a fair way to adjust based on living costs - within certain bounds - that isn't based on rent index, or at least weighted in favour of lower cost areas
by pm 8y ago
Is there a fair way to adjust based on living costs - within certain bounds - that isn't based on rent index, or at least weighted in favour of lower cost areas? Paying Bay Area salaries for every employee just isn't feasible for most startups.
- dasmoth 8y agoPaying Bay Area salaries for every employee just isn't feasible for most startups. How does that explain the large number of Bay Area, on-site-only startups?
- tybit 8y agoIt probably implies that only certain types of start ups are well suited there. E.g well funded VC startups that are looking to go big or go bust where paying lots for talent is worth if for access to many more employees and VCs.
- lmm 8y agoOn-site-only is a lot more productive, we just like to pretend otherwise because we wish it wasn't?
- ricardobeat 8y agoAs evidenced by?
- lmm 8y agoI'm offering it as a possible explanation for why onsite-only Bay Area startups could be a success but remote startups not be able to afford Bay Area salaries.
- pm 8y agoI'm talking about startups that are outside the Bay Area, and outside the US.
- avar 8y agoYes, you'd use something like the OECD's price level index: https://data.oecd.org/price/price-level-indices.htm https://data.oecd.org/price/price-level-indices.htm None of these are perfect, you're never going to get two truly comparable locations when accounting for mortage/rent, groceries, cost of transport, cost of consumer products etc., but it's a whole lot better than mainly looking at one variable (rent).
- randallsquared 8y agoNo. The only fair way to adjust is based on value to the company, and what the potential employee is willing to accept. It isn't reasonable to use pay to remove the financial advantages of a candidate's choice of location, and then claim "you can now hire the best people on the planet in any particular function" as the original link does. If someone is among the best people on the planet, they'll likely be paid considerably more than the San Francisco average without regard to what their costs are. One of the touted benefits of working remotely, for those who can, is exactly the ability to trade off the advantages and disadvantages of living in places with varying characteristics, and it's unsettling to have a company which claims to support and encourage remote work also be upfront about actively working against remote workers' ability to make these choices.
- rgoulter 8y agoYeah. "Paid to a standard of living" seems unfair for employees in that it dictates the employee's spending. (e.g. someone saving half of their salary in high-cost area saves more than someone saving half in a low-cost area, for the same 'standard of living'). AFAICT, the flipside is that "flat global pay" is that then the company can't offer as compelling an offer to those in expensive areas. (i.e. if everyone paid a flat fee and you were stuck in an expensive city, then you would be penalised when looking for remote work).
- pm 8y agoIt's either flat fee or adjust for cost-of-living based on a person's location. Flat fee is fairer, but it cuts out talent from the most expensive places.
- dragonwriter 8y ago> Is there a fair way to adjust based on living costs Not for work where the employer isn't specifying a location constraint. For on-site work, while one can debate the exact ideal formula, location adjustments within a firm based on comprehensive cost-of-living makes quite a lot of sense.