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"Facebook will reduce the pay of workers who move to less expensive areas." Personally, this is a deal breaker for me. I don't want to get paid less for doing
by sbuccini 6y ago
"Facebook will reduce the pay of workers who move to less expensive areas."
Personally, this is a deal breaker for me. I don't want to get paid less for doing the same amount of work. In a remote world, deciding where to live should be a personal decision of how one spends their income. Facebook doesn't pay employees less because they decided to drive an expensive car to work.
Facebook, along with all other tech companies, make crazy amounts of revenue per employee. The pay reductions will be a rounding error on the company's budget. Why not keep salaries the same and get the absolute best talent in every market across the world?
- FanaHOVA 6y ago> Why not keep salaries the same and get the absolute best talent in every market across the world? Because people living in those other markets will be more than happy to take a "reduced pay" for SF standards, since that's way higher than any other local wage.
- lokar 6y agoAll (most?) big companies already set pay based on local market conditions. This is actually based on what pay levels are in the market, not cost of living.
- three_seagrass 6y agoThe local market rates are correlated with, if not caused by, the cost of living in that market.
- lokar 6y agoMost of the time, but with exceptions. For example, for engineers in many big tech companies, pay vs COL in London is not very attractive.
- three_seagrass 6y agoAnd Moscow. Of course there are outliers but the trend, especially in the U.S., remains.
- jonny_eh 6y agoI'd say that's true within a country, but not between countries, due to the difficulty of moving across borders.
- whalesalad 6y agoDoesn’t make it any easier to swallow. Your value as an employee is not coupled to your physical location.
- rfwhXQ5H 6y agoThat's not the point. Why would I pay Bay Area salaries for someone living in bumfuck Iowa? It's all about supply and demand.
- whalesalad 6y agoDeadlock. This comment thread won’t go anywhere.
- im3w1l 6y agoWhat I don't get is why you would pay Bay Area salaries for someone living in Bay Area when you could get an equally good remote worker based in Iowa on the cheap. Like just don't hire in Bay Area at all.
- rfwhXQ5H 6y agoWhile that may be true in the future, the talent pool in the Bay Area at present is undeniably better.
- blackoil 6y agoIs it any different from say a kg of rice, will feed the same still would cost diff in a village of Vietnam then Whole Foods in silicon valley. Price is by demand / supply.
- whalesalad 6y agoYou’re comparing a human being to a commodity like rice. Unbelievable.
- vecter 6y ago
- ABeeSea 6y agoYup, at least one FANG pays more in SF than Seattle for the same job and same work.
- akhilcacharya 6y agoAmazon does this, but everywhere else save New York (including Detroit, Austin, Boston+, Arizona offices) is on the same scale as Seattle.
- moneywoes 6y agoDo you know how much more? I.e. is a couple thousand or more significant?
- beefalo 6y agoMore, %10-20 for Amazon in bay area vs seattle
- kube-system 6y agoI'm sure most of them do. This is standard practice for companies that operate offices in multiple regions, not just tech, but any company over the past century at least.
- whateveracct 6y agoSo if I get a remote job working from a high COL area and move, and then I move, do I get my pay reduced? If so, I might as well reduce my effort accordingly ;) you get what you pay for EDIT: And odds are, the employer won't notice enough to fire me.
- zaptheimpaler 6y agoBut does that mean you would start working 2x the hours if you moved from somewhere else to SF? :)
- whateveracct 6y agoOdds are I can meet the bar of employment without that, so no. You have _some_ leverage as an employee to make it work for you imo. But if you reduce my pay, you're gonna make me take stock of what I'm giving you and shift the balance in my favor if I can easily get away with it.
- droopyEyelids 6y agoHere are your options, i think: 1) You're upfront about it and tell your manager, they update workday, HR schedules a meeting with you to explain the multiplier effect and how your salary is being reduced. 2) You're kind of sneaky, you update your state tax withholding, it updates workday and put you into the appropriate COL bucket for next year's performance review, your salary slowly falls in line with people in your COL area. 3) You keep it secret, allow the company to keep paying taxes to your original state, maybe pay estimated taxes or something to your new state? Don't develop any relationships with coworkers that'll eventually leak your true situation, get away with it?
- Tehchops 6y agoAdd me to the pile of those who don't like my salary adjusted arbitrarily based on where I decide to live. I don't think companies that want to attract upper-tier engineering talent will be able to get away with it either. Good engineers: A) Are outnumbered by job openings non-trivially B) Return many multiples in value of their total compensation cost C) Are well aware of A and B from a negotiating standpoint If I'm operating in the same market orbitals as Facebook, I see this as an instant hiring advantage. Simply tell candidates: "Not only have we shifted towards remote-focused teams, we won't arbitrarily grade your salary based on where you or your family choose to live" The increased costs will be a pittance compared to the potential 8-9 figure market advantage gained in 18-36 months by having consistently won hiring battles.
- TigeriusKirk 6y agoOk, but if you're hiring 100% remote people, the "local market" is everywhere. I get why management wants to do this, but I doubt it will stick with remote workers.
- save_ferris 6y agoThey want to have their cake and eat it too. The interesting thing is that I know of several smaller companies that don’t do this, so it’ll be interesting to see how this decision impacts their attrition.
- alexpetralia 6y agoIs this quote from the WSJ article? I cannot find it.
- mrits 6y agoThey are having a live company conference right now
- paxys 6y agoThis is just the reality of remote work which people are ignoring. Facebook (or any other company) has zero reason to pay Bay Area salaries if they can hire anywhere. Salaries WILL be the same everywhere in the world. They will just be a lot lower than you are used to.
- Apocryphon 6y agoOn the flip side, perhaps COL will go down as well.
- Tehchops 6y ago> This is just the reality of remote work which people are ignoring. Facebook (or any other company) has zero reason to pay Bay Area salaries if they can hire anywhere. Are they paying "Bay Area" salaries, or "Skills With The Most Obvious Correlating Signal Of Living In The Bay Area" salaries? > Salaries WILL be the same everywhere in the world. Does a Mercedes and a Honda Civic cost the same? No? Well why not? They're both cars. They're paying for the skillsets, and for salaries to be the "same everywhere in the world", the skillsets would have to be the same, and we're not at the point where they've been commoditized to that level(which is a different discussion versus geography anyways).
- tanilama 6y agoThere is 'not getting paid less for the same amount of work', only market can set the rate. Facebook pays Bay Area salary only because they have to, to get the talents they want.
- mrits 6y agoIt actually works quite the opposite. You will be way better off financially moving from the SF/Seattle/NYC than to. The wage adjustments just don't come near handling the extra expenses.
- cobookman 6y agoDepends on how frugally you live. If you are young and ok with room-mates. You'll save more money with the higher cost of living in SF than other areas.
- mrits 6y agoIf you didn't live in SF your roommates could be paying you rent...
- lawrenceyan 6y agoNot really. The majority of things cost the same regardless of where you live besides real estate, which is extraordinarily distorted from actual value.
- mrits 6y agoMost companies have separate expense allowances for these cities because of what you said is certainly not true.
- lawrenceyan 6y agoA car costs the same no matter where you live in the United States. A computer costs the same no matter where you live in the United States. A phone costs the same no matter where you live in the United States. A refrigerator costs the same no matter where you live in the United States. I could go on, but you get the point I'm trying to make here right?
- mrits 6y ago"A car costs the same no matter where you live in the United States." -- do you really believe that?
- namanaggarwal 6y agoI am watching it live and the way Mark said is, "We will be basing compensation on location like we always have and still paying top of market". I think that's fair right. If you can get a better quality of life with less pay, then thats fine. It's a choice that you are free to make.
- roosterdawn 6y agoThis should really be the pinned comment, as it does tell you everything you need to know. You've always had to move somewhere more expensive/with a heavier tech center gravity to have your career take off whether it's in terms of clout or total compensation (both of which are inextricably intertwined). Where this development fascinates me is that it vastly increases the pipeline into the FAANG BigCos. I'm sure that, not to be outdone by FB, other members of FAANG will be having serious conversations that are along the same lines as this. Even if your career at a certain company plateaus because of satellite syndrome, you at least have the door open to moving to where the action is if that's what you prioritize. But for me, so long as the real world reflects the asymmetry of capital allocation at central nodes, so too will salaries reflect that. I don't see any point in protesting that. I feel like it's more valuable to try and figure out a way to speed up the diffusion from central nodes outwards which already appears to be happening, and which this story is part and parcel of.
- JoeAltmaier 6y agoIgnoring the 'morality' of it (there isn't any, its just business), reducing pay would be difficult if there is any employment contract?
- jeffbee 6y agoI've never had a software engineering position in the US that had a contract. For me it's always been we'll pay you X, we reserve the right to change X at any time for any/no reason, there might be bonuses but who can say, and we can fire you without notice at any time for any/no reason.
- izacus 6y agoThat sounds like a contract. An oral contract is still one.
- jeffbee 6y agoThese are written, not oral. The point is it's written in the agreement that the company can unilaterally change the compensation without notice or reason.
- ensignavenger 6y agoBut if they lower your wages, you can generally qualify for unemployment.
- JoeAltmaier 6y agoHm. I've been an independent consultant for too long I guess. Back in the day, we signed a dozen forms to get hired including one indicating pay and duties.
- blackoil 6y agothe pay increase is quite frequent and ubiquitous, so contracts are re negotiated, most employment contracts don't come with time limits.
- swiftcoder 6y ago
- vishnugupta 6y agoThis is already the case, regardless of WFH. Managers are blatantly told that they could either hire one engineer in US or 4 in India. The variation won’t be as dramatic within a region but it’ll be there.
- keiferski 6y agoI don’t know why this opinion is so widespread. The only reason why salaries are so high in the Bay Area is because of the high cost of living. If companies didn’t factor COL into salaries, it’s likely that they’d be lower across the board. In fact, developers everywhere benefit from the high salaries of the Bay Area, as it sets the general expectation for the profession.
- lokar 6y agoThat's not how companies see it. They are not responding to high COL. They are responding to competition for talent from other companies. Competition -> high pay high pay + zoning rules -> high COL
- throwaway0a5e 6y agohigh pay -> solve all your big problems -> biggest problem is your neighbor -> zoning rules -> high col -> only wealthy people can live there -> companies that hire wealthy people set up shop nearby -> competition for workers increases pay -> goto(1)
- keiferski 6y agoThe baseline salary is still based on the cost of living, which is my point. Competition doesn’t drive salaries into the stratosphere entirely by itself, especially in a market with a fairly large supply of workers.
- didgeoridoo 6y agoAgree. Living in an urban core is a luxury good. Why should you be compensated extra for choosing to consume it?
- realbarack 6y agoI suspect as this scales within and across companies, "location fraud" will become common, where employees claim to live in a more expensive location in order to collect a higher salary. There's probably a b2b opportunity for a company to enforce honesty with respect to something like this.
- herval 6y agoThey can get the absolute best talent in every market across the world WITHOUT paying Bay Area salaries - just pay double whatever the local average is! This is THE reason driving all these companies to announce the shift to remote: it’ll be a massive cost saving. Access to talent that can’t live in a center where they have offices is nice, but hardly justifies the overhead of remote work
- jeffbee 6y agoIt's a market-clearing price. If Google is willing to pay more for remote workers in Pocatello, Idaho, then they'll be able to poach them. If not, wages will fall. Tech companies have always paid less to staff in cheaper cities like Pittsburgh, but the ratio usually still favors the employee (i.e. they make 90% of the Bay Area base salary and their cost of living is 20% as high). Workers can also hack the system by getting irrevocable, long-term RSU grants and then getting transferred to cheaper markets.
- alexbanks 6y agoThe thing that really sucks is that higher base comp is usually always better, even with higher COL. If you consider things like 401ks, IRAs, out of pocket maximums - having higher base comp is just better. Even if in SF vs. Boise, you're taking home 50% of your paycheck (and spending 33% of that takehome on rent), you're still paying more into those things in SF than Boise.
- empath75 6y agoThen negotiate for the higher salary, but keep in mind you'll be competing with people willing to take a lot less than you because they can afford to.
- deleted 6y ago[deleted]
- natalyarostova 6y agoCompanies set prices in accordance to labor market supply and the marginal salary they need to offer to get someone. Not some specific idea of egalitarian fairness.
- hagope 6y agoAlso, what if people move every year? are they going to readjust after every move?
- Apocryphon 6y agoWho in this modern housing market is able to move every year?
- typest 6y agoRenters.
- KoftaBob 6y agoIt's a bit more complicated than "paid less for doing the same amount of work". Compensation isn't purely based on amount of work done, there are other market factors involved like supply of talent. If a company suddenly allows working remotely full time, they've suddenly increased their supply of talent, as moving to another city will no longer be a roadblock when they consider Facebook. At the same time, if more and more companies go with a remote friendly approach, the supply of job openings that applicants have access to will also increase. Theoretically, this will lead to some sort of equilibrium where compensation is actually based more on the value/output of your work than other factors. To make an analogy, an apartment building in SF serves the same purpose as an apartment building in Ohio, yet they charge vastly different rents. You're paying less in Ohio for something that provides the same utility (shelter), because of factors outside of the direct utility of the apartment.
- y-c-o-m-b 6y agoI think I agree with you on the surface, but at the same time I wonder what impact Bay Area salaries would have in low cost-of-living areas. What about gentrification? Isn't one of the biggest complaints about tech workers (and especially people moving from CA) that their high income is making life less affordable for those native to a particular area?