9 ms·

All (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.

by lokar 6y ago

three_seagrass 6y ago
The local market rates are correlated with, if not caused by, the cost of living in that market.
- lokar 6y ago
  Most 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 ago
    And Moscow. Of course there are outliers but the trend, especially in the U.S., remains.
- jonny_eh 6y ago
  I'd say that's true within a country, but not between countries, due to the difficulty of moving across borders.
whalesalad 6y ago
Doesn’t make it any easier to swallow. Your value as an employee is not coupled to your physical location.
- rfwhXQ5H 6y ago
  That'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 ago
    Deadlock. This comment thread won’t go anywhere.
  - im3w1l 6y ago
    What 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 ago
      While that may be true in the future, the talent pool in the Bay Area at present is undeniably better.
- blackoil 6y ago
  Is 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 ago
    You’re comparing a human being to a commodity like rice. Unbelievable.
    - vecter 6y ago
      Surely you realize that your current compensation is already decided based on market forces and not some inherent "value".
      - whalesalad 6y ago
        I work for myself and dictate the cost of my services. There’s a market involved, sure, but it’s not a race to the bottom like the commodity markets. I dictate my value, not my zipcode or employer.
        vecter 6y ago
        The market dictates your price for the value you provide. You can't charge $1B/hour and get away with it. There is an optimal profit-maximizing price for your services, regardless of whether or not you acknowledge that fact. Yes, you can change more than this amount, but you will get fewer clients and be making less total profit as a result. That could be totally fine and rational since there are other utility-maximizing considerations for you like how much you want to work, the kind of work you do, the kind of clients you're willing to take on, etc., but that doesn't change the fact that you can't arbitrarily set your price and not expect a change in the amount of business you can conduct. You may not be profit-maximizing, but companies certainly are, and as a result, they'll pay whatever rates the market allows them to.
        renewiltord 6y ago
- audleman 6y ago
  Cost of living is higher if you live in a major metropolitan area. That higher SF salary gets you the same amount of goods and services as a lower salary in Utah. This is a pretty basic concept. If you want to get paid the big salary, move to the big city. Don't complain about higher rent and cost of food. Or live frugally.
  - lghh 6y ago
    But there is value in living in those higher CoL areas (hence them being higher CoL) that you sacrifice living in a lower CoL area. You sacrifice on space to live in SF, but you get all the other benefits which is why people do it. If I sacrifice the SF benefits, why do I then also have to sacrifice my CoL/pay ratio without any additional gain?
  - deleted 6y ago
    [deleted]
- majormajor 6y ago
  I think the attempt is to tie you value as an employee to you disposable income instead of your housing and basics income. I find them usually often inaccurate, though. For companies that don't pay at the top of the scale, the people in the high-cost areas are comparatively screwed (software engineers having to resort to living with roommates!?), whereas for the companies paying more, sometimes it tips the other way (like failing to account for how most costs don't scale with area the way housing does, so you could end up with a $500+ disadvantage in disposable income in one of the cheaper areas).
  - whalesalad 6y ago
    This is an extremely self-limiting and myopic viewpoint on employment. For instance, the only person who can classify income as disposable or not is me. No one else is allowed to make that decision, or is even deserving of knowing the information at all. If your hiring manager is giving you the song and dance about calculations on your cost of housing and milk, you need to turn around and go elsewhere. If you think you’re a cog in a machine, yes, you can determine your value this way. If you feel you have inherent value in and of yourself, your attitude will change about work and employment. The value I provide to a company has absolutely nothing to do with where I live. If I’m a good hire, I’m a good hire.
    - majormajor 6y ago
      Did you notice the "I think the attempt is..." part of my post, which positioned it as an attempt to understand the employer negotiation position, not as my own views? It's a view on negotiation, not on employment. But I think feelings like yours get in the way, regardless. "Determining your value" is internalizing things way too much. Failing to convince the opposite side in a negotiation is very different from "your value".[0] Being a cog in a machine - or, more directly in this situation, being seen as replaceable by the next candidate who would accept the offer you don't like - isn't about how you feel or think of yourself, it's about what you can do and what you demonstrate. That holds true for far more than just the initial interview and offer negotiation, too. [0] I'm tempted to suggest the person who's happy to be a "cog" - show up, do some work, get paid, and define their life and their value in non-work terms - may value themselves more than us maximizers!
ABeeSea 6y ago
Yup, at least one FANG pays more in SF than Seattle for the same job and same work.
- akhilcacharya 6y ago
  Amazon does this, but everywhere else save New York (including Detroit, Austin, Boston+, Arizona offices) is on the same scale as Seattle.
- moneywoes 6y ago
  Do you know how much more? I.e. is a couple thousand or more significant?
  - beefalo 6y ago
    More, %10-20 for Amazon in bay area vs seattle
- kube-system 6y ago
  I'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 ago
So 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 ago
  But does that mean you would start working 2x the hours if you moved from somewhere else to SF? :)
  - whateveracct 6y ago
    Odds 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 ago
  Here 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 ago
Add 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 ago
Ok, 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.

All (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.

by lokar 6y ago

All (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 ago

The local market rates are correlated with, if not caused by, the cost of living in that market.

lokar 6y ago
Most 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 ago
  And Moscow. Of course there are outliers but the trend, especially in the U.S., remains.
jonny_eh 6y ago
I'd say that's true within a country, but not between countries, due to the difficulty of moving across borders.

whalesalad 6y ago

Doesn’t make it any easier to swallow. Your value as an employee is not coupled to your physical location.

rfwhXQ5H 6y ago
That'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 ago
  Deadlock. This comment thread won’t go anywhere.
- im3w1l 6y ago
  What 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 ago
    While that may be true in the future, the talent pool in the Bay Area at present is undeniably better.
blackoil 6y ago
Is 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 ago
  You’re comparing a human being to a commodity like rice. Unbelievable.
  - vecter 6y ago
    Surely you realize that your current compensation is already decided based on market forces and not some inherent "value".
    - whalesalad 6y ago
      I work for myself and dictate the cost of my services. There’s a market involved, sure, but it’s not a race to the bottom like the commodity markets. I dictate my value, not my zipcode or employer.
      - vecter 6y ago
        The market dictates your price for the value you provide. You can't charge $1B/hour and get away with it. There is an optimal profit-maximizing price for your services, regardless of whether or not you acknowledge that fact. Yes, you can change more than this amount, but you will get fewer clients and be making less total profit as a result. That could be totally fine and rational since there are other utility-maximizing considerations for you like how much you want to work, the kind of work you do, the kind of clients you're willing to take on, etc., but that doesn't change the fact that you can't arbitrarily set your price and not expect a change in the amount of business you can conduct. You may not be profit-maximizing, but companies certainly are, and as a result, they'll pay whatever rates the market allows them to.
      - renewiltord 6y ago
audleman 6y ago
Cost of living is higher if you live in a major metropolitan area. That higher SF salary gets you the same amount of goods and services as a lower salary in Utah. This is a pretty basic concept. If you want to get paid the big salary, move to the big city. Don't complain about higher rent and cost of food. Or live frugally.
- lghh 6y ago
  But there is value in living in those higher CoL areas (hence them being higher CoL) that you sacrifice living in a lower CoL area. You sacrifice on space to live in SF, but you get all the other benefits which is why people do it. If I sacrifice the SF benefits, why do I then also have to sacrifice my CoL/pay ratio without any additional gain?
- deleted 6y ago
  [deleted]
majormajor 6y ago
I think the attempt is to tie you value as an employee to you disposable income instead of your housing and basics income. I find them usually often inaccurate, though. For companies that don't pay at the top of the scale, the people in the high-cost areas are comparatively screwed (software engineers having to resort to living with roommates!?), whereas for the companies paying more, sometimes it tips the other way (like failing to account for how most costs don't scale with area the way housing does, so you could end up with a $500+ disadvantage in disposable income in one of the cheaper areas).
- whalesalad 6y ago
  This is an extremely self-limiting and myopic viewpoint on employment. For instance, the only person who can classify income as disposable or not is me. No one else is allowed to make that decision, or is even deserving of knowing the information at all. If your hiring manager is giving you the song and dance about calculations on your cost of housing and milk, you need to turn around and go elsewhere. If you think you’re a cog in a machine, yes, you can determine your value this way. If you feel you have inherent value in and of yourself, your attitude will change about work and employment. The value I provide to a company has absolutely nothing to do with where I live. If I’m a good hire, I’m a good hire.
  - majormajor 6y ago
    Did you notice the "I think the attempt is..." part of my post, which positioned it as an attempt to understand the employer negotiation position, not as my own views? It's a view on negotiation, not on employment. But I think feelings like yours get in the way, regardless. "Determining your value" is internalizing things way too much. Failing to convince the opposite side in a negotiation is very different from "your value".[0] Being a cog in a machine - or, more directly in this situation, being seen as replaceable by the next candidate who would accept the offer you don't like - isn't about how you feel or think of yourself, it's about what you can do and what you demonstrate. That holds true for far more than just the initial interview and offer negotiation, too. [0] I'm tempted to suggest the person who's happy to be a "cog" - show up, do some work, get paid, and define their life and their value in non-work terms - may value themselves more than us maximizers!

ABeeSea 6y ago

Yup, at least one FANG pays more in SF than Seattle for the same job and same work.

akhilcacharya 6y ago
Amazon does this, but everywhere else save New York (including Detroit, Austin, Boston+, Arizona offices) is on the same scale as Seattle.
moneywoes 6y ago
Do you know how much more? I.e. is a couple thousand or more significant?
- beefalo 6y ago
  More, %10-20 for Amazon in bay area vs seattle
kube-system 6y ago
I'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 ago

So 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 ago
But does that mean you would start working 2x the hours if you moved from somewhere else to SF? :)
- whateveracct 6y ago
  Odds 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 ago
Here 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 ago

Add 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 ago

Ok, 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.