12 ms·

Zuckerberg says employees moving out of Silicon Valley may face pay cuts

153 points by SREinSF 6y ago

Ericson2314 6y ago
How do new hires get trained remotely, and will it be as effective? It's a problem I just thought about.
- grumple 6y ago
  At my company, they fly you out to train with your boss/senior dev for a week-long intensive. After that, it's easier to get the rest of the knowledge transferred remotely. But I have no doubt you could train someone remotely if you put a little more planning into it (automate environment setup, good written documentation, good video chat software).
Klonoar 6y ago
This feels like a "welp we need to cut some pay, let's see who takes the bait". Cost of living should not dictate your value to the company. If you're an engineer supporting x number of users worth y dollars, it literally does not change what you bring to the table whether you do the job in SF or Birmingham. Yes, they could hire cheaper in Birmingham, but they can't hire _you_. If you have a proven track record of doing incredible work, then you should be paid accordingly. What you pay in rent/mortgage/etc is none of the company's business. I would argue that if you're a SWE and you go along with this, you're complicit in the wage fixing that this industry has had to grapple with for ages now. Demand to be paid what you're worth or walk. (And yes, I get that some people can't afford to be choosy. Those of us who can, should be, though.)
- jedberg 6y ago
  > Yes, they could hire cheaper in Birmingham, but they can't hire _you_. Unless you move to Birmingham. Now they can hire you. And if you want to live there then you'll probably take the offer because it will still be better than the local options in Birmingham. Employee pay has always been about "what does it take to get them to work here" and not value to the company. If there is something in Birmingham that you value, then you'll be willing to take a pay cut to be there.
  - Klonoar 6y ago
    _Some_ people will do that, like the aforementioned "can't be choosy" cohort I noted in my original comment. For all the talk about abundance of engineering talent, talk to anyone who's actively had to hire in the past six months and it's a complete slog of unqualified candidates. I would find it hard to believe that engineering talent (_especially_ at FAANG level) is in a market position that doesn't afford them negotiation power. One or two people doing this is certainly nothing, but if enough do it, then it makes a potential difference. I'll be very curious to see how FBs staff handles this come Jan 1. Probably disappointed, I'm aware... but curious nonetheless.
    - jedberg 6y ago
      > talk to anyone who's actively had to hire in the past six months and it's a complete slog of unqualified candidates. That's always been the case. When I did interviews at Netflix, people who had resumes that said "Senior Engineer" for five years couldn't do fizzbuzz in their favorite language. Yes, if enough really talented people all get together and demand higher wages, they might stay high. And some stellar performers will demand high wages regardless of where they are. But the truth of it is that most people are not stellar performers. They're good engineers who can get work done. And they will demand median salaries. Median salaries will probably shift towards an equilibrium below SF salaries and above {pick your favorite small town in middle America}.
- gwright 6y ago
  > Cost of living should not dictate your value to the company. Your "value" to the company depends a lot on your compensation and your compensation depends on the marketplace for other developers with similar skills.
  - throwawaythekey 6y ago
    I struggle to see the mental leap many are making here. Are you stating that cost of living impacts your skill level? In some cases that may be true but I think for what most are discussing here the causation would be the other way. Growing up in a poor area may effect your skill level but moving as an adult from a high COL to low COL area should have minimal impact. To me it makes more sense that each developer would command the salary that corresponds to their skills, and then adjust their COL in order to be comfortable.
    - gwright 6y ago
      > Are you stating that cost of living impacts your skill level? Not at all. If all things are equal except the cost of living difference then a company can get X units of value at a discount by hiring the person with the lower cost of living at a lower salary. The discount is equal to the cost-of-living difference. Of course in the real world things are rarely "equal" except for cost-of-living and so the effect is only going to be seen in the aggregate.
      - throwawaythekey 6y ago
        > company can get X units of value at a discount by hiring the person with the lower cost of living at a lower salary. So the hiring process should favour low salaries rather than cost of living? If that is the case then you can easily replace cost of living adjustments with candidate salary expectation.
        gwright 6y ago
        "market rate" is a metric that incorporates candidate salary expectations and geographic cost of living adjustments as well as many other things such as tax considerations?
- Barrin92 6y ago
  Your salary isn't based (at least directly) on your value to the company. It's based on how little they can get away to pay you for the service they want you to provide. If you move somewhere with a lower cost of living, then chances are you're willing to accept a lower salary. If you truly provide some unique value you may have enough negotiating power to keep your salary, otherwise they'd look for a replacement.
huangc10 6y ago
Always two sides to the same story. As a software engineer, of course I think I should make the same regardless of I'm on-site or remote. As a founder, of course I'm not going to pay someone who works on-site vs. remote the same. It's a never ending debate.
- rukittenme 6y ago
  > I'm not going to pay someone who works on-site vs. remote the same. Sound like you'll be bringing lower quality remote engineers into a lower quality remote environment. Don't be surprised when that strategy blows up.
  - huangc10 6y ago
    I am actually not a founder of any sort. I just mean if I put myself in the shoes of a founder. But true story, I am working at a successful startup that started from a Wordpress blog with a bunch of remote workers from Prague.
- umeshunni 6y ago
  > As a software engineer, of course I think I should make the same regardless of I'm on-site or remote. Yup, this is super tricky. Even if the company pays me the same, I don't make the same whether I live in SF BA vs in Denver (13% income tax in CA vs 5% in CO). Additionally, I don't need to make the same whether I live in SF or in Denver. I would spend 5% less purely because a similar house in a similar suburb with similar schools costs 25% less to rent in Denver than in SF Bay Area. In other words, with no discernible drop in quality of life, I could make 10-15% less than in SF BA and live a similar life in Denver. This isn't even considering quality of life improvements (which are subjective) or the cost of buying (which is also more subjective but also has to factor in risk, appreciation etc)
Jemaclus 6y ago
This is one of the things that's always bothered me. Let's say you hire me for your company in San Francisco and pay me $150K. You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value. In other words, the company will (eventually) make more than $150K per year off my contributions to the company. But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of "cost of living". Why? My value to the company hasn't changed! I am still worth the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company? As remote working becomes more and more acceptable, we're going to start to see companies like Twitter and Facebook competing nationwide, not just in Silicon Valley. An engineer in Oklahoma will now be in a market that includes all of the big giants, and not just the local banks or whatever. Likewise, Twitter and Facebook will be competing against each other in the lower COL areas like Oklahoma! And not just SF startups, but competing against NYC and London startups as well. This whole area is really fascinating to me, but the "you get paid differently depending on where you live" thing has always struck me as bizarre and one-sided in favor of the businesses and not the people in high demand, like good software engineers.
- dexter0 6y ago
  > You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value. Part of that value calculus was that you are willing to relocate (or already reside in) the Bay Area. In other words, if the company offered only $90K and still required you to live in the Bay Area, you and most other qualified candidates would balk at the offer. > The only thing that changed is where I choose to reside. What difference is that to the company? Clearly the company is betting that if you walk away instead of accepting the pay cut, they will be able to find another qualified candidate among the now much larger talent pool they are able to court with remote work.
- deleted 6y ago
  [deleted]
- alkibiades 6y ago
  thats not how the free market works. im not sure where people got the strange concept they are paid what they are worth to the company. or that they are paid based on how hard they work. its literally just supply and demand like everything else.
rmason 6y ago
In other words you can work remotely but stay close to home base? Imagine how a Facebook developer could live in a place like Detroit or New Orleans? Have you seen the house you can buy for under a $1 million in Detroit! https://detroit.curbed.com/maps/most-expensive-homes-sold-detroit-2017 https://detroit.curbed.com/maps/most-expensive-homes-sold-de...
- abledon 6y ago
  the unit tests I could write from home there... oh my god.
MattGaiser 6y ago
https://news.ycombinator.com/item?id=23261394 https://news.ycombinator.com/item?id=23261394 in the other thread, there are a myriad of people thinking that there won't be. Excitement about moving to Iowa while making 150,000 was very premature.
- sb52191 6y ago
  I will gladly take some amount of a pay cut to move out of the Bay Area, but obviously it's very dependent on how much that is. 15% less to live in Lake Tahoe? Yea, I'd probably do that. 50% to live in Seattle? Obviously not.
nostromo 6y ago
People should be warned that working remotely has been career suicide for as long as I've been in tech. Being "out of sight, out of mind" from management generally means you're passed over for promotions, and often the first to get cut during layoffs. It's just human nature. It's easier to layoff the person that's been working from across the country (or another country) than it is to layoff the person at the desk next to you that you've worked beside for years.
- christiansakai 6y ago
  I think small team and good manager/team lead will mitigate this.
- somebrody 6y ago
  It is only suicide for in-company promotion tracks. It has no effect on your career if you learn to not depend on in-company tracks for your success.
  - asah 6y ago
    "I work for Silicon Valley Inc, NameOfCompany division"
  - SpicyLemonZest 6y ago
    That's not just a matter of learning. The kinds of things you can achieve are different. If you want to become a director of some big engineering organization one day, you'll need to build up your position within the companies you work and not just your personal brand.
  - nojito 6y ago
    WFH only works in theory when the economy is booming. In a recession WFH employees are going to the be first ones on the chopping block.
- alkibiades 6y ago
  i think therse a good subset of people who dont really care that much about their careers. atleast from my experience working at fang. they just like the high pay and WLB and dont seem to care about being promoted or advancement.
martythemaniak 6y ago
I've been mostly reading the WFH debates here on HN and this seems to have come as a shock to many advocates. You know, companies already had offices in different places you could already move out of SF to elsewhere and this was part of the deal. This isn't anything new, there was never the option of taking your Bay Area salary and living it up in Laos.
- whateveracct 6y ago
  It was an option to live wherever in the United States though. Every place I've worked remotely based in SV/SF has paid accordingly despite me and the other engineers not living there. Startups & BigCos alike.
  - gwright 6y ago
    The more interesting question is not whether that was your experience but what the aggregate data might say about that. It seems to me that companies that don't make that adjustment are spending a lot more on labor than they need to, but it may be that for certain types of businesses that it just doesn't make a difference in the overall financial picture. There are very few businesses/industries that have a revenue/employee (or profit/employee) ratio like high-tech companies. And so fine-tuning employee compensation geographically may just be lost in the noise of their operations. I doubt that practice is consistent across other business types though and it also suggests that employees at these businesses should be asking for even higher compensation!
  - bradlys 6y ago
    You were getting $400k+/yr living in BFE? I'm surprised. How did you manage that? I've never really seen that happen with companies I've interacted with but I've heard of things like it here and there...
deleted 6y ago
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mikedouglas 6y ago
Solve for the equilibrium. Market salaries at the top hubs will eventually go down, and salaries outside them will rise.
floatingatoll 6y ago
Facebook and Palantir both used to pay people up to $10k/year to live within a mile or so of the office, since the cost of living in SF & Palo Alto & Menlo Park was so much higher than the rest of SFbay. I don't know if they still offer that perk, but I can attest that the increased costs of rent within a mile of those offices would, at that time, burn up that entire $10k and then some, relative to the rest of SFbay. Are they right to do this, given that it's probably a contributing factor to increased rents? Probably not. But I bet it was negotiated with the cities to try and reduce emissions and parking requirements, too.
- nikhizzle 6y ago
  This perk at fb was halted in 2008 precisely for the reason you mention above - it raised all the rents suitable for employees at the time within that perimeter by $1000/mo. (Source: I worked for fb)
  - shuckles 6y ago
    Henry George had something to say about this!
- neilparikh 6y ago
  Similarly, I always hear people talking about how tech companies should pay their contractors higher wages to account for the cost of living in the Bay Area. But given that the largest expense there is rent, that has the same problem: if there are more people looking for housing is greater than the number of available units, all you've done is changed who gets housing, and number of people with housing remains the same.
joshpadnick 6y ago
We're a remote-first company and went through this same discussion when we began hiring people in different cities, not just in the USA but all around the world. What we found is that any approach to setting salaries has to balance the following factors: * Pay people enough to live comfortably * Pay people enough that they accept our offer vs competition * Pay people in a way that feels fair * Pay people in a way that is transparent * Pay people in a way the company can afford it * Pay people in a way that there isn't a risk of huge fluctuations (e.g. currency fluctuations) Without a doubt the best solution is to pay every employee as if they live in San Francisco, what we call "single-city." That gives high marks on every dimension above...except that it's extremely expensive for the company. Basecamp.com can afford this but I doubt most companies can. We ultimately went with a formula where we look up the average salary for your title in NYC (the USA's most expensive city), multiply it by some multiplier (to make sure we pay systematically above market), and discount it by the cost of living in your city compared the cost of living in NYC. When we can afford it, we'll move to a single-city model based on San Francisco.
- sct202 6y ago
  How do you do the cost of living adjustment? I've used a few just for fun before and have gotten wildly different results for NYC vs Chicago (+21%, +51%, +75%) from the first few listed on Google.
  - google234123 6y ago
    Take the median? Look in more detail how they calculate the values and pick the one that makes the most sense?
- jedberg 6y ago
  I run a remote-first company and follow a single-city model. But that city isn't SF. I don't really know what city it is, but we pay people with the same experience doing the same work the same pay regardless of where they live. I understand that this means that I probably can't afford someone in SF, but I also know that there is no way I was poaching from FAANG anyway, and there is plenty of good talent not in SF. So I get high marks on all the criteria, as long as they don't live in an expensive city. It's a tradeoff I'm willing to make. As we get more successful, I can move everyone up to match the more expensive cities.
subsubzero 6y ago
This is no surprise, I commented earlier on this with another company but figured I can re-use it here: Both me and my Wife's company have pay bands based on geographical region(most employees know nothing about this and most companies employ these salary COL changes for relocation) and certain regions you can take a big pay cut. Say your salary in the bay area is 100k for example, move to the South, say Florida and it typically drops 30%(typically as low as they chop your salary) so your new salary is 70k, Denver area is 15% paycut etc. These numbers change somewhat from company to company but they do exist for most companies and should be factored in.
Nasrudith 6y ago
I suspect that eventually we may see a realignment to "utility" based pay rates as opposed to location. The old rates of SV may wind up their own tier in Work From Home who can demand that rate successfully. Of course that depends upon proper judgement and valuation of employees and prospective employees.
whateveracct 6y ago
I've been getting paid SV salary to work remotely for SF/SV companies for a while now. This is just companies treating engineers as a cost center - showing true colors.
librish 6y ago
This shouldn't come as a surprise to anyone who knows the general compensation strategy for all the major tech companies. They don't pay based either on value added or cost of living (which is why compensation is higher in the Bay Area compared to London). They pay based on market rate where the target is something like 95th-percentile based on market surveys they do. Presumably this hits some sweet spot in acceptance rate vs cost. Employee compensation is a big ticket item for these companies on the balance sheet so they're highly incentivized to put a lot of thought into their setups. Additionally if we truly go fully remote salaries will almost certainly go down just looking at the supply change alone. Previously these companies only hired * A) People who met the hiring bar * B) People who were willing to relocate to one of office location If you remove B you've massively increased the available talent pool.
- volkk 6y ago
  > If you remove B you've massively increased the available talent pool. i'm not convinced this is the case. maybe by a bit...but massively? if you look at all of the places that all of the top paying FAANG companies are located--lets keep it within the US for simplicity's sake--you've got basically all of the major cities with the top talent. I'm not really picturing THAT many brilliant developers that fall under the bucket of: a) really smart and able to pass FAANG interviews b) not willing to relocate if they did get a huge offer sure there are plenty of outliers, but my gut feeling tells me that MOST of the talent that really cares enough and wants to be at FAANG are already living in most of the tech hubs currently. i dont think the surge of competent applications will be that meaningful statistically speaking. not sure if i communicated myself clearly here, sort of rambled.
  - mttddd 6y ago
    I suspect you are right and most of the top talent is in major cities but even then most faang jobs are in the bay area. Anecdotally (and with all the caveats that go with that) I wanted to work for a faang but turned them down several times until an opportunity came up in DC. I have other friends in cities like NYC and Chicago in the same boat. They dont want to leave their current city and even if there is a faang presence it may be small (chicago) or their area of focus doesnt match with the teams in their local faang office (nyc)
j45 6y ago
The thing about remote work is.. it could become a global marketplace now for talent. The big companies could get to off-shore again in a global remote-first re-jigging.
- dudul 6y ago
  It will already take a while for companies to absorb the change of distributed organization in the US. Opening to the world brings yet another set of challenges: taxes, employment regulations in each country, timezone differences, cultural differences, etc. I know FANG are really good at propaganda, but I don't see them going overnight from "good work can only be done with everyone in the office" to "well sure, one guy in SF, one in London, and a third in Sydney", no big deal, just jump on the zoom" without looking completely ridiculous.
  - erik_seaberg 6y ago
    I keep remembering how we'd just meet over video rather than shlep all the way to the other end of Google's Mountain View campus.
- zebnyc 6y ago
  If the direction is to go full / mostly remote, I believe most companies will insist on ensure that working hours mostly overlap with US business hours. So I think the big winner here will mostly be tech workers based in South America. At my previous job at a SF based ad-tech company, I was the lone SF based engineer. Boss was in Australia, rest of the engineering team was in South america.
newfeatureok 6y ago
Funny how no one was complaining when they got a 50 to 200% raise by moving there. It just makes sense - why would you pay more than necessary?
RyanGoosling 6y ago
The Administration owns the land and property. They need the high salaried employees to stick around town to pay the exorbitant rents. I hope that helps tie things together for you.
- scintill76 6y ago
  Which administration?
iamcurious 6y ago
Cue to the horde of new startups that will be 100% remote and eat Zuckerberg's lunch. Remote will be the new open space, with all the buzz words, feel good stories and even the blind eye towards its obvious defects. Seriously, everything is documented, you can grow without worrying about floor space, you get access to a larger pool of talent, you are probably imagining more. Current managers may not like it, but hey it is okay to be old, leave it to the young to innovate.
- maerF0x0 6y ago
  They dont have to buy $30 a day worth of food/snacks. No foosball table maintenance costs. Air conditioning/heat on and on it goes. Working remote for less money is probably a fools game once you consider the cost of your home office and lost perks. Companies know this and are playing it smart by saying it's a benefit and therefore should pay _less_
british_india 6y ago
Zuckerberg is a dick.
zebnyc 6y ago
If this is a leading indicator that remote work is going to become mainstream, I am anxious at the prospect of new grads / junior engineers' ability to get their foot in the door.
dang 6y ago
Related ongoing thread: https://news.ycombinator.com/item?id=23261394 https://news.ycombinator.com/item?id=23261394
- koheripbal 6y ago
  Can we consolidate?
  - dang 6y ago
    It seems like they're divergent enough to keep separate. Last I checked, at least.
zuhayeer 6y ago
An interesting thing about Facebook comp thus far has been that their pay bands for engineering were the same across the United States assuming wherever they had an office (unlike other large companies like Microsoft and Amazon). For reference check out https://www.levels.fyi/company/Facebook/salaries/Software-Engineer/ https://www.levels.fyi/company/Facebook/salaries/Software-En.... Pay cuts would come as a pretty hefty change to those who have already moved or relocated. At the same time, this is now an employers market. With remote work taking stride, pay cuts feel inevitable – why would companies pay top dollar for talent they have broader access to and who are willing to accept less. We'll have to wait and see how new offers start looking come August.
- jarjoura 6y ago
  That won't change if you're an employee working in an office with a local team. Remote only roles will be billed differently.
xchip 6y ago
Companies that sells Hardware sell it at the same everywhere despite the cost of living. Why isn't this the same for employees? We need to call out this bullshit.
- maerF0x0 6y ago
  Many companies will have different pricing models in different countries. See https://steamdb.info/sales/ https://steamdb.info/sales/ as an interesting exercise in arbitrage
InvOfSmallC 6y ago
I mean, it's not something that isn't expected. I also think it's fair in a way. I'm curious to see how many engineers will be interested. For example there is a company, quite famous, already known for the remote working that wanted to make me an offer, but it implied me opening a company in my country so that they can pay me because it was to complicated to have me directly in the payroll. What I mean is that the law is still not prepared to support this worldwide.
stevespang 6y ago
It's all because Zuckerberg needs more money to pay for NO TRESPASSING SIGNS all along the public Hawaiian beachfront that he does not own, yet is attempting to control and micromanage.
coronadisaster 6y ago
Just drop the salaries further and force them to move to the poorest areas of the country?
tzs 6y ago
Many comments have pointed out that pay is determined by the cost of replacement. For employees at an office in SF (or Seattle or NYC or London or anywhere else), the relevant cost is how much they have to pay to get someone else in that same city. Hence, for non-remote workers the pay has to be high in high cost of living places. Many people seem to think that when the same principle is applied to remote work, that means the pay should depend on the cost of living where that particular remote worker lives. Is that actually the correct application of that? If a remote worker in, say, Tulsa, OK quits and the company wants to replace them with another remote worker there is no reason they need the replacement to be in Tulsa, OK. It should be fine from the company's point of view if the replacement lives in Boise, ID (which has a lower COL than Tulsa), or Salt Lake City, UT (about the same COL as Tulsa), or Spokane, WA (higher COL than Tulsa). So why should they offer more for workers that happen to live in Spokane, about the same for those in Salt Lake City, and less for those in Boise? It seems to me to make the most sense from the company point of view to consider all remote workers to be essentially in the same location, and how much they pay should be what it takes to attract the number of qualified remote workers that they want to hire.
6gvONxR4sf7o 6y ago
All the justifications of "salaries are just supply and demand" are evil to me (not that I'm saying facebook's choice here is evil). Yes, they'll often pay you the least they can get away with. They'll also treat you as badly as they can get away with. Treating people as badly as you can get away with is not good, even if it's a natural product of supply and demand.
switch11 6y ago
Interesting. Thought Facebook didn't screw over its own employees seems they are getting inspired by Amazon
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NotSammyHagar 6y ago
I have a job in a tech center and I make a great salary because of competition for my services, in NY or Seattle or SF or where ever. Right now I'm working from home entirely. If I'm in Seattle and I work from my cabin 100 miles from Seattle, no one will know assuming I have internet. Taxes are the same too afaik (no local or state taxes). Presumably this is okay with everyone. How much working away from my supposed seattle job (that doesn't even exist right now) do I get before I am not working in Seattle? Suppose I saved so much money from my seattle job that I bought a weekend condo in another state, in Oregon. If I go there many weekends, I think I can still keep my seattle lifestyle (there's some matter for the oregon tax court to decide I guess). But am I still "working in Seattle"? Now suppose I go from my cabin near Seattle to a cabin on the other side of Washington state. Or I go spend 40% of my time in my Idaho cabin (boy, I have a lot of cabins, they are so cheap with my Seattle salary ;-)). When do I stop being a Seattle employee and become a whatever employee? If I have 3 houses in states with the same "no income tax" like in Seattle can I live 51% in Seattle and split time in the other places and still be a seattle employee? Obviously I'm trying to point out the arbitrariness of these policies.
deleted 6y ago
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153 points by SREinSF 6y ago

Ericson2314 6y ago

How do new hires get trained remotely, and will it be as effective? It's a problem I just thought about.

grumple 6y ago
At my company, they fly you out to train with your boss/senior dev for a week-long intensive. After that, it's easier to get the rest of the knowledge transferred remotely. But I have no doubt you could train someone remotely if you put a little more planning into it (automate environment setup, good written documentation, good video chat software).

Klonoar 6y ago

This feels like a "welp we need to cut some pay, let's see who takes the bait". Cost of living should not dictate your value to the company. If you're an engineer supporting x number of users worth y dollars, it literally does not change what you bring to the table whether you do the job in SF or Birmingham. Yes, they could hire cheaper in Birmingham, but they can't hire _you_. If you have a proven track record of doing incredible work, then you should be paid accordingly. What you pay in rent/mortgage/etc is none of the company's business. I would argue that if you're a SWE and you go along with this, you're complicit in the wage fixing that this industry has had to grapple with for ages now. Demand to be paid what you're worth or walk. (And yes, I get that some people can't afford to be choosy. Those of us who can, should be, though.)

jedberg 6y ago
> Yes, they could hire cheaper in Birmingham, but they can't hire _you_. Unless you move to Birmingham. Now they can hire you. And if you want to live there then you'll probably take the offer because it will still be better than the local options in Birmingham. Employee pay has always been about "what does it take to get them to work here" and not value to the company. If there is something in Birmingham that you value, then you'll be willing to take a pay cut to be there.
- Klonoar 6y ago
  _Some_ people will do that, like the aforementioned "can't be choosy" cohort I noted in my original comment. For all the talk about abundance of engineering talent, talk to anyone who's actively had to hire in the past six months and it's a complete slog of unqualified candidates. I would find it hard to believe that engineering talent (_especially_ at FAANG level) is in a market position that doesn't afford them negotiation power. One or two people doing this is certainly nothing, but if enough do it, then it makes a potential difference. I'll be very curious to see how FBs staff handles this come Jan 1. Probably disappointed, I'm aware... but curious nonetheless.
  - jedberg 6y ago
    > talk to anyone who's actively had to hire in the past six months and it's a complete slog of unqualified candidates. That's always been the case. When I did interviews at Netflix, people who had resumes that said "Senior Engineer" for five years couldn't do fizzbuzz in their favorite language. Yes, if enough really talented people all get together and demand higher wages, they might stay high. And some stellar performers will demand high wages regardless of where they are. But the truth of it is that most people are not stellar performers. They're good engineers who can get work done. And they will demand median salaries. Median salaries will probably shift towards an equilibrium below SF salaries and above {pick your favorite small town in middle America}.
gwright 6y ago
> Cost of living should not dictate your value to the company. Your "value" to the company depends a lot on your compensation and your compensation depends on the marketplace for other developers with similar skills.
- throwawaythekey 6y ago
  I struggle to see the mental leap many are making here. Are you stating that cost of living impacts your skill level? In some cases that may be true but I think for what most are discussing here the causation would be the other way. Growing up in a poor area may effect your skill level but moving as an adult from a high COL to low COL area should have minimal impact. To me it makes more sense that each developer would command the salary that corresponds to their skills, and then adjust their COL in order to be comfortable.
  - gwright 6y ago
    > Are you stating that cost of living impacts your skill level? Not at all. If all things are equal except the cost of living difference then a company can get X units of value at a discount by hiring the person with the lower cost of living at a lower salary. The discount is equal to the cost-of-living difference. Of course in the real world things are rarely "equal" except for cost-of-living and so the effect is only going to be seen in the aggregate.
    - throwawaythekey 6y ago
      > company can get X units of value at a discount by hiring the person with the lower cost of living at a lower salary. So the hiring process should favour low salaries rather than cost of living? If that is the case then you can easily replace cost of living adjustments with candidate salary expectation.
      - gwright 6y ago
        "market rate" is a metric that incorporates candidate salary expectations and geographic cost of living adjustments as well as many other things such as tax considerations?
Barrin92 6y ago
Your salary isn't based (at least directly) on your value to the company. It's based on how little they can get away to pay you for the service they want you to provide. If you move somewhere with a lower cost of living, then chances are you're willing to accept a lower salary. If you truly provide some unique value you may have enough negotiating power to keep your salary, otherwise they'd look for a replacement.

huangc10 6y ago

Always two sides to the same story. As a software engineer, of course I think I should make the same regardless of I'm on-site or remote. As a founder, of course I'm not going to pay someone who works on-site vs. remote the same. It's a never ending debate.

rukittenme 6y ago
> I'm not going to pay someone who works on-site vs. remote the same. Sound like you'll be bringing lower quality remote engineers into a lower quality remote environment. Don't be surprised when that strategy blows up.
- huangc10 6y ago
  I am actually not a founder of any sort. I just mean if I put myself in the shoes of a founder. But true story, I am working at a successful startup that started from a Wordpress blog with a bunch of remote workers from Prague.
umeshunni 6y ago
> As a software engineer, of course I think I should make the same regardless of I'm on-site or remote. Yup, this is super tricky. Even if the company pays me the same, I don't make the same whether I live in SF BA vs in Denver (13% income tax in CA vs 5% in CO). Additionally, I don't need to make the same whether I live in SF or in Denver. I would spend 5% less purely because a similar house in a similar suburb with similar schools costs 25% less to rent in Denver than in SF Bay Area. In other words, with no discernible drop in quality of life, I could make 10-15% less than in SF BA and live a similar life in Denver. This isn't even considering quality of life improvements (which are subjective) or the cost of buying (which is also more subjective but also has to factor in risk, appreciation etc)

Jemaclus 6y ago

This is one of the things that's always bothered me. Let's say you hire me for your company in San Francisco and pay me $150K. You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value. In other words, the company will (eventually) make more than $150K per year off my contributions to the company. But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of "cost of living". Why? My value to the company hasn't changed! I am still worth the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company? As remote working becomes more and more acceptable, we're going to start to see companies like Twitter and Facebook competing nationwide, not just in Silicon Valley. An engineer in Oklahoma will now be in a market that includes all of the big giants, and not just the local banks or whatever. Likewise, Twitter and Facebook will be competing against each other in the lower COL areas like Oklahoma! And not just SF startups, but competing against NYC and London startups as well. This whole area is really fascinating to me, but the "you get paid differently depending on where you live" thing has always struck me as bizarre and one-sided in favor of the businesses and not the people in high demand, like good software engineers.

dexter0 6y ago
> You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value. Part of that value calculus was that you are willing to relocate (or already reside in) the Bay Area. In other words, if the company offered only $90K and still required you to live in the Bay Area, you and most other qualified candidates would balk at the offer. > The only thing that changed is where I choose to reside. What difference is that to the company? Clearly the company is betting that if you walk away instead of accepting the pay cut, they will be able to find another qualified candidate among the now much larger talent pool they are able to court with remote work.
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alkibiades 6y ago
thats not how the free market works. im not sure where people got the strange concept they are paid what they are worth to the company. or that they are paid based on how hard they work. its literally just supply and demand like everything else.

rmason 6y ago

In other words you can work remotely but stay close to home base? Imagine how a Facebook developer could live in a place like Detroit or New Orleans? Have you seen the house you can buy for under a $1 million in Detroit! https://detroit.curbed.com/maps/most-expensive-homes-sold-detroit-2017 https://detroit.curbed.com/maps/most-expensive-homes-sold-de...

abledon 6y ago
the unit tests I could write from home there... oh my god.

MattGaiser 6y ago

https://news.ycombinator.com/item?id=23261394 https://news.ycombinator.com/item?id=23261394 in the other thread, there are a myriad of people thinking that there won't be. Excitement about moving to Iowa while making 150,000 was very premature.

sb52191 6y ago
I will gladly take some amount of a pay cut to move out of the Bay Area, but obviously it's very dependent on how much that is. 15% less to live in Lake Tahoe? Yea, I'd probably do that. 50% to live in Seattle? Obviously not.

nostromo 6y ago

People should be warned that working remotely has been career suicide for as long as I've been in tech. Being "out of sight, out of mind" from management generally means you're passed over for promotions, and often the first to get cut during layoffs. It's just human nature. It's easier to layoff the person that's been working from across the country (or another country) than it is to layoff the person at the desk next to you that you've worked beside for years.

christiansakai 6y ago
I think small team and good manager/team lead will mitigate this.
somebrody 6y ago
It is only suicide for in-company promotion tracks. It has no effect on your career if you learn to not depend on in-company tracks for your success.
- asah 6y ago
  "I work for Silicon Valley Inc, NameOfCompany division"
- SpicyLemonZest 6y ago
  That's not just a matter of learning. The kinds of things you can achieve are different. If you want to become a director of some big engineering organization one day, you'll need to build up your position within the companies you work and not just your personal brand.
- nojito 6y ago
  WFH only works in theory when the economy is booming. In a recession WFH employees are going to the be first ones on the chopping block.
alkibiades 6y ago
i think therse a good subset of people who dont really care that much about their careers. atleast from my experience working at fang. they just like the high pay and WLB and dont seem to care about being promoted or advancement.

martythemaniak 6y ago

I've been mostly reading the WFH debates here on HN and this seems to have come as a shock to many advocates. You know, companies already had offices in different places you could already move out of SF to elsewhere and this was part of the deal. This isn't anything new, there was never the option of taking your Bay Area salary and living it up in Laos.

whateveracct 6y ago
It was an option to live wherever in the United States though. Every place I've worked remotely based in SV/SF has paid accordingly despite me and the other engineers not living there. Startups & BigCos alike.
- gwright 6y ago
  The more interesting question is not whether that was your experience but what the aggregate data might say about that. It seems to me that companies that don't make that adjustment are spending a lot more on labor than they need to, but it may be that for certain types of businesses that it just doesn't make a difference in the overall financial picture. There are very few businesses/industries that have a revenue/employee (or profit/employee) ratio like high-tech companies. And so fine-tuning employee compensation geographically may just be lost in the noise of their operations. I doubt that practice is consistent across other business types though and it also suggests that employees at these businesses should be asking for even higher compensation!
- bradlys 6y ago
  You were getting $400k+/yr living in BFE? I'm surprised. How did you manage that? I've never really seen that happen with companies I've interacted with but I've heard of things like it here and there...

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mikedouglas 6y ago

Solve for the equilibrium. Market salaries at the top hubs will eventually go down, and salaries outside them will rise.

floatingatoll 6y ago

Facebook and Palantir both used to pay people up to $10k/year to live within a mile or so of the office, since the cost of living in SF & Palo Alto & Menlo Park was so much higher than the rest of SFbay. I don't know if they still offer that perk, but I can attest that the increased costs of rent within a mile of those offices would, at that time, burn up that entire $10k and then some, relative to the rest of SFbay. Are they right to do this, given that it's probably a contributing factor to increased rents? Probably not. But I bet it was negotiated with the cities to try and reduce emissions and parking requirements, too.

nikhizzle 6y ago
This perk at fb was halted in 2008 precisely for the reason you mention above - it raised all the rents suitable for employees at the time within that perimeter by $1000/mo. (Source: I worked for fb)
- shuckles 6y ago
  Henry George had something to say about this!
neilparikh 6y ago
Similarly, I always hear people talking about how tech companies should pay their contractors higher wages to account for the cost of living in the Bay Area. But given that the largest expense there is rent, that has the same problem: if there are more people looking for housing is greater than the number of available units, all you've done is changed who gets housing, and number of people with housing remains the same.

joshpadnick 6y ago

We're a remote-first company and went through this same discussion when we began hiring people in different cities, not just in the USA but all around the world. What we found is that any approach to setting salaries has to balance the following factors: * Pay people enough to live comfortably * Pay people enough that they accept our offer vs competition * Pay people in a way that feels fair * Pay people in a way that is transparent * Pay people in a way the company can afford it * Pay people in a way that there isn't a risk of huge fluctuations (e.g. currency fluctuations) Without a doubt the best solution is to pay every employee as if they live in San Francisco, what we call "single-city." That gives high marks on every dimension above...except that it's extremely expensive for the company. Basecamp.com can afford this but I doubt most companies can. We ultimately went with a formula where we look up the average salary for your title in NYC (the USA's most expensive city), multiply it by some multiplier (to make sure we pay systematically above market), and discount it by the cost of living in your city compared the cost of living in NYC. When we can afford it, we'll move to a single-city model based on San Francisco.

sct202 6y ago
How do you do the cost of living adjustment? I've used a few just for fun before and have gotten wildly different results for NYC vs Chicago (+21%, +51%, +75%) from the first few listed on Google.
- google234123 6y ago
  Take the median? Look in more detail how they calculate the values and pick the one that makes the most sense?
jedberg 6y ago
I run a remote-first company and follow a single-city model. But that city isn't SF. I don't really know what city it is, but we pay people with the same experience doing the same work the same pay regardless of where they live. I understand that this means that I probably can't afford someone in SF, but I also know that there is no way I was poaching from FAANG anyway, and there is plenty of good talent not in SF. So I get high marks on all the criteria, as long as they don't live in an expensive city. It's a tradeoff I'm willing to make. As we get more successful, I can move everyone up to match the more expensive cities.

subsubzero 6y ago

This is no surprise, I commented earlier on this with another company but figured I can re-use it here: Both me and my Wife's company have pay bands based on geographical region(most employees know nothing about this and most companies employ these salary COL changes for relocation) and certain regions you can take a big pay cut. Say your salary in the bay area is 100k for example, move to the South, say Florida and it typically drops 30%(typically as low as they chop your salary) so your new salary is 70k, Denver area is 15% paycut etc. These numbers change somewhat from company to company but they do exist for most companies and should be factored in.

Nasrudith 6y ago

I suspect that eventually we may see a realignment to "utility" based pay rates as opposed to location. The old rates of SV may wind up their own tier in Work From Home who can demand that rate successfully. Of course that depends upon proper judgement and valuation of employees and prospective employees.

whateveracct 6y ago

I've been getting paid SV salary to work remotely for SF/SV companies for a while now. This is just companies treating engineers as a cost center - showing true colors.

librish 6y ago

This shouldn't come as a surprise to anyone who knows the general compensation strategy for all the major tech companies. They don't pay based either on value added or cost of living (which is why compensation is higher in the Bay Area compared to London). They pay based on market rate where the target is something like 95th-percentile based on market surveys they do. Presumably this hits some sweet spot in acceptance rate vs cost. Employee compensation is a big ticket item for these companies on the balance sheet so they're highly incentivized to put a lot of thought into their setups. Additionally if we truly go fully remote salaries will almost certainly go down just looking at the supply change alone. Previously these companies only hired * A) People who met the hiring bar * B) People who were willing to relocate to one of office location If you remove B you've massively increased the available talent pool.

volkk 6y ago
> If you remove B you've massively increased the available talent pool. i'm not convinced this is the case. maybe by a bit...but massively? if you look at all of the places that all of the top paying FAANG companies are located--lets keep it within the US for simplicity's sake--you've got basically all of the major cities with the top talent. I'm not really picturing THAT many brilliant developers that fall under the bucket of: a) really smart and able to pass FAANG interviews b) not willing to relocate if they did get a huge offer sure there are plenty of outliers, but my gut feeling tells me that MOST of the talent that really cares enough and wants to be at FAANG are already living in most of the tech hubs currently. i dont think the surge of competent applications will be that meaningful statistically speaking. not sure if i communicated myself clearly here, sort of rambled.
- mttddd 6y ago
  I suspect you are right and most of the top talent is in major cities but even then most faang jobs are in the bay area. Anecdotally (and with all the caveats that go with that) I wanted to work for a faang but turned them down several times until an opportunity came up in DC. I have other friends in cities like NYC and Chicago in the same boat. They dont want to leave their current city and even if there is a faang presence it may be small (chicago) or their area of focus doesnt match with the teams in their local faang office (nyc)

j45 6y ago

The thing about remote work is.. it could become a global marketplace now for talent. The big companies could get to off-shore again in a global remote-first re-jigging.

dudul 6y ago
It will already take a while for companies to absorb the change of distributed organization in the US. Opening to the world brings yet another set of challenges: taxes, employment regulations in each country, timezone differences, cultural differences, etc. I know FANG are really good at propaganda, but I don't see them going overnight from "good work can only be done with everyone in the office" to "well sure, one guy in SF, one in London, and a third in Sydney", no big deal, just jump on the zoom" without looking completely ridiculous.
- erik_seaberg 6y ago
  I keep remembering how we'd just meet over video rather than shlep all the way to the other end of Google's Mountain View campus.
zebnyc 6y ago
If the direction is to go full / mostly remote, I believe most companies will insist on ensure that working hours mostly overlap with US business hours. So I think the big winner here will mostly be tech workers based in South America. At my previous job at a SF based ad-tech company, I was the lone SF based engineer. Boss was in Australia, rest of the engineering team was in South america.

newfeatureok 6y ago

Funny how no one was complaining when they got a 50 to 200% raise by moving there. It just makes sense - why would you pay more than necessary?

RyanGoosling 6y ago

The Administration owns the land and property. They need the high salaried employees to stick around town to pay the exorbitant rents. I hope that helps tie things together for you.

scintill76 6y ago
Which administration?

iamcurious 6y ago

Cue to the horde of new startups that will be 100% remote and eat Zuckerberg's lunch. Remote will be the new open space, with all the buzz words, feel good stories and even the blind eye towards its obvious defects. Seriously, everything is documented, you can grow without worrying about floor space, you get access to a larger pool of talent, you are probably imagining more. Current managers may not like it, but hey it is okay to be old, leave it to the young to innovate.

maerF0x0 6y ago
They dont have to buy $30 a day worth of food/snacks. No foosball table maintenance costs. Air conditioning/heat on and on it goes. Working remote for less money is probably a fools game once you consider the cost of your home office and lost perks. Companies know this and are playing it smart by saying it's a benefit and therefore should pay _less_

british_india 6y ago

Zuckerberg is a dick.

zebnyc 6y ago

If this is a leading indicator that remote work is going to become mainstream, I am anxious at the prospect of new grads / junior engineers' ability to get their foot in the door.

dang 6y ago

Related ongoing thread: https://news.ycombinator.com/item?id=23261394 https://news.ycombinator.com/item?id=23261394

koheripbal 6y ago
Can we consolidate?
- dang 6y ago
  It seems like they're divergent enough to keep separate. Last I checked, at least.

zuhayeer 6y ago

An interesting thing about Facebook comp thus far has been that their pay bands for engineering were the same across the United States assuming wherever they had an office (unlike other large companies like Microsoft and Amazon). For reference check out https://www.levels.fyi/company/Facebook/salaries/Software-Engineer/ https://www.levels.fyi/company/Facebook/salaries/Software-En.... Pay cuts would come as a pretty hefty change to those who have already moved or relocated. At the same time, this is now an employers market. With remote work taking stride, pay cuts feel inevitable – why would companies pay top dollar for talent they have broader access to and who are willing to accept less. We'll have to wait and see how new offers start looking come August.

jarjoura 6y ago
That won't change if you're an employee working in an office with a local team. Remote only roles will be billed differently.

xchip 6y ago

Companies that sells Hardware sell it at the same everywhere despite the cost of living. Why isn't this the same for employees? We need to call out this bullshit.

maerF0x0 6y ago
Many companies will have different pricing models in different countries. See https://steamdb.info/sales/ https://steamdb.info/sales/ as an interesting exercise in arbitrage

InvOfSmallC 6y ago

I mean, it's not something that isn't expected. I also think it's fair in a way. I'm curious to see how many engineers will be interested. For example there is a company, quite famous, already known for the remote working that wanted to make me an offer, but it implied me opening a company in my country so that they can pay me because it was to complicated to have me directly in the payroll. What I mean is that the law is still not prepared to support this worldwide.

stevespang 6y ago

It's all because Zuckerberg needs more money to pay for NO TRESPASSING SIGNS all along the public Hawaiian beachfront that he does not own, yet is attempting to control and micromanage.

coronadisaster 6y ago

Just drop the salaries further and force them to move to the poorest areas of the country?

tzs 6y ago

Many comments have pointed out that pay is determined by the cost of replacement. For employees at an office in SF (or Seattle or NYC or London or anywhere else), the relevant cost is how much they have to pay to get someone else in that same city. Hence, for non-remote workers the pay has to be high in high cost of living places. Many people seem to think that when the same principle is applied to remote work, that means the pay should depend on the cost of living where that particular remote worker lives. Is that actually the correct application of that? If a remote worker in, say, Tulsa, OK quits and the company wants to replace them with another remote worker there is no reason they need the replacement to be in Tulsa, OK. It should be fine from the company's point of view if the replacement lives in Boise, ID (which has a lower COL than Tulsa), or Salt Lake City, UT (about the same COL as Tulsa), or Spokane, WA (higher COL than Tulsa). So why should they offer more for workers that happen to live in Spokane, about the same for those in Salt Lake City, and less for those in Boise? It seems to me to make the most sense from the company point of view to consider all remote workers to be essentially in the same location, and how much they pay should be what it takes to attract the number of qualified remote workers that they want to hire.

6gvONxR4sf7o 6y ago

All the justifications of "salaries are just supply and demand" are evil to me (not that I'm saying facebook's choice here is evil). Yes, they'll often pay you the least they can get away with. They'll also treat you as badly as they can get away with. Treating people as badly as you can get away with is not good, even if it's a natural product of supply and demand.

switch11 6y ago

Interesting. Thought Facebook didn't screw over its own employees seems they are getting inspired by Amazon

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NotSammyHagar 6y ago

I have a job in a tech center and I make a great salary because of competition for my services, in NY or Seattle or SF or where ever. Right now I'm working from home entirely. If I'm in Seattle and I work from my cabin 100 miles from Seattle, no one will know assuming I have internet. Taxes are the same too afaik (no local or state taxes). Presumably this is okay with everyone. How much working away from my supposed seattle job (that doesn't even exist right now) do I get before I am not working in Seattle? Suppose I saved so much money from my seattle job that I bought a weekend condo in another state, in Oregon. If I go there many weekends, I think I can still keep my seattle lifestyle (there's some matter for the oregon tax court to decide I guess). But am I still "working in Seattle"? Now suppose I go from my cabin near Seattle to a cabin on the other side of Washington state. Or I go spend 40% of my time in my Idaho cabin (boy, I have a lot of cabins, they are so cheap with my Seattle salary ;-)). When do I stop being a Seattle employee and become a whatever employee? If I have 3 houses in states with the same "no income tax" like in Seattle can I live 51% in Seattle and split time in the other places and still be a seattle employee? Obviously I'm trying to point out the arbitrariness of these policies.

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