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Facebook pay cuts for remote employees who move prove that labor market rigged?
- Thorrez 6y ago>Readers: Does the fact that Facebook can unilaterally set the price it will pay for labor depending on the cost of housing from which the labor toils show that the market for Silicon Valley labor is rigged? I don't understand what he is asking. What does "rigged" mean in this context? Is he asking if SV employers are rigging wages too low? This seems to be evidence almost the opposite of that, because SV employers are paying remote SV employees more than remote non-SV employees. Is he asking if SV employers are rigging wages too high? What motivation would they have to do that?
- RNCTX 6y agoZuckerberg's failure to graduate and build his enterprise via his former ivy league institution is showing. Most of them have the same perceptions of their workforce: that employees are indentured servants who owe the company their time. The difference is Zuckerberg is willing to 'mask-off' admit this disregard for everyone but himself.
- loraa 6y agoThis is what most companies do. I worked for companies 20 years ago that would let you move to anywhere they had an office but you would be paid according to that location.
- m463 6y agoThe future will be personalized pricing for everything. I just wonder if it will work. I've heard people say "folks in california are ok with their taxes and paying more for things". Which makes me think of "people don't care about their privacy". Thing is, people do care, but they can do very little about what is done to them.
- goatinaboat 6y agoThe future will be personalized pricing for everything. It will be a strange world with strange incentives. For example what motivates me to earn more if I can’t buy more because my personalised price for everything goes up by the same amount? Airlines already use sleazy tactics to extract more money (perhaps they regret that now), but will this go further down the chain and I pay more for say food as well?
- loopz 6y agoWhy would they regret being bailed out? In these circumstances, society requires safety valves where we can freeze financial activity to address more pressing concerns. Such mechanisms need improvements. But the crisis do highlight practices of ie. stock buybacks where short-term thinking is encouraged and even rewarded. These are just prelude to the next financial meltdown, unless mitigated beforehand.
- deleted 6y ago[deleted]
- cscurmudgeon 6y agoYes. But that market that is rigged is the housing market in California. Too much NIMBYism has resulted in a highly distorted market that then spreads to other related markets.
- raverbashing 6y agoIt would be too good if the NIMBY landlords would suddenly loose a good amount of tenants. > “We’ll adjust salary to your location at that point,” said Zuckerberg, citing that this is necessary for taxes and accounting Well, he's not wrong (on the tax/etc calculation on the salary) though even with a change on the base salary to non-SF salaries the move might be worth it.
- claudeganon 6y agoOf course it does and the only force strong enough to counterbalance Zuckerberg would be a Facebook union. This is why organized labor has always pressed to set a floor for wages and other terms. Otherwise, the people who run the places will always try to pit different groups of workers against each other like this.
- gorgoiler 6y agoSalary based on an individual’s needs is quite the “hmmmmm” moment. It is one of the reasons Violet Newstead — Lily Tomlin’s character in 9 to 5 — is given when she furiously demands to know why she was passed over for a fair promotion. The guy who got the job instead? Well had a wife and kids to support. He needed it more.
- luckylion 6y agoRegarding having a family: that's also a signal for stability. If you have a family and have settled down, there's less risk for the employer that you'll quit. I don't know how large the difference is for men and women with children and who's family planning is complete. For young women who have no children, the "risk" (from the employer's perspective) of pregnancy and motherhood is another large factor.
- matthewbauer 6y agoI don’t think those rationalizations would protect you from a lawsuit. In the US, equal pay for equal work based on gender is the law nowadays.
- telesilla 6y agoYou'll quit as a young, single anything if you are treated without respect... Besides, the line in this film was to point out the sexism in society where women work for free - in this case, the man's wife who is at home with the children while the boss is able to take advantage of this situation to get more out of his worker. On top of, the obviousness that the worker is less likely to quit because of the family 'burden' where, back to the circular sexism, the wife cannot be the one getting the job because she is a woman.. Remote working hugely serves to balance the possibility of everyone regardless of gender and nationality to access the jobs that best fit their talent and work ethic. I'll be very very interested to see what happens to traditional gender and nationality roles once it's fully entrenched.
- luckylion 6y agoI'm sorry, I don't know the movie, my comment wasn't on its story. The "has family" checkbox isn't so much a sexist thing, I believe. A woman with children is also much less likely to just pack her bag and move to India on her search for enlightenment, she has more things tying her down, making her more predictable. If you want a long term employee, you'll pick a woman with children over a single man without children, all other things being equal. Remote working might have an impact there. But if you believe that there are hidden biases holding some people back, they won't just go away, and remote working isn't going to change that, unless you completely anonymize any communication between the employees and the company. Would be a fun experiment, but I don't know how practical it is.
- clairity 6y agothe underlying point, which isn't explicitly spelled out, is that labor should be priced by the value it accrues to the buyer, regardless of the cost of that labor (locationally in taxes, mortgages, etc.). it's hypocritical of facebook not to price it's own products (advertising rates) on a cost-plus basis, if it believes so strongly that its employees should do so. or, they should accept that labor can be priced on value just as it prices its own products.
- drivebycomment 6y agoYou are very much mistaken. No product is priced based on that. It is always primarily about supply and demand, labor market included.
- qqqwerty 6y agoFacebook could probably layoff half their staff without even the tiniest impact on revenues. The vast majority of engineers in these companies are replaceable. The high salaries are largely due to the competitive market and the FAANG obsession of only hiring the best. While some employees have a high enough profile/reputation that they can demand value based salaries, for the average engineer, the pay is essentially a slight premium over what the next lower tier of candidates would cost.
- clairity 6y agonot sure what to make of your comment. you're simultaneously asserting that the engineering labor market is cost-plus ("the pay is ... a slight premium"), but with its "high" salaries, it's not. that's incoherent--similarly incoherent to facebook pushing employees into cost-plus pricing while enjoying value-based pricing for itself. absent significant outside influence, markets, including labor markets, will naturally drive prices down to cost-plus levels through competitive dynamics. if a market has outsized value-based pricing, it's a prime signal of inefficiency, and competitors should enter (not being a free market is a significant barrier, but a different issue).
- qqqwerty 6y ago
- roenxi 6y agoHeh, this certainly isn't meant to happen in theory. If Facebook manages to carry this decision it suggests something really odd is happening in the programmer labour market - the buyer shouldn't have enough power to do this in a competitive market. Companies just don't pay people high salaries because of 'need'.
- qqqwerty 6y agoIts probably too early to tell how this pandemic will impact software engineers. There have been plenty of high profile layoffs, but there are also plenty of companies that are going gang busters right now (zoom, netflix, etc..). However, I would not be surprised if Facebook did some internal polling of their employees and saw really high levels of interest in leaving the Bay areas[1]. So its possible that the salary adjustments were brought up as a way to counterbalance the interest levels. If 2/3 of company decides to just pick up and leave the Bay area, that could cause some problems. [1] https://www.sfgate.com/living-in-sf/article/2-out-of-3-tech-workers-would-leave-SF-15289316.php https://www.sfgate.com/living-in-sf/article/2-out-of-3-tech-...
- gpapilion 6y agoThe competitiveness of the job market sets the price. Looking at the Bay Area vs really everywhere else in the us you’ll find less liquidity in tech which depresses the price. Conversely, you’re paying for access to the labor market with your rent, so good markets have high rent. The company is paying for your costs, plus providing you a margin. If your cost are lower, your margin is the same but the absolute number is smaller.
- luckylion 6y ago> The company is paying for your costs, plus providing you a margin. If your cost are lower, your margin is the same but the absolute number is smaller. In that case, they'd look at your lease to see what you are paying. They don't, and whether you live in a cheap apartment or in a luxury one does not matter, even though it can easily change that "margin" by 100%. You're right regarding the competitiveness setting the price. And once the company is fully remote, the competition is no longer constrained by locality. It does not make any sense to pay more or less because the remote worker lives in some location, and unless there is no competition, somebody else will just pay them more and you will not get the employees you were looking to get for cheap.
- erik_seaberg 6y agoRemote employers right now need to decide whether they want to hire the kinds of people who relocated to the bay area to benefit their careers, because that means they still have to compete with bay area offers. If remote work becomes the norm, at that point bay area offers will no longer be higher (and some of us will leave). Maybe American offers overall will no longer be higher....
- gpapilion 6y agoThe second part of this is to remember that moving to a large metro area is good for the employee too. It makes it easy to find the next job, and easy to get highend internet. The candidate can always choose to relocate to make their offer make sense, but I somehow don’t think we’ll see a lot of that.
- onetimemanytime 6y agoThey are sides to the coin, as they say. Salaries are X in San Francisco and NYC because its competitive and cost of living is high. So are taxes. But then ,if Facebook hired 12000 people in SF it means that they are worth the (say) $250K each a year and then some. If they work from Vietnam or Small Town, Georgia FB still gets the same benefits but the employees would have like a triple or quintuple salary. I don't have an answer to this, but I'm almost certain that people in a foreign country office don't get paid the same as those that work in SF or NYC. But then, FB, Google and the likes are already super-profitable so it's hard to argue in their favor.
- TomMarius 6y agoMaybe the value is in having the employees nearby?
- MrBuddyCasino 6y agoDon’t overthink this: „ It's odd to see Valley types, in light of the FB WFH news, debating whether comp should follow a 'cost plus' or 'fraction of value added' model. In my experience it's always followed the Goldman Sachs bonus algorithm: Exactly $1 more than your walkaway price as an employee.“ https://twitter.com/antoniogm/status/1263586217183965184?s=21 https://twitter.com/antoniogm/status/1263586217183965184?s=2...
- Consultant32452 6y agoMost of my friends are blue collar workers. It's absolutely delicious to see valley types express concerns that "poor people from somewhere else will steal their jobs."
- blihp 6y agoMore likely they want their SV-level paycheck while working from a low cost of living location. The reality is large companies typically don't work (or rather, pay) that way for their employees.
- rapsey 6y agoMaybe one day they will understand that free trade is better overall actually means better for the very rich and very poor and worse for everyone in the middle. A college degree is unfortunately no indicator of common sense.
- Consultant32452 6y agoThe difference between them is that the blue collar workers knew they were in the middle, and the valley workers who thought they were at the top are about to find out they've been in the middle all along.
- buboard 6y agoFreelancers and IT workers around the world know that too well
- ido 6y agoWhy is being worse for the middle more important than being better for the very poor? We need to structure taxation such that (some of) the very top's gains gets redistributed to everyone else. It's crazy to me that I pay a larger % of taxes on my high-5-figures income than Jeff Bezos, Bill Gates or Larry Ellison (or other robber-baron types with worse PR if you prefer).
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- joshuamorton 6y agoAlso this isn't new or unique. Amazon pays 10% more in the bay than in Seattle. Google has pays more in Seattle than in Atlanta, and more in SF/NYC than in Seattle.
- jzl 6y agoAgree with your point but the 10% discount for Seattle is super easy to justify: no state sales tax. So there's no cost of living adjustment for Seattle, just an equalization due to the tax situation.
- ailun 6y agoIncome tax, you mean.
- ido 6y agoWhy should the benefactor of the state's tax policy for employees be the company and not the employee?
- ferzul 6y agobecause the powerful party is more powerful
- joshuamorton 6y agoTax is certainly one part of the cost of living. The cost of living is just that, the cost of living, not simply the consumer price index or whatnot.
- deleted 6y ago[deleted]
- vl 6y agoAFAIK, Google pays the same in Seattle/Bay Area/NYC. This is why some people at Google transfer to Seattle from NYC and SF.
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- ggm 6y agoyUo KNow _It _Only _Needs saying once.
- hn_throwaway_99 6y agoI've seen a bunch of these arguments recently, and they seem pretty baffling to me. It's not "rigging", it's supply and demand, nothing more. As an employee competing against other potential employers, you're going to demand a rate of pay that you think is "worth it" to you. The issue is, many people would be willing to work for less if they could stretch those dollars further in a lower cost locale. I've generally been a fan of Greenspun's blog, but this conclusion seems nonsensical to me.
- matthewbauer 6y agoI don’t think this is quite supply and demand. The remote worker is already hired and then they move. The value Facebook gets presumably hasn’t changed but they are now paying a different rate. If this were about starting salaries, you might be right.
- mstibbard 6y agoI'd assume they would keep total cost to Facebook roughly similar, which depending on the state you move to it might result in less take home pay for the employee?
- phreeza 6y agoHow so, the same argument about making dollars go further applies to someone already hired.
- toto444 6y agoFacebook employees working in London are paid, say, half as much as the ones in SV. If we follow your reasoning, London employees are half as productive as the SV ones.
- SauciestGNU 6y agoIf I knew my colleague in the same position as me was making twice as much as I do just by virtue of physical location, I'd be pretty miffed. I probably won't work at much more than half capacity, if even that much.
- jariel 6y ago2 things: 1) Buffer I think does this. Pay adjusted based on location/cost of living. 2) There's a world of difference between Montana and 'Palo Alto' where they can come in once a week, or whenever needed, or for meetings, or to pick something up, or for a 2-week crunch etc.. Basically: 'local remote' is different than 'really remote'. Also, time zones matter, countries matter, languages matter.
- s_kilk 6y agoNo, it just proves that Marx was right about the nature of the wage/salary. The value of labour power is the cost of reproducing/maintaining that worker at a particular standard of living, not some particular fraction of the value generated at work.
- dlkf 6y agoAbove, user mrbuddycasino said exactly the same thing without invoking a certain philosopher's name. That post is getting upvoted. I think hn users reflexively stop reading and downvote when they see "Marx." Which is a shame, because he was an interesting guy. You don't need to be a full-fledged communist to acknowledge that he had a lot of insight.
- erik_seaberg 6y agoMarx was a crank who speculated about work and value but never tried to hire anyone. Why would they know or care about your standard of living? Supply and demand determine the wage they need to offer to keep you. If you move to a labor market with lower local demand, you now have fewer potential employers making offers that Facebook must outbid.
- DarthGhandi 6y agoThey should take it further and pay equivalent employees in the same office different rates based on whether they live in an expensive neighborhood or not. Rent makes up the biggest expense living in Sydney by far but it can vary wildly depending on which area. Pay those in rich areas more to cover costs and watch the leaps of logic unfold.
- rainyMammoth 6y agoIf you are a remote employee in the Bay Area, do you keep your Bay Area salary? As a thought exercise, what would prevent someone to rent a very cheap closet in a flat share and use it as an official address? What if you start spending 50% of your time visiting your relatives in Montana? I expect that a new US remote salary standard will eventually emerge out of all of this. The company would pay you a certain amount and the free market will help you decide which state/city you decide to go live in. New York is expensive but is also seen as more desirable than Omaha or Phoenix, individuals should pay more to live in more expensive and more desirable areas. Paying employees more to be remote in high CoL cities means that you subsidize their rent or mortgage.
- mdasen 6y agoI'm not a lawyer, but I'm guessing this counts as fraud. Facebook could terminate you if they found out and try to recover wages from you. Nevada might not care since it has no income tax, but most states would care if you were actually resident there and not paying taxes. If you moved to Portland for its lower cost of living, tax officials might not like that you aren't paying taxes to Oregon. It's a little weird, but most companies seem to want to vary salaries by location, even for remote work. It might not seem fair or correct, but I do think there are reasons you couldn't pull of a scheme like that. The IRS has information sharing agreements with most states. Let's say you pick Arizona. What happens when your car is registered in Arizona and the IRS tells Arizona that you earned a lot of money and should have paid them thousands? Do you register your car in California, keep a CA license, buy car insurance at the CA address that it isn't garaged at? I know that these are small things and often people don't change this stuff for a few years after college, but at some point it starts adding up to more and more evidence of one's intent to defraud. Do you set up a non-USPS mail-forwarding scheme to make it seem like you're still in CA? If you get into a car crash, will your insurance start looking into why you're always in Arizona? For Facebook, it wouldn't be too hard for them to figure it out. You'll be connecting to their servers for work from an IP address. Do you keep a server in the CA flat share to proxy everything? What if the box goes down? Worse, this shows real thought going into the fraud. It wasn't a casual, "oh, I thought I was going to be spending most of my time in the $500/mo flat share and just innocently forgot to update that I'm in Arizona basically always" and rather something really intended to defraud. To keep tax collectors off your back, you'd have to let FB pay CA and then you'd have to pay AZ tax out of your pocket. Even a cheap $500 flat share eats into the profitability of this scheme. If you're earning $200k in CA and offered $150k in AZ, $13k of that will likely be eaten up by expenditures. Plus, with roommate turnover, at what point do people think it's weird to have someone on the lease that basically doesn't exist? How much time and money do you spend on flights for administrative things like flying back to CA to renew your license? Heck, do you vote in CA despite not living there? It could certainly be profitable, but it does seem like there's significant risk of being caught. I'm not a lawyer, but this feels like defrauding an employer and different states handle background checks differently, but it seems like something that might go on a record that wouldn't be great to explain away. Like, "I was 19 and we thought it would be fun to steal the University sign" is a lot easier to explain than "I thought the company should pay me more so I defrauded them out of tens or hundreds of thousands of dollars."
- negamax 6y agoIt might still be worth it to move away from monopoly landlords and rogue city governments existing on bad housing policies
- tener 6y agoHow is this even legal? FB signed contract to pay X amount of dollars and now it can lower that amount unilaterally and without any kind of warning? Mind boggling to me, but then again I live in Europe... So, how does it work in US?
- amf12 6y ago> How is this even legal? FB signed contract to pay X amount of dollars and now it can lower that amount unilaterally and without any kind of warning? I think it works the same in Europe right? If you work for a company in Zurich and then move with them to London your wages will decrease, right? The difference being you will have to sign a new contract because its a different country. In the case of the US, they might not have to sign a different contract (unless they are on a visa). There is nothing stopping them from checking with FB what their new pay would be and then move.
- millstone 6y agoIt's at-will employment: they can fire you for mostly whatever. The upside is it's easier to be hired, because hiring is less risky for employers.
- lordnacho 6y agoThis is no different anywhere else, the company just says "at the end of whatever term we've committed to, eg 3m, we want to pay you less. Take it or leave it". Same as of they were giving you a raise, the terms can change.
- tener 6y agoHuh, I have permanent contract without end date. It is forbidden here to keep people on short term contracts indefinitely. Raise is done as an amendment to the contract and, technically, can be refused.
- lordnacho 6y agoYeah but the contract has a clause that says if either of you wants to stop working together, there's a few months notice, right? It's only permanent in the sense that the end date is not known beforehand.
- nmzq 6y agoAll it would take would be one other FAANG employer to not reduce pay based on location for them to start losing talent.
- neilwilson 6y agoOf course the labour market is rigged. It's a power struggle. Facebook will only pay what they have to. You'll take the best offer you can get - there or elsewhere. That's how it works isn't it? If you're in the gig economy the employer has the power since they have plenty of alternatives to go for. If you're in the talent economy then the employer either takes your price or doesn't do the thing they want to do and you go to one of the other people after your services. And that's the difference. Workers tend not to have a a 'no deal, I'll not bother option'. Because if they do that eventually they starve. The lower down the tree they are the quicker they starve. I think it was Beveridge that pointed this out originally. Essentially companies only hire when there is a chance of a profit, whereas workers have to get hired or they starve. That's the asymmetry of power which Beveridge hoped to correct by ensuring there were always more jobs on offer than people who wanted them. Right at the moment Facebook knows you don't have too many alternatives - given the state of the economy. Zuckerberg is taking advantage of that to reduce his costs while still appearing to be magnanimous. Welcome to the gig economy.
- op03 6y agoOn the flip side thanks to the way Zuckerbergs mind works, he will attract only certain sections of the 'best and brightest' spectrum. Nothing new in what he is doing and we have seen what trajectories companies take - you just end up becoming either a Yahoo or an Oracle.
- vl 6y agoFB should pay more to remote workers. Cost of having a worker in an office (even in the tragedy of a city Menlo Park is) is very non-trivial. Now remote work is the new norm, and companies make the worker pay for space, furniture, internet, some equipment, parking, and, in case of FB, food. On top of that worker doesn’t come to the office, and doesn’t consume these valuable resources there. If worker moves out of the Bay Area, or even better, California, FB doesn’t have to pay high local taxes. So FB should give bonus for working from home, not tax it. I joke with my friends working at Google/FB/MS/Amazon that soon company will make them pay for the office - “want to come the office? Pay the rent yourself”.
- Cookingboy 6y ago>FB should pay more to remote workers. All your arguments are about why FB can pay more to remote workers, but just because they can doesn't mean they should and definitely doesn't mean they will.
- vl 6y agoSince remote workers cost less due to the lack of office expense, it makes sense for companies to encourage workers to work remotely. And what better encouragement there is than money?
- ferzul 6y agothe arguments were about why they should. specifically mentioned were costs transferred from the corporation to the employee
- benhurmarcel 6y agoWhich have nothing to do with how salaries are calculated.
- neonate 6y agoDoesn't this just boil down to externalities like colocation preventing the market from being efficient? I don't understand why people regard this as such a puzzle.