5 ms·

Does the value you create for the company depend on location? I don't think it's fair for businesses to extract more profit from me because I live in a cheaper

Does the value you create for the company depend on location? I don't think it's fair for businesses to extract more profit from me because I live in a cheaper area than my coworkers

temporalparts 6y ago
Cost of living and taxes are very real. CA income taxes are > 10%. Some states have 0% income tax. On that basis alone, CA employees should make 10% more than those places without income tax. Then there's cost of living, rent, etc. You can legitimately earn more while being paid less by moving to a lower cost location.
benhurmarcel 6y ago
Your salary isn't proportional to the value you create. It only has to be less than that value, but otherwise it's just determined by offer and demand.
erik_seaberg 6y ago
Facebook is paying what it takes not to be outbid on hiring you. Currently that depends on supply and demand for the labor market you're in. If everyone paid for value, Intel and AMD would be getting almost all of my salary.
- vkou 6y ago
  People working remotely from Palo Alto are in the same labour pool as people working remotely from Eugene, Oregon... And the wierdo who lives in a goat farm in the middle of nowhere, Idaho. The labour pool argument only makes sense if you commute into the office. With remote work, everyone in the same country + timezone belongs to the same labour pool. Companies that will treat the remote labour pool as uniform will trivially be able to outbid companies that underpay people in low COL areas, and overpay people in high COL areas. Why would I work for Gitlab, with its 0.66 COL multiplier for my town, and a 1.2 COL multiplier for NYC, when I could work for Foolab, which has an across-the-board 0.8 COL multiplier? Given that situation, you'll quickly find that the only people working for Gitlab are people based in high COL areas. Instead of a money-saving technique, it becomes a money-spending technique, as they end up subsidizing employees relocating to the highest-COL areas.
  - sytse 6y ago
    At GitLab our rates are not based on COL but a market rate https://about.gitlab.com/handbook/total-rewards/compensation/#competitive-rate https://about.gitlab.com/handbook/total-rewards/compensation... So as people are able to earn more in remote locations our rates will go up with them. I think most companies will end up paying local rates https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-rates/ https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra... so as more companies start hiring remotely the rates will go up gradually. I don't think think that there will be many Foolabs that pay one rate.
    - vkou 6y ago
      Market rate is, in reality, a close enough proxy for COL. I'm happy to use the two concepts interchangeably. My point still stands. Any firm that will provide an equal across-the-board wage, that's significantly below market rate in NYC/Bay Area, but significantly above market rate in low COL areas will eat your lunch, in terms of wage competitiveness among the latter group. They won't hire anyone from the former group - but just being in the bay area does not make you a better engineer. You'll be stuck paying expensive people in high COL areas, that are doing the same work as cheap people in lower COL areas.
      - sytse 6y ago
        Sorry, I made a mistake. I edited my comment to add "don't" to "I don't think think that there will be many Foolabs that pay one rate."
        vkou 6y ago
        Why wouldn't there be, as more work goes remote? Why compete on the high-billing end of the salary curve, when you can compete on the low-billing end of the salary curve, for the exact same quality of talent? "We won't pay NYC wages, but we will pay the rest of you better wages than our competitors" is a great pitch to employees[1]... While being a net benefit to your payroll. [1] Except for those living in NYC, of course. But you don't have to hire them.
baxtr 6y ago
I think were you live will become a lifestyle choice. Today, you would not subscribe to your question if it was asked on different topics, like: "Does the value you create for the company depend on the type of car I drive?" That might sound provocative. But where is the real difference?

Does the value you create for the company depend on location? I don't think it's fair for businesses to extract more profit from me because I live in a cheaper area than my coworkers

temporalparts 6y ago

Cost of living and taxes are very real. CA income taxes are > 10%. Some states have 0% income tax. On that basis alone, CA employees should make 10% more than those places without income tax. Then there's cost of living, rent, etc. You can legitimately earn more while being paid less by moving to a lower cost location.

benhurmarcel 6y ago

Your salary isn't proportional to the value you create. It only has to be less than that value, but otherwise it's just determined by offer and demand.

erik_seaberg 6y ago

Facebook is paying what it takes not to be outbid on hiring you. Currently that depends on supply and demand for the labor market you're in. If everyone paid for value, Intel and AMD would be getting almost all of my salary.

vkou 6y ago
People working remotely from Palo Alto are in the same labour pool as people working remotely from Eugene, Oregon... And the wierdo who lives in a goat farm in the middle of nowhere, Idaho. The labour pool argument only makes sense if you commute into the office. With remote work, everyone in the same country + timezone belongs to the same labour pool. Companies that will treat the remote labour pool as uniform will trivially be able to outbid companies that underpay people in low COL areas, and overpay people in high COL areas. Why would I work for Gitlab, with its 0.66 COL multiplier for my town, and a 1.2 COL multiplier for NYC, when I could work for Foolab, which has an across-the-board 0.8 COL multiplier? Given that situation, you'll quickly find that the only people working for Gitlab are people based in high COL areas. Instead of a money-saving technique, it becomes a money-spending technique, as they end up subsidizing employees relocating to the highest-COL areas.
- sytse 6y ago
  At GitLab our rates are not based on COL but a market rate https://about.gitlab.com/handbook/total-rewards/compensation/#competitive-rate https://about.gitlab.com/handbook/total-rewards/compensation... So as people are able to earn more in remote locations our rates will go up with them. I think most companies will end up paying local rates https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-rates/ https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra... so as more companies start hiring remotely the rates will go up gradually. I don't think think that there will be many Foolabs that pay one rate.
  - vkou 6y ago
    Market rate is, in reality, a close enough proxy for COL. I'm happy to use the two concepts interchangeably. My point still stands. Any firm that will provide an equal across-the-board wage, that's significantly below market rate in NYC/Bay Area, but significantly above market rate in low COL areas will eat your lunch, in terms of wage competitiveness among the latter group. They won't hire anyone from the former group - but just being in the bay area does not make you a better engineer. You'll be stuck paying expensive people in high COL areas, that are doing the same work as cheap people in lower COL areas.
    - sytse 6y ago
      Sorry, I made a mistake. I edited my comment to add "don't" to "I don't think think that there will be many Foolabs that pay one rate."
      - vkou 6y ago
        Why wouldn't there be, as more work goes remote? Why compete on the high-billing end of the salary curve, when you can compete on the low-billing end of the salary curve, for the exact same quality of talent? "We won't pay NYC wages, but we will pay the rest of you better wages than our competitors" is a great pitch to employees[1]... While being a net benefit to your payroll. [1] Except for those living in NYC, of course. But you don't have to hire them.

baxtr 6y ago

I think were you live will become a lifestyle choice. Today, you would not subscribe to your question if it was asked on different topics, like: "Does the value you create for the company depend on the type of car I drive?" That might sound provocative. But where is the real difference?