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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.c

by 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.
    - sytse 6y ago
      That would restrict all your hiring to the lowest wage markets. For some considerations also see https://about.gitlab.com/handbook/total-rewards/compensation/#why-we-pay-local-rates https://about.gitlab.com/handbook/total-rewards/compensation...
      - vkou 6y ago
        > That would restrict all your hiring to the lowest wage markets. The talent quality is the same. Some of those reasons in the link are directly contradictory, some are nonsense, and others are inapplicable to other firms (But sure, they may well make sense for Gitlab.) > A concentration of team members in low-wage regions, since it is a better deal for them, while we want a geographically diverse team. May be a priority for Gitlab, but that is not a priority for any firms that required people to relocate their butts to Silicon Valley, or that never supported remote work prior to Covid. > Team members in high-wage regions having less discretionary income than ones in low-wage countries with the same role. Seriously? Do team members with more obligations, like children enrolled in private schools, ailing parents, or overleveraged mortgages also get the same amount of discretionary spending as their less-burdened coworkers? Isn't choosing which zip code to live in discretionary? And why does this even enter the picture, when, as you claim, your wages are set by market, rather than by COL? The market doesn't care about employee discretionary income. There's nothing fair about market wages, just like there's nothing fair about the weather. They just are. > Team members in low-wage regions being in golden handcuffs and sticking around because of the compensation even when they are unhappy. This is an incredibly employee-hostile reason. "We don't want to pay you too much, because imagine if you ever become unhappy." Good lord. > If we start paying everyone the highest wage our compensation costs would increase greatly, we can hire fewer people, and we would get less results. This, however, is a fantastic reason. See my previous post on why it makes sense for a remote firm to not pay anyone NYC wages. > If we start paying everyone the lowest wage we would not be able to attract and retain people in high-wage regions. Why is this a goal of the firm? Scratch that - if that's a goal of the firm, that's fine. It's a weird goal, though. Companies typically don't go into business with the goal of attracting and retaining people in high-wage regions. They typically go into business to make a lot of money by solving problems for their customers. So, it's fine that this is a goal for Gitlab, but it certainly does not seem to be a goal of any company I've ever worked for, or am likely to work for. You adjust wages up for employees hired in, say, non-NYC, who choose to move to NYC. How would doing so meet that goal? Is someone from Oklohoma who moved to NYC for a raise suddenly providing a diversity-of-skills-and-perspectives need that was unmet, prior to their geographic relocation? Are they now providing more value, that necessitates paying them more? If not, why was hiring in high-wage areas a goal in the first place?
- erik_seaberg 6y ago
  People who relocate to hot labor markets are more invested in our careers than people who don't. Employers who pay extra to draw from hot labor markets have different problems leading to different skillsets. For better or worse, we're earlier adopters.

by sytse 6y ago

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.
  - sytse 6y ago
    That would restrict all your hiring to the lowest wage markets. For some considerations also see https://about.gitlab.com/handbook/total-rewards/compensation/#why-we-pay-local-rates https://about.gitlab.com/handbook/total-rewards/compensation...
    - vkou 6y ago
      > That would restrict all your hiring to the lowest wage markets. The talent quality is the same. Some of those reasons in the link are directly contradictory, some are nonsense, and others are inapplicable to other firms (But sure, they may well make sense for Gitlab.) > A concentration of team members in low-wage regions, since it is a better deal for them, while we want a geographically diverse team. May be a priority for Gitlab, but that is not a priority for any firms that required people to relocate their butts to Silicon Valley, or that never supported remote work prior to Covid. > Team members in high-wage regions having less discretionary income than ones in low-wage countries with the same role. Seriously? Do team members with more obligations, like children enrolled in private schools, ailing parents, or overleveraged mortgages also get the same amount of discretionary spending as their less-burdened coworkers? Isn't choosing which zip code to live in discretionary? And why does this even enter the picture, when, as you claim, your wages are set by market, rather than by COL? The market doesn't care about employee discretionary income. There's nothing fair about market wages, just like there's nothing fair about the weather. They just are. > Team members in low-wage regions being in golden handcuffs and sticking around because of the compensation even when they are unhappy. This is an incredibly employee-hostile reason. "We don't want to pay you too much, because imagine if you ever become unhappy." Good lord. > If we start paying everyone the highest wage our compensation costs would increase greatly, we can hire fewer people, and we would get less results. This, however, is a fantastic reason. See my previous post on why it makes sense for a remote firm to not pay anyone NYC wages. > If we start paying everyone the lowest wage we would not be able to attract and retain people in high-wage regions. Why is this a goal of the firm? Scratch that - if that's a goal of the firm, that's fine. It's a weird goal, though. Companies typically don't go into business with the goal of attracting and retaining people in high-wage regions. They typically go into business to make a lot of money by solving problems for their customers. So, it's fine that this is a goal for Gitlab, but it certainly does not seem to be a goal of any company I've ever worked for, or am likely to work for. You adjust wages up for employees hired in, say, non-NYC, who choose to move to NYC. How would doing so meet that goal? Is someone from Oklohoma who moved to NYC for a raise suddenly providing a diversity-of-skills-and-perspectives need that was unmet, prior to their geographic relocation? Are they now providing more value, that necessitates paying them more? If not, why was hiring in high-wage areas a goal in the first place?
erik_seaberg 6y ago
People who relocate to hot labor markets are more invested in our careers than people who don't. Employers who pay extra to draw from hot labor markets have different problems leading to different skillsets. For better or worse, we're earlier adopters.