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VMware Cuts Pay for Remote Workers Fleeing Silicon Valley

• disgruntled101 6y ago
  And just like that your manager has decided that your work is now less valuable despite meeting the same KPIs, adding the same value and sacrificing the same amount of your lifespan to make him rich.
  • Spooky23 6y ago
    Your work was never worth that much. I pay people 1/4 of Bay Area rates who are just as good and live better in a more obscure location. The downside was there aren’t enough people, but remote addresses a lot of that. The big salaries and localization are about control, especially with investors. Talent follows the jobs, and we are in a consolidation cycle. IBM successfully ran significant technology centers in obscure places like Minnesota, Binghamton, NY and Vermont for decades.
    • deegles 6y ago
      > The downside was there aren’t enough people, but remote addresses a lot of that. That's a big assumption! Wouldn't that imply there are software engineers who don't work in their field because they can't find work where they live? It's safe to say that most already relocate to where the money or work is.
      • deleted 6y ago
        [deleted]
  • steve_taylor 6y ago
    Engineers are paid according to their scarcity, not so much their KPIs. Remote work changes the supply and demand situation in favour of employers.
    • PixyMisa 6y ago
      Only if the employers are idiots. Good engineers are always scarce.
    • jackyinger 6y ago
      I don’t really buy that argument. I doubt that there are lots of skilled engineers out in rural places just waiting to be tapped by remote work. Skilled talent clusters around the jobs. I suppose there’s the international aspect, but that isn’t what is going on here.
      • sp332 6y ago
        You're going to be shocked when you realize the number of people who don't want to move to San Francisco. There's a smaller but still substantial number of people who don't want to deal with living in any dense metro area. There are even plenty of people who don't want to move very far from their friends and family at all.
      • deleted 6y ago
        [deleted]
  • meddlepal 6y ago
    Alternatively its a disguised reduction in workforce. Doesnt impact the stock like a layoff but probably has a non-negligible impact culling some employees from the herd.
    • jbhouse 6y ago
      When you cut pay are you more likely to lose your best and brightest, or those without better options? Sure, maybe it helps the bottom line now, but lowering wages to reduce head count is the best way to ensure brain drain (in most cases, obviously there are exceptions to everything)
  • maximente 6y ago
    the agency isn't with "your manager" so much as a large fraction of tech salaries were effectively a hedge against you walking down the metaphorical street and finding a different job. now that that's no longer such a concern, coupled with what i would guess is largely a scarcity mindset brought on by the pandemic, it's not really a surprise that comfortable engineers aren't putting up a huge fight when their salaries are merely 2 standard deviations above the mean of one area or another.
    • digi59404 6y ago
      I’d argue remote work means that folks can “walk down the street and find a job” quicker. Remote work means companies like those in say Chattanooga, TN can now source and hire workers from San Francisco. If they’re willing to pay for them and/or compensate/entice them otherwise. It also means workers can be free to leave San Francisco without affecting their salaries as much. I live in a small city, that’s not a huge tech hub, and I make equivalent salary to someone in SF or in Seattle. I’ve done so for numerous years. I’d also argue that much of these salary reductions have other means. Such as stock implications in a Covid world, an attempt to curb a runaway burn rate, or even a veiled attempt at reducing the workforce slowly without severance packages or legal issues.
  • bdcravens 6y ago
    In the interest of value equivalence, do you believe COL adjustments in the Bay area are unfair?
  • cortesoft 6y ago
    No one has ever had their salary set by JUST the value they provide for the company. If anything, the value they provide is simply the CEILING for how much an employer would pay them; if they paid them more, they would be losing money and it would be better to not have the employee at all. Employers pay the least amount they can in order to attract and keep an employee. That pride is set by supply and demand. Remote work vastly increases the supply of available workers, which will drive down wages. While it also increases the number of companies that need employees, most of the ones that aren't in the major tech centers aren't really competing for those highest salary engineers; they simply don't generate enough value from an engineer to be able to afford those higher salaries.
  • jariel 6y ago
    "your manager has decided that your work is now less valuable " No - this is supply and demand. There are two sides to the equation, not one. Someone working where there is no taxes, and low cost of living, will value the employment opportunity differently. The 'clearing price' for the 'trade' will thus be different, even when all other factors are otherwise the same (i.e. the workers skills and abilities are identical.)
  • x86_64Ubuntu 6y ago
    It may be more useful to look at tit from the angle not of "value" but of compensation. For the employer to acquire your services, they have to compete with other companies and part of that competition is going to be on how much you are paid. When you leave to another place with a different COL or different job market, the amount competing companies are willing to pay decreases. Sorry for rambling.
  • selfinvariant 6y ago
    Well, that's a useful reminder that work by itself does not have an intrinsic value. What matters is an outcome or a perception of it. Sacrificing your lifespan is generally not something that is valued in a corporate life at all, outside of the face value of being visible. In my experience companies who try to not pay based on location tend to underpay in general (Gitlab would be a prime example).
• wiredone 6y ago
  In other news, companies have been paying salaries based on cost of living expenses since the dawn of time. I see this less as a "cutting" pay and more "rehiring you in another state at your relevant salary tier".
• mgh2 6y ago
  Scarcity of workforce is artificially created by rich countries, where talent can be discriminated due to location and citizenship. Now that you can hire internationally and remotely, talent is no longer confined to rich locations, thus democratizing opportunities for workers from poorer countries. A lose from the rich is a gain for the poor.
  • streetcat1 6y ago
    This is not true for complex software. The complexity of modern infra systems (like vmware vm) is so high, that there are very few people (regarding of the location) capable of understanding and creating such software on time and in budget. I will be surprised if the salary cut includes good engineers.
    • kec 6y ago
      There are 7 billion people on the planet. Even if only 0.001% are capable of working on VMWare, that's still nearly 100,000 people. High salary Silicon Valley engineers are not nearly as special or unique as some think they are.
    • ksmith14 6y ago
      I worked for VMware from 2007-2014 on things other than the core virtualization products. I think you’re overestimating the situation. There is a group that did have a fair number of CS PhDs to develop and maintain the core piece — the virtual machine monitor (VMM) but then there’s a large number of plain old everyday SWEs developing the bulk of vSphere and the desktop virtualization products. I would expect VMW’s policy to apply to just about everyone. A few old timers that have reached the principal engineer or fellow levels might be able to avoid it but that’s a few dozen out of 20,000+
  • selfinvariant 6y ago
    There is a lot of complexity for a US-based company around hiring people internationally: 1. Security. How would you prevent your monorepo being copied out to competitive companies in a foreign region or get snooped by some local government officials? 2. HR/Payroll. If you want to be compliant with local laws you will need to create local business entity. Would that make sense to do if you only have one employee in the country? How expensive that setup is going to be? 3. Somewhat obvious cultural/language/timezone difference. There were a lot of conversations about moving jobs to India in early 2000. It didn't happen - I think primarily for reasons that I just outlined. I don't see what's different this time.
• lykr0n 6y ago
  Yep. Just like relocating between cities while at the same company will cause your payscale to adjust. Look at the US Federal Government, or most state governments. There is X Pay for the position, and then that pay has a modifier based on location & cost of living. A GS 8 makes $41,310. That's their base Salary. Now in Seattle, that comes out to $52,472. In Albany, NY it's $48,696 due to locality. Not controversial at all.
  • mulmen 6y ago
    Exactly, this is like HR 101 right? These companies didn't even have to deploy a new payroll system, let alone invent anything. If HR people spent more time innovating and less time at conferences they'd figure out how to cut your pay when you log in on vacation. I have never in my life worked for a company that had an office and no remote workers. There's always someone in Montana or something. This is not new, at all.
    • client4 6y ago
      Haha hi from Montana.
  • tzs 6y ago
    For remote workers, though, where the company doesn't care if a given worker is in Seattle or Albany there is no need to pay them different amounts for the same work. They just need one pay level for that work, which is high enough to get enough total workers to fill all their remote openings. I expect it to eventually end up that most companies will have N+1 pay scales, where N is the number of cities they have offices in: one pay scale in each city where they have offices for the workers who actually work in those offices, and one pay scale for remote workers.
• jeffbee 6y ago
  This is a wealth transfer from landlords to companies and doesn't really have a lot to do with the workers.
  • jeremynixon 6y ago
    Companies to landlords, but yes.
    • jeffbee 6y ago
      How? They had to pay more because the employees had higher housing costs, because of artificially scarce housing in SF. Now the employee gets the same pay net of housing, the landlords (as a class) get less, and the company keeps the difference.
      • CinchWrench 6y ago
        I think you and the parent are just talking past each other and you really agree on the same thing. I don't see this as a new wealth transfer though, I see it as the cessation of an ongoing wealth transfer. I think the parent does too.
• Dopameaner 6y ago
  Seems reasonable. I wonder what would be consequences for this? and how significant will it be when more companies do this. Will services that are based entirely on Silicon Valley charge less? Real Estate will be lower? Less trafic
• gnicholas 6y ago
  If someone moves from CA to a state with no state income tax, the savings from that piece alone could make up most of the salary difference. If your gross pay is cut by 15% but your post-tax pay is only 5% lower, you've still got way more earning power in WA, TX, NV, or FL.
  • ThrustVectoring 6y ago
    that logic only works if you're saving a large fraction of your paycheck. If you're spending most of your paycheck, that invariably winds up getting taxed somehow, and only the overall state tax revenue fraction matters.
    • gnicholas 6y ago
      It's true that states need to get revenue from somewhere, so property tax rates may be higher. But the property costs are so much lower, even high rates would result in lower tax burden. Basically, other states do not necessarily raise as much revenue as CA overall. CA provides lots of services (which you may or may not use), which contributes to the high overall taxation.
      • ThrustVectoring 6y ago
        It depends on a ton of variables, but it can be boiled down to two: how the tax is distributed based off of various demographics, and how much total tax is levied. Unless you have some reason to believe that the tax distribution is better for you - for instance, if you save half of your paycheck and are moving to a state without income tax - then the only thing that matters is the overall level of taxation.
    • Retric 6y ago
      That really depends on spending habits. If you travel out of state regularly then you receive the same benefit as savings. On top of that State spending and the relative tax burden on each income range can also vary significantly.
  • thehappypm 6y ago
• sjg007 6y ago
  Eh, it won't last. There will be enough competition for engineers that salaries will rise again. Also this won't apply to talent the company doesn't want to lose.
• geodel 6y ago
  So companies are finally telling employees: Take a pay cut or take a hike. Now putting aside that "scarce talent" or "skilled engineer" myth most companies are just fine working with half ass CRUD app peddlers. And they are about as much in demand and as much a commodity as crude oil in 2020.
  • drewcoo 6y ago
    I wondered how long until "remote work" became the new "talent scarcity," an excuse to pay less. Programmers like us are not commodities, though, or we'd be worth as much in one location as another, given we can work remotely. And we could be traded (like pro athletes). We are service agents more like cleaners or restaurant waitstaff.
• Uptrenda 6y ago
  The cost of living in a city reflects its overall desirability: the job market, access to education, safety, and so on. If you're living in an amazing city where you have every amenity at your doorstep but a much higher cost of living -- then you should eat those costs in the same way you would moving to a better apartment. Conversely, why should someone in a --worse-- location have their salary --reduced-- to reflect the same ratios when they're not gaining the benefits of living in the more desirable location? If I suddenly started living in a tent or sleeping on a park bench should my salary also be reduced to reflect the lack of rent and utilities I'm paying? What if I change my diet so I'm only living on rice and cans of beans? I could reduce my 'cost of living' there too. Better not pitch these ideas to VMWare. They might sell it as 'minimalism' and list it as a benefit.
  • yoav 6y ago
    Cost of living is not personal to a person it’s an average to get basics of food cost and housing in an area. Not everyone has the privilege to just move whenever they want. To use your example: if you got paid a Montana salary and already lived in SF and had ties where you were unable to move cities you would be forced to move into a tent because that’s what you would be able to afford. (I’m just using Montana and tent as examples I’m not checking actual figures for this analogy) Adjusting salaries based on cost of living is making sure that people are not forced to move to a different city in order to afford the same size apartment and amount of food. Your outlook makes dollar amount equitable, but a dollar is only useful when you try to spend it on something. That same tent and rice costs 10x more in one place vs another place. COL based salary adjustment makes the purchasing power equitable. The real output of the dollar you’re given. Which is more equitable in my opinion. I was once asked to move to SF for a job and given a 20% bump compared to Toronto salaries so I could afford it. The same apartment actually costs 4x in sf so I’m paying 2x for half the space here. If I hadn’t had my pay adjusted for cost of living I’d struggle to pay rent here and my visa requires that I live within 75 miles of the city for 6 years.
    • vecinu 6y ago
      > I was once asked to move to SF for a job and given a 20% bump compared to Toronto salaries so I could afford it Just to dwell on this point for a bit, I think your offer was not equitable. When I was offered to leave the GTA for SF I received a 50% pay bump with the knowledge that it would be closer to 200% in a few years. Fast forward 1.5 years and that's exactly what happened. A few years later and the pay bump was closer to 300% and I'm happy it worked out the way I imagined, otherwise like you said, it would not have been worth it.
• emerged 6y ago
  and now remote workers will flee VMware for companies which pay them normal salaries.
• purplezooey 6y ago
  This is comical in an environment where pay raises don't even track (or barely track) inflation, and then only if you are in the "top 10% of achievers". All of a sudden HR departments are economists and experts in adjusted living costs. Executive staff, of course, is exempt.