4 ms·

For a remote company to adjust pay to employee's geography: so not cool. Offering remote and paying people based on what they're worth to the company: Part of

by gyulai 6y ago

For a remote company to adjust pay to employee's geography: so not cool. Offering remote and paying people based on what they're worth to the company: Part of the solution! (The problem being: Structural deficits in certain regions yield lack of adequately-compensated employment opportunities for the highly-skilled. This makes the highly-skilled relocate. This makes it difficult to overcome structural difficulties). Offering remote and paying people based on where they are: Part of the problem!

nrmitchi 6y ago
I also suspect, but don't have evidence to back it up, that it will also further contribute to socioeconomic divides. You grew up in a wealthy neighborhood and decide to live close to family? Here is a pay package at X. You grew up in a poverty-stricken area in a poor state, and need to live close to home to support your family? Well the cost-of-living there is 60% cheaper, so here is a pay package at X*(1-0.6). People who have the ability to move most likely still will, because it is economically viable. People who have family obligations and grew up in less affluent areas will be the ones getting the short end of the "location-adjusted-comp" stick.
- aero142 6y ago
  Seems like there is a pretty strong market force here where it is much easier to recruit employees in cheaper cost of living cities by beating that offer.
Rapzid 6y ago
I would resign immediately if my employer tried that.
enra 6y ago
So how do you imagine hiring people with similar experience/skill level SF if they base salary offers are $200k and Europe people are happy with $100k since their rent/mortgage/livingcost is about 5-10x less? Pay everyone $200k or $100k (essentially stop hiring in high cost location)? Until the markets/remote salaries align, you kind of have to pay based salaries the people are able/need to receive in their respected market.
- _AzMoo 6y ago
  If an employee is worth $200k to your company in SF, why are they not worth $200k to your company in Europe?
  - ericd 6y ago
    Because, at least for the moment, it's unlikely that any company is going to offer that European $200k. It's about BATNA, not perceived fairness. That said, this might change if remote work becomes a lot more common, and we might see a big flattening of salaries. Bad for SF real estate prices (and for high earners in those companies in general), since people in those HCOL markets will suddenly be competing a lot more directly with workers from elsewhere, modulo language skills, ease of scheduling, cultural fit, etc.
    - _AzMoo 6y ago
      Right, it's about BATNA, but it stands to reason that especially in a time of ubiquitous remote work, offering remote workers salary parity will attract the highest talent from all regions, thereby providing a competitive advantage.
  - enra 6y ago
    There isn't an objective measure available what an employee is worth to a company, especially at the hiring stage, especially in startups. If engineer lvl4 with the criteria you're hiring, is paid x in y market at z stage of the company then you pretty pay bit more or less depending how good you think they are compared to the average. Basically companies base their compensation bands on the 50-90th percentile what the market is. People are also anchored their previous compensation, it's hard to get people to accept drastically lower compensation even if you think they are overpaid in their current job. So it all comes down to finding a compensation that both parties are willing to engage in at (the market). The market is still not fully liquid, uniform or not all talent is the same so the pay differs in different markets. You could obviously game this too by saying to pay what people are they are "worth" but you just happen value SF experience more than other experience, essentially.
  - 6y ago
ponker 6y ago
I agree with this in principle because the outcome of non-adjusted pay will be a "race to the bottom" on wages, which will get more wages to people in poorer areas that helps them lift those areas out of poverty, while basically making New Yorkers unhireable as remote workers unless they possess extraordinary skill. To think that anything else would happen, like the ludicrous "Bay Area salary" becoming the global standard offer, is like thinking that anyone would hire a house painter who quotes twice the market price to paint your house, by explaining that he lives in a 6-bedroom posh waterfront condo and also maintains a country house.

by gyulai 6y ago

nrmitchi 6y ago

I also suspect, but don't have evidence to back it up, that it will also further contribute to socioeconomic divides. You grew up in a wealthy neighborhood and decide to live close to family? Here is a pay package at X. You grew up in a poverty-stricken area in a poor state, and need to live close to home to support your family? Well the cost-of-living there is 60% cheaper, so here is a pay package at X*(1-0.6). People who have the ability to move most likely still will, because it is economically viable. People who have family obligations and grew up in less affluent areas will be the ones getting the short end of the "location-adjusted-comp" stick.

aero142 6y ago
Seems like there is a pretty strong market force here where it is much easier to recruit employees in cheaper cost of living cities by beating that offer.

Rapzid 6y ago

I would resign immediately if my employer tried that.

enra 6y ago

So how do you imagine hiring people with similar experience/skill level SF if they base salary offers are $200k and Europe people are happy with $100k since their rent/mortgage/livingcost is about 5-10x less? Pay everyone $200k or $100k (essentially stop hiring in high cost location)? Until the markets/remote salaries align, you kind of have to pay based salaries the people are able/need to receive in their respected market.

_AzMoo 6y ago
If an employee is worth $200k to your company in SF, why are they not worth $200k to your company in Europe?
- ericd 6y ago
  Because, at least for the moment, it's unlikely that any company is going to offer that European $200k. It's about BATNA, not perceived fairness. That said, this might change if remote work becomes a lot more common, and we might see a big flattening of salaries. Bad for SF real estate prices (and for high earners in those companies in general), since people in those HCOL markets will suddenly be competing a lot more directly with workers from elsewhere, modulo language skills, ease of scheduling, cultural fit, etc.
  - _AzMoo 6y ago
    Right, it's about BATNA, but it stands to reason that especially in a time of ubiquitous remote work, offering remote workers salary parity will attract the highest talent from all regions, thereby providing a competitive advantage.
- enra 6y ago
  There isn't an objective measure available what an employee is worth to a company, especially at the hiring stage, especially in startups. If engineer lvl4 with the criteria you're hiring, is paid x in y market at z stage of the company then you pretty pay bit more or less depending how good you think they are compared to the average. Basically companies base their compensation bands on the 50-90th percentile what the market is. People are also anchored their previous compensation, it's hard to get people to accept drastically lower compensation even if you think they are overpaid in their current job. So it all comes down to finding a compensation that both parties are willing to engage in at (the market). The market is still not fully liquid, uniform or not all talent is the same so the pay differs in different markets. You could obviously game this too by saying to pay what people are they are "worth" but you just happen value SF experience more than other experience, essentially.
- 6y ago

ponker 6y ago

I agree with this in principle because the outcome of non-adjusted pay will be a "race to the bottom" on wages, which will get more wages to people in poorer areas that helps them lift those areas out of poverty, while basically making New Yorkers unhireable as remote workers unless they possess extraordinary skill. To think that anything else would happen, like the ludicrous "Bay Area salary" becoming the global standard offer, is like thinking that anyone would hire a house painter who quotes twice the market price to paint your house, by explaining that he lives in a 6-bedroom posh waterfront condo and also maintains a country house.