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It's not a relic, it's a way to price labor effectively. You're not paying for work, you're paying for the candidate to choose you over a competitor. If you're

by 121789 6y ago

It's not a relic, it's a way to price labor effectively. You're not paying for work, you're paying for the candidate to choose you over a competitor. If you're competing against local Bay Area or high CoL companies that are local, you will have a lower offer and will likely lose out on talent. That's OK as a strategy, but you may just be selecting out of low-CoL areas and limiting your pool of labor. The alternative, which sounds like a relic, is offer your 150K and a reasonable upward CoL adjustment certain areas. Small enough that someone from a low CoL place wouldn't want to move, but high enough to keep your company competitive in high CoL places. If you have enough labor supply, you many not have an issue, but if you are having trouble finding skilled people and assume that skilled people are unevenly distributed in high-CoL places, it's a reasonable path to go down.

opportune 6y ago
It doesn't seem that effective to me, because it makes some assumptions about employees' willingness to move or engage in location arbitrage. For many employees without children and especially those who are single, moving areas is not a dealbreaker. For those who save a lot, really you just end up incentivizing them to move to expensive areas. It's basically based on the model of thinking of "we should pay this employee the minimum it takes for them to work for us" rather than "we should pay this employee what it takes for working for us to be worth it to them" It makes more sense to lock someone's CTC (cost to company) if they're remote and then let them live anywhere. This allows them to fully realize the remote benefit of being able to live wherever they want. Especially if other companies stick to the old model of adjusting pay based on COL, this makes working remotely in a low COL a better offer at no price difference to the company for someone who is willing to move whichever place is most economically efficient for them.
valuearb 6y ago
If you have to pay $200k to get talented engineers in the Bay Area, and find out you can get equally talented people in the Midwest to work remotely for you for $130K, obviously it makes sense to set waters geographically. But what happens when your competitors realize this as well? Now you can no longer get the same level of talent in Iowa for $130K, soon it’s $150k, then it goes up again. You aren’t paying for work, you are competing for talent. I think the market ends up being bifurcated, where working locally in-office gets a premium when it’s worth a premium, but remote pays the same no matter where you are outside of time zone issues.

by 121789 6y ago

opportune 6y ago

It doesn't seem that effective to me, because it makes some assumptions about employees' willingness to move or engage in location arbitrage. For many employees without children and especially those who are single, moving areas is not a dealbreaker. For those who save a lot, really you just end up incentivizing them to move to expensive areas. It's basically based on the model of thinking of "we should pay this employee the minimum it takes for them to work for us" rather than "we should pay this employee what it takes for working for us to be worth it to them" It makes more sense to lock someone's CTC (cost to company) if they're remote and then let them live anywhere. This allows them to fully realize the remote benefit of being able to live wherever they want. Especially if other companies stick to the old model of adjusting pay based on COL, this makes working remotely in a low COL a better offer at no price difference to the company for someone who is willing to move whichever place is most economically efficient for them.

valuearb 6y ago

If you have to pay $200k to get talented engineers in the Bay Area, and find out you can get equally talented people in the Midwest to work remotely for you for $130K, obviously it makes sense to set waters geographically. But what happens when your competitors realize this as well? Now you can no longer get the same level of talent in Iowa for $130K, soon it’s $150k, then it goes up again. You aren’t paying for work, you are competing for talent. I think the market ends up being bifurcated, where working locally in-office gets a premium when it’s worth a premium, but remote pays the same no matter where you are outside of time zone issues.