18 ms·

Stripe Employees Who Relocate to Get $20k Bonus and a Pay Cut

63 points by siftrics 6y ago

tempsy 6y ago
good deal if you were looking to quit soon so long as there’s no vesting period but i’m guessing there’s a one year term on it.
Hydraulix989 6y ago
You can come out ahead if you relocate to a lower taxed state like NV or TX.
Traster 6y ago
Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible.
- Barrin92 6y ago
  it wasn't obvious that the market doesn't run on labour theory of value? Of course a company is going to pay you as little as you're willing to sell your labour for. That's why the exact same dinner costs less in Brunswick Georgia than it does in Palo Alto
- s1artibartfast 6y ago
  I'm not sure what exactly you are critiquing here. >Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. You are payed your replacement cost. If you bring more value, you are harder to replace. It has nothing to do with total value, if this was the case, no company would ever make a profit. Is there anyone who thinks that a company pays employees $1 more than they have to? I haven't met anyone who thought otherwise. Afterall, they aren't a charity. >The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible I also haven't met anyone who goes above and beyond out of some sense charity. I know people who work hard because they enjoy their work, or think they will get more pay, but not simply for the sake of the company value.
- jo032 6y ago
  Maybe not at Stripe, but a lot of big tech employees (especially at Google and Facebook) would get substantial paycuts if they got paid for the value they brought to the company rather than the market price ("as little as they can get away with"). the average FAANG engineer does a shockingly small amount of work that has any impact on revenue
  - mrkstu 6y ago
    The average FAANG engineer is partially being compensated for NOT working at a competitor- i.e. the best talent is also the biggest threat and if there isn't a salary cap then the NY Yankees are sometimes going to sign redundant players just to keep them from improving competitive teams.
    - robocat 6y ago
      This arguments fails on so many dimensions that it must just be a meme. I’ll use Google as the example. For it to work Google has to be able to monopolise the buying of talent. Most damning, the premise itself is self defeating. Somehow Google is picking the most talented people (delivering far in excess of say $1M marginal returns), yet somehow it is paying well below that to steal that talent and furthermore Google is then wasting that talent (employee delivering value below their pay+overhead). To assume Google chooses to waste talent merely to achieve some low value outcome (damaging a competitor by $1 doesn’t magically enhance Google’s returns by $1 so the factors are way out here) seems to assume the Google is somehow acting against their best financial interests. I don’t think Google is as poorly run as that. Also: 1. Occam’s razor: Could it be that a Google is actually getting good value by paying very high salaries? Yes. The average revenue per person for Google is about 160G$ / 115kiloemployees = 1M4 per employee. I do note that using an average is silly because the value distribution is not flat, but neither is the employee salary distribution flat. But the figure is so large, average does say something useful for back-of-envelope calcs. 2. Can Google monopolise by buying power alone? No. Other companies have similarly high returns per employee (Apple is 260G$/160kiloemployees, Netflix is 20G$/20kiloemployees) so for Google to outbid them, it needs to outbid above the marginal revenue per employee, which clearly is well above a 600k$ salary. 3. Can Google corner the market for talent by restricting supply? No. We know that there are plenty of talented developers because Google isn’t the only company making over $1M revenue per employee. Google employs about 115000 people. Let’s say 50000 of those were “overpaid“ to remove them from the competitors. If the total pool of equivalent talent were as small as 250000, then Google couldn’t monopolise talent. Yet other companies with high revenues per employee have a sum total of employees higher than 250000. Furthermore Google’s returns per effective employee become ~$2.8M/employee, so Google can obviously afford to pay $1M for talent it really wants! Your sports analogy fails because sports are designed to be zero-sum where there can be only one winner, so the best player can capture more of the winnings.
- onion2k 6y ago
  Tech companies aren't charitable foundations designed to help developers. They're businesses. They aim to maximise profit. If they can lower wage costs of course they'll do it. I suspect this is just the beginning of the move away from the Bay Area. Give it twenty years and small offices and remote workers distributed across the country will be very normal. Wages (and Bay Area house prices) will reflect that.
- kgin 6y ago
  Nobody gets paid for the value they bring. People get paid by how much it would cost to find and onboard a qualified replacement.
  - lbotos 6y ago
    People paid on commission do. That said, I'm not going to advocate that we all get paid on commission.
- austhrow743 6y ago
  Too obvious? It can’t be more obvious enough. I’m sick of this weird phenomenon where people talk like it was maybe some other way. See: hn and every thread that touches on pay. Might as well say it’s a little too obvious that shoes go on feet.
notyouravgdoge 6y ago
What's missing in some salary discussions on HN: Compensation Trajectory: Sure, I can relocate from [HCOL city] to [LCOL city] and come out ahead today after factoring taxes, home prices, etc. What happens in the long term? Will I have a harder time getting promoted because of lower visibility? Will my annual raises and stock refreshes be lower than my counterparts who did not relocate? In tech-dense areas like the Bay Area, I can switch jobs and negotiate a substantial salary increase. Will LCOL areas allow me to substantially increase my salary when I switch jobs? Home Prices: Folks often cite cheaper housing as a reason for leaving HCOL areas. I generally agree with that. But housing is an investment, not necessarily an expense. You might be paying seven figures for a small townhouse in the Bay Area. However, you'll get your money back when you sell your home in the future (assuming a sufficiently long time horizon and the ability to wait out dips in the housing market). Like any other investment, there are risks associated and ROI is not guaranteed, but my point is that spending $1M on a house is not the same as spending $1M on a luxury car. Purchasing Power: Earning more money in a HCOL city (relative to earning less in a LCOL city) goes a long way once you leave your local economy. Want to send your kids to a private university? Most tech employees won't qualify for financial aid regardless of where they live. In that case, tuition for [private university] is the same regardless of whether you live in San Francisco or rural Oklahoma.
- deleted 6y ago
  [deleted]
- awinder 6y ago
  The problem in my mind is that while homes are investments they’re not great investments (they’re rather illiquid, they’re not diversified, they’re multipurposed when a domicile and that makes valuation and decisions messy). They carry a lot of benefits too though, so it’s a worthwhile asset, but having to put a larger % of your wealth into that asset would be suboptimal. In my experience the delta on home prices (and then down payments) is in excess of the salary deltas but however that math breaks down individually seems like the right thing to focus on. Oh yeah and then after that you can choose where to live for whatever reasons work for you :-)
  - 6y ago
rdtwo 6y ago
If you move to a non tax state then you might come out ahead. Cali taxes are killer
kdamica 6y ago
Cost of living adjustments are nothing new, so I'm not sure why people seem surprised by them. If a person moves somewhere with lower taxes or housing costs, they'll easily come out even after a 10-15% pay cut. Also it sounds like only salary is affected, so it's an even smaller percentage of total comp.
- jlizzle30 6y ago
  So should Oakland residents be paid less than San Francisco residents?
  - GhostVII 6y ago
    Oakland residents and San Francisco residents are in the same job market, so they have the same salary.
    - jlizzle30 6y ago
      Exactly. And now with full-remote work, NYC & Tulsa the same job market too.
  - shajznnckfke 6y ago
    Companies with HQ in Oakland do tend to pay less. For a company with HQ in SF, I think they consider the employee pays for the Oakland savings with a worse commute, and since the employee is willing to work in SF they have to compete with SF salaries.
- akhilcacharya 6y ago
  This is real strange to me especially, since at my company I believe all of SFBA and NYC is +15% TC, but the rest of the country from Madison to Tempe to Boston are all the same TC band.
- ffggvv 6y ago
  equity is only the same for existing employees... which is standard practice. but usually it would be lower for new employees who start remote
NetBeck 6y ago
Will employees who stay have the option of paying Stripe $20k for a 10% raise?
jlizzle30 6y ago
In the context of a 100% remote company, 'where I live' feels like it's none of the company's business. The parallel is a non-remote company paying you less to commute from Oakland than San Francisco. Tying pay to location makes sense in the short-term as the industry transitions, but I don't see these policies holding over the longer-term.
hevelvarik 6y ago
I’m reading on hackers news that in SV engineers are making 200-400k, geez, suck it up, stay put and get paid, my friends
Waterluvian 6y ago
I don’t get why where I live is any of their business. Why on earth does it matter what it costs for me to live the life I want? All that should matter is what they need to pay me to compete with other companies who want to hire me too. If the act of paying remote people differently based on where they remote from is successful then it means the free market isn’t working right and engineers for these jobs are commoditized.
- shajznnckfke 6y ago
  If you live in SF, your job market includes non-remote SF jobs. If you live in Idaho, it doesn’t. Therefore your market wage is lower in Idaho even if you are doing the same work. Seems pretty clear-cut to me.
- Justin_K 6y ago
  I think the reason is because cost of living adjustments were built into the salaries being offered. It would have been smarter for companies to offer jobs as X + Cost of Living Adjustment = Y. Instead, they just offered a salary of Y. I also think part of it has to do with an expectation of higher productivity when working out of an office or headquarters.
- itsoktocry 6y ago
  It's weird that they are cutting pay to these employees. Wages will naturally trend downward as you're now competing with developers everywhere.
viraptor 6y ago
Even though this is the same thing as pay cut, it makes more sense to me when described as: company pays you averaged living expenses + extra depending on position. It's in company's interest that you live in a low cost area. It's in your interest to make sure the "extra per position" doesn't go down when you move. As long as both sides are happy here, I don't see an issue.
bleah1000 6y ago
It's weird that nobody talks about what it means when you relocate. For Stripe it might not be an issue, but large companies probably have people in all different locations. This means that if you relocate to a place where someone else is already working, is it fair if someone moved there and is now being paid much more than you? Also, what about if you had all women at a location and a man relocates there and gets to keep their higher salary. I think the women would feel that this is not okay either. This applies to any other protected categories where legal issues can come up. There are other considerations when talking about salary, and whether people can keep higher salaries when they relocate from a place where there is high competition for employees and a high average salary to a place with lower competition for employees and lower average salaries.

63 points by siftrics 6y ago

good deal if you were looking to quit soon so long as there’s no vesting period but i’m guessing there’s a one year term on it.

Hydraulix989 6y ago

You can come out ahead if you relocate to a lower taxed state like NV or TX.

Traster 6y ago

Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible.

Barrin92 6y ago
it wasn't obvious that the market doesn't run on labour theory of value? Of course a company is going to pay you as little as you're willing to sell your labour for. That's why the exact same dinner costs less in Brunswick Georgia than it does in Palo Alto
s1artibartfast 6y ago
I'm not sure what exactly you are critiquing here. >Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. You are payed your replacement cost. If you bring more value, you are harder to replace. It has nothing to do with total value, if this was the case, no company would ever make a profit. Is there anyone who thinks that a company pays employees $1 more than they have to? I haven't met anyone who thought otherwise. Afterall, they aren't a charity. >The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible I also haven't met anyone who goes above and beyond out of some sense charity. I know people who work hard because they enjoy their work, or think they will get more pay, but not simply for the sake of the company value.
jo032 6y ago
Maybe not at Stripe, but a lot of big tech employees (especially at Google and Facebook) would get substantial paycuts if they got paid for the value they brought to the company rather than the market price ("as little as they can get away with"). the average FAANG engineer does a shockingly small amount of work that has any impact on revenue
- mrkstu 6y ago
  The average FAANG engineer is partially being compensated for NOT working at a competitor- i.e. the best talent is also the biggest threat and if there isn't a salary cap then the NY Yankees are sometimes going to sign redundant players just to keep them from improving competitive teams.
  - robocat 6y ago
    This arguments fails on so many dimensions that it must just be a meme. I’ll use Google as the example. For it to work Google has to be able to monopolise the buying of talent. Most damning, the premise itself is self defeating. Somehow Google is picking the most talented people (delivering far in excess of say $1M marginal returns), yet somehow it is paying well below that to steal that talent and furthermore Google is then wasting that talent (employee delivering value below their pay+overhead). To assume Google chooses to waste talent merely to achieve some low value outcome (damaging a competitor by $1 doesn’t magically enhance Google’s returns by $1 so the factors are way out here) seems to assume the Google is somehow acting against their best financial interests. I don’t think Google is as poorly run as that. Also: 1. Occam’s razor: Could it be that a Google is actually getting good value by paying very high salaries? Yes. The average revenue per person for Google is about 160G$ / 115kiloemployees = 1M4 per employee. I do note that using an average is silly because the value distribution is not flat, but neither is the employee salary distribution flat. But the figure is so large, average does say something useful for back-of-envelope calcs. 2. Can Google monopolise by buying power alone? No. Other companies have similarly high returns per employee (Apple is 260G$/160kiloemployees, Netflix is 20G$/20kiloemployees) so for Google to outbid them, it needs to outbid above the marginal revenue per employee, which clearly is well above a 600k$ salary. 3. Can Google corner the market for talent by restricting supply? No. We know that there are plenty of talented developers because Google isn’t the only company making over $1M revenue per employee. Google employs about 115000 people. Let’s say 50000 of those were “overpaid“ to remove them from the competitors. If the total pool of equivalent talent were as small as 250000, then Google couldn’t monopolise talent. Yet other companies with high revenues per employee have a sum total of employees higher than 250000. Furthermore Google’s returns per effective employee become ~$2.8M/employee, so Google can obviously afford to pay $1M for talent it really wants! Your sports analogy fails because sports are designed to be zero-sum where there can be only one winner, so the best player can capture more of the winnings.
onion2k 6y ago
Tech companies aren't charitable foundations designed to help developers. They're businesses. They aim to maximise profit. If they can lower wage costs of course they'll do it. I suspect this is just the beginning of the move away from the Bay Area. Give it twenty years and small offices and remote workers distributed across the country will be very normal. Wages (and Bay Area house prices) will reflect that.
kgin 6y ago
Nobody gets paid for the value they bring. People get paid by how much it would cost to find and onboard a qualified replacement.
- lbotos 6y ago
  People paid on commission do. That said, I'm not going to advocate that we all get paid on commission.
austhrow743 6y ago
Too obvious? It can’t be more obvious enough. I’m sick of this weird phenomenon where people talk like it was maybe some other way. See: hn and every thread that touches on pay. Might as well say it’s a little too obvious that shoes go on feet.

notyouravgdoge 6y ago

What's missing in some salary discussions on HN: Compensation Trajectory: Sure, I can relocate from [HCOL city] to [LCOL city] and come out ahead today after factoring taxes, home prices, etc. What happens in the long term? Will I have a harder time getting promoted because of lower visibility? Will my annual raises and stock refreshes be lower than my counterparts who did not relocate? In tech-dense areas like the Bay Area, I can switch jobs and negotiate a substantial salary increase. Will LCOL areas allow me to substantially increase my salary when I switch jobs? Home Prices: Folks often cite cheaper housing as a reason for leaving HCOL areas. I generally agree with that. But housing is an investment, not necessarily an expense. You might be paying seven figures for a small townhouse in the Bay Area. However, you'll get your money back when you sell your home in the future (assuming a sufficiently long time horizon and the ability to wait out dips in the housing market). Like any other investment, there are risks associated and ROI is not guaranteed, but my point is that spending $1M on a house is not the same as spending $1M on a luxury car. Purchasing Power: Earning more money in a HCOL city (relative to earning less in a LCOL city) goes a long way once you leave your local economy. Want to send your kids to a private university? Most tech employees won't qualify for financial aid regardless of where they live. In that case, tuition for [private university] is the same regardless of whether you live in San Francisco or rural Oklahoma.

deleted 6y ago
[deleted]
awinder 6y ago
The problem in my mind is that while homes are investments they’re not great investments (they’re rather illiquid, they’re not diversified, they’re multipurposed when a domicile and that makes valuation and decisions messy). They carry a lot of benefits too though, so it’s a worthwhile asset, but having to put a larger % of your wealth into that asset would be suboptimal. In my experience the delta on home prices (and then down payments) is in excess of the salary deltas but however that math breaks down individually seems like the right thing to focus on. Oh yeah and then after that you can choose where to live for whatever reasons work for you :-)
- 6y ago

rdtwo 6y ago

If you move to a non tax state then you might come out ahead. Cali taxes are killer

kdamica 6y ago

Cost of living adjustments are nothing new, so I'm not sure why people seem surprised by them. If a person moves somewhere with lower taxes or housing costs, they'll easily come out even after a 10-15% pay cut. Also it sounds like only salary is affected, so it's an even smaller percentage of total comp.

jlizzle30 6y ago
So should Oakland residents be paid less than San Francisco residents?
- GhostVII 6y ago
  Oakland residents and San Francisco residents are in the same job market, so they have the same salary.
  - jlizzle30 6y ago
    Exactly. And now with full-remote work, NYC & Tulsa the same job market too.
- shajznnckfke 6y ago
  Companies with HQ in Oakland do tend to pay less. For a company with HQ in SF, I think they consider the employee pays for the Oakland savings with a worse commute, and since the employee is willing to work in SF they have to compete with SF salaries.
akhilcacharya 6y ago
This is real strange to me especially, since at my company I believe all of SFBA and NYC is +15% TC, but the rest of the country from Madison to Tempe to Boston are all the same TC band.
ffggvv 6y ago
equity is only the same for existing employees... which is standard practice. but usually it would be lower for new employees who start remote

NetBeck 6y ago

Will employees who stay have the option of paying Stripe $20k for a 10% raise?

jlizzle30 6y ago

In the context of a 100% remote company, 'where I live' feels like it's none of the company's business. The parallel is a non-remote company paying you less to commute from Oakland than San Francisco. Tying pay to location makes sense in the short-term as the industry transitions, but I don't see these policies holding over the longer-term.

hevelvarik 6y ago

I’m reading on hackers news that in SV engineers are making 200-400k, geez, suck it up, stay put and get paid, my friends

Waterluvian 6y ago

I don’t get why where I live is any of their business. Why on earth does it matter what it costs for me to live the life I want? All that should matter is what they need to pay me to compete with other companies who want to hire me too. If the act of paying remote people differently based on where they remote from is successful then it means the free market isn’t working right and engineers for these jobs are commoditized.

shajznnckfke 6y ago
If you live in SF, your job market includes non-remote SF jobs. If you live in Idaho, it doesn’t. Therefore your market wage is lower in Idaho even if you are doing the same work. Seems pretty clear-cut to me.
Justin_K 6y ago
I think the reason is because cost of living adjustments were built into the salaries being offered. It would have been smarter for companies to offer jobs as X + Cost of Living Adjustment = Y. Instead, they just offered a salary of Y. I also think part of it has to do with an expectation of higher productivity when working out of an office or headquarters.
itsoktocry 6y ago
It's weird that they are cutting pay to these employees. Wages will naturally trend downward as you're now competing with developers everywhere.

viraptor 6y ago

Even though this is the same thing as pay cut, it makes more sense to me when described as: company pays you averaged living expenses + extra depending on position. It's in company's interest that you live in a low cost area. It's in your interest to make sure the "extra per position" doesn't go down when you move. As long as both sides are happy here, I don't see an issue.

bleah1000 6y ago

It's weird that nobody talks about what it means when you relocate. For Stripe it might not be an issue, but large companies probably have people in all different locations. This means that if you relocate to a place where someone else is already working, is it fair if someone moved there and is now being paid much more than you? Also, what about if you had all women at a location and a man relocates there and gets to keep their higher salary. I think the women would feel that this is not okay either. This applies to any other protected categories where legal issues can come up. There are other considerations when talking about salary, and whether people can keep higher salaries when they relocate from a place where there is high competition for employees and a high average salary to a place with lower competition for employees and lower average salaries.