6 ms·

Buried in the article they also talk about cutting the pay of people who move away from big cities based on their "geopay" scale, a new trend that I have a hard

Buried in the article they also talk about cutting the pay of people who move away from big cities based on their "geopay" scale, a new trend that I have a hard time seeing as anything other than corporate greed we should vigorously oppose. I understand not every company can afford to do Basecamp's "pay everyone SF wages" thing, but any company can afford to set uniform pay grades at some level and one would think that the equal pay for equal work principle should apply here. One should neither receive a big city subsidy nor have their pay cut for choosing to live somewhere else.

uberduper 6y ago
Everyone thinks they should be getting SF salaries in this new era of remote work. Nobody thinks they should be getting a Flint salary. Equal pay for equal work doesn't have to mean the bar is raised.
sokoloff 6y ago
I think there are reasons to make either choice (one global salary vs a localized market salary). The former optimizes for fairness/equality of continuing employees and takes the "what is the value of the work?" as the foremost question. The latter puts the focus on "what is the market price [the next-best-alternative] for this employee?" and tries to ensure that you don't have unhappy employees staying longer than either side would prefer because they are "stuck" with a salary that they can't match in any other opportunity available to them and so do just enough to not get fired.
- kethinov 6y ago
  The latter seems unlikely to me. If we stigmatized or outlawed geopay, the net effect would be rising wages across the board because companies would not want to be locked out of hiring good people in HCOL areas. That or the cities would empty out and the relative income needed to live well would flatten. Either way, a win for society.
ghaff 6y ago
The problem is that if (even just keeping the discussion to the US) a company pays, say, Chicago wages everywhere, that means they effectively probably can't hire anyone in the Bay Area for example. Of course, a lot of companies already basically don't try to salary match the hire who has an offer from Facebook or Google in SV and wants to work there.
- kethinov 6y ago
  Sounds like a good incentive to just pay SF wages to everyone which any company currently in SF clearly can do. Those that aren't in SF already can't afford SF talent so it makes little difference. It's not like there's some glut of companies out there paying Chicago wages to most employees except for their 1 or 2 in SF who get a HCOL bonus. And to the extent that there are companies doing that, perhaps it wouldn't be so bad for society if they stopped.
- koheripbal 6y ago
  The ultimate outcome, no matter what companies do, is that tech workers just won't live in big cities any longer. If remote work is an option, then paying high rents just doesn't make sense. Moreover, as this trend continues, the ultimate outcome is not US workers moving to low-cost locations, it is foreign workers supplanting US workers in extremely low cost locations.
  - wrkronmiller 6y ago
    I don't buy this. > If remote work is an option, then paying high rents just doesn't make sense. I live in NYC because I like NYC, not because the pay is higher. I took a net pay cut after rent, taxes, etc after moving here from Maryland, in spite of getting a substantial pay rise. I suspect that's not uncommon. > the ultimate outcome is not US workers moving to low-cost locations, it is foreign workers supplanting US workers in extremely low cost locations. This was already on the table. Generally speaking, you get what you pay for.
    - sethammons 6y ago
w0utert 6y ago
A policy like this is basically saying 'we only pay you as much as necessary to compete with your other employment options', which are currently still mostly those near where you are living. If more companies allow remote work and they don't all do the same thing, this kind of 'geopay' policy will have to be abandoned. But I agree it's completely backwards, you should be paid according to the value you create for the company, and nothing else.
- davidf560 6y ago
  > you should be paid according to the value you create for the company, and nothing else But, you need to subtract your pay from the value you create. If you create $1MM value but cost $500K, and someone in the Midwest can create that same $1MM value for only $150K, it's pretty obvious what most companies will choose. FAANG companies somehow convinced themselves that paying $500K for talent in SV made sense even if they could get similar talent basically anywhere else in the US for less. This massive WFH experiment that we've all been in seems to have demonstrated to some of them that physical location doesn't really matter as much as they thought. The next logical step is that paying inflated rates to hire someone in a particular physical location doesn't make sense, if you're just going to have them work remote anyway. WFH may just be the pin that burst the SV tech wage bubble.
  - 908B64B197 6y ago
    > FAANG companies somehow convinced themselves that paying $500K for talent in SV made sense even if they could get similar talent basically anywhere else in the US for less Could they? The market for 500K engineers is very different than 60K or 100K. With remote work, you'll see a handful of organizations getting the top talent across all locales, and the local companies who won't be able to compete be stuck with the rest. It's a winner-takes-all situation that will now happen on a global scale.
    - davidf560 6y ago
      My point is there is no such thing as a "$500K engineer" anywhere but SV (and maybe Seattle), and thus no such market exists elsewhere. Honestly even writing "$500K engineer" sounds so absurd to me because it's so far away from "normal"... I doubt anyone who lives within 500 miles of me doing software development as an individual contributor makes even half that. Maybe I'm badly misinformed though. Believe it or not, there's plenty of smart, even brilliant people who do not live (and choose not to live) in California. I myself may not be FAANG-caliber, but I've known known a number of people who used to work where I do and now work for Amazon, Facebook, and Google. They moved to the west coast, but obviously prior to taking those jobs they were just as good and living in the Midwest working for a Midwest salary. It's honestly rather shocking to me that people seemingly genuinely believe that there can't possibly exist smart engineers who live somewhere other than SV.
Charles808 6y ago
Overhead cost of providing a physical workspace is easily 50%+ of base compensation costs. Companies save a fortune by having employees work from home. "Geopay" scales are exploitation. Employee X should be compensated in relation to the value they bring through their efforts, not at the minimum possible level that the employer can get away with.
- jjav 6y ago
  > Overhead cost of providing a physical workspace is easily 50%+ of base compensation costs. That estimate is high by about an order of magnitude. To get a sense of the cost ceiling per person, look at the least cost-effective way to rent a monthly desk which is to do it as an individual in a co-working space. Here's one price list for coworking space in Campbell (Silicon Valley) https://drive.google.com/file/d/1iljwYScQ4d5F4rUcQN-9XH0D8E2h71cn/view https://drive.google.com/file/d/1iljwYScQ4d5F4rUcQN-9XH0D8E2... An open office desk is $325/month, up to a dedicated cubicle for $725/month. So for a junior engineer at $150K salary, that's between 2.6% to 5.8% of their base comp in office space cost. Now, of course, a company renting tens of thousands of square feet at a time gets better rates due to scale, so the percentage is less than those examples.
- claudeganon 6y ago
  The only way to counter that is through collective bargaining, which many people on this site seem to view as beneath them. “Geopay” really isn’t any different from how Google/Apple/etc colluded in the past to suppress developer wages.
- driverdan 6y ago
  At low paying jobs sure but when you're talking about $100k+ tech employees it does not cost 50% of base compensation for the physical workspace.

uberduper 6y ago

Everyone thinks they should be getting SF salaries in this new era of remote work. Nobody thinks they should be getting a Flint salary. Equal pay for equal work doesn't have to mean the bar is raised.

sokoloff 6y ago

I think there are reasons to make either choice (one global salary vs a localized market salary). The former optimizes for fairness/equality of continuing employees and takes the "what is the value of the work?" as the foremost question. The latter puts the focus on "what is the market price [the next-best-alternative] for this employee?" and tries to ensure that you don't have unhappy employees staying longer than either side would prefer because they are "stuck" with a salary that they can't match in any other opportunity available to them and so do just enough to not get fired.

kethinov 6y ago
The latter seems unlikely to me. If we stigmatized or outlawed geopay, the net effect would be rising wages across the board because companies would not want to be locked out of hiring good people in HCOL areas. That or the cities would empty out and the relative income needed to live well would flatten. Either way, a win for society.

ghaff 6y ago

The problem is that if (even just keeping the discussion to the US) a company pays, say, Chicago wages everywhere, that means they effectively probably can't hire anyone in the Bay Area for example. Of course, a lot of companies already basically don't try to salary match the hire who has an offer from Facebook or Google in SV and wants to work there.

kethinov 6y ago
Sounds like a good incentive to just pay SF wages to everyone which any company currently in SF clearly can do. Those that aren't in SF already can't afford SF talent so it makes little difference. It's not like there's some glut of companies out there paying Chicago wages to most employees except for their 1 or 2 in SF who get a HCOL bonus. And to the extent that there are companies doing that, perhaps it wouldn't be so bad for society if they stopped.
koheripbal 6y ago
The ultimate outcome, no matter what companies do, is that tech workers just won't live in big cities any longer. If remote work is an option, then paying high rents just doesn't make sense. Moreover, as this trend continues, the ultimate outcome is not US workers moving to low-cost locations, it is foreign workers supplanting US workers in extremely low cost locations.
- wrkronmiller 6y ago
  I don't buy this. > If remote work is an option, then paying high rents just doesn't make sense. I live in NYC because I like NYC, not because the pay is higher. I took a net pay cut after rent, taxes, etc after moving here from Maryland, in spite of getting a substantial pay rise. I suspect that's not uncommon. > the ultimate outcome is not US workers moving to low-cost locations, it is foreign workers supplanting US workers in extremely low cost locations. This was already on the table. Generally speaking, you get what you pay for.
  - sethammons 6y ago

w0utert 6y ago

A policy like this is basically saying 'we only pay you as much as necessary to compete with your other employment options', which are currently still mostly those near where you are living. If more companies allow remote work and they don't all do the same thing, this kind of 'geopay' policy will have to be abandoned. But I agree it's completely backwards, you should be paid according to the value you create for the company, and nothing else.

davidf560 6y ago
> you should be paid according to the value you create for the company, and nothing else But, you need to subtract your pay from the value you create. If you create $1MM value but cost $500K, and someone in the Midwest can create that same $1MM value for only $150K, it's pretty obvious what most companies will choose. FAANG companies somehow convinced themselves that paying $500K for talent in SV made sense even if they could get similar talent basically anywhere else in the US for less. This massive WFH experiment that we've all been in seems to have demonstrated to some of them that physical location doesn't really matter as much as they thought. The next logical step is that paying inflated rates to hire someone in a particular physical location doesn't make sense, if you're just going to have them work remote anyway. WFH may just be the pin that burst the SV tech wage bubble.
- 908B64B197 6y ago
  > FAANG companies somehow convinced themselves that paying $500K for talent in SV made sense even if they could get similar talent basically anywhere else in the US for less Could they? The market for 500K engineers is very different than 60K or 100K. With remote work, you'll see a handful of organizations getting the top talent across all locales, and the local companies who won't be able to compete be stuck with the rest. It's a winner-takes-all situation that will now happen on a global scale.
  - davidf560 6y ago
    My point is there is no such thing as a "$500K engineer" anywhere but SV (and maybe Seattle), and thus no such market exists elsewhere. Honestly even writing "$500K engineer" sounds so absurd to me because it's so far away from "normal"... I doubt anyone who lives within 500 miles of me doing software development as an individual contributor makes even half that. Maybe I'm badly misinformed though. Believe it or not, there's plenty of smart, even brilliant people who do not live (and choose not to live) in California. I myself may not be FAANG-caliber, but I've known known a number of people who used to work where I do and now work for Amazon, Facebook, and Google. They moved to the west coast, but obviously prior to taking those jobs they were just as good and living in the Midwest working for a Midwest salary. It's honestly rather shocking to me that people seemingly genuinely believe that there can't possibly exist smart engineers who live somewhere other than SV.

Charles808 6y ago

Overhead cost of providing a physical workspace is easily 50%+ of base compensation costs. Companies save a fortune by having employees work from home. "Geopay" scales are exploitation. Employee X should be compensated in relation to the value they bring through their efforts, not at the minimum possible level that the employer can get away with.

jjav 6y ago
> Overhead cost of providing a physical workspace is easily 50%+ of base compensation costs. That estimate is high by about an order of magnitude. To get a sense of the cost ceiling per person, look at the least cost-effective way to rent a monthly desk which is to do it as an individual in a co-working space. Here's one price list for coworking space in Campbell (Silicon Valley) https://drive.google.com/file/d/1iljwYScQ4d5F4rUcQN-9XH0D8E2h71cn/view https://drive.google.com/file/d/1iljwYScQ4d5F4rUcQN-9XH0D8E2... An open office desk is $325/month, up to a dedicated cubicle for $725/month. So for a junior engineer at $150K salary, that's between 2.6% to 5.8% of their base comp in office space cost. Now, of course, a company renting tens of thousands of square feet at a time gets better rates due to scale, so the percentage is less than those examples.
claudeganon 6y ago
The only way to counter that is through collective bargaining, which many people on this site seem to view as beneath them. “Geopay” really isn’t any different from how Google/Apple/etc colluded in the past to suppress developer wages.
driverdan 6y ago
At low paying jobs sure but when you're talking about $100k+ tech employees it does not cost 50% of base compensation for the physical workspace.