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> Clearly companies are willing to pay $200k+ for top talent. In a market where the market equilibrium for that top talent is $200K+. There is no inherent virt

> Clearly companies are willing to pay $200k+ for top talent. In a market where the market equilibrium for that top talent is $200K+. There is no inherent virtue in a '$200k+' number. > "Cost of living" or however you want to break down that salary is irrelevant to what companies think employees are worth. Exactly. Companies care about the cost of labor, not the cost living. And if you are in a different geography with a lower cost of living, it is believable that the cost of your labor is less. Why is it surprising then?

jayd16 6y ago
You're not understanding the demand side. >There is no inherent virtue in a '$200k+' number. Indeed there is. It shows that the value gained by the employer is at least that of $200k+. It is not arbitrary and it is not wholly derived by supply. The cost of labor is set by the labor supply as well as the labor demand. Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful. A less abstract way to look at things is this. The cost of living boost is just a bait to work somewhere. There's no magic to it. Just because you took one deal doesn't mean you should so easily take the opposite deal.
- majormajor 6y ago
  > Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful. The company tolerating remote workers changes the supply to the company. The people moving immediately are seeing the first effect here, but if it becomes permanent, the people who don't move will inevitably get the same paycut. Why pay $200K for someone in SF when someone in Des Moines will take $140K, but wasn't willing to relocate five years ago?
  - jayd16 6y ago
    >The company tolerating remote workers changes the supply to the company. The crux is that the supply curve is not fully known. For argument's sake, you can imagine both that talent is distributed uniformly as well as imagine top talent was already pulled towards urban centers. We don't know exactly what the answer is but one thing that does not make sense is that the supply is somehow linked to local cost of living. You admit yourself that this current offer to relocate is artificial and not a product of the market reaching equilibrium, so why accept it?
    - majormajor 6y ago
      The supply may not explode - maybe most talent was already tilted towards those expensive areas since that's where so many jobs were - but for any given employer in a given city, today's supply is a lower bound for their supply if they accept remote workers. It can only go up. There's a potential scenario of now "company in cheap city X is willing to pay for SF talent, but couldn't convince them to relocate before, but can now hire them remote" that would also push up demand for top talent, but it seems much more likely to me that demand for top talent stays about the same while supply increases at least a small amount, which would push down wages.
- kinkrtyavimoodh 6y ago
  > You're not understanding the demand side. I think I am understanding it, but you are merely repeating your points without addressing the economics that I am pointing out. > Indeed there is. It shows that the value gained by the employer is at least that of $200k+. Yes and so the value you generate for the employee puts an upper bar on what salary you can command, not a lower bar, which is what you seem to be implying. > Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. It increases the supply available, because today, given the investments Google has made in setting up offices for ~30000 employees in the bay area, they have to fill that demand using employees located in the bay area. They don't have to do that if they can hire from anywhere, so the supply increases. > Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful. And they do! Google has employees around the world, and surprise, they do not get paid as much as they would have gotten paid in the Bay Area. Why is a Google engineer in Bengaluru who is hired by the same hiring process paid 1/3rd of what they'd get paid in MTV? And to preempt the usual HN racism against the quality of Indian engineer, the same Google engineer would be paid the MTV salary if they moved to MTV. This is not a hypothetical, this is literally what happens to the countless Google engineers who transfer from BLR to MTV. Based on your logic, why is that engineer NOT paid the MTV salary today in BLR? ———— I mean I am not even making a far-fetched claim. Bay area salaries are the highest in the world. They have to move down towards the average if some other salaries are going to rise because the engineer who lives in Randomville Alabama didn't have a Google office he could commute to and hence wasn't in the supply pool, but now is, can now compete for the Google job.
  - jayd16 6y ago
    >Based on your logic, why is that engineer NOT paid the MTV salary today in BLR? Indeed, perhaps that will be the case if there really is so much supply; if that's what the supply curve turns out to be. But it makes zero sense to pin salaries to local cost of living other than to bait a candidate to live somewhere you want them to. Its not based on demand, its not based on supply.

jayd16 6y ago

You're not understanding the demand side. >There is no inherent virtue in a '$200k+' number. Indeed there is. It shows that the value gained by the employer is at least that of $200k+. It is not arbitrary and it is not wholly derived by supply. The cost of labor is set by the labor supply as well as the labor demand. Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful. A less abstract way to look at things is this. The cost of living boost is just a bait to work somewhere. There's no magic to it. Just because you took one deal doesn't mean you should so easily take the opposite deal.

majormajor 6y ago
> Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful. The company tolerating remote workers changes the supply to the company. The people moving immediately are seeing the first effect here, but if it becomes permanent, the people who don't move will inevitably get the same paycut. Why pay $200K for someone in SF when someone in Des Moines will take $140K, but wasn't willing to relocate five years ago?
- jayd16 6y ago
  >The company tolerating remote workers changes the supply to the company. The crux is that the supply curve is not fully known. For argument's sake, you can imagine both that talent is distributed uniformly as well as imagine top talent was already pulled towards urban centers. We don't know exactly what the answer is but one thing that does not make sense is that the supply is somehow linked to local cost of living. You admit yourself that this current offer to relocate is artificial and not a product of the market reaching equilibrium, so why accept it?
  - majormajor 6y ago
    The supply may not explode - maybe most talent was already tilted towards those expensive areas since that's where so many jobs were - but for any given employer in a given city, today's supply is a lower bound for their supply if they accept remote workers. It can only go up. There's a potential scenario of now "company in cheap city X is willing to pay for SF talent, but couldn't convince them to relocate before, but can now hire them remote" that would also push up demand for top talent, but it seems much more likely to me that demand for top talent stays about the same while supply increases at least a small amount, which would push down wages.
kinkrtyavimoodh 6y ago
> You're not understanding the demand side. I think I am understanding it, but you are merely repeating your points without addressing the economics that I am pointing out. > Indeed there is. It shows that the value gained by the employer is at least that of $200k+. Yes and so the value you generate for the employee puts an upper bar on what salary you can command, not a lower bar, which is what you seem to be implying. > Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. It increases the supply available, because today, given the investments Google has made in setting up offices for ~30000 employees in the bay area, they have to fill that demand using employees located in the bay area. They don't have to do that if they can hire from anywhere, so the supply increases. > Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful. And they do! Google has employees around the world, and surprise, they do not get paid as much as they would have gotten paid in the Bay Area. Why is a Google engineer in Bengaluru who is hired by the same hiring process paid 1/3rd of what they'd get paid in MTV? And to preempt the usual HN racism against the quality of Indian engineer, the same Google engineer would be paid the MTV salary if they moved to MTV. This is not a hypothetical, this is literally what happens to the countless Google engineers who transfer from BLR to MTV. Based on your logic, why is that engineer NOT paid the MTV salary today in BLR? ———— I mean I am not even making a far-fetched claim. Bay area salaries are the highest in the world. They have to move down towards the average if some other salaries are going to rise because the engineer who lives in Randomville Alabama didn't have a Google office he could commute to and hence wasn't in the supply pool, but now is, can now compete for the Google job.
- jayd16 6y ago
  >Based on your logic, why is that engineer NOT paid the MTV salary today in BLR? Indeed, perhaps that will be the case if there really is so much supply; if that's what the supply curve turns out to be. But it makes zero sense to pin salaries to local cost of living other than to bait a candidate to live somewhere you want them to. Its not based on demand, its not based on supply.