5 ms·

> Why charge customers based on value you provide, but pay employees by what their own expenses are? This is incorrect. Costs and salaries are market based, sh

by Jare 6y ago

> Why charge customers based on value you provide, but pay employees by what their own expenses are? This is incorrect. Costs and salaries are market based, shaped by supply and demand.

vladvasiliu 6y ago
That explains variations in the case of people having to show up daily at the office in some location. The market is that location and you have to pay a rate expected in that area / market. But in the case of remote, isn't the market the whole area to which you're open? If a company is open to hiring from the entire US, the market becomes the whole country. So if you decide on hiring engineer E, why would you pay more if E decides to live in SF instead of [low COL city]? E is the same exact person and whatever work they do is not dependent on where they happen to be. The only variation I could see as "fair" would be dependent on how taxation varies. I'm not familiar with how these things work in the US, but if there's variation in payroll or income tax due to the state where the employee actually works, I can understand that for a given cost the company, the employee's after tax salary may vary.
- temp667 6y ago
  Fair is not relevant, supply and demand are. Those are geographically different in major ways. Compensation offers follow this including for remote work.
  - vladvasiliu 6y ago
    I agree that fair is irrelevant, but my point is that the supply and demand dynamic is different in the remote situation. Indeed, if all companies went full remote overnight, the demand wouldn't change that much, whereas the supply would be much larger. If the company doesn't expect the employees to be physically present in a given location, the supply of talent is increased since it isn't restricted to a given area anymore. So while I understand that people living in SF wouldn't appreciate having their salaries cut to the level of [low COL city], I don't see how companies would continue to pay SF rates when they can access talent for a lower price just because they live someplace else. And said talent could even be the same exact SF engineer deciding to live someplace else for personal reasons.
    - temp667 6y ago
      Companies have found that to hire engineers living in SF, they need to pay more than hiring someone living in Idaho. That is supply and demand. Could those employees move elsewhere? Sure. That may in fact happen. But right now, an engineer in SF has both remote demand and local demand at FAR higher rates than someone in idaho.
      - lnnnn 6y ago
        Why companies care about hiring people in SF? If the company is fully remote, it shouldn’t matter. If it does matter then saying it’s fully remote is a lie. If there’s a need for a specific role to be physically in SF then hire in SF for that role. Also at this day the idea that they are competing against companies hiring locally is ludicrous. That might have been the case 5 years ago, but today most companies are hiring globally for remote positions — that’s your competition. Paying based on where people live is just burning company to subsidize insanely high real estate — and ensure your SF bros can keep their jobs.
ulucs 6y ago
That's also incorrect, as any hired employee creates a surplus which is divided to the firm and employee through Nash bargaining. Equations of supply and demand go into the coefficient determining how large a fraction the employee receives.

by Jare 6y ago

> Why charge customers based on value you provide, but pay employees by what their own expenses are? This is incorrect. Costs and salaries are market based, shaped by supply and demand.

vladvasiliu 6y ago

That explains variations in the case of people having to show up daily at the office in some location. The market is that location and you have to pay a rate expected in that area / market. But in the case of remote, isn't the market the whole area to which you're open? If a company is open to hiring from the entire US, the market becomes the whole country. So if you decide on hiring engineer E, why would you pay more if E decides to live in SF instead of [low COL city]? E is the same exact person and whatever work they do is not dependent on where they happen to be. The only variation I could see as "fair" would be dependent on how taxation varies. I'm not familiar with how these things work in the US, but if there's variation in payroll or income tax due to the state where the employee actually works, I can understand that for a given cost the company, the employee's after tax salary may vary.

temp667 6y ago
Fair is not relevant, supply and demand are. Those are geographically different in major ways. Compensation offers follow this including for remote work.
- vladvasiliu 6y ago
  I agree that fair is irrelevant, but my point is that the supply and demand dynamic is different in the remote situation. Indeed, if all companies went full remote overnight, the demand wouldn't change that much, whereas the supply would be much larger. If the company doesn't expect the employees to be physically present in a given location, the supply of talent is increased since it isn't restricted to a given area anymore. So while I understand that people living in SF wouldn't appreciate having their salaries cut to the level of [low COL city], I don't see how companies would continue to pay SF rates when they can access talent for a lower price just because they live someplace else. And said talent could even be the same exact SF engineer deciding to live someplace else for personal reasons.
  - temp667 6y ago
    Companies have found that to hire engineers living in SF, they need to pay more than hiring someone living in Idaho. That is supply and demand. Could those employees move elsewhere? Sure. That may in fact happen. But right now, an engineer in SF has both remote demand and local demand at FAR higher rates than someone in idaho.
    - lnnnn 6y ago
      Why companies care about hiring people in SF? If the company is fully remote, it shouldn’t matter. If it does matter then saying it’s fully remote is a lie. If there’s a need for a specific role to be physically in SF then hire in SF for that role. Also at this day the idea that they are competing against companies hiring locally is ludicrous. That might have been the case 5 years ago, but today most companies are hiring globally for remote positions — that’s your competition. Paying based on where people live is just burning company to subsidize insanely high real estate — and ensure your SF bros can keep their jobs.

ulucs 6y ago

That's also incorrect, as any hired employee creates a surplus which is divided to the firm and employee through Nash bargaining. Equations of supply and demand go into the coefficient determining how large a fraction the employee receives.