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Are companies going to start adjusting salaries for people who move (this makes zero sense to me, the value you add most likely doesn’t change because of where

• hello_moto 6y ago
  The crazy salary level was set by location not by skillset alone so the skillset is still valued the same but the location depreciate accordingly. Just like buying a house: there are 2 variables that contributes to the total value, the land (location) and the building.
• WaxProlix 6y ago
  Salaries have very little to do with how much value one adds. If anything, it's more about how much value can be extracted. If companies can pay less and get the same value, they totally will.
  • pdonis 6y ago
    > Salaries have very little to do with how much value one adds. Yes, it does; but it's not how much value you, as an individual, add, but how hard it would be to find someone else who could add the same value but would work for less money. > If companies can pay less and get the same value, they totally will. Yes, which means companies are aware of how much value an employee adds; they are just also aware of what the current market price is for that amount of value. Whereas, many employees are not aware of that. In any case, the primary benefit of the observation that the more value you add, the more you get paid is long term, not short term: it tells you that, if you want to increase your total lifetime compensation, you need to become harder to replace. In other words, you need to add, not just value, but some particular kind of value that fewer other people could add if they were hired in your place. The scarcer the kind of value you add is, the higher the price you can get for it.
• hartator 6y ago
  It’s not about value you bring but competition to get your talent. Someone in the middle of nowhere will get far less offers and way less attractive ones than someone in the middle of SF.
• lotsofpulp 6y ago
  >(this makes zero sense to me, the value you add most likely doesn’t change because of where you live)? Price is the intersection of supply and demand. A buyer will ask a seller to accept a lower price if they think the seller is willing to accept a lower price. A seller might accept a lower price if they don't think they can get a higher price. You are paid $X because the buyer couldn't find someone willing to accept $X-1, and you accepted $X because you couldn't find someone to give you $X+1.
  • Droobfest 6y ago
    Then the question becomes if Sillicon Valley will now also try to hire remotely from a larger talent pool all across the U.S. (or even world).
    • minhazm 6y ago
      Silicon Valley, at least the bigger companies, already do that. Most people are not native to the area. Almost everyone I know in the bay area moved there for work.
      • redblacktree 6y ago
        Yes, but the set of people who are available to work remotely is much bigger than the set of people willing to relocate.
        • nostrademons 6y ago
          The big tech companies have plenty of satellite offices, though. If you want to work for Google but need to stay in NYC, Boston, Pittsburgh, Chicago, Santa Monica, Seattle, Boulder, Austin, etc. for whatever reason, you can totally do that. You just are somewhat limited in the teams/projects you can be working on, and it may affect your career advancement. (But this likely applies to remote work as well.)
  • SilasX 6y ago
    Yes, that's correct. But the question being asked is why the location changes the $X's there. I don't know that restatement of economic generalities helps unless you're going to apply them to the dynamic being asked about.
• duxup 6y ago
  I worked for a valley company that changed people's salary if they moved to a new office. Work in the valley, make more, if you moved they'd lower your pay. Midwest salaries were notably lower. Oddly enough it was more of a issue brought up by folks at HQ as they knew they were more expensive and a particular group was really paranoid about it... like constantly. It was a bad scene.
  • ticmasta 6y ago
    This seems similar to how I felt when consulting and knew I was billing at a much higher rate than others. Even if there is some form of value-for-money angle you feel like you have a target on your back and will be an early "win" for the bean counters when the knifes come out. My advice: be prepared for the end at anytime (like 4pm today) and enjoy it while you can!
  • conductr 6y ago
    I have a similar but totally different example from a non-tech field. I live in Texas. We had an office in Bay Area. Sometime we had people in Texas that reported to a higher level people in Bay Area. For whatever reason, market rate of pay in Bay Area for this field was similar to the market in Texas. However COL had a large variance. We were a pretty tight bunch that knew basic details of each other’s personal lives. It was crazy the amount of subtle strife this dynamic caused. When someone in Texas buys a large home and a new BMW or is traveling all the time. And their peer or even boss in Bay Area is struggling to split an apartment with a roommate well after “roommate appropriate age” by Texas standards.
• sanp 6y ago
  What you are paid is only somewhat related to the value you bring. Remote work increases the pool of potential employees...
• polskibus 6y ago
  It happens all the time, people in EU with similar skillset are paid much less than people in the US, even after adjusting for the differences what your taxes give you (ie. healthcare).
• gmadsen 6y ago
  I don't think it is 1-1 perfectly like that. In silicon Valley, a person with x skills is worth y dollars. If going remote, there will still be people with hard to find skills, probably because all the people with those skills were already in silicon valley. I don't see these jobs getting salary decreases. however, standard crud jobs that most programmers can do, yeah that will go down as rural employees are willing to work for less out of Utah or something.
  • notJim 6y ago
    At least at places I've worked, there isn't really that distinction though. There's not one of type of engineer that does "standard crud jobs" (whatever that would mean) and another type that designs/scales systems or whatever. Instead, companies seem to prefer to hire generalists who can (theoretically) do either job, even if that means salaries might theoretically be higher. In other words, candidates for engineering positions all go through the same hiring pipeline, with small variations for front-end vs back-end, etc. I think as engineers, we should prefer this, because it gives us greater flexibility in our careers and greater room for growth.
    • gmadsen 6y ago
      My point I was trying to make is probably such an outlier that it is hyperbole. So you are probably right. I would guess John Carmack would get paid the same whether he lived in a small hut in Estonia or if he lived in SF. I don't think thats true for the person building a web app for a local company to sell knitted socks.
• drewda 6y ago
  Facebook announced that they'd be adjusting employee salaries by new home location at the start of the new calendar year, I think. Some more distributed companies like Salesforce have been adjusting compensation for years when employees move from the Bay Area to other office locations.
  • edmundsauto 6y ago
    Didn’t they adjust it not based on COLA but on what the talent market is in that region? That’s making it explicitly market based, although that obviously includes a cost of living component.
    • xur17 6y ago
      Are they taking into account the fact that the talent market is now national / international given remote work?
      • edmundsauto 6y ago
        I have no idea, but given that it's localized by region, probably not? I don't think anyone knows how the new WFH conditions will impact local market conditions.
• jojo2333 6y ago
  Of course they are, and it makes perfect sense.
• throwawaygh 6y ago
  Pay for software engineering will contract because it turns out programming is not that difficult and there was nothing special about the sf set except their need to cover stupid high rents.
  • silicon2401 6y ago
    It's going to be quite a reality shock when people realize their salaries were kept high _because_ their jobs weren't open to remote workers.
    • 8f2ab37a-ed6c 6y ago
      Wait until programmers realize that telling everybody that they should learn how to code depresses their own wages years later.
  • humanrebar 6y ago
    Not quite. Consider pay for athletes and entertainers. Why pay Robert Downey Jr. big bucks? There are millions of actors out there! No, there could be a long tail of meagerly paid folks, just like baristas who aspire to be professional singers. But some folks (allegedly the best of the best somehow) will be getting top dollar.
    • strangegecko 6y ago
      Robert Downey Jr. is paid more because of brand recognition in the target market (people will watch a movie just because he's in it), not because he's a much better actor than everyone else. Software developers don't really have that. Maybe if you're John Romero people buy your games without looking too closely, but it's pretty rare in comparison.
  • rienbdj 6y ago
    I used to think this. Now I think that doing software well is actually very, very hard and even the best practitioners often get it wrong. The market for the best developers will always be high in my view.
• iandanforth 6y ago
  This is exactly correct. If you pay for a product you are not entitled to force a price reduction if the efficiencies of the producer improve. In most cases purchasers are not even entitled to know about production costs. It's just that with in person labor purchasers have gotten used to having access to this privileged information and abuse it. No, the real economic force at work for here is the halo effect. If you're in SV you must be good! You went to Stanford and worked at Google? You must be good! Then competition for that group takes over driving up prices. Housing costs are just an excuse people give themselves / investors.
  • spaceflunky 6y ago
    >If you pay for a product you are not entitled to force a price reduction if the efficiencies of the producer improve. No, you actually should be. If you work in manufacturing and you're any good at your job, you analyze what it actually cost to make a product. If for example, the price of a commodity heavily used in your product bottoms out from a previously very high price, you should make a call to your supplier demanding some kind of price adjustment (either future or retroactively). SV paid high prices because the explosive growth and geographic constraints made housing prices very high, therefore salaries had to go up to entice people to come. Rising salaries were not based on competition for talent alone. I get that a lot of companies are posturing that they wont localize pay, but eventually they'll wise up since their talent pool has grown very significantly. Salaries use to go because pool of applicants who were willing to move to SV was a lot smaller. Now that limitation has all but evaporated. These companies aren't stupid, they'll find cost savings just like those people moving to the boonies.
    • lotsofpulp 6y ago
      >If for example, the price of a commodity heavily used in your product bottoms out from a previously very high price, you should make a call to your supplier demanding some kind of price adjustment (either future or retroactively). You can only do this if you have an alternative, such as another supplier willing to provide you the product at a lower price. But my COGS going down has only partial bearing on what my customer pays me. I charge my customers the maximum I can get them to pay me, and my suppliers do the same to me. >SV paid high prices because the explosive growth and geographic constraints made housing prices very high, therefore salaries had to go up to entice people to come. Rising salaries were not based on competition for talent alone. SV paid high prices because they wanted to hire people in a specific geographic area, thereby lowering the supply of labor they had to choose from. If SV expands their supply of labor, and SV thinks it can get the same output from different supplier willing to accept less, then they will choose to do that.
• NDizzle 6y ago
  Don't let the employers do that to you. If they try, go elsewhere. I kept my bay area salary while moving to Arkansas.
  • mr_woozy 6y ago
    not everyone has this luxury unfortunately.
• scarmig 6y ago
  Supply and demand. But, if it ultimately turns out on-site employees provide no real advantages over remote employees, the end result is going to be a grand leveling more weighted toward a downward adjustment in Bay Area wages than an upward adjustment in within-the-US wages.
  • lotsofpulp 6y ago
    Yes, just like all the textile and manufacturing wages got a downward adjustment in middle America and got an upward adjustment in Asian countries.
• notJim 6y ago
  Anecdotally, I'm aware of two companies that do change salaries based on location. One large-ish publicly traded company, and one late-stage startup.
  • sokoloff 6y ago
    My wager is 90+% of tech companies will adjust salaries by location and 10% or less will pay pan-US salaries.
• bighitbiker3 6y ago
  Salary isn't all about "the value you add" and at the end of the day it's supply and demand. However, regardless of if the worker is taking a lower salary they should be maximizing purchasing power in whatever location they're working. If you can move somewhere rural, have a better quality of life, and have a higher savings rate while taking a pay cut you're still better off than your counterparts in [HCOL area] making double your salary. Your salary only matters when compared to your peers in similar living situations.
• triceratops 6y ago
  This "your salary = your value add" meme has never made any sense to me. In a fair world that should be the case, but it never has been and never will be. Proof: offshore outsourcing.
  • Nasrudith 6y ago
    It is an upper bound essentially for a sustainable company and is a point of convergence "your salary <= your value add". It actually maxing out implies being done only because all supply is accounted for. A bigger "value add - salary" essentially moves towards the front of the queue for hiring. If given two "equal" canidates why pay more if you don't have to? (The actual equality given other complications like cultural, language barriers, and similiar is another topic.) The "fairness" is also not mathematically viable as it assumes axiomatically that no action can be taken to earn profit that isn't "unfair" as the deserved value is based upon output and not input provided, which leaves no room for expansion nor buffer and no incentive to actually operate a business. TL;DR - most popular understanding of economics is pretty damn confused.
    • triceratops 6y ago
      I'm sorry, but I did not understand your comment at all. Some of those sentences don't parse for me. I don't know what you're trying to say. Can you please clarify?
      • sokoloff 6y ago
        It seemed clear enough to me. Your salary is less than or equal to the value you add (companies will usually not knowingly pay you more than you’re worth), not equal to it. The rest was expanding on that core point by computing the expected profit a company gains by hiring someone (value - salary [minus total costs, actually]) and that a company will seek to maximize its profits.
        • triceratops 6y ago
          I guess I was confused by the use of the pronoun "it" right at the beginning. With no context, I had trouble deciding what it mean, or deciphering much of the post. What you explained is the only bit I was able to guess at on my own, mostly because it's common sense. The part about the mathematical viability of fairness was particularly quite puzzling.
• jiveturkey 6y ago
  most famously, gitlab has always done this. others do also and with covid many have announced they would, including such giants as facebook. your perspective on value is wrong. you aren't paid for the value you bring. in capitalistic society you are paid at replacement cost. this is why unions are so important in some industries (mostly semi-skilled), to stop the next guy for agreeing to work at a lower standard. now, if you have a lower cost of living, having moved "away", 1/ your net purchasing power is the same, so why would you complain, and 2/ your equivalent replacement cost is lower. i don't understand your last bit about increasing housing prices. if you are paid less when you move away, how are housing prices pushed up? isn't it the opposite? if you bring your high salary with you, that pushes up housing prices.
• PenguinCoder 6y ago
  > the value you add most likely doesn’t change because of where you live)? I have been shouting this into the wind for years (as a remote/WFH) employee. I agree with you, 98% of companies out there don't.
• mr_woozy 6y ago
  Technically while you are correct that it should make no salary difference where workers choose to base themselves, unfortunately corporations and HR will use this as a sorting metric to pay qualified workers less because it's only to their advantage to do so. While you'd think the worker would benefit from being more globally employable the companies conversely have a larger pool of candidates now to choose from, which means they can afford to pay less for talent.
  • conanbatt 6y ago
    Companies don't decide how much to pay, its the result of competing forces on supply and demand
• asdff 6y ago
  Some actually do and more will probably follow suit. This might put you in a bind for lateral movement as well. Much harder to build an effective network over zoom, and nepotism is for better or worse how the world works because there are probably 1000 qualified people for every job opening. If you get laid off from your remote job, it will be tough to land another one when your competition is suddenly the entire country where people are comfortable asking for salaries far lower than yours and companies are happy to exploit cheaper labor.
• ticmasta 6y ago
  >> this makes zero sense to me, the value you add most likely doesn’t change because of where you live Salaries were/are so high because of the limited supply of qualified labour. If they now accept workers from everywhere the supply side constraint just got blown wide open.
  • whimsicalism 6y ago
    Eh.. I think most of the top tech talent in America lives on the West coast or NYC. Sure, might open up to more people - but not "blown wide open."
    • disgruntledphd2 6y ago
      This is because top tech talent is defined by the people who work in those cities ;) In other words, I would be very surprised if you were correct, as not everyone has the capability (or desire) to move to large and expensive cities, and the likelihood is that there are lots of very very good people working in the rest of the country due to family situations/age/personal choice.
• jasonkester 6y ago
  Personally, I've never had an issue negotiating around this. Companies will certainly try to pay you less for any number of reasons. But there's no reason you as the employee (with nearly all the leverage in this market) need to let that happen. I mean sure, it's clear that there's a cost difference between my house here in rural France and its equivalent in the Bay Area. But personally I'd prefer that difference be captured by me rather than my employer, so I don't tend to budge from my "Bay Area" rate. Here's hoping the rest of us fleeing the bay right now choose to stand up for themselves too.