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The price paid for labor is only tangentially related to the value of product produced. Wages are set by supply and demand, and the labor market is still very m
by cortesoft 6y ago
The price paid for labor is only tangentially related to the value of product produced. Wages are set by supply and demand, and the labor market is still very much location dependent. Companies who need local workers are forced to pay the rate required to attract and keep them, and that cost is a lot higher in some places than others.
The company doesn't pay someone in San Francisco more than someone in Kansas because the San Francisco worker has a higher cost of living, they do it because the San Francisco worker would go work for someone else for more money if they didn't. The worker in Kansas doesn't have that alternative option.
Now, as more and more companies become primarily remote employers, we will likely see the location based variance for workers diminish. However, this is likely to mean that the higher cost of living places see their wages decrease more than lower cost of living places increase.
- ornornor 6y agoI was never able to save as much as I did when working in Switzerland. Both in relative and absolute numbers. And I didn’t change my lifestyle.
- deleted 6y ago[deleted]
- solidsnack9000 6y agoYeah, I think this is the point people need to recognize -- wages are about clearing costs, which relates to the value of what workers produce (if something is more valuable, people can pay more to compete for the talent to produce it). If developers were literally paid for the value of what they produce, there'd be no profits and the companies wouldn't be good vehicles for investment, wouldn't have funds for R&D, &c.
- suyash 6y agogood point, they justify by saying things like 'cost of living' when in reality it's about many other things like supply/demand, need for local talent who can come to office etc etc.