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I'm curious what it will do to tech salaries as well. Will developers working remotely for SV companies from LCOL areas be compensated the same as those in SV?

I'm curious what it will do to tech salaries as well. Will developers working remotely for SV companies from LCOL areas be compensated the same as those in SV? Will smaller firms elsewhere have to raise salaries to compete with locals taking non-regional salaries?

throwaway201103 6y ago
You're looking at it from the wrong side. Developer supply for SV companies just expanded to include potentially everyone who for various reasons did not want to or was unable to relocate to SV. Tech salaries will fall for SV companies, though it might initially be a bump up from what those non-local developers could get in their local areas.
908B64B197 6y ago
> Will developers working remotely for SV companies from LCOL areas be compensated the same as those in SV? Some will, some won't! Truth is, those who decide to offer compensation based on value added instead of a magic HR approved formula will get interest from everyone else. I expect some companies to use this CoL-based compensation as a way to let go underperformers and others to attract talent that was previously unavailable. > Will smaller firms elsewhere have to raise salaries to compete with locals taking non-regional salaries? They'll have to.
- throwaway201103 6y ago
  > those who decide to offer compensation based on value added instead of a magic HR approved formula You're leaving out "what the candidate will accept"
bcheung 6y ago
Short term: People working remote in other locations will have higher salaries from SV companies since they are used to paying those salaries. People moving from SV to other locations should expect moderate drops (10-20%). In my own experience moving to a 0% state income tax state, it effectively canceled out the savings from CA tax but the cheaper housing more than made up for it. Longer term: Tech salaries will come down as employers hire from a larger talent pool that is cheaper on average. This will make it hard for people in SV to work remote as they won't be as competitive. This probably means SV will become more affordable. > be compensated the same as those in SV? Generally speaking no, compensation has an aspect of location. Companies are going to have a harder time paying SV rates if they know you are in a cheaper area.
- mattnewton 6y ago
  I think the longer term will come to pass faster than many people realize, like 2-3 years fast for new college grads and people moving jobs. Big companies are already signally they will adjust pay based on location, and it's a small leap from there to "fix the glitch"
filmgirlcw 6y ago
> Will developers working remotely for SV companies from LCOL areas be compensated the same as those in SV? No. At larger companies, they already have these types of adjustments and will just be making more of them. For smaller companies, they’ll very quickly start to implement these types of adjustments. Depending on where you go, the trade-off can still work in your favor, even with a lower salary. But COL calculators aren’t perfect and don’t change as often as the areas can. So you can be in a position where your COL rises but your salary, per the calculator does not. When I moved to Seattle from NYC, I got a lower salary because of COL differences, even though the real COL is the same (and in some ways, is higher than NYC). Yes, rent in Seattle is going to be lower when directly compared to New York City (so same type of area/amenities/size), but your options are lower too, which can push you towards a higher priced house or apartment than you might choose in New York. I pay a lot more in rent in Seattle than I did in NYC. It’s a nicer place and the equivalent in Williamsburg would be higher, but I’d have more options that were less than what I pay in NYC that still fit my needs and are close to the places I need to be. Food prices and cost of good are the same (sales tax is higher in Seattle and there are fewer food options for delivery). It’s the state income tax that is the differentiator. That’s 10% of my income a year I don’t lose as I did in New York. And that can be significant. If I left Washington for a place with LCOL, I’d need to calculate my lower salary against the real-world costs of the new place, plus any additional expenses (like owning a car and gas money and maintainable/insurance), and the tax implications of the new place. Going from California to Texas will be a big change tax wise, but going from Washington state to Iowa, which has a 9% state income tax and a LCOL, I’d need to calculate whether that lower salary would be a good enough deal for me to leave. And of course, you have to factor in the cost you personally value the place you live from a culture and opportunity point of view. I like big cities. Cities have suffered tremendously with COVID because all the things we love about cities have gone away. But I’m still (perhaps stupidly) bullish on cities. I grew up in the suburbs of a major city but haven’t lived outside of a major metropolitan area since I was 18 years old. I have no desire to live in suburbia, even if the housing prices are low and space is plentiful. That just isn’t my thing. So the trade-off to do that would be require a significant increase in compensation. But I don’t have children and I understand that lots of people don’t have the same affinity for big cities that I do. They are happy with those tradeoffs. To be able to buy a home or a condo for under $1 million. And for those workers, going from a $300k SF salary to something like $180k might be just fine. But anyone expecting to make that $300k in Montana or Texas is fooling themselves. There will always be outliers who will be compensated more or the same, regardless of where they live. But those are outliers. It’s not the norm. There are some that predict the move away from big cities will depress tech salaries in general. I think there might be some of that, but it just depends on how many people actually move. Part of the reason you have hubs in various industries like SF and Seattle and NYC and DC and Boston and LA is because that’s where a lot of the talent has decided to congregate. And talent!= company HQ. Atlanta probably does as much production work as LA does, but Hollywood and the film and television and streaming industries are still centered in Los Angeles. No studio executive is moving from Malibu to Buckhead (an actor or producer might buy a second house there, sure). For tech, maybe there will be a wide dispersion. But I don’t think it’s a guarantee.

throwaway201103 6y ago

You're looking at it from the wrong side. Developer supply for SV companies just expanded to include potentially everyone who for various reasons did not want to or was unable to relocate to SV. Tech salaries will fall for SV companies, though it might initially be a bump up from what those non-local developers could get in their local areas.

908B64B197 6y ago

> Will developers working remotely for SV companies from LCOL areas be compensated the same as those in SV? Some will, some won't! Truth is, those who decide to offer compensation based on value added instead of a magic HR approved formula will get interest from everyone else. I expect some companies to use this CoL-based compensation as a way to let go underperformers and others to attract talent that was previously unavailable. > Will smaller firms elsewhere have to raise salaries to compete with locals taking non-regional salaries? They'll have to.

throwaway201103 6y ago
> those who decide to offer compensation based on value added instead of a magic HR approved formula You're leaving out "what the candidate will accept"

bcheung 6y ago

Short term: People working remote in other locations will have higher salaries from SV companies since they are used to paying those salaries. People moving from SV to other locations should expect moderate drops (10-20%). In my own experience moving to a 0% state income tax state, it effectively canceled out the savings from CA tax but the cheaper housing more than made up for it. Longer term: Tech salaries will come down as employers hire from a larger talent pool that is cheaper on average. This will make it hard for people in SV to work remote as they won't be as competitive. This probably means SV will become more affordable. > be compensated the same as those in SV? Generally speaking no, compensation has an aspect of location. Companies are going to have a harder time paying SV rates if they know you are in a cheaper area.

mattnewton 6y ago
I think the longer term will come to pass faster than many people realize, like 2-3 years fast for new college grads and people moving jobs. Big companies are already signally they will adjust pay based on location, and it's a small leap from there to "fix the glitch"

filmgirlcw 6y ago

> Will developers working remotely for SV companies from LCOL areas be compensated the same as those in SV? No. At larger companies, they already have these types of adjustments and will just be making more of them. For smaller companies, they’ll very quickly start to implement these types of adjustments. Depending on where you go, the trade-off can still work in your favor, even with a lower salary. But COL calculators aren’t perfect and don’t change as often as the areas can. So you can be in a position where your COL rises but your salary, per the calculator does not. When I moved to Seattle from NYC, I got a lower salary because of COL differences, even though the real COL is the same (and in some ways, is higher than NYC). Yes, rent in Seattle is going to be lower when directly compared to New York City (so same type of area/amenities/size), but your options are lower too, which can push you towards a higher priced house or apartment than you might choose in New York. I pay a lot more in rent in Seattle than I did in NYC. It’s a nicer place and the equivalent in Williamsburg would be higher, but I’d have more options that were less than what I pay in NYC that still fit my needs and are close to the places I need to be. Food prices and cost of good are the same (sales tax is higher in Seattle and there are fewer food options for delivery). It’s the state income tax that is the differentiator. That’s 10% of my income a year I don’t lose as I did in New York. And that can be significant. If I left Washington for a place with LCOL, I’d need to calculate my lower salary against the real-world costs of the new place, plus any additional expenses (like owning a car and gas money and maintainable/insurance), and the tax implications of the new place. Going from California to Texas will be a big change tax wise, but going from Washington state to Iowa, which has a 9% state income tax and a LCOL, I’d need to calculate whether that lower salary would be a good enough deal for me to leave. And of course, you have to factor in the cost you personally value the place you live from a culture and opportunity point of view. I like big cities. Cities have suffered tremendously with COVID because all the things we love about cities have gone away. But I’m still (perhaps stupidly) bullish on cities. I grew up in the suburbs of a major city but haven’t lived outside of a major metropolitan area since I was 18 years old. I have no desire to live in suburbia, even if the housing prices are low and space is plentiful. That just isn’t my thing. So the trade-off to do that would be require a significant increase in compensation. But I don’t have children and I understand that lots of people don’t have the same affinity for big cities that I do. They are happy with those tradeoffs. To be able to buy a home or a condo for under $1 million. And for those workers, going from a $300k SF salary to something like $180k might be just fine. But anyone expecting to make that $300k in Montana or Texas is fooling themselves. There will always be outliers who will be compensated more or the same, regardless of where they live. But those are outliers. It’s not the norm. There are some that predict the move away from big cities will depress tech salaries in general. I think there might be some of that, but it just depends on how many people actually move. Part of the reason you have hubs in various industries like SF and Seattle and NYC and DC and Boston and LA is because that’s where a lot of the talent has decided to congregate. And talent!= company HQ. Atlanta probably does as much production work as LA does, but Hollywood and the film and television and streaming industries are still centered in Los Angeles. No studio executive is moving from Malibu to Buckhead (an actor or producer might buy a second house there, sure). For tech, maybe there will be a wide dispersion. But I don’t think it’s a guarantee.