39 ms·

“Location-Based Pay” – Who are we to complain?

• jschveibinz 6y ago
  Should your pay be reduced if you move somewhere cheaper? Well, like everything else, the market gets to decide. So the answer is probably “yes” because of market pressure. Like my father used to say in his own version of English, “you don’t get nothin’ for nothin’”.
• KingOfCoders 6y ago
  The article talks about fairness. But there is much more sides to fair salaries. I wrote about it some time ago "The reason for discontent and thoughts about unfairness is that people have very different ideas about what is fair. They base salary fairness on different things. Some think it’s fair to base salary on past performance, current performace, past performance and future potential, needs, equality, experience or current market demand." https://svese.dev/fairness-in-salaries/ https://svese.dev/fairness-in-salaries/
  • erik_seaberg 6y ago
    Market demand is the correct answer. None of us would be making six figures if not for the other nearby employers who would like to hire us. Before the web happened, we were paid like accountants. > If you hire engineers when the market for engineers is tight, you might overpay compared to your existing employees. A Junior developer might end up with a higher salary than your senior guys. It's on you to know how much your competitors might offer to lure away your senior devs, and deter it. If you wait for them to negotiate, you might lose some of them.
    • KingOfCoders 6y ago
      Yes I try to convince people to have better salaries without the employees demanding them.
• echelon 6y ago
  What if you drive around the country in an RV and call SF home for one month out of the year? If you've got an address there and spend more time in California than any of the other states you visit, seems like you'd be a Californian resident. One of my coworkers did this.
  • jokethrowaway 6y ago
    You will need to pass California residency test (probably being in California for more than 6 months). Given the company is employing you, they should know where you reside. If you're working through another company you could give an address to your actual employer without being resident.
    • dbcurtis 6y ago
      California’s tax authorities are much quicker than that to decide you are a resident and tax you accordingly.
• RivieraKid 6y ago
  It's not unfair. It's a voluntary transaction, in which both parties benefit. Both companies and workers have always behaved in a profit-maximizing way.
  • Closi 6y ago
    Voluntary transactions that are profit maximising and benefit both parties can still be unfair. For instance, most people accept that for the same job and all things being equal you should pay a black/white person the same wage. If there was a job posting that said ‘we pay this skin colour X and this skin colour Y because according to our analysis people with darker skin tones are willing to accept a lower wage’ there would rightfully be outrage. It would be unfair, while being a voluntary transaction which is profit maximising and in which both parties benefit. I know you aren’t arguing for that though - we accept as a society that we shouldn’t pay people different based on race, but lots of people do believe that we should pay people differently based on where they were born and what visa status they hold. I personally think this view will change over time as globalisation and remote working continues.
  • teddyh 6y ago
    Some volontary transactions are nonetheless illegal, because to allow them would negatively affect society as a whole. The usual example is that it is not legal (as it once was) to sell yourself into slavery. Also, overly onerous contracts can (in many jurisdictions) not be enforced. Simply put, “It's a voluntary transaction” can never be a sufficient argument for why something ought to be legal.
    • jokethrowaway 6y ago
      It's interesting you bring up slavery. I think I should be allowed to sell myself or kill myself if I wanted to. I certainly don't want society or a government to regulate on that. Eg. I'd rather be a slave than starving on the road, I'd rather be dead than in some particular irreversible painful medical condition. The only actions which are ethically wrong in my book are hurting someone else or damaging / stealing their property. Incidentally the government breaks these rules legally everyday (eg. taxation, wars, spying on people).
• cangencer 6y ago
  Your salary is only partially based on "the value created by employee" - most of it is the market forces of supply and demand. When you're remote, you're competing with a much larger number of people for the same positions.
  • RivieraKid 6y ago
    Salary is always lower than the (expected) value of work. If the value of work was equal to salary, the employer would have to reason to do this transaction.
    • nanis 6y ago
      The price of everything is always between the value placed on it by the buyer and the cost to the seller. Not a revelation. At the margin, they are all equal because trade continues until the gains from trade are exhausted. In many countries and U.S. states, laws guarantee that the cost of an employee to an employer is almost twice as much as what the employee is paid. In those circumstances, the potential gains from bilateral trade are not exhausted and people engage in that trade outside of the dominion of the state.
      • andrejserafim 6y ago
        That's it. I believe, like in any market the top earners, who are hard to get and hurt when they go will continue to get high pay. Since even if you include the world (and most jobs don't, they include some timezones, jurisdictions only) the market is still rather small. But if you're just the average developer, like most of us really are - the higher competition will surely make it harder to negotiate higher pay.
      • emidln 6y ago
        > In many countries and U.S. states, laws guarantee that the cost of an employee to an employer is almost twice as much as what the employee is paid. This might be true at the lower end close to minimum wage, but payroll taxes are a specific % (usually around 15% at the federal level, and the employee pays about half that) and insurance and other benefits are typically a fixed cost per head (15k to 30k per year at most of the places I've worked). The only thing that might be variable are things like 401k match. Once you get to six figure salaries, the fully loaded cost per employee is 120-130% of their salary.
• teddyh 6y ago
  The author argues against fair and equal salaries because… T-shirts made in Bangladesh might become more expensive? Because people in foreign nations might be paid more? This feels very similar to the common arguments against raising the minimum wage, and I really don’t buy it.
  • Smaug123 6y ago
    I didn't read it as arguing against or for anything. Rather, I read it as "I really want <this>; extended to its logical conclusion, that would also suggest <this> which I don't want. Conundrum!" It even says at the end, "I’m not here to make any grand pronouncements about globalisation… My only point is that, when it comes to “location-based pay”, maybe we should be careful what we wish for." I take that as a pretty explicit "hey, this is difficult and I don't have a good answer".
  • imtringued 6y ago
    The value of a T-Shirt is pretty low and manual labor can only produce a few T-shirts per hour. That forces T-Shirt production to go to low cost labor countries. If you could somehow train those workers to produce 10x as many T-Shirts they would also get paid 10x as much. There simply isn't enough value to pay them more. Software is the opposite. Each worker produces a lot of value so companies can afford to pay them more. A few decades ago western countries were worried that Japan would take over the electronics market because they could produce much cheaper there. In reality Japan went up the value chain and Japanese products are just as expensive as in any other western nation.
    • teddyh 6y ago
      > There simply isn't enough value to pay them more. Why? If your answer is “Because a T-shirt isn’t valuable”, then that’s a circular argument.
      • sokoloff 6y ago
        Mass market T-shirts are worth some maximum amount to consumers. It’s a circular argument with its center rooted in this fact. A T-shirt manufacturing employee’s wage is capped as some fraction as the value of that shirt to an end consumer times the number of shirts they can make in a year.
• DrBazza 6y ago
  One thing about this is that the money saved by paying employees less, goes into someone’s pocket. Senior management, or the owner. Some people will benefit massively from this. And don’t forget zero office costs since everyone is remote. I’d also expect to see coworking spaces in some of the larger towns to be thing soon too.
  • mustyoshi 6y ago
    Even if nobody is going to the office, it isn't free.
  • kweinber 6y ago
    If this continues, expect to see a lot of high-paying jobs leave high earning markets like San Fran and New York as pay decreases to meet lower cost cities and countries. Working from a lower cost area could be all the market supports in a few years.
    • ghaff 6y ago
      >Working from a lower cost area could be all the market supports in a few years. At which point, SF and NYC would be low cost areas as well. This won't happen for various reasons but real estate is determined by demand of which employment opportunities are a big component outside of resort communities and similar.
• balhbloo 6y ago
  Companies have no business telling me how much they think my life should cost nor how I should spend my money. If they're paying "lifestyle" choices, based on bullshit cost of living make believe metrics, they should reward my lifestyle choice to travel constantly and pay that cost of living accordingly. I'm not surprised tho, remote work is still an embryo, I'm gonna keep pushing for what I want but we can't expect too much. When I'm rich and successful I'm gonna pay a standard global rate for the each role. No bullshit country adjustments. The market will just have to eat it
  • sokoloff 6y ago
    Markets are two-sided. If you pay a single, global rate, you may find yourself setting that rate such that you’re priced out of certain markets and lack access to money-motivated talent there. You will be part of the market that’s eating it.
    • balhbloo 6y ago
      Hahaha thanks. I'm not smart enough to consider second order effects at this point. It's more of a personal crusade that I know is right so I'll just have to do it see what happens .
      • lotsofpulp 6y ago
        What will happen, unless your product is unique, in high demand, and has a large moat, is your customers will purchase from a competitor selling goods at a cheaper price. See what happened to US textile and manufacturing industry.
        • balhbloo 6y ago
          I suppose I'm idealistic to think that paying people more (what I think of as) fairly will better motivate them retain them and lead to better productivity. And also we'll be able to attract better people everywhere to produce better product. I could be wrong. Sad if so, but it's worth a try
• choeger 6y ago
  I do not want to debate the fairness of it, because it is way too complex for a comment. But there is another downside of pay cuts for remote workers: A remote worker does not have access to the same market as someone living in a hot cluster like The Valley. A real-world example from Europe: If I take my Berlin salary and live just 50km out of the city, I am easily one of the top-earners in that area. Naturally, I lose easy access to many offerings of that city, but that's part of the deal, I think. Now if I ever wish to switch employers, I can look in Berlin, but I am at a disadvantage if many companies insist on on-site work. If they don't, I compete on a much larger market with many more would-be employees. This problem should be reflected in payment, I think. So from my, completely egocentric, perspective it would be ideal if companies demand on-site one or two days a week, so I can choose the best spot for living in a larger area, but still only compete in a limited market.
  • ghaff 6y ago
    >So from my, completely egocentric, perspective it would be ideal if companies demand on-site one or two days a week, Pretty much all the surveys I see suggest that this will be the most common outcome. Maybe roughly 20% fully remote and 20% mostly back in the office. Though doubtless not uniform across companies. (I expect my company will tilt more towards remote given that we were relatively heavily remote pre-pandemic.) Which implies that most will probably remain in the orbit of a larger metro; many of the jobs aren't in the city anyway. And many people will want to stay accessible to a metro for other reasons. I had about a 45 mile commute most non-travel days at one point for a while. (I did take the train some days.) It was pretty doable 1-2 days per week but wasn't sustainable on a daily basis.
    • hackissimo123 6y ago
      I'm applying to jobs now (in the UK) and I'm yet to speak to a single company that plans on a full return to the pre-pandemic normal. Everyone is either staying 100% remote indefinitely, or they're hoping to adopt a hybrid approach like what you describe. It's a bad time to own city-centre commercial real estate.
• wwww4all 6y ago
  The company will pay you the lowest amount you are willing to accept. Location has nothing to do with salary rates. If they could find someone at lower salary, anywhere in the world, they would hire that person. They can’t, that’s why they are paying the current salary rates. The company may use it as an excuse, but you can choose to walk. When enough top level people refuse pay cut, the company will drop the charade quick. Even if just 10% of high performance engineers decide to walk, that would cause major disruptions in the roadmap and cost millions in development costs. Simply demand higher salary and negotiate. The company will make adjustments to fill the in demand positions. Be prepared to walk away and find the company that will pay the higher salary.
• sneak 6y ago
  The reason companies are paying people less when they move is because they are declaring a pay cut to their staff and the staff are saying "oh, okay". If a customer started paying me less than our previously agreed rate, I would stop working for them, and find a different customer. Employment is no different. Don't get screwed every single time your employer tries to screw you.
• teddyh 6y ago
  The concept of a “profession” or “field” is, properly speaking, meaningless, because every situation is slightly different. What is, then, this concept we have of what a fair wage ought to be for any given group of people with a similar occupation? I would guess that the concept of fair wages is a rudimentary, and emotion-based, form of unionization. If everybody can’t help but feel upset about something which is “unfair”, this is, in effect, a form of collective action – a sort of union you can’t help but be a member of. In this light, the idea of a location-based pay can be seen as a simple hack to neutralize this de-facto union. If people otherwise aren’t unionized, this hack gives employers back the sole power in the employer-employee relationship, which was what employers wanted from the start.
• BerislavLopac 6y ago
  One of the main problems here is that the companies have absolutely no idea how much an employee is valuable to them, or at best not until they have been working there for several years, and even then only in vague terms.
• carlio 6y ago
  I think the problem is that the conversation is "we'll pay you X of which one factor is where you live" when it should be "we'll pay you X if you work for us, do you accept?". The reasons for people offering a salary amount is irrelevant, it's about if the offer is acceptable to an employee. If I move somewhere, I get paid the same, and if it's cheaper I get more spending money, if it's more expensive, I have to swallow the costs. If the contract says "we can renegotiate if you relocate", that's not a contract I'd sign, but it's up to the company and employee to decide if that's an acceptable clause in the contract. A contract which says "we'll pay you less if you move somewhere cheaper" must also say "we'll pay you more if you move somewhere more expensive" but then suddenly my employment incentivises my location. I wouldn't move from Warsaw to Bangladesh but it might make economic sense to move to Zurich. If it's in the contract that the employer must honour the movement, then they have unexpected cost recalculations to do. If it's not, and you're just hoping for a "good faith" agreement, again that's not a contract I'd sign, but others might.
  • tchalla 6y ago
    > A contract which says "we'll pay you less if you move somewhere cheaper" must also say "we'll pay you more if you move somewhere more expensive" but then suddenly my employment incentivises my location I believe this is a key point in the argument. Currently, I see only one party having an upside but no downside.
    • lotsofpulp 6y ago
      Because only one party has the upside when the seller of labor moves to a location where they have few buyers of labor. A seller of labor that has multiple buyers can negotiate for more pay in places where they have lots of buyers for their labors (and their buyers can afford to pay). A buyer of labor will not explicitly state this for obvious reasons, just like a seller of labor will not explicitly state they will accept lower pay if their situation changes, but every transaction in life is possible to be subject to negotiation.
      • carlio 6y ago
• Wowfunhappy 6y ago
  This is why I'm concerned (selfishly) that the remote work trend might end up being terrible for wealthy countries. If you’re working 100% remotely in the US, is there really no one in India who couldn’t do your job just as well? Are you sure? There’s a lot of people in India, and they all have a much lower cost of living. (I don’t mean to single out India, it’s one of many countries.)
  • sokoloff 6y ago
    But singling out India is somewhat sensible here (in a positive way). The Indian education system churns out tens of millions of new grads each year, most of whom speak English and many of whom have a strong grounding in math/comp-sci. India has the raw materials to be super-competitive in a remote-primarily software development environment. You might single then out as they’re a place with one the best combinations of these raw materials and still a relatively low cost for daily living. (My company is remote-forced right now and intends to go remote-first/primarily when COVID’s acute phase is behind us. I don’t think remote will be as terrible for wealthy countries if COVID is contained in 2021. Remote is hard and comes with its own set of drags. Once companies can get back together, I think you’ll see “remote but with monthly travel to HQ” or “1-2 days in office” dominate over “I never have a lunch with any colleague” modes of working.)
  • vp8989 6y ago
    US tech workers are massively over-payed so it's tough to feel sorry for ourselves. I moved here from Europe and the salaries are completely absurd, especially at the junior level. People are being brought in from college, they can barely tie their shoe laces without someone there to help them and they are given 6 figures. Meanwhile I know people in the UK who are seasoned lead engineers who work hard and literally put entire companies on their backs and they make half the money.
    • KDJohnBrown 6y ago
      European salaries are absurdly low. As an expat who doesn’t benefit from government services the same way an EU/UK citizen would, it’s a non starter. London is easily as expensive, if not moreso than San Francisco. I don’t understand how engineers can work for 30-45% less.
• AYBABTME 6y ago
  Location based pay adjustments will stop being a thing when competition for remote workers will justify it. Companies want location-based pay because they can get away with it: either they think office-first will return, or they think more workers from cheaper areas will be available, so no need to pay more. Whether this will happen remains to be seen. Personally, I think location-based pay will fail to attract top talent, so it'll diminish in prevalence over time. But my conjecture is as good as yours.
• nnp7000 6y ago
  What's missing from these debates is optionality. A company pays you not only what it takes for you to do the job, but also their perceptions of your options. Two people working the same job on-site at the same company can have a substantial pay difference even without negotiation because one is self-taught and has only high school while another has a master's degree from Stanford. Yes, the former's competent and shows drive and ambition and that's nice. The company just scored a dark horse. But the company also knows the former employee (likely) isn't as aggressively courted by other companies which can pay well, so they feel they can pay that person less. If you're the only person in the world who can do what Facebook really needs done, they'll pay you $1M+ to do it from anywhere in the world.
  • snarf21 6y ago
    I agree with you. It will take a while for the adjustment of remote to re-settle to a new norm. There is one other thing that is a small factor in all of this. I'm not saying it is unsurmountable or anything but local/state/country taxes are a factor. We hired someone remote recently who was in Canada. We had to create a new company in CA just so we could pay this individual. For salaried/W2 style employment, there can be a non-trivial amount of extra legal/finance work for the company. Hiring local-ish avoids this. Obviously, having everyone on a 1099/Contractor style employment would avoid this too but most people want salary plus provided benefits. Again, a larger company may easily be able to absorb these costs but they aren't zero.
    • Sytten 6y ago
      There are SaaS services now that handle this problem, but honestly I am glad you did that. Most US company just hire as contractor in Canada even if it is not legal per Canadian law and it will get workers in trouble pretty soon I think. The CRA will crack down on that loophole and employees will be in trouble.
  • um_ya 6y ago
    The underlying principle here is competition. A worker sells their labor and a company purchases it. When everyone lived in SF, a worker wouldn't accept a job paying below $100k because they wouldn't be able to afford to live. That same person in a cheaper state could negotiate a lower price, but most of the talent was saturated in SF. Now that everyone has left SF, there's no point in paying those prices if they can still retain you for a lower wage.
• the_gipsy 6y ago
  Company doesn't pay based on the "value of your work" - it pays based on what other companies would pay you. Local candidates are scarcer than remote. Personally, I hate the resulting dynamic. Move to SF and the company basically subsidizes a million dollar mortgage. Move to Manila and your subsidized mansion could be $10k, 100 times less (maybe I'm exaggerating, I have no idea about real estate in the Philippines - but you get the idea). That's insane! The worst part is that landlords get a huge cut of this, and I don't think they add a fraction of that value to society. I hope that in the end, with the pandemic, it all balances out to two tiers: on-site and remote. I get that many companies still value attendance, whatever. I just hope that all remote positions balance out globally. It doesn't make sense to pay some guy in Utah twice as much as some guy from Honduras, if neither come into the office.
  • Tade0 6y ago
    > I just hope that all remote positions balance out globally. I've been working remotely since 2015 and the market has been gradually moving in this direction(at least in eastern Europe where I come from) - COVID-19 only speeded things up.
  • jorblumesea 6y ago
    > It doesn't make sense to pay some guy in Utah twice as much as some guy from Honduras, if neither come into the office. This assumes equal education, skill level, cultural norms and infrastructure. But these are often not equal. If your clients are in the US, hiring developers US side greatly reduces the chance of cultural misunderstanding and communication problems. Also timezone issues here too, for clients based on North America. US higher education system is fairly strong, and not all countries are equal on that front. India for example, is known for degree mills and ways to "cheat" the system. Which is why US masters degrees are required for the most part. That is not to say there aren't incredibly smart people in every country, but it's not an even playing field and some countries have risks associated with hiring. Another good example is infrastructure. I'm not sure how many times a developing world coworker has been blocked because of shoddy internet or inconsistent utilities. These asymmetries will persist, remote or otherwise.
• tybit 6y ago
  I suspect while most companies say location based pay is based on cost of living, this is not actually true. Amazon is quite upfront about this, they pay based on cost of labor. I.e they pay what they need to get the staff they want in that area.
  • ghaff 6y ago
    And cost of living is only one factor feeding into cost of labor. Tech companies tend to pay more in the Bay Area because, if they didn't, they'd have trouble hiring people. But they're probably not going to pay the same amount because someone chooses to live in Aspen. I honestly don't expect big changes--20% adjustments don't really qualify as "big." All the data I've seen suggests that most people will likely remain within at least a 1-2 day/week commute into an office.
• LatteLazy 6y ago
  Companies will pay as little as they can, employees will charge as much as they can. Everything else is an excuse or window dressing. What someone is paid is not connected to what they are worth or their value. Nor is it "fair" because fair isn't a real thing. Your company is not your family. Unless you own a significant share, it's purely your adversary. I wish people would just honestly admit this. Pretending otherwise almost always leads to workers misunderstanding what is happening and getting underpaid.
• djoldman 6y ago
  Why does it sometimes seem like there is a willful disregard for what actually drives companies (profit)? As a consequence of US laws and the way the economy runs (US capitalism), companies are incentivized to seek cheap labor. They will pay the lowest price they can. If person A and person B produce the exact same work but A will accept a lower wage, obviously the company will hire A. If people are upset/perplexed/confused by this, I think the crux of it is: why do some people accept a lower wage? In this case it's ostensibly because some people live in lower cost of living areas.
• KDJohnBrown 6y ago
  I’ve been getting paid a San Francisco salary for 7 years while living abroad working as a Sr DevOps Engineer (I have 25 years experience). After the pandemic hit, my company slowly fired half the staff and replaced us with Russians & Belarussians for 1/5 the price. Now it’s a buyer’s market and wealthy startups (including many ycombinator startups) are offering me 50-70% less than I made at my last job. Literally so little money I would have $800 leftover after child support and paying my dying mother’s mortgage. I ask them, “do you understand that paying employees 60% less for the same work creates a toxic environment? You are already struggling with 18 month average turnover. If I take this job, I will quit in a month, without notice, if somebody offers me 5% more, since you view me as a commodity.” It has disgusted me enough that I’ve left tech entirely and instead am about to buy an apartment building. I would rather be a rent seeking parasite than get paid less than interns and junior engineers with 2 years experience.
  • ThalesX 6y ago
    Two companies ago, I was tech lead for a small team of 3. I asked for a regularization of my pay check as I was getting 60% market value; 90% or I’m going to look elsewhere. I told them they have 6 months to figure out what they want to do with me because I don’t like dropping projects just like that. They fought me the whole 6 months to keep my low pay. In the last day of the 6 months, I went and offered my resignation and the manager smiled at me, with a lot of proud in his voice, informing me that they debated and my salary would go up to 80% market value. It has disgusted me enough that even 200% would have made me leave.
• xyzelement 6y ago
  > Let’s say you hire me for your company in San Francisco and pay me $150K. .. But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of “cost of living”. Why? My value to the company hasn’t changed! The average article/comment on HN is extremely confused about how compensation works. This is a huge problem because if you don't reason about comp well, you're guaranteed to make suboptimal moves for yourself. In the example - does the author also expect to pay SF-level rent in Tulsa since "the value of housing to me hasn't changed?" Nope, because of the scarcity dynamic: if you HAVE to be in SF, you are forced to pay SF rent. If you can be anywhere, you can follow inexpensive supply. If you understand that, you can understand the employer side. If I HAVE to have a SF programmer, I HAVE to pay them SF level rates. If I can have a programmer anywhere in the US, I can follow the supply. So I pay a Tulsa programmer a Tulsa salary. The fact that he once lived in SF is irrelevant to the equation. I totally get why you don't want to hear that but that's how it is. It doesn't make sense to pay you more just because you were once in a pricier locale any more than you will pay more for rent just because you once did. I am making this clear because I find that it's important to understand reality you're operating in. If you are with me so far on this argument, you can follow it to the natural conclusion of how you can make big bucks: don't be generic. If your biggest salary driver is your proximity to the office, it was always a matter of time. Instead, work on developing combinations of knowledge/skills/experience/network/etc that are valuable and unique. That's always been my strategy and while I worry about many things in life, I don't worry about a Tulsa version of me driving my salary down (even if the version of me in Tulsa is me...)
  • true_religion 6y ago
    If a company hires someone in Tulsa and then they move to San Francisco will the company pay more? The end goal of location based compensation seems to be encouraging everyone to live in a low cost area, and take a lower wage thereby saving the company money. I can see why it makes sense to the company, but as an employee I wouldn't support the idea. We may not have a software union, but the least we can do is be critical of ideas that will directly lead to paycuts.
    • xyzelement 6y ago
• maytc 6y ago
  From my experience working remote, there are two intertwining issues. Should geography factor into an employee's pay? And how much should pay differ in different geography? My answer to the first is yes. The second however is a bit more nuanced. The first case is when employers find the best and brightest talent from all around the world and expect these employees to work together and deliver similar value. In this case I think globally fixed base salary * a cost of living index multiplier capped at 10-15% difference makes the most sense. You don't want the pay discrepancy here to be too large as these people work together on the same level. For example, using local market rates, a Bay Area employee will likely earn double someone in the EU for the same role. The second case is when employers want to outsource work to a cheaper labor market. In this case, expectation is that the workers will not be of equal skill and/or the work can be done with little training. Another way to look at this, the relationship is more hierarchal. The HQ is managing the remote worker for work for example. In this case I think a competitive pay relative to the location's market rate make sense.
• new_here 6y ago
  The remote tech workers and manufacturing labourers compared in the article are both still subject to the same market forces. Remuneration is the equilibrium of what a company is willing to buy at and what the worker is willing to sell at. A worker will want a higher price and a company will want a lower price. If they agree at an equilibrium then an employment contract is signed. Manufacturers have leverage to lowball the salaries of workers because if a worker declines to sell their labour at a low price, then the company can likely find other sellers because there is a large supply of unskilled labour. But if the supply of a specialised labourer is limited and the company really needs it, then the company has to consider more carefully if they want to pass on the deal or if they want to buy the labour at a higher price. If Facebook now chooses to pay lower salaries based on the cost of living of a worker's location, then that is their risk to take as they'll open themselves up to more competition. It's up to the remote worker to decide if they want to sell their labour to Facebook at that price or if they're comfortable to decline and look at their other options, which depends on the demand for remote workers of their particular skill set.
• semiquaver 6y ago
  Location based pay is generally set based on _cost of labor_, not cost of living.
  • emteycz 6y ago
    And cost of labor is generally at least the cost of living.
    • semiquaver 6y ago
      Sure, but they vary by a lot. For example, engineering salaries in Canadian cities are roughly 60% of US cities with comparable cost of living. I see people talking about “cost of living” being an unfair criteria to set salaries and I agree! But that’s a strawman: almost no employer uses that to set salaries, they use a much more sensible number: the estimated cost to hire a replacement in the same area.
      • emteycz 6y ago
        That's exactly the point - it's not good for people when the market rate goes too close to or below cost of living. 60% of cities having the same pay are irrelevant when there's the rest of the world, which is generally poorer.
• malka 6y ago
  Why should I be truthful when my employer ask where I live ?
  • yawaworht1978 6y ago
    I have had this exact situation once way before the covid situation. And I did not take advantage, I should have perhaps. Cannot even say lesson learned, covid will likely be the new normal for a long long time.
  • ghaff 6y ago
    For one thing, you're probably committing tax fraud if you lie.
  • hackissimo123 6y ago
    If you're going to lie, make you sure you fake the timezone in your git commit timestamps.
• inglor_cz 6y ago
  I wonder to which degree do the companies still consider remote work subpar and count the expected loss in output into the total remuneration. It isn't a given that people will work less at home, lone introverted developers may actually increase their output, or people who were freed from constant interruptions at their workplace. But people with family, especially with young kids, may really be way less efficient when working remotely.
• daxfohl 6y ago
  Soon the employer side of the debate is going to be "move somewhere cheaper or you're fired".
• ironmagma 6y ago
  Again with the corporate shills. > Companies reduce your pay because they can. And employees increase their pay because they can. There will always be at least a few companies that don't partake in this location-based BS, and the rest of the companies will have to compete with them somehow.
• MrPowers 6y ago
  Think the programming talent pool is increasingly getting split into run-of-the-mill and superstar developers. The location based pay argument depends on if you're an average or superstar employee. Average employees (e.g. building CRUD websites) will get location based pay because that's what the market dictates. Superstar employees, people that are unique on the global scale, will get superstar pay, regardless of location. In the Spark world, there are few people that are able to understand the source code, optimize Catalyst plans, write huge data processing pipelines, etc. These types of employees won't see location pay adjustments. Basecamp pays superstar rates for superstar employees. Factory workers that perform "routine functions" earn location based wages.
  • nnp7000 6y ago
    Yes, I feel pay for developers is going to become more bimodal as time goes on; similar to lawyer compensation.
    • MrPowers 6y ago
      Yep, agreed. Here's an article for the bimodal nature of starting salaries for lawyers for interested parties: https://www.biglawinvestor.com/bimodal-salary-distribution-curve/ https://www.biglawinvestor.com/bimodal-salary-distribution-c... The upper end of the biglaw salaries was capped because of an unspoken "cartel pricing cap". Big law firms don't want to compete for the upper-echelon talent. Not sure if tech companies will be able to informally collude in such a manner to cap the upper end of the bimodal curve.
      • phendrenad2 6y ago
        This is fascinating. I wonder if doctors and engineers and other knowledge-based professions have a similar distribution if you look hard enough.
        • deleted 6y ago
          [deleted]
• gamesbrainiac 6y ago
  As a Bangladeshi, I can tell you that the workers in my country don't have proper unions. They can't negotiate. Salary is the last thing on their minds, they can't even negotiate safe working conditions. They are uneducated, so they don't know what they deserve. See here -> https://en.wikipedia.org/wiki/2012_Dhaka_garment_factory_fire https://en.wikipedia.org/wiki/2012_Dhaka_garment_factory_fir... So, the cheap stuff that you're getting is because someone is getting a super bad deal, by exploiting the heck out of workers. Same in China. The garments factory owners are walking away with tonnes of money, leaving the workers high and dry. The more _subtle_ point that the author is making, is that, "wait, if people realize that they can get awesome developers in developing nations for a lower price, I'm not going to get hired any more in my over-priced city". Good, move to a place where your salary is worth more, and work to enrich that community. Why should SF and NY get all the benefits of economic growth?
  • bagacrap 6y ago
    I have a feeling that many of the engineers who live in locations far off from SV such as Bangladesh, who do have the skills to make it as a FAANG employee (for example), already choose to move to SV/London/etc and collect that salary. If so, there shouldn't really be all that much untapped potential* in the third world. The way FAANG companies greedily hoover up the eligible talent pool (regardless of whether they have good project ideas for those folks to work on) makes me think it's not likely they'd overlook a vast pool of talent that's cheaper and just as productive. *Not counting those who never had access to education or a computer to become fully realized engineers in the first place. Just commenting on ready-to-go software engineers.
    • hh3k0 6y ago
      Not everyone is willing to leave family, friends, and country behind.
      • JoeAltmaier 6y ago
        But its a larger fraction than ever before in history, its pretty safe to say. So the problem is perhaps the smallest its been, and declining. That's a positive thing.
• CapitalistCartr 6y ago
  If I ask for a raise because I just had a kid, my boss rightly tells me my personal life is the company's respinsibility, my personal life isn't a basis for my pay.
  • Spooky23 6y ago
    When he whines about how difficult it will be to replace you when you leave, remind him that management’s failure to plan isn’t your personal responsibility.
  • Jabbles 6y ago
    Maybe not, but this is reasonably similar to expecting paid paternity leave, something that is common (and mandatory) in many countries.
    • CapitalistCartr 6y ago
      I was more aiming for, "If my personal life isn't a basis for a pay raise, it's damn sure isn't a basis for a pay cut".
• yowlingcat 6y ago
  Another comment brought up optionality, and that's certainly part of it for big companies -- so much of how much you're paid is directly related to their perception of your own optionality and how you and others like you bucket into their leveling system to keep the buckets full enough. For smaller companies, I think fungibility is another way to look at it. Fungibility is sort of taken for granted at big companies because it needs to be there to grow past a certain size without imploding. But small companies can make a lot of money by accepting non-fungibility and keeping total headcount minimal. What I think this means is that they'll probably be a lot more inclined to dismiss location-based pay because for a growth inclined company, it's basically a rounding error in their cost benefit analysis. You need capable people to do stuff /and/ work well with other people, it's hard to find them anywhere (even if you're looking globally). If someone's doing good work and you want to pay them more to incentivize them, it's not going to be a huge pain to get that checkbook control and the CEO is likely to implicitly sign off on it. The same can't be said for big companies.
• Decabytes 6y ago
  I think it is reasonable that companies wouldn't pay silicon valley prices for someone living in middle of nowhere Idaho. With that being said I think part of the issue is that most people are not being paid enough in general, and with the increase in student loan debt, stagnation in wages, and overall less buying power that people have today, the idea of having wages cut feels very bad. That compounded with the fact that companies already look for ways to pay you less, this is just adding another reason. It's also important to bring up that the company will save money by not having as large of an office (or even having one), saving on any commuter pass subsidies, etc so just cutting wages for remote workers, puts more money in their pocket. And what are they doing with all this extra money? Are they hiring a few more employees in those teams that have been begging for extra hands for years? Are they reinvesting in the company, giving more employee benefits, setting up funds for employee hardship, helping employees set up a remote work space, helping employees relocate? Or are they just using the money and doing stock buy backs, pocketing the extra change, and expecting people to continue working in the same environment as before, just from their bedroom?
  • bagacrap 6y ago
    I think they should pay you /more/ to live in Idaho. Clearly California is an extremely desirable place to live, and too many people do elect to live there, causing issues with: traffic (pollution), wildfires, power outages, affordable housing shortages, long lines at the DMV. We need to add more disincentives to living there in order to load balance the population a bit.
• heisenbit 6y ago
  The elephant in the room is not whether I‘m worth 150K in S.V. but 50K if my cost of living is lower elsewhere. The real issue is what enables S.V. companies top pay three times as much. Why is it not possible to set up a similar company elsewhere which makes similar revenue and should be either insanely profitable or pay 150K and employees would become insanely rich as cost of living are lower. I think neither S.V. nor the market is rational.
  • Ericson2314 6y ago
    https://en.wikipedia.org/wiki/Economic_geography https://en.wikipedia.org/wiki/Economic_geography cities matter. You might say "but...but...the internet". Well, perfecting remote work is just the beginning. The unplanned/sponteneous interactions that lead to new relationships also matter. Maybe when we get that soviet internet that browses you. > I think neither S.V. nor the market is rational. I agree, and it's possible general "bullshit jobs" and Q.E./softbank bubble type phenomena dwarf the intrinsic value of cities. But still, those are orthogonal effects. Contrary to most American nostalgia, going rural does not defeat the bullshit.
    • SilasX 6y ago
      >cities matter. >You might say "but...but...the internet". Well, perfecting remote work is just the beginning. The unplanned/sponteneous interactions that lead to new relationships also matte Yes, I can totally get why anyone would pay a premium for someone who is physically present, or can be on relatively little notice. But that only be relevant as far as "local or remote?", where the former gets a premium against the latter, and it shouldn't care about looking up the specific CoL of which remote location you're working from (so long as business hours are maintained). The issue is that location-based pay does do this.
      • dasil003 6y ago
        Yeah a few years ago I was looking around at companies and had some interest in joining Gitlab. Then I saw their pay scale for Oakland and it was laughably low compared to SF even though that was all within my local job market. Ultimately remote first companies that don’t do this will win the talent war and steadily push remote salaries up. Depending how successful they are it may also push major market salaries down over time.
• motohagiography 6y ago
  Please, for the love of anything meaningful, read a book about negotiation before trying to sound this stuff out. If you accept the term "location based pay," you have basically handed your wallet to the "wallet inspector," and you are being hustled. It's just like "policy," or "pay scale," they are utter bullshit if you have something of value. The media people who write articles about whether "location based pay, is it good?" are literally just 20-something bloggers with zero life experience trying to get published, and their editors and publishers have a stake in promoting the idea that your work should be cheaper. If you want to pay me based on location, I'm going to charge you based on location, because I know what kind of prima donnas people from the bay area <or insert region> can be and I charge a risk premium for having to put up with their nonsense. If that sounds offensive, why should using their perception of my housing situation as leverage be legit? If you are looking at a role, you need a clear idea of the total comp you are looking for as a part of your own plan for your life. Comp isn't a reward for good behaviour unless you are a prisoner begging guards for privileges or an animal doing tricks for treats - it's earned from value. When an HR person tells you what they want to pay you, say, "that's interesting, thank you, here is the data I have on what this role looks like from sources x, y, z, and these are the criteria I am using to evaluate the total package value." Those X, Y, and Z sources and references are things I've written about here before. Please, please, please, if you write code, read a book on negotiation.
  • zamalek 6y ago
    > total comp you are looking for as a part of your own plan for your life. I very recently learned a damned hard lesson in this. I believed in the product, I was given interesting problems to solve, there were good benefits, there was a good culture, I had stock options. The pay was shit, the options evaporated during a merger, and I want to buy a home. Next round, I'm getting paid my worth and it's going to remote. "Believing in the product" is just a load of bullshit that C-suite spin to enrich themselves. They believe in nothing but their own bottom line, so why shouldn't you? Figure out what you are worth, what working conditions (overtime etc.) you can tolerate, and do good work for good money.
    • tachyonbeam 6y ago
• paulie_a 6y ago
  This is just another example of the imbalance of the hiring process Who a.i to complain: I'm the person. Interviewing your company
• 0xbadcafebee 6y ago
  > Why? My value to the company hasn’t changed! Of course it has. Go read the definition of "value". It's the market price, or a fair return or equivalent value, relative worth, etc. You are literally less valuable if you work in some podunk town where cost of living is half. They pay you more to work in SF because in SF you're more valuable. Because it's a market full of other engineers who all demand (and will actually get) more pay. The company would love to devalue you, but they can't in SF. You have to remember that they aren't paying you relative to your worth to the products. They're paying you relative to the costs necessary to produce the products. They want to reduce those costs, and so they will reduce those costs. One of those is paying the market rate for an engineer. Paying over the market rate is just throwing away money.
• deleted 6y ago
  [deleted]
• prlambert 6y ago
  "If I worked remotely for Facebook and wanted to move somewhere central where rents are three times higher, would Zuck give me a raise? Somehow I doubt it." I can't speak for Zuck, but Sundar does. I work for Google. We also have local market indexed compensation (which I support, but not relevant to this point). If you move to a city with higher labor prices, you get paid more. I've seen it multiple times with people in my team. It's a total non issue, just paperwork. Very very standard.
  • blackshaw 6y ago
    That's not really what I meant though. I don't work for Google, but I imagine their "local market-indexed compensation" assigns a single weighting to London, even though the CoL within London varies by an order of magnitude (at least in terms of rent) depending on where exactly you live. If we take the location-based pay argument to its logical extreme, why introduce an upper limit? (Yes, I know it's not really this simple. Just trying to provide some food for thought.)
• jrlocke 6y ago
  Location is simply a convenient cudgel. It would be just as defensible to trot out family size based pay (greater pay for more mouths) or net worth based pay (greater pay for lesser existing privilege) or the like. Location just gets those in power what they want: higher personal comp and lower employee salaries.
  • carapace 6y ago
    I agree. This is the same industry that formed a "wage-fixing cartel" against their own developers and engineers. I'm sure that they will do anything they think they can get away with. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L... > The defendants are Adobe, Apple Inc., Google, Intel, Intuit, Pixar, Lucasfilm and eBay, all high-technology companies with a principal place of business in the San Francisco–Silicon Valley area of California. Pando had a story about the scope of the fraud: > "Revealed: Apple and Google's wage-fixing cartel involved dozens more companies, over one million employees" > Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees. https://pando.com/2014/03/22/revealed-apple-and-googles-wage-fixing-cartel-involved-dozens-more-companies-over-one-million-employees/ https://pando.com/2014/03/22/revealed-apple-and-googles-wage... There's a lot more coverage: https://pando.com/tag/techtopus/ https://pando.com/tag/techtopus/
• phendrenad2 6y ago
  > Should remote workers have their pay reduced if they move somewhere cheap? That makes the most economic sense for the company, as they can judge employees based on their local office, not the other global employees at that salary level. Also it's good to not have people in the same office doing ostensibly the same job with wildly differing salaries. > Some call this unfair, and they’re probably right. Agreed. But fairness rarely factors into business decisions. > Why? My value to the company hasn’t changed! I am still worth the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company? By moving to a low-COL area, you have proven to the company that you can't handle the high-stress high-stakes world of a financial center. The company usually has a bad idea of your worth. What do you think happens when you send them an indicator like this? > If I worked remotely for Facebook and wanted to move somewhere central where rents are three times higher, would Zuck give me a raise? Somehow I doubt it. No, but you can go next door and interview at Google the next day, and get bumped up to the standard big-city salary. So it's a pointless argument. > Companies reduce your pay because they can. Not only that, they have to to compete with all of the other companies that do it. They made a risk/reward assessment and decided that the ill-will toward their employees and potential resignations is worth the salary savings. The rest of the article dives into comparisons with extremely impoverished areas, which I don't think are relevant for a discussion about remote work.
• lordnacho 6y ago
  The real question raised in this blog is actually why we allow capital to move and not labour. People who are wondering why living standards in the West have underperformed productivity should take a look at that question. Of course he's right about location based pay, too. The thing that ties it together is negotiating position. Chances are if you're a firm that many of your employees will in fact be OK, implicitly or explicitly, to share the gains from relocating to a cheaper area with your company. If you move to a place where you have 20K lower expenses, it's reasonable to think you'll share some of that with your employer, if only because you find it inconvenient to find a new one. It is of course true that you're as useful to the company as before, but it's a poker game. It's perfectly fine for you to insist on the same pay, but you'll have to run the gauntlet of your employer calling your bluff. I foresee more movement on this issue. Different firms will try different policies, and different employees will try different jobs. We'll get some moves to read about shortly, once this has played out a bit. One thing is for instance simply representing you live somewhere other than where you spend your time. Someone is going to find a friend in central London, NYC, or SF, and swap addresses with them. For instance if I live with my family in the suburbs, I could "swap" with some younger person living in town centre, and give them a piece of the action instead of my employer.
• spoonjim 6y ago
  I think that the optics of “location based pay” are going to kill the concept in name but not in reality. Nike doesn’t offer “location based pay” in its factories. It doesn’t tell people in Bangladesh that they will be paid 20x as much in San Francisco, because they won’t be. Companies will open engineering offices in say Texas or Florida and say “the job is software engineering. It pays $80k a year, not $280k. Take it or leave it” and eventually through attrition or “incredibly difficult decisions” end up closing down the San Francisco offices.
  • deleted 6y ago
    [deleted]
• yelite 6y ago
  Before remote working becomes a trend recently, location-based pay is just a result of price being determined by supply and demand, plus the fact that location is a major constraint for both job seeking and recruiting. For anyone believes their work has intrinsic value, if you try to calculate this value into a number (salary), ultimately you need to use some kind of market reference (Like, I am able to get an offer of $xxxx from another company). This market reference is heavily based on location if remote work isn't a viable option to you. Now, why do companies still stick to location-based pay when many other companies are embracing remote work? I think that's just cultural inertia and eventually software engineers will be paid without taking their location into account. But that's not a good thing for everyone, because the salary at that point will probably be much lower than what people get paid in SF area today.
• iEchoic 6y ago
  If you're running a remote company, there's another reason (besides fairness) that location-based pay is a bad idea: it makes it harder to create a compensation structure that incentivizes high performance. If Person A is outperforming Person B, but is getting paid less because they happen to live somewhere else, you lose the ability to claim that you compensate people for performance without sounding like you're talking out of both sides of your mouth. Not only is Person A not going to be happy about that, Person A is not going to believe that compensation at your company is based on performance. Companies that want to hire and incentivize the best people need to be congruent in their messaging around compensation and performance. Claiming that compensation is performance-based and then including a factor (location) that has no bearing on performance is incongruent and will not help to develop the right culture in this regard.
  • deleted 6y ago
    [deleted]
  • kmonsen 6y ago
    I mean it’s, but if you don’t take location into account then suddenly you can only hire from low cost locations where the talent does not exist. It’s really unfair whatever you do, and right now there is no good solution. Partially because there is no good way of understanding the value of an employee.
    • benrbray 6y ago
      What do you think of employee-owned companies as a way to accurately assess that value? It seems like capitalism and the question of whether profits should go to laborers vs owners is central to this issue.
      • kmonsen 6y ago
        I mean I like it, but I don’t think that’s very relevant as I don’t have a few billion dollars. There is just so much money splashing around in investor driven companies right now because of cheap money that I don’t see it working out. I also think investors provide more then money that is hard to overcome. They have a network you will only get access to if they get cheap investments and for some type of companies that is necessary.
• DanHulton 6y ago
  It's heartbreaking to read articles like this where the author _almost_ gets it, and then swerves off at the last second into "but there's nothing we can do, so shut up in case it gets worse." Absolutely, it's not easy to unionize, organize, and work towards change, but we don't have to _just accept_ offensive payment practices, working conditions, and side-effects from globalism.
• softwaredoug 6y ago
  If some companies do location based pay, and others don’t, won’t the market naturally begin to favor those that don’t?
• mhb 6y ago
  Also apply this to the price of college whose price is similarly set based on the circumstances of the applicant rather than its value.
• joshuaissac 6y ago
  > Let’s say I manufacture a shirt in San Francisco and you buy it for $100. [...] $100 is a price you’re willing to pay to wear it. > [...] if I [...] make the shirt in [...] Bangladesh, you want to cut the price and reduce it to $20, because of “cost of living” for the workers This is a strawman argument. If I am willing to pay $100 for a shirt, I would not demand the price be cut just because it was made in Bangladesh. Given a choice between a $100 SF shirt and a $99 Bangladesh shirt that are otherwise identical, I would buy the latter. I think many others would make the same choice. The only times I can think of where I would discriminate by location are if: 1. I am trying to support a particular industry in a particular region 2. I am trying not to support a particular industry in a particular region 3. I am actually paying for the "Made in X" label rather than the shirt itself, for social status, prestige, etc.
• comprev 6y ago
  I have told clients they are entirely within their rights to work with another contractor who probably charges 1/3 of my rate from a cheap "developing" European country. It's up to them to assess if the additional costs working with me are value for money. To this day, they are still my clients.
• aurelianito 6y ago
  I think it shows that employers are a cartelized oligopsony. That's why they can get away with paying different salaries based on anything but performance (in this case, location)
• astura 6y ago
  It's SOP that relocations in neatspace comes with a cost of living adjustment, it makes sense that remote employees would follow.
• praptak 6y ago
  So just because capitalism exploits some people harder than you this somehow casts doubt on your right to complain? I honestly don't see any other argument in the article, so apologies if this sounds like a strawman or a nitpick - this is definitely not intentional.
• maxk42 6y ago
  Throughout my career I've had recruiters attempt to get me to produce a "salary history". My polite way of telling them to go fuck themselves is to say "It's none of your business and it doesn't matter: This is my price and if you're not willing to pay it then we're done here." Still get the job offer probably four times out of five. There is no world in which telling them this info can be used for any purpose other than to attempt to pursuade you to take an offer for less money. Location-based pay is the same thing in a different wrapper and my response to it is the same.
  • ljm 6y ago
    If I was asked for that kind of info I'd hang up the phone. Recruiters (in the UK here) may ask what you're currently getting paid, but you'll never be asked to prove it. That's when you inflate the number to what you expect, or something in line with the market, taking some care not to be completely ridiculous about it. A good recruiter will try and negotiate up on your behalf, especially if their agency's fee and their commission is based on a percentage.
    • maxk42 6y ago
      Yep. But not one recruiter in ten is good.
• erikerikson 6y ago
  Pointing out the difference in our thinking is great. I appreciate that. There are a couple problems. The inequity of wages in Asia to those in "the West" are a temporary artifact that is slowly receding. Wages have been rising as has cost of living. Location based pay says, I see you reduced your costs and I want to capture your increased profits. Increased efficiency is a normal mechanism for businesses to increase profits but you're an individual and you don't get to do that. More raw: I think I can get away with giving you less. It reflects a growing problem in our society, that we are pulling up ladders to prosperity by reinforcing natural dynamics to exacerbate them (i.e. bigger slice). Often we're doing so in ways that reduces additive economic outcomes (i.e. smaller pie). The challenge with location based pay is that this makes the offered salary less competitive and the labor more competitive. This increases the probability of turnover so those costs eat up the gained efficiency. However, the losses are booked in an illegible manner which allows them pay reducer's biases to avoid noticing them.
• 6gvONxR4sf7o 6y ago
  There’s absolutely no reason they need to know your location before making an offer. “Where am I? Pacific time zone in US tax jurisdiction.” I hope location becomes something people talk about in negotiations like salary expectations and previous compensation. “Don’t tell them where you live until you get an offer.” “Get them to name a number before you say where you are.” “Recruiters who force you to tell them up front are a huge red flag.” There’s a big list of questions you aren’t allowed to ask a candidate because while yes they do indicate that a candidate has a weaker negotiating position and therefore paying them less is “fair” in a market sense, we have collectively decided that exploiting that market disparity is unfair. So you aren’t allowed to ask it anymore. In other words, the market doesn’t define a “fair” wage. Fairness comes from elsewhere. Hopefully “what city are you in” becomes an off-limits question ASAP. You live in a historically disadvantaged location? Great we’ll pay you less. I wonder what kind of disparities that’s gonna cause.
• draklor40 6y ago
  You are paid the minimum the company can get away with. No more, but a lot less.
• coldtea 6y ago
  >The label in my shirt says Made in China. Likewise for my jacket, and my jeans were made in Bangladesh. “Equal pay for equal work” is a nice idea, but I don’t think we apply it universally. Well, seen from one aspect we should. Clothes, gadgets, etc, should become more expensive, and those workers more well paid (let's ignore atm whether they'll still be given those jobs - perhaps jobs would move closer to the buyers in that case, though I doubt it). This will discourage planet/society killing conspicuous or mechanical consumption of BS, and things like "fast fashion". https://www.monbiot.com/2012/12/10/the-gift-of-death/ https://www.monbiot.com/2012/12/10/the-gift-of-death/
• f430 6y ago
  > Facebook, one of many giants to be shifting permanently to a more remote-friendly culture, has announced that those who move to lower-priced locales will have their salaries reduced accordingly. There it is. The cost savings of giving workers a haircut because they moved to a place with low cost living is the TRUE driver from WFH-forever initiative.
• asdfasgasdgasdg 6y ago
  I don't really understand why we're talking about this. There's not any realistic regulatory approach to preventing companies from paying based on CoL. And absent such regulation, the market forces are far too powerful to be counteracted by internet comments, no matter how strident.
• ajmurmann 6y ago
  This debate is made more complicated than it needs to be because almost everyone keeps getting confused between cost of living and cost of labor. These two are somewhat correlated but can easily deviate from each other especially for a given industry in a given place. We are right now in a transition phase during which employers and employees are trying to find market equilibrium under these here conditions were remote work suddenly is a bigger option. I expect that we'll naturally arrive at a few different pay ranges for similar work that result in essence in different markets based on constraints required by the work. That might be based on a requirement to be in a specific location, time zone, country (for legal reasons), or unconstrained as long as the work gets done. Ultimately I expect this to result in location mattering a whole lot less for most software job's compensation. This means much lower comp for folks in SF or NYC and much higher comp for folks in places that currently have low cost of labor like the middle of the US, but also Central and South America. Remote work is gonna be the great equalizer. It's exciting to be able to work from more locations. On the other hand the dream of a silicon valley salary for folks who moved to Bozeman, MT will last a short time for the average developer. And salaries in SV will also adjust down as fewer jobs will require being there and now compete with developers in more locations. Edit: typo
  • jaarse 6y ago
    As someone who is more interested in economics than software, I believe you are 100% right. Once companies figure out how to have employees work remotely, there won’t be as many high priced SV developer jobs. Companies just might decide to higher all (insert Eastern European block country here) developers because they are “local” to each other and are willing to work for a fraction of the cost. It’s not about what you are worth. It’s what companies can replace you for, and if you are remote that replacement value goes down.
    • ummonk 6y ago
      They could have done that in the past too (and plenty of companies did - just not the ones that went on to be the most successful). Outsourcing to one country didn’t require remote work.
• ehnto 6y ago
  I think it's a fallacy to compare different countries in this way. If you take the "What right do you have to complain" route it would just be a race to the bottom, and guess who wins? The companies who get to pay everyone less. You can advocate for making your local community better while still advocating that other parts of the world who have it worse off as well. However I think missing in this argument is an admission that SV wages are ridiculously inflated thanks to the playground of economics software tends to play in, which is what is causing this issue to crop up in the first place.
• vhiremath4 6y ago
  So we don’t do location-based pay at our company, but we do factor in PEO costs in order to ensure folks are full time employees for legal reasons. So, if you’re a senior software engineer in Nigeria (for example), your salary would be exactly what we’d pay a senior software engineer in SF, NY, etc. but we’d lower the pay by ~40% (for example) if that’s how much the PEO firm charged us to operate within that country. I hate that we have to do this, and I’m really looking for PEOs that charge less but they all seem to take a significant amount of capital so we’re starting to consider spinning up entities in order to scale more efficiently and take on lower operational costs. However, then we get back to having to hire within that country’s entity to get that benefit (Ireland for example). Anyone know of cheaper PEOs or better ways? I want my team getting paid as much as possible because, at the end of the day, it’s the same cost to our business anyway.
• EVa5I7bHFq9mnYK 6y ago
  But that's always been the case. I worked remotely in a 3rd world country for $1500 a month, then moved to SV and saw my salary magically sextuple, for the same exact job.
• gunnr15 6y ago
  Author lost me at “you get paid what it takes to make you do the job” In a distributed future (for tech at least), information re: my value to the company will also be increasingly available. This availability of information + liquidity of talent will create a more perfect market where “what it takes for me to do the job” = how much value that job creates.
• carapace 6y ago
  > But there’s another point I haven’t seen get as much attention: what right do any of us in the rich world have to complain about “location-based pay”? > The label in my shirt says Made in China. Likewise for my jacket, and my jeans were made in Bangladesh. “Equal pay for equal work” is a nice idea, but I don’t think we apply it universally. I actually heard that "record scratch" noise in my head. This is a totally different thing. Apples to oranges. If an European or American textile worker moved to China but was doing the same work for the same company and the company tried to lower their salary that's the same problem. If a company fires an European or American textile worker and outsources their job to China, that's not the same problem.
• sschueller 6y ago
  Since gitlab does location base pay I should ask them for location based price. Oh wait i'ts the same for everyone!
• asimpletune 6y ago
  The best explanation for this is to think of yourself (assuming you’re an employee) as a small business with one customer.
• ummonk 6y ago
  The analogy at the end is not accurate. I as the consumer don’t pay less for a shirt made in Bangladesh - I buy the highest quality shirt that is offered at the lowest price, and don’t factor on the cost of living (or mote accurately cost of labor) of where the shirt was manufactured. Regarding the widespread practice of locale-adjusted pay (it generally is not cost of living adjusted e.g. London is paid far less than SF despite a similar cost of living), it is a clear example of why the argument of “women can’t be paid less because companies would hire more women if they were cheaper” is simply false.
• ogre_codes 6y ago
  Pay should be pegged to your skills and any demands the job is placing on you. The only time changing pay based on location makes sense is if where you work is a requirement of the job. Paying people more because they work at an office in a high rent area makes sense. Varying what remote workers get paid based on where they choose to live makes zero sense.
• fishnchips 6y ago
  From my perspective as an employer the pay is primarily a function of scarcity. Location-based pay would make perfect sense for roles where supply is abundant and location is irrelevant. Example: simple data entry jobs of the kind you can outsource to Upwork. When looking for senior software engineers the supply is very limited relative to demand, and as a startup [0] we don't have the luxury to discriminate based on location other than timezone (though we're somewhat flexible there, too). Hence, we'll pay the right candidate the right salary, regardless of whether they're physically located in the Bay Area or in rural Vietnam. Because if we don't, someone else will. [0] Yes, we're hiring - https://spacelift.io/careers.html https://spacelift.io/careers.html
• ralphc 6y ago
  If it's all remote, how does your employer know where you're really at? I'm waiting for the story where someone's caught claiming to live in SF or NYC for the pay but really lives somewhere rural.
• u678u 6y ago
  It doesn't make sense for remote workers to be paid based on location. But that doesn't mean remote workers should be paid as much as those who are working in the office in SF. At the end of the day its supply/demand. When everyone worked in an office supply of great developers was limited. If you're remote suddenly the pool is larger. People used to live in low COL for other reasons not just cost. You can argue that all the best developers used to live in the Bay Area, and if those people are distributed across the country the supply is the same.
• cactus2093 6y ago
  Does anyone know how equity is affected by remote policies at most big tech companies? I think that perhaps it isn't? Companies take back unvested equity if you're terminated or resign, but I don't think I've seen anything in my equity agreement docs that would let them take some of it back for a cost of living adjustment (though they could probably adjust the terms of new equity grants going forward). If I'm hired in a low CoL area I bet they adjusted for, but what if I was hired in the Bay Area and then move? Am I crazy or is there perhaps a huge loophole here, at least in the short term, that nobody is talking about? Let's look at a senior engineer (E5) at FB on levels.fyi - $380k total comp comprised of $196k base, $30k bonus, $154k equity. If your base & bonus get cut by 50% by going remote but you keep the equity, that's still $267k a year so your total comp has only been cut by 30%. And hell you could make up a significant amount of that in taxes alone. For a staff engineer or manager at E6/M1 level it's even more dramatic - $578k total comp down to $436k, which is only a 25% decrease and just a stupidly high compensation for somewhere with a low cost of living where, say, you can buy the equivalent of a $3M silicon valley home for well under $1 million.
• InstantCapital 6y ago
  I guess this is the digital version of a captive audience, i see it becoming more popular.
• tomaszs 6y ago
  I have heard about the idea twice during two job interviews. And I closed negotiations immediately. The reason why: These companies reps told they do it, to prevent inequalities. However this is a straight in your eyes lie. If I will go to Apple in my country, they won't sell it to me two times cheaper that in the US. But the most important issue for me: With proper salary I can invest where I live. I can hire people. Create jobs, support for foundations, pay more taxes. All of this combined helps to lower inequality. When I have to earn less because I am from poor country, it just cements the inequality. That is why I consider it an offensive lie, and an immediate deal breaker. Actually such companies are immediately blacklisted by me. Because what they really say is that they want to hire me not because of my skill, but because I am cheap person from a cheap country. It is not only about me. But also about employees from their countries. How should I feel if a company explicitly tells that it will fire local skilled professional to replace him with cheaper me. He has family too. It is not kind of a deal that interests me at all.
• esotericn 6y ago
  I just reject WFH out of hand for these reasons. If the culture of software development remains primarily WFH, and it becomes too onerous for me to find a job that's actually an in-person, in-office role, I'll just leave, wasting all of the experience I've built up and contributing further to the supply issues. It's just sad. Terribly sad. You want to sit at home and only look at a screen - that's cool, enjoy your dystopia. I'm out, I don't need this shit.
• mbrooks 6y ago
  I guess this is the digital version of a captive audience, i see it becoming more popular.
• benlivengood 6y ago
  Who are we to complain? Location-based pay is 80% political because immigration law keeps the majority of the world's people from immigrating to countries with better human rights laws than their own. The U.S. fought a civil war over the biggest human rights abuse (slavery) so I'd say it's worth complaining about. Disparity of human rights is arbitraged by national governments in free trade (ever wonder why free trade and not free movement?) agreements to allow profit at the national levels on both sides. That explains $10 T-shirts. The reason that SV in particular currently has insane income disparity is because online advertising is a very inefficient market and FB and Google can still afford to set arbitrary de-facto salaries for tech workers. There is a mix of other market disruption and speculative investing that helps to keep the whole thing afloat. The trend in a healthy market should be for tech salaries to normalize with the rest of the world.
• chrisbennet 6y ago
  ".., and I have to wonder if “location-based pay” works in both directions. I live in suburban London, ten-ish Tube stops from the belly of the beast. If I worked remotely for Facebook and wanted to move somewhere central where rents are three times higher, would Zuck give me a raise? Somehow I doubt it."
• jorblumesea 6y ago
  People are vastly underselling the risk associated with remote work. As someone who works with remote workers and developers from the developing world, the idea that companies can just outsource all of this work is a bit of a pipe dream, at least now.
• jdashg 6y ago
  Calls for location-blind "pay based on my value" share a remarkable parallel with the desire for house prices that track a house's uninflated intrinsic value: The market doesn't care what you think it should pay.
• golemiprague 6y ago
  What does it even mean "fair"? You get payed whatever you can negotiate, your skills, location or contribution doesn't matter. There are no rules, just get the most you can, if you can shop get a better salary, if not get what you offered. There is no point complaining.
• bryanrasmussen 6y ago
  Location based pay makes some sense when hiring or applying for a job, I live in Denmark, it is pretty expensive here and I charge quite a lot even in my market. If you can't pay my price I can't afford to work for you, partially because of my location. But let's suppose I am hired, and I decide to move to another location because I am in a position to do so. Basically, the company using location based pay takes out one of the benefits I can derive from moving. Because I work for a company with location based pay I might not be able to move somewhere else until I quit that company! Especially as the company with location based pay probably isn't calculating in the expenses of moving, finding new schools, babysitters etc. all the extra stuff you need to do when you move somewhere new, which if you're making a lot of money for that area can be better handled because, guess what, money makes lots of problems more manageable. So yes if you want to hire me you have to pay me something I can afford and you can afford, but if you want to change my pay based on if I decide to move somewhere cheaper later I don't think I could afford to tie myself to you like that.
• dbjacobs 6y ago
  Location based pay for "in-person" jobs makes sense. You are trying to convince a person to live and work in a specific locale and the requires different amounts of money depending on the location. But for jobs which are fully remote, the pay should be the same regardless of where you live. If a person wants to live in Thailand so they can save more of their paycheck vs living in NYC where they could enjoy city life, that is a tradeoff for the employee to make and the employer should not care.
• k4ch0w 6y ago
  I think we will see a shift where some companies continue paying current salaries, and others will do location-based. The companies who keep paying current salaries will see people with skill move to them. If you're a great employee, you will still have people competing for you and I don't think this should concern you.
• allenu 6y ago
  It's ridiculous to me that a company can say, "Hey, where you live requires less pay for a baseline standard of living, therefore we'll pay you less" but they would never, ever consider saying, "Oh, you live in a town with fewer opportunities and less pay? Well, we'll charge you less for our product then."
  • HNJE 6y ago
    While it isn't due to less economic opportunities necessarily, price discrimination is absolutely a thing: https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination
    • allenu 6y ago
      Oh, I totally agree that companies do it. Where they choose to differentiate in price or pay is based on their whims, so it's not a question of fairness, IMO.
• locallost 6y ago
  I was in this boat a little bit, working remotely for someone in an expensive city. Initially I was paid a little bit less, and probably still am, but not that much. But anyway, at one point my counter argument was: location is not the only factor. If you're not going to compensate people based solely on their performance, then you also need to include other factors, not only their location because it's not the only expense in life. One can have rich parents, and the other parents that need support, etc. One can be a single person, the other can have six kids. You can go on and on. If you go that road it will be hard to figure out any compensation because there are too many individual factors. One other thing is: a company operating in an expensive market will itself be expensive. When they start paying the workers less, I doubt they will become less expensive. Basically somebody will just pocket this difference, most likely few at the expense of many.
• mvh 6y ago
  Anything having the premise “what right do laborers have to complain …” is offensive and ridiculous. (Regardless of who the laborers are or how well paid they are or what form the labor takes.)
• ymbeld 6y ago
  Basically “be careful what you wish for”. Really? I can stop capitalist globalization by merely asking inconvienent questions? Will Nike forego their profit margins by moving production close to wherever their HQ is? Somehow I doubt I have that power.
• GoodJokes 6y ago
  There is no way to be consistent with location based pay. At least not in a way that is clearly just cynical cost cutting. I can halve my rent by moving ten miles away. This is essentially a slippery slope to a company deciding what is appropriate for you to buy.
• spoonjim 6y ago
  Virtually even doing software engineering is thriving from location based pay. If you are in a rural mud hut in a poor country you don’t even get to write code and if you are in the US you get six figures absolute minimum. People only get offended when one company pays two salaries across locations —- not when two different companies set up entirely different businesses based on locational wage, keeping software engineering in San Francisco and sweatshops in the Philippines.
• sbpayne 6y ago
  If the company is not “remote first,” I think there’s a reasonable argument that your value is not location independent. That being said, I can’t really think of a good argument for anything beyond pay based on in-office vs remote.
• csallen 6y ago
  Salary is a negotiation between parties. Looked at soberly, you're the business, your employer is your customer, and the salary they pay you is really the price you charge for your services. They have no obligation to pay more for your services than they think they have to, compared to alternatives on the market. And you have no obligation to charge less for your services than you can get from other "customers". Either of you can negotiate the price up or down, and the other is free to take it or leave it. It's not about who "deserves" what. It's a simple negotiation, like every other business transaction. The more valuable (and less replaceable) your services are, the more pay you can successfully negotiate for. I guarantee you there are plenty of people at these "location-based pay" companies who've negotiated for considerably higher pay than others in their location. Just as there are many businesses (e.g. Apple) who've found a way to charge more for their products than their competitors have. So it's worth learning to negotiate. And, perhaps more importantly, it's worth learning to provide massive value that's hard to replace. Or accepting the tradeoffs if you choose not to. Let's say you mould your skillset to fit perfectly into a commonly-open job description: front-end software engineer. Well great, the benefit is you have lots of jobs you can apply for, so you can easily "fire" one company to go work at another. The downside is you're now in direct competition with a million other people who've shaped themselves to have the same common skillset, so it's easier for companies to fire you. Competition drives prices down and makes you more easily replaceable. But it gives you some safety due to redundancy. That's often a reasonable tradeoff to make, but you should be aware you're making it. If you want the big bucks, it helps to be rarer, and to work at places and in roles where it's easier to demonstrate your value.
  • ZephyrBlu 6y ago
    Did you follow your own advice and negotiate with Stripe when they acquired Indie Hackers? :P.
    • csallen 6y ago
      Of course! I don't claim to be a master negotiator -- far from it. But I did negotiate. And, more importantly, I'm quite differentiated. There was no other Indie Hackers to buy.
• kache_ 6y ago
  Location based pay? "We looked at your '''Peer Group''' and the '''best''' we can offer you is Z" - Yeah, well you can blow it out your ass. There are N (which you know is a lot) other companies willing to hire me, and I currently make X amount (which I will not tell you). If you don't offer me Y, I will not move (which I will also not tell you how much it is). I don't need money, but I'm not going to work for anything less than what I can pull, and I pull a lot already. t. remote worker
• 627467 6y ago
  "Should remote workers have their pay reduced if they move somewhere cheap?" Who is anyone to say one way or another? It's a negotiation between 2 parties. Employee will try to argue that value they bring is indifferent of where they are based and employer will try to argue that employees are a) less valuable when remote and/or b) more replaceable by other similar workers in those/similar locations. Either part will try to call each other bluff. Both will learn that it's ultimately expensive to take an absolute approach and likely to negotiate a middle ground. I don't buy that remote-only companies benefit by being able to quickly arbitrage by hiring only from cheapest places because you can only remain truly remote when vast majority of your workers are all in various locations, not pooled together in certain locations.
• hankchinaski 6y ago
  anecdotal evidence of mine is when i interviewed for a large US tech company for a remote role based in the UK. based on their pay bracket someone living in central london or in a rural village in northern ireland will be entitled to the same pay. how does that make any sense? this all remote work “bonanza” from big tech companies seems to be just another cost optimization trick - all thanks to supply-demand imbalance for remote roles
• teekert 6y ago
  I already get location based pay. My collegues in the US (I'm in the Netherlands) make about 1.5 times my salary. Ok, they need to buy an expensive house in an expensive neighborhood so their kids can go to a good enough school. He also need expensive healthcare, and even then, when he gets cancer he needs significant savings. Our schools are just all fine, and when you get sick, you just get help. My colleagues here in the Netherlands do make the same, whether they are living in Amsterdam or a small village. So I guess location based pay is also about where you draw some lines. Anyway, if my boss would tell me I'd be getting less when I move to somewhere cheaper, I'd say: Ok, bye! Next job. In another country, hmm, not so sure.
• ineedasername 6y ago
  I think we should go a step further. Companies should audit all of the expenses of their employees, because it's not just people living in a low COL area: It's people living in the same high COL area but still living way below their means. Why should a company have to pay an employee who chooses to live in a $2k apartment the same as one across town who pays $3k? And food, or cars... Pets... Kids.... If you choose not to have additional expenses, why should a company pay you so much more than it costs you to live? Want to save 10% of your salary each month? Too bad, company policy says 5% is the max. /S
• deleted 6y ago
  [deleted]
• trhway 6y ago
  >Why? My value to the company hasn’t changed! I am still worth the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company? it did change a lot. Most low COL locations are the locations with comparatively bad job market and that means that by moving to such a low COL you're chaining yourself to that nicely paying remote job. You wouldn't risk to argue with your boss, to insist on your opinion, etc. and instead you're more probably going to become a complacent long-term employee, more and more becoming kind of office dead weight with each year. Different mindset makes a different engineer. Getting $600K at FB in SV is just getting your appetite wet, you're thinking about bigger things while getting the same $600K while living deep in Montana - well, it is a retirement, you've made it.
• Mc91 6y ago
  I started last year living in New York City. Many of my friends have moved down to Raleigh, Charlotte, Atlanta, and Tampa over the past few years, and in spring of last year I got a job offer and moved south as well. Insofar as living expenses - coming from New York I do not own a car so a place near good public transportation was important. I also wanted to live in a nice neighborhood that had other young professionals. This narrowed things down to two neighborhoods - one had a lot of theaters, bars, restaurants, art galleries etc. but had no decent supermarket within walking distance - the other did (and also had my bank and other convenient places). I went with the latter neighborhood. The ballpark for a one bedroom in this neighborhood was $1400-1600, with square feet being one determining factor. Knowing that I would be stuck inside due to Covid I opted for more square feet and was looking for apartments around $1600. A very desirable two bedroom townhouse came on the market for $1700 which was $100 more than I wanted to spend, but it was so perfect I went $1200 over a year. I'm a software engineer, I can afford it. I have a parking space in the building garage that I rarely use as I am from New York City and have yet to buy a car (I rent when needed). I have two bedrooms (one converted to a gym, as public gyms were closed for a while) and two bathrooms. I have a door on a tree lined street where twentysomethings walk by walking their dogs and such, another door goes to the apartment building. I have two parks nearby, one which is pretty nice where I jog when it is not winter. I am two blocks from my bank, a good supermarket, and several bars and restaurants. I have a washer and dryer in the unit. The place was built a decade ago and is all modern appliances. I am less than a ten minute walk from the train station. My office is actually moving next to my train station, but if it re-opens before the move my commute is less than half an hour. $1700 a month. 1000+ square feet, in-unit washer/dryer, first floor door opening to the outside, attached garage, walking distance to train, supermarket, bars, parks - it would be difficult to even find this in the New York metro area. Everything in New York City is at least double the price for something like this. It's a nice place to hole up in and WFH during the pandemic, and not expensive. The reality is if I moved back to the NYC metro area at some point, I would be paying more for a smaller apartment with less amenities in a less desirable neighborhood that was farther from everything. Especially talking to young (or entering middle age) married professionals who moved down - with the breadwinner earning $100-150k a year - they can afford to buy a nice sized house in a nice neighborhood, two cars, go on vacations etc. They can just live a nice comfortable life on $100k while the well-educated wife is raising two kids until they're grown more and she'll go back to work. The math would just be impossible to work out in New York, even on the salary of a programmer or PM or QA etc. who is getting paid well compared to the average Joe.
• deleted 6y ago
  [deleted]
• aneutron 6y ago
  I don't think the analogies made in this article stand for the markets nor the skills we are considering. You may think I'm full of shit, and its within your right, but I the amount of time and resources you'll spend to find a good match for a factory worker at some assembly line, compared to that for a skilled software engineer with that's being paid 150k$, is not even remotely comparable. And the value each bring to your company are not the same either. Perhaps you can make the argument that in both cases there are "plenty of fish in the sea", but I'd wager there's a lot less fish in the developer side of things. I don't know, but it just smells like false analogies and I'm too tired to write about it ...
• GekkePrutser 6y ago
  Location-based pay is an unfortunate necessity. If it didn't exist, companies just wouldn't get any employees in San Francisco, nobody would be willing to work for the wage. Obviously they're not going to pay SF wages in the rest of the world. I mean a company like FaceBook could, they certainly have the means. But they wouldn't. The shareholders wouldn't let them, due diligence and all. They have to maximise their return to the shareholders. If I would be earning what I do in Barcelona and living in SF I wouldn't be able to even pay the rent. If wages for the same jobs had to be the same everywhere, it would mean the lowest common pay would quickly become the standard. Effectively all IT jobs would be moved to India. Nobody would bother working in the US for that pittance so there'd be no point hiring for it. So obviously cost of living factors into it. It makes sense that this goes both ways. Otherwise someone from SF moving elsewhere would be making a lot more than their local colleagues and that wouldn't be fair either. In fact when I moved to Barcelona from Ireland (with the same company) my pay was reduced somewhat. I had to sign a new contract with the local entity against local conditions. It was a bit of a bummer but on the other hand, I did gain a lot of quality of life. Great weather. Free healthcare that's actually good. Public transport that actually works (so no more car expenses). In the end it was a good move. If you fight against this you will only increase the race to the bottom (and to Asia). It's this very thing that keeps areas like San Francisco viable as an IT hub. If you're expecting them to honour the juicy SF pay everywhere you won't see that. Even if they do you'll be the first to get axed when budgets need cutting. What you see in general is that pay is indexed to local standards so you get the same standard of living for the same job in each place. At least this is what my employer does. Which is fair enough in my point of view. Money is a means to live, not a goal on its own. Would it really be fair to have people living in one place scraping pennies to get by and others living like a king while doing the same job?
• deleted 6y ago
  [deleted]
• rmrfrmrf 6y ago
  there was once a guy that said that wages, at the end of the day, trend toward the employee's means of subsistence. seems like companies now are doing away with the window dressing around the employer-employee relationship.
• growmn 6y ago
  Lol
• kelnos 6y ago
  A thought I recently had about all this: Let's rewind two years. You work for a company that's headquartered in San Francisco. You live in Texas, in one of the suburbs of Dallas, as part of the company's small, but substantial, remote workforce. You've been paid well, but less than you'd be paid for the same position if you lived in San Francisco. Now fast-foward to the present day. Many of your coworkers have moved out of SF to lower-cost areas. Your company has decided to adopt a location-based pay system. You look at the charts HR has put together, and find that if someone who currently lives in SF wants to move to your town, they'd get a 15% pay cut. You think about this in reverse. You've wanted to live in SF for a while, but were turned off by high rents. SF rents have been down a bit because of COVID, and you want to give it a try. You contact HR and ask them if you were to move to SF, would you get an automatic pay raise due to the new location-based pay policy. What does your company say? My guess would be they'd say no. They try to justify it by saying that there's no headcount available for hires in SF right now. But of course there's no "headcount" specifically allocated for people who want to move out of SF, but those employees are still free to move where they please, more or less. So, big surprise: the "location-based pay" only applies when it benefits the employer.
• djrogers 6y ago
  The inevitable result of Location Based Pay and all-remote workforce’s will look an awful lot like offshoring at many companies. Why wouldn’t it?
• twirlock 6y ago
  This whole debate comes from the tension produced by tech companies locating themselves in overpriced shitholes for prestige and to collectivize with the culture of said shitholes, but then they want to be selectively pragmatic about things like pay. The obvious answer is to stop hiring people who need to jack off about where they live, but then the leadership in the company would have to stop jacking off too.
• eyelidlessness 6y ago
  One thing I rarely see addressed in these discussions is the effect that tech salaries have on cost of living generally, and how that affects tech hubs and the communities they take root in. My city (Seattle) has long been Microsoft adjacent and not quite as long home to other tech behemoths. But the real tech boom here has drastically increased the cost of living and I’ve heard similar stories from other cities. It’s already a burden for many of the people I know who work in the service industry or other lower paid jobs that don’t scale with median income. I’ve seen one major wave of gentrification push out families who’d been in their neighborhoods for generations, and I can’t imagine the impact it would have if Seattle tech workers distorted the market with SV salaries, all else being equal. It’s not that I don’t want everyone to be paid their value, and I’m glad there’s increasingly an openness to more transparent wage information geographically. But I think something important is missing in the conversation and I think it could also be important to tech workers when negotiating their own comp: solidarity isn’t just looking out for one another, it’s also looking out for oneself. I could imagine the fight against location based pay being a lot more effective if the fight was part of a coalition that supports and coordinates with much less privileged workers who are far more affected by huge capital influx in their communities.
  • bradlys 6y ago
    The issue is that Seattle and other tech hubs just don’t keep up with demand to move to the city. That’s why prices are going up. Supply is limited for housing. If they increased the density, it wouldn’t have seen such a dramatic spike.
    • eyelidlessness 6y ago
      We can’t keep up with demand. There’s constant construction everywhere. It’s been a running joke for years that if you try to walk/ride/bus/drive anywhere you’ll encounter a new development each time. Sure, some of the problem is that the new developments are almost all too expensive for current residents but I’m not sure how you deal with that. The common wisdom is more vacancies lead to a renter’s market but it hasn’t panned out. To the extent there are vacancies they’re all investment properties. It’s overly simplistic to say build more housing.
• chadash 6y ago
  A simple thought experiment. A company in India decides to open an office in NYC. They say, it wouldn’t be fair to have different pay for different people doing the same work so let’s pay people in NYC a Bangalore wage. You’d laugh at them. That’s not how markets work. But for some reason we expect them to work differently in the opposite direction?
• newbie789 6y ago
  I’m not entirely clear on the purpose of this post. It begins with “maybe I’ll regret this if I move to London”, and then the rest of the post is about how it’s fine that enormous pay cuts are cool because they aren’t happening to the author. I’m somewhat perplexed that an openly equivocating casual musing that openly features the author’s complete disconnection from the topic made its way to the front page of HN. It doesn’t really appear to have any substantive material to justify its position aside from uh, jeans? It kind of reads like boilerplate ad copy but instead of selling you “Buy this iPod” it’s “It’s actually cool if your employer decides to keep $60k of your current salary for themselves because of your zip code “
• Uptrenda 6y ago
  OP asserts that we have no right to complain because other people have it worse... This is a logic fallacy known as the 'fallacy of relative privation.' It's faulty reasoning because its an infinite race to the bottom. Noooo: you can't complain about that because [...] and they in tern also cant complain because [...] until eventually you reach the last person on Earth who was born in infinite pain and suffering who can complain. It's just a very unrealistic model. https://rationalwiki.org/wiki/Not_as_bad_as https://rationalwiki.org/wiki/Not_as_bad_as OPs sweat shop metaphor is also a little far-fetched since they are comparing relatively unskilled workers with specialized tech workers (specialization commands a higher price based on limiting supply.) I think we have every right to complain about companies exploiting workers. They --already-- rely on a disparity of information in salary negotiations to manipulate prices in their favor. I think these practices and others are highly immoral and lead to people being paid far less than they're worth.
  • jb775 6y ago
    Great point about the logical fallacy. The whole reason an "employee" exists is because they create more value than they cost. The only relevant factor is how much value they create (either in the form of eventual increased profits or eventual decreased costs)...location has absolutely nothing to do with that calculation. I.E. If a business could rent a money printing machine, the location of that machine doesn't matter....the only thing that matters is how much money it prints in relation to how much it costs to rent. Any argument from the business stating they should "rightfully" be charged less to rent the machine is merely a negotiation tactic intended to increase profits for the business owners. If you work at a company that does this or is threatening to do this, I'd seriously consider making a move to one that takes the opposite approach. Any hint of this mindset from a company should be taken as a huge red flag.
    • josephg 6y ago
      > The only relevant factor is how much value they create (either in the form of eventual increased profits or eventual decreased costs) Not true. Its a market. The upper bound on your pay is how much value you're expected to create. The lower bound is your breakeven point - where you're not sure if its worth going in to work or not. The range in the middle is pure profit - its value created by your employment. If your income is close to your value to the company, you're capturing most of that profit in your pay packet. If your income is close to your breakeven point, your workplace is capturing most of the value of your employment. Where it lands is dependent on competition. If there's lots of capable software engineers and almost nobody hiring, then competition for jobs pushes wages down. If there's lots of jobs and not enough capable software engineers then competition for software engineers pushes our salaries up. "Location based pay" assumes your employer is no longer competing with other SV-based software companies (because you don't live there). But your remote job is proof that you have remote work choices! And as more companies become remote-friendly, your company is competing for my time with all the other remote-friendly employers. (Which should push wages up). And employees are competing with everyone else who can apply for remote work (which is a larger pool of applicants).
• mdip 6y ago
  > Let’s say you hire me for your company in San Francisco and pay me $150K … [blah blah blah, I provide that much value ...] But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of “cost of living”. There's that really big missing piece in the middle: When you took that job, your bargaining position was "I am willing to accept $150,000 at my talent level and my competition is other folks who are willing to arrive at this office in San Francisco every day." I've turned down a job very similar to that, twice, for much less money to work remotely. I like Sushi, but my wife makes good Italian and I get to eat with my family. But now that $150,000 job is all-remote! And even if I was at 80% "San Francisco" pay, I'd be doing incredibly well where I live, so if I started negotiating salary for that job, my '20% above ADP-reported' is going to be a whole lot more palatable to the hiring manager, and he doesn't care that the next town over's name ends in "tucky". Worst part of it is that last time I checked, I live in an area that lands around the 5th highest cost of living. I would accept a salary adjustment due to a move, personally, with research/negotiation to ensure that my new salary truly takes into account real costs that I will experience. And if I cannot accept my employers terms, there are now a whole lot of other companies who are hiring remotely. Like, almost all the companies. So I'll find one that does. These kinds of programs will exist for a while, I bet -- some great employers will probably attract employees by offering a program like this (along with non-discriminatory policies around ... allowing you to move from a really cheap place to a really expensive place while compensating you accordingly). But the vast majority who go "all remote" are simply going to start hiring wherever the cheapest talent to fill the need exists. If a 30-something mom/dad in North Dakota is just as capable of joining Teams calls/performing a mid-level QA job (you know, for the cloud-based web/mobile app...), but will do it at $36,000. Well, ... Think "Off-shoring" at closer geographies/more common cultures (ok, maybe; some of ya'll city-folk ... need sunlight or something). Companies are good at not learning from past mistakes, so expect whole technology teams at some shops to be brought into a (virtual conference) room with HR reps while they sort out the details of their transition and training of their replacements. Your "available talent pool" is ... big. And it now includes my wife. She left the workforce when she had children. She didn't return when they went to school -- it didn't make sense. Factor in child-care/extra car/insurance/fuel/non-optimal meals, 40 hr/wk equating to 7:00A-6:00P with commute and the "extra money left over" wasn't worth losing what we felt was basically the reason we work in the first place. And forget about landing one of those coveted remote jobs when you've been out of the work-force since before the iPhone came out. Welp, that ended last month. So dispensing with the doom and gloom, humanity has always figured it out in the past, we will again: In my mind, this is "the first sign of what's to come". The whole equation on hiring/employment has been undergoing a lot of change, but I think the explosion in remote work stands to be the biggest disruption of my lifetime. If companies steadfastly refuse to adjust for cost of living, and only hire where it's cheap, expect people to move from cities. And it might be as simple as "rent goes down, people move back in". While many/most jobs cannot be performed remotely (manufacturing-related in particular), by moving all that can to remote-only the impact of "a large employer leaving a city" on a city -- in theory -- is far less. You are prevented from living in certain places if you like certain kinds of work, today. Suddenly, for a lot of jobs, that's no longer the case. Staffing is the #1 cost for companies -- for a reason, it is a company ... it's entire value -- optimizing that cost (by reducing what you are paying people to do work -- I'm not trying to spin here). Maybe an extra hire can be made for the next project? Maybe, over time, the cost savings are so much (real-estate, etc) that it might make sense to take some of these other jobs that aren't very easy to do remotely and figure out how we can do them remotely, too? Maybe everyone stays home in their pajamas and rots away, we all die and fall into the dark ages, again? It's been ... interesting? seems wrong ... being a part of all of this. The place I work handled things superbly; we continue to work remotely and ... everyone, as far as I can tell, is actually working. I hear about employers installing weird monitoring apps and such on their employees phones/work PCs and I think: sell the stock; clearly a lot of staff with nothing to do. My deadlines/expectations didn't disappear simply because the office did. I feel like I'm working a lot less some days -- I'm working more, I'm just spending no time on the road. Prior to my current job I had been remote for over a decade; I'd forgotten how much I enjoyed the benefits. [0] I'm assuming that my area and the vast majority of the US, like Tulsa, would have paid $90,000 for said job. [1] If I were paid San Francisco-equivalent salary for my work where I live, which isn't terribly low cost of living to begin with. ... I'd have my own lake house up north. Certainly wouldn't get out of time-share presentations so quickly and easily. [2] We enrolled our kids in a charter all-virtual school when it appeared our district was going to go virtual. We figured a school with employees that had been doing this for the last ten years would fare better than our district's thrown together-in-a-week plans. Very few decisions ever end up in the "100%-the-right-choice" category, but that one sure did!
• jmchuster 6y ago
  My initial reaction is that companies pay money to accomplish two things only 1) acquire you 2) keep you. Since you're already working there, they don't need to worry about (1), so then they just need to lower your salary just enough that it's not worth it for you to switch, with a calculation for how much it would piss you off. You see this already all the time, where new hires get higher starting salaries than experienced employees are getting. And then once you're in, some companies don't even bother to give inflation raises. The industry average tenure is 4 years (and probably even less depending on your region). Maybe that can be doubled or tripled based on salary, but only if you're offering FAANG level golden handcuffs. If someone is going to switch jobs at some point regardless of a 10% bump, then you might as well just give them nothing, or cut their salary. And then i might imagine further that retention rates are already well know to plummet for those who switch to remote and move to a different city.
• eggy 6y ago
  My family and I were set to move to Florida from NY just before COVID made the press. I was going to take a 10% cut in salary, because cost of living would be less and the company office there was equally at a lower rate than the NY/NJ offices or other US-based locations. We are an ESOP company, so we all have an interest in the performance and bottom line of the company. At first I was taken aback, but then I realized the move would be good for my family for a lot of reasons, and my lifestyle would not suffer. We looked at a house that was a lot more of value located to my soon-to-be downtown office than anything I could find in NY/NJ. The comparison of overseas workers making so little for the clothes and other items we wear used to illicit a knee-jerk feeling of disgust and indignation, but then I remembered an acquaintance of mine back in college who made his business by renting rack space in retail stores in NYC to hang his clothing line he designed. They were made in overseas locations where he would fly to after he started making money to do quality control for his designs. When the corporate social responsibility thing started taking off with Nike and Kathy Lee Gifford's 'sweatshops', I asked him about it. He told me if he didn't produce his clothes there, the village where he employed a few dozen people would have no economy, and his product would not be able to be produced in the US/Europe. I didn't truly understand this until I lived in SE Asia for eight years. I spent the last year living in a remote East Javanese rice-farming village where over half of the houses had dirt floors. I quickly gained an understanding that balanced my view. My in-laws and their families make $4-$7 a day working in the rice fields depending on the task they do. A neighbor got a job sewing either Gucci, or Michael Kors purses and handbags for $20/day. She's very happy, and her entire family is benefiting from her salary that is five times what she would make, and her working conditions are more comfortable than working in the sawa (rice field in Indonesian). She would be devastated if a CSR (Corporate Social Responsibility) group and incensed Westerners had her job move elsewhere or shutdown. The company might make a concession in this area to create good PR and continue their practice in their other locations, or they might shut it down (likely). I am not an economist, but I am also aware that some local economies have been ruined when false economies are setup i.e. disproportionate and artificially hiked salaries. Anecdotally I have heard some village in Pakistan was incensed that a "victory" for labor per a Western news article destroyed their life, and they were resentful at how the CSR effort affected them. I think the solution is to grow local businesses and entrepreneurs. This usually occurs slowly when people like my friend in Java take their skill and knowledge of the products they have been making and start a similar or other business. I think this is the only true way to help these communities. Quick fixes or PR examples of a model setup by Nike or an other big company for PR purposes is just a show and cannot be a real changer.
• makecheck 6y ago
  I can see how something changes when an employee moves elsewhere but it is far from a simple cost of living factor. Off the top of my head... Possible new company costs: - In theory a company could incur new costs based on where their employees are (e.g. you move to a different state; that changes how they compute taxes from your income, they may need to become aware of several new state laws, may need new licenses, etc.). - The company may have made a deal with their HQ city, e.g. tax breaks in exchange for $X jobs. If they renege because everyone moved away, they may lose a lot. - Maintaining widespread remote work is not free; not only IT setup (high availability, etc.) but a need to do so very securely. Probably at the very least new staff or contracts for this alone. New company SAVINGS: - Depending on how many people move, they may need MUCH less office space. This saves in rent in high-rent areas, air conditioning, coffee, cleaning or whatever else they have to count. ...Considering all of the above, the idea of a company scaling pay sounds like it should at the very least be negotiable. They clearly have some new costs but arguably also save a ton in the process! So does the employee. And it may be difficult to quantify the value of having a vastly greater talent pool, enabling the business to hire people that otherwise would not have wanted to move to SV.