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> and not on the market value of your work Interesting choice to invoke market value to argue that the salaries that the market has settled on for remote work

by cactus2093 6y ago

> and not on the market value of your work Interesting choice to invoke market value to argue that the salaries that the market has settled on for remote work are too low. The market value of work isn't the amount of revenue that the work brings in. If you think you can capture the full value of the work you do for yourself, you're always free to work as a solo entrepreneur instead of working a traditional job. That's kind of an upper bound on what the company could pay you, but the market value of the work is based on the number of employees the company needs and the number of qualified employees they can find. Remote work floods the supply with lots more available workers than they can find in any one city, so salaries for those roles go down. That's not treating you like a child, it's just how a market works.

cmeacham98 6y ago
Your comment could justify a divide in pay between in-person and remote workers. Presumably, the ability to be available in person is valuable in some companies and the market for that is smaller, so more compensation. However, what it does not justify is location-based pay. From the company's perspective, there is no significant difference between a remote worker in New York City or Birmingham, Alabama.
- ianai 6y ago
  It’s funny how the power of markets seems so easily used to reinforce the current market outcome. Like wage prices are artificially high or right where they should be because the market must be right. Without looking at the factors closely (like one should when discussing labor especially), there’s the possible outcome that current wages are held down below their market clearing prices by external factors and market power.
  - Negitivefrags 6y ago
    The market is always right pretty much by definition. The “external factors” you speak of are the market conditions in which the market operates. You can change the external factors and the market will rebalance to a new equalibrium but that doenst mean the market was wrong before and correct now.
- cactus2093 6y ago
  I still think what I said is true basically by definition, but yeah fair enough it does beg the question why companies don't hire exclusively in cheap areas now, driving down the market rates in expensive cities. I think supply and demand is still a big part of the answer. By square mileage the potential locations where employees can live has grown by 200x by opening up to remote work anywhere in the US (napkin math, US is 3.8 million sq miles, bay area and tri-state area combined are ~20k sq miles). But obviously the number of available engineers hasn't expanded by nearly that much, engineers are much more concentrated in the areas where most of the jobs have been concentrated up until now. I.e. companies still can't afford to limit their supply to remote only, just as they increasingly can't afford to limit supply to bay area only. Then there's also the perhaps more controversial issue of skill & experience. The most in-demand engineers are the people with experience at Google, FB, etc. and these people are concentrated in the places where these companies are. Ambitious people also have self-selected to live in these hot markets for years. You could argue that these proxy factors shouldn't matter and companies should be measuring skill directly, but as an industry we still haven't cracked that problem. So on average, a remote engineer in NYC probably is more valuable to most companies than one in Birmingham, Al. Like it or not, there's still a lot inertia to overcome here (and maybe even a little bit of validity to these patterns).
  - mattmanser 6y ago
    This is pretty much wrong, the evidence is against you, you are paying for in-location developers. There are plenty of developers who speak great English in the EU, many natively in the UK and Australia and Canada. Why are these not all getting heavily poached by SV? Because SV value in-person developers, so have driven up the pay for developers in SV, but in Europe a mid-level developer is still on something like €40-50k.
    - burntoutfire 6y ago
      Remote work from Europe for a SV company is problematic, there's practically no overlap of working time so the European workers needs to work late evening and into the night to be able to stay in touch with the team. Not that many experienced (i.e. older and with families) people are ok with that.
pc86 6y ago
A lot of people on HN scream against location-based pay, because for some reason they assume they'll make more without it. If they live in Europe, or rural America, they might be right. But HN has a highly disproportionate number of Valley and NYC residents. They're all getting [big] pay cuts if you get rid of location-based pay. The biggest (but not only) reason someone in SF makes $250k+ total comp is because it's so expensive to live in SF. Not too long ago, I remember threads on HN where people were saying that $200k or $250k wasn't enough for a SF dev and using real estate prices and general cost of living as justification. You can't have it both ways - either your general cost of living is taken into account in your salary (location-based pay), or it's not. If it's not, get ready for a market where the average senior developer makes $90-110k/yr, total comp.
- adkadskhj 6y ago
  Yea, i really don't get so many of the comments here. If i live in a low COL area and i apply, why wouldn't i want the competitive advantage of being able to charge them half as much and make twice as much profit as my competition? People outside the bay area can make a good living charging well below crazy SF rates. This isn't even an argument to me. It's not even a discussion. Of course when you have a pool of talent, and that talent is competing for a single job, they will use every tool possible. If you can work for half the price of some SF guy paying massive SF rates, why wouldn't you use that tool? Yea sure, i could make $200k a year - that would be neat i suppose, but it's insane imo. The number only exists because of SF specific problems. And i'm not in SF.
  - User23 6y ago
    There is no nice way to say this anyhow, but it needs to be said to further the discussion that does in fact exist: this is thinking like a chump. Being a chump is not a competitive advantage, it’s being taken advantage of. I fully respect your right to sell yourself short, but please don’t present it as somehow economically sophisticated and potentially lead less experienced readers here to follow the same foolish path.
    - 6y ago
eli_gottlieb 6y ago
>Interesting choice to invoke market value to argue that the salaries that the market has settled on for remote work are too low. My friend who works remote makes just as much as I used to working in the office (when I was in industry). He's not getting "location-based" pay, so I'd say that "the market" has not unanimously decided on that quite yet.
robocat 6y ago
> the full value of the work you do > That's kind of an upper bound on what the company could pay you No. If you have a monopoly on a skill/knowledge/certification/etc, then in theory you can extract rent from the business, potentially up to the profits of the business (well, profits less the returns required to cover risk of capital). The maximum you can earn is far more than the value you create.
rayiner 6y ago
> Remote work floods the supply with lots more available workers than they can find in any one city, so salaries for those roles go down. You’re correct, but that’s not what’s happening here. Facebook isn’t paying remote workers uniformly less than in person workers. It is paying different amounts for different remote workers depending on where they live. That makes no sense given that, as you observe, there is a single national market for remote workers. The fact that Facebook can do that is an indicator that it either has market power in the employment market for programmers, or that we’re in an odd situation where the market hasn’t reached equilibrium.
airza 6y ago
This line of thinking breaks down since those companies have a much larger pool of workers to draw from, but they are also competing against every other company who is hiring remotely in their country. In the end, employers are free to make whatever excuse they want to try to pay less, but I will respectfully decline to take a 50% pay cut to produce the same value for them :)

cmeacham98 6y ago

Your comment could justify a divide in pay between in-person and remote workers. Presumably, the ability to be available in person is valuable in some companies and the market for that is smaller, so more compensation. However, what it does not justify is location-based pay. From the company's perspective, there is no significant difference between a remote worker in New York City or Birmingham, Alabama.

ianai 6y ago
It’s funny how the power of markets seems so easily used to reinforce the current market outcome. Like wage prices are artificially high or right where they should be because the market must be right. Without looking at the factors closely (like one should when discussing labor especially), there’s the possible outcome that current wages are held down below their market clearing prices by external factors and market power.
- Negitivefrags 6y ago
  The market is always right pretty much by definition. The “external factors” you speak of are the market conditions in which the market operates. You can change the external factors and the market will rebalance to a new equalibrium but that doenst mean the market was wrong before and correct now.
cactus2093 6y ago
I still think what I said is true basically by definition, but yeah fair enough it does beg the question why companies don't hire exclusively in cheap areas now, driving down the market rates in expensive cities. I think supply and demand is still a big part of the answer. By square mileage the potential locations where employees can live has grown by 200x by opening up to remote work anywhere in the US (napkin math, US is 3.8 million sq miles, bay area and tri-state area combined are ~20k sq miles). But obviously the number of available engineers hasn't expanded by nearly that much, engineers are much more concentrated in the areas where most of the jobs have been concentrated up until now. I.e. companies still can't afford to limit their supply to remote only, just as they increasingly can't afford to limit supply to bay area only. Then there's also the perhaps more controversial issue of skill & experience. The most in-demand engineers are the people with experience at Google, FB, etc. and these people are concentrated in the places where these companies are. Ambitious people also have self-selected to live in these hot markets for years. You could argue that these proxy factors shouldn't matter and companies should be measuring skill directly, but as an industry we still haven't cracked that problem. So on average, a remote engineer in NYC probably is more valuable to most companies than one in Birmingham, Al. Like it or not, there's still a lot inertia to overcome here (and maybe even a little bit of validity to these patterns).
- mattmanser 6y ago
  This is pretty much wrong, the evidence is against you, you are paying for in-location developers. There are plenty of developers who speak great English in the EU, many natively in the UK and Australia and Canada. Why are these not all getting heavily poached by SV? Because SV value in-person developers, so have driven up the pay for developers in SV, but in Europe a mid-level developer is still on something like €40-50k.
  - burntoutfire 6y ago
    Remote work from Europe for a SV company is problematic, there's practically no overlap of working time so the European workers needs to work late evening and into the night to be able to stay in touch with the team. Not that many experienced (i.e. older and with families) people are ok with that.

pc86 6y ago

A lot of people on HN scream against location-based pay, because for some reason they assume they'll make more without it. If they live in Europe, or rural America, they might be right. But HN has a highly disproportionate number of Valley and NYC residents. They're all getting [big] pay cuts if you get rid of location-based pay. The biggest (but not only) reason someone in SF makes $250k+ total comp is because it's so expensive to live in SF. Not too long ago, I remember threads on HN where people were saying that $200k or $250k wasn't enough for a SF dev and using real estate prices and general cost of living as justification. You can't have it both ways - either your general cost of living is taken into account in your salary (location-based pay), or it's not. If it's not, get ready for a market where the average senior developer makes $90-110k/yr, total comp.

adkadskhj 6y ago
Yea, i really don't get so many of the comments here. If i live in a low COL area and i apply, why wouldn't i want the competitive advantage of being able to charge them half as much and make twice as much profit as my competition? People outside the bay area can make a good living charging well below crazy SF rates. This isn't even an argument to me. It's not even a discussion. Of course when you have a pool of talent, and that talent is competing for a single job, they will use every tool possible. If you can work for half the price of some SF guy paying massive SF rates, why wouldn't you use that tool? Yea sure, i could make $200k a year - that would be neat i suppose, but it's insane imo. The number only exists because of SF specific problems. And i'm not in SF.
- User23 6y ago
  There is no nice way to say this anyhow, but it needs to be said to further the discussion that does in fact exist: this is thinking like a chump. Being a chump is not a competitive advantage, it’s being taken advantage of. I fully respect your right to sell yourself short, but please don’t present it as somehow economically sophisticated and potentially lead less experienced readers here to follow the same foolish path.
  - 6y ago

eli_gottlieb 6y ago

>Interesting choice to invoke market value to argue that the salaries that the market has settled on for remote work are too low. My friend who works remote makes just as much as I used to working in the office (when I was in industry). He's not getting "location-based" pay, so I'd say that "the market" has not unanimously decided on that quite yet.

robocat 6y ago

> the full value of the work you do > That's kind of an upper bound on what the company could pay you No. If you have a monopoly on a skill/knowledge/certification/etc, then in theory you can extract rent from the business, potentially up to the profits of the business (well, profits less the returns required to cover risk of capital). The maximum you can earn is far more than the value you create.

rayiner 6y ago

> Remote work floods the supply with lots more available workers than they can find in any one city, so salaries for those roles go down. You’re correct, but that’s not what’s happening here. Facebook isn’t paying remote workers uniformly less than in person workers. It is paying different amounts for different remote workers depending on where they live. That makes no sense given that, as you observe, there is a single national market for remote workers. The fact that Facebook can do that is an indicator that it either has market power in the employment market for programmers, or that we’re in an odd situation where the market hasn’t reached equilibrium.

airza 6y ago

This line of thinking breaks down since those companies have a much larger pool of workers to draw from, but they are also competing against every other company who is hiring remotely in their country. In the end, employers are free to make whatever excuse they want to try to pay less, but I will respectfully decline to take a 50% pay cut to produce the same value for them :)