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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

by 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).
- jb775 6y ago
  > The lower bound is your breakeven point - where you're not sure if its worth going in to work or not. This is conflating an irrelevant piece of data that has nothing to do with the business outside of them using it against you to negotiate lower pay. It doesn't make any sense to use this number in a "range" to calculate profit for a business. Also, competing with SV-based companies is irrelevant as well since the same amount of competition exists currently. The amount of competition holds steady as long as the work-location flexibility offered across those companies is relative. And that's completely the choice of the business. If I'm paying to rent a cash printing machine, I have no realistic claim to demand all cash printing machine renters charge me less because I all of a sudden decide to work with renters from other locations. Obviously, I may find other renters willing to accept less, but I have no claim to demand that renters immediately drop their rental rates.
polishdude20 6y ago
I think a highly contributing factor in employment for that phenomenon is the employers themselves. Just as a company won't pay you what you're actually worth, you won't demand what you're actually worth. You as an employee will usually demand what you need to afford the things you want. If you live in India, the money needed for that is probably less. If you live in SF, the money needed for that is much more. An employee doesn't negotiate thinking about their true worth to the company. They negotiate thinking about what they need to survive comfortably in their current location. At least, this is on average. One side needs to change their way of negotiating before this becomes equal.

by jb775 6y ago

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).

jb775 6y ago
> The lower bound is your breakeven point - where you're not sure if its worth going in to work or not. This is conflating an irrelevant piece of data that has nothing to do with the business outside of them using it against you to negotiate lower pay. It doesn't make any sense to use this number in a "range" to calculate profit for a business. Also, competing with SV-based companies is irrelevant as well since the same amount of competition exists currently. The amount of competition holds steady as long as the work-location flexibility offered across those companies is relative. And that's completely the choice of the business. If I'm paying to rent a cash printing machine, I have no realistic claim to demand all cash printing machine renters charge me less because I all of a sudden decide to work with renters from other locations. Obviously, I may find other renters willing to accept less, but I have no claim to demand that renters immediately drop their rental rates.

polishdude20 6y ago

I think a highly contributing factor in employment for that phenomenon is the employers themselves. Just as a company won't pay you what you're actually worth, you won't demand what you're actually worth. You as an employee will usually demand what you need to afford the things you want. If you live in India, the money needed for that is probably less. If you live in SF, the money needed for that is much more. An employee doesn't negotiate thinking about their true worth to the company. They negotiate thinking about what they need to survive comfortably in their current location. At least, this is on average. One side needs to change their way of negotiating before this becomes equal.