8 ms·

A Follow-Up to “Location-Based Pay”

49 points by blackshaw 6y ago

UweSchmidt 6y ago
The author makes the classic error of bringing the economics textbook to the real world: with no location based pay, surely some of that chunk of money the market assigns to wages will be spread to the underpaid people in other places? In the real world company A tries to squeeze wages in one place and company B obviously tries to hire at local wages in the other place. There is no built-in fairness, it's just a negotiation strategy. The new equilibrium could be that everyone earns less. I'd rather have that employees around the world can take home a western salary if possible, putting that money into the local economy and raise salary expectations among their peers.
- sand_castles 6y ago
  > There is no built-in fairness Wage equilibrium around the world is inevitable with the rapid increase in integrated markets and improvement in telephony technology. What this means for workers is far less important that what it means for capitalists. We talk about race to the bottom for workers, completely ignoring race to the bottom for landlords / corporations and governments. landlords around the world have to now compete on a much more even footing. Rise of the corporate sector in China / Russia / Africa puts deflationary pressure on developed countries. Governments that do not offer much, would watch the young and skilled flee to live under better government structure.
  - SuoDuanDao 6y ago
    I don't understand your reasoning, how does the rise of the corporate sector in developing nations put deflationary pressure on developed countries? Wouldn't competition from new economic centres dilute the value of development in Western countries thereby causing inflationary pressure?
    - ayo4yayo 6y ago
      Their point is that even if wages go down workers are able to move to cheaper areas.
    - sand_castles 6y ago
      deflationary / inflationary have precise meaning in macroeconomics. when JPow says deflationary, what he means is general fall in demand. It could "look" inflationary to a wage earner, if he loses his job, his saving account returns 1%, and the cost of products spiral out of control ( causing a fall in demand from JPow's perspective ). inflationary conditions like those in the 1970s are unlikely as most countries are quite developed these days, and general increase in price in developed countries doesn't mean prices are increasing everywhere for all products.
nivenkos 6y ago
It's not about "how good we have it", it's about logical compensation policies. I literally just left my job today, because they refused to give me a raise due to my location (and pay level). I got a much better offer in a slightly more expensive location (I can move). It makes no sense to tie pay to location when you aren't competing solely in that location. Your employees can move to places with better pay and benefits too (or companies that don't strictly tie compensation to location).
- Cthulhu_ 6y ago
  It's about cost of living too. I was offered a job literally across the street from where I live, but their wages were probably based on cost of living from a few years ago; I bluntly said I cannot afford to live there from what they were offering, and the one minute commute does not pay for said mortgage. At the moment I make a decent amount of money for where I live, but at the same time, cost of living has gone up while my wage has stagnated. I'm very tempted to bite the bullet and look for a job in e.g. the Amsterdam region again, hopefully I can negotiate WFH conditions and the pay will be significant enough to warrant spending the extra time in the commute (once the 'rona is over, of course).
  - subpixel 6y ago
    Just to be clear - because it took me a minute to grasp this myself - cost of living is your concern, but not an employer’s. The question they are asking is not “can Johnny pay the mortgage” but “Johnny wants X - can we fill this role for 2/3 X? Can we offshore this role for the savings?”
    - danaris 6y ago
      But cost of living should be a concern of the employer. Ignoring it, saying "but we should just get the absolute cheapest we can", is essentially claiming that the employer does not exist within, and rely on, a society. It's socializing their costs in order to make more profit. The idea that employers should, as a principle, seek to pay the least possible for the best work, is predicated on the idea of a free market, which is a theoretical construct. It requires a lot of things, like perfect information on all sides, and externalities being properly priced in, that don't actually exist in the real world.
NiceWayToDoIT 6y ago
Location pay reduction is fair to the rich. Simply put, our "chains" are designed in such a way for us to stay in them as long and possibly - contributing to society, whatever that word could mean. Basically, with the current state of property prices and overall prices, the UK average is struggling equally as a person from Eastern Europe - as someone said: "majority is one month salary far from bankrupt". What I am trying to say is real income is what is left after your expenses. Our system is profit-centric, and most of the profits go similar to snowballs, always to the bigger ones. In our world those big ones have additional supper power, they can change rules so that they can become even bigger...
- yerwhat01010 6y ago
  > the UK average is struggling equally as a person from Eastern Europe This can't possibly be true, or the UK wouldn't be full of Eastern Europeans who migrated to Britain for its economic opportunities.
  - throwewey 6y ago
    No, it can't be true, I believe many in Eastern Europe actually have it much better than their UK counterparts. At least if you're in Engineering, Tech etc. I'm talking about the ability to afford a house on an engineer's salary, which is simply not doable in the UK.
    - yerwhat01010 6y ago
      I'm a mid-level engineer in the UK and I can afford a house on my salary.
      - NiceWayToDoIT 6y ago
        Where in UK are we talking about London where all good things happen or Sheffield ? And what is your salary ... By the way, when we say "afford", I mean be comfortable, that if you lose your job you will not lose your home because you cannot pay 2 payments, and therefore lose your deposit and everything you have payed in until that point. Buying home in UK is life under constant stress of "what if" and pandemic, Brexit and current economy have not done a good job of removing that fear...
wwww4all 6y ago
High performance software engineers need to demand higher salary. More Compensation for use of home office space, internet, utilities, etc. Learn to negotiate better based on performance impact to position. The demand for high performance software engineers are vastly greater than the supply.
- valvar 6y ago
  I don't understand how people can say that demand is greater than supply or the other way around. Aren't they exactly matched, using the nifty concept of salaries? Anything else seems absurd. The demand for skilled software engineers working for free is infinite. The supply of skilled software engineers willing to work for one million dollars per month is much greater than the demand for such.
polote 6y ago
If you have something to argue it has probably already been discussed in the previous thread https://news.ycombinator.com/item?id=26131138 https://news.ycombinator.com/item?id=26131138
- ZephyrBlu 6y ago
  Statistically, this is likely to be true.
brunes 6y ago
Remember: if you can do your job from anywhere, then someone else can also do your job from anywhere. Folks who reject their location-based pay will eventually be replaced by others who are just as skilled but have until recently been shut out of the market, and will gladly take it.
subpixel 6y ago
GitLab’s documentation points out very clearly that the ratios they use to pay less outside of SF are not “cost of living” adjustments, but “cost of market”. What that means is that wherever you may live, you are competing against the lowest offer another worker of similar value anywhere in the world will accept. If you look at the charts, you’ll see how low those offers may go. In a world where people are not able to move all over, this may not be tested. But in today and tomorrow’s global, mobile workforce this is going to cause friction.
- grumple 6y ago
  > GitLab’s documentation points out very clearly that the ratios they use to pay less outside of SF are not “cost of living” adjustments, but “cost of market”. What does this even mean? The market will bear paying some of us top wages anywhere. If you offer me less because I'm in a different location, I'll just take the offer from the other SF-based company that offers me more.
grumple 6y ago
I don't really have much to complain about. I work remotely, and I've noticed a significant trend upwards in remote pay in messages from recruiters. If someone from another country can get those jobs, they should get the same pay. Needless to say, I'm skeptical that many can, because the skills are hard to find and take years to develop, and go beyond simply understanding the basics of coding.
mlthoughts2018 6y ago
“But first, an anecdote... when I was a kid...” Nope. See ya. Whatever follows next is not going to be worthwhile.
nickdothutton 6y ago
For high skill, scarce talent, cost of market > cost of living. For workers who by the nature of their job could work anywhere (more or less) cost of living is of almost zero importance.
bottled_poe 6y ago
Equal pay across borders just shifts wealth away from where it was created and bypasses regulations we believe to be important. Further, within local communities this can create enormous wealth gaps. Can’t argue with the righteous arguments here around rewarding talent and equal opportunity, but be careful what you wish for...
abellerose 6y ago
It's amusing to observe "Location-Based Pay" just pop into existence and for the only purpose of lowering the wage of whoever's hired. Programmers have been capable of working from home since the internet matured. Value doesn't comes from location, instead it's from a programmer's skill and ability of simplifying the task needed to be completed by maintainable code. There's no serious argument for location-based pay. Yes, there's people all over the world. Nothing has changed recently besides programmers being forced to work from home because of the pandemic.
brozaman 6y ago
Regardless of fairness and cost of market I think it's not something beneficial for the companies when it comes to finding and keeping talent. I live in Spain, and I'm in the same timezone as Germany, now let's imagine I'm percentile 99 when it comes to talent and an American company wants to hire me. Because I live in the middle in Spain they offer me 75k euros a year, if I were in Germany I would get 110k instead. Now my current company pays me 70k and I'm happy where I am, I'm definitely not changing jobs. However if I was offered the 110k I would seriously consider moving because it's a lot more. So instead of paying me the 110k they end up paying 110k to a worse candidate in Germany. Not only they pay the same to a worse candidate, if I were making 110k I would be kidnapped at the company because nobody else would pay that much here.
ymbeld 6y ago
Bringing up points like the second/third world wages in a conversation about first-world pay will benefit neither first-world workers nor any other worker (which begs the question -- qui bono?). Their arguments are not even consistent: 1. They claim that it is just about bringing an awareness to the issue. 2. It’s not about stiffing any worker (so-called first-world or otherwise). 3. You shouldn’t be a hypocrite. 4. But in order to be consistent (not to violate (3)) you need to also argue that you yourself shouldn’t be able to, say, work remotely for a Bay Area company and get the same pay as the locals. Therefore (1) can’t be true since you actually have to forfeit the negotiation on the altar of your own relative privilege (see (2)). Then they close this new article by saying that: 1. We shouldn’t argue against location-based pay. 2. Then they approvingly quote someone who claims that “we should reject the notion of Location-Based Pay”. But that contradicts (1) since this means that you should actively combat the idea of location-based pay.

49 points by blackshaw 6y ago

The author makes the classic error of bringing the economics textbook to the real world: with no location based pay, surely some of that chunk of money the market assigns to wages will be spread to the underpaid people in other places? In the real world company A tries to squeeze wages in one place and company B obviously tries to hire at local wages in the other place. There is no built-in fairness, it's just a negotiation strategy. The new equilibrium could be that everyone earns less. I'd rather have that employees around the world can take home a western salary if possible, putting that money into the local economy and raise salary expectations among their peers.

sand_castles 6y ago
> There is no built-in fairness Wage equilibrium around the world is inevitable with the rapid increase in integrated markets and improvement in telephony technology. What this means for workers is far less important that what it means for capitalists. We talk about race to the bottom for workers, completely ignoring race to the bottom for landlords / corporations and governments. landlords around the world have to now compete on a much more even footing. Rise of the corporate sector in China / Russia / Africa puts deflationary pressure on developed countries. Governments that do not offer much, would watch the young and skilled flee to live under better government structure.
- SuoDuanDao 6y ago
  I don't understand your reasoning, how does the rise of the corporate sector in developing nations put deflationary pressure on developed countries? Wouldn't competition from new economic centres dilute the value of development in Western countries thereby causing inflationary pressure?
  - ayo4yayo 6y ago
    Their point is that even if wages go down workers are able to move to cheaper areas.
  - sand_castles 6y ago
    deflationary / inflationary have precise meaning in macroeconomics. when JPow says deflationary, what he means is general fall in demand. It could "look" inflationary to a wage earner, if he loses his job, his saving account returns 1%, and the cost of products spiral out of control ( causing a fall in demand from JPow's perspective ). inflationary conditions like those in the 1970s are unlikely as most countries are quite developed these days, and general increase in price in developed countries doesn't mean prices are increasing everywhere for all products.

nivenkos 6y ago

It's not about "how good we have it", it's about logical compensation policies. I literally just left my job today, because they refused to give me a raise due to my location (and pay level). I got a much better offer in a slightly more expensive location (I can move). It makes no sense to tie pay to location when you aren't competing solely in that location. Your employees can move to places with better pay and benefits too (or companies that don't strictly tie compensation to location).

Cthulhu_ 6y ago
It's about cost of living too. I was offered a job literally across the street from where I live, but their wages were probably based on cost of living from a few years ago; I bluntly said I cannot afford to live there from what they were offering, and the one minute commute does not pay for said mortgage. At the moment I make a decent amount of money for where I live, but at the same time, cost of living has gone up while my wage has stagnated. I'm very tempted to bite the bullet and look for a job in e.g. the Amsterdam region again, hopefully I can negotiate WFH conditions and the pay will be significant enough to warrant spending the extra time in the commute (once the 'rona is over, of course).
- subpixel 6y ago
  Just to be clear - because it took me a minute to grasp this myself - cost of living is your concern, but not an employer’s. The question they are asking is not “can Johnny pay the mortgage” but “Johnny wants X - can we fill this role for 2/3 X? Can we offshore this role for the savings?”
  - danaris 6y ago
    But cost of living should be a concern of the employer. Ignoring it, saying "but we should just get the absolute cheapest we can", is essentially claiming that the employer does not exist within, and rely on, a society. It's socializing their costs in order to make more profit. The idea that employers should, as a principle, seek to pay the least possible for the best work, is predicated on the idea of a free market, which is a theoretical construct. It requires a lot of things, like perfect information on all sides, and externalities being properly priced in, that don't actually exist in the real world.

NiceWayToDoIT 6y ago

Location pay reduction is fair to the rich. Simply put, our "chains" are designed in such a way for us to stay in them as long and possibly - contributing to society, whatever that word could mean. Basically, with the current state of property prices and overall prices, the UK average is struggling equally as a person from Eastern Europe - as someone said: "majority is one month salary far from bankrupt". What I am trying to say is real income is what is left after your expenses. Our system is profit-centric, and most of the profits go similar to snowballs, always to the bigger ones. In our world those big ones have additional supper power, they can change rules so that they can become even bigger...

yerwhat01010 6y ago
> the UK average is struggling equally as a person from Eastern Europe This can't possibly be true, or the UK wouldn't be full of Eastern Europeans who migrated to Britain for its economic opportunities.
- throwewey 6y ago
  No, it can't be true, I believe many in Eastern Europe actually have it much better than their UK counterparts. At least if you're in Engineering, Tech etc. I'm talking about the ability to afford a house on an engineer's salary, which is simply not doable in the UK.
  - yerwhat01010 6y ago
    I'm a mid-level engineer in the UK and I can afford a house on my salary.
    - NiceWayToDoIT 6y ago
      Where in UK are we talking about London where all good things happen or Sheffield ? And what is your salary ... By the way, when we say "afford", I mean be comfortable, that if you lose your job you will not lose your home because you cannot pay 2 payments, and therefore lose your deposit and everything you have payed in until that point. Buying home in UK is life under constant stress of "what if" and pandemic, Brexit and current economy have not done a good job of removing that fear...

wwww4all 6y ago

High performance software engineers need to demand higher salary. More Compensation for use of home office space, internet, utilities, etc. Learn to negotiate better based on performance impact to position. The demand for high performance software engineers are vastly greater than the supply.

valvar 6y ago
I don't understand how people can say that demand is greater than supply or the other way around. Aren't they exactly matched, using the nifty concept of salaries? Anything else seems absurd. The demand for skilled software engineers working for free is infinite. The supply of skilled software engineers willing to work for one million dollars per month is much greater than the demand for such.

polote 6y ago

If you have something to argue it has probably already been discussed in the previous thread https://news.ycombinator.com/item?id=26131138 https://news.ycombinator.com/item?id=26131138

ZephyrBlu 6y ago
Statistically, this is likely to be true.

brunes 6y ago

Remember: if you can do your job from anywhere, then someone else can also do your job from anywhere. Folks who reject their location-based pay will eventually be replaced by others who are just as skilled but have until recently been shut out of the market, and will gladly take it.

subpixel 6y ago

GitLab’s documentation points out very clearly that the ratios they use to pay less outside of SF are not “cost of living” adjustments, but “cost of market”. What that means is that wherever you may live, you are competing against the lowest offer another worker of similar value anywhere in the world will accept. If you look at the charts, you’ll see how low those offers may go. In a world where people are not able to move all over, this may not be tested. But in today and tomorrow’s global, mobile workforce this is going to cause friction.

grumple 6y ago
> GitLab’s documentation points out very clearly that the ratios they use to pay less outside of SF are not “cost of living” adjustments, but “cost of market”. What does this even mean? The market will bear paying some of us top wages anywhere. If you offer me less because I'm in a different location, I'll just take the offer from the other SF-based company that offers me more.

grumple 6y ago

I don't really have much to complain about. I work remotely, and I've noticed a significant trend upwards in remote pay in messages from recruiters. If someone from another country can get those jobs, they should get the same pay. Needless to say, I'm skeptical that many can, because the skills are hard to find and take years to develop, and go beyond simply understanding the basics of coding.

mlthoughts2018 6y ago

“But first, an anecdote... when I was a kid...” Nope. See ya. Whatever follows next is not going to be worthwhile.

nickdothutton 6y ago

For high skill, scarce talent, cost of market > cost of living. For workers who by the nature of their job could work anywhere (more or less) cost of living is of almost zero importance.

bottled_poe 6y ago

Equal pay across borders just shifts wealth away from where it was created and bypasses regulations we believe to be important. Further, within local communities this can create enormous wealth gaps. Can’t argue with the righteous arguments here around rewarding talent and equal opportunity, but be careful what you wish for...

abellerose 6y ago

It's amusing to observe "Location-Based Pay" just pop into existence and for the only purpose of lowering the wage of whoever's hired. Programmers have been capable of working from home since the internet matured. Value doesn't comes from location, instead it's from a programmer's skill and ability of simplifying the task needed to be completed by maintainable code. There's no serious argument for location-based pay. Yes, there's people all over the world. Nothing has changed recently besides programmers being forced to work from home because of the pandemic.

brozaman 6y ago

Regardless of fairness and cost of market I think it's not something beneficial for the companies when it comes to finding and keeping talent. I live in Spain, and I'm in the same timezone as Germany, now let's imagine I'm percentile 99 when it comes to talent and an American company wants to hire me. Because I live in the middle in Spain they offer me 75k euros a year, if I were in Germany I would get 110k instead. Now my current company pays me 70k and I'm happy where I am, I'm definitely not changing jobs. However if I was offered the 110k I would seriously consider moving because it's a lot more. So instead of paying me the 110k they end up paying 110k to a worse candidate in Germany. Not only they pay the same to a worse candidate, if I were making 110k I would be kidnapped at the company because nobody else would pay that much here.

ymbeld 6y ago

Bringing up points like the second/third world wages in a conversation about first-world pay will benefit neither first-world workers nor any other worker (which begs the question -- qui bono?). Their arguments are not even consistent: 1. They claim that it is just about bringing an awareness to the issue. 2. It’s not about stiffing any worker (so-called first-world or otherwise). 3. You shouldn’t be a hypocrite. 4. But in order to be consistent (not to violate (3)) you need to also argue that you yourself shouldn’t be able to, say, work remotely for a Bay Area company and get the same pay as the locals. Therefore (1) can’t be true since you actually have to forfeit the negotiation on the altar of your own relative privilege (see (2)). Then they close this new article by saying that: 1. We shouldn’t argue against location-based pay. 2. Then they approvingly quote someone who claims that “we should reject the notion of Location-Based Pay”. But that contradicts (1) since this means that you should actively combat the idea of location-based pay.