4 ms·

You are paid based on how difficult you are to replace. Hence the location based pay

by Bakary 4y ago

mont 4y ago
> You are paid based on how difficult you are to replace May be true in general but definitely is unrelated to location based pay (wouldn't it be easier to higher another faceless IC in the bay area than in OKC?)
- Bakary 4y ago
  There are many reasons to hire people locally, even if they do work remote. This factors into the replace-ability aspect.
chrisseaton 4y ago
By this logic pay would be lowest in for example San Francisco because there are tons of engineers with diverse skill sets there they can hire. Obviously not the case.
- Bakary 4y ago
  Companies still want to hire local, non-remote talents for all sorts of reasons, from timezones to regulations to just internal/external culture. This will take a long time to change, if it ever does. Technically, a company could chose to hire only foreigners in cheaper countries, and I'm not talking about unreliable hires from developing nations but other competent Westerners whose biggest QoL mistake was not being born with a US visa. If you are an American who wants to be a nomad, the company will rarely fire you on the spot in favor of a more manageable new employee of your country of residence, because it already has a relationship with you and hiring is expensive and lengthy. What they can do however, is decrease your salary because they are no longer beholden to American anchor prices. You are no longer part of the contingent of local talent that they hire for various reasons, and will concede the decrease because the company still offers you the perspective of being a highly paid nomad. Think of it another way: how come it is nearly universally the case that junior American devs are paid salaries that are equal or higher to that of non-American devs working outside of America but within the same company?
  - chrisseaton 4y ago
    > What they can do however, is decrease your salary because they are no longer beholden to American anchor prices. They pay you as much as they need to to get you or someone of equivalent skill as you (encompassing all things including communication skills) to work for them. 'Anchor prices' isn't a thing. > how come it is nearly universally the case that junior American devs are paid salaries that are equal or higher to that of non-American devs working outside of America but within the same company Because that's how much it takes to get them to work for the company. That's the only answer to any question of 'why is someone paid this much' (in a functioning market.)
    - Bakary 4y ago
      Well that's exactly my point. There is great educational infrastructure in America, so all else being equal Americans have astounding opportunities to become highly paid knowledge workers and the American society will produce many of these individuals. However, that does not make the typical competent American dev that much smarter than the mass of competent employees elsewhere. What will cause the discrepancy in salary is that there is much more money swirling into America per capita, and that immigrating to the US is very difficult. This becomes obvious if you consider the salary difference between Canadians and Americans, despite them being nearly identical in many relevant respects other than the amount of capital involved in their respective countries. If you combine that with the multiple reasons that might lead an American company in hiring American talent or at least talent based in America, you end up in a situation where you want a portion of America-based employees even though you have to pay them more, but if any individual employee leaves the territory the reason to pay them American market rates erodes away, even if they have the American nationality. They no longer meet the need that led the company to paying those prices in the first place. Keep in mind that if that need didn't exist, and salary was the sole consideration, they would have more than enough great devs around the world to never have to hire in America to begin with. The nomadic employee has fewer cards in hand because they want to live in a different country and also have a near American salary, which leads to a compromise where their salary is decreased. If they start to make too much trouble to the point where starting the hiring process anew is worth it, they can be replaced by an equally intelligent and capable local dev who will quietly accept the salary in question.
lukemercado 4y ago
> You are paid based on how difficult you are to replace. Hence the location based pay You're partially right. Pay is very much about how difficult you are to replace. However Location in many industries is no longer the dominant input. Location is the dominant input in an office-centric model, but isn't in a Remote model. In an office centric model, the company would have to pick where to locate the office and that location would have a "commute radius" in which they could effectively expect their employees to willingly come in to the office from. This meant that any physical office's "commute radius" was effectively its talent pool. So if you put your office in a high cost of living area, you now have to pay enough for people to live in that area or be willing to commute in from lower cost of living areas. This reality is the foundation for the "location based pay" detente between Labor and Capital. It's worth noting that these things are also interdependent and self reinforcing. Eg: An area (like Silicon Valley, or any other business cluster) has a higher density of talent, which is more attractive to employers, which means more employers want to be in that area. More employers means more competition for that talent, which drives wages up. As those wages then filter into the market you see the price for supply constrained necessities (houses typically) go up, and often times that will drive cost of living up. In a remote work world, this entire cycle is dramatically disbursed and the core foundation of the "location based pay" detente between Labor and Capital is shattered. What this ultimately means is that Capital no longer pays for Talent + Location + Competitive wages within that location. Instead they pay for Talent + Availability (timezones mostly, but internet connectivity is in there as well). This should, in theory, drive a larger talent pool, which, depending on demand for that talent, might lower wages in a given "Availability". If it does, then the cycle starts anew as Employers start to seek out ways to be in that "Availability". The big question one needs to ask is whether there is enough demand to suck up all the talent within the workable "Availabilities". If there is, then wages stay the same or go up. If there isn't, then wages go down. My personal opinion is that any company doing "location based pay" in a remote work world is shooting themselves in the foot (unless they have market power in those locations).
- Bakary 4y ago
  Everything you've said is logical, but the radius you are describing is multifaceted. There are regulations, inertia, cultural and ideological factors, and all sorts of other considerations that come into the capital vs. labor struggle and recreate the radius even with remote technology. In our current world, American salaries are inflated for macro reasons, but the shift you are describing may very well flatten the skilled salaries for currently wealthier regions and increase those for poorer regions.

You are paid based on how difficult you are to replace. Hence the location based pay

by Bakary 4y ago

You are paid based on how difficult you are to replace. Hence the location based pay

mont 4y ago

> You are paid based on how difficult you are to replace May be true in general but definitely is unrelated to location based pay (wouldn't it be easier to higher another faceless IC in the bay area than in OKC?)

Bakary 4y ago
There are many reasons to hire people locally, even if they do work remote. This factors into the replace-ability aspect.

chrisseaton 4y ago

By this logic pay would be lowest in for example San Francisco because there are tons of engineers with diverse skill sets there they can hire. Obviously not the case.

Bakary 4y ago
Companies still want to hire local, non-remote talents for all sorts of reasons, from timezones to regulations to just internal/external culture. This will take a long time to change, if it ever does. Technically, a company could chose to hire only foreigners in cheaper countries, and I'm not talking about unreliable hires from developing nations but other competent Westerners whose biggest QoL mistake was not being born with a US visa. If you are an American who wants to be a nomad, the company will rarely fire you on the spot in favor of a more manageable new employee of your country of residence, because it already has a relationship with you and hiring is expensive and lengthy. What they can do however, is decrease your salary because they are no longer beholden to American anchor prices. You are no longer part of the contingent of local talent that they hire for various reasons, and will concede the decrease because the company still offers you the perspective of being a highly paid nomad. Think of it another way: how come it is nearly universally the case that junior American devs are paid salaries that are equal or higher to that of non-American devs working outside of America but within the same company?
- chrisseaton 4y ago
  > What they can do however, is decrease your salary because they are no longer beholden to American anchor prices. They pay you as much as they need to to get you or someone of equivalent skill as you (encompassing all things including communication skills) to work for them. 'Anchor prices' isn't a thing. > how come it is nearly universally the case that junior American devs are paid salaries that are equal or higher to that of non-American devs working outside of America but within the same company Because that's how much it takes to get them to work for the company. That's the only answer to any question of 'why is someone paid this much' (in a functioning market.)
  - Bakary 4y ago
    Well that's exactly my point. There is great educational infrastructure in America, so all else being equal Americans have astounding opportunities to become highly paid knowledge workers and the American society will produce many of these individuals. However, that does not make the typical competent American dev that much smarter than the mass of competent employees elsewhere. What will cause the discrepancy in salary is that there is much more money swirling into America per capita, and that immigrating to the US is very difficult. This becomes obvious if you consider the salary difference between Canadians and Americans, despite them being nearly identical in many relevant respects other than the amount of capital involved in their respective countries. If you combine that with the multiple reasons that might lead an American company in hiring American talent or at least talent based in America, you end up in a situation where you want a portion of America-based employees even though you have to pay them more, but if any individual employee leaves the territory the reason to pay them American market rates erodes away, even if they have the American nationality. They no longer meet the need that led the company to paying those prices in the first place. Keep in mind that if that need didn't exist, and salary was the sole consideration, they would have more than enough great devs around the world to never have to hire in America to begin with. The nomadic employee has fewer cards in hand because they want to live in a different country and also have a near American salary, which leads to a compromise where their salary is decreased. If they start to make too much trouble to the point where starting the hiring process anew is worth it, they can be replaced by an equally intelligent and capable local dev who will quietly accept the salary in question.

lukemercado 4y ago

> You are paid based on how difficult you are to replace. Hence the location based pay You're partially right. Pay is very much about how difficult you are to replace. However Location in many industries is no longer the dominant input. Location is the dominant input in an office-centric model, but isn't in a Remote model. In an office centric model, the company would have to pick where to locate the office and that location would have a "commute radius" in which they could effectively expect their employees to willingly come in to the office from. This meant that any physical office's "commute radius" was effectively its talent pool. So if you put your office in a high cost of living area, you now have to pay enough for people to live in that area or be willing to commute in from lower cost of living areas. This reality is the foundation for the "location based pay" detente between Labor and Capital. It's worth noting that these things are also interdependent and self reinforcing. Eg: An area (like Silicon Valley, or any other business cluster) has a higher density of talent, which is more attractive to employers, which means more employers want to be in that area. More employers means more competition for that talent, which drives wages up. As those wages then filter into the market you see the price for supply constrained necessities (houses typically) go up, and often times that will drive cost of living up. In a remote work world, this entire cycle is dramatically disbursed and the core foundation of the "location based pay" detente between Labor and Capital is shattered. What this ultimately means is that Capital no longer pays for Talent + Location + Competitive wages within that location. Instead they pay for Talent + Availability (timezones mostly, but internet connectivity is in there as well). This should, in theory, drive a larger talent pool, which, depending on demand for that talent, might lower wages in a given "Availability". If it does, then the cycle starts anew as Employers start to seek out ways to be in that "Availability". The big question one needs to ask is whether there is enough demand to suck up all the talent within the workable "Availabilities". If there is, then wages stay the same or go up. If there isn't, then wages go down. My personal opinion is that any company doing "location based pay" in a remote work world is shooting themselves in the foot (unless they have market power in those locations).

Bakary 4y ago
Everything you've said is logical, but the radius you are describing is multifaceted. There are regulations, inertia, cultural and ideological factors, and all sorts of other considerations that come into the capital vs. labor struggle and recreate the radius even with remote technology. In our current world, American salaries are inflated for macro reasons, but the shift you are describing may very well flatten the skilled salaries for currently wealthier regions and increase those for poorer regions.