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This really is one of these things where every employee in a cheap cost of living area will say "Exactly, man!" and people in an expensive area will see it diff
by dewey 3y ago
This really is one of these things where every employee in a cheap cost of living area will say "Exactly, man!" and people in an expensive area will see it differently because it might cap them lower than what they could get.
I always find that a very naive point of view, of course I would want to earn a US tech salary while living somewhere in the country side, who wouldn't. But I'm also aware that this is not how the world works in reality, there's different tax systems, different expense costs and we don't live in a global one-market world.
I find the strategy of defining different "zones", like most of the remote first / salary transparency companies much more realistic.
- throw0101a 3y ago> This really is one of these things where every employee in a cheap cost of living area will say "Exactly, man!" and people in an expensive area will see it differently because it might cap them lower than what they could get. Well the co-founders live in the Silicon Valley area, with their physical HQ being in Emeryville: * https://en.wikipedia.org/wiki/Emeryville,_California https://en.wikipedia.org/wiki/Emeryville,_California
- dewey 3y agoEarly stage VC-backed startup compensation is very different from later stage companies or bootstrapped companies. It's very common for founders or early employees to receive a lower salary and receive equity instead.
- throw0101a 3y agoHolding paper-gains equity doesn't provide monthly cashflow to buy groceries. :)
- dewey 3y agoI'm sure 200k will cover that, even in the SV.
- cdchn 3y agoI got some bad news for you.
- OkayPhysicist 3y agoThe Bay Area is expensive, but it's not THAT expensive.
- cdchn 3y agoIf you've got a family to support and you need to rent or try to own a home you're going to have a tough time with 200k.
- OkayPhysicist 3y agoI don't know how you're coming to that conclusion. 200k's not going to buy you a large house, but it'll comfortably pay rent/food/savings for a 2-3 bedroom house or apartment for a family of 2-4 in all but the very most expensive parts of the Bay. For mortgages, you'd need to be looking in the cheaper parts of the Bay, but that still means "dense, boring suburb" as opposed to "crime-ridden slum".
- cdchn 3y agoThey didn't say "Bay Area", they said SV.
- almost_usual 3y agoIf you owned a home in the Bay Area prior to 2020 and refinanced down to a sub 3% mortgage 200k is plenty. If you’re trying to buy now on that salary it will be challenging.
- tock 3y agoIt's just crab mentality unfortunately.
- wuliwong 3y agoHmmm...I actually had to look up what crab mentality meant but I don't see how it applies here. From my quick lookup, crab mentality apparently refers to a reactionary state of mind where a person wants to sabotage another's success even when it doesn't directly impact their own. In the case of everyone making the same salary, you could certainly still sabotage someone's success but I don't see how having the same salary makes this type of mentality _more_ likely than at a company with a more typical salary distribution. My concern with everyone having the same salaries is that, potentially, employees have less motivation to excel in their individual work and are more likely to do the minimum to just stay in good standing with their employer and not get fired. Maybe a company can offset the lack of direct financial motivation with more of a team motivation that the financial success of the company as a whole results in financial reward for the individual or some other way of recognizing individual success inside the company. I am doubtful this flat salary structure will result in a more successful company overall but I do think it's good to try new things. And yes this has probably been tried a number of times before but maybe not exactly like this. Or maybe some other external variables have changed w.r.t. other attempts in the past and this time it works. The typical salary structures we see in US companies today are the result of a large number of trials and errors and learning.
- tock 3y agoAh I think you misunderstand. I think employees in the west being pissed that someone in a third world country makes the same salary as them is crab mentality. I totally understand why companies want to pay less though. It's massive cost savings and it makes sense for them to hire for less money.
- wild_egg 3y ago> of course I would want to earn a US tech salary while living somewhere in the country side It's not about what you want, it's about knowing your value. If your work is worth a SF salary then that's what you should be getting. Moving from Idaho to SF doesn't magically make you more productive. The company knows it's still getting more value from you than what you're being paid. They just want to keep more of that value for themselves whenever possible. Have some respect for yourself and know your worth
- carbotaniuman 3y agoOr, it could be that being San Francisco has agglomeration effects (granted most startups/companies uterrly fail at this part).
- spacemadness 3y agoI am so confused by this. I demand more in the Bay as Bay area landlords and their Nimby pals are exploitative jerks and California taxes and fees add up quick. Why is that cleanly separated from the discussion? I see it as more “I will demand more here than other places” vs. “I know my worth and it’s exactly X”
- OkayPhysicist 3y agoBeing in SF makes the market for your labor more competitive. If I'm living on a ranch in rural Idaho, I would interact with very few people on a given day, and most of them would be the same people I interacted with yesterday. In SF, I'd be interacting with far more people, and far more new people, with a much higher probability of those people working in tech, some subset of whom will be willing to offer me a job.
- Aurornis 3y ago> Moving from Idaho to SF doesn't magically make you more productive. If your entire world consists of staying home and interacting remotely with a company, then you are correct: Location doesn't change anything. However, moving to a high-energy city with a high density of experienced engineers and tech companies can increase your rate of learning, career advancement, and experience much more rapidly than living in a smaller city. You have to actually branch out and interact with local companies and people, but it does happen. But this is all beside the point. Hiring is a labor market. Developers who live in SF have more high-paid job options to choose from than someone living in Idaho. As a result, you need to bid more to get them into your company. Hence, the higher salary. The discussion about cost of living misses this point. The real reason developers from places like SF get paid more is because if you don't pay them wages that are competitive with their local companies, they're just going to walk away and take any number of higher paying jobs they have access to.
- keepamovin 3y agoIs that why you went to Berlin? How does Berlin compare to SV for cost of living?
- dewey 3y agoThis site is usually helpful: https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+States&country2=Germany&city1=San+Francisco%2C+CA&city2=Berlin&tracking=getDispatchComparison https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
- KomoD 3y agoNo, that should not be trusted, any random person can go mess with the numbers.
- dewey 3y agoJust like Wikipedia and many other information sources. Don't trust one source blindly, do your research and you'll be fine. It gives a good enough general indication. A comparison like this will always depend on too many factors to make it applicable to everyone in any case.
- keepamovin 3y agoInteresting, it's almost double in SV the cost of Berlin! How much salary do you think should allocate to base and how much toward any location adjustments, in general?
- dewey 3y agoI can't answer that, but there's some companies that do all that in public: - https://handbook.gitlab.com/handbook/total-rewards/compensation/compensation-calculator/ https://handbook.gitlab.com/handbook/total-rewards/compensat... - https://www.checklyhq.com/blog/open-sourcing-our-pay-calculator/ https://www.checklyhq.com/blog/open-sourcing-our-pay-calcula... - https://buffer.com/salary-calculator https://buffer.com/salary-calculator
- a_imho 3y agoAssuming interchangeable human resources there are basically 2 options, either the company is extracting more value from everyone than the salaries they pay, in that case paying fairly would eat into the company's bottom line. Poor CXOs would not turn extra profits by keeping less fortunate employees on low salaries but just the regular one. Or the highest paid employees are not pulling their weight and their salaries are already subsidized by the rest of the company, which is also not quite fair. Nevertheless, I agree everyone looks at this problem from their own POV, however it should not be the norm to provide equal compensation for equal work.
- keepamovin 3y agoCan you explain more about your view that it should not be the norm to provide equal compensation for equal work?
- a_imho 3y agoIt was a bad edit, it (should not be controversial | should be the norm) to expect equal compensation for equal work. In slightly more detail https://elsajohansson.wordpress.com/2017/09/13/what-does-a-wage-gap-look-like/ https://elsajohansson.wordpress.com/2017/09/13/what-does-a-w... https://elsajohansson.wordpress.com/2022/09/16/the-wage-gap-2/ https://elsajohansson.wordpress.com/2022/09/16/the-wage-gap-...
- keepamovin 3y agoIf that's your blog, well done! I am totally on board with everything you say there. I've been thinking this way for years, thanks for articulating some more reasons why this is really important! Love your work! :)
- a_imho 3y agoThank you for taking a look. Be warned though, I'm personally affected and just as biased as everyone else on both sides of the issue.
- azinman2 3y ago> of course I would want to earn a US tech salary while living somewhere in the country side, who wouldn't I wouldn’t. I like cities and center of culture and human activity. And the stats generally show cities growing globally, so I’m not the only one.
- dewey 3y agoReplace "somewhere in the country side" with "some other place where the cost of living is lower than the highest one in the country" if it makes you happier.
- azinman2 3y agoThe same argument applies. Places with high costs of living are high because they’re desirable. There are no cheap cities I’d want to live in.
- keepamovin 3y agoYour perspective on egalitarian salaries is intriguing, but it's important to remember you can't speak for others regarding their intentions or their whys, or what it is for them. You can't pretend to define that for someone who is not you. While you argue it's naive and cite different tax systems and costs, companies are successfully adopting this approach even in high-cost areas like the Valley. It might be hard to argue that the world doesn't work like that in reality, given that it’s already happening. While it may not be widespread, it doesn’t mean it’s without merit or unrealistic. After all, remember that today's 'unrealistic' could be tomorrow's norm! It's tempting to think that people in less expensive areas would be the main proponents of a uniform salary, but the reality is nuanced. Preferences are likely influenced by a variety of factors, not just cost of living. Your later points about the differences between compensation at different company stages are well taken, however it could be difficult to assert how much this dynamic affects preferences given the practice is not limited to early stage companies and equity vests often fail to yield returns. In addition, your suggestion that only people in poor places want egalitarian salaries, could be seen as disrespectful of other people, because it seems to ignores the totality of an individual while preferring to try to reduce them to simplistic motivations. In that way, it’s also considered abusive. And can also be seen as disrespectful of others experience, and maybe arrogant: "Only people in poor areas want such naive, unrealistic salaries." Looking deeper, this aspect of your comment, combined with its narrow focus on a single explanation, might be interpreted as your attempt to express your personal frustrations at your own salary performance, or justify and rationalize why you may not be making more. This might occur because you may find it easier to view something you don't have as unrealistic and naive, rather than the result of choices you could change. In short, while you mention that egalitarian salaries and enthusiastic support of them is naive and unrealistic, it could be argued that the view espoused in your comment is naive and unrealistic because: it lack awareness of complex dynamics; ignores the totality of an individual while preferring to try to reduce them to simplistic motivations, and dismisses real practices as unrealistic, which might also be seen as out of touch. Overall, your views unfortunately could be interpreted as narrow and an expression of personal frustration, instead of a reflection of underlying real dynamics. To conclude, while it's likely there's some truth to the correlation you propose, it's also likely true that even if some correlation exists, location is not the only factor at play. People may have various salary preferences, independent of their location, just as the value they provide is also independent. Finally, indeed, your view could be expressed more respectfully of others. Anywho, it's understandable you may have that perspective, given what your background might be. Yet it's always good to remember that you can adapt your view over time, can grow and can include more data to expand that awareness of reality which you value! :)