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> Think about it: if a company pays a person less because of the color of their skin or their gender, the company would be in big trouble. But somehow it's OK t

by deng 3y ago

> Think about it: if a company pays a person less because of the color of their skin or their gender, the company would be in big trouble. But somehow it's OK to pay a person less based on their location? I'd suggest the author thinks yet a bit more about this. "color of the skin", "gender", "location of living", I'm sure the author can figure out what differentiates the first two from the latter. For a start, one could think about which of these things one is able to change. Or you might ask the question: which of these things have actually something to do with my job? And yes, location matters: the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc. Don't get me wrong: one can surely discuss whether differentiating pay based on location is OK or not. However, comparing this to discrimination because of skin color or gender will not help this discussion at all, as in effect the author is comparing GitLab to a racist and sexist organization, which will end any discussion fairly quickly.

rmk 3y ago
Yeah, his statement makes about as much sense as the expectation that all people must be charged the same for something all over the world. i.e., 50c-equivalent hamburger in, say, South Africa should have the same price in San Francisco. Ain't gonna happen because economic realities do not bow to idealism, however well-intentioned.
shutupnerd0000 3y ago
This topic is as tired and cliche on this forum as "single page apps vs progressive enhancement"
paulddraper 3y ago
> one can surely discuss whether differentiating pay based on location is OK or not. However, comparing this to discrimination because of skin color or gender will not help this discussion at all Exactly. Compare it to something else, like paying people more if they own a sports car.
dijit 3y ago
Thats a somewhat uncharitable interpretation. As you are almost certainly aware, the majority of racial problems in the US boil down to the very simple fact that black people are on average of low socio-economic standing; and if there is one thing the US system is geared against its any person of low socioeconomic standing. Put succinctly: You might consider that its ok to pay differently based on if you’re in Los Angeles or Bryan, Ohio- but would you feel the same if pay was different depending on if you lived in Inglewood vs Santa Monica?
- b112 3y ago
  Thats a somewhat uncharitable interpretation. No, it isn't. And you are trying to tie racial issues to pay issues via correlative methods, instead of causative.
- weebull 3y ago
  Inglewood and Santa Monica are close enough to require the same level of income in order to afford a certain standard of living. Sure the standards of living may not overlap much, but they are on the same scale. That's not true of California and Ohio in general.
  - dijit 3y ago
    Regardless of Ohio or California: you're saying that companies should pay less based on the income of their neighbourhood and you don't agree that it will disproportionately affect people of colour. Interesting perspective, I don’t think I agree though.
    - weebull 3y ago
      Not income of their neighbourhood, but the cost of living in their city/state. It needs to be a big enough region that a good job gives social mobility, but introducing California wages into Ohio would cause massive inflation there, driving normal people into poverty. At the same time nobody could live in LA on Ohio wages.
- Jaygles 3y ago
navane 3y ago
And, which one has a historic asymmetric power balance. We discriminate pay on job role, on job level, on performance. We discriminate on length (tank crew), eyesight (pilots). That is not Discrimination however, because it lacks a historic asymmetric power balance.
- wenebego 3y ago
  What about western countries using cheap foreign labor? Seems like an asymmetric power balance to me
  - deng 3y ago
    That's actually a point worth discussing. Because here's one thing that should be obvious, but apparently many people are unaware of: if you work for a large, multi-national company, you are almost certainly affected by location-based pay. GitLab is not an outlier here, but well within the norm for a company that has subsidiaries in different countries. The main difference with GitLab is that a) they are completely remote, b) they are called "GitLab" in every country instead of creating subsidiaries with different names, and c) they have made the "mistake" of making the payment differences entirely transparent. They were absolutely not forced to do that, but they did it nevertheless, and they should be applauded for that.
  - slickrick216 3y ago
    Western countries do that to each other and within themselves. Maybe it’s not the west or countries it’s people.
  - navane 3y ago
    That is a valid point, but the article compares Netherlands wages to US wages, these countries do not have a history of exploiting each other.
  - Tijdreiziger 3y ago
    A while ago there was a thread about cheap African labor, and some Africans showed up in the thread and explained that what we (westerners) consider ‘cheap’ is actually still a lot more than the local salaries, so it gives them a lot more social mobility.
deleted 3y ago
[deleted]
rpastuszak 3y ago
> And yes, location matters: the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc. remote.com is a good counterexample here: https://remotecom.notion.site/Total-Rewards-Glossary-ec96c10298ad4e4daac6426dd9cf66b8#cd28625334314c4f910e9d52acdb91c1 https://remotecom.notion.site/Total-Rewards-Glossary-ec96c10... location-based pay is (generally) a product of how much the employer can get away with rather than the operational cost etc...
tmsh 3y ago
The main reason Silicon Valley or where-founded-high-cost-of-living companies hire in low cost of living locations is due to the value they get in paying less for compensation but getting proportionally more value than the lower compensation. Requiring that compensation be the same everywhere would simply incentivize companies to only hire locally since they’d improve communication (even if fully remote) due to offsites, same timezone etc. Esp., in an economy where there is a large supply of people wanting to be hired in HCOL locations. That’s not to say this couldn’t change in the future (sometimes it’s good to ignore the current “how” and incentives / reality). But it’s useful to be realistic. There’s also something to be said for companies taking the risk and hiring in other countries. This increases knowledge (not to say the company is “better” but it probably has some reasons for why the local talent joins), sows the seeds for future companies there etc.
- ozr 3y ago
  The (good) companies I've been at are location agnostic on pay, or close to it. It's not about getting a discount, it's about expanding the talent pool. We want the best we can get, not the best within 25 miles of a hub.
  - vitus 3y ago
    I see where you're coming from, but in practice offering location-agnostic salaries means you're not competitive in areas that command higher salaries (notably, large tech hubs like the Bay Area, Seattle, New York). If anything, you're trading the talent pool near those hubs (and let's be honest, the rest of the US) for talent in other countries. That's a trade-off you might be willing to make, but I hope you understand that not every company is willing to write off the entire talent pool of the US. (As a point of reference, the only two countries that Google pays comparably to even the cheapest parts of the US are Switzerland and Israel.)
    - ozr 3y ago
      Salary is one part of comp, which is one part of what makes a company attractive. There are plenty of levers to pull that are not salary, and not based on geography.
ipaddr 3y ago
In a world of free immigration that may be true but many are locked into a location because of where they were born
alberth 3y ago
WFH / Remote This is a direct consequence of people wanting WFM but not understanding the implications. Going into an office gives employees pay leverage due to cost of living in that locale (assuming they live in a top pay market, SF/NYC/etc). But if you have an entire Remote company & culture, now - companies can hire in any locale and pay lowest common denominator (even if that locale is half way around the world). Remote work turns everyone into effectively an independent contractor competing against all other talent from all around the world. In office means you’re mainly competing against other people in your locale.
- angra_mainyu 3y ago
  Interestingly enough, none of the places I worked remotely for ever factored in CoL. A senior dev got paid the same, be it in South Korea, Brazil, Romania or New York City.
- chasd00 3y ago
  fortunately, wfh is widespread enough now that if a company doesn't want to pay you then you can take your skills elsewhere. If the talent pool is worldwide now then so are the employment opportunities.
intelVISA 3y ago
There are corps who pay SF salary globally and reap the rewards, GitLab isn't really able to compete at that level imo.
- darepublic 3y ago
  You may be right. Though if the articles author is right that they hired too many devs, then they probably could have had a team of 30 sf salaried devs instead of 130 lower salaries and would have done more with them (theoretically)
- mardifoufs 3y ago
  Can you name a few who are reaping rewards from doing that?
  - dijit 3y ago
    DuckduckGo, Accelbyte and Oxide.Computer are the ones I know of.
    - surajrmal 3y ago
      All of which pay low for the bay area.
    - sbrother 3y ago
      I haven't looked at the other two, but DuckDuckGo's salaries are in no way competitive in the US market.
- mistymountains 3y ago
  My (biotech, mostly remote) company does this. They may not love it but they realize they have to hire from SF, Boston, NYC etc to get the best ML talent and people expect market salaries / don’t want to up and move if they don’t have to.
angra_mainyu 3y ago
> And yes, location matters: the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc. B2B contracts are a thing. It's very common for many devs that work remotely for other companies. There's also companies that offer something like "Payroll as a Service". Still B2B is superior in every way, and can often net you much more money than just being an employee due to being able to leverage tax-optimizations.
heresie-dabord 3y ago
From TFA: > my salary was around €120 000 per year [...] For The Netherlands this is a good salary, and you'll have a hard time finding companies that offer better and let you work from home full time. For his country, he was well paid and worked from home 100% as well. > But if I had instead lived in the Bay Area, I would've earned at least twice that amount, possibly even more. Not because I am somehow able to do my job better in the Bay Area, or because of any other valid reason for that matter, but because I would be living in the Bay Area instead of in The Netherlands. He says it was "not fair" that he wasn't paid the same salary as people in a different country. There are no Victim Points to be scored here. The author has a poor understanding of economics.
- sjwhevvvvvsj 3y ago
  Also the social safety net in NL covers a lot of things you have to pay for yourself in the USA.
- Cthulhu_ 3y ago
  €120.000 a year puts him comfortably in the top 1% earners: https://www.cbs.nl/nl-nl/visualisaties/inkomensverdeling https://www.cbs.nl/nl-nl/visualisaties/inkomensverdeling, but he complains he'd earn twice as much if he lived in an area where the cost of living is much higher? I mean he lives in Amsterdam, which is more expensive than the rest of the country, sure, but nowhere near what it's like in SF according to https://www.numbeo.com/cost-of-living/rankings.jsp https://www.numbeo.com/cost-of-living/rankings.jsp (Amsterdam is ranked 75, vs SF at 8), and I'm not sure if that index includes health care and social benefits like state pension, etc. Speaking of, that's only salary, ìt excludes stocks, bonuses, pension contributions, and other benefits. Then there's accessibility; living in central Amsterdam means he can fulfill most of his daily needs and transport by bike. Can't get much cheaper than that. TL;DR, he can move to SF if he wants to earn SF rates.
- username332211 3y ago
  > The author has a poor understanding of economics. Does he or does the company? If they had decent understanding of economics, they should have shut down their Bay Area operations?
drewcoo 3y ago
Where a person lives is indicative of their culture. And their unwillingness to move shows deep ties to family and friends. There is a clear difference in mental/emotional makeup with those willing to relocate at the drop of a hat. Just because these traits are not protected by US law does not mean that they should not be valued. They are also traits of human diversity and discriminating based on those traits is still discrimination, just not discrimination against US-protected classes.
cedws 3y ago
>I'd suggest the author thinks yet a bit more about this. "color of the skin", "gender", "location of living", I'm sure the author can figure out what differentiates the first two from the latter. I suppose what you're getting at is that you can't change your race or skin colour, but you can change your location. That isn't really the case if you're Ukrainian, or just from a country with a weak passport.
- siva7 3y ago
  I guess OP was wrong in that some people really can't figure out what differentiates the first two from the latter. You can change your location even from a country with a weak passport but it won't be easy (like it won't be easy to get accepted into a top-tier university), but you still can't change color of skin no matter how hard you try.
  - pawelmurias 3y ago
    You can change the color of your skin a little bit by controlling sun exposure.
  - cedws 3y ago
    Michael Jackson did it.
bruce343434 3y ago
> the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc. This is why women who want to get pregnant don't get hired in the USA (extra costs associated with postnatal (ETA: maternity) leave). And yet that's not okay. So your basic rule of thumb is not quite comprehensive.
- deng 3y ago
  It's weird I have to say this, but from what I wrote it of course does NOT follow that ANYTHING that makes economic sense for a company cannot be discriminatory. That would be a dystopian rule straight out of an Ayn Rand novel.
drubio 3y ago
Conflating the three is easy, because instead of paying for delivered value, the company is doing arbitrage on location ( like it could do with gender, race or anything else) All companies will take advantage of maximizing their profit or reducing cost, but it's a slippery slope once a subjective metric to determine value is used. I for one live in a "low" CoL, but my AWS bill is just the same as a person in NY, SF or Geneva, should I also expect a discount because "my income is lower"? Or is it only fair to be billed equally, because the value all of us get is the.same ? Turn the tables, if a dev in India, Romania or Mexico is delivering the same value as one in the US or UK should (s)he be paid any less ? Why ?
- HDThoreaun 3y ago
  > instead of paying for delivered value Here's your mistake. Companies have never and will never pay for delivered value. They pay the least they can to get an acceptable candidate. The difference is important, and the mentality that companies are paying for delivered value rather than the minimum acceptable amount leads to these mistaken conclusions often. As for why? Because their goal is to maximize profit of course. Why pay more when less will do? The overseas dev should be paid less because their opportunity costs are much lower, so they accept a lower wage.
- Aurornis 3y ago
  > because instead of paying for delivered value, This argument falls apart when you consider that some projects have zero or negative value. Developers who work on these projects still get paid and we obviously don’t have to write a check when we make a mistake that costs the company money. Nobody actually likes “delivered value” compensation except under hypothetical circumstances where they imagine it can only increase their pay. The hiring market is a market. Supply and demand drives compensation. Delivered value isn’t one of those forces driving supply and demand. It sets the maximum an employer can pay someone and still get an ROI, but that’s it. > Turn the tables, if a dev in India, Romania or Mexico is delivering the same value as one in the US or UK should (s)he be paid any less ? Why ? Because it’s a job market and you’re bidding for candidates against their other options. If you’re house shopping and you find an identical 3 bed, 3000 sq. ft. house in all of those markets, would you expect to bid the same for it? Of course not. The sooner we accept the realities of job markets and supply and demand, the sooner this all makes sense.
angarg12 3y ago
I've worked in 5 different countries in my life, and one lesson you learn quickly is that it's impossible to compare salaries between locations at face value. For example, now I live in the US and although my salary is about twice what it was in England, my lifestyle remains about the same, worse in some aspects, and better in others. I'm almost certain OP lifestyle would have taken a hit living in Bay Area, even with a higher comp. And this is simply comparing income, not accounting for many other variables (social benefits, taxes, culture...). In fact I'll probably take a big hit in comp to move back to Europe so that I can live a more comfortable lifestyle.
- verst 3y ago
  I agree completely. This is what I always tell my family in Europe: Sure, my salary on the US West Coast may be high, but the lifestyle this affords me (while being reasonably future oriented in preparing for retirement, family planning etc) is almost certainly worse. (Not to mention cultural differences in attitudes towards work.) You can't assess salaries as someone who would temporarily work somewhere else and then export that money back to their home country. You have to view the salaries in the context of someone who will spend their life there.
  - ghaff 3y ago
    It's also just very situation-dependent. I live in at least the periphery of a HCoL East Coast urban area but I have a paid-off house, don't have kid-related expenses, and don't eat out a lot (especially expensively) in the local area. I do travel a fair bit but those costs would be similar no matter where I lived. So, for me, I don't really live in an HCoL area to the same degree as if I were renting in the city and going out on the town all the time or were paying for childcare.
- arwhatever 3y ago
  HN post from a few years back that really stuck with me https://news.ycombinator.com/item?id=22777745 https://news.ycombinator.com/item?id=22777745 “What Armenians should know about life in America (2014)” I think you have to get the actual content from the Wayback Machine now. Gist was that many Armenian families tended to be miffed at the amount of financial assistance their relatives who had moved to America tended to send back, particularly upon learning of their apparently high salary amounts. Article then goes on to describe how American society tends to nickel-and-dime its members to death from every direction. More broadly, the article was a fascinating outsider’s look at our culture and lifestyle.
boo-ga-ga 3y ago
I think author gets many things wrong. As for location, the motivation is stated here, and in my opinion, it really makes sense: https://handbook.gitlab.com/handbook/total-rewards/compensation/#paying-local-rates https://handbook.gitlab.com/handbook/total-rewards/compensat... Imagine they would pay Bay Area salaries everywhere including Philippines or Ukraine. People there would be in "golden handcuffs" and burn out instead of changing job when it's time to go. This would produce terrible results for both the company and people. And of course, if they chose to pay some kind of world-median salaries, then they wouldn't hire people in California or London at all. There are other controversial things said about product managers being unneeded, and that the company shouldn't have more than 100 developer for a product. I think it's pretty clear that the author is a great autonomous engineer who would be happy and very successful in a (relatively) small startup. Maybe if not for the tax rule changes waiting, he would have left the company earlier, and would write a happy article about his experience there. This gets us back to the location-based rates again by the way:). Imagine how difficult it would be for the author to leave the company if in addition to stocks, he would have had $300k compensation in Amsterdam.
- paulddraper 3y ago
  > Imagine they would pay Bay Area salaries everywhere including Philippines or Ukraine That would be absurd. But what if they paid Philippines or Ukraine salaries everywhere instead? They wouldn't hire Bay-area engineers. Okay. And maybe the offshore has too much language/timezone friction. Okay. So choose a different price point, whatever is the cheapest to get engineers who match your condition, regardless of what their steet address is.
- chrsig 3y ago
  > People there would be in "golden handcuffs" and burn out instead of changing job when it's time to go Good ol' "we can't pay you that much, because what if we wanted to stop paying you that much. It'd be bad for you if we handed you this pile of money, you might hurt yourself. We're helping you by keeping it to ourselves, trust us."
  - cmaggiulli 3y ago
RHSeeger 3y ago
> But somehow it's OK to pay a person less based on their location? At the end of the day, it winds up being a choice between - Pay someone based on their location - People in lower COL areas complain, but are (in theory) being paid an amount with the same buying power as someone in a higher COL area (being paid me) [1] - Pay the same regardless of location - People lower COL areas are making more buying power, but people in higher COL won't even work for you; because it's not realistic to pay the higher COL amount to everyone [2] There's no solution that makes everyone happy. [1] Not really true, since it doesn't account for a lot of factors; such as retirement savings, etc. [2] Not strictly true but, if you pay the higher COL amount to everyone, then you can hire fewer people for the same amount of money.
- mitthrowaway2 3y ago
  I guess the question is, do you need people in high-COL areas to work for you? There's no shortage of developers in Arizona / Europe / Canada / etc, so why would companies like Gitlab spend so much money on bay-area devs? A corporation could save a lot of money by only hiring developers elsewhere who deliver similar work. And cutting labor costs does seem to be the operating mode that a lot of software companies are in at the moment.
  - danenania 3y ago
    A lot of talented people tend to concentrate in the hcol areas because it gives them the most optionality (plus many other benefits, of course, for people who can afford them). If you’re hiring for some specific niches or need very senior people, removing candidates in hcol tech centers from your search pool could make it a lot harder to hire. Like imagine saying you want to hire a great US political lobbyist but you can’t hire anyone who lives in DC. It would be tough right? The dynamics in tech aren’t as dramatic but there’s still some of that effect. I’m not saying an alternative strategy couldn’t work, but there are good reasons companies want to be able to hire in hcol markets.
    - paulddraper 3y ago
      > If you’re hiring for some specific niches or need very senior people, Okay, so you'll pay more for those niches or seniority. At whatever price is competitive with the market as a whole. You don't need to include location. I'm sure people who drive fancy cars need more money too, but I'm not gonna pay more for that.

by deng 3y ago

rmk 3y ago

Yeah, his statement makes about as much sense as the expectation that all people must be charged the same for something all over the world. i.e., 50c-equivalent hamburger in, say, South Africa should have the same price in San Francisco. Ain't gonna happen because economic realities do not bow to idealism, however well-intentioned.

shutupnerd0000 3y ago

This topic is as tired and cliche on this forum as "single page apps vs progressive enhancement"

paulddraper 3y ago

> one can surely discuss whether differentiating pay based on location is OK or not. However, comparing this to discrimination because of skin color or gender will not help this discussion at all Exactly. Compare it to something else, like paying people more if they own a sports car.

dijit 3y ago

Thats a somewhat uncharitable interpretation. As you are almost certainly aware, the majority of racial problems in the US boil down to the very simple fact that black people are on average of low socio-economic standing; and if there is one thing the US system is geared against its any person of low socioeconomic standing. Put succinctly: You might consider that its ok to pay differently based on if you’re in Los Angeles or Bryan, Ohio- but would you feel the same if pay was different depending on if you lived in Inglewood vs Santa Monica?

b112 3y ago
Thats a somewhat uncharitable interpretation. No, it isn't. And you are trying to tie racial issues to pay issues via correlative methods, instead of causative.
weebull 3y ago
Inglewood and Santa Monica are close enough to require the same level of income in order to afford a certain standard of living. Sure the standards of living may not overlap much, but they are on the same scale. That's not true of California and Ohio in general.
- dijit 3y ago
  Regardless of Ohio or California: you're saying that companies should pay less based on the income of their neighbourhood and you don't agree that it will disproportionately affect people of colour. Interesting perspective, I don’t think I agree though.
  - weebull 3y ago
    Not income of their neighbourhood, but the cost of living in their city/state. It needs to be a big enough region that a good job gives social mobility, but introducing California wages into Ohio would cause massive inflation there, driving normal people into poverty. At the same time nobody could live in LA on Ohio wages.
Jaygles 3y ago

navane 3y ago

And, which one has a historic asymmetric power balance. We discriminate pay on job role, on job level, on performance. We discriminate on length (tank crew), eyesight (pilots). That is not Discrimination however, because it lacks a historic asymmetric power balance.

wenebego 3y ago
What about western countries using cheap foreign labor? Seems like an asymmetric power balance to me
- deng 3y ago
  That's actually a point worth discussing. Because here's one thing that should be obvious, but apparently many people are unaware of: if you work for a large, multi-national company, you are almost certainly affected by location-based pay. GitLab is not an outlier here, but well within the norm for a company that has subsidiaries in different countries. The main difference with GitLab is that a) they are completely remote, b) they are called "GitLab" in every country instead of creating subsidiaries with different names, and c) they have made the "mistake" of making the payment differences entirely transparent. They were absolutely not forced to do that, but they did it nevertheless, and they should be applauded for that.
- slickrick216 3y ago
  Western countries do that to each other and within themselves. Maybe it’s not the west or countries it’s people.
- navane 3y ago
  That is a valid point, but the article compares Netherlands wages to US wages, these countries do not have a history of exploiting each other.
- Tijdreiziger 3y ago
  A while ago there was a thread about cheap African labor, and some Africans showed up in the thread and explained that what we (westerners) consider ‘cheap’ is actually still a lot more than the local salaries, so it gives them a lot more social mobility.

deleted 3y ago

[deleted]

rpastuszak 3y ago

> And yes, location matters: the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc. remote.com is a good counterexample here: https://remotecom.notion.site/Total-Rewards-Glossary-ec96c10298ad4e4daac6426dd9cf66b8#cd28625334314c4f910e9d52acdb91c1 https://remotecom.notion.site/Total-Rewards-Glossary-ec96c10... location-based pay is (generally) a product of how much the employer can get away with rather than the operational cost etc...

tmsh 3y ago

The main reason Silicon Valley or where-founded-high-cost-of-living companies hire in low cost of living locations is due to the value they get in paying less for compensation but getting proportionally more value than the lower compensation. Requiring that compensation be the same everywhere would simply incentivize companies to only hire locally since they’d improve communication (even if fully remote) due to offsites, same timezone etc. Esp., in an economy where there is a large supply of people wanting to be hired in HCOL locations. That’s not to say this couldn’t change in the future (sometimes it’s good to ignore the current “how” and incentives / reality). But it’s useful to be realistic. There’s also something to be said for companies taking the risk and hiring in other countries. This increases knowledge (not to say the company is “better” but it probably has some reasons for why the local talent joins), sows the seeds for future companies there etc.

ozr 3y ago
The (good) companies I've been at are location agnostic on pay, or close to it. It's not about getting a discount, it's about expanding the talent pool. We want the best we can get, not the best within 25 miles of a hub.
- vitus 3y ago
  I see where you're coming from, but in practice offering location-agnostic salaries means you're not competitive in areas that command higher salaries (notably, large tech hubs like the Bay Area, Seattle, New York). If anything, you're trading the talent pool near those hubs (and let's be honest, the rest of the US) for talent in other countries. That's a trade-off you might be willing to make, but I hope you understand that not every company is willing to write off the entire talent pool of the US. (As a point of reference, the only two countries that Google pays comparably to even the cheapest parts of the US are Switzerland and Israel.)
  - ozr 3y ago
    Salary is one part of comp, which is one part of what makes a company attractive. There are plenty of levers to pull that are not salary, and not based on geography.

ipaddr 3y ago

In a world of free immigration that may be true but many are locked into a location because of where they were born

alberth 3y ago

WFH / Remote This is a direct consequence of people wanting WFM but not understanding the implications. Going into an office gives employees pay leverage due to cost of living in that locale (assuming they live in a top pay market, SF/NYC/etc). But if you have an entire Remote company & culture, now - companies can hire in any locale and pay lowest common denominator (even if that locale is half way around the world). Remote work turns everyone into effectively an independent contractor competing against all other talent from all around the world. In office means you’re mainly competing against other people in your locale.

angra_mainyu 3y ago
Interestingly enough, none of the places I worked remotely for ever factored in CoL. A senior dev got paid the same, be it in South Korea, Brazil, Romania or New York City.
chasd00 3y ago
fortunately, wfh is widespread enough now that if a company doesn't want to pay you then you can take your skills elsewhere. If the talent pool is worldwide now then so are the employment opportunities.

intelVISA 3y ago

There are corps who pay SF salary globally and reap the rewards, GitLab isn't really able to compete at that level imo.

darepublic 3y ago
You may be right. Though if the articles author is right that they hired too many devs, then they probably could have had a team of 30 sf salaried devs instead of 130 lower salaries and would have done more with them (theoretically)
mardifoufs 3y ago
Can you name a few who are reaping rewards from doing that?
- dijit 3y ago
  DuckduckGo, Accelbyte and Oxide.Computer are the ones I know of.
  - surajrmal 3y ago
    All of which pay low for the bay area.
  - sbrother 3y ago
    I haven't looked at the other two, but DuckDuckGo's salaries are in no way competitive in the US market.
mistymountains 3y ago
My (biotech, mostly remote) company does this. They may not love it but they realize they have to hire from SF, Boston, NYC etc to get the best ML talent and people expect market salaries / don’t want to up and move if they don’t have to.

angra_mainyu 3y ago

> And yes, location matters: the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc. B2B contracts are a thing. It's very common for many devs that work remotely for other companies. There's also companies that offer something like "Payroll as a Service". Still B2B is superior in every way, and can often net you much more money than just being an employee due to being able to leverage tax-optimizations.

heresie-dabord 3y ago

From TFA: > my salary was around €120 000 per year [...] For The Netherlands this is a good salary, and you'll have a hard time finding companies that offer better and let you work from home full time. For his country, he was well paid and worked from home 100% as well. > But if I had instead lived in the Bay Area, I would've earned at least twice that amount, possibly even more. Not because I am somehow able to do my job better in the Bay Area, or because of any other valid reason for that matter, but because I would be living in the Bay Area instead of in The Netherlands. He says it was "not fair" that he wasn't paid the same salary as people in a different country. There are no Victim Points to be scored here. The author has a poor understanding of economics.

sjwhevvvvvsj 3y ago
Also the social safety net in NL covers a lot of things you have to pay for yourself in the USA.
Cthulhu_ 3y ago
€120.000 a year puts him comfortably in the top 1% earners: https://www.cbs.nl/nl-nl/visualisaties/inkomensverdeling https://www.cbs.nl/nl-nl/visualisaties/inkomensverdeling, but he complains he'd earn twice as much if he lived in an area where the cost of living is much higher? I mean he lives in Amsterdam, which is more expensive than the rest of the country, sure, but nowhere near what it's like in SF according to https://www.numbeo.com/cost-of-living/rankings.jsp https://www.numbeo.com/cost-of-living/rankings.jsp (Amsterdam is ranked 75, vs SF at 8), and I'm not sure if that index includes health care and social benefits like state pension, etc. Speaking of, that's only salary, ìt excludes stocks, bonuses, pension contributions, and other benefits. Then there's accessibility; living in central Amsterdam means he can fulfill most of his daily needs and transport by bike. Can't get much cheaper than that. TL;DR, he can move to SF if he wants to earn SF rates.
username332211 3y ago
> The author has a poor understanding of economics. Does he or does the company? If they had decent understanding of economics, they should have shut down their Bay Area operations?

drewcoo 3y ago

Where a person lives is indicative of their culture. And their unwillingness to move shows deep ties to family and friends. There is a clear difference in mental/emotional makeup with those willing to relocate at the drop of a hat. Just because these traits are not protected by US law does not mean that they should not be valued. They are also traits of human diversity and discriminating based on those traits is still discrimination, just not discrimination against US-protected classes.

cedws 3y ago

>I'd suggest the author thinks yet a bit more about this. "color of the skin", "gender", "location of living", I'm sure the author can figure out what differentiates the first two from the latter. I suppose what you're getting at is that you can't change your race or skin colour, but you can change your location. That isn't really the case if you're Ukrainian, or just from a country with a weak passport.

siva7 3y ago
I guess OP was wrong in that some people really can't figure out what differentiates the first two from the latter. You can change your location even from a country with a weak passport but it won't be easy (like it won't be easy to get accepted into a top-tier university), but you still can't change color of skin no matter how hard you try.
- pawelmurias 3y ago
  You can change the color of your skin a little bit by controlling sun exposure.
- cedws 3y ago
  Michael Jackson did it.

bruce343434 3y ago

> the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc. This is why women who want to get pregnant don't get hired in the USA (extra costs associated with postnatal (ETA: maternity) leave). And yet that's not okay. So your basic rule of thumb is not quite comprehensive.

deng 3y ago
It's weird I have to say this, but from what I wrote it of course does NOT follow that ANYTHING that makes economic sense for a company cannot be discriminatory. That would be a dystopian rule straight out of an Ayn Rand novel.

drubio 3y ago

Conflating the three is easy, because instead of paying for delivered value, the company is doing arbitrage on location ( like it could do with gender, race or anything else) All companies will take advantage of maximizing their profit or reducing cost, but it's a slippery slope once a subjective metric to determine value is used. I for one live in a "low" CoL, but my AWS bill is just the same as a person in NY, SF or Geneva, should I also expect a discount because "my income is lower"? Or is it only fair to be billed equally, because the value all of us get is the.same ? Turn the tables, if a dev in India, Romania or Mexico is delivering the same value as one in the US or UK should (s)he be paid any less ? Why ?

HDThoreaun 3y ago
> instead of paying for delivered value Here's your mistake. Companies have never and will never pay for delivered value. They pay the least they can to get an acceptable candidate. The difference is important, and the mentality that companies are paying for delivered value rather than the minimum acceptable amount leads to these mistaken conclusions often. As for why? Because their goal is to maximize profit of course. Why pay more when less will do? The overseas dev should be paid less because their opportunity costs are much lower, so they accept a lower wage.
Aurornis 3y ago
> because instead of paying for delivered value, This argument falls apart when you consider that some projects have zero or negative value. Developers who work on these projects still get paid and we obviously don’t have to write a check when we make a mistake that costs the company money. Nobody actually likes “delivered value” compensation except under hypothetical circumstances where they imagine it can only increase their pay. The hiring market is a market. Supply and demand drives compensation. Delivered value isn’t one of those forces driving supply and demand. It sets the maximum an employer can pay someone and still get an ROI, but that’s it. > Turn the tables, if a dev in India, Romania or Mexico is delivering the same value as one in the US or UK should (s)he be paid any less ? Why ? Because it’s a job market and you’re bidding for candidates against their other options. If you’re house shopping and you find an identical 3 bed, 3000 sq. ft. house in all of those markets, would you expect to bid the same for it? Of course not. The sooner we accept the realities of job markets and supply and demand, the sooner this all makes sense.

angarg12 3y ago

I've worked in 5 different countries in my life, and one lesson you learn quickly is that it's impossible to compare salaries between locations at face value. For example, now I live in the US and although my salary is about twice what it was in England, my lifestyle remains about the same, worse in some aspects, and better in others. I'm almost certain OP lifestyle would have taken a hit living in Bay Area, even with a higher comp. And this is simply comparing income, not accounting for many other variables (social benefits, taxes, culture...). In fact I'll probably take a big hit in comp to move back to Europe so that I can live a more comfortable lifestyle.

verst 3y ago
I agree completely. This is what I always tell my family in Europe: Sure, my salary on the US West Coast may be high, but the lifestyle this affords me (while being reasonably future oriented in preparing for retirement, family planning etc) is almost certainly worse. (Not to mention cultural differences in attitudes towards work.) You can't assess salaries as someone who would temporarily work somewhere else and then export that money back to their home country. You have to view the salaries in the context of someone who will spend their life there.
- ghaff 3y ago
  It's also just very situation-dependent. I live in at least the periphery of a HCoL East Coast urban area but I have a paid-off house, don't have kid-related expenses, and don't eat out a lot (especially expensively) in the local area. I do travel a fair bit but those costs would be similar no matter where I lived. So, for me, I don't really live in an HCoL area to the same degree as if I were renting in the city and going out on the town all the time or were paying for childcare.
arwhatever 3y ago
HN post from a few years back that really stuck with me https://news.ycombinator.com/item?id=22777745 https://news.ycombinator.com/item?id=22777745 “What Armenians should know about life in America (2014)” I think you have to get the actual content from the Wayback Machine now. Gist was that many Armenian families tended to be miffed at the amount of financial assistance their relatives who had moved to America tended to send back, particularly upon learning of their apparently high salary amounts. Article then goes on to describe how American society tends to nickel-and-dime its members to death from every direction. More broadly, the article was a fascinating outsider’s look at our culture and lifestyle.

boo-ga-ga 3y ago

I think author gets many things wrong. As for location, the motivation is stated here, and in my opinion, it really makes sense: https://handbook.gitlab.com/handbook/total-rewards/compensation/#paying-local-rates https://handbook.gitlab.com/handbook/total-rewards/compensat... Imagine they would pay Bay Area salaries everywhere including Philippines or Ukraine. People there would be in "golden handcuffs" and burn out instead of changing job when it's time to go. This would produce terrible results for both the company and people. And of course, if they chose to pay some kind of world-median salaries, then they wouldn't hire people in California or London at all. There are other controversial things said about product managers being unneeded, and that the company shouldn't have more than 100 developer for a product. I think it's pretty clear that the author is a great autonomous engineer who would be happy and very successful in a (relatively) small startup. Maybe if not for the tax rule changes waiting, he would have left the company earlier, and would write a happy article about his experience there. This gets us back to the location-based rates again by the way:). Imagine how difficult it would be for the author to leave the company if in addition to stocks, he would have had $300k compensation in Amsterdam.

paulddraper 3y ago
> Imagine they would pay Bay Area salaries everywhere including Philippines or Ukraine That would be absurd. But what if they paid Philippines or Ukraine salaries everywhere instead? They wouldn't hire Bay-area engineers. Okay. And maybe the offshore has too much language/timezone friction. Okay. So choose a different price point, whatever is the cheapest to get engineers who match your condition, regardless of what their steet address is.
chrsig 3y ago
> People there would be in "golden handcuffs" and burn out instead of changing job when it's time to go Good ol' "we can't pay you that much, because what if we wanted to stop paying you that much. It'd be bad for you if we handed you this pile of money, you might hurt yourself. We're helping you by keeping it to ourselves, trust us."
- cmaggiulli 3y ago

RHSeeger 3y ago

> But somehow it's OK to pay a person less based on their location? At the end of the day, it winds up being a choice between - Pay someone based on their location - People in lower COL areas complain, but are (in theory) being paid an amount with the same buying power as someone in a higher COL area (being paid me) [1] - Pay the same regardless of location - People lower COL areas are making more buying power, but people in higher COL won't even work for you; because it's not realistic to pay the higher COL amount to everyone [2] There's no solution that makes everyone happy. [1] Not really true, since it doesn't account for a lot of factors; such as retirement savings, etc. [2] Not strictly true but, if you pay the higher COL amount to everyone, then you can hire fewer people for the same amount of money.

mitthrowaway2 3y ago
I guess the question is, do you need people in high-COL areas to work for you? There's no shortage of developers in Arizona / Europe / Canada / etc, so why would companies like Gitlab spend so much money on bay-area devs? A corporation could save a lot of money by only hiring developers elsewhere who deliver similar work. And cutting labor costs does seem to be the operating mode that a lot of software companies are in at the moment.
- danenania 3y ago
  A lot of talented people tend to concentrate in the hcol areas because it gives them the most optionality (plus many other benefits, of course, for people who can afford them). If you’re hiring for some specific niches or need very senior people, removing candidates in hcol tech centers from your search pool could make it a lot harder to hire. Like imagine saying you want to hire a great US political lobbyist but you can’t hire anyone who lives in DC. It would be tough right? The dynamics in tech aren’t as dramatic but there’s still some of that effect. I’m not saying an alternative strategy couldn’t work, but there are good reasons companies want to be able to hire in hcol markets.
  - paulddraper 3y ago
    > If you’re hiring for some specific niches or need very senior people, Okay, so you'll pay more for those niches or seniority. At whatever price is competitive with the market as a whole. You don't need to include location. I'm sure people who drive fancy cars need more money too, but I'm not gonna pay more for that.