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Comment by daenz | Hacker News Reader

I've had a related thought: is it ethical to pay a person less based purely on where they live? I understand that there are different cost of living factors for different places, but that's on the employee's side and should be none of the employer's business. If they employer can pay $200k/yr for a remote employee, it shouldn't matter where they live, and so scaling that value seems discriminatory to me.

Anyone have thoughts about this?

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> If they employer can pay $200k/yr for a remote employee

It's interesting that folks envisioning a globally uniform payscale tend to posit SF salaries in Hanoi rather than Hanoi salaries in SF.

Fair point. I was just copying the parent post's number. Likely it would be somewhere in between, as you seem to suggest.

Yeah, these guys are going to get slapped back into reality so hard if this WFH thing really takes off.

Not really. I think we just assume that the situations where housing can't keep up with employment would shift the `income minus necessities` equation in our favor, making the massive assumption that we're willing to move somewhere cheap, or that enough other people are willing to move somewhere cheap, or just not move here in the first place. If the necessity of commuting to SF goes away, SF housing prices are less impacted, so it's more like Portland salaries in SF, and closer-to-Portland cost of living in SF.

The US Government, normally a very conservative org, has cost of living increases for federal workers and (I think) military service members. Based on that, I think it's pretty well accepted (perhaps incorrectly!) that it is ethical.

Or maybe practical beats ethical.

What if we took that thinking and turned it around:

The minimum wage for a McDonalds cashier in NYC is $15/hour.

McDonalds also operates in India, and hires cashiers that do essentially the same work. If the employe was able to pay $15/hour for the same type of work in NYC, then shouldn't they pay the Indian cashier INR 1,125 / hour? Or what about the other way around, why shouldn't the NYC cashier get paid at the Indian cost-of-living?

And forget wages, how about the cost of goods and services? A 4BR house in Columbus, OH can cost about $300,000 — but the same house might cost about $3M in Palo Alto. Is this unfair / discriminatory? The house itself might be identical.

I disagree with both of those examples because the physical location of the job/house is the important factor affecting the cost. In the McDonalds example, the physical restaurant is embedded in the community and partakes in the market forces of that physical location. In the house example, same thing, the physical house is embedded in the community and partakes market forces derived from the demand of others wanting to live in that community. The location of the job or asset affects its value.

However, in remote work, this is no longer true to the degree of other jobs (disregarding regional taxes, paperwork, etc). The job can exist anywhere and the value derived from it (all else being equal, like worker quality, etc) does not change.

> In the McDonalds example, the physical restaurant is embedded in the community and partakes in the market forces of that physical location

Wouldn't this be true of remote software engineer jobs too? Market forces would drive wages downward. If you live in Minnesota and demand SF-salary, your neighbor (who is similarly qualified) might accept a lower salary, and their neighbor might accept an even lower salary, etc until you find the local market equilibrium.

Are you suggesting that that's unjust?

The difference is that the equilibrium reached from SF-based neighbors undercutting eachother, would be different from the equilibrium reached from Minnesota-based neighbors undercutting eachother, for the same job and qualifications.

Yes, and?

The net result of that is that software engineers in Minnesota get paid lower than software engineers in SF.

My question is: how is this unjust? By your own argument, the difference in salaries for physical cashiers across the globe can be attributed to market forces. I'm making the same argument re: remote software engineer salaries.

I don't know that it is or is not unjust. I am suspecting that it is because the employer has an information advantage (knowledge of the employee's location) granted implicitly by government regulation (employment paperwork). It is not normal market forces. This information advantage doesn't exist in the same way for non-remote work.

That's not really an information advantage — the employer can demand that information even without the need for employment paperwork (ignoring the impracticality of that for argument's sake). An employer has an interest in knowing in which time zone their remote employee is situated. If there is onsite work to be done with clients in different geographies, knowledge of where employees live so as to be able to efficiently deploy them is also another use case. And finally, the employer can simply demand that the employee divulge that information through negotiation leverage — the same way that they can force an employee to divulge their name.

Also, this argument can be used the other way around. Why should an employee know what the employer's finances are? Perhaps the employer has the raw ability to pay an employee more (even if it's not economically expedient), but why should the employee know this? Why should the employee know where the employer is physically situated?

In every market, the employee and employer both have information on where the other is situated and how much they are able to pay / receive. That's not really information asymmetry.

Also, at this point, remote software engineer salaries are some of the most well published in the industry, though there is definitely room for improvement in salary transparency. All that being said, I don't think you can convincingly argue that ALL remote software engineers ought to be paid exactly the same, regardless of their local cost of living. They can certainly try to negotiate their wages up, but there will also be downward pressure on wages if the labor market is loose enough.

I disagree with the idea that an employer can demand information that the state does not require. If an employer asks for salary history, a candidate can simply tactfully say "no," and walk away if necessary. Saying no doesn't preclude working there (except in how it may agitate the negotiator). Where a candidate lives is not something you can convince the employer to negotiate without, because the state requires that information. You cannot have the job without revealing it. So I still think it's different.

Just playing devils advocate: is it ethical to pay someone SF salary despite them living in a third world country where they are essentially richer than kings and can wreak havoc on the economy/culture if they themselves aren't ethical (paying off government, etc). Salary is not a number, its a "standard of living". But paying two engineers in two different zip codes the same number, you are technically paying the person in the cheaper location more. They have a much higher "standard of living".

My main PoV for this is it doesn't particularly matter to the business where the employee is if they're working 100% remote, they're getting the same value out of the same employee regardless of where they happen to live. Trying to judge how much a salary is worth to the person just lets businesses justify getting similar value for lower cost when they're already coming out way ahead.

> is it ethical to pay a person less based purely on where they live?

It's not just rent/mortgage price differences, there are also different laws regarding taxation, healthcare and retirement.

On the other hand you can't offer someone in the Bay Area a Eastern Europe level salary. Nobody would come, but you can offer a slightly higher than average salary in E.E. and they would definitely come. It's just that a global company needs to hire in both regions to be competitive.

Yeah employers should pay employees for the value of their work, which does not depend on their physical location.

Also, employers always pay employees less than the value of their work and pocket the rest. This is called profit.

Definitely an interesting point. What happens when you are remote in one expensive city then move to a cheaper city? Does the employer need to know where you presently reside? I would think not.

the pay is based (as it should be) on market conditions, regulations and contractual obligations. Should not be based on ethics - those can vary in surprising ways.

I would be inclined to agree with you if your residence wasn't information you were required to give to your employer. It takes the normal market negotiations out of the equation.

It's like if your rent was information you were required to give to your employer. They could then make lower offers to people with lower rent, because the market conditions are now warped in favor of the employer.

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