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Comment by dclusin | Hacker News Reader

I got a job offer from Capital One several years ago in Richmond, VA. I liked the location and the company but my current gig is paying over twice as much in San Jose, CA. I just don't see this panning out on a large scale once people realize that their paychecks will also drop significantly when they move away.

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Three possibilities:

1. All the bay area companies realize they can employ the best talent remotely from around the country (globe?) successfully. The SF pay premium drops.

2. Bay Area companies pay according to cost of living, many remotely. Some people move, some stay. SF pay premium holds.

3. Everyone realizes the pre pandemic normal was right all along and having a lot of talented people in the same building matters a lot for company success. SF pay premium holds.

I agree, although if the premise of the article is true, #1 is the implied outcome.

We already know #1 isn’t true. Facebook, and Twitter both reduce salaries for remote workers.

They probably still pay a local premium but that isn’t different from the Bay Area in general.

4. Everyone realizes effects are important but also that there is pent up demand for non-sf locations, second tier hubs get more traction, SF premium slowly erodes.

Feels like we've been through #1 with the wave of Indian outsourcing prophesied to eat up US IT industry 20 years ago.

If Austin or Denver offer employees at a discount, why not Manila and Bangalore?

Staying within North America largely eliminates the timezone problem.

It also avoids a lot of cultural/communication problems. Even when everyone speaks the same language, words have subtly different meanings in different cultures. This is true across NA as well, but SF vs Atlanta is much closer than Chicago vs India or Brazil. Not to mention that these are also big countries with their own regional language variations.

This doesn't make much sense either -- many companies will happily employ people from India or Brazil if they live in SF or Chicago. Why are the "cultural/communication problems" not present then?

People in the US from other countries have often assimilated at least some US culture. Or will be expected to assimilate important cultural issues more rapidly in an office in the US with mostly US cultured people than in an office elsewhere with few US cultured people.

Many of the communication problems are rapidly addressed with constant realtime communication that happens in a shared office but doesn't with teams working separate hours.

There's also a big difference between one or two people from other places on an American team, which will still behave like an American team, and a team of people entirely from country X, which will behave like a country X team.

Exhibit A: https://www.cnn.com/2020/07/01/tech/cisco-lawsuit-caste-disc...

I’m reminded of communications between Sega of America and Sega of Japan noted in console wars, where SoA would make a suggestion, and SoJ world respond “Ok”. The former understood that to be agreement, the latter was stating it as acknowledgment. Even though they were speaking the same language, their understanding was different and getting in the way.

I don't fully buy this argument. New York offices rarely outsource to Equador.

As someone who works with a company only two timezones away, I think there is truth to it. I wouldn't say it's the only reason though.

This isn't true, we outsource work to Colombian developers frequently.

I meant relatively. We outsource a lot more to India. But my main point was that South American countries aren't making a significant dent in New Yorkers' wages.

Culture and time zone differences are generally greater SF to Manila, over SF to Austin.

Taxes are less complicated too.

The real reason is because talent can travel and would be more likely to go to higher paying areas.

Cut too much and it is "pay peanuts and get monkeys". This isn't implying any innate inferiority of foreign nationals but that at large if they could already get $200k/yr instead of $20k/yr of course they would heavily bias the talent towards it leaving the average far worse. Plus businesses around then already should have learned a painful lesson during previous failed cost cutting attempts that IT isn't factory drudge work.

or: Companies realize that the SF Pay Premium is so large that it's okay to overpay in some areas. Ex: Paying $250k in South Carolina may sound outrageous but it's a steal if you find a really good dev there rather than a similar dev in Atlanta for $350k if they're both going to work remote. Or $500-600k for SF/Cali.

1 & 2 are actually the same thing, just at different points on the timeline.

2 comes first (and arguably already exists - many large employers already adjust pay by locality). If 2 is sustained long enough, there's an implied drop in demand within SF/SV (or Seattle or NYC) which leads to 1.

What probably makes the most sense for a business that has N offices plus remote workers who can live pretty much anywhere they want and still do their work is to have N+1 pay scales.

These would be one pay scale at each office for the workers in that office, and one pay scale for all remote workers.

The pay scales for each office would take into account the cost of living in the area of that office.

The pay scale for remote workers would not take into account the cost of living of any particular employee's location.

This is because as far as the company is concerned, "remote" is one location. All that they need to do is pay enough so that they can fill all their remote openings.

That's already how they do things within cities. Cost of living varies considerable from neighborhood to neighborhood in most big cites but do you often see companies having different pay scales on a per neighborhood basis? When I worked at a company in Santa Monica, for instance, I don't think anyone doing the same job with the same experience as me would have gotten very far saying the company needs to pay them more than me because they lived in Beverly Hills and I lived in Pasadena.

I just don't see this panning out on a large scale once people realize that their paychecks will also drop significantly when they move away.

If you didn't do a basic cost-of-living comparison, then it's probably good that you didn't go work for a bank.

2x+ comp for a SWE in San Jose vs Richmond almost certainly still comes out ahead in annual net worth gain.

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