Is it universally accepted in the industry that it’s OK to pay engineers who live in cheaper places less than those with high cost of living? I mean, the company is getting the same value in either case.
This is also how you establish yourself as an outlier ;)
The interesting thing will be to see how remote work will change this over the next few decades.
If you’re being hired for a remote role then at most salary could vary according to time zone, perhaps a small difference due to taxation issues.
Paying 40% more to get the same value from someone living in SF has no possible justification (from a business pov) if you’re hiring for a global remote position (which is what Gitlab does)
If there’s actually a business reason someone living in SF might add more value they should hire locally.
This all sounds like a lame way of ratinalizing paying more to some employees who happen to live in SF (early hires likely) while pretending everyone is treated the same according to some equation.
Global trade & containers are to thank for that, I suppose.
In fact I'd really wager that an iPhone is something that costs much less in manufacturing costs than other things made in China.
No, they're not. Someone living near the main office (or if the company is fully remote just near the rest of the team), can attend face-to-face meetings with their team, they can be there for in-person client demos without needing prior notice and plane tickets, they're in the same time zone for remote meetings, if the team is international then people in different countries cost most for buying services and dealing with legal stuff..
Having staff live and work remotely does come with additional costs, and there are downsides, so it's not unreasonable to suggest the value isn't the same. When you're assessing the cost of staff you don't only look at the outputs.
Honestly, if I get hired by Buffer while living in a low-cost area, I’d immediately move to a high-cost city to get better pay. Supposedly, HR shouldn’t bat an eye on that, since there’s the calculator? Or would they ask me to not move?
Would an engineer living out of a hostel in LA get paid more than one who has a mansion in Bali?
If anything, creating this situation is actively creating a disadvantage to remote workers by not allowing them access to this privileged information. In my previous role, this was a real problem (and I was part of it!) where the remote team members didn’t have access to the in-depth information that those of us in the office did. That should have been on us to fix, but we didn’t and the company suffered as a result.
At Hotjar, like Gitlab, we’re 100% remote so we don’t have this 2-tier information system. There are costs, however ALL of these are good costs to have. They improve organisational resilience immensely and they’re things colocated offices should have but typically don’t until the time comes (usually after something bad happens).
Unlike Gitlab, we don’t split compensation based on location, it’s simply based on your role and seniority. It comes with some challenges but it makes me feel as valued as someone working from London or Munich, where the cost of living is higher.