> Why charge customers based on value you provide, but pay employees by what their own expenses are?
This is incorrect. Costs and salaries are market based, shaped by supply and demand.
This is incorrect. Costs and salaries are market based, shaped by supply and demand.
But in the case of remote, isn't the market the whole area to which you're open? If a company is open to hiring from the entire US, the market becomes the whole country. So if you decide on hiring engineer E, why would you pay more if E decides to live in SF instead of [low COL city]? E is the same exact person and whatever work they do is not dependent on where they happen to be.
The only variation I could see as "fair" would be dependent on how taxation varies. I'm not familiar with how these things work in the US, but if there's variation in payroll or income tax due to the state where the employee actually works, I can understand that for a given cost the company, the employee's after tax salary may vary.
Indeed, if all companies went full remote overnight, the demand wouldn't change that much, whereas the supply would be much larger.
If the company doesn't expect the employees to be physically present in a given location, the supply of talent is increased since it isn't restricted to a given area anymore.
So while I understand that people living in SF wouldn't appreciate having their salaries cut to the level of [low COL city], I don't see how companies would continue to pay SF rates when they can access talent for a lower price just because they live someplace else. And said talent could even be the same exact SF engineer deciding to live someplace else for personal reasons.
Could those employees move elsewhere? Sure. That may in fact happen. But right now, an engineer in SF has both remote demand and local demand at FAR higher rates than someone in idaho.