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Pay isn’t directly based on COL. It’s based on supply and demand. If there were thousands of baristas available to fill jobs at SF Starbucks, the pay would be lower. The reason pay is higher in SV is because all the same firms were competing against each other for the limited supply of talent. One could argue the supply is impacted by COL, but it’s still only an indirect cause of pay determination.

I don't understand where people get the idea that prices are based on anything but supply and demand.

An interesting exception from intuitive understanding of supply and demand:

https://en.wikipedia.org/wiki/Veblen_good

I'm not an economist but it has always seemed to me that Veblen goods are actually selling status and prestige. Flooding the market with product devalues the associated status which is what causes the price to drop.

Consider the offshoring of manufacturing to undeveloped/developing nations. It reduced manufacturing costs, increased profits to businesses, and/or lowered the price to consumers giving the products a competitive advantage over those made in developed nations.

The ability to outsource to places where cost of living and wages were low allowed this to occur.

I don't see that the office-based/remote-based working situation is much different to this. The main uncertainty whether remote working is actually as effective, at scale, as when it occurs in an office environment. Since knowledge work output is far less tangible than manufacturing output, I'm skeptical.

The main incentive for employers to shift to remote workers, outside of the current pandemic situation, is the same reason they shifted to open-plan offices - Cost saving. Here, that's realized via lower wages.

I agree with what you write, but I don't see what this has to do with price being the intersection of supply and demand curves.

Because COL drives supply and demand. If you're only willing to pay $5/hr in SF, you'd have less supply because people won't be willing to work for that price.

At least in google pay was more based on col than supply and demand. The reason was if not everyone would move to Mountain View and that was not good for the company. So in general offices in low col like India or Taiwan paid better than expected to try to have people stay.

There were exceptions like London for some reason.

> suddenly when it comes to tech bros who are seeing a pay cut, we are all up in the arms?

I think you cut right to the heart of the issue here. As a software engineer, for years I've heard "If you want to make the big bucks, you have to move to the bay area" or some variation of that. No one on here seemed to have a problem with location based comp when it worked in their favor. Now that it's not people are up in arms.

Let's be honest and call it like it is. A lot of people in major tech hubs see an opportunity to game the system and are just hurt that companies aren't going to let them.

> A lot of people in major tech hubs see an opportunity to game the system and are just hurt that companies aren't going to let them.

That seems like a negative way of framing it. They are exercising their rights as laborers. Whether or not they are successful is TBD, but they aren't "hurting" companies, they're negotiating. That larger groups are forming to collectively push the notion implies a greater chance of success.

I don't really have a positive or negative take on the situation. It's the workers' rights to try and fight for a higher salary and it's the companies' rights to either pay them or tell them no. The majority of the workers affected by this are making well above the poverty line, so I'm happy to let the free market handle this.

What I do have a very negative view on is articles like this that try and frame it as some big moral argument and hide behind things like discrimination to get people on their side. Like I said, I feel like most people complaining about this saw an opportunity to increase their take home pay by a lot and are now just angry that their plans have been foiled.

If the author want to live in India, but thinks he can provide more value (and thus should be paid more) than everyone in his local market, then let him make his case. If that isn't the case and he doesn't provide any more value that the other people in his local market, then why should the company continue to pay him an above market salary when theres a ton of other potential applicants out there?

Basically, I find him pretending that this isn't about money very disingenuous.

I don't think the author is pretending it isn't about money - that seems to be the central thesis of the entire article. The point they are making is that if the author wants to live in India, if the work is entirely remote anyways, they shouldn't have to provide additional value.

If his work was worth $100K when he lived in SF, why isn't the equivalent work worth $100K in Wichita?

To me it seems like a recognition of the fact that for remote work, location doesn't really matter, so the market rate is national or global. If Starbucks wants to hire, they can base their pay rate on the local labor market, but software companies should expect to pay a national rate for those types of jobs going forward if remote work is going to be more of a standard.

> The point they are making is that if the author wants to live in India, if the work is entirely remote anyways, they shouldn't have to provide additional value

They should because there is nothing stoping their company from hiring someone else in India for the Indian market rate.

> If his work was worth $100K when he lived in SF, why isn't the equivalent work worth $100K in Wichita?

His work wasn't worth $100k. It cost $100k to hire someone who was willing/able to do his work and come into the office.

> but software companies should expect to pay a national rate for those types of jobs going forward if remote work is going to be more of a standard

I couldn't agree with you more, but I think a lot of people have things backwards. People in the Bay Area (etc) were being payed wages far, far above the national rate. These companies aren't cutting wages below the national rate, they're attempting to remove the premium they were paying to local employees.

> They should because there is nothing stoping their company from hiring someone else in India for the Indian market rate.

They already could do that. Nothing about the situation has changed.

> It cost $100k to hire someone who was willing/able to do his work and come into the office.

Well, see, now you are adding a thing. That's the entire point of this article. The company didn't outsource the job before. Plus, with lower office space requirements and fewer commuters, companies will save money without touching salaries. If being in an office is a requirement, then sure, but the premise of the argument is that these jobs are being done just as productively without physical presence.

> People in the Bay Area (etc) were being payed wages far, far above the national rate.

Says you. Bay Area pay rates were at a premium because the best talent went there for the network effects. Now there is a diaspora happening. The talent is still worth the premium rate (otherwise the employer already would have looked to lower their basis), so why should it go down just because the IP that connects to their company VPN is in Arizona instead of California? That seems backwards to me.

I completely understand the motives of the company, but the employees should absolutely not accept that. One day good software engineers (etc.) might be that fungible, but they aren't today.

> Simple answer: economics.

Yes, that's a very simple answer – unfortunately, not entirely conclusive. A MacBook costs the same across the entire US. A Netflix subscription costs the same across the entire US.

Maybe equal pay is just the right kind of unreasonable: The one that will get increasingly more reasonable the more it is being done, providing a push towards a more egalitarian society, first interregional and then international.

Netflix cost lot lower in India. Macbooks quite a bit higher. In one case reason is much lower purchasing power in other case much higher tax rate as Macbooks may come under luxury goods.

Even if I limit to US none of these 2 are like recurring major expense like food, housing, and myriad local services which have location sensitive pricing.

All of your examples are geography dependent and is not actually equal work - the Oklahoma barista can't do the same job as the SF barista, because telecommuting baristas is not a thing.

But if the job role is to maintain a server fleet, and you can realistically do the job from anywhere, then you should get paid the same amount whether you happen to be in SF or Oklahoma, since you can complete the job in the same manner.

Equal pay for equal work makes sense - what doesn't make sense is to assume that the pay will normalize into bay-area level pay, versus bay-area level pay being lowered because companies realize they can pay everyone 70% as much and have the employees live in lower cost of living areas.

^ This exactly. The market will actually tend to equal pay for equal work: this has already happened in numerous industries in the form of layoffs of people in one expensive location to be replaced by people doing the same work in less expensive locations, until people doing the actual same work, including notably dealing with the same kind of constraints, roughly have the same pay whenever/wherever possible. There are of course a lot of variables in what makes company consider that 2 people do "the same job": sometimes, a company will value a certain proximity of a team, which you could interpret as considering someone further away from where the team is based cannot actually do "the same job". Either way, there is no reason why geographically-independent jobs should not end up aligning to some global, geographically-independent wage... and as always, this will not benefit those who are highest-paid doing said job...

How is a Barista's work different in SF vs Oklahoma? Making coffee is the same process (and I'm talking about regular baristas). It is unequal pay for the same work, in different locations.

>there'll be plenty of people there who can do your job for less with the same set of skills

Why weren't they already hired instead of the SF person, then?

Really? Is every person on earth with certain capability doing or getting opportunity to do exactly that work.

I don’t understand your point? The GP was implying that as soon as a SF engineer moves somewhere else, there are other engineers locally who could equally do their job.

Because there's benefits to hiring people who would work in person.