“Location-Based Pay” – Who are we to complain?

So, the cheap stuff that you're getting is because someone is getting a super bad deal, by exploiting the heck out of workers. Same in China.

The garments factory owners are walking away with tonnes of money, leaving the workers high and dry.

The more _subtle_ point that the author is making, is that, "wait, if people realize that they can get awesome developers in developing nations for a lower price, I'm not going to get hired any more in my over-priced city".

Good, move to a place where your salary is worth more, and work to enrich that community. Why should SF and NY get all the benefits of economic growth?

They have no obligation to pay more for your services than they think they have to, compared to alternatives on the market. And you have no obligation to charge less for your services than you can get from other "customers". Either of you can negotiate the price up or down, and the other is free to take it or leave it.

It's not about who "deserves" what. It's a simple negotiation, like every other business transaction.

The more valuable (and less replaceable) your services are, the more pay you can successfully negotiate for. I guarantee you there are plenty of people at these "location-based pay" companies who've negotiated for considerably higher pay than others in their location. Just as there are many businesses (e.g. Apple) who've found a way to charge more for their products than their competitors have.

So it's worth learning to negotiate. And, perhaps more importantly, it's worth learning to provide massive value that's hard to replace. Or accepting the tradeoffs if you choose not to.

Let's say you mould your skillset to fit perfectly into a commonly-open job description: front-end software engineer. Well great, the benefit is you have lots of jobs you can apply for, so you can easily "fire" one company to go work at another. The downside is you're now in direct competition with a million other people who've shaped themselves to have the same common skillset, so it's easier for companies to fire you. Competition drives prices down and makes you more easily replaceable. But it gives you some safety due to redundancy. That's often a reasonable tradeoff to make, but you should be aware you're making it. If you want the big bucks, it helps to be rarer, and to work at places and in roles where it's easier to demonstrate your value.

If Person A is outperforming Person B, but is getting paid less because they happen to live somewhere else, you lose the ability to claim that you compensate people for performance without sounding like you're talking out of both sides of your mouth. Not only is Person A not going to be happy about that, Person A is not going to believe that compensation at your company is based on performance.

Companies that want to hire and incentivize the best people need to be congruent in their messaging around compensation and performance. Claiming that compensation is performance-based and then including a factor (location) that has no bearing on performance is incongruent and will not help to develop the right culture in this regard.

If you're the only person in the world who can do what Facebook really needs done, they'll pay you $1M+ to do it from anywhere in the world.

Local candidates are scarcer than remote.

Personally, I hate the resulting dynamic. Move to SF and the company basically subsidizes a million dollar mortgage. Move to Manila and your subsidized mansion could be $10k, 100 times less (maybe I'm exaggerating, I have no idea about real estate in the Philippines - but you get the idea). That's insane!

The worst part is that landlords get a huge cut of this, and I don't think they add a fraction of that value to society.

I hope that in the end, with the pandemic, it all balances out to two tiers: on-site and remote. I get that many companies still value attendance, whatever. I just hope that all remote positions balance out globally. It doesn't make sense to pay some guy in Utah twice as much as some guy from Honduras, if neither come into the office.

I think neither S.V. nor the market is rational.

But there is another downside of pay cuts for remote workers: A remote worker does not have access to the same market as someone living in a hot cluster like The Valley.

A real-world example from Europe: If I take my Berlin salary and live just 50km out of the city, I am easily one of the top-earners in that area. Naturally, I lose easy access to many offerings of that city, but that's part of the deal, I think. Now if I ever wish to switch employers, I can look in Berlin, but I am at a disadvantage if many companies insist on on-site work. If they don't, I compete on a much larger market with many more would-be employees. This problem should be reflected in payment, I think.

So from my, completely egocentric, perspective it would be ideal if companies demand on-site one or two days a week, so I can choose the best spot for living in a larger area, but still only compete in a limited market.

https://rationalwiki.org/wiki/Not_as_bad_as

OPs sweat shop metaphor is also a little far-fetched since they are comparing relatively unskilled workers with specialized tech workers (specialization commands a higher price based on limiting supply.) I think we have every right to complain about companies exploiting workers. They --already-- rely on a disparity of information in salary negotiations to manipulate prices in their favor. I think these practices and others are highly immoral and lead to people being paid far less than they're worth.

The location based pay argument depends on if you're an average or superstar employee.

Average employees (e.g. building CRUD websites) will get location based pay because that's what the market dictates.

Superstar employees, people that are unique on the global scale, will get superstar pay, regardless of location. In the Spark world, there are few people that are able to understand the source code, optimize Catalyst plans, write huge data processing pipelines, etc. These types of employees won't see location pay adjustments.

Basecamp pays superstar rates for superstar employees.

Factory workers that perform "routine functions" earn location based wages.

I'm not surprised tho, remote work is still an embryo, I'm gonna keep pushing for what I want but we can't expect too much.

When I'm rich and successful I'm gonna pay a standard global rate for the each role. No bullshit country adjustments. The market will just have to eat it

> [...] if I [...] make the shirt in [...] Bangladesh, you want to cut the price and reduce it to $20, because of “cost of living” for the workers

This is a strawman argument. If I am willing to pay $100 for a shirt, I would not demand the price be cut just because it was made in Bangladesh. Given a choice between a $100 SF shirt and a $99 Bangladesh shirt that are otherwise identical, I would buy the latter. I think many others would make the same choice.

The only times I can think of where I would discriminate by location are if:

1. I am trying to support a particular industry in a particular region

2. I am trying not to support a particular industry in a particular region

3. I am actually paying for the "Made in X" label rather than the shirt itself, for social status, prestige, etc.

If the contract says "we can renegotiate if you relocate", that's not a contract I'd sign, but it's up to the company and employee to decide if that's an acceptable clause in the contract.

A contract which says "we'll pay you less if you move somewhere cheaper" must also say "we'll pay you more if you move somewhere more expensive" but then suddenly my employment incentivises my location. I wouldn't move from Warsaw to Bangladesh but it might make economic sense to move to Zurich. If it's in the contract that the employer must honour the movement, then they have unexpected cost recalculations to do. If it's not, and you're just hoping for a "good faith" agreement, again that's not a contract I'd sign, but others might.

The average article/comment on HN is extremely confused about how compensation works. This is a huge problem because if you don't reason about comp well, you're guaranteed to make suboptimal moves for yourself.

In the example - does the author also expect to pay SF-level rent in Tulsa since "the value of housing to me hasn't changed?" Nope, because of the scarcity dynamic: if you HAVE to be in SF, you are forced to pay SF rent. If you can be anywhere, you can follow inexpensive supply.

If you understand that, you can understand the employer side. If I HAVE to have a SF programmer, I HAVE to pay them SF level rates. If I can have a programmer anywhere in the US, I can follow the supply. So I pay a Tulsa programmer a Tulsa salary. The fact that he once lived in SF is irrelevant to the equation.

I totally get why you don't want to hear that but that's how it is. It doesn't make sense to pay you more just because you were once in a pricier locale any more than you will pay more for rent just because you once did. I am making this clear because I find that it's important to understand reality you're operating in.

If you are with me so far on this argument, you can follow it to the natural conclusion of how you can make big bucks: don't be generic. If your biggest salary driver is your proximity to the office, it was always a matter of time. Instead, work on developing combinations of knowledge/skills/experience/network/etc that are valuable and unique.

That's always been my strategy and while I worry about many things in life, I don't worry about a Tulsa version of me driving my salary down (even if the version of me in Tulsa is me...)

We are right now in a transition phase during which employers and employees are trying to find market equilibrium under these here conditions were remote work suddenly is a bigger option. I expect that we'll naturally arrive at a few different pay ranges for similar work that result in essence in different markets based on constraints required by the work. That might be based on a requirement to be in a specific location, time zone, country (for legal reasons), or unconstrained as long as the work gets done.

Ultimately I expect this to result in location mattering a whole lot less for most software job's compensation. This means much lower comp for folks in SF or NYC and much higher comp for folks in places that currently have low cost of labor like the middle of the US, but also Central and South America.

Remote work is gonna be the great equalizer. It's exciting to be able to work from more locations. On the other hand the dream of a silicon valley salary for folks who moved to Bozeman, MT will last a short time for the average developer. And salaries in SV will also adjust down as fewer jobs will require being there and now compete with developers in more locations.

Edit: typo

I hate that we have to do this, and I’m really looking for PEOs that charge less but they all seem to take a significant amount of capital so we’re starting to consider spinning up entities in order to scale more efficiently and take on lower operational costs. However, then we get back to having to hire within that country’s entity to get that benefit (Ireland for example).

Anyone know of cheaper PEOs or better ways? I want my team getting paid as much as possible because, at the end of the day, it’s the same cost to our business anyway.

I wish people would just honestly admit this. Pretending otherwise almost always leads to workers misunderstanding what is happening and getting underpaid.

That compounded with the fact that companies already look for ways to pay you less, this is just adding another reason. It's also important to bring up that the company will save money by not having as large of an office (or even having one), saving on any commuter pass subsidies, etc so just cutting wages for remote workers, puts more money in their pocket.

And what are they doing with all this extra money? Are they hiring a few more employees in those teams that have been begging for extra hands for years? Are they reinvesting in the company, giving more employee benefits, setting up funds for employee hardship, helping employees set up a remote work space, helping employees relocate? Or are they just using the money and doing stock buy backs, pocketing the extra change, and expecting people to continue working in the same environment as before, just from their bedroom?

If you’re working 100% remotely in the US, is there really no one in India who couldn’t do your job just as well? Are you sure? There’s a lot of people in India, and they all have a much lower cost of living.

(I don’t mean to single out India, it’s one of many countries.)

Of course he's right about location based pay, too.

The thing that ties it together is negotiating position. Chances are if you're a firm that many of your employees will in fact be OK, implicitly or explicitly, to share the gains from relocating to a cheaper area with your company. If you move to a place where you have 20K lower expenses, it's reasonable to think you'll share some of that with your employer, if only because you find it inconvenient to find a new one.

It is of course true that you're as useful to the company as before, but it's a poker game. It's perfectly fine for you to insist on the same pay, but you'll have to run the gauntlet of your employer calling your bluff.

I foresee more movement on this issue. Different firms will try different policies, and different employees will try different jobs. We'll get some moves to read about shortly, once this has played out a bit. One thing is for instance simply representing you live somewhere other than where you spend your time.

Someone is going to find a friend in central London, NYC, or SF, and swap addresses with them. For instance if I live with my family in the suburbs, I could "swap" with some younger person living in town centre, and give them a piece of the action instead of my employer.

My colleagues here in the Netherlands do make the same, whether they are living in Amsterdam or a small village. So I guess location based pay is also about where you draw some lines.

Anyway, if my boss would tell me I'd be getting less when I move to somewhere cheaper, I'd say: Ok, bye! Next job. In another country, hmm, not so sure.

My answer to the first is yes. The second however is a bit more nuanced.

The first case is when employers find the best and brightest talent from all around the world and expect these employees to work together and deliver similar value. In this case I think globally fixed base salary * a cost of living index multiplier capped at 10-15% difference makes the most sense. You don't want the pay discrepancy here to be too large as these people work together on the same level. For example, using local market rates, a Bay Area employee will likely earn double someone in the EU for the same role.

The second case is when employers want to outsource work to a cheaper labor market. In this case, expectation is that the workers will not be of equal skill and/or the work can be done with little training. Another way to look at this, the relationship is more hierarchal. The HQ is managing the remote worker for work for example. In this case I think a competitive pay relative to the location's market rate make sense.

There are a couple problems.

The inequity of wages in Asia to those in "the West" are a temporary artifact that is slowly receding. Wages have been rising as has cost of living.

Location based pay says, I see you reduced your costs and I want to capture your increased profits. Increased efficiency is a normal mechanism for businesses to increase profits but you're an individual and you don't get to do that. More raw: I think I can get away with giving you less.

It reflects a growing problem in our society, that we are pulling up ladders to prosperity by reinforcing natural dynamics to exacerbate them (i.e. bigger slice). Often we're doing so in ways that reduces additive economic outcomes (i.e. smaller pie).

The challenge with location based pay is that this makes the offered salary less competitive and the labor more competitive. This increases the probability of turnover so those costs eat up the gained efficiency. However, the losses are booked in an illegible manner which allows them pay reducer's biases to avoid noticing them.

If a customer started paying me less than our previously agreed rate, I would stop working for them, and find a different customer.

Employment is no different. Don't get screwed every single time your employer tries to screw you.

Like my father used to say in his own version of English, “you don’t get nothin’ for nothin’”.

I can't speak for Zuck, but Sundar does. I work for Google. We also have local market indexed compensation (which I support, but not relevant to this point). If you move to a city with higher labor prices, you get paid more. I've seen it multiple times with people in my team. It's a total non issue, just paperwork. Very very standard.

Of course it has. Go read the definition of "value". It's the market price, or a fair return or equivalent value, relative worth, etc.

You are literally less valuable if you work in some podunk town where cost of living is half. They pay you more to work in SF because in SF you're more valuable. Because it's a market full of other engineers who all demand (and will actually get) more pay. The company would love to devalue you, but they can't in SF.

You have to remember that they aren't paying you relative to your worth to the products. They're paying you relative to the costs necessary to produce the products. They want to reduce those costs, and so they will reduce those costs. One of those is paying the market rate for an engineer. Paying over the market rate is just throwing away money.

Amazon is quite upfront about this, they pay based on cost of labor. I.e they pay what they need to get the staff they want in that area.

"The reason for discontent and thoughts about unfairness is that people have very different ideas about what is fair. They base salary fairness on different things. Some think it’s fair to base salary on past performance, current performace, past performance and future potential, needs, equality, experience or current market demand."

https://svese.dev/fairness-in-salaries/

At the end of the day its supply/demand. When everyone worked in an office supply of great developers was limited. If you're remote suddenly the pool is larger. People used to live in low COL for other reasons not just cost.

You can argue that all the best developers used to live in the Bay Area, and if those people are distributed across the country the supply is the same.

Location just gets those in power what they want: higher personal comp and lower employee salaries.

Nike doesn’t offer “location based pay” in its factories. It doesn’t tell people in Bangladesh that they will be paid 20x as much in San Francisco, because they won’t be.

Companies will open engineering offices in say Texas or Florida and say “the job is software engineering. It pays $80k a year, not $280k. Take it or leave it” and eventually through attrition or “incredibly difficult decisions” end up closing down the San Francisco offices.

Remuneration is the equilibrium of what a company is willing to buy at and what the worker is willing to sell at. A worker will want a higher price and a company will want a lower price. If they agree at an equilibrium then an employment contract is signed.

Manufacturers have leverage to lowball the salaries of workers because if a worker declines to sell their labour at a low price, then the company can likely find other sellers because there is a large supply of unskilled labour.

But if the supply of a specialised labourer is limited and the company really needs it, then the company has to consider more carefully if they want to pass on the deal or if they want to buy the labour at a higher price.

If Facebook now chooses to pay lower salaries based on the cost of living of a worker's location, then that is their risk to take as they'll open themselves up to more competition. It's up to the remote worker to decide if they want to sell their labour to Facebook at that price or if they're comfortable to decline and look at their other options, which depends on the demand for remote workers of their particular skill set.

Disparity of human rights is arbitraged by national governments in free trade (ever wonder why free trade and not free movement?) agreements to allow profit at the national levels on both sides. That explains $10 T-shirts.

The reason that SV in particular currently has insane income disparity is because online advertising is a very inefficient market and FB and Google can still afford to set arbitrary de-facto salaries for tech workers. There is a mix of other market disruption and speculative investing that helps to keep the whole thing afloat. The trend in a healthy market should be for tech salaries to normalize with the rest of the world.

Now, why do companies still stick to location-based pay when many other companies are embracing remote work? I think that's just cultural inertia and eventually software engineers will be paid without taking their location into account. But that's not a good thing for everyone, because the salary at that point will probably be much lower than what people get paid in SF area today.

it did change a lot. Most low COL locations are the locations with comparatively bad job market and that means that by moving to such a low COL you're chaining yourself to that nicely paying remote job. You wouldn't risk to argue with your boss, to insist on your opinion, etc. and instead you're more probably going to become a complacent long-term employee, more and more becoming kind of office dead weight with each year. Different mindset makes a different engineer. Getting $600K at FB in SV is just getting your appetite wet, you're thinking about bigger things while getting the same $600K while living deep in Montana - well, it is a retirement, you've made it.

In this light, the idea of a location-based pay can be seen as a simple hack to neutralize this de-facto union. If people otherwise aren’t unionized, this hack gives employers back the sole power in the employer-employee relationship, which was what employers wanted from the start.

It’s already a burden for many of the people I know who work in the service industry or other lower paid jobs that don’t scale with median income. I’ve seen one major wave of gentrification push out families who’d been in their neighborhoods for generations, and I can’t imagine the impact it would have if Seattle tech workers distorted the market with SV salaries, all else being equal.

It’s not that I don’t want everyone to be paid their value, and I’m glad there’s increasingly an openness to more transparent wage information geographically. But I think something important is missing in the conversation and I think it could also be important to tech workers when negotiating their own comp: solidarity isn’t just looking out for one another, it’s also looking out for oneself.

I could imagine the fight against location based pay being a lot more effective if the fight was part of a coalition that supports and coordinates with much less privileged workers who are far more affected by huge capital influx in their communities.

Let's rewind two years. You work for a company that's headquartered in San Francisco. You live in Texas, in one of the suburbs of Dallas, as part of the company's small, but substantial, remote workforce. You've been paid well, but less than you'd be paid for the same position if you lived in San Francisco.

Now fast-foward to the present day. Many of your coworkers have moved out of SF to lower-cost areas. Your company has decided to adopt a location-based pay system. You look at the charts HR has put together, and find that if someone who currently lives in SF wants to move to your town, they'd get a 15% pay cut.

You think about this in reverse. You've wanted to live in SF for a while, but were turned off by high rents. SF rents have been down a bit because of COVID, and you want to give it a try. You contact HR and ask them if you were to move to SF, would you get an automatic pay raise due to the new location-based pay policy.

What does your company say? My guess would be they'd say no. They try to justify it by saying that there's no headcount available for hires in SF right now. But of course there's no "headcount" specifically allocated for people who want to move out of SF, but those employees are still free to move where they please, more or less.

So, big surprise: the "location-based pay" only applies when it benefits the employer.

If a person wants to live in Thailand so they can save more of their paycheck vs living in NYC where they could enjoy city life, that is a tradeoff for the employee to make and the employer should not care.

If the culture of software development remains primarily WFH, and it becomes too onerous for me to find a job that's actually an in-person, in-office role, I'll just leave, wasting all of the experience I've built up and contributing further to the supply issues.

It's just sad. Terribly sad. You want to sit at home and only look at a screen - that's cool, enjoy your dystopia. I'm out, I don't need this shit.

For smaller companies, I think fungibility is another way to look at it. Fungibility is sort of taken for granted at big companies because it needs to be there to grow past a certain size without imploding. But small companies can make a lot of money by accepting non-fungibility and keeping total headcount minimal.

What I think this means is that they'll probably be a lot more inclined to dismiss location-based pay because for a growth inclined company, it's basically a rounding error in their cost benefit analysis. You need capable people to do stuff /and/ work well with other people, it's hard to find them anywhere (even if you're looking globally). If someone's doing good work and you want to pay them more to incentivize them, it's not going to be a huge pain to get that checkbook control and the CEO is likely to implicitly sign off on it. The same can't be said for big companies.

But let's suppose I am hired, and I decide to move to another location because I am in a position to do so. Basically, the company using location based pay takes out one of the benefits I can derive from moving. Because I work for a company with location based pay I might not be able to move somewhere else until I quit that company! Especially as the company with location based pay probably isn't calculating in the expenses of moving, finding new schools, babysitters etc. all the extra stuff you need to do when you move somewhere new, which if you're making a lot of money for that area can be better handled because, guess what, money makes lots of problems more manageable.

So yes if you want to hire me you have to pay me something I can afford and you can afford, but if you want to change my pay based on if I decide to move somewhere cheaper later I don't think I could afford to tie myself to you like that.

These companies reps told they do it, to prevent inequalities. However this is a straight in your eyes lie. If I will go to Apple in my country, they won't sell it to me two times cheaper that in the US.

But the most important issue for me:

With proper salary I can invest where I live. I can hire people. Create jobs, support for foundations, pay more taxes.

All of this combined helps to lower inequality. When I have to earn less because I am from poor country, it just cements the inequality.

That is why I consider it an offensive lie, and an immediate deal breaker. Actually such companies are immediately blacklisted by me.

Because what they really say is that they want to hire me not because of my skill, but because I am cheap person from a cheap country.

It is not only about me. But also about employees from their countries. How should I feel if a company explicitly tells that it will fire local skilled professional to replace him with cheaper me. He has family too. It is not kind of a deal that interests me at all.

You see this already all the time, where new hires get higher starting salaries than experienced employees are getting. And then once you're in, some companies don't even bother to give inflation raises.

The industry average tenure is 4 years (and probably even less depending on your region). Maybe that can be doubled or tripled based on salary, but only if you're offering FAANG level golden handcuffs. If someone is going to switch jobs at some point regardless of a 10% bump, then you might as well just give them nothing, or cut their salary. And then i might imagine further that retention rates are already well know to plummet for those who switch to remote and move to a different city.

One other thing is: a company operating in an expensive market will itself be expensive. When they start paying the workers less, I doubt they will become less expensive. Basically somebody will just pocket this difference, most likely few at the expense of many.

If you accept the term "location based pay," you have basically handed your wallet to the "wallet inspector," and you are being hustled. It's just like "policy," or "pay scale," they are utter bullshit if you have something of value. The media people who write articles about whether "location based pay, is it good?" are literally just 20-something bloggers with zero life experience trying to get published, and their editors and publishers have a stake in promoting the idea that your work should be cheaper.

If you want to pay me based on location, I'm going to charge you based on location, because I know what kind of prima donnas people from the bay area <or insert region> can be and I charge a risk premium for having to put up with their nonsense. If that sounds offensive, why should using their perception of my housing situation as leverage be legit?

If you are looking at a role, you need a clear idea of the total comp you are looking for as a part of your own plan for your life. Comp isn't a reward for good behaviour unless you are a prisoner begging guards for privileges or an animal doing tricks for treats - it's earned from value. When an HR person tells you what they want to pay you, say, "that's interesting, thank you, here is the data I have on what this role looks like from sources x, y, z, and these are the criteria I am using to evaluate the total package value." Those X, Y, and Z sources and references are things I've written about here before.

Please, please, please, if you write code, read a book on negotiation.

[0] Yes, we're hiring - https://spacelift.io/careers.html

Who is anyone to say one way or another? It's a negotiation between 2 parties. Employee will try to argue that value they bring is indifferent of where they are based and employer will try to argue that employees are a) less valuable when remote and/or b) more replaceable by other similar workers in those/similar locations.

Either part will try to call each other bluff.

Both will learn that it's ultimately expensive to take an absolute approach and likely to negotiate a middle ground.

I don't buy that remote-only companies benefit by being able to quickly arbitrage by hiring only from cheapest places because you can only remain truly remote when vast majority of your workers are all in various locations, not pooled together in certain locations.

Well, seen from one aspect we should. Clothes, gadgets, etc, should become more expensive, and those workers more well paid (let's ignore atm whether they'll still be given those jobs - perhaps jobs would move closer to the buyers in that case, though I doubt it).

This will discourage planet/society killing conspicuous or mechanical consumption of BS, and things like "fast fashion".

https://www.monbiot.com/2012/12/10/the-gift-of-death/

You may think I'm full of shit, and its within your right, but I the amount of time and resources you'll spend to find a good match for a factory worker at some assembly line, compared to that for a skilled software engineer with that's being paid 150k$, is not even remotely comparable.

And the value each bring to your company are not the same either. Perhaps you can make the argument that in both cases there are "plenty of fish in the sea", but I'd wager there's a lot less fish in the developer side of things.

I don't know, but it just smells like false analogies and I'm too tired to write about it ...

One of my coworkers did this.

> The label in my shirt says Made in China. Likewise for my jacket, and my jeans were made in Bangladesh. “Equal pay for equal work” is a nice idea, but I don’t think we apply it universally.

I actually heard that "record scratch" noise in my head. This is a totally different thing. Apples to oranges.

If an European or American textile worker moved to China but was doing the same work for the same company and the company tried to lower their salary that's the same problem.

If a company fires an European or American textile worker and outsources their job to China, that's not the same problem.

> Companies reduce your pay because they can.

And employees increase their pay because they can. There will always be at least a few companies that don't partake in this location-based BS, and the rest of the companies will have to compete with them somehow.

It begins with “maybe I’ll regret this if I move to London”, and then the rest of the post is about how it’s fine that enormous pay cuts are cool because they aren’t happening to the author.

I’m somewhat perplexed that an openly equivocating casual musing that openly features the author’s complete disconnection from the topic made its way to the front page of HN. It doesn’t really appear to have any substantive material to justify its position aside from uh, jeans?

It kind of reads like boilerplate ad copy but instead of selling you “Buy this iPod” it’s “It’s actually cool if your employer decides to keep $60k of your current salary for themselves because of your zip code “

However I think missing in this argument is an admission that SV wages are ridiculously inflated thanks to the playground of economics software tends to play in, which is what is causing this issue to crop up in the first place.

Regarding the widespread practice of locale-adjusted pay (it generally is not cost of living adjusted e.g. London is paid far less than SF despite a similar cost of living), it is a clear example of why the argument of “women can’t be paid less because companies would hire more women if they were cheaper” is simply false.

I don't need money, but I'm not going to work for anything less than what I can pull, and I pull a lot already.

t. remote worker

It isn't a given that people will work less at home, lone introverted developers may actually increase their output, or people who were freed from constant interruptions at their workplace. But people with family, especially with young kids, may really be way less efficient when working remotely.

Paying people more because they work at an office in a high rent area makes sense.

Varying what remote workers get paid based on where they choose to live makes zero sense.

In a distributed future (for tech at least), information re: my value to the company will also be increasingly available.

This availability of information + liquidity of talent will create a more perfect market where “what it takes for me to do the job” = how much value that job creates.

Who a.i to complain: I'm the person. Interviewing your company

If you're a great employee, you will still have people competing for you and I don't think this should concern you.

That makes the most economic sense for the company, as they can judge employees based on their local office, not the other global employees at that salary level. Also it's good to not have people in the same office doing ostensibly the same job with wildly differing salaries.

> Some call this unfair, and they’re probably right.

Agreed. But fairness rarely factors into business decisions.

> Why? My value to the company hasn’t changed! I am still worth the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company?

By moving to a low-COL area, you have proven to the company that you can't handle the high-stress high-stakes world of a financial center. The company usually has a bad idea of your worth. What do you think happens when you send them an indicator like this?

> If I worked remotely for Facebook and wanted to move somewhere central where rents are three times higher, would Zuck give me a raise? Somehow I doubt it.

No, but you can go next door and interview at Google the next day, and get bumped up to the standard big-city salary. So it's a pointless argument.

> Companies reduce your pay because they can.

Not only that, they have to to compete with all of the other companies that do it. They made a risk/reward assessment and decided that the ill-will toward their employees and potential resignations is worth the salary savings.

The rest of the article dives into comparisons with extremely impoverished areas, which I don't think are relevant for a discussion about remote work.

I hope location becomes something people talk about in negotiations like salary expectations and previous compensation. “Don’t tell them where you live until you get an offer.” “Get them to name a number before you say where you are.” “Recruiters who force you to tell them up front are a huge red flag.”

There’s a big list of questions you aren’t allowed to ask a candidate because while yes they do indicate that a candidate has a weaker negotiating position and therefore paying them less is “fair” in a market sense, we have collectively decided that exploiting that market disparity is unfair. So you aren’t allowed to ask it anymore. In other words, the market doesn’t define a “fair” wage. Fairness comes from elsewhere.

Hopefully “what city are you in” becomes an off-limits question ASAP. You live in a historically disadvantaged location? Great we’ll pay you less. I wonder what kind of disparities that’s gonna cause.

Am I crazy or is there perhaps a huge loophole here, at least in the short term, that nobody is talking about? Let's look at a senior engineer (E5) at FB on levels.fyi - $380k total comp comprised of $196k base, $30k bonus, $154k equity. If your base & bonus get cut by 50% by going remote but you keep the equity, that's still $267k a year so your total comp has only been cut by 30%. And hell you could make up a significant amount of that in taxes alone. For a staff engineer or manager at E6/M1 level it's even more dramatic - $578k total comp down to $436k, which is only a 25% decrease and just a stupidly high compensation for somewhere with a low cost of living where, say, you can buy the equivalent of a $3M silicon valley home for well under $1 million.

That being said, I can’t really think of a good argument for anything beyond pay based on in-office vs remote.

If it didn't exist, companies just wouldn't get any employees in San Francisco, nobody would be willing to work for the wage. Obviously they're not going to pay SF wages in the rest of the world. I mean a company like FaceBook could, they certainly have the means. But they wouldn't. The shareholders wouldn't let them, due diligence and all. They have to maximise their return to the shareholders.

If I would be earning what I do in Barcelona and living in SF I wouldn't be able to even pay the rent. If wages for the same jobs had to be the same everywhere, it would mean the lowest common pay would quickly become the standard. Effectively all IT jobs would be moved to India. Nobody would bother working in the US for that pittance so there'd be no point hiring for it.

So obviously cost of living factors into it. It makes sense that this goes both ways. Otherwise someone from SF moving elsewhere would be making a lot more than their local colleagues and that wouldn't be fair either.

In fact when I moved to Barcelona from Ireland (with the same company) my pay was reduced somewhat. I had to sign a new contract with the local entity against local conditions. It was a bit of a bummer but on the other hand, I did gain a lot of quality of life. Great weather. Free healthcare that's actually good. Public transport that actually works (so no more car expenses). In the end it was a good move.

If you fight against this you will only increase the race to the bottom (and to Asia). It's this very thing that keeps areas like San Francisco viable as an IT hub. If you're expecting them to honour the juicy SF pay everywhere you won't see that. Even if they do you'll be the first to get axed when budgets need cutting.

What you see in general is that pay is indexed to local standards so you get the same standard of living for the same job in each place. At least this is what my employer does. Which is fair enough in my point of view. Money is a means to live, not a goal on its own.

Would it really be fair to have people living in one place scraping pennies to get by and others living like a king while doing the same job?

As a consequence of US laws and the way the economy runs (US capitalism), companies are incentivized to seek cheap labor. They will pay the lowest price they can.

If person A and person B produce the exact same work but A will accept a lower wage, obviously the company will hire A.

If people are upset/perplexed/confused by this, I think the crux of it is: why do some people accept a lower wage? In this case it's ostensibly because some people live in lower cost of living areas.

Off the top of my head...

Possible new company costs:

- In theory a company could incur new costs based on where their employees are (e.g. you move to a different state; that changes how they compute taxes from your income, they may need to become aware of several new state laws, may need new licenses, etc.).

- The company may have made a deal with their HQ city, e.g. tax breaks in exchange for $X jobs. If they renege because everyone moved away, they may lose a lot.

- Maintaining widespread remote work is not free; not only IT setup (high availability, etc.) but a need to do so very securely. Probably at the very least new staff or contracts for this alone.

New company SAVINGS:

- Depending on how many people move, they may need MUCH less office space. This saves in rent in high-rent areas, air conditioning, coffee, cleaning or whatever else they have to count.

...Considering all of the above, the idea of a company scaling pay sounds like it should at the very least be negotiable. They clearly have some new costs but arguably also save a ton in the process! So does the employee. And it may be difficult to quantify the value of having a vastly greater talent pool, enabling the business to hire people that otherwise would not have wanted to move to SV.

I honestly don't see any other argument in the article, so apologies if this sounds like a strawman or a nitpick - this is definitely not intentional.

The comparison of overseas workers making so little for the clothes and other items we wear used to illicit a knee-jerk feeling of disgust and indignation, but then I remembered an acquaintance of mine back in college who made his business by renting rack space in retail stores in NYC to hang his clothing line he designed. They were made in overseas locations where he would fly to after he started making money to do quality control for his designs. When the corporate social responsibility thing started taking off with Nike and Kathy Lee Gifford's 'sweatshops', I asked him about it. He told me if he didn't produce his clothes there, the village where he employed a few dozen people would have no economy, and his product would not be able to be produced in the US/Europe.

I didn't truly understand this until I lived in SE Asia for eight years. I spent the last year living in a remote East Javanese rice-farming village where over half of the houses had dirt floors. I quickly gained an understanding that balanced my view. My in-laws and their families make $4-$7 a day working in the rice fields depending on the task they do. A neighbor got a job sewing either Gucci, or Michael Kors purses and handbags for $20/day. She's very happy, and her entire family is benefiting from her salary that is five times what she would make, and her working conditions are more comfortable than working in the sawa (rice field in Indonesian). She would be devastated if a CSR (Corporate Social Responsibility) group and incensed Westerners had her job move elsewhere or shutdown. The company might make a concession in this area to create good PR and continue their practice in their other locations, or they might shut it down (likely). I am not an economist, but I am also aware that some local economies have been ruined when false economies are setup i.e. disproportionate and artificially hiked salaries. Anecdotally I have heard some village in Pakistan was incensed that a "victory" for labor per a Western news article destroyed their life, and they were resentful at how the CSR effort affected them.

I think the solution is to grow local businesses and entrepreneurs. This usually occurs slowly when people like my friend in Java take their skill and knowledge of the products they have been making and start a similar or other business. I think this is the only true way to help these communities. Quick fixes or PR examples of a model setup by Nike or an other big company for PR purposes is just a show and cannot be a real changer.

    > Let’s say you hire me for your company in San Francisco and pay me $150K … [blah blah blah, I provide that much value ...] But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of “cost of living”.

I've turned down a job very similar to that, twice, for much less money to work remotely. I like Sushi, but my wife makes good Italian and I get to eat with my family.

But now that $150,000 job is all-remote! And even if I was at 80% "San Francisco" pay, I'd be doing incredibly well where I live, so if I started negotiating salary for that job, my '20% above ADP-reported' is going to be a whole lot more palatable to the hiring manager, and he doesn't care that the next town over's name ends in "tucky". Worst part of it is that last time I checked, I live in an area that lands around the 5th highest cost of living.

I would accept a salary adjustment due to a move, personally, with research/negotiation to ensure that my new salary truly takes into account real costs that I will experience. And if I cannot accept my employers terms, there are now a whole lot of other companies who are hiring remotely. Like, almost all the companies. So I'll find one that does.

These kinds of programs will exist for a while, I bet -- some great employers will probably attract employees by offering a program like this (along with non-discriminatory policies around ... allowing you to move from a really cheap place to a really expensive place while compensating you accordingly).

But the vast majority who go "all remote" are simply going to start hiring wherever the cheapest talent to fill the need exists. If a 30-something mom/dad in North Dakota is just as capable of joining Teams calls/performing a mid-level QA job (you know, for the cloud-based web/mobile app...), but will do it at $36,000. Well, ...

Think "Off-shoring" at closer geographies/more common cultures (ok, maybe; some of ya'll city-folk ... need sunlight or something). Companies are good at not learning from past mistakes, so expect whole technology teams at some shops to be brought into a (virtual conference) room with HR reps while they sort out the details of their transition and training of their replacements.

Your "available talent pool" is ... big. And it now includes my wife. She left the workforce when she had children. She didn't return when they went to school -- it didn't make sense. Factor in child-care/extra car/insurance/fuel/non-optimal meals, 40 hr/wk equating to 7:00A-6:00P with commute and the "extra money left over" wasn't worth losing what we felt was basically the reason we work in the first place. And forget about landing one of those coveted remote jobs when you've been out of the work-force since before the iPhone came out.

Welp, that ended last month.

So dispensing with the doom and gloom, humanity has always figured it out in the past, we will again:

In my mind, this is "the first sign of what's to come". The whole equation on hiring/employment has been undergoing a lot of change, but I think the explosion in remote work stands to be the biggest disruption of my lifetime. If companies steadfastly refuse to adjust for cost of living, and only hire where it's cheap, expect people to move from cities. And it might be as simple as "rent goes down, people move back in". While many/most jobs cannot be performed remotely (manufacturing-related in particular), by moving all that can to remote-only the impact of "a large employer leaving a city" on a city -- in theory -- is far less.

You are prevented from living in certain places if you like certain kinds of work, today. Suddenly, for a lot of jobs, that's no longer the case. Staffing is the #1 cost for companies -- for a reason, it is a company ... it's entire value -- optimizing that cost (by reducing what you are paying people to do work -- I'm not trying to spin here). Maybe an extra hire can be made for the next project? Maybe, over time, the cost savings are so much (real-estate, etc) that it might make sense to take some of these other jobs that aren't very easy to do remotely and figure out how we can do them remotely, too? Maybe everyone stays home in their pajamas and rots away, we all die and fall into the dark ages, again?

It's been ... interesting? seems wrong ... being a part of all of this. The place I work handled things superbly; we continue to work remotely and ... everyone, as far as I can tell, is actually working. I hear about employers installing weird monitoring apps and such on their employees phones/work PCs and I think: sell the stock; clearly a lot of staff with nothing to do. My deadlines/expectations didn't disappear simply because the office did. I feel like I'm working a lot less some days -- I'm working more, I'm just spending no time on the road. Prior to my current job I had been remote for over a decade; I'd forgotten how much I enjoyed the benefits.

[0] I'm assuming that my area and the vast majority of the US, like Tulsa, would have paid $90,000 for said job.

[1] If I were paid San Francisco-equivalent salary for my work where I live, which isn't terribly low cost of living to begin with. ... I'd have my own lake house up north. Certainly wouldn't get out of time-share presentations so quickly and easily.

[2] We enrolled our kids in a charter all-virtual school when it appeared our district was going to go virtual. We figured a school with employees that had been doing this for the last ten years would fare better than our district's thrown together-in-a-week plans. Very few decisions ever end up in the "100%-the-right-choice" category, but that one sure did!

Insofar as living expenses - coming from New York I do not own a car so a place near good public transportation was important. I also wanted to live in a nice neighborhood that had other young professionals. This narrowed things down to two neighborhoods - one had a lot of theaters, bars, restaurants, art galleries etc. but had no decent supermarket within walking distance - the other did (and also had my bank and other convenient places). I went with the latter neighborhood.

The ballpark for a one bedroom in this neighborhood was $1400-1600, with square feet being one determining factor. Knowing that I would be stuck inside due to Covid I opted for more square feet and was looking for apartments around $1600. A very desirable two bedroom townhouse came on the market for $1700 which was $100 more than I wanted to spend, but it was so perfect I went $1200 over a year. I'm a software engineer, I can afford it.

I have a parking space in the building garage that I rarely use as I am from New York City and have yet to buy a car (I rent when needed). I have two bedrooms (one converted to a gym, as public gyms were closed for a while) and two bathrooms. I have a door on a tree lined street where twentysomethings walk by walking their dogs and such, another door goes to the apartment building. I have two parks nearby, one which is pretty nice where I jog when it is not winter. I am two blocks from my bank, a good supermarket, and several bars and restaurants. I have a washer and dryer in the unit. The place was built a decade ago and is all modern appliances. I am less than a ten minute walk from the train station. My office is actually moving next to my train station, but if it re-opens before the move my commute is less than half an hour. $1700 a month.

1000+ square feet, in-unit washer/dryer, first floor door opening to the outside, attached garage, walking distance to train, supermarket, bars, parks - it would be difficult to even find this in the New York metro area. Everything in New York City is at least double the price for something like this.

It's a nice place to hole up in and WFH during the pandemic, and not expensive. The reality is if I moved back to the NYC metro area at some point, I would be paying more for a smaller apartment with less amenities in a less desirable neighborhood that was farther from everything.

Especially talking to young (or entering middle age) married professionals who moved down - with the breadwinner earning $100-150k a year - they can afford to buy a nice sized house in a nice neighborhood, two cars, go on vacations etc. They can just live a nice comfortable life on $100k while the well-educated wife is raising two kids until they're grown more and she'll go back to work. The math would just be impossible to work out in New York, even on the salary of a programmer or PM or QA etc. who is getting paid well compared to the average Joe.

After the pandemic hit, my company slowly fired half the staff and replaced us with Russians & Belarussians for 1/5 the price.

Now it’s a buyer’s market and wealthy startups (including many ycombinator startups) are offering me 50-70% less than I made at my last job. Literally so little money I would have $800 leftover after child support and paying my dying mother’s mortgage.

I ask them, “do you understand that paying employees 60% less for the same work creates a toxic environment? You are already struggling with 18 month average turnover. If I take this job, I will quit in a month, without notice, if somebody offers me 5% more, since you view me as a commodity.”

It has disgusted me enough that I’ve left tech entirely and instead am about to buy an apartment building. I would rather be a rent seeking parasite than get paid less than interns and junior engineers with 2 years experience.

The company may use it as an excuse, but you can choose to walk. When enough top level people refuse pay cut, the company will drop the charade quick. Even if just 10% of high performance engineers decide to walk, that would cause major disruptions in the roadmap and cost millions in development costs.

Simply demand higher salary and negotiate. The company will make adjustments to fill the in demand positions. Be prepared to walk away and find the company that will pay the higher salary.

There it is. The cost savings of giving workers a haircut because they moved to a place with low cost living is the TRUE driver from WFH-forever initiative.

Absolutely, it's not easy to unionize, organize, and work towards change, but we don't have to _just accept_ offensive payment practices, working conditions, and side-effects from globalism.