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Comment by nnp7000 | Hacker News Reader

What's missing from these debates is optionality. A company pays you not only what it takes for you to do the job, but also their perceptions of your options. Two people working the same job on-site at the same company can have a substantial pay difference even without negotiation because one is self-taught and has only high school while another has a master's degree from Stanford. Yes, the former's competent and shows drive and ambition and that's nice. The company just scored a dark horse. But the company also knows the former employee (likely) isn't as aggressively courted by other companies which can pay well, so they feel they can pay that person less.

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.

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If you're that one person who can do that one Facebook thing I'm sure you can get way more that $1M and I think that's good.

But I don't think that's about optionality. That's about the actual value of your skill, and its scarcity.

Optionality is more like: Google would probably hire you do CRUD apps because you went to Stanford and passed our Google-like interview when we hired you to do CRUD apps, so we will pay you what we think it costs for you to not go do that at Google. Dave over here went to SF State and was hired before the algo-interview craze; no chance Google will hire him, so we can and will pay him less even if he makes better CRUD apps than you do.

If I, your hiring manager, also went to Stanford I will pay you even more because I sure think I have high optionality! And if my manager went to Stanford then all the better because he will immediately understand why you need more than Dave. Which, in the end, is true: Dave's still here, right?

I agree with you. It will take a while for the adjustment of remote to re-settle to a new norm.

There is one other thing that is a small factor in all of this. I'm not saying it is unsurmountable or anything but local/state/country taxes are a factor. We hired someone remote recently who was in Canada. We had to create a new company in CA just so we could pay this individual. For salaried/W2 style employment, there can be a non-trivial amount of extra legal/finance work for the company. Hiring local-ish avoids this. Obviously, having everyone on a 1099/Contractor style employment would avoid this too but most people want salary plus provided benefits. Again, a larger company may easily be able to absorb these costs but they aren't zero.

There are SaaS services now that handle this problem, but honestly I am glad you did that. Most US company just hire as contractor in Canada even if it is not legal per Canadian law and it will get workers in trouble pretty soon I think. The CRA will crack down on that loophole and employees will be in trouble.

The underlying principle here is competition.

A worker sells their labor and a company purchases it.

When everyone lived in SF, a worker wouldn't accept a job paying below $100k because they wouldn't be able to afford to live. That same person in a cheaper state could negotiate a lower price, but most of the talent was saturated in SF. Now that everyone has left SF, there's no point in paying those prices if they can still retain you for a lower wage.

> But the company also knows the former employee (likely) isn't as aggressively courted by other companies which can pay well, so they feel they can pay that person less.

The corollary is that if you can reliably find and hire such people you’ll have a massive competitive advantage.

You are right of course, but as far as we know no one has figured out how to do that.

> A company pays you not only what it takes for you to do the job,

This is the same thing as:

>but also their perceptions of your options.

Someone else alluded to it as well, you could just as easily view pay as a measure of how much it will take to get you to work for them, rather than a measurement of how much value you will provide the company. From that lens, location based pay almost makes sense.

But it's still a stupid and arbitrary mechanism, and if you're negotiating you should treat it that way. It sounds very systematic and regulatory, but it's not. Just ask them for what you think they're willing to pay you, just like any other negotiation.

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