That works both ways though. The 6x places might move to, say, 4x over time, but the 1x and 2x places will salary upwards to compete.
As someone who works in the Midwest USA, I don't see anything but upside for people like myself.
As someone who works in the Midwest USA, I don't see anything but upside for people like myself.
> As someone who works in the Midwest USA, I don't see anything but upside for people like myself.
I worked for a large tech company that started going remote before COVID. Once they started pulling out of expensive cities and opening offices in cheaper foreign countries, it became an uphill battle to hire anyone in the United States at all. Why hire a $100K Midwest US engineer when you can hire two good international engineers for the same salary and not have to pay for their health insurance?
There will always be some demand for US engineers and time zones put some limits on outsourcing, but opening the floodgates to full-remote companies means that even engineers in the cheapest US cities are now competing against increasingly qualified engineers who will happily take half the compensation to do the exact same work.
As I mentioned in another comment on this thread, engineer salaries are bimodal. I believe this is because labor demand is bimodal. It sounds the company you are describing has this hiring philosophy: we prefer to hire as many mode 1 engineers as we can for the dollar. However, there are also companies that have a counterparty hiring philosophy: we would rather have a smaller, more mode-2 engineer centric organization than a larger more mode-1 engineer centric organization.
What's more, I've noticed that the small, more deliberately leveraged organizations have a strong bias towards the latter hiring philosophy, because it applies not just to their technology divisions, but to the organization as a whole. In finance, it's the boutiques; in technology, it's the startups. Large companies that are able to maintain mode-2 centric culture exist, but generally only when they have high-profit revenue based on R&D.
Facebook, Google, etc. have offices around the world, but that hasn't led them to close any of their US offices. If there were enough equally qualified candidates in these areas that would accept compensation at a fraction of Bay Area salaries, why wouldn't they follow suit?
We already have a majority immigrant workforce, and talent is still scarce as it is. I am originally from the American Midwest growing up within driving distance to a top ranked CS university that attracts diverse students from all over the globe with near perfect standardized test scores, literally contending with the likes of Stanford and MIT.
However, our graduates all leave town afterwards for greener pastures at the usual suspects. We just recently got out first homegrown unicorn startup, and there are plenty of satellite offices for brand name companies here. Still, hardly anybody ever stays.
World class engineering talent abroad wants their golden ticket to the US, in particular, to a handful of specific cities only. The vast majority of my FAANG coworkers are immigrants, for example, and our interview bar is more selective than Harvard in terms of raw acceptance rate. Tech companies are essentially in an arms race for brains, even lobbying for more favorable immigration laws. Surprisingly, none of the people we have hired (and cleared our challenging bar for algorithm interview performance) have any desire to return to their home countries. Meanwhile, this global workforce has not dropped total compensation one iota.
Wait till they discover all the competent English speaking engineers in South America
It is easy for a thousand engineers to train in Bay Area and move elsewhere.
But could another locale train a thousand engineers to be ready to employed in the Bay Area companies?
In many cases, the value (initial value) comes from assimilating in the culture and while a lot of bigCos could still make people work in Bay Area before sending them home, the challenge is for these locations to evolve to be capable themselves.
The Bay Area does not have a monopoly on good culture or experts: at times it may even notably lack them. There are many experts there and much good culture to learn from, but there are also many idiots and charlatans, and it is just as likely you'll find one of them first. How does a beginner tell the difference?
There is no locational bound on where people can learn to write great software, on where they can write great software, on where they can teach others to write great software, or on where a strong culture can be grown and shared, i.e. one of good ethics, responsibility, fun, art, innovation, trust, etc.
The Bay Area is not magical; it is just a place where a lot of money and a useful attitude toward spending it (on risky technology ventures) got cyclically concentrated over time.
They are not directly linked, and it is a harmful falsehood to perpetuate (sorry to single your specific comment out here -- I know lots of people are saying it.)
Would they pay you more if you moved to a more expensive area of the city, or less if you chose a bit cheaper? Would they pay you noticeably more in a year of higher than average inflation? Would they change your wage depending upon your marital status, which impacts expenses dramatically? At any point in setting your offer number, did they do calculations of your reasonable expenses, or ever take into account what type of lifestyle you lead? No.
If you are a software developer, you likely make enough to pay an average person's bills in your area, plus some luxuries, and then a bit more beyond. Likely enough to put away some savings over time. Was $YourCo just ... very generous in letting you have that amount of savings, compared to other industries, which pay less?
No. None of these are the case, because cost of living is not relevant to your salary, except to the small degree in which it factors into what the market (i.e. we) expects and will accept. That is where "region" has traditionally played a role, because low mobility between regions has historically made them into homogenous, isolated markets, which is where this falsehood can creep in.
So what really sets that number?
Industry salary reports, people's beliefs in 'the market trends', gossip about what other companies are offering, the acceptance rate they've had on offers in the recent past, your stated salary expectations, your experience level, the degree of specialization your role has, the importance of that role to them, their overall budget for hires, whether you negotiated or not, and whether or not you have competing offers you can play against them. All this boils down to "what they think you will accept, and how badly they want you." -- not your costs.
What happens when American employers starting hiring more and more in Europe/Africa/Asia? I'm not sure. I think fluent English communication skills, timezone affinity, cultural connection, and ease of travel to 'say hi' all form bits of moat, but those will certainly matter less and less with time.
In the near term, as SF+NYC start to allow remote work 'across North America', I think there are just way more jobs and companies looking than there are liquid engineers ready to move. Salaries might drop while we transition, but I really believe they'll go broadly as high as (or higher than) they were in those markets for a time, and this Spotify move is exactly why: the big players will now be competing for the best people everywhere, and the average carrying cost per employee, with no office requirements, is way down.
I definitely agree it's not simple to know where the market will fall in the long run. If European/African/Asian companies start correspondingly hiring here, that'll help North American engineers overall, but I'm not sure if we'll all end up at 1x, 3x, .5x, or what. It's easy to forget that there is room for an awful lot of software jobs in the world, especially, again if companies no longer need to pay for office space proportional to headcount. Some of these companies have a lot of money and were primarily constrained in the past by offices+office-inertia.
Regardless, 'cost of living' is not the root cause driving wages that people keep claiming it is, and when employees join in that lie, it hurts us.
It's all just what the markets of employers and employees are willing to bear, and what we should really be estimating as those isolated markets merge over the next decade is more like #qualified engineers / # potential software jobs, world-wide.