Comment by PragmaticPulp | Hacker News Reader

Comment by PragmaticPulp | Hacker News Reader

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> Truthfully, I don't see this working out in the long run. Companies like Facebook are making desperate grabs to keep control over how work is done and how it is compensated, but I believe market forces will kill efforts like ZIP code based compensation.

I think you're right, but I don't think the end game is that everyone gets FAANG-level salaries everywhere.

When companies realize that they can hire people for a fraction of SF Bay Area salaries while still paying them 20-30% more than their local salaries, the overall compensation structure will slide downward toward that number.

Then the next step is when they realize they can hire foreign people in similar timezones at another lower step on the compensation ladder (while still paying more than their local jobs would offer). The compensation then slides further down toward this average.

> In reality, if you're top tier talent, you can command top tier compensation no matter what your ZIP code is.

Works in theory, not as much in practice. There's still value to having people collaborate in person (I say this as someone who has primarily worked remote long before COVID). Companies paying top dollar have a lot of leverage to get employees to move and work in-person still.

"A fraction?" How much less do you think they can pay? This sounds suspiciously like the myth of off-shoring, get the same work for a fraction of the cost, but from what I've heard the competent ones quickly command more pay and are certainly not "a fraction" of a SF salary.

> "A fraction?" How much less do you think they can pay?

Half of Bay Area FAANG salaries is still more than a huge swathe of localities in the country - let alone the continent, where you'd likely plumb a quarter or an eighth and still be above local averages.

I think this would be an interesting hypothesis to entertain if it wasn't already falsified by the observation that FAANG (& similar) pay much more than a 30% premium over the "median" tech job not just in the US, but in pretty much every market where they compete.

An instructive example would be India: TC for senior engineers at Google, Amazon, Uber, etc is already north of $150k there. Note that this is _already higher_ than the median tech salary _in the US_. Meanwhile there are still places in India paying new grads $10k.

You see something similar in Ukraine, where 40-50k was a reasonable rate for senior engineers, and then Lyft enters the market and starts giving seniors 6-figures.

I think the answer, as always, is that there are just not enough sufficiently talented & qualified engineers, even taking into account the global talent pool, to balance the rapidly increasing demand for those engineers. If it was just one or two companies paying this level of outsized compensation I'd be skeptical of the long-term trend, but it's not - this is pretty much all modern tech companies, because the unit economics of software businesses make good developers extremely valuable.

I was curious what the story looked like for South America, and, hey, turns out these tech companies already pay 6-figures there too. Heck, Coinbase is offering _mid-level_ engineers in Brazil 6-figures for remote roles.

> An instructive example would be India: TC for senior engineers at Google, Amazon, Uber, etc is already north of $150k there. Note that this is _already higher_ than the median tech salary _in the US_. Meanwhile there are still places in India paying new grads $10k.

Keep in mind these companies are really trying to get the 1% of developers in that market. Anything below the 95th percentile is unemployable. [0] [1] [2]

[0] https://restofworld.org/2020/india-engineering-degree/

[1] https://www.business-standard.com/article/opinion/india-s-ta...

[2] https://www.business-standard.com/article/companies/95-engin...

I would be wary of the 95% figure. Another user on HN (who currently works at FAANG) pointed out that he took the test used in that survey and failed. The interface for the coding test was not reflective of how actual software development is done (ie no syntax highlighting, memorization, etc). Even accounting for the diploma mills and the private universities with underresourced CS departments, the 95% figure seems unusually high.

Even if we assume for the sake of argument that that's true, I think that only enhances my point: there aren't enough engineers that these companies are willing to employ such that they would tip the scale on the supply/demand balance sheet and push compensation down (in real terms; obviously every additional marginal engineer pushes down compensation in counterfactual terms).

It strikes me as unlikely that big tech companies could save a large fraction of their engineering salary payments by firing a ton of engineers and replacing them with newly-hired engineers in different countries, and the only reason that they haven’t done this is that they simply have not had this same realization that you have had. It’s possible, of course, but I have a sneaking suspicion there’s more to the story.

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