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Comment by summerlight | Hacker News Reader

When it comes to equal pay in all region, I usually find that people tend to think it as Bay Area level (or at least US metro level) pay for everywhere. But a more realistic consequence would be developing country level pay for everywhere. There are tens of millions of developers outside the developed countries which will gladly accept one third of the market rate in developed countries. If you live in Europe or US and speak European languages, you gotta accept the fact that this geographical/linguistic barrier has been a critical factor for your annual salary.

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I think it will be more differentiated than that. If you are top talent at FAANG you'll probably continue to be able to demand top comp. If the you are a mediocre dev and you're salary is only high because you are in SF, your comp will likely go down. Comp in developing countries is already going up as well as part of the remote boom. Comp in Colombia for example seems to have practician doubled in the last year.

My thoughts on this in longer form: http://amurmann.com/posts/remote-labor-market-future/

Your articles is still not really "optimistic" although it appear to be with a certain neutrality... As OP said most salaries will tend to slowly align to low income countries, like in nature, the communicating vessels principles, where liquids tend to align to a common mean level. That's means some Tajikistan or Paraguayan or Samoans workers will be happy, while other, like us in the western worlds with our actual cost of living will no be happy at all.

Oh, sure formally being remote we can relocate. Unfortunately living in the physical real world relocate is not just a matter of physical location on Earth but also physical situations around, for instance if I relocate to northern Urals from here (France Alps) I'll probably able to spot a nearly-similar climate (a bit hotter in summer, a bit colder in winter probably) and appear to be hyper-rich in the Urals BUT if I just need to buy food there is no Drive supermarket nearby there. If I just have a carious tooth I'm almost on my own or I have to fly 500-800 miles at minimum just to sort that out. Not talking about real eventual emergencies. Such services until we have global teleport network (something really fictional from our real current perspective) can be "remote".

Long story short IF I'm a young slave (yes, not Citizen, not worker) with a significant dose of optimism transfused in my body I can be happy and say: "hey, I'll go to some 'tropical-alike' area of the world where with very little I'm still rich! Wonderful! Or maybe I'll even be a digital nomad! Hooray!" and PERHAPS being happy for a little while, than discover it's too late to came back and being a new poor slave. Not much different than modern digital service mass market where some services start free, nice and friendly than they start to offer premium features, quality lower without them (and also with them, often), some fees for all arrive, ... and most customers are so locked-in even only by their peers being communication-centric that they have to remain, suffer and pay.

Now if we enlarge such vision: top talents are very few. Some or even most of them are considered "top" just because they choose to live to work instead of the contrary. All the rest? Try to enlarge the game behind eligible remote jobs: did you think you can get good food and health just paying more? Sorry, you can't. Surely in hoteliers terms just seeing some south Americans clinic you might think that's false. Unfortunately if you really touch the (obscene) quality of their real services you'll discover that scale matter also to form talents. To give them experience. There is no school that can substitute scale. If we do not have OVERALL good services for the society we also can't have good services for a small élite. We can mock them, we can self-convince them they are good seeing the sorry state of others humans, but we do not get nothing really good.

Try to see how innovation after public research era/bit labs era drop. Our actual IT is still way BEHIND old Xerox PARC level. Oh sure, is popularized, more colorful, more performant, far cheaper etc. What we can call "non-talented improvements" but there is NO REAL INNOVATION anymore. That's the result of scale: private markets can't reach the public research scale for the public and as a result they just produce popularized crap. Now imaging the result on social scale outside IT.

IMHO there will always be a language and culture barrier, and timezones. A Spanish company would prefer to hire Spanish speakers ( so Spain or Latin America) over Tajiks. What good are developers, for instance, if you can't really communicate with them due to limited timezone overlap and language issues?

Learning a language enough is not that hard, especially with languages like English... Spanish is a little bit harder, but still easy. It's not Chinese or Japanese with more alphabets etc...

Surely as I said that happen more or less slowly witch means that at first we will experience a proximity preference, but just see for call centers: here (France, Italy) there is an epidemic of offshored call-centers operators in the Balkans and north-Africa: they barely speak Italian or French but they get far little wages so for many companies that's good.

It's probably something in between though. There's probably a point in between Developing Country Pay and Bay Area Pay where the company can get quality work done for the price they're willing to pay.

Obviously, they're less likely to get Bay Area developers, but I don't really see how that's a problem - there are plenty of good devs elsewhere. Maybe this is a good incentive for Bay Area devs to move somewhere cheaper :)

> Maybe this is a good incentive for Bay Area devs to move somewhere cheaper :)

Why give up Bay Area salaries, and the large Bay Area job market, to make less money somewhere else for the only company that would pay it?

One of the reasons people stay in the Bay Area is the ease of finding new jobs in tech. If you don't like your job, you don't need to put up with it, because there are plenty of other options.

On the other hand, if you move out of the area and there are only a few employers who will hire you where you live at a salary you can live with, you do not have that ability. And good luck moving back -- if you spend a few years out of the Bay Area housing market, the cost of moving back would blow your mind.

> On the other hand, if you move out of the area and there are only a few employers who will hire you where you live at a salary you can live with, you do not have that ability. And good luck moving back -- if you spend a few years out of the Bay Area housing market, the cost of moving back would blow your mind.

If this was true, there would be few young developers and recent grads, which is not the case. Owning a home is overrated, especially with the current prices.

> Owning a home is overrated, especially with the current prices.

You know what sucks? Renting in the Bay Area and seeing regular rent increases every single year, such that your rent today is 30% more than it was two years ago.

You know what's awesome? Buying a home several years ago and seeing it go up in value by 30% while your monthly mortgage bill has remained the same -- and also knowing that a significant portion of that monthly payment is going into your home equity and is still your money.

Renters are getting hurt far more by inflation than homeowners.

You know what’s not awesome? Buying a home in the last year or two of a housing bubble, having your home drop in value 30-50%, owing $150,000+ more on a loan than the house is worth, losing your job, and being unable to sell your home to move to another area for a new job without walking away from the house or coughing up big money at a closing.

Except this has never happened within the Bay Area. Even in the 2008 pop, it never was that bad and you got your money back by 2011.

> having your home drop in value 30-50%

That might sting. But I don't believe it's ever happened in the bay area. Housing didn't drop 50% in 2001 and it didn't drop 50% in 2008.

I did drop, yes. Sometimes even underwater, as my home did in 2001.

The other factor is that "underwater" doesn't mean anything if you like the house and want to keep living in it.

Oh no that's WORSE than that.

Wages surely will more or less slowly going to a mean world level, witch means going high for some very poor people who normally live doing non-IT jobs (so they can't even learn fast enough to really profit) and going low for us in the western world. Some countries who happen to be in the middle now, let's say like Vietnam or Russian Fed., probably will not suffer that shift much, we will.

Moving also is not a mere geographical relocation: I can spot for instance a handful of nice areas in the world, in natural terms, where I can live well in natural terms BUT I depend on the physical world, on someone else jobs who can't be remote. Let's say you'll relocate to a natural paradise. Let's say you just want a new pair of shoes. Oh that's easy, just wait for the next delivery, it MIGHT happen in a month or two. Cheese? Oh, well, you might buy something vacuum-packed and frozen but it will be really expensive and of a very bad quality. You need health services? BWHAHAHAHHAHA did you know the meaning of natural selection? Well, if you can survive without them you'll live otherwise you'll die IF you are lucky. If not you might live for years, decades perhaps with very big handicap just because no one fix an issue quickly and how we know it should be done so a broken leg became a twisted and painful limb, a bad tooth a hole that force you to eat just tender foods on the other side of the mouth creating other jaw problems / pains witch in turn, ...

That's is.

Surely we have lived like that for millennia... Happy to came back to such life WITHOUT the real freedom of that past?

That's why u never become an employee in the modern age. The only way to become wealthy nowadays is to own things: own companies, securities, certificates that allow you to perform certain useful jobs. The actual work is dirt cheap; access to the results of the work is pure gold.

"That's why u never become an employee in the modern age."

Suppose everyone follows your advise- how will the economy function?

I work for others as an employee so that I can buy assets and businesses (e.g. house, 401k) for myself.

I think our economy would function very well if more people do this. Many already do.

Sounds like collective bargaining to me

People would decide to form companies, so we would never get what the commenter wants.

This idea was explained really well back in 1937, in The Nature of the Firm. It explains why we form companies instead of all being individual contractors making trades with each other.

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

Worse unless someone has figured out how to do the internal coordination that companies do. That’s a huge part of why first world countries are richer. They have large companies that embody social technologies and make long term and large scale coordination easier. Most people want security more than you be an entrepreneur and perhaps get rich, with much higher chances of losing everything and higher stress because the buck stops with you.

It wouldn't. If your society goes down that path it will sink with all the grifters.

What about winner takes all markets? For instance there's only a few major ridesharing companies. It would be hard to start a small, profitable ridesharing business. And they couldn't pay staff engineers 500k+.

Don't start a ridesharing company then. Start a company that VC's couldn't possibly invest in (or don't want to) but is profitable.

Speaking from the perspective of working remotely for over 5 years with multiple teams (all of differing compositions): salaried + contractors, US (all three timezones) + South America + Europe (Eastern and Western) + Asia, junior + senior + staff engineers, etc.; and being involved in plenty of interview loops for remote engineering positions.

You're missing two key reasons why salaries won't normalize to developing country level pay:

1) Timezones are painful. +3h west to east coast US is usually tolerable if not slightly inconvenient at times, but not too bad. +5h and above starts to strain team dynamics. East US to London/Ireland caused more than a couple great US engineers to seek greener pastures within other teams at the company; a few teams had difficulty staffing majority European teams with US talent. A 50\50 split was usually more tolerable. Any time difference more than that within a team is insanity. Feedback loops become too large, there's no cohesion, and a host of other issues.

2) 10M+ engineers at the senior level don't exist. You want engineers that can autonomously churn through "we have a problem with no identified solution" situations. These engineers earn 2x to 3x their cost through technical leverage. At the senior+ level, talent supply is lower than demand. And if you want to train up an employee from junior to senior, good luck doing that with a timezone difference > +3h.

As long as there are tech companies printing gobs of money while demanding more talent than is available for engineers to produce $$$ for $, then salaries won't normalize to developing country pay.

Eh... I've worked with remote teams and found that you largely get what you pay for. Even if the devs technical chops were good, that language/cultural/distance barrier meant a lot of misunderstandings, and time spent breaking down tasks to avoid misunderstandings, that commensurately lowered their productivity. Also the overhead for their offices, HR, tax compliance, etc... it really didn't pay in the long run until a lot of them were hired.

Exactly. If your entire pool is global and you want quality people, you don’t have to pay anywhere near bay area wages to get it.

No offense and not trying to be racist or anything but I’ve never really worked with someone from South Asia or Eastern Europe who didn’t have some sort of insane crippling communication problem that made working with them nearly impossible. Yes I realize it’s a two way street but usually it’s US companies driving the car.

I work with several Ukrainians working in Ukraine. They all speak pretty good English. The only thing they struggle with is the dumb ass slang I spontaneously create, and even then they tend to understand from the tone.

I’m sure there are amazing workers/communicators and exceptions to my rule.

Each and every Ukrainian I work with has impeccable communication skills to a point where sometimes I have to check if they live here in the UK.

That’s a temporary state of affairs. If you’re talent constrained but not capital restrained the returns to talent will increase and those to capital decrease over time. See long run increases in returns to Labour in every country that has managed to successfully industrialize, e.g. China or South Korea. For a software developer example see the run up over the last two decades in salaries for Indian, Chinese or E European developers.

The (unfortunate) reality is that the quality of software engineers outside the major tech hubs even in the US is relatively poor—-and it gets worse abroad. Other countries’ talents tend to migrate to these tech hubs, leaving their home countries with even more relatively poor talent.

This is going to be another decade resembling the outsourcing movement that occurred in the 2000s: and it will have a similar outcome. That outcome being that paying lower wages yields worse results and a huge backlash.

Outsourcing in the 2000s was difficult, technologically. Zoom meetings didn't exist. Github didn't exist. Continuous integration and automated testing was not really a thing. There was nothing like Slack. Screen sharing was difficult if not effectively impossible. Remote work is much more practical today, and the pandemic gave it a huge turbo-boost. I don't think we'll see a replay of oursourcing from 20 years ago (which was generally a debacle, no argument).

No talented engineer is going to look at a wage that is 2-3x locally in relatively poor conditions (crowding, sanitary, etc.) and think it’s a better deal than what they can get by emigrating. It might not be as bad as the outsourcing debacle, but it’s not going to be much different.

Having a multiple of the prevailing income locally offers the chance to buy your way out of some of the inconveniences of crowded cities.

In a lot of cases, the salaries for an SWE2/SWE3 aren’t 2-3x the median but 5-10x the local median income.

Yes, but you’re still living in conditions that are relatively poor compared to what you can get in developed countries (not just western/white ones). And these people aren’t ignorant or stupid: there’s a reason they emigrate in the numbers they do.

2-3x isn't actually bad level when the prices are also lower. Also the place with highest compensation sounds from discussion here have both crowding as in having room mates and sanitary issues with all of the issues of homelessness around...

And if we are talking about developing areas, the dev pay is already above median and being much higher will afford quite a good living conditions, away from all problems.

Is this “relatively poor talent” already working as software engineers?

If so, this change will reallocate which companies are employing them, but until it attracts people to the field who wouldn’t have otherwise entered it, it doesn’t seem like it will change the aggregate much.

We already have a whole bunch of top developers who move to the Bay Area because it's the only place to get paid what they're worth. Pay will probably drop by whatever the all-in cost of relocating is, but not by two thirds; people who can make 3x as much by moving to the Bay Area already do, on the whole.

I would restate as them moving to the Bay Area because they are worth a lot more there, and can therefore earn more money.

I'd say they're worth the same in a value sense (if we're talking remote then they're doing the same work, after all), it's just that their price is higher.

We are anchoring our pay to the 60th percentile of San Francisco. According to the most recent market data, this is higher than the average European pay.

That is also higher than the average San Francisco pay (assuming a normal distribution).

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