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IMO a better advantage is that you can hire talent from anywhere, without the caveat that they have to uproot their life to join your team. Paying local market rate is shitty (generally) and reduces your competitiveness against other remote employers that don't try to squeeze 10-40% off employee salaries (which is most of them, FWIW). Not to mention, how could you possibly make 10m rev/employee but with a straight face worry about them making 20k 'too much' because they live in Iowa or something!?

I wouldn't even bother applying at Gitlab because I know they won't pay me competitively. Pass!

TLDR: "can pay local market rates" only works if you're the only company to ever offer remote work, and you have to compete only with other local market offers. Which is a fantasy in 2018.

> hire talent from anywhere

> try to squeeze 10-40% off employee salaries

I guess you're talking about anywhere… in the US.

They made $10.5M in revenue _total_, not per employee. It's quite possible they are still not profitable, in which case $20k per employee would be a lot.

They have some 350 employees. That's $30k per employee per year. They are most assuredly NOT making a profit or anything near it.

>and reduces your competitiveness against other remote employers that don't try to squeeze 10-40% off employee salaries

Well, duh. Google paying its engineers X instead of X + 100,000 reduces its competitiveness against other employers too. Doesn't mean they should raise salaries by 100k across the board though. Companies pay what they must to attract the workers they need, why would they pay more? They're in most cases not a charity being run for the benefit of the employees. And for remote work, being remote is usually a huge perk for the employee so naturally it comes with a shortfall in somewhere else, such as salary.

Sure I agree with your general point, but other remote companies WILL pay more.

I've worked for 3 companies remotely over the past 6 years. Every single one of them, including being employee #8 or so at a seed-round startup paid more than the max Gitlab would pay me for a backend role. Like, in 2012, as employee #10 at a bootstrapped startup, I was paid more. Gitlab pays crazy under market, end of story.

GitLab's rate calculations are really off for a few markets... Phoenix, Austin and Atlanta come to mind there. Software Devs do var above the mean income in the area relatively speaking than in other cities.

> charity being run for the benefit of the employees.

Whose benefit then?

Companies can try to do that. I've worked remotely for 5 years and always inquire about compensation up front. If they try to pay local market rates, I decline to interview with them. When you're working remotely, you need to view yourself as being competitive with candidates that are local to their SF / Seattle / NY offices and demand the same compensation as a local hire. This further reduces the pool of companies willing to hire you, but if you have the time when looking for a job it is definitely possible.

Buffer is mostly if not all remote and they adjust salaries based on employee location. Their salaries are open for everyone to see as well.

https://open.buffer.com/transparent-salaries/

It looks like GitLab does the same thing

Yep, and in both cases high CoL markets they are paying low and in low CoL markets companies that don't do this are paying much higher. At the end of the day you aren't going to draw "the best" of employees by paying local market rates.

Buffer's is hilarious, mostly because they are claiming Seattle and Boulder both have "average" cost of living. So they are still favoring employees, but the low CoL people are being paid way more than the high due to their garbage CoL calculator.

Which SF tech company pays SF market rates for say someone living in Poland or Ukraine ? Haven't heard of that.

I live in the US and can't speak to that, sorry.

The 100% remote company I work for is based in Chicago and pays Chicago market rate for all positions regardless of where you live (I live in South Dakota). I find that it's generally fair and a plus to both the company and the employee this way.

Fellow remote working South Dakotan here.

Current employer tried to pull the local salary adjustment. I wasnt interested. In this market I think it's fairly easy to negotiate which I did.

Remote is an OK perk, but not worth a massive pay cut.

I've heard that's the policy of Basecamp as well. It's a more equitable solution by far than these other companies, enabling the employee's strategic selection of their place of residence.

Compensation models at Gitlab & Buffer strike me as being creepily paternalistic in pursuit of some misunderstanding of egalitarianism. Who wants to work for a company that's keeping tabs on where you live to make sure you don't get too far ahead of your peers?? Sounds like something out of a digital age Atlas Shrugged.

what's living in south Dakota like?

It's also BS, though, because if you hire someone in a high wage market they will frequently move. Unless you have a very well communicated policy of readjustment, it ends up with grossly unfair outcomes to employees and dysfunction within teams.

In a "traditional" pay model, nobody knows what anybody else makes and everybody gets what they negotiate for. Presumably candidates' cost of living would factor in to what they ask for.

But automatically and transparently paying people based on their location is weird to me. If Bob has chosen to live in a place where houses are insanely expensive, or if Bob has chosen to drive a luxury car or keep a pet elephant, those are Bob's decisions. None of them mean that he contributes more to the company.

Also, since a company has non-infinite funds for salary, paying Bob more to live in SF inherently means that the company either pays less money to Alice in Arizona, thereby incentivizing her to quit or move to SF, or else doesn't hire Carol.

> One of the corporate advantages of 100% remote is the business can pay your team whatever their local market rate is

What if instead you framed it as "we can offer almost-SF rates to people all over the U.S., which makes us one of the top choices for every dev outside the big cities"? That's a huge talent pool to take your pick from. Seems like a competitive advantage to me.

Do they also sell their product with differential pricing in different markers? Does the product price also use a COL adjustment? If not, then why not? That does mean adjustments to salary based on location is not really a fair game.

I agree. The distributed company I work for moved all developer salaries to the same pay-scale this year (basically, SF rates) regardless of where they live. There are 18 people on my team who live all over the world and the only thing I take into account when deciding their salaries is how valuable they are. We used to apply slight percentage adjustments for each city, etc, and it was a huge waste of time and felt very unfair.

> I turned down an offer with Gitlab at the final stage because they adjusted the geo-compensation calculation in the late stages of the interview

If you took the job, and then moved, how would they know?

Because they're not paying you in bitcoin or by brown paper envelope. There's federal, state & local city tax reporting for each employee, W-4's to fill, W-2's to mail, health care providers to setup (different in each state even within the same company), 401Ks etc. Unless you're going underground not only from your employer but also the tax authorities.

Now if you maintain your high-cost address but go tripping around the world, perhaps they wouldn't find out for a while.

Gitlab is offering much more than the cost of local taxes as a bonus for maintaining a "high-cost" address. And your federal taxes would be almost entirely refunded; they'd be withheld normally but you qualify for the foreign earned income deduction based purely on your location during the year.