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Comment by TulliusCicero | Hacker News Reader

> First, I think I should be paid based on the value I bring to a company, not my location. Otherwise, aren't we subsidizing those who choose to live in an expensive place like SF or NYC over those who are happy with a smaller city like Portland of Austin?

Employees are never only paid based on value. If that was the case, janitors would make great money, since having a clean work environment is very important and valuable.

What you're missing here is leverage. Janitors don't make much money because most people are capable of basic janitorial tasks, and thus they have little leverage in the job market because they could be easily replaced.

In the case of Gitlab, employees in hotter job markets have more leverage because they could more easily find a high paying job where they live. People living in weaker job markets don't have that. Gitlab is paying the former group more precisely because they have more options.

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I get that it's normal for companies to pay local market rate for talent, but if the entire company is remote then what is "local" really?

I don't see any problem with them paying someone in Canberra less than they pay an equivalent person in SF, but I think it's disingenuous to make it about "cost of living." Someone with kids and a mortgage has a much higher cost of living than someone without (in the same location) but do they automatically get paid more?

The local (tech) job market determines what the workers will accept, not (as others have noted) the cost of rent or beer.

> I don't see any problem with them paying someone in Canberra less than they pay an equivalent person in SF, but I think it's disingenuous to make it about "cost of living." Someone with kids and a mortgage has a much higher cost of living than someone without (in the same location) but do they automatically get paid more?

Only one of those two things correlates strongly with market wages, though. But you may be right that it may be more transparent to just say "cost of labor" rather than "cost of living".

Thank you, "cost of labor" is precisely the point.

Just say "we pay the local market rate where you live" and if that's true, you won't have any problem with your offers. If the developer in Canberra expects a Mountain View salary they will presumably explain to you why that's in your interest, and you can be convinced or not. Everyone else will be OK with the local market rate, because markets.

Publishing your "Canberra Disadvantage Index" doesn't seem likely to get you anything but people complaining on the Internet.

(Though I do wonder what GitLab would do if they find someone in Canberra they really want to hire and she already makes a San Francisco wage. My guess is they hire her and ask her to keep quiet about the salary.)

Why not move or at least rent a po box/number to give the impression you work at a high pay location?

I see the PO box question every time this discussion comes up.

For starters, you'd have to be okay with living a lie to your coworkers and putting your career at risk if you ever let the facade slip. You can't ever talk about local events at the virtual water cooler. Do you live in the same time zone as one of the high-cost-of-living cities? If not, you can't ever mention what time your kids go to school either. Is your employer ever going to fly you out to conferences or all-hands meetings? They're either buying your plane ticket directly or expecting to see a receipt; good luck explaining why you never fly out of your "home" airport. Does your employer report your earnings to the IRS? If so, you'll likely be committing some sort of tax evasion or at least having to submit a ton of corrective paperwork each year. Do they provide insurance? You'll have to explain to the provider why your address isn't what your company thinks it is or else risk voiding your coverage and/or committing insurance fraud. And so on, and so forth.

All in all, it's probably doable, but very few people would consider it worth the effort unless they are pathologically inclined towards fraud in the first place.

Right, it'll actually manifest in just not applying at all.

Bear in mind though that, for example, in the UK there's a differential of 50% for living 1-2 hours' train ride out.

I don't even know if towns I've previously lived in and commuted into London from would be counted as "London" by their calculator.

Its not about locality, its about paying as little as possible to get the people you want. If you want someone from Podunk Kansas you could easily pay them a third as much as someone living in a major metro but yours will still be the best offer they have.

Hopefully this equalizes out over time as more tech companies can properly adopt remote workers and thus even out the employment field away from centralizing in a few specific cities but we are a long way from that.

> Hopefully this equalizes out over time as more tech companies can properly adopt remote workers and thus even out the employment field away from centralizing in a few specific cities but we are a long way from that.

I used to think that way, but in, like, the late 90's/early 00's. "Surely as internet access and software tools continually improve, remote work will become better and more common, democratizing blah blah blah."

Instead, while the internet getting better definitely happened, the pay differential and clustering effect in major tech hubs only increased.

As for why that would happen, I have a few different thoughts, but I think the gist of it is that the internet getting better spawned huge internet giants like Google and Facebook, and organizationally it's still an advantage to have people colocated so they went with that.

It's funny, isn't it, the way that tech hub salaries continue to increase, with many companies willing to hire remotely only if that means low-priced offshore talent, and yet there are plenty of people in the US who offer a middle ground compromise but are generally overlooked. Like yourself, I really thought we'd be farther along in remote work acceptance by this point. While I've been a remote worker since 2005 as a moonlighter, freelancer, employee, and small-business owner (IE: have been through different experiences) it's still very challenging to get companies on board with remote work, despite the cases studies like GitLab.

Thank about that. This thread starts by saying it’s unfair to pay based on location and a given person provides the same value from anywhere, yet the worlds most successful companies choose to hire in the most expensive locations. Programmers in SF must be more valuable or companies wouldn’t hire there. In fact wages are high because of demand for that location itself not justness the cluster of talent there. As a remote company owner who hires in both North America and Asia, Timezones matter a lot. We have some incredible devs in Asia who I’d pay twice as much if they moved here. It’s not about living cost, it’s about opportunity cost for both sides. Salaries are a negotiation, and location matters to the extent the parties involved say it does.

“Programmers in SF must be more valuable or companies wouldn’t hire there.”

Or, that’s where companies are and they’ll take what they can get in the area because they like having warm bodies in the office rather than dealing with better qualified remote workers (like practically every company)?

I think it's a mix really. I think there are a lot of founders who really believe that SF developers are worth the 2x (or more!) markup. Personally, I don't think it's true at all -- in fact, hot markets tend to attract people who want money, not people who are talented.

On the other hand, non-collocated teams are challenging and if you have very little experience running a team (as many young founders do) it might be wise to hire locally -- at least at the beginning. I think a lot of founders also probably underestimate the amount of time they'll need to get off the ground. So if they have $5M, it might seem OK to have a burn rate of $2M per year (I'm using pseudo-random numbers). They'll think, "If we can't get another big round in 2 1/2 years, then we might as well move on to something else". So they are willing to pay the money.

>If you want someone from Podunk Kansas you could easily pay them a third as much as someone living in a major metro but yours will still be the best offer they have.

Not anymore, someone will be following the "locality doesn't matter mantra" and will outbid you. What you are saying might be more true for entry level or very generic skill sets. But if you are hiring top talent, you have to offer the same best offer everywhere, because if you won't then someone else will.

Locally is in that case all opportunities you have available at your location. If you can get remote job that will pay better than GitLab than you can negotiate easily. In that case probably you don't have better options if you keep working for that company.

>Locally is in that case all opportunities you have available at your location. If you can get remote job that will pay better than GitLab than you can negotiate easily. In that case probably you don't have better options if you keep working for that company.

Or you work remotely for a year at a lower salary, then leverage documented experience excelling at remote work to get hired in a higher paying remote role.

Value tends to scale with scarcity, economics 101. Gitlab doesn't have to pay people higher salaries for living in HCOL. All it should care about is talent level, which should favor hiring talented people not in HCOL.

> Value tends to scale with scarcity, economics 101.

By this reasoning, you'd expect to find the most "valuable" baseball players in areas devoid of professional baseball teams.

Something tells me you didn't completely think this through.

Gitlab is willing to pay high salaries for people living in expensive areas for essentially the same reason Google's dev offices are mostly located in expensive areas.

Baseball players move to where there are teams.

And programmers tend to move where there are tech companies.

Less so. If you want to play in MLB (and you do, because that's where any of the money is) then you have to move to where there's an MLB stadium - the team isn't going to move to you.

Whereas, there are many more software companies that pay roughly the same wages all of the world, and companies offer remote work, which will reduce the differentiation - but not eliminate it.

>there are many more software companies that pay roughly the same wages all of the world

I question whether there are many companies that, aside from executives or other high value employees, pay similar salaries around the world. I imagine at least some pay comparable salaries across the US--or at least salaries that don't completely follow CoL--but pay Indian or Chinese developers what they pay Bay Area ones? That seems unlikely at any scale.

That's why I said "tend to move", yes.

> there are many more software companies that pay roughly the same wages all of the world

The jobs with the really high salaries (and arguably the most exciting coding jobs) are disproportionately located in a handful of major tech hubs.

Programming is unique in that you don't have to be physically located in same place as others to do work. It's no brainer why GitLab is targeting this "hidden" talent pool.

Yes and no. I’ve had the opportunity to try some state of the art telepresence/teleconferencing kit. Stuff that they visit your office before they decide if they’ll sell it to you and then do a custom fit-out of a suite. Imagine the swankiest private cinema, x10, and another one on the far side.

It doesn’t hold a candle to a bunch of guys in a room at a physical whiteboard, for the sheer collaboration bandwidth. Fully-remote has its use cases, but it doesn’t cover all use cases.

I agree.

Most players drafted are not from big cities with professional teams. Most are from smaller farming communities, poorer countries, etc. The reason is big city kids have better options with higher success rate compared to more rural kids.

> By this reasoning, you'd expect to find the most "valuable" baseball players in areas devoid of professional baseball teams.

Why? Scarcity is dependent on demand. Something that absolutely nobody wants will never be scarce, even if the quantities of said thing are small in absolute numbers.

If there is no professional baseball team, presumably nobody needs a professional baseball player, and thus professional baseball players won't be scarce at all, but rather infinitely abundant and pay will reflect that by trending towards zero.

Following your logic, the value of someone in a high-demand market like SF or NYC will be higher, because it'll be much harder to find someone to do the job for the same low price as someone in a non-HCOL area. I mean those willing to work for the same price as a LCOL engineer in a HCOL area are very scarce, so they WOULD contribute good value on average if only you could hire them. But you probably can not, and I agree with the comment above yours.

Maybe compensation/bonuses/promotions are the proper way to reward those who have proven their added value.

If a bunch of companies started setting equal salaries for remote work not dependent on location, then over a long period of time the workers with the desired talent level would migrate to areas with low cost of living and start applying for those jobs.

The issue is that today the people with the desired talent level are likely to have already moved to a HCOL area because that's where the highest concentration of available work is. You have to compete with the other jobs they could take that are scaled to the HCOL area.

Turns out popuplation migration is not instantaneous, spherical, or frictionless.

"employees in hotter job markets have more leverage because t"

No, cost of living does not imply hotter markets for software developers.

Vancouver, London, Hong Kong, Moscow are very expensive with not tons of devs, and devs are lower paid.

They use a "rent index", "hot market adjustment", and "country factor" to account for that, I think.

> Vancouver, London, Hong Kong, Moscow are very expensive with not tons of devs, and devs are lower paid.

True enough, but rent correlates with tech salary pretty well within the US at least, where I'm guessing most of their employees are.

> In the case of Gitlab, employees in hotter job markets have more leverage because they could more easily find a high paying job where they live.

That's not real leverage. Leverage is provided by the minimum salary demands of the cheapest alternative supplier of labor that provides an adequate substitute. That you can walk away from an offer isn't leverage if I have someone else I can hire for the same salary and get the same benefit from employing.

Location has no relevance (it may be that desirable skill correlates with location, but then paying for that doesn't require a separate location adjustment.)

Now, for on-premise worker a worker in a higher CoL area may have more leverage because the minimum demand substitute workers is higher, but that doesn't apply to remote work where the employer can hire people from elsewhere.

But if everyone is working from home, you'd have access to the whole market, thus finding a same candidate without this leverage ?

(please excuse my english)

You only have access to the subset of the market that offers remote employment.

"Market" in this context means employees, not employers. The subset of employees completely disinterested in remote work is presumably much smaller than the subset of employers disinterested in offering it.

But you wouldn't have access to the whole market, because you'd be missing out on people in the major tech hubs. And as it turns out, much of the best talent in the world is clustered in those tech hubs.

But the candidate doesn't have that many options so they have to put up with what they can get. It's thw law of offer and demand.

That's not really true. As a remote developer, my employer is evaluating me against all other remote developers and their compensation. I'm evaluating my employer against all other employers offering remote positions.

Sure, the employer has more power in that negotiation, but it's not like there aren't others out there.

Your English is good. :)

> employees in hotter job markets have more leverage because they could more easily find a high paying job where they live.

But... couldn't any dev easily just move to San Francisco? This isn't 1900; it's easy to move to a new city.

Maybe we should start a service that lets everyone receive mail in SF, so you can put a SF address on your resume.

Is it really that easy?

I live on the east coast. My family lives within 30 minutes of me. My closest friends live within 30 minutes.

Moving would require leaving that behind. That's not (emotionally) easy for myself nor my family.

It's easy now that family life is no longer held to the same high esteem as it once was in American culture and we have traded our real, face to face, immersive, relationships for digital ones. (I've heard all the apologetics for digital relationships being "real", so you need not reply to this with them)

> But... couldn't any dev easily just move to San Francisco?

No, someone not already working at SF wages quite likely can't easily just move to SF.

Moving to SF is definitely hard and expensive...which is why larger companies regularly move new hires out to their HQ and then do all sorts of things to make moving easy.

I’ve seen companies that’ll reimburse all moving expenses, offer an upfront cash moving bonus, provide temporary furnished housing for the first couple months, and, if necessary, help handle immigration and other legal details. Sometimes companies even provide a moving consultant that the new hire can delegate tasks to like hiring a moving company or arranging for their childrens’ school transfer.

The time of easy moves to California was decades ago. Sure, it's physically easy to travel to SF, but moving is a different beast.

Not all devs are in our..."tier" so to speak. They're not picking up full relocation packages or even a few grand upon signing to make the move easier. They'll need cash in hand to get a place.

Funding a move is hard enough as a new grad without many possessions.

It gets even harder (unless you keep sharp enough to get paid relo) to move as you add vehicles, maybe buy instead of rent a property, and gather stuff like furniture.

That's before factoring in how some people have social ties to their current town. SF is good for well-compensated mercenaries or the few lucky people that got to grow up there.

I find it ironic how you point out someone else as tone deaf elsewhere in this thread.

I'm an east coaster that moved to the west coast for 8 years as an adult - and I have a large number of friends who have moved to the bay area from the east coast. As in, I could literally name fifty of them.

Is it expensive? Sure. But it's still pretty easy to move if you don't have a family tying you down. Moving anywhere is a pain, but people do it.

>What you're missing here is leverage. Janitors don't make much money because most people are capable of basic janitorial tasks, and thus they have little leverage in the job market because they could be easily replaced.

Janitors often make more than you think (both in terms of compensation and benefits), because while their job is easily replicated, they also require a great deal of trust.

I think this concept can extend across all jobs - you're not just paying for skill. If someone is dependable and trustworthy, it might be worth paying a small premium to keep them around versus an unknown quantity.

Every time an employee who might have stayed if that had a slightly higher wage, you run the risk of a toxic person coming in.

> Janitors often make more than you think (both in terms of compensation and benefits)

Government janitors, sure, because the government consistently pays above market-rate for low-skilled positions and under market-rate for high-skilled positions.

But in the private sector, I'd have to see some data. I'm not saying they all make minimum wage, but I don't think it's good money.

I can't speak for other governments, but the US feds use contractors for most facilities work, not direct employees.

In what sense do I have more leverage living in London vs. Manchester?

I can just move to London.

Pay differences across visa barriers might make some sense. Within a country it's just odd.

It's effectively saying 'go and live in London, or we'll pay you less'.

The barrier of entry to 'live in London' is about 6k a year for a flat share. Way less than GitLab's pay differential.

(It's actually kind of funny that a hack would be to subsidise someone living in London, have that registered as your address, and live in a place with a lower cost of living in a nice house.)

Well, guess I'm never working at GitLab now. Oops. :P

> I can just move to London.

But it's more hassle, and it would mean giving up your current friend network, may be a burden on your family, like if you have kids, or your spouse already has a good job. Someone already in London doesn't have to deal with that. Ergo, they have more leverage.

It's a remote job.

I get a small flatshare and do the Mon-Fri working thing. (Loads of people do this for on prem jobs because homes in London are small and/or pricey. You get the train in on Mon, stay till Fri, and go home to your big country house).

Then I stop doing the commute because it's a remote job and this is obviously silly.

Basically it seems like this whole thing rests on arbitrary rules set for no reason.

I can't figure out how working for GitLab in a northern English town would work at all and why anyone would apply when they could rent a postbox (or even an entire flat) in London and come out way ahead.

If the differences were a few grand it'd be different. It's more like half the money for living a couple hours north on a train.

Not everyone can up and move that easily. So it does make a difference in reality.

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