Hacker News Reader

Comment by biztos | Hacker News Reader

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.

View on HN

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.

> 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.

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.

Reply on news.ycombinator.com