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Comment by monsterbash506 | Hacker News Reader

We don't need high-tax, low freedom SF. People can do work over the internet. Look at GitLab. Hundreds of employees and no physical location. Imagine making a 6 figure income but living in a place with minimal state and local income taxes. We are entering the period of fully digital corporations. The ultimate form of this is the DAO (see Bisq, Maker, Augur sort of).

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You seem to assume SF salaries will be offered in places that are also super cheap?

Do you expect founders and investors to ignore the cost of living reality in Nowheresville just cause?

Sure, if you're young and single and saving aggressively, you can still come out ahead in SF.

But Even at half or 1/3 the salary, you'd still come out ahead in many areas across the country, if you have a family of 4. In SF, it's not just the extreme housing costs, but also the 3K-4K/month day care costs (if you can get it), and all the other COL.

My numbers disagree: https://thestartupconference.com/2018/09/21/about-that-silic...

This sentence is telling: "Sure, he lives in a great 3,000 sq.ft house that only costs $500/month."

You've discounted the value of that house.

You forgot that the house might be on more than an acre of land, with a stream and some forest.

Your comparison isn't equivalent at all. Add some land, and suddenly you aren't coming out ahead. You can't even pay your bills.

How can you save when you’re paying $4k a month in rent?

Make $20K/month in salary, bonuses, and stock awards.

Why on earth would the value someone added to a company have anything to do with the cost of living where they live? Either you support remote or you don't but I would not expect different remote salaries based on where that remote employee lives.

I know some companies do this, but I can't imagine it's a practice that will continue once remote work becomes the norm as it makes little sense.

To you an employee it makes no sense.

To an investor it does.

Human history is filled with stories of seeking cheaper labor.

Have you not been following the anxiety over offshoring? Why did all that manufacturing go to China?

Cities in America used to be the centers of manufacturing and then it moved to rural areas. If you research it you might find like I did that cost of living was cheaper in rural areas. And a lot of businesses decided moving to and building a new factory in a rural area, which happens infrequently, and hiring more people who worked for less was cheaper over the long run.

SF is one data point, but folks who were already priced out there are in Seattle and Portland, etc., pricing out others who have to go somewhere.

Maybe the first generation of workers will make bank due to lack of capable workers, but others will join the trend of moving, rural populations of folks capable of this work will grow and work for less.

I don’t have concrete numbers around how soon or how many people will move, because I can’t predict the future, but the general pattern has happened over and over in just 150 yrs.

And the parallels to ancient empires conquering a new land and enslaving the people to grow the wealth of the king or whatever mean the idea goes back further. It only got wrapped in our contemporary language of economics in the last 150-200 years.

Manufacturing and software development are very different though. Any able bodied person can work in a factory. If we're being generous I'd say at most 10% of the population is even capable of writing software. The demand for these people is only going to increase. As we have seen with rising developer salaries, the scarcity of the skill allows some leverage to the employee that other fields lack.

Software development is also unique in that it's one of the few roles that works really well remotely. I'd say most developers are even more productive remote than in the office due to the need to sustain mental focus in a way that's difficult with a lot of distractions.

Don’t get me wrong; I would expect salaries for remote programmers in rural areas to be higher than typical for the area.

But the future is not going to be something like hundreds of thousands a year in a town where average of cost of living is like $30-$40k.

It’s quite possible I am being too cynical. But people spend all day carefully measuring what we should make to insure the balance isn’t too tilted in our favor. I doubt they’re going to miss what seems like an obvious reality to me.

You're right over the long-term, but all market advantages disappear over the long-term. The fact that in 50 years software development will be a commodity skill that anybody can do from anywhere does nothing to ease a labor shortage today. And the remote worker who can competently ship software on demand doesn't care that his kids won't be able to do the same; he can make bank now and use the excess to set them up for the careers that'll be in high demand tomorrow.

What you're proposing is out of touch with reality. Compensation is based on value added, but also based on geography. Bartenders in South Dakota don't make the same as bartenders in San Francisco for a reason, though they add the same value to an establishment.

Most companies would stop hiring remote if they had to pay SF salaries - that's just the fact.

> Bartenders in South Dakota don't make the same as bartenders in San Francisco for a reason, though they add the same value to an establishment.

I bet the drinks in SF cost more so they actually do add more value there. You're talking about on-premise work and I'm talking about remote work. If you have a great dev that starts working remote in NY then moves to Kentucky would you give them a pay cut? Of course not, they'd still be super valuable to the company and you'd want to retain them.

How is cost of a drink related to the value the maker provides?

I will admit you have a point with the NY>Kentucky example. In that situation, the company may pay them the same, but if the company hires two equally talented devs, one in NY and one in Mexico, there will absolutely be a difference in their pay. If the dev in mexico moves to the US, their salary also goes up accordingly.

The companies could be incorporated in remote areas as well, and use the benefits to provide competitive salaries.

Value added doesn't have much to do with it but there are other supply and demand factors at work. Truly remote friendly employers are still the exception so there is still high demand for engineers who are willing to relocate to the Bay Area. Someone not already there who is evaluating job opportunities will be considering a number of factors besides salary: cost of living, disruption of relocating to them and their family, lifestyle, culture, etc. and how they weight these factors will depend on the individual. They will be willing to accept pay lower by whatever it is worth to them to stay where they are.

Value-added actually does depend on where you are: in-person interactions are significantly more valuable than remote ones. Network effects from who you know (which generally depends on where you are) matter. Interactions with creative people work as sounding boards for ideas.

This is precisely why technology companies cluster in hubs - not just SV but Austin, Denver/Boulder, Seattle, etc. and aren't more or less evenly distributed.

That aside, salary is determined by supply and demand, not solely by value-added. Value-added is a factor in labour demand, but it can be totally swamped by other factors.

i dont know why this is being downvoted. There's no reason for every company in the world to pile down into one city where the locals don't even want the growth.

I guess it's not commonly known but SF by population count is only 10% tech. The other 90% is mostly anti-tech. There's even protests against more tech moving into the city and the occassional attempt at anti-tech regulation (no bus laws, no free lunch laws, etc). i think they succeeded with the no bus laws: I know at least one startup that was shut down for providing bus service for workers.

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