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?
Do you expect founders and investors to ignore the cost of living reality in Nowheresville just cause?
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.
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.
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.
Most companies would stop hiring remote if they had to pay SF salaries - that's just the fact.
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.
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.
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.
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.
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.
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.