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Comment by throwaway4721 | Hacker News Reader

They are compensated according to locale. Our Google sheet of offer anecdata contains a few entries for Stripe, some remote and some SF. I’ve seen a salary difference of 30%. I don’t know the people who entered them personally so I can’t speak to how well they performed during the interview, so take that with a grain of salt.

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A salary difference of only 30% relative to SF? That's going to be above market in most other places, and miles above market in many.

I just don't understand this.

If a company knows how to get choose a USD200k engineer in SF and get a good return for the company off that engineer, then why wouldn't you pay USD200k in all areas?

USD200k is a good carrot where I live, so you would be able to attract the best engineers living here (with far less competition and far less churn).

I get it that SF has network effects, but good remote engineers also tap into the same network.

> then why wouldn't you pay USD200k in all areas?

Because they don't have to. Peoples' expectations of salary are likely in line with their local job markets, so even great developers living in a rural area will likely either accept the average base salary for their locale, or move to SF for the larger payday (and all of the expenses that come with it).

This should be reversing because the internet grants us easy access to this data, so market signals should be forming, but it isn't reversing, which is suspicious. Getting the data is harder, but we do already have data sets to compare to (and can apply inflation, CoL, other adjustments as time goes on).

The only real reason for zip-code adjustments would be some labor-related, CONUS, or state laws that I'd be unfamiliar with.

If I deliver the same business value as a Silicon Valley engineer, and you're paying me less, I'm getting arbitrage'd.

I agree, if we're getting paid differently based on zip code but producing the same business value we're getting arbitrage'd. The question is; how do we as developers make money off this market inefficiency?

We have a few options. 1. Negotiate better salaries. This is only possible when the purchasing price of the next best developer also increases. This already happens in the Bay area market. It is happening slower outside the Bay. 2. Start own our business. We hire the best developers at a higher rate which raises the market rate for a developer. This is happening in the Bay but much more slowly outside. 3. Move to a better geographic market. A lot of people who can chose this.

Developers probably can't exploit/correct this market because we have no way of directly/quickly making profit from the price difference.

I would love for developers to capture a larger share of the value they create. Does anyone have any ideas on how to restructure the incentives of the market to make this happen? (Cooperatives?)

In that case what if I use the zip code for getting a better salary and then just move a cheaper location?

Depends on the company. At my previous one you were locked in to where you started so I left after moving to a more expensive city and they refused to adjust it.

There are a lot of bad managers who style themselves as feudal lords and one of the known ways to get them to give up on that model is offering to save them a bunch of money. Pay someone a bunch of money and I don’t get to yell at them? No thanks.

Also if the hire is living on a ranch in Montana then at least as of today they don't have that many companies to choose from if they turn you down for a lower salary than Bay Area engineers get. In SF they can just walk down the street to the next place but there aren't that many really remote companies out there.

I mean companies that you don't transition to remote but start off as remote and are treated as a first-class employee the whole time and that the workflows are remote-friendly.

In addition to what kossae said, overpaying for the market is not good for Stripe. The flip side of massively reducing churn is that it also means people wont leave even when they want to, because of the golden handcuffs. Stripe doesn't want demotivated employees who are only staying because they'll have to take a 50k pay cut to work anywhere else.

> If a company knows how to get choose a USD200k engineer in SF and get a good return for the company off that engineer, then why wouldn't you pay USD200k in all areas?

If you're willing to buy a $2 million property in Palo Alto, would you pay $2 million for the exact same property in West Mississippi?

To a company an employee is a commodity investment only - no matter what the culture manifesto says. There are a lot of factors that determine who gets paid what.

Would you pay for any services in your locale at San Francisco rates?

People don't get paid more in San Francisco because they deliver more value than a worker in New York City or London. San Francisco rates are high because of geographic scarcity of talent in that location. Over the long term remote is going to reduce SFBA rates, not propagate them.

> If a company knows how to get choose a USD200k engineer in SF and get a good return for the company off that engineer, then why wouldn't you pay USD200k in all areas?

If they can get those other people to join paying 100k, why wouldn't they want to save 100k per engineer?

Companies pay you what they need to in order to get you to join and unfortunately, market rates are still largely decided by location.

I know, why wouldn't a company pay more. When I go buy something, I always insist on paying double for it. It just makes sense to pay more when you don't have to.

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