It's no more fair than paying based on lifestyle choices; if any employee in SF is providing labor worth $200k, then an employee in Bucharest providing the same labor is also worth $200k. The fact that the SF employee has higher expenses doesn't make their labor more valuable. Sure, they are paying more to live in a more desirable location, but that no more deserves higher pay from a remote employer than an employee paying more to live in a bigger house, or to consume more expensive designer drugs outside of work hours.
Is it 'fair' from a pure salary-to-value ratio? No. But economics isn't about 1-1 'fairness', it's about the allocation of scarce resources at a mutually-agreed upon price, or wage in this case. This is partly why comparing salaries is stupid, especially across locations.
Well, yes, when I argued against the idea it was fair without also arguing against the clear fact that it occurs, I was rather clearly saying that the fact that it occurs has nothing to do with fairness.
> it's a result of real market conditions
Yes, specifically, the absence of robust competition for remote labor of the precise kinds Gitlab is buying is the “real market condition” that allows them to do this kind of segmentation.
Ironically, the more attention (and copycats) all-remote firms like Gitlab get, the less viable this cost-saving tactic will be, provided that they don't involve in illegal (in many jurisdictions) joint cooperation to limit wages of the type that, unfortunately, tech firms have engaged in in local markets in the past.
If they were based on supply and demand, locality of seller would have no effect on the price buyers were willing to pay for goods that aren't location-sensitive, e.g., remote work, because it's not a location-bound market and goods would trade at the global market clearing price absent (inefficient) artificial market segmentation that is only possible (for buyers) when there is an effective monopsony for the particular good/service being purchased (since competition would exploit the underpriced segments buy buying up what they are selling at a price above what the attempted segmenter was offering.)
Were that true, global markets where the location of the seller is immaterial to the utility of the good or service sold and didn't create extra costs to get it to the buyer wouldn't have different rates based on the seller's location, by the Law of One Price.
> Your arguments read like “if a BigMac costs half a Dollar in a developing country then the BigMac is inherently worth half a dollar and should cost the same in the US”
A more precise equivalent would be “there is no rational reason for the same buyer to be willing to pay more to purchase a Big Mac delivered from a neighboring higher CoL city as an identical one delivered with the same latency from a different neigboring community with a lower CoL.” Local prices for Big Macs between countries naturally vary precisely because Big Mac distribution isn't globalized the way remote labor is, and a Big Macs from a McDonald’s in Turkmenistan is not an equivalent substitute for one from a McDonald's next to Market Street for a buyer in Downtown SF.
Local wage policies for remote work are an effort by employers to present a rationalization to employees not to increase their wage demands to what the globalized market they are actually competing in will support. They will only be able to be maintained so long as remote work isn't widely offered and there isn't a meaningful competitive (on both sides) market; once there are enough competing buyers for any given kind of labor, competition for labor will see the best workers from low-CoL area consistently going to employers that aren't lowballing them.
That's obviously what is going on. Trying to sell it with a dishonest narrative about some inherent fairness of scaling compensation to local cost of living is B.S. Local cost of living is just assumed to be a reasonable approximate proxy for what competing bidders, most of whom are presumed to be local and thus location-sensitive rather than remote and thus location-insensitive, are likely to offer. There's no ethical rationale in operation, just cost optimization.
So in your view it's fine to pay different amounts of money for the same work?
Because they did the same work?
>who is anyone to say that's not allowed?
I didn't say it's not allowed. I think it's poor business practice, and poor for society, incentivizing devs to stay in expensive areas instead of moving out to cheaper remote areas.
>If you forced them to be paid the same then one of them will not be working for you even if they want to; either because you can't afford to hire them both or the bay area engineer can't live on the salary.
That is speculation and I speculate you are wrong.
It's also not a company's job to incentivize where it's employees live.
I understand where you're coming from but there's nothing inherently wrong with paying different wages for the same work if it's a consensual agreement. If one worker is satisfied with his salary, and is being paid well for his area, the only reason to complain about a worker in a costlier area being paid more is envy/jealousy.