How to Pay Remote Workers
npf.io
npf.io
Where do you think profits come from? Profit is the difference between what you pay your workers and the value of their work.
It think this point is explained really well in the article: why should someone who lives in a city with a high cost of living be paid more than someone who lives in a low cost of living one? Effectively, what you are doing is giving the person in, say, SF, more money to be able to afford a better lifestyle than the person in rural Ohio (to use the same example of the article). Why is that fair? And also, if that is fair, then is me moving to live on a yacht in Montecarlo a reason for the company to pay me 500k a year to afford that lifestyle?
Workers should be paid fairly. And to do that you have to pay everybody the highest salary you are paying for that position. I think Stackoverflow does that now, I remember reading an article on their blog about it.
> You are worth exactly the minimum that you're willing to accept in payment based on your individual circumstances
This is what I would like to change. There's an asymmetry of power in employment (if you lose an employee it's just a nuisance, if a person loses employment it can destroy their life) that is exploited by business and it can lead to terrible situations, such as people that are generating value for a company that posts heavy benefits but in return they don't even get a living wage.
Attempting to quantify this is exactly why we're in the situation that we are. If it was easy to quantify a person's "value" to the company relative to other workers, perhaps we would live in a different world. But it's not as simple as "salesman X received Y sales this month, 20% of that is Z". Who determines the hidden value of the marketing effort? How much of that should be allocated to the engineers who build and maintain the product? What about the people who find the talent to hire? Who would want to clean the toilets if the janitor wasn't here?
After that kind of thought experiment it becomes abundantly clear that there's no meaningfully objective way to quantify a worker's value as a percentage of company profit. Each person's perspective will color their estimation of a particular worker's value. An objectively bad solution.
The present way of doing things is not a result of any attempt at fairness or idealogical belief in the equality of man, it's really just the simplest working solution to the problem that anyone has been able to demonstrate.
> it's really just the simplest working solution to the problem that anyone has been able to demonstrate.
'Working solution' is a stretch. There is a lot of people working below a living wage in companies that still post significant profits, where top executives receive salaries several orders of magnitude higher than those employees. That does not seem adjusted to me.
And don't get me wrong, solutions to this problem are hard and I know it, the system is complex. But situations like paying less to remote workers when they do the same work are incredibly clear and easy to solve, and they show that it's not only that it's difficult, it is that those business do not care at all about making things fair for their employees.
In an ideal world, you would because you would care for people. If not everybody, at least the people around you. As an employer, you are hiring people who will spend the majority of their waking hours working for you, with you, at your company. In theory, you would care if they are happy or not, motivated or not, paid fairly or not. You would care if they can afford that visit to the doctor they need, if they are taking enough breaks, enough time off. Ideally, you would keep an eye on your employees to make sure nobody is overdoing, to watch out for for employees whose performance is going down and figure out if they are getting burnt out or what's actually going on. All those things would pay back in the end. Happy employees do better works. Burnt out employees don't. Recovering from that is hard, and even though you can say "who cares, I'll fire them and hire someone else", there's still the fact that the hiring process is expensive.
In an idea world though. But I guess I do understand that for many people the only thing that matters is squeezing as much money for their business out of society as they can get away with. Though, this becomes a somewhat philosophical discussion at this point, and I think that's beside the point.
In my case honestness would have made several firms more profitable. I'm a high school drop out but lifelong programmer from a early age. As such I've had to work for well below market rates on my way up. Generally I do better than most of my college educated peers but since I lack the education I have been compensated much less. As a result I leave jobs every year or two, often around the time I'm really hitting my stride and providing significant value to the organization. As I tend to be above the median I end up on the projects that are critical to the company so what you end up with is someone building a quarter of your infrastructure and then leaving because "its corporate policy to max raises out at 5%" or some other nonsense. At that point you have to go back to the market (counter offers when you told me raises are warranted but impossible are an insult and I refuse to accept them) and likely pay at least market rate for a new employee then get him or her up to speed all as deadlines slip.
When I explain this to whomever I'm giving my notice to I am frequently asked "why would I pay you more than I need to" as a retort. I just shrug my shoulders and move on to the next job.
It kind of illuminates the whole system.
The fact that business shouldn't need to pay a fair, or even a living wage (in fact, they're kind of obligated not to, if possible, because, competition).
It works as long as there are people desperate enough to take any offer at all - which will always be the case because people need to eat, so they can't opt out because wages are too low. So not really a "free market" at all.
I don't think the OP is refuting that. Paying someone 50% of the value they generate is fine. That's how businesses work. Paying someone 2% of the value they generate because they live in <place with a low cost of living> is much less easy to justify.
Also, plenty of people in my responses are denying that this is what profit is.
Examples include directly hiring trade unions, cooperatives, associations...
This does not seem like any kind of justification for continual reward, not to mention it doesn't apply at all in situations where the workers themselves take on a lot of risk day to day (e.g. construction). Furthermore, this would only work as a justification for when the owner really did take a risk, and companies where the current owner is the same as the person who started the business (i.e it's not clear that future CEOs shoulder the same risk). And of course, all of this is based on the idea that risk is an inherent good and worthy of reward and praise - I can see many cases where it's not, especially in very exploitative businesses.
>he can always ask for more
He can ask for it, but with the weakened power of collective bargaining it's unlikely he'll get it. It also depends on how replaceable the worker is. Did you see the article on HN today about how Kickstarter fired two union organizers?
>change employer
From the point of view of the worker this doesn't help much at all, since there would be no reason they'd necessarily get a better wage at other places.
>or start his own business
With what capital? Even if he had capital, why would a worker who is so disillusioned with the nature of wage work feel compelled to start a business? Unless he doesn't care for the plight of others against what he experienced while he was himself a wage worker.
This is really so vague as to be meaningless. A McDonalds can't operate without someone at the drive through. So isn't the value of the drive through worker incredibly high since they are essential to the operation of the business?
No. Labor Economics tells us that an employee will be paid at the market rate. They are paid based on how many other people are willing and capable of doing the job and what rate they will accept.
Also, Labor Economics tells us what happens, and I do not argue with that. I am saying that we should take more into account actual value and avoid extreme profit-driven views, such as reducing someone's salary for the exact same job just because they live in X country instead of Y.
In an efficient market your theoretical business would be driven into bankruptcy or bought out by the competition that is properly allocating capital.
Also the ceo answers to the shareholders who hired him with the job of maximizing returns. Unless this is a coop there is no reason for it to operate the way you are talking about.
> In an efficient market your theoretical business would be driven into bankruptcy or bought out by the competition that is properly allocating capital.
And as a good theoretical exercise it's pretty useless. In reality most of the markets are not efficient, changing salaries is not 'free' (i.e., employees work differently depending on how you treat them, and replacing unhappy employees has a cost), and there's more to companies and employees than pure economics.
> Also the ceo answers to the shareholders who hired him with the job of maximizing returns
This is what I am criticising, the 'maximize returns over everything' philosophy. Any company already has a lot of power over any employee, and they abuse that position to the point of cheating people out of their fair share of what they produce just because they live in a different place. And in this case we're talking about a relatively benign situation, but the same philosophy pushes companies to lower wages below a living level, condemning people to poverty so that the company "maximizes profits".
if i live in a country where the average cost-of-living is low, i find that it's because of a generally poorer living standard and i have to spend a lot more compared to the local average to get the same standard that i'd have elsewhere.
A good backend python developer working for a London company here can get 80-100k GBP, if company X wont pay this, then company Y will. The developer goes to company Y.
If the job can be done remotely, and everyone is happy, then who the hell cares that this developer lives in an area with low cost of living? He's fulfilling the contract (quality work in exchange for money) and where they are physically located is irrelevant in determining their compensation.
Why would I pay remote worker the same as for local developer, if I can find remote developers willing to work for much less?
Seems like you solved your mistery after all! As abusiness you want to spend as little as possible.
That’s the end goal of large corporations, yes. Why are we so eager to help them? Developers already undermine their own value by crowing to everyone who will listen “anyone can be a developer and do what we do”.
What do you think your boss thinks when he or she hears you say all these things?
(Not you in particular, devs in general)
> their own value by crowing to everyone who will listen “anyone can be a developer and do what we do
I sincerely doubt developers believe that, or at least not experienced developers. Software is cutthroat: anything that can be automated is already automated. People who can't work beyond that are useless.
Making a remote worker's income less attractive is one way to redress that balance of perception.
I'm not sure how much progress we are ever going to make towards remote working as core practice, since the last decade has re-built a collapsed economy on the basis of hyper-inflated urban property values in 19thC-style urban conurbations such as NYC, SF, Tokyo, London, etc (and, increasingly, smaller satellite cities that had not benefited in this way until recent years, but have now become super-distant commuter communities).
The net-enabled, 'dispersed' society is probably further away than it has ever been because of these factors.
Second: Being forced into an onsite job in a city with high rents and bad traffic is bad. Being taken advantage of on salary for living in a low cost-of-living area is also bad. One badness doesn't cancel out the other. There are just so many instances I can think of of going to a manager and making some argument that's a variation on the theme "Can you please stop treating me badly?" and the response being "We treat all these other people badly, so if we stop treating you badly, that would be unfair to them!" Well, that's just not a valid argument! I don't want to be treated badly, and if not treating me badly implies not being able to treat these other people badly, then maybe that's the route you should be taking, goddammit!
Tokyo’s rental prices and house prices have moved very little in the last twenty years while the population has gone up by half. If you let people build housing you can have huge increases in population without increases in property prices.
> The net-enabled, 'dispersed' society is probably further away than it has ever been because of these factors.
Fully remote companies exist and their numbers will only grow. There were very few of those ten years ago and there will be a lot more than double the current number ten years from now.
That sounds wrong, and there are now plenty of companies that are fully remote , for which it is the stationed-worker who are a burden
By working remotely, companies and workers are working together in cutting those landlords out of the equation, and that leaves a huge pile of money on the table that landlords are now not taking away from companies or workers (depending on how you look at it).
The question is: Should it be the worker or the company getting that pile of money?
My feeling is: It should be shared as companies and workers have to work together to make it happen.
If the whole pile of money goes to the workers, then companies are not incentivized to do anything to drive forward the remote work revolution.
If the whole pile of money goes to the companies, then workers will have an incentive to continue to play the old game whereby, if they want to earn more, they have to move to the valley and take an onsite job.
If the pile of money is shared somehow, then both sides have the right incentives to drive forward a real change for the better, and it's a win-win situation for everybody involved (except the landlords).
I'm not saying the split has to be 50/50. Realistically, the split will be determined by market forces like supply and demand around the particular job role. We're already seeing this play out: For job roles that have low barriers of entry and for highly commoditized types of work, a greater proportion will go to the company, like what we are seeing on Upwork where everybody gets paid what an Indonesian freelancer gets paid. For jobs where it really matters to get the best people and where these people are hard to get, a greater proportion will go to the worker and you will see everybody around the world doing that kind of work earning as much as they would earn if they were doing that job onsite in the valley.
There would have been no incentive for that company to open an office in Nicaragua if they would have had to pay similar salaries than what they were paying in USA, i mean, we have a lot more employee benefits and protections. Of course i would have loved to get more money out of it, and i feel we were delivering equal value than our peers, but if i think about it, the economics wouldn't have made sense.
I've been remote for ~5 years, haven't owned a car for ~3, and I've saved a bunch of money. Uber and public transit handle most of my needs, and even after monthly passes and uber surge rates I estimate I save close to $500-600 USD a month in car payment/insurance/maintenance.
The main downside is that I'm in Canada, and being carless in the winter can get ugly.
You should also consider that the costs you've outlined are not paid "per headcount" but rather collectively for the company / per company site. This means that often the company would need to completely disimss the office location or move to a smaller location.
I do not disagree with you, I'm just showing that money are not some magical points that you allocate with everything else falling into place.
That said, companies that are fully remote (e.g. Gitlab [2]) tend to actually adjust your wage for having similar purchasing power wherever you choose to live. This then encourages the company to hire from inexpensive countries, which has it's own pros and cons.
[1] https://www.forbes.com/sites/abdullahimuhammed/2019/05/21/he...
[2] https://about.gitlab.com/handbook/people-operations/global-c...
Companies don't set pay to be fair. They set pay to attract and retain the talent they need. Otherwise, companies that employ people in India wouldn't have a 3x pay spread for people doing the same work (hi Red Hat). Software developers in general wouldn't make more than, say, plumbers. The potential employees' perception of fairness does come into the picture a bit, but that takes a distant back seat to good old supply and demand. If a company needs to pay more to attract and retain talent in area X, they pay more. If they need to pay less to attract and retain talent in area Y, they pay less. This is just basic business. Companies pay local prices for real estate or electricity, and they pay local prices for personnel.
The only thing different about remote workers is that there's no single local standard to measure against. So you have to tailor things more specifically to the individual. But if you think that you should pay remote workers more or less because they're more or less productive, or because you're saving money by not having to provide them an office, you're forgetting the purpose of pay. Attract and retain. Supply and demand. That's it.
P.S. I'm not trying to make a moral argument here. I'm certainly no laissez-fair "markets uber alles" greed funnel. Quite the contrary. Companies are free to make their decisions on some different basis and more power to them, but there's no escaping the fact that most will cut costs wherever they can. Of the places they might cut corners, geographic salary differences are far from the worst option. If and when salary fairness gets to the top of the list, I'd start with not paying women less.
Being able to discuss things face-to-face gives us more and higher quality (diagramming, eye contact) communication channels, in addition to avoiding things like bad audio, bad video, etc.
There is also lower friction in haphazard discussions; someone can overhear things and chime in a thought that could turn out to be useful. Sometimes, the effort of messaging or calling someone will cause us to not bother to include someone in the conversation for a chance that they could contribute.
If different timezones are involved, then a remote worker's value is lowered due to the higher friction in addition to the round trip time for communication.
Living in a country with the cost of living lower than in the US allows me to take a job of an equally qualified American programmer by working for a smaller salary which is still twice as big as the highest offer from a local company.
The downside is that an equally qualified programmer from Egypt or Bangladesh can easily take that job from me, but I can find solace in the fact that this reduces the global poverty :)
Pay average Bay Area salaries to full remote workers in low CoL areas. Most likely top tech companies have no offices there, and even if they do, chances are you pay more.
It matters to product managers. Managing remote team is more difficult therefore PMs will always push against this.
I've been working remotely for years now, and my relationships with the various PMs I've had has always been: talk about what needs to be done, and then be left alone to actually do it, check back when I have progress or if I have outstanding questions that arose from better understanding the problem domain. Plus the daily stand up meetings that have always been optional to attend. Done, nothing else, nothing complicated.
Is this uncommon across the industry?
When people are colocated in an office (and I guess this is a generalization), there are more incidental chats, knowledge-sharing, status-updates, stress/challenge-sharing etc.
I do better work and get more done at home though, and from an environmental perspective it seems like an obvious choice.
Companies with offices still use work methodologies. They still use SCRUM, kanban boards, retrospectives, meetings, wikis/documentation, and above all tickets/issues/stories or whatever is the term your company prefers. And I'm sure they aren't writing their stories on pieces of paper, or their documentation in binders. Everything is done through a tool that saves everything online to make it available to everyone.
Your PM running into you at the office while you are taking a break and asking how the work is proceeding doesn't really add any value to neither the work you are doing nor the information they already have about it. Scheduling a weekly catch up meeting to discuss progress (depending on the size of the story of course and yadda yadda, just making an example here) makes more sense. And you can easily do that with a video call.
First, I think it's important to point out that there's a difference between a fully distributed team and a mostly-local team with some remote members. A lot (not all) of the problems have to do with the disparity between the colocated and non-colocated workers. For example, the colocated majority in a mixed team will often cling to old habits wrt soliciting or providing feedback/approval on commits, conveying important news, etc. Just turn your head a bit and speak a bit louder; everyone will get the cue and listen in. Ditto for learning new tricks by hearing or seeing someone near you. There's no incentive for them to do anything but what works for them. On a fully distributed team people do develop alternatives because they have to.
Other things that are more difficult remote include anything involving a whiteboard, from design discussions to planning sessions. Online alternatives are never as good. Inability to participate in group social activities, or to detect nuance in conversation based on tone of voice (where a fully distributed team would come up with textual alternatives) can lead to a surprisingly quick erosion of mutual trust. This is why people who do work "full time" remotely - like me BTW - still benefit from frequent in-person visits.
> Is this uncommon across the industry?
I think your experience sounds a bit exceptional, but there's probably a lot of variance according to technical area and project characteristics. For me, working on a large codebase with lots of hidden coupling so that no individual project can be accomplished without tight collaboration at least across the dozen-person immediate team (if not the broader 40-person team), being remote is a real handicap. Can/should the codebase be fixed? Sure, but that project itself requires even tighter coordination until it's done. Were I to attempt it, I'd have to be on-site for months.
I think there are more bad codebases and weak teams than there are the opposite, so my guess would be that my experience (and this is not the first team in which I've been a remote minority) is not far from the norm.
You could easily manage people in distributed teams and a lot of companies are doing that. How else you manage a team in a company that is operating in 5-10-20-30 countries? :-D