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Comment by product50 | Hacker News Reader

You are wrong that FAANG companies will pay the same salary as you make in SF if you are in a low cost state like Indiana. I have a friend at one of those companies and they were running a survey to gauge employee's keenness for permanent wfh - and they were very clear that employee's salary will be adjusted based on which city they are based in. So, while this is still healthy, since FAANG pays pretty well, but don't expect half a million dollar working from your house in Indiana.

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Just want to point out that there's no rational basis for this argument unless the employee in SF is much more productive.

To put it another way, do you currently see pay adjustments based on housing costs for employees living in SF? Have you ever heard of differences across employees simply because one of them has a more expensive house?

Dude in SF is more likely to bump into other dudes in SF and talk about system design, math or AI or competition or best practices or stacks.

Dude in Indiana doesn't have that opportunity. You'd say but Internet, but things like motivation, inspiration, innovation comes from a certain external factors (which we still haven't figured out).

That's why even with massive internet penetration, it's the tech hubs that keep pumping winners and hits

> do you currently see pay adjustments based on housing costs

Yes, it's commonly referred to as "cost of living adjustment."

The rational basis is that the employer sees strategic value in having a physical presence in a given locale, and are willing to pay a premium to have employees actually located there.

Note that I've been working remotely full-time for years, and never plan to go back. I am, however, under no illusions that my salary is a permanent thing.

> Yes, it's commonly referred to as "cost of living adjustment."

I think you missed the point I was making. Have you seen two employees living in the same city, with one paid more because he decided to buy a more expensive house?

I'm aware that there are regional differences, but they can be explained by factors like different productivity levels. This discussion is different - it's about the same employee living in two different locations.

The employees are in a different negotiating position. Google pays them as little as they can get away with.

If living in a nicer house caused engineers to have more job opportunities at higher salaries, then Google probably would pay you more for living in a nicer house.

Doesn't matter. An employee in Google London is paid lesser than the employee in Google SF. So while you can cry about injustices and rationality, salaries will likely be paid based on cost of living and even geography (based on London example).

> So while you can cry about injustices and rationality

Strange reply. I'm not talking about injustices. I'm saying a company would be pretty dumb to pay someone more just because of where they chose to live. Profit maximization and all that.

No but they will pay them less.

Paying person A less than person B means paying person B more than person A.

You would have to pay me more if competing employers are willing to pay me more. Right now that depends on which job market I live in. Remote wages seem relatively lower, which isn't surprising when few companies have embraced remote yet.

You should ask yourself: do I want to hire people who decide relocating to Silicon Valley would be good for their career, or those who can't or won't?

Yeah. Google makes like a million dollars per engineer, so it's either "make less money on this engineer than you'd like" or "don't hire this engineer and make nothing". It would be stupid if they were doing it for no reason, but competition is higher for engineers in SF.

Got a link for your ‘Google earnings per engineer’ $1 million figure?

Not OP but the $1m figure doesn't really matter. Their point is google makes $x per engineer, you can make $x - (large number) or $0. Whether it's $1m or $10m, it doesn't change the fact.

Google made $65 billion in 2014[0], and had ~20k engineers[1], which puts the number per engineer at $3.5 million. [0] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... [1]https://www.quora.com/How-many-software-engineers-does-Googl...

They'll pay more to people living in SF because those people have better alternatives and can negotiate harder, and the factors that cause that are the same factors that make housing in SF expensive.

> I'm saying a company would be pretty dumb to pay someone more just because of where they chose to live. Profit maximization and all that.

That's only the case if skilled engineers are fungible entities with a smooth supply/demand curve. That is absolutely not the case.

if a lot of top companies let people work remotely, then it will be a new competitive world for remote workers too. that hasn't happened yet, but it could.

"Cost of Living" adjustments are a red herring, what they really are is really "competition density".

There are plenty of tech companies paying great salaries in the bay because they have to, otherwise they would just go work for someone else. On the other hand, if you lived in Oklahoma you aren't going to say no to $LOCAL_OFFER+10k just because bay area salaries are $LOCAL_OFFER+90k.

As long as this disparity exists, I forsee bay area salaries and CoL still being high. Until companies move headquarters out of the bay, the trend will continue.

FAANG doesn't determine salaries based on cost of living, but cost of labor, which maps to your concept of "competition density".

There is no rational reason for Google to pay bay area salaries for Indiana employees - will they really say no if Google offers 300K instead of the 500K they would get in the bay area? Sure, the person could reject it to make a statement, but most people would gladly take a salary that would buy them a small castle.

All FAANG needs to do is to beat local salaries by a significant margin to get well qualified employees - that would still make these people WAY cheaper than bay area employees.

the rational reason would be they want to hire those people. Hiring top talent is a very competitive thing. Your avg dev at a small company in a small town might or might not be as good as that person who made it in sf. If 100k people leave sf and a good number of them keep their high salaries (or almost) then guess what, those companies will hire people from the other companies that cut pay too much.

> FAANG doesn't determine salaries based on cost of living, but cost of labor, which maps to your concept of "competition density".

Yep, that's exactly what a Google recruiter told me - they try to pay at the upper end of the _local_ market.

If you're working remotely, then you just tell <big tech company> you live in NYC/SF. If they still offer a subpar salary, then you get an offer at <big tech company #2> and bid them against each other. Salary negotiation is a two-way street. Companies that hire remote workers care more about results, which has nothing to do with the cost of living in your location.

Are you implying to lie about where you actually live?

If they're doing something as absurd as using it as a negotiating tactic to pay you less, then yes.

But companies report your salary and withhold income for local taxes. How would that work?

For example, my paycheck literally has withholdings for California every two weeks.

Yes. All the time. Its standard practice to pay more at high cost of living areas. I've not worked at a company with offices in different cost of living areas that did not do this.

> Just want to point out that there's no rational basis for this argument

The argument is that people in lower cost-of-living areas are willing to work for less, a public company's main motivation is profit, and companies lower their profit by paying employees more than is required to hire and retain them.

Google pay varies by office (quite a lot) and they're upfront about it but it has nothing to do with housing costs. It's based on the cost of hiring in the local market.

I am voluntarily transferring from Google SF to Google London and I am taking a significant salary cut. London isn't really any cheaper to live in, but you can hire good developers for much less in Europe.

I'd be really interested in how they plan to implement this. I'd certainly hope it would be more sophisticated than a linear adjustment of salary based on differences in the cost of living.

I live and work out of St. Louis at the moment, and I've spent a bit of time evaluating FAANG salaries in relation to the cost of living in their relevant areas. While in most cases it seemed I could maybe get 1.5x to 2x my St. Louis salary, I was looking at around a 5x increase in housing costs alone. It never made any sort of financial sense to make the move (as much as I would've liked to).

Of course the most sensible approach would be to offer just above market rate in whatever the local market is. That can be awfully hard to determine though. It's much more a function of local supply and demand than anything that correlates to cost of living.

They didn't say that though, so the whole "you're wrong" is unwarranted.

They said local companies will have to compete with FANG salaries. To your point these would likely be cost of living adjusted, but would almost certainly be higher than the current average in most Midwestern cities.

Lol - let us see. You must me dreaming if you are expecting no significant cost of living adjustments on salaries.

You are again completely misreading what I said, which clearly states that there will be cost of living adjustments, but that the salaries are still likely to be higher than non-tech hub averages.

Not every online conversation has to be a fight with winners and losers.

You are right. I was reacting based on your first sentence. Sorry about that!

So they were running a survey gauging whether it's possible to pay people less to work from home, but do we know the result of that survey? Maybe they find out that they cannot hire the same talent for less money in Indiana.

No - they were running a survey to figure out employee's interests in wfh permanently across US - but at the same time being very clear that the salary will be adjusted based on where they are.

Right but their ability to actually do that is subject to market forces. To me it's not a given they could do it.

I'm not claiming they can't, but their intention isn't proof either way.

Why don't you try living in Ohio and then demand $500k salaries which big-tech pays to software engineers and see if it works out?

1. I'm sure there are software engineers in Ohio working remotely making 500k and more, but no it's not the norm.

2. That's not the point: we're talking about a hypothetical shift where top software engineering talent is fleeing the bay area. If that talent moves to Ohio, and there is no cheaper alternative of similar quality, Google might not have a choice.

Again, not pretending like I know what's going to happen. My point is that big-tech doesn't have total power in setting prices. If at any point in the last 20 years they could have hired qualified engineers in Ohio for $100k they would have already done it.

I think you are thinking about this too much. I know you would like to earn these big packages in Ohio. But honestly, what is more likely to happen is that companies will optimize for themselves too and if they are able to find good talent at cheaper prices (since cost of living expenses for employees are down significantly), they will do that. So on average SV salaries will go down as employees spread over US.

Can't have it both ways. SV pays top $$ because of 1) top notch skills and 2) cost of living. Now you are taking #2 away - so things will ease a bit

I'd never want to live in Ohio. "You are thinking about it too much" is a weak argument.

Again, if companies could find good talent at cheaper prices in Ohio they would. Existing talent moving around does not increase the amount. It's not a given that market rate will decrease.

You don't get it. It is fine. Logic is hard sometimes.

Abandoning the discussion and resorting to personal attacks, great post.

What's stopping someone from moving to SF for higher comp on hiring, then getting a P.O. box or friend's mailing address in SF and moving back to work from lower cost area after some time?

Is your employer really going to decrease your salary after the fact? Can you file taxes in your lower cost of living state after you lock in your high SF comp package and never notify your employer but still pay your taxes in the state you moved back to?

Note: I don't condone illegal behavior just thinking of edge cases that benefit us tech workers.

Mostly the tax fraud parts of your statement. However I'm sure it happens

What if you create some business entity in that state?

Would it be tax fraud if you’re still in California? You record your address when you file with the state, I don’t think the state cares where you get your mail.

I guess the employer could have some contractual terms requiring your address to be at some location. I’ve never seen that though.

I think you just change your address if you move within the state. I don’t think companies track your address as long as you’re the same for taxation. That’s why people do insane 2 hour commutes.

Aka tax evasion? Your local government probably wouldn’t be thrilled about that.

https://www.postbulletin.com/more-northwest-pilots-accused-o...

> Is your employer really going to decrease your salary after the fact?

Yes. I have remote working friends who've been required to take a pay cut because they moved.

That's the most interesting part to me which will play the major role in how WFH situation will evolve. I 100% understand the logic in such situations, but:

1) If company like Twitter is saying: "From tomorrow our default is work from home, but you all get 20% salary cut". This will be essentially a salary cut, nothing more. If let's say Facebook says WFH=on-site developers from Twitter will be flowing to Facebook because of 20% salary cut

2) In order for everyone in FAANG to say simultaneously that we have to cut salaries 20% simply because it is WFH now - there should be a strong evidence that productivity in remote workers is 20% less and they will need to hire 20% more engineers to have the same amount of work done. If it is not correct then companies have incentive to drive this number down to 10% or 0%

3) FAANG and overall Valley residents must also consider the long term effect on their community. I doubt that Silicon Valley will survive going 100% virtual and concentration of innovation can be lost if people go 100% remote. So they might impose 10-20% cut on a premise that they want to create a community on-site. Not sure how C-suits evaluate such factor.

Overall I suppose if companies go WFH by default they will need to reevaluate their incentives structures to be competitive.

You are making some questionable assumptions about our economy. It doesn’t really matter what incentives theoretically exist if there isn’t money to, say, maintain your current staffing levels at their current pay.

Perhaps Twitter is leading the pack in an industry-wide pay cut? I hope not, but that seems to be what the rest of the workforce has experienced in recent months.

My full time job is producing video for YouTube. My revenue from ads is a straightforward calculation: I get 55% of whatever advertisers pay YouTube/Google to run ads on my channel.

Despite having posted record growth in every other positive metric, overall revenue (read: advertiser spending) has tanked in recent months.

Facebook. Google. Twitter. YouTube.

They are all internet advertising companies. And if my personal observations are any indication, I suspect they may be hurting for cash right about now.

Yup. Salaries are based on the local market.

This is true but salaries aren't based on cost of living exclusively they are based on demand as well. If more companies shift to remote work that will spread demand across the US driving up salaries in low cost of living areas and reducing them in high cost of living areas.

True, but I'd argue that remote working exists in a market of its own, somewhere between sf rates and local market rates.

Most FAANG have a high cost of living band and a regular band. The high cost of living band pays 15-30% extra for living in the Bay Area/NYC. Everywhere else pays the same whether it's Boston, Detroit, or the middle of the desert.

The Bay Area can mean Pacific Heights, or Concord. Probably half or 2/3 the cost of living in the latter.

Yeah - just that FAANG don't hire people outside top cities. So your middle of desert point is misleading.

most faang don't hire remote - but they do allow people to work remote in certain circumstances, they also tend to maintain smaller engineering offices all over the country so transferring isn't as difficult once your in.

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