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?
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.
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.
Yep, that's exactly what a Google recruiter told me - they try to pay at the upper end of the _local_ market.
For example, my paycheck literally has withholdings for California every two weeks.
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.
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?
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...
That's only the case if skilled engineers are fungible entities with a smooth supply/demand curve. That is absolutely not the case.
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.
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.
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
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.