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Comment by daenz | Hacker News Reader

What's the rationale for this?

Currently, the market for location-based labor is deeper than the market for location-agnostic labor, so employers assume that their competition is local - and often it is.

That's less true for the top 20% or so of tech candidates. A person with known skills and a good network can obtain offers from multiple remote-friendly companies today. There's already a location-ignorant market for their skills (probably not at San Francisco comp, but also not at rural North Dakota comp).

As more remote jobs are available, more people will receive multiple remote offers, that is, they'll find a deeper location-ignorant market for their skills. Over time, one would expect this location-ignorant comp to settle around the actual value added.

(Longer explanation in a related thread: https://news.ycombinator.com/item?id=18900072#18903795)

Interesting, thanks for the reading. I am tempted now to get a higher salary in an expensive location, work on-site and then remotely from that location, then quietly move away without telling anyone. As long as my hours are the same and work quality don't change, nobody should be the wiser.

you have to have payroll run in the state where you work

so you couldn't do this without either updating with HR or tax fraud

Cost of living within a state can vary pretty greatly. eastern vs western Washington for example. Spokane vs Seattle: https://www.bestplaces.net/cost-of-living/spokane-wa/seattle...

From what I understand, the employee loses leverage. If you don’t like the lower salary, often your only option is another company in your area that will also pay an equivalently low salary.

Hopefully if enough companies start hiring remote workers, our leverage will go up.

I'm not so sure that the leverage will change.

If remote work were to go mainstream and that became the norm, employers won't pay different salaries based on location: they will pay one salary based on the cheapest location. It's not that different from outsourcing work today — there might exist manufacturing workers in the Rust belt that are capable of doing manufacturing, but employers just shift all their supply chains out to cheaper countries, since there's little difference between a Chinese person's labor, and a Pennsylvanian's labor.

Similarly, if everyone is remote, then the difference between employees that live in low COL areas and employees that live in high COL areas starts to really blur. There might be exceptions to this for extremely high skilled engineers, but they're marginal cases.

If we move to an all-remote (or even a "most-remote") engineering culture, then software engineering jobs will simply be "outsourced" to the cheapest COL areas.

I think this assumes all engineers are seen as equal. In some cases they may be. But in other cases companies are looking for good talent. If that good talent can show many remote companies are interested in them, they can likely command a nicer salary. But from what I understand today there aren’t enough remote friendly companies to make that work.

If you're making the argument that good talent will always be able to command a high salary...nobody doubts that.

This "good talent" is not the norm. Google has tens of thousands of software engineers, and only a handful of them (mostly the staff/principal/distinguished engineers) have the kind of negotiation leverage you're talking about, but they already get paid a lot in high COL cities anyway.

True. Very top talent can basically do whatever they want. But there’s a spectrum and I think a wider range can benefit. I think you and I are mostly disagreeing on that.

I think today a lot of “good but not top” talent find themselves crammed into the very crowded Bay Area. I’m hopeful that can be relieved a bit. But I’m being pretty optimistic.

They have to pay more in higher CoL areas to attract candidates -- either ones from that area, or ones who would be moving in.

They don't have to pay more in cheaper areas to attract candidates, so they don't.

I took a substantial paycut at Google when I transferred from the US to Germany, for example, even though I was doing essentially the same work.

It costs someone less to live in a cheaper city so businesses don't need to pay as much to hire workers in that city. The employee's choice is to take the pay cut, or to take a lower-paying job at another company in their new home city.

Sorry to be cynical but I assume its just profit driven, keep in mind not all companies employee these bands. For those that do their rationale is why pay a employee more than the region dictates? I think an employee needs to figure out if the COL drop still makes sense to where they move. Say you make 200k in the bay area and move to san diego, which I was told is about a 10% to 15% paycut, you still make 170k and a typical engineer there makes alot less than this, so basically its all down to how bad you want to move to an area and if it makes financial/career sense.

Theoretically, if they pay market, they can get someone to take the position. If you want over the market rate, there's a fair chance that someone with similar skills will under-bid you.

Other factors are at play than pure rational economics, though, so that might or might not work out.

The company feels it can decide your quality of life for you, instead of your compensation. It's kind of unethical (imo) but not uncommon. I'm fortunate that my current remote employer does not engage in this sort of thing.

Most companies agree with the general consensus that SV software engineers are overpaid, at least a little bit. They aren't willing to pay that premium if they don't feel they have to.

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