All (most?) big companies already set pay based on local market conditions. This is actually based on what pay levels are in the market, not cost of living.
I dictate my value, not my zipcode or employer.
That could be totally fine and rational since there are other utility-maximizing considerations for you like how much you want to work, the kind of work you do, the kind of clients you're willing to take on, etc., but that doesn't change the fact that you can't arbitrarily set your price and not expect a change in the amount of business you can conduct.
You may not be profit-maximizing, but companies certainly are, and as a result, they'll pay whatever rates the market allows them to.
It's obvious we're not comparing humans to rice here since we're not buying and selling humans. It's so obvious that I can only conclude you're acting in bad faith intentionally.
If you want to get paid the big salary, move to the big city. Don't complain about higher rent and cost of food. Or live frugally.
I find them usually often inaccurate, though.
For companies that don't pay at the top of the scale, the people in the high-cost areas are comparatively screwed (software engineers having to resort to living with roommates!?), whereas for the companies paying more, sometimes it tips the other way (like failing to account for how most costs don't scale with area the way housing does, so you could end up with a $500+ disadvantage in disposable income in one of the cheaper areas).
For instance, the only person who can classify income as disposable or not is me. No one else is allowed to make that decision, or is even deserving of knowing the information at all.
If your hiring manager is giving you the song and dance about calculations on your cost of housing and milk, you need to turn around and go elsewhere.
If you think you’re a cog in a machine, yes, you can determine your value this way.
If you feel you have inherent value in and of yourself, your attitude will change about work and employment.
The value I provide to a company has absolutely nothing to do with where I live. If I’m a good hire, I’m a good hire.
It's a view on negotiation, not on employment.
But I think feelings like yours get in the way, regardless.
"Determining your value" is internalizing things way too much. Failing to convince the opposite side in a negotiation is very different from "your value".[0]
Being a cog in a machine - or, more directly in this situation, being seen as replaceable by the next candidate who would accept the offer you don't like - isn't about how you feel or think of yourself, it's about what you can do and what you demonstrate. That holds true for far more than just the initial interview and offer negotiation, too.
[0] I'm tempted to suggest the person who's happy to be a "cog" - show up, do some work, get paid, and define their life and their value in non-work terms - may value themselves more than us maximizers!
I don't think companies that want to attract upper-tier engineering talent will be able to get away with it either.
Good engineers:
A) Are outnumbered by job openings non-trivially
B) Return many multiples in value of their total compensation cost
C) Are well aware of A and B from a negotiating standpoint
If I'm operating in the same market orbitals as Facebook, I see this as an instant hiring advantage. Simply tell candidates:
"Not only have we shifted towards remote-focused teams, we won't arbitrarily grade your salary based on where you or your family choose to live"
The increased costs will be a pittance compared to the potential 8-9 figure market advantage gained in 18-36 months by having consistently won hiring battles.
For example, for engineers in many big tech companies, pay vs COL in London is not very attractive.
I get why management wants to do this, but I doubt it will stick with remote workers.
EDIT: And odds are, the employer won't notice enough to fire me.
But if you reduce my pay, you're gonna make me take stock of what I'm giving you and shift the balance in my favor if I can easily get away with it.
1) You're upfront about it and tell your manager, they update workday, HR schedules a meeting with you to explain the multiplier effect and how your salary is being reduced.
2) You're kind of sneaky, you update your state tax withholding, it updates workday and put you into the appropriate COL bucket for next year's performance review, your salary slowly falls in line with people in your COL area.
3) You keep it secret, allow the company to keep paying taxes to your original state, maybe pay estimated taxes or something to your new state? Don't develop any relationships with coworkers that'll eventually leak your true situation, get away with it?