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Comment by arachnids | Hacker News Reader

I think a lot of people don't understand how pay works. The price of a good is determined not by how important it is to you, but by its marginal utility i.e. how difficult it would be to get more if you need it. Water, for example, is critical for life, but is basically free in most civilized areas in the first world because it is abundant.

The price a company is going to pay for your labor depends on how hard it is for them to replace you. If FB can replace a SWE in Atlanta with another for 90k$, that is what they will pay. It has nothing to do with the value of the work you're doing.

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Value of work definitely is a major part of it depending on priorities, but also everything else you said. It’s not a black and white thing as some make out, all revolving around one element.

> Water, for example, is critical for life, but is basically free in most civilized areas in the first world because it is abundant.

I largely agree with your comment, but I disagree with this sentence. Water is almost free in most civilized areas because it's not subject to free market economics (for good reason). Basic water supply is usually provided by the local government (and this applies to places where it is scarce). If water were treated the same way health is in the US, its price wouldn't be anywhere close to free.

Everything is subject to “free market economics”, no matter how much you try and force it not to be. It just happens that it’s very easy to “control” the price of water, because the supply far outstrips the demand anyway.

Beer costs about $0.50 a liter here in Shanghai. At 50L a day, $25 that’d be $750 a month. Doable in most of the first world.

If you want to know the realistic upper bound for local price of water see how much Coke costs. That’s not something the government much concerns itself with anywhere. Or look at the price of water in someplace like Gurgaon our Dubai, cities so hideously planned that drinking water and sewerage are transported by tanker.

Water can be provided for very low cost even with less than competent governments.

in your average walmart, a gallon of coke, soda is cheaper than a gallon of water.

I don't know why rumors like this persist when they're so easy to fact check. When I go on Walmart's website, a 2-liter (~half gallon) bottle of store-brand cola is $0.87 and a gallon of drinking water is $1.00.

Following this argument, the replacement cost for a SWE in SF is also 90k$ since they can hire an engineer to replace them in Atlanta. Thus resulting in most of the SF office being let go.

Atlanta isn’t SF, though.

But if employees work remotely anyways, why does it matter where the employee is (as long as they can work the same hours, so within a few hours of the same timezone)?

If we’re assuming all engineers will work remotely, sure. That’s not the point the parent commenter was making though, as far as I understand.

The point is just that if a company wants to participate in a labor market, it has to pay at the going rate in that market. For various reasons, a company might choose to stay in a pricy market. For example, it might be easier to hire for some skillset, or it might be easier to grow your team because your employees have lots of friends with similar skills that they can refer.

Companies that don't think this is an advantage should do what you're recommending, but the ones that do will continue to hire here, while also hiring in other markets. I don't know which group is more correct (it's pretty hard to make any authoritative claims about these things), but that does explain why there isn't a mass exodus from SF to ATL.

A point to note here is that labor markets vary not just by location, but also by what the job is. Many companies in the Bay Area do outsource some parts of their internal IT or Business Intel functions to Accenture and co, for example. What they're doing is exactly that - they're leaving this expensive market because they don't believe the benefits are worth the markup for those specific roles

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