Comment by joshpadnick | Hacker News Reader

Comment by joshpadnick | Hacker News Reader

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We're a remote-first company and went through this same discussion when we began hiring people in different cities, not just in the USA but all around the world. What we found is that any approach to setting salaries has to balance the following factors:

* Pay people enough to live comfortably

* Pay people enough that they accept our offer vs competition

* Pay people in a way that feels fair

* Pay people in a way that is transparent

* Pay people in a way the company can afford it

* Pay people in a way that there isn't a risk of huge fluctuations (e.g. currency fluctuations)

Without a doubt the best solution is to pay every employee as if they live in San Francisco, what we call "single-city." That gives high marks on every dimension above...except that it's extremely expensive for the company. Basecamp.com can afford this but I doubt most companies can.

We ultimately went with a formula where we look up the average salary for your title in NYC (the USA's most expensive city), multiply it by some multiplier (to make sure we pay systematically above market), and discount it by the cost of living in your city compared the cost of living in NYC.

When we can afford it, we'll move to a single-city model based on San Francisco.

I run a remote-first company and follow a single-city model. But that city isn't SF.

I don't really know what city it is, but we pay people with the same experience doing the same work the same pay regardless of where they live.

I understand that this means that I probably can't afford someone in SF, but I also know that there is no way I was poaching from FAANG anyway, and there is plenty of good talent not in SF.

So I get high marks on all the criteria, as long as they don't live in an expensive city. It's a tradeoff I'm willing to make.

As we get more successful, I can move everyone up to match the more expensive cities.

How do you do the cost of living adjustment? I've used a few just for fun before and have gotten wildly different results for NYC vs Chicago (+21%, +51%, +75%) from the first few listed on Google.

Take the median? Look in more detail how they calculate the values and pick the one that makes the most sense?

the problem with cost of living averages is that they don't take into account different living standards.

cost of living is largely driven by cost of property and rent. places with lower living standards are much cheaper than others. even within the same city. if the majority of people in a city accept those lower standards then the average goes down. But if you want to have the same nice apartment that that your colleagues in more expensive cities afford then your cost goes up.

this is especially noticeable in large asian cities where the majority of people live in cheaper housing than what a european standard would consider acceptable.

for example the salaries gitlab offers for china make it hard for any expat to work for them because they don't take this into account:

https://about.gitlab.com/handbook/total-rewards/compensation...

(i am picking out gitlab because they have this nice calculators that makes their pay very transparent)

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