Facebook employees may face pay cut if they move to cheaper areas to remote work

Also if the value and quality of work is the same... shouldn't the pay remain the same.

Also this leads to income inequality. A person from a poor neighborhood/country gets paid less than someone in a wealthy area.

But Also every company has a clause that prevents your pay being cut no?

If you’re getting a location based pay adjustment you’re either working for a company that doesn’t give a shit about you or you aren’t negotiating hard enough. Both of these cases are fixable.

The Bay Area salaries paid by the big tech employers are not really representative of the "CoL allowances" historically paid for working in places like Manhattan and SV. With some exceptions, like successful Wall Street traders, Big Law, etc., additional comp earned in those places was still not usually enough to make up for higher living costs. Today that's probably not the case at at least a handful of big companies.

What responsibility does a company have to pass profits onto it's employees? If you a share of the profits, buy some shares.

"should". Why? Their job is to be as profitable as possible.

At some point, having everyone in golden handcuffs isn't necessarily a wholly positive thing. If you're working for Facebook in a low-cost area at a (high-end) SV salary, you've got a huge incentive to just tough it out even if you hate your job.

Companies adjust pay scales because they mostly can and I doubt there are a material number of large distributed companies that don't do so. If they pay competitive Bay Area salaries everywhere, then they're paying more than they need to in order to hire people elsewhere.

> Does anyone have a good explanation why companies do this?

1. To make more money 2. Because they can

Aside of the monetary benefits: Social cohesion. With a senior developer silicon valley payment, you would be payed roughly the equivalent of middle to upper management at large companies in other industrial countries. Likely several times the payment of doctors, teachers, etc... And you may guess how it is in other countries with even lower costs of living.

Imagine the effect on society as a whole on that. And in several regions, those tech companies are not really welcome to open offices, because of those effects on the rest of society.

> My gut feel would be that if Facebook continued paying same rate even though people weren't in the bay area anymore that nobody would ever be able to compete and therefore the retention would be much longer.

Does Facebook have a problem retaining in the Bay Area or anywhere else for that matter?

Market. Say, now they're not limite to hire only people that want to live in the Bay Area but the whole world.

> I am surprised to see comments on HN accusing the company of theft and greed for doing this. Isn’t the cost of living in an area the biggest factor in the salary? If so moving to another area will automatically reduce the salary. I don’t think they are being unfair or greedy. You don’t want the salary structure to in a remote area to be the same as the Bay Area. That will be unfair to the rest of the companies that want to hire in that city.

If this were the case, it would not be that so many companies have moved out of the Bay Area. I know of a small manufacturer that moved their entire operation 3000 miles away with 7 years left on their lease. That was a few years ago and the building is still empty.

The businesses that remain are ones where the salaries align with the living expenses, not the other way around.

I suspect this trend of lowering pay based on location will work while there are limited employers hiring remotely. If there is broad embracing, then salaries will likely rise to reduce attrition.

Complete speculation, but we may be looking at comments from people who genuinely don't understand (or believe) that you can buy a typical Silicon Valley style house (1200 sq ft on zero acres) in most of the country for 150k to 250k. The standard of living on the same money is completely different.

Cost of living is not the factor here, cost of labor is as others have mentioned. If not, for example London tech salaries would have been comparable to NYC/SF/SEA if you compare cost of living.

Because they don't pay people based on how much they're worth. They pay based on how much you'd say yes to.

One argument is that, especially for large companies like Facebook, if you exclude the tech hubs, it's hard to hire enough people with the skills they need.

I think it's also the case that there are probably quite a few employers who don't necessarily try very hard to outbid the big companies in places like SV.

That's a very one-sided view. What about the worker's right to get a competitive edge by charging less for their labor? Why the hell should most of the jobs go to people who are in Silicon Valley? Why should people have to pay extortionate prices to live there?

Do to a lot of things (citizenship, licenses, taxes, etc) you aren't legally allowed to be employed without a address on a form somewhere

You still need a fixed mailing address for many things, so I assume they'd use that

It's fraud.

Then maybe the pay increase will help ameliorate what I can only imagine is the subtle pain in one’s soul caused by working for Facebook in 2020.

If the employee comes out ahead then they might be fooled into thinking that Facebook is not picking their pocket.

One funny thing about entitlement is that it only matters if those who hold the power decides it matters.

> This is disgusting. The value a worker provides the company does not magically go down just because their expenses go down. If I am providing the same value that another worker is, we should be compensated similarly regardless of where we choose to live.

You are not paid according to the value you provide to your employer. Despite our best efforts at magical thinking, your employer is interested in the least amount of money they have to spend to get XYZ business goals hit and it happens that your skills are useful to get make that happen. However, unless you are very exceptional in your area, you are a replaceable human resource as far as the org chart is concerned.

You're paid according to your ability to negotiate which is a function of many things ( biases, average market, internal business deadlines, perceived value to the business etc.). Sure, your unique ability to drive sales up 100% YoY is a nice skill but turns out someone else is willing to hit the same goals for 50k less than you are because they live in a cheaper area and don't need the extra cash to live a comfortable life. In that case, you may be valuable but you have no leverage in the negotiation anymore.

Since salaries and budgets are kept secret and employers will always offer the least amount they believe you'll accept first, you are entering the conversation severely handicapped already. We will certainly see suppression in wages over the next few years.

I think the problem comes down to having different definitions of value. Devs think it's 100% based on their code output or their communication with others or things like that which are quantifiable outputs that can be achieved relatively equally and remotely. Management has a different rubric, and yes maybe geographic proximity is on that rubric (for reasons unknown or no reason at all).

Does the value that a worker provide the company actually go down or not, if transitioning to working remotely? I don't think it's so clear-cut as to be an automatic and obvious no (that it doesn't go down). If management thinks it does, then they will only be proven right/wrong over time through the labor market and attribution or through financial results.

Of course, the opposite could well be true, and this how a market opportunity is created: managers who think the opposite, can put their money where their beliefs are, and hire/pay workers based on a different value-rubric, and if they're more correct in their assessment, then they might win out in the long-run.

I want to agree but this problem is kind of weird.

If the situation was reversed, would you still say it’s fair because a worker gets paid for his/her value to the company?

For instance, let’s say you were working for a company in a rural area. Your pay is perfectly average for your position and others in your position at other companies get an equal salary.

Your company asks you to relocate to their office in central NYC, for the same job you’re doing now. Your cost of living doubles as a result. (Hypothetical amount) Should they increase your pay to account for this?

I sure do, but then why would the opposite be so wrong? I agree that you are paid for your value to the company, but we also can’t pretend like CoL is the same everywhere.

Edit: After posting this I remembered this was a big discussion in politics in my country recently. Dutch Call Centre’s were relocating to Spain during summer breaks and offering Dutch students jobs there (advertised using the fact that it’s Spain and you can party). As a result the companies would offer the students a lower wage since Spain’s minimum wage is a lot lower than the dutch one.

Your pay is a function of supply and demand here, not value provided. Working for a company is an opt-in choice, so it's not theft. If you want a better agreement go work somewhere else. And when enough people do that, pay will go up to compete for those people. But if a company can get away with paying less, they will. And arguably, they have a fiduciary responsibility to do so.

Why are you okay with working for a company to begin with? Presumably, whatever they pay you (perhaps your current high salary at the expensive place, perhaps even maintaining your high salary after you move to a cheaper place) is still less than the value they extract from you (most employees would like to think they "provide value").

One should think of any employment as just a temporary situation. At the moment, your life situation causes you to make the risk/reward calculation that you're willing to let a company capture some of the value you provide in exchange for steady income. Your goal should be to save enough out of that steady income so that the risk/reward calculus shifts in favor of leaving the company, working for yourself, and capturing all of the value that you provide the world.

Do you know of a single company that doesn’t do this?

Even HN darlings famous for being remote-first like Gitlab adjust salary to cost of living.

Yet another example of how clueless managements are. They are incapable of actually assessing value of the actual work performed. So they use proxy metrics like LoC, hours worked, in-person presence in the office.

If you want to paid very well, then churn out thousands of lines of rubbish code, be in the office for 70+ hours, attend their meetings, pay rapt attention to their PowerPoints and laugh at their jokes. Bingo!

I expected it, and actually think that expecting otherwise is a little bit of _snowflake-thinking_.

It does appear that way. Perhaps it reflects the increasing disentangling of the work being done from where it is being done. That's increasingly the case for knowledge work. If a company needs drivers, chefs, receptionists at a given location they will have to pay the going rate at that location. The people have to be able to get to the work place. That means living within a certain radius which impacts on the cost of living. If the work happens at a cheaper cost centre generally the labour costs will be cheaper. On a different note I wonder what this could mean for the future. When I occasionally look at the kind of bids for free lance work on various platforms I get the sense that there are plenty of people that would happily do my job for a fraction of the remuneration. Things might become more competitive than they have been. Perhaps I'm wrong.

IMO it's not that much just Facebook, but the _market_ and now the market is suddenly bigger (all the good talent that didn't want to move to SF).

...... what? This is an example that capitalism does work. If someone wants to live in Random City A then Facebook will still have to compete with the local wages there to get people to work for them. The labor market is supply and demand driven. And of course Facebook decides the wages of their employees, how else would it work? The employment agreement is two sided, if people don't like the offer they can go work somewhere else.

Massive caveat: Facebook is an absolutely garbage company and the world would be better off if they didn't exist. But paying less based on location is reasonable.