Some people argue; why does it matter where I live?
If this is true, what is the global remote rate?
On the other hand, I totally agree with Sid (from GitLab)[1]:
> "If we pay everyone the San Francisco wage for their respective roles, our compensation costs would increase greatly, and we would be forced to hire a lot fewer people. Then we wouldn’t be able to produce as much as we would like," Sid explains. "And if we started paying everyone the lowest rate possible, we would not be able to retain the people we want to keep.
> "So you end up in a place where the compensation is somewhere in between. And that would cause us to have a concentration of team members in low-wage regions because it’s a better deal for them. They’re getting more than the market rate, so they’re more likely to apply and accept an offer. And they’re more likely to stay regardless of how happy they are, which is not healthy for them or the company."
That makes sense! Both company and the employees are equally happy. I don't find anything wrong with that.
I think choosing an "above the local rate" rate to pay your employees is the way to go. Rate them based on the criteria you think it's best and put that in perspective against their local rate and the rate ofc that they want. They are going to be some that live in Greece and want to be compensated with SF rates. That's fine and they are probably able to do it. But that shouldn't affect your own strategy.
1: https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra...
This makes sense, however it does mean you will end up hiring mostly from low wage regions. Which may not be a bad thing for the company, however it will be for people in higher wage regions.
That's like saying a company that primarily works on a smaller countrys' market, thus their revenue is much smaller, cannot afford to hire engineers from SF and that's hurting those engineers for some reason?
People move to lower rage regions, they spend less time commuting, the have more money available for other expenses (as rent is not a big chunk of their income).
In the end, this pushes to a decentralized workforce and may reduce the cost of living on highly populated areas (NYC or SF)
Apple is making products that the majority of the country that they operate in, simply cannot afford. Let alone the rest of the planet. Are we considering that to be discrimination?
Within the United States, the choice to live in a low cost of living area could easily be changed by moving. Millions of people move each year in the US, many of them due to work. In fact, I had to move from a low-cost area that is considered depressed in order to find a job.
Now I can see that living outside the US can bring challenges to moving, like visas, and national origin is a protected trait. But if their policy is to pay local rates, then that does not discriminate based on anyone's individual traits and is wholly based on the market.
Does it suck? Sometimes. I would have gladly stayed in my low-cost depressed area if there was a job for me there. The best play for me would be to move to an expensive area (done), make a lot of money (I wish), and move back to the cheap area to retire early. But my wife doesn't want to ever move.
Decide based on merit of the candidate. If they are remote BUT are worth paying $x/Year, pay them. If they are not worth paying, their location doesn't matter. If that $x/Year s good enough for both parties, who cares what the number is compared to say US salary or Silicon Valley.
You need a frame of reference.
Bottomline is: Don't let the candidate dictate what you should and should not do. If they don't like the offer and you don't think they are worth more than that, capitalism baby. You move on. Until then, keep negotiating.
In fact, simply paying your local salary to remote workers opens a pool of really experienced people from all over the world for you. In many cases probably even superior in experience than you would be able to find locally with your local average salary. So you are already winning big here, why would you want to screw that by assuming their worth based on where they live?
How can one even calculate that? For example, cheaper/poorer countries might have a worse healthcare system without insurance, so people would need additional money saved aside for health emergencies (like cancer or similar) for themselves and their family. And this is just one example.
But, as a business person, you should pay the lowest amount you possibly can while maintaining the level of quality you require. People who live in LCOL areas are more likely to accept a lower bid to do the same amount of work, which opens the pool of labor up enormously for a lower price point.
What you absolutely shouldn't do imo, is set up a job req for a price point, then negotiate a candidate down because of where they live.
If you can only pay 80k / year, then offer 80k. If you get a candidate from somewhere that 80k is above average, isn't that just a win/win?
Wow, that hurts. You treat all your employees as slaves? What about investing in people to produce better quality and commitment?
I always thought that it is better to have one Gilfoyle who can afford a new Lamborghini every month no matter where he lives, than having 50 miserable copies, because someone wants to save a few pennies. And guess what? At the end they cost you more...
Buffer and Gitlab are pretty open about their methodologies, where they use pay bands for a position and then the do a location & experience adjustment. Essentially this is how I have done it in the past (typically as the team gets larger), you set pay bands per country per position, then do location & experience based adjustments. You can see how gitlab does it if you check out one of their open positions there is a salary calculator and it shows you the basics (they even show how options work). That said, you shouldn't rule someone out just because their pay request exceeds your defined band/location/experience calculation if their experience/expertise justifies their ask. To me the banding is there to set a starting point and make things open and transparent to the best of your abilities without publishing peoples individual pay rates.
When I ran my consultancies I priced my contracts as either a fixed weekly rate or a value price. So it didn't matter where the client was located or my employee(s). When we billed weekly rates it was a specified rate for a specific project role regardless of who the client was. When it was value based deal I didn't care if the client was in SF or Kansas, I based the price on the value it brought to the client and what I thought was fair but lucrative enough to take the project.
I do know there are freelancers that change their rate based on the client but I honestly don't agree with it, typically to me it means you rate is too low or you are pricing improperly. Your rate should be moving up as you gain experience but it shouldn't vary much by client, unless you start value pricing or when you start dealing with enterprises who demand insane support and hand holding.
In one example you are an employee, in the other you should be running a business and the two are not equivalent in pay, process or responsibility, so trying to treat them as they are is improper.
IMO freelancer is just a label for an employee with no benefits, no protections and full tax liability. Consultants (or dev shops etc) generally build real businesses and are treated considerably different.
- Do you want to pay fair
- do you want to maximize value for your money
- or do you want to hire from the pool of the top 10% world wide?
max value: you hire for little money from poorer nations
top 10%: you adjust to local rates
fair: here it gets philosophical... I'll probably go with you pay everyone the same, which probably again means you'll not hire from rich countries.
E.g. if you pay local market rates for someone based in Seattle and another one based in Zimbabwe - I'm pretty sure that former's quality of life will be much better.