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Comment by chasd00 | Hacker News Reader

It's interesting to me that companies are threatening to reduce pay if a remote employee moves to a lower cost of living area. It's hard to understand the logic when geography is the only change driving the decrease in pay. Same person, same job, same skills, same productivity, the only thing that has changed is the person's cost of living.

I wonder if a remote employee working in a low cost of living area moved to a high cost of living area would their pay be increased or would the company put up a fight? "You voluntarily moved to a high cost of living area, why should i pay you more?". However, "you voluntarily moved to a low cost of living area, i'm paying you less" is reality.

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So bizarre that this is being floated. Company has no idea what my cost of living is, regardless of where I live.

i.e. 1. Employee moved back in with parents, not paying rent. Should company start paying them less because they need less?

2. Employee works remote from Arkansas, has 2 kids in college and is sending checks home to support mom. Company pays them less because... Arkansas?

How about the number we agreed on is the number we agreed on.

Yeah, ironic how there is nothing on https://about.gitlab.com/pricing/ about cheaper packages based on the customers location. But they want to pay you less as an employee based on your location.

The most amusing aspect of Gitlab's location based compensation is that they spin it as employees in higher CoL locations should be paid more (while carefully choosing to ignore the corollary implication that employees in lower CoL locations are paid less for the same work).

Cost of living in terms of rent or expenses is not everything. If I work from India, I also pay in terms of reduced life expectancy due to higher pollution, greater chance of dying in a road accident and what not. If a perverse sense of 'fairness' (or a facade of it) is so important to companies, I would love to see these factors being considered too.

I think you're over thinking it.

The company agreed to pay you X amount because that's the market in the area you and the employer are competing in. Once you expand beyond that area the market changes. You're now competing against all of the other engineers from SF to Arkansas (and beyond). Let's put this way. If you're working from Arkansas, why should your employer pay you 400k/yr when they can just hire someone else in a cheap COL area within a reasonable timezone for a fraction of that?

I don't think that it's the right thing to do, but just to share what's being done elsewhere, for 1 it's absolutely the case in Japan.

As an anecdote from first hand experience, if your parents live close enough to your work (less than 2 hours commute) it's considered that you could live with them, regardless of what you actually do. Then, you cannot claim the $7k/year indemnity for accommodation. This is significant for a salary of $36k in this company (not in tech).

If you find that bizarre, why isn't it also the case when the starting pay is different when the same company hires someone in a different location?

> How about the number we agreed on is the number we agreed on.

This is exactly what the company is doing.

They’re paying you the number you agreed upon until they don’t want to anymore (or until they’ve fulfilled whatever contractual agreements they’ve made). You’re not guaranteed to keep getting the number you agreed upon if your work sucks or the company goes out of business.

By the same token, you’re not obligated to hold up your end of the bargain any longer than you have to based on whatever agreement was made. Want to move to a cheap city and find a new high-paying job? Go nuts.

I don't understand why people have such a hard time understanding that the value of something changes depending on the context (aka "the market").

Soda at the grocery store? $1.50 Soda at the gas station? $1.99 Soda at Disney World? $30

Your skills are not worth a fixed rate. Your skills are worth more in certain areas because the demand is higher in those areas. As soon as you go remote, you are competing with every other remote worker in the US. More competition, lower price.

This is about the time that people start to imply (or even say straight out) that their skills are really special, and that there aren't good developers outside the valley. So they totally deserve the rate they're being paid.

I hate to be the bearer of bad news, but there are actually quite a lot of smart people who just don't care to live in the valley for various reasons, and they are all just as available as you are when the whole team is 100% remote. Companies are going to love it, but a subset of employees are going to be sad as the market rate adjusts to the new reality.

I guess as it becomes more obvious to people that the logical next step for a fully remote company would basically be to lay off staff in higher cost of living locations (I'm sure we are starting to see this), more people will internalize this reality.

Sure, but this is closer to having soda delivered to your home. The costs on the production side don't matter to you. You only care about price, quality, and delivery time.

I personally suspect the employment market is just not very efficient due to a lack of information. If companies had perfectly accurate information about how good every software person is, available for free, we'd probably all be paid based on that information, with our cost of living ignored.

You don't understand probably because your paycheck depends on not understanding, e.g. you think you are benefiting from the current status quo. Others call it unfair because their paycheck also depend on it.

What if the market says you can get away paying less for group X? What if X is some historically marginalized group? Does it make it OK? What if X = remote workers?

https://elsajohansson.wordpress.com/2017/09/13/what-does-a-w...

That only works as long as the company is able to hire someone with your skillset at your new LocalRate.

This cuts both ways; your ability to demand higher pay is contingent on that you can get that pay elsewhere. If other companies at your new LocalRate are paying substantially less, then your remote employer only has to beat those offers to remain competitive (from your point of view).

Each individual hiring case is wildly different, with different supply/demand and price dynamics, and it's nothing like the commodity sold at a gas station example. Yes some companies will penny pinch, but some companies just wont. Not worth their time.

So why don't they just fire every remote worker in high cost of living areas?

Soda is a fungible commodity. People are not.

So if you quit your job, the company...

A) will be irreparably harmed and have to cease operations.

B) will hire a replacement and be fine.

(Hint: It's B)

As my Dad always said, the graveyards are full of indispensable people :)

I would argue most people in a organization actually are fungible, especially the more junior they are. At least in software.

It's not a coincidence that conversations around the number of engineers/designers required for a project commonly end up referring to them as 'resources' in most companies.

Since algorithm interviews are the current norm for filtering, there are a huge swathes of people who are just as good at beating such interviews but never got the chance due to their location.

Someone decided to drink the kool-aid the PM is selling. While business is business and we are not family. We are deeply human, don't ever refer to people as a resource if you want a more healthy working environment.. that goes for any industry or company.

Great observation. It’s a shake down because they have leverage over you.

Edit: it’s truly a test of elasticity

Markets in everything:

Your salary is the balance between the leverage you have over the company and the leverage the company has over you. If they can get rid of you and hire someone remotely for half the price they will. If you want to stay in an expensive city while working remotely and the company can't do without you, they won't.

You can't think of your pay as a transaction based on value you bring. It's based on 1) retaining you 2) how much would it cost to replace you

For 1, what are your alternatives in your local market or remote positions (next best alternative). For 2, if they just fired you instead and then opened up the position to anyone anywhere, what would they have to pay?

Also, yes, I have moved from a low cost of living area to a high cost of living area and got a pay adjustment. It is standard to increase pay for those moves (they they are not always approved though)

> You voluntarily moved to a high cost of living area, why should i pay you more?".

This does happen now when companies have multiple offices. I've seen people move from LCOL to HCOL and see a cost of living adjustment.

It's standard operating procedure for a major relocation to come with a COL adjustment. About as normal as it gets.

I seriously can't believe some companies have the nerve to pull off something like this

Why not? It's a business relationship; both parties are in it to come out as ahead as possible. Why would a company pay a remote worker $400k/yr in Oklahoma when they can just pick from a country-wide candidate pool who will do the same job for a fraction of that?

Companies are typically very impersonal about money, to a much greater extent than people. I'm sure some highly compensated employees are about to be sad, but this is just business. It's a free market, and it just got a lot bigger.

It's a scam. Just like companies encouraging employees not to discuss their salaries with each other.

My wife’s employer makes fairly drastic COL changes based on office location (bank with large corporate offices in 3-4 US cities and branches worldwide). From the lowest COL office to the highest, it can be 10s of thousands USD.

Edit - they don’t officially do WFH (outside COVID) so cant comment on that.

Realistically, there will be two scenarios:

Company Type 1, where they don't care where you live

Company Type 2, where they explicitly care, and have some stupid table they look at.

I suspect it will lead to a lot of employees at T2 companies getting shafted. Not everyone is as Online as the HN crowd.

At my company, it’s about equality. Everyone gets paid within the same range for the same work after adjusting for cost of living. Move to higher COL, raise, lower, cut. It’s that simple.

So if I have 7 kids and a physical disability should I get paid more because my COL is higher? Shouldn't someone get paid for the work they provide? COL is frankly none of the f*cking company's business.

Except that this idea is always a farce. People talk about cost of living as though it doesn't vary wildly within a city from neighborhood to neighborhood.

You in effect pay people more to live in nicer areas. If I move to a place tons of other people move to it likely has some positives (better schools, more to do, closer to nice vacation opportunities), and higher costs.

Also if the high COL employee owns a property, much of that difference goes into equity in their home. Which they can they cash out and move to a low COL area.

A former employer of mine wanted me to relocate to their HQ in NorCal and they were going to give me a raise to cover the cost of living increase. (I decided not too.)

I see it as an opportunity to show you're a team player by moving to a lower-CoL area and taking a pay cut. Believe me - the bosses WILL notice who takes this offer.

I really hope you mean /s

You could simply never give your employer your residential address (use a post box) and then just continue to not do so when you move.

My personal residence address is need-to-know, and if I were to have an employer, they would have no need whatsoever to know my residential address.

If you're remote, it's simply not their business. You might have an extra step when filing state income tax, but that's your liability, not theirs.

Your employer probably has to pay state taxes/state unemployment insurance, may have to ensure that they are filing certain state forms as an employer of a resident of a given state, may have to adjust health care policies to address state-specific requirements (or residency requirements of the plan they have, etc).

Unfortunately, given the run-amuckness of registration and compliance requirements, it probably is needed for your employer to know where you live (or at least in which state and local taxation/regulation entity).

Yes this is accurate. At my company they've said in the past that they have to count business trips to certain states because once you have employees that have "worked" in those states for more than X days a year, it can be shown that you have a "presence" there and would need to pay state taxes.

Another great argument for always going for c2c instead of W2 work.

The simplest solution to me as a director is to determine the value difference between on-site vs remote employees, then factor in the costs needed to run the office per person, and pay differently based on that delta. However in my experience my team is all getting more done remote, so if anything I should be paying them more to move out into middle America.

In my opinion, the argument companies really should be hiding behind is the cost of labor for a given geo. It's got cost of living baked into it, is sufficiently handwavy, yet still makes it a little more clear that you're compensated based on market supply/demand and little else.

anecdotally I've heard some companies are doing a "meet in the middle" sort of scenario that means the employee still is incentivized to move away.

Eg: moving to 10% lower CoL? then it will only be a 5% pay cut, or something along those lines.

Your point of "same output, why not same return?" makes sense, but this way employees are incentivized

In that case I would get that as written note / contract with their signature and then move to more expensive area.

Someone needs to run the experiment. Move to some place in Russia outside the Moscow metropolitan area. Apply to Gitlab. If you get the job, relocate to San Fran. See if your pay quadruples.

I feel like GitLab is one of the few places where this would happen. They have a salary calculator that's basically just band * CoL * performance in band[0].

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

Or they can simply say "No."

GitLab was rumoured to be suspending hiring in Russia and China, but I can't see a reference to it on their page. They ban seemingly random countries [0] like Sweden, while allowing hires in Australia, wonder what their rationale is.

It's hard to hire remote employees in different COL areas without opening yourself up to legal liability, if people are able to bounce around and hold onto COL salaries disproportionate to the local area.

Ex, if a bunch of white and asian bay area employees relocate to Florida, taking their salaries, and then Facebook hires some local hispanic employees at 1/2 the rate... well, you can try to explain exactly what happened after you get sued, but that doesn't sound like a lot of fun. And even if you legally get away with it, you are going to have a lot of REALLY unhappy employees.

Not to mention you're opening yourself up to a real game, where employees move to the Bay Area for a year to get hired at a high salary, and then immediately leave for 2x the salary. All you've done is turned salaries into a game that benefit highly-mobile employees.

So I definitely understand why this feels shitty, but I honestly can't see it working any other way for large corporations. You have to have some kind of local salary adjustment you can stand behind, when you're remote-first hiring.

I've thought about playing this game, one of the largest retailers in the country just pays you based on the cost of living in your zip code. I could move in with my in laws in Honolulu for a few months and use that zip code, get hired, and then move back to my low cost of living area.

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