Should Remote Compensation Be Tied to Location? | Hacker News Reader

Should Remote Compensation Be Tied to Location?

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18 pointsallannienhuis19 comments

I have a pretty unpopular and attitude about this. Cost of living adjustments are literally that: salaries adjusted so that you get the same lifestyle whichever city you happen to be living in. To argue against a cost of living adjustment in a downward direction means you want to live better elsewhere.

Which is really the elephant in the room in these conversations. People want to live like kings in a $500/mon 3 bedroom house in the middle of nowhere while making a salary level that only exists so that those people could afford SF housing. Basically, people want to get rich.

Which leads me to my real unpopular rant: this is the same group that generally believe CEOs make too much money. Yet when given the opportunity to make the argument that we should be making closer to the same as those around us, they don't want equality; they want their turn to be on top.

Companies paying less “because they can” as opposed to “because they must” will always lose out to the companies that will pay more “because they can” in an employee’s market. And if the both companies are in the same market, that means that both the work and the profits are of similar kind. So it’s not exactly wise to adjust your wages down just because it seems like there’s nothing stopping you. Pay your employees according to the value they produce, not where they produce it from.

There's a Pareto optimal middle ground here, because companies that pay more don't want to pay a lot more. They want to pay enough to beat their competitor's offer. All companies involved aren't interested in that number going higher than it has to. This is why cost of living adjustments exist in the first place. The pandemic didn't invent remote work.

The pandemic didn’t invent remote work, and that’s why even after the pandemic, some companies will pay the same regardless of where you live, just as they did before. It’s up to the employee to choose the place that they most prefer to live in that case, which maybe it’s a city that gives them high margins or maybe it’s one that gives them a nicer quality of life per some arbitrary metric.

Keep in mind, as well, that employees are already not forced to live where their employer wants them to be. They can live far away from work, and then commute an absurd amount each day, then get their paycheck and keep their cheap cost of living too. We don't pay someone who comes into the office less just because they live far away.

It's just that in that scenario, a lot of carbon is being emitted, and the employee's life is being wasted needlessly.

Couldn't have said it better myself.

Making SF-level money in Montana for a job that isn't normally worth SF-level money everywhere is a bug, not a feature.

This is one of the reasons why I really like consulting. One's value is directly tied to two things: bill rate and margin. If you can justify increasing your/the company's rate and increasing your/the company's margin, you (usually) make more money. Doesn't matter where you are.

I charge $X to provide services remotely (on an hourly or monthly basis, whatever). Whether I live in a cheap or expensive area is completely irrelevant to whether it makes sense for the company to pay me $X.

As someone from the Rust Belt, a company that says "we'll only pay you more if you move to an ExpensiveCoastalCity" is insulting. Such a policy feels like coastal elites actively trying to keep everywhere but NY and SF poor.

> they don't want equality; they want their turn to be on top

Oh. The timeless human condition, and American embodiment of “pursuit of happiness”?

Pay are subject to demand and supply. If a company insist on co-located employees, pay is subject to demand and supply at that location. If company allows for remote work, pay is subject to global demand and supply of remote employees.

Exactly. If companies tried to do this then people could just get a virtual address in an expensive city say New York and go and live somewhere cheap, say Guatemala. Also let's say out of 10 big software companies 8 offer same pay wherever you are, 2 location based. Which one are you gonna work for?

I think they should be paid the same, compare living in Germany vs a poorest country, yes your cost of living would be cheaper in the poorest country but also your quality of life in terms of infrastructures and public services, perhaps depending on the country access to health might be harder too, getting a top education, finding mentors... etc.

There are two scenarios, the company offers you relocation or not, if the they don't then you should be paid the same as people located in the the richest country.

I think is fair to be paid for the quality and value of your job regardless where you happen to live (at your own will or not).

I don't think that 'should' is the best lens through which to view this. The better question is, would offsite talent (at or above the quality of onsite talent) be willing to do the job for less. I would hazard a yes to that because of the drastic difference in savings rate in low CoL areas. E.g. would be willing to make 30% less to live in a CoL area where your CoL is 40% less? If the delta in CoL exceeds the delta in pay change, I bet this takes off.

What is fascinating to me here is the question of whether and where talent will relocate to. Places like the SF Bay, Boston, Austin, Seattle, NYC etc attract folks for more than just the jobs. There's culture, great schools (at least in the greater Seattle area), and many other reasons why people may choose to live in these locations. So while there certainly will be an adjustment that occurs, it might not be as significant as one would imagine.

Yeah, there’ll be some suburbanization, but you’re right to point out that access to schools and belonging to similar-minded communities has sway. Besides the current trend to urbanize is on par with more Millenials reaching their 30s and some in 40s, so the trend should not be as surprising given reproductive habits.

My personal thought is the US has already been in a continual ebb and flow state on remote working. Remember Marissa Mayer and Yahoo? She didn't want employees working remote any more.

So yes, remote compensation will always be tied to location, as there will probably always be a mix of local and remote workers.

Of course it should be. You have always been paid based on what it takes to keep you at the company rather than your work output or where you live. If you live in the middle of no where your options suck so it doesn't take much to keep you.

If customers pay differently depending on the location of the employees, then yes.

I understand to some extent varying pay based on location, since e.g. the cost of living in the bay area is easily 2x what I'm paying in Cincinnati, OH. But it can't be used as an excuse to pay talent poorly. For their part, my current employer made my pay about 10% less when I went from working in Seattle to going remote in Cincinnati, and that felt more or less OK since it worked out to a slight raise thanks to lower expenses. Had they gone with the "market rate" for an engineer here though, I would have gotten easily a 50% pay cut since there aren't any "big tech" companies around here. It's a tricky balancing act.

If you consider the employers as customers of the employees' services, then they do pay differently depending on the location of the employees. That's a tautology, though, so not much insight there.

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