"Equal pay for equal work" in remote jobs
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So naive.
In an ideal, utopian world? Maybe it would work this way. Maybe.
In reality, your compensation is a function of your negotiating power. Some people, in fact, manage to get the same pay even when working remote, because they're "highly employable". Others don't.
And let me add: I almost agree that remote work shouldn't necessarily command the same pay. A company's goal is to "extract" from each employee more value than his/her/their salary. If a company manages to save on a salary because the employee doesn't have much negotiating power, good for the company.
This is not to say that a company should do anything it wants, far from it. It simply means that if you accept that you live in a market-enabled society, your salary is at stake, too. You want to pay $2 dollars for milk, instead of $20? That's thanks to competition between companies. That's market forces at play. You want it there? Accept it on salary negotiation too.
It's not though. "The support granted to U.S dairy producers represented approximately [...] 73% of the farmers' marketplace revenue. USDA data also reveals that US dairy farmers operate at a loss, and have a cost of production that is higher than what they earn from the marketplace."[1]
We're subsidizing the low cost of milk via taxes because the marketplace failed to provide both affordable milk and the ability for dairy farmers to make a living.
[1] https://markets.businessinsider.com/news/stocks/american-dai...
So the price is both two low and too high? This is not a failure of the marketplace (aka price discovery), this is the U.S. deciding that cheap milk and overproduction is in the nation's best interest and we should socialize some of the production costs.
There are logical (milk as a staple product and avoidance of shortages), and illogical (milk lobby takes too much effort to oppose) reasons for it, but it is not a marketplace failure. Remove the subsidies and the market would quickly find the higher price at which dairy farmers could produce milk profitably and consumers would purchase it.
If it is in our societal interest to produce more milk so people can eat, and the market doesn't do so, requiring subsidy, then that is a failure of the market to meet society's need.
You're conflating the failure of a marketplace to function properly (as in smooth functioning of supply, demand, liquidity, etc) with the failure of the marketplace to provide social benefit.
That dairy producer's lobby is quite powerful and politically important to both parties. See the key role they played in the politics Trump was playing around NAFTA renegotiations last year.
E.g., the market decides to off-shore manufacturing. This is good short-term as it leads to lower prices for consumers. But it's also potentially a failure at a national long-term level as it has reduced our manufacturing capacity. The short-term bias of the market can adversely affect long lead-time strategic interests. See: the inability to quickly pivot to manufacture medical goods in a pandemic or military goods in a large-scale conflict.
These types of market failures are what lead to the socialization that you mention.
We used to consume much less milk pre-WWII. And we are consuming less and less cow's milk.
It's dubious on many levels, but has its defenders.
That USD$2.80 would result in PPP $4.20
As for whether anyone should have a problem, you're welcome to have a problem. It's a free country. Whether that will lead to an outcome you desire is independent, though.
de jure != de facto
Companies are legally prohibited from stopping unionization in the US. But that's not how it works in reality.
Most people work in an 'at-will' states. This means a company can terminate employees at any time. Want to unionize? Have at it.
All an employer needs to do is find is some company policy a person is violating (and trust me, EVERYONE is violates their company's policies from time-to-time, if only because company policies are so verbose and onerous). Your work badge isn't immediately visible? That's a policy violation. Go over your lunch a few minutes? That's a policy violation.
The company fires the unionizer. Now the onous is on the fired employee to prove that they were fired for unionizing. As long as the company doesn't say "I fired you because you were unionizing" (which they would never do), you got a lengthy legal battle on your hands.
Now where do you take your battle? To the NLRB. Now you have to fight against regulatory capture and political appointees who are hostile to the very idea of organized labor. Even if you do win, it will cost untold sums of time and money. It will be years before everything is adjudicated. At that point, what does it matter? The unionizer has been forced to move onto another job in the interim (and hope that the other company doesn't avoid hiring the person because of the labor complaint. And if the potential employer does? Another legal battle that the unionizer has to enter and prove).
Why should a voluntary, consensual signing of a contract be made illegal?
Companies have been fighting unions for a century.
In some cases leading to massacres:
Yes - union contracts may include a ban on non-union workers. As long as that's not mandated by law - it's really none of our business.
I would potentially be on board with outlawing such agreements altogether, but it's not fair to restrict unions to be unable to make exclusivity agreements when every other type of organization can.
If, as an employer, you would prefer not to adhere to strong labor protection laws in the market you desire to operate in, you are free to find markets more to your liking.
The whole point of having negotiating power is they can't just "stop" it. Because you, as a union, collectively have enough power to force them to the table to negotiate.
Whether or not the company has a problem with unions is basically irrelevant.
Just because I'm in Atlanta doesn't make me inherently worth less than my peers in SF.
Whether this is good or bad is beside my point, as are what other second-order effects may arise. I'm simply pointing out, "everybody in the world gets paid SV rates" simply isn't on the table. So don't go into this process expecting that outcome.
If suddenly the supply expands from the Bay Area to all of the US, that changes the equation. Don’t forget that guy in Atlanta who is equally as talented as you, but willing to work for 20% less than you make.
I think the mistake you are making is assuming that your salary represents your worth to the company.
Should a person be charged SF prices for groceries when they're living in Atlanta because they're getting SF pay? Clearly not. You can't have your cake and eat it too.
Unions are good to protect employees that don't have negotiating power (e.g. factory workers), otherwise companies would take too much advantage of them.
I am not sure this necessarily applies to knowledge workers, especially if their work can be done remotely to some extent.
And I am not saying that I am against unions; but like with everything else in life, everything comes with pros and cons.
I have personally witnessed several examples of unions using their position to drive their political agenda at the expense of well-intentioned companies (most of it in my home country, Italy, in the 1990s and 2000s). So, beware: unions do not solve everything; they bring their own set of problems.
> company's goal is to "extract" from each employee more value than his/her/their salary. If a company manages to save on a salary because the employee doesn't have much negotiating power, good for the company.
If that's a companies goal, then an employee's goal should be to counter that, and Unions are a line of defense against companies treating an employee as a resource to "extract" from.
Free markets are good and all, but companies leveraging their outsized power against individual people shouldn't be surprised nor able to prevent individuals from working to put that power in check.
I am not sure this necessarily applies to knowledge workers, especially if their work can be done remotely to some extent.
These two paragraphs contradict each other.
Work rules are another way. My dad told me about the union work rules at the factory where he was a white collar employee (R&D department). I'm reminded of those stories when I've tried to get someone to do some programming for me in a large organization.
Granted these rules have their origins in preventing abuse, or replacing skilled labor with unskilled, but they existed nonetheless and were part of running a business.
I think the opposite is true. The companies try to stop it precisely because it will weaken the company's negotiating position. I personally think unions have their place, but from an employers perspective there is little incentive to be pro-union (unless you are just arguing from a moral -- not pragmatic -- view).
> So naive.
> In an ideal, utopian world? Maybe it would work this way. Maybe.
> In reality, your compensation is a function of your negotiating power.
> ...if you accept that you live in a market-enabled society, your salary is at stake, too.
This logic horrifies me because it applies equally well to wage disparities based on protected classes. We have collectively decided as a society that this argument is faulty and unethical.
That doesn’t mean remote work should get equal pay. It just means that your argument doesn’t hold.
I dunno if GP meant to imply that, but this is kinda the key flaw with the "equal pay for equal work" thing. most engineers earn way more than the median income. this is a direct result of existing in a market-based economy where wages are determined by supply and demand rather than some abstract notion of fairness. you can't complain that the payscale is different for atlanta vs sf while maintaining that it's totally fine for you to make 5x as much as the cashier at 7-Eleven.
It's that the "equal work" part? Comparing one cashier to another cashier (assuming same hours, same responsibilities, etc) is equal work, so is part of an "equal pay for equal work" conversation. Comparing a cashier to a software dev is a wholly separate conversation.
Markets currently play a massive role in determining prices across our entire society. A wage is a price paid for an individual's labor.
Labor markets are not perfect. No market is (despite the wailings of the ideologues). We try to fix these issues with specific policies and regulations. There is plenty more work to do here. But if you are advocating for the abolishment of labor markets entirely, I would love to see the details of your proposal. I don't know of any society today that has managed to do so.
I can do a better job than many in SF for half the price. Have already spent close to a decade waking up early for US west coast meetings.
Get the feeling that a day of reckoning is coming for those clinging so dearly to their location based earnings. I've been saying it for years about Australia being so constrained with cities like Sydney and Melbourne which magically have some of the most expensive land prices on Earth. Getting away from these places and making your own digital way is truly a freedom to behold.
That clause at the bottom of a job page: "no discrimination based on citizenship, origin, etc..."? Just corporate/legal mumbo jumbo.
This is how it feels for the non-elite, non-American. In a weird way, the pandemic is leveling the playing field. Democratize opportunities, increase competition, decrease wages- plain supply and demand.
The non-elites everywhere are getting hosed.
That's a good point, because no other groups of people only complain about issues when they start to affect them personally.
I get the argument that "well I'm doing the same work here or there, why should I be paid differently?". But this is what things like outsourcing are intended to do isn't it? To get the same work done for cheaper.
This quickly falls down once salaries and payments become public. In economic parlance, when everybody has all the information and the job market becomes efficient.
Or really, use any other marginalized group with limited negotiation power and see how your comment turns out. Only difference is remote is not protected class, but that is simply an implementation detail.
Everybody argues this issue from the POV of their very own salary and it is understandable. It is fair to say you think you are at the good end of the deal and you like it there. But the moral argument about equal work should be equally compensated is nigh unchallengable.
https://elsajohansson.wordpress.com/2017/09/13/what-does-a-w...
I don't the think premise is at all clear, never mind 'unchallengeable', especially if you take 'be equally compensated' to mean 'have the same nominal cash pay'.
Why is 'nominal cash' equivalence superior to 'purchasing power parity' from a moral perspective, for example? Is it moral for some workers to receive rewards that are richer than others (in terms of what they will buy) purely on the basis of local economics?
Why is it moral for workers in locations with generous government programs to receive the same nominal cash pay as those who might have to pay out of pocket for some of those same services in different locations?
"All other things being equal, equal pay for equal work" sounds reasonable, but when you're not holding all other things equal, the moral position is more tenuous.
Remote = lower costs. Female ≠ lower costs.
I’m not arguing against equal pay for equal work. I’m arguing that it’s a bad analogy to compare being remote with being female.
It also depends on what you think about wage gaps and why do we need equal employment laws in the first place?
Geographic location is not a category for protection, nor is it going to become one. First, it simply isn't something that can't be changed, and second, our elites in general want us to be able to move around freely, so they aren't going to make it one.
Point is, just because an outgroup can be discriminated (legally) it is not fair morally.
Of course it's not a protected class, and that's by design. Protected classes are things you cannot change (with the exception of religion), and thus you shouldn't be able to discriminate based on them. You wanting to live in Kansas doesn't (shouldn't) afford you some protected status giving you an artificial pay increase.
That's right, I suppose:
But, why do I have more negotiating power, if I can sufficiently fake an address in San Francisco?
This is just a way for employers to exert their power and reduce salaries across the board. It should be resisted.
So, what exactly are you saying then? Should there be checks in place to ensure salary negotiations between an employer and employee be treated differently than two big companies hashing out milk prices or not?
If not that would certainly be a very naive position which gets increasingly problematic, quickly, the more lopsided negotiation power and money is distributed between the two parties. A human centric society has to provide checks for that. An understanding of what we want can for example be driven by articles such as the one linked and is instrumental to the process.
When I took my remote job 8+ years ago, it was a big pay increase, plus my expenses went way down.
Feel bad for the prop 22 stuff and gig economy, because they are part of the same struggle. It never ends.
Ahhmm, no. Where does negotiation power stem from? Is it a skill? No. You are a product much like eveything else in this economy and you price is a function of how much you cost (living cost, heavily depedent on location) + supply/demand trends. Yes, your attitude and negotiation skills can impact your salary but only by a bit. You can't get your salary to tripple by negotiation. Why? What is the force that doesn't allow that? Supply and demand of other people who will do the same for less.
Thus I argue the trend will be a big decline in salaries for remote jobs in places like SF or London, but a very slight increase in salaries in places like india. The market of remote workers is going global, thus the price for this product will adjust accordingly. There will still be some variation in the salary depending on where you are, but the global min-max difference will decrease
> You can't get your salary to tripple by negotiation. Why? What is the force that doesn't allow that?
I can't triple the speed at which I can throw a baseball, either, because of physics, but it's obviously a skill I can improve relative to other throwers of baseballs.
Depends on the law. If I'm female, and you're male, then equal pay laws may force it to be the same for equivalent work.
Most of the rest of the world forces business to compete for labour - which is as it should be.
Jobs, not people, should wait.
It already is, despite all the press claiming it isn't. In summary the difference in pay is caused by different choices men and women make in how much they value flexibility at work.
See: https://harvardmagazine.com/2016/05/reassessing-the-gender-w...
If the rest of the world want to send us stuff, that's a benefit not a loss.
It was the moral thing to do, and it happened despite the men it affected.
https://www.fb.org/market-intel/how-milk-is-really-priced-in...
I don't understand why you think that you are in opposition to the author.
Some people, when working on site, make more than other on site employees because they're "highly employable".
Bottom line is, being "highly employable" is the only relevant factor in negotiating, remote vs. on site is irrelevant, and you shouldn't let companies to bluff you otherwise.
If they like you a lot more than the other candidate, who just happens to live in a high cost of living location, are they really going to pass you over to hire the other candidate, if you demand the same wage that candidate would receive?
Capitalism isn't just for companies, you know.
If you're not "highly employable", get highly employable and negotiate knowing your worth.
If there is ever a trend of a significant number of developers moving to low COL areas, then every recession, reorganization, merger, etc. becomes a potential situation for employers to threaten your job or relocating to Trumpville, Nebraska.
This is itself a bit naive. In a basic market with voluntary transactions the distribution of the gains from trade is undefined.
If your labor sells for $100/hour and costs you $10/hour to produce (basic food, water and shelter) then it is a perfectly legitimate equilibrium for the company to pay you $10.01/hour and take the other %89.99 as profit.
It's only through politics that we can make sure that the gains from trade are evenly split. The math of markets doesn't define it.
That's clearly not the case since my employer could legally pay me $15/hour for my work, but pays significantly more. They do so, because they are competing with other employers for talent.
Yes, but the RESULT of the two-way competition where both employees and employers are competing is undefined in a simple model of the market.
If you work as a cleaner or an uber driver, you may find that even though you generate some surplus, you don't actually get any of it (or you get almost none of it)
False. Competition from other employers can do this too.
Yes, it CAN but whether it actually does depends on the details. If you are a cleaner or an uber driver, you might generate some surplus but you might see the other parties take all or almost all of that surplus.
OK, but if you go in front of the employers as individuals, 1 might gain, but everybody will lose. That's not how work relationship works.
I get that on HN everybody feels like a genius and individualism is rampant. But that's a fertile ideological environment for mass exploitation.
Tech workers are just workers first and foremost, and the same dynamic of the labor market are true for tech workers, as they are true for anybody else.
Exactly. Based on talking with others about their salaries, I usually seem to be one who gains. So I will oppose efforts to normalize pay for a given role because I will lose and probably take a pay cut.
There's also nothing wrong with paying more or less for a job. Some people are better workers, period. This is true even if they have the same job title.
The long term strategy of location pay differentials may seem like punishing people for leaving SF, but it's the opposite.
I've been paid 80% of SF rate to live in the middle of nowhere and anyone else who has done this will realize it's an amazing deal. When a 3000 sq ft house costs considerably less than your 1 bedroom apartment, you realize that your cost of living didn't just drop by more than 20%, but that standard of living went way up.
The long-term play from tech companies suddenly going remote is that in 1 year or so, once a sizable portion of the workforce has relocated, the "salary reduction" to move out, will become a "salary enhancement" to live in SF. Then the conversation will be "Look Matt, it really doesn't make sense to pay you a premium just because you want to work SF. If you want to stay that's fine, but we'll be downgrading your pay to meet company standards."
ADDED: Salary is pretty sticky in a downward direction. However, over time, one can imagine levels equalizing as things like RSUs/bonuses become more similar across locations.
A former chairman of the Czech Green Party, a young and progressive gay guy moved to a rural area, bought an older ruin of some former baron's chatelet and started putting it into order. With his husband.
In a year or so, his Tweets started shifting noticeably to the center and sometimes to the right, to a great consternation of his former Green co-partisans.
There is something about life out there that changes people's priorities.
I have seen this happening only for CEOs and such.
As a counter-anecdote: I moved from the Florida panhandle to the SF Bay area, and while certain things like housing and taxes were quite a bit more expensive, most things really weren't. The California salary/equity increase meant my relative standard of living and (most importantly) ability to save went way up. Without going into specific numbers, in 2019 the amount I was able to put away into 401k, IRAs, and other tax advantaged savings accounts exceeded my entire Florida gross salary in 2009. And I'm not even getting one of those wild outlier high-level FAANG engineer compensations. It's a world of difference.
Note that I specified 80% of a Bay area salary, not an arbitrary salary difference. You're implying that you got a 25% raise to move to SF and were able to life off of only 20% of your new salary?
I'm not comparing average middle of nowhere salary to SF, I'm saying that for remote workers you typically get something like 80% of an SF salary, typically dramatically higher than most locals get for similar work. Were I lived I was still easily making double what most other tech people in the area were paid.
Getting double or triple your old salary will of course make the move to SF worth it. But if you can work in the FL pan handle for just 20% less than you make know, you'll live amazingly.
Ratios wise, the Bay Area is worse and stays worse unless you plan to leave or join FAANG.
Yes, this is a fantasy of many businesses, but it only works in a down market when a business does not have to meaningfully compete for employees with other businesses.
I moved from an apartment in LA to owning a home in Michigan. My standard of living had not gone up. Instead of being surrounded by an interesting, diverse set of generally sane people, and having many more job opportunities readily available in my field, I have COVID denying, borderline cultists who tried to assassinate the governor and generally make it unsafe for me to go anywhere without risking getting sick and stolid corporations that underpay and don’t take risks. Thankfully, I still work remotely for a company in California so I can go back when this all blows over.
Employment is a social contract, looking for a compromise between two positions:
* Employers want to essentially acquire a good (productive employee) for the best quality / price ratio. If a trained monkey could do the job for peanuts, employers would be happy.
* Employees, and the society made up of employees, want stability, employment rights etc. as salary work is a backbone of societal stability.
Employers will happily pay the lowest amount of salary that will convince someone to work for them - COL being a key consideration. Employees will negotiate on the basis of the value they bring, but in principle, there is no moral obligation for employers to pay a wage that's fair, based on the value of the employee work, perhaps above ~subsistence levels.
How it works out, we'll see. Perhaps societies agree that strong-arming employers to pay equal salaries, regardless of location, will work - that's how unions, weekends and paid holidays came to be in the developed world (sorry Americans). But neither is a fundamental human right, and rather a societal contract, negotiated between labour takes and makers.
For a different take, should it also be unfair for someone qualified, living in a lower cost-of-living location, to offer their employment to the same company for less? This seems like normal salary negotiation to me.
is there moral obligation to do your job well instead of let's say watching youtube and doing bare minimum not to get fired?
It's funny how people expect moral behaviour from other people but not from companies made of these people. Somehow it's fine for companies to be jerks.
Do we though? We expect people to not break the rules, e.g murder or steal. We don't expect people to stop eating meat, polluting the earth, or generally to stop being extremely selfish. If we expected everyone to be moral you and I wouldn't be spending money on vacations and buying computer games but on trying to save poor kids in Africa and Bangladesh.
Maybe I'm hanging around the wrong people (I often wonder where all the "right" ones are), but that's how it is. And if I don't play the same game, I'll keep getting fucked until I die. It's really depressing.
Once you learn about the horrors of the animal abuse happening thanks to the money with which you buy meat, I think it's the right thing to stop. And similarly, to encourage others to decrease their meat consumption by letting them know that by buying meat, they are very likely going against their values (just ask them if they would pay to torture a dog, for example).
Instilling better norms in a society is hard work, but it's a good thing. Thanks to the efforts of our predecessors, we now look down on beating one's wife, for example. Let's join together, and make it the norm to give 10% of our income to the most cost-effective charities we can find (see https://www.givingwhatwecan.org/ )
No
You can choose to do well to avoid being fired.
You can choose to do well to chase a promotion.
You can choose to do well because the work interests you.
But you are not morally obligated to do anything, and if your employer is not very good at evaluating your work, then — like a man who buys a gym membership and never goes — that's on them.
Both you and GP seem to be talking from an amoral perspective. To many people there is certainly a moral obligation to put in an honest effort and pay fair wages.
of course not. I do that all the time and don't think I'm doing something imoral. it's up to the employer to figure out that I could do more tickets. I'm not stupid to say: hey, I finished my tickets, give me more work :))
Look at many of the products we make together. Why would we hide behind laws that protect bad practices and think those same companies take a moral high ground on this issue. It is, and always will be, due in part to fiduciary responsibility to shareholders, about the money.
You're not morally obligated to agree to literally anything, but you are morally obligated to uphold your end of an agreement.
We expect different behavior from a beehive than we expect from the bees, don't we?
Employers trying to adjust salaries based upon COL really isn't much different to printer manufacturers software disabling printers and selling them at a cheaper price. It's an attempt at price differentiation - in the opposite direction.
I'm objecting to the critique of COL-adjustments on moral grounds: that it is wrong, according to some metric, to pay people differently, based on where they work remotely from. I don't think it is wrong. Maybe impractical, and maybe we agree it's a nuisance, and as workers can force the employers to reject that. But fundamentally fits in with what employment is.
I would think what is documented and certified when filing taxes will be important, perhaps retroactively. Jobs and new software tools may pop up to help companies better understand their geographically distributed workforce from an accounting perspective. Employees with legal challenges (past or present) have the potential to reduce productivity.
i.e. is it only downward adjustments for COL that you object to? and, if so, what's the logic in that (other than pure self-interest)?
This is true, but there's more to it. Employers typically make a product and they still need to sell it to somebody who is not a poor monkey. Employers also need a safe social environment so that their offices do not get burn by the angry masses, and if the factory takes fire they expect the firefighters to show up. Thus, employers have a real interest in living in a safe world full of happy, well-paid people.
This seems like a purely semantic distinction to me. Unless you're religious and believe that humans are "endowed by their Creator with certain unalienable rights" then everything you're claiming as a 'right' is just some generally-agreed social principle that your ancestors fought hard to establish.
Until "the board" steps in and says 'no', right? That's been my experience. Proclamations and cheerleading about "we're a meritocracy, we act democratically in this company".
Times get tough (like a Global pandemic coming along), employees ask firm questions like "will the executives taking a pay cut like the rest of us?"
Response: "the board said no"
"We're all in this together"; "The board won't approve it."
"Burnout is real! Take steps to monitor it";"The board won't approve a 4 day work week"
etc. I've been in some VERY heated and passionately argued meetings in the last month as a leader, hearing my cohort leaders giving voice and in some cases giving voice myself to concerns and frustrations coming from a workforce that is growing pretty pessimistic watching how much of the internal corporate cheerleading and messaging in practice is at odds with corporate rhetoric that have manifested during our extended org-wide WFH.
Wonder if anyone else has observed the same.
When it comes to knowledge / skill based work, the high end of the spectrum is a multiple of value over the low end. Sometimes that's 1.5x, sometimes it's 10x, sometimes it's 100+x.
It doesn't matter how many scientists you hired if you didn't hire the first one (or one of the first ones) to create a working and marketable COVID vaccine, for example. It doesn't matter how many engineers you hired at 50k/year if you didn't hire the guy for 2 million / year that finally got self-driving cars working.
At a less extreme scale, it doesn't matter how many junior devs you hire to do the work if one senior dev could have done it faster and with less headaches, which happens all the time in tech. On a daily basis, in my experience at multiple tech jobs.
And let's also remember that market salaries selects for talent before the talent is even there; today's smartest students that want a paycheck go for tech careers (and some other fields). If tech stops paying well, those people go into other fields, and you don't even get the option to hire that 10xer because they don't exist. If you stop paying well but your competitors continue to pay top dollar, your competitors will leave you in the dust.
Perhaps free markets are not really the right system to apply when managing human resources, and especially to distributing the fruits of our collective efforts.
In other words, companies with this policy pay you as low as the market allows them, without you being poached by a local competitor.
A company decides to pay based on COL. Their engineers in rural areas are much cheaper and they now have a strong incentive to hire more people in Des Moines than in SF. They do so, thus driving up the demand for (and thus, price of) engineers in Des Moines. Likewise, by hiring fewer SF engineers, they're driving down the demand for (and thus, price of) engineers in SF. Give it a while and the national price for a given engineer converges.
I don't know exactly what the timeline here is - probably longer than a couple years, but less than 20. As an SF engineer, this'll probably pull my salary down, but the salary of engineers throughout the country up.
> As an SF engineer, this'll probably pull my salary down, but the salary of engineers throughout the country up.
I'd say the salary of engineers throughout the world would go up.
I think this is a positive change that will make the overall industry more efficient and benefit society as producing high-quality software becomes more affordable. And I say this as an engineer in a high-pay city who benefits from the current inequality in the system.
I believe the change will be gradual enough that people like me can keep earning good pay by continuing to improve our skills and learn from experience.
Cost of living does have explanatory power.
Sometimes a market price disparity for a group is driven by nothing but social expectations.
Consider that the causal arrow might more strongly point the other direction on wages vs cost of living.
There are other newly remote companies as well, but many of them were guilty of illegal anti poaching agreements in the past. Poaching is basically another word for "hiring away," that shows a strange employee ownership mentality.
It's completely ridiculous that you say "Okay I'll give you $100k if you live in NYC, but only $60k for the same work if you live in the Rust Belt."
If it makes economic sense for you to pay me $100k, making that conditional on where I live is just a jerk move.
As someone who actually does live in the Rust Belt, it feels like these tech companies are saying "Yeah we're going to actively try to keep the wealth created by our business models concentrated in the coastal cities we like, and keep the rest of the country poor."
Thought experiment: I have a friend in NYC. I tell the company "Yeah you should totally pay me $100k, I live in high-CoL area, $FriendsAddress is my NYC address." Then I simply don't tell anyone at the company I'm actually doing my job from somewhere in West Virginia or Indiana or Wisconsin. How would the company even know the difference? On the rare occasion the company or someone sends me some work-related postal mail, my friend can simply forward it to me.
In practice I wouldn't do this. I'd simply walk away from a company that uses this offensive hiring practice on me.
If you truly run into cases where the hiring decision has already been made, so you're sure you're hiring the person independent of where they live, and then decide you'll pay them less if they live elsewhere - then one of 2 things is happening. Reality #1 - you're being subjected to some kind of corporate level accommodation where the business has decided that "we'll just take the hit and up-adjust salaries based on cost of living". If they don't apply this approach universally, the only alternative would be to either pay everyone $100k and therefore not have the ability to hire as many people, or simply not hire from $100K markets and only hire from $80k. Reality #2 - there's some real corporate corruption happening at the company where they're doing this for the sake of some central policy, but it's not a real constraint. That'd be unfortunate.
https://buffer.com/salary/customer-engagement-strategist/ave...
> At that stage, someone who'd be an appropriate "right next step" for the company at $80K may not be the right next step if they were at $100K
This is the right way to look at things. You look at the price / performance tradeoff of each employee, and make an offer based on that.
All the SF people get at least $100k because they all turn down the $70k offers, for the good and simple reason they can't live the lifestyle they want on $70k in SF.
Some Rust Belt folks might take a $70k offer because it's interesting work, and a fairly good salary in an economically depressed area.
> you're being subjected to some kind of corporate level accommodation where the business has decided that "we'll just take the hit and up-adjust salaries based on cost of living"
This is the kind of policy I was expressing my distaste for.
If I don't qualify for the CoL based on my location, it sure feels like the SF-level salary is the baseline and I'm being down-adjusted.
> corruption happening at the company where they're doing this for the sake of some central policy
I don't really think this is a thing. I think it's more a misguided attempt to equalize the lifestyle of employees who happen to live in different places. An ideal of "All of our employees should be able to afford a middle class lifestyle" means you pay your Bay Area people $100k and your Appalachian Mountainfolk $60k.
If you look at it from that perspective, it makes sense.
I'm trying to point out that from the view of someone who, at an earlier point in his career, was looking for remote employment while living in a low CoL area, this perspective isn't the one that comes naturally.
Instead it felt more like my skills are worth $100k, and there are a bunch of tech companies out there who will pay me $100k, but they all have this really strange rule that they'll only pay me what I'm worth if I agree to spend 40% of it on incredibly overpriced housing in a city I don't want to live in.
And I got really angry because it felt like they're screwing me. And screwing me in a way that's completely insane and economically irrational for them. Either pay me $100k for remote work, or don't. Whether I'll spend $15k or $50k of that $100k on food and shelter is, quite frankly, none of my employer's business.
That was many years ago. I'm at a much better place in my career now. But at any given point in time, there are probably thousands of people at the point where I was. It helps to be aware of prospective hires' perspectives when considering compensation policies.
Also consider that so many expenses in life are the same wherever you live. For instance, Apple charges the same for a MacBook Pro delivered to Iowa as San Francisco, so if your Iowa rate is half that of San Francisco's, that new laptop takes you twice as many hours to buy. And for what? Also, someone's student loans don't change when they move from a more expensive place to a cheaper one, so in absolute terms anyone making fixed payment stands to take a massive pay cut if they move to a place with COL-based salary changes.
My company is remote-only for now. Without asking them, I have no idea whether my coworkers are in Berkeley or Des Moines. Why should the one living in a cheaper please make less than the one next door? Yes, I completely understand why an employer would like to pay less salary to the latter, but I can't think of any defensible reason that would make the person in Iowa OK with this.
We've been talking about this for the last 150 years. Workers are paid for their labor power, not the value they produce.
> If it makes economic sense for you to pay me $100k, making that conditional on where I live is just a jerk move.
Like laws of motion, the economic system we have naturally leads to exploiting this disparity.
> In practice I wouldn't do this. I'd simply walk away from a company that uses this offensive hiring practice on me.
Extend this to the labor pool at large. Some people have the ability to walk away from these practices while others don't. Ask yourself who has this ability and who doesn't and if this is the outcome we want.
If $100k is what you're willing to pay for a Tesla Model S but it only costs $60k, it's completely ridiculous for you to walk into the store and say "Ok I would give you $100k if you charged me that much, but I'll pay you $60k instead because that's all you charge". If it makes economic sense for you to pay $100k for that car, then paying the lower amount of $60k that the store charges is just a jerk move.
Doesn't really make sense in this context. At the end of the day, salary is a lot more fuzzy than an item in a store with a set price, but it's still dictated by market forces like everything else.
> In practice I wouldn't do this. I'd simply walk away from a company that uses this offensive hiring practice on me.
That's great and that's exactly the thing that would change how the market works. If this does end up happening and enough people are in demand enough even living in low COL places, the market for tech workers will adapt and become more national. It feels like we're at a bit of a discontinuity point right now where nobody knows if labor markets for knowledge work will continue to be locally defined as they always have been, or are becoming more national. What will dictate this is people like you and me comparing our best offers, doing what's best for us, and seeing where we end up.
> it feels like these tech companies are saying "Yeah we're going to actively try to keep the wealth created by our business models concentrated in the coastal cities we like, and keep the rest of the country poor."
I guess can see that perspective, but it's really beside the point. This is the collective behavior of everyone driving the market like it always is, it won't ultimately just be up to a couple of executives to decide.
Trust me, us folks living in the coastal cities have our own pet peeves from our perspective that we can complain about all day too. We pay a lot more in federal taxes relative to the benefits we get than any other part of the country. We are nearly an order of magnitude less represented in congress and by our electoral college votes, because empty land is worth as much as people in the US. But again none of these things are really relevant to the topic at hand.
If society deems this undesirable, the government can create polices to try to achieve a different outcome. This would be a complex undertaking. But I imagine there are beneficial options that exist, especially if the goal is to merely reduce or mitigate the harshest aspects of the labor markets. We already do this in many cases. Employment law is a big area of law.
If you can buy a product for $50 from one site and that's worth it to you but you can buy it for $35 from another site...
What was written is literally an argument for not trying to minimize expenditures. But it makes economic sense to minimize expenditures, that's business 101.
"Objective value" doesn't exist. Not only is it hard to determine because information is generally far from perfect, but the only thing that matters to actual people in the actual world is relative value (aka, incremental value).
That is to say: All decisions in life are about choosing your best option. Hiring is no different.
Your example could possibly work for NYC vs. upstate, middle-of-nowhere NY, though.
But you'll file in your real state of residence, and the other state will then insist you owe them taxes because your employer reported you were working there.
That could be an awkward conversation since a W-4 has this above your signature: "Under penalties of perjury, I declare that this certificate, to the best of my knowledge and belief, is true, correct, and complete."
Definitely consult a tax attorney before you try anything like this.
Let's say I paid you 100k in the rust belt, and you're happy with that, you might not be happy with that in NYC because of the higher cost of living. The inverse is true too. If you're happy with 100k in NYC, you'll be more happy with it in a lower COL location. Which means I can pay you (and more importantly others) less and they'll still be happy. This changes the supply and demand equation.
Using PHP presumably... there's your salary rate problem.
Google has like 100,000 employees. They had a net profit of $34B in 2019. That is 340,000 per employee. From a "we could pay people more" perspective, they are wildly underpaying their employees. That is precisely as much of a jerk move as anything else.
The only solution to this is collective action. I do hope that recognition of "wow, we really do get screwed by the bosses" among remote tech workers will allow the entire industry to see how capitalism seeks to minimize their pay.
A cleaner gets paid less because it is unskilled work and almost any able bodied person can be a cleaner. Same someone that stacks shelves in a super market.
The same happens in our industry. VB.NET developers aren't in demand, the contract rates are sometimes £200-300 a day less than a React JS / C# .NET Core developer in Manchester which is in demand. Higher demand pushes up the price of labour.
I'm not convinced a union wouldn't adjust pay based on location though. A lot of times they already adjust pay by tenure, and other factors that don't affect job performance directly.
Right now employees at tech companies do have power. If you get an offer that is adjusted based on cost of living, you can say no, and there are plenty of other places hiring.
It pains me to see people get frustrated by this fact.
If you want to live like a local in Jakarta (to use an extreme example), you can do so very cheaply, $180 a month for a room, eat rice for breakfast lunch and dinner.
If you want to live like a San Franciscan in Jakarta, it will cost as much if not more as in San Francisco. An apartment will cost several thousand dollars a month. Non-native food that gets imported, such as olive oil or cheese, will be very expensive.
So which is the definition of "cost of living" of a city? Is it how the average person lives there, or is how much it costs for the same lifestyle as where the company is based?
I can buy considerably more food for 100 Euros in southern Italy than in Zurich. Rents are so much cheaper too.
Same goes for eating out, going to the cinema, getting around, plumbers, and hair cuts. Most things, really.
Of course, shipping some Swiss cheese and timber to Sicily in order to live my Zurich lifestyle is very expensive. There are some concessions in item availability depending on the location. But that's completely besides the point.
I'm convinced that a sizeable amount of the "location doesn't matter" people are just bummed that they can't pull in a SF salary and live like a king on a small SEA island.
Take the minimum, over all cultures, of what would be taken as a comfortable lifestyle, and then assess the income required to maintain that lifestyle in various cities to see that, in a real sense, those cities do have different costs of living.
That said, I believe the most sensible companies will not allow their HR/payroll departments to apply a standard cost-of-living formula, simply because there are bound to be prospective employees in Jakarta whose market values are higher than those of other prospective employees who happen to live in SFO and, as an employer, I'll want to hire all those people at their respective market values.
Like, I’m a US citizen and have basic programming skills. Not long after college I landed a software engineering job and I immediately have access to markets like SF or NYC, all I have to do is pack up and move (and it turns out I don’t even have to pack up, because relocation packages include it).
Let’s say you’re from Syria and have a similar set of skills. This sounds hypothetical, but I’m thinking of a specific, real person here. You go to college in the middle east, eventually get a tech job doing operations work in the EU, get an intra-company transfer to the US, have to deal with US govt. questions to work in tech or get a bank account, and then eventually transfer to a software engineering job.
At the same point it makes complete sense that there are dense clusters of highly skilled software engineers in a few places, like SF, and if you want access to that talent pool you have to pay them enough money to make rent.
I don’t think that there is a good answer.
A Starbucks barista in SF gets paid one and half times that in Oklahoma. They do equal work, just different locations. A lady in the Zara sweatshops in Bangladesh gets paid a dollar for the entire day, while a lady in a luxury boutique in LA probably earns 100x that. They do the same jobs, why don't we all globally decide the pay in a single currency?
Simple answer: economics. Adjusting for COL was always a thing, moving away from a high COL area always meant a pay cut. Similarly anyone who moved from India or China or Europe to the Bay, got a pay hike. And the reason this happens is supply and demand. Some people are valuable enough to companies that regardless of where they live they get the same money. Bezos or Musk can move to Madagascar for all they care. For 99.999999999% of the rest, we are replaceable. If you're gonna move to Indiana and demand Bay Area salaries, there'll be plenty of people there who can do your job for less with the same set of skills. And if not in Indiana, somewhere else, maybe India. Economics. Simple. Otherwise, we'd all be drinking $200 coffees and $500 avocado toasts.
I think you cut right to the heart of the issue here. As a software engineer, for years I've heard "If you want to make the big bucks, you have to move to the bay area" or some variation of that. No one on here seemed to have a problem with location based comp when it worked in their favor. Now that it's not people are up in arms.
Let's be honest and call it like it is. A lot of people in major tech hubs see an opportunity to game the system and are just hurt that companies aren't going to let them.
Yes, that's a very simple answer – unfortunately, not entirely conclusive. A MacBook costs the same across the entire US. A Netflix subscription costs the same across the entire US.
Maybe equal pay is just the right kind of unreasonable: The one that will get increasingly more reasonable the more it is being done, providing a push towards a more egalitarian society, first interregional and then international.
But if the job role is to maintain a server fleet, and you can realistically do the job from anywhere, then you should get paid the same amount whether you happen to be in SF or Oklahoma, since you can complete the job in the same manner.
Equal pay for equal work makes sense - what doesn't make sense is to assume that the pay will normalize into bay-area level pay, versus bay-area level pay being lowered because companies realize they can pay everyone 70% as much and have the employees live in lower cost of living areas.
Why weren't they already hired instead of the SF person, then?
Historically those markets have been localised due to the fact that few companies employed full time remote team members, and relocating countries is intentionally made difficult and expensive.
If we see a sustained transition where a significant percentage of companies (even in just particular industries) support full time remote work, we should expect to see supply and demand for talent in that market to become less localised (time zones are still a thing, and full time remote is different to full time remote _and_ distributed).
If that plays out, you'd expect locations with historically lower compensation to get a bump (regardless of cost of living), and locations with historical higher compensation to get a reduction (again, regardless of cost of living).
Companies don't care what your expenses are per se. The valley is an intensely competitive hiring market which forces up compensation, which in turn forces up cost of living - housing supply is very finite and many people living there have lots of disposable income.
It is not that far either, I bet Software Developers do not have beyond 7 years for this to take shape and of course, those massive layoffs are just around the corner when remote works becomes the standard.
It was a greater good for a much larger number of people, but for those at the top of the pay scale, it was a severe reduction in quality of life.
Shooting for a higher average has the effect of bringing up a ton of folks' incomes, while negatively impacting a few.
You, too, could be the few.
Now comes the pandemic which forces - or should I say “allows” - companies to try out the remote model in unison without the risk of being the first mover.
It turns out that it works good enough. But then a company must be questioning why it should continue paying the location premium to employees if it doesn’t see any benefit in it anymore. Adjusting existing salaries downwards, even though the employees didn’t make any changes in their commitment, is socially unacceptable.
Now companies hope that if an employee decides to take advantage of the new freedoms they have an open for this conversation where they try to cut the location premium based on COL arguments, which they know is not the real reason.
If it would be up to companies alone, they would have already reduced all our salaries and if we wouldn’t have liked that, they would have said.. well just move to a lower COL area, we don’t mind
100% agreed with this. I personally see no issue in paying a premium if an employer is asking for something extra, like being in a specific location, or working odd hours, paying a premium is reasonable. There are many reasons why a company may want someone to be on-site in a specific city; this applies if the city is SF, or a small city.
The issue that I personally have is when location is not a factor, but is still factored in to "location dependent pay". Pay someone in SF more because it's important to you for them to be phsycially present? Sure. Pay someone in Oklahoma less than someone in Austin, despite the fact that neither of their locations makes a difference to their work? Now you're openning yourself up to implicit discrimination and "unfair" conditions.
But the advantage of a remote workforce, from the employer's point of view, is 1) getting the brilliant people who can't leave their hometown to work for you, and 2) not having to pay San Francisco salaries. If you're an incredibly gifted talent, you'll fall into category 1 and they will pay you the San Francisco pay regardless of your location (or you can find an employer who will). But if your contribution is shipping high quality, but fundamentally non-novel, Node apps or similar, you'll find that the "standard" salary is that which is paid in Timbuktu, and if you're sitting in San Francisco and want more, you'll have to provide your employer with a compelling reason, or they'll just opt to hire a second person in Timbuktu instead.
Ofc, if they want people to come and sit in their SF office they have to pay more. On other hand if they can get replacement for their ex-local resource for remote for cheaper they might do that.
There are a limited pool of people willing to move to the Bay Area (I’ve had this discussion with my HR before - great candidate, great package, they look at rent and say “nah”).
If your pool of potential employees goes from X in the Bay Area to 10 * X across all 50 states, that increase in supply will impact wages.
That guy making $100,000 in Ohio who wouldn’t take a $175,000 salary in the Bay Area might be very willing to take $150,000 if he doesn’t have to move.
This is going to be a huge lesson in Supply and Demand for the workforce.
And contemplate that there are zillions of intelligent people learning to speak English and who can code (and do other things) very well.
I don't think the American / Western workforce realizes how fragile their position is in the long run.
Today it's about 'remote work' but starting the moment the pandemic is over, there are 5 resumes from Poland, Sri Lanka, Malaysia, Zambia, and Fiji - all of whom very qualified and will work for 1/3 the cost to replace you. And I mean you. (Even CEOs and AI Researchers are replaceable, or at least, investors will believe they are).
These forces are unassailable in our current structure and in some ways it may not be good.
It may lead to further consolidation among the 0.1% as they gain more power.
And while the 'power centres' may be located in the West, but they're really just 'international zones', not really American/Western in anything but civil and legal structure.
We saw the manufacturing jobs go out the door for the last 50 years, and frankly it was a boon for 2 Billion people have come out of 'abject $1/day starving poverty' into 'survivable $20/day humble-means poverty' ... but now the same thing will happen to white collar workers as well.
The Fed Chairman, usually very demure and super conservative and orthodox, even talked about how 'we're not going back to the way it was' - it's not just remote working, it's the insane amount of debt, perennial 0% and negative interest rates, aging workforce (including China), and frankly a surprisingly conflict-free world (it's hard to believe that but it's true) thriving on trade. It's definitely a Brave New World - for those who've grown up and remember the Post WWII order ... it's kind of spooky because the rules are being rewritten in a major way.
Everyone seems to take company statements at 100% face value and that they won't change.
I expect many of these companies to do a 180 reversal of policies eventually.There will be some discord and grievances but will eventually drown out.
There may be lingering affects of the situation though as a more willingness to allow 1-2 days from home but not 100%.
One possible interesting side-effect: it may result in 'democratizing' tech to some extent, if enough seed populations of engineers remain in the lower-COL areas and continue to work remotely.
Over time the pay will become equal, and high COL areas will either stop being high COL or will no longer be where people are hired from.
Sure, average salaries will probably drop from SF ones. Rich companies will save some more money. Startups who have some mental flexibility will be able to snatch some good hires. Employees stuck in cheap countries will get more offers. Countries' economies will have a push to improve or become even more irrelevant. Politicians will steal even more taxes from remote workers. More people will start their own business.
The market and the world will go on.
Of course, the corollary to this is that maybe remote worker's aren't always as good a choice as local workers, which would explain an otherwise puzzling market inefficiency.
The author of this article seems confused about the term “cost of living”. It doesn’t mean all of your personal expenses including grandparents and pets, it’s a measure of the cost of a geographical location.
“ The cost of living is the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time period.”
https://www.investopedia.com/terms/c/cost-of-living.asp
... and since many places’ cost of living is a lot lower than the Bay Area, it’s clear why companies would like to take advantage of that fact to lower salaries for people who choose to live somewhere cheaper. It’s not clearly an unreasonable idea, but dropping employees existing salaries is questionable, something employees may need to push back on or be prepared to change jobs. It’s going to be interesting if the big tech companies willingly lower their hiring competitiveness by reducing compensation broadly.
It is possible to outsource jobs overseas, but the additional friction in communication will frequently overwhelm the benefits.
I learned this from watching firms first outsource to New Zealand and then to India, only to pull the work back because the communication and training issues were huge.
In general, anything more than 8 hours either way is pretty much impossible (and 3-5 is probably the most workable).
Additionally, cultural differences are super super important (and ignored in a lot of these discussions).
If you feel inclined you can say “I’m taking a job with an employer who doesn’t pay based on location”.
But there’s really no reason to do the employer the service of telling them.
This opens a whole can of worms. If a person moves to a lower COL location but then has kids would they break even?
Why do you think so many software companies have offices in india? Because it allows them to pay less based on cost of living.
Can anyone on the other side of things chime in? Is this how it works, or is there more going on? Is it a "we-don't-negotiate-with-terrorists" policy to stop negotiation from propagating?
In the end, finding extremely talented developers is still a difficult, time-consuming, risky endeavor, remote or in-office.
Tbh if the company where I am would pay the same no matter where you're located I'd go live in a flat Bucharest for 1/3 of the cost I have now and probably buy 10 2 bedroom flats there in 10 years and then retire. If my wife would be able to do the same we'd retire in 6-7 years tops.
OR
If I still have to be in the same country I could leave the London area and move up north for a fraction of the cost.
I guess one can differ in the opinion on whether discrimination as defined is ethical or unethical. In this case the argument hinges on cost of living based on location and the willingness of the workers to work for less or more. However, if the cost of living argument was say in the context of Muslims needing more money because Halal food is harder to find and more expensive, then I think most people would agree that this is discrimination on the basis of religion and probably not legal in most jurisdictions of users here. I guess many people can distinguish these scenarios since discrimination based on race/religion is historically problematic and deserving of special protection whereas generic discrimination isn't necessarily problematic until it is. For me, "Because I can," is not a defense of unfair behavior and less pay for the same work is unfair in my norms.
For me, any determination based on criteria other than the individual's ability to perform the work is suspect. It is just too easy to abuse to maintain power imbalances in the world (obviously people living in ghettos are going to be paid less: it costs less to live in a ghetto, then they cannot earn more to either improve the ghetto or leave). It seems to me if you want to demand people work in the city with the office, you make the part of the contract where they are required to be in the office for some determined hours a sevarable part of the contract with its own remuneration. Then all remote workers get paid the same uniform smaller amount but are never required to be in the office: the requirement of being in the office is relevant to ability to perform work in some sense. If you live outside of the country and the company needs to handle special taxes for that, well either it could be flat out forbidden if HR won't do it or they could reasonably require you to pay for the actual costs associated with foreign reporting of income. Other than that, the employer should stay out of my personal business.
It's one thing to allow remote workers from one country to work from anywhere in the world. It's a completely different thing to create a universal and homogenized labour market for tech work.
Universal salaries would allow established and well funded companies to hire anyone anywhere at massively unfair non-local salaries. Individuals would be better off but the job market for equivalent local jobs would suffer and, as a result, new companies in those nations would suffer too.
The difference in purchasing power of the established tech companies in rich nations would annihilate the local labour market competition. It would become next to impossible for non-rich-nation startups to hire the best talent because of the huge opportunity costs potential employees would face. Exporting the benefits of economic privilege like this at the expense of host nations is textbook economic imperialism[0].
Individual benefit isn't the only lens that this issue needs to be examined through.
It's used by business to pretend to have an office in city X (expensive) while actually working in city Y (or in a completely different country). It can also be used to provide an address coming from a fashionable/trendy part of the city.
There are similar services that offer re-mailing services. Basically you pay a fee and have a fund for postages/stamps. Whenever mail arrives it gets re-packaged and re-mailed to your real address.
It's basically proxying for real mail.
I used reship.com multiple times to appear to be located in Oregon and overcome "we don't ship to your location" problems.
If an employer's particular remote-salary algorithm spits out a number that is less then what equally-qualified employees can get elsewhere, they will go elsewhere. If not, they won't. The end effect is that any employer participating in a market will must pay what that market is demanding, regardless of what the algorithm says.
This reminds me a little of the 2008 recession where a lot of analysts at investment banks that were making a lot of money without much experience were fired and those jobs didn't return after the economic recovery. I believe that brought about increased algorithmic trading. It's tough to find sympathetic people to this issue.
I imagine displaced tech workers, now living in lower COL areas will have trouble finding sympathetic ears as well. I would certainly prefer to be the employer versus the employee in this contest.
But in the latter case, they should also be paying people with families more than singles, for example. Since that is not the case, I can't see how they can justify 'cost of living' adjustments.
Quite apart from the fact that the cost-of-living indices are often wildly incomparable. For example, sending your kids to a state school in Norway, vs for example Equatorial Guinea.
Obviously in the latter case, you actually need to send the kids to an often ludicrously expensive expat school to obtain even the same ball-park level of education, and so even though the cost of just living may be much lower, it is actually more expensive to maintain a comparable lifestyle.
As many have pointed out, it's usually neither of those. The pay is determined by supply and demand.
For the employees who are making these value-based arguments on behalf of their employer to then be told that they should be payed less based on where they live seems hypocritical at best.
Differentiation is the key here, if you can do that then you have leverage no matter where you live.
Google has more applicants applying because they don't need to live in California, but the average applicant is also no longer limited to applying to jobs in the area they can live.
The companies have a bigger pool of applicants, but the typical applicant now has more leverage because they're no longer geographically limited. In theory, this should lead to an equilibrium.
Instead, if companies give coupons to pay for rent and food, nobody would complain because they wouldn't see the real value of different cities' coupons.
IMO, the effort should be focused on improving the conversion formulas. Although from what I've seen, people living in cheaper cities are getting a better deal than their colleagues living in SF or NY right now.
This is an awesome observation, but I think it needs the qualification that not all of your salary is spent on COL and that people in high COL areas have an advantage in this regard. If you're saving X% of your salary for vacation, say, it's better to be saving in a high COL area because X will be around the same, but the absolute number will be bigger - and this is money you will not be spending in your area.
When I was a PhD student in NYC I was able to travel for more than a month every summer using money I had saved from teaching in NYC. If I had been doing my PhD in a small mid-western college town, I couldn't have done that.
Say I buy a condo in SF and a colleague buys something equivalent in Iowa. Our employer pays us borh so we have equivalent revenue after mortgage.
After 20 years I can sell my condo, move to Iowa, buy his condo and then two more like it.
This is now way to put it that makes this fair.
Eventually, most people are just going to live further away and commute less.
It also gives people less of an incentive to migrate to bigger cities; they can live comfortably in their own and invest in their own cities.
It has nothing to do with any other abstraction. If someone else can do the work for less (including the cost of finding and hiring that person) then you're going to get paid less.
What's the incentive to stay in the $1k/sqft Bay Area if our coworkers in $90/sqft Michigan are living the lives of kings and queens?
I doubt you'll see qualified developers seeing a salary cut anywhere near as deep as you project, because the process I describe will play out faster than needed to inject the needed stability.