“Location-Based Pay” – Who are we to complain?
blackshaw.substack.com
blackshaw.substack.com
So, the cheap stuff that you're getting is because someone is getting a super bad deal, by exploiting the heck out of workers. Same in China.
The garments factory owners are walking away with tonnes of money, leaving the workers high and dry.
The more _subtle_ point that the author is making, is that, "wait, if people realize that they can get awesome developers in developing nations for a lower price, I'm not going to get hired any more in my over-priced city".
Good, move to a place where your salary is worth more, and work to enrich that community. Why should SF and NY get all the benefits of economic growth?
*Not counting those who never had access to education or a computer to become fully realized engineers in the first place. Just commenting on ready-to-go software engineers.
I may have misunderstood? There was a comment saying not everyone was willing to do this, then you said but more people are than ever before in history, which is positive, no? Did I misunderstand?
But you're right, sorry, I could have phrased my reply in a way that was more explicit about not putting words into your mouth.
I should have just put it in my own words, without projection:
You say, if I'm understanding, that it's a great thing that never before in history have so many been willing to leave family, friends, and country behind. When I see that so many people are leaving family, friends, and everything they know behind for other countries, when they are moving from poorer countries to richer ones, what I see is that quality of life is so unequal across the planet, and people are so desperate. While meanwhile most rich countries are doing their best to keep out these desperate people hoping to leave everything they knew behind for a chance at a secure and dignified life. This to me does not seem like a positive thing. People should better be able to find safety, security, and dignity without having to leave behind their family, friends, and country.
The world has changed.
Hm - I roll to doubt. I think there's an idea in the USA (and the west more broadly) that the quality of life in wealthy countries is Good and the quality of life in poor countries is Terrible For Everyone. (At least, everyone but the ultra-wealthy).
Thats reductive, and (perhaps unfairly) I'm pattern matching your comment to that perspective.
The quality of life for most people in Bangladesh is way better than the quality of life anyone living in a tent city in SF / LA. I doubt many people living in tents in Oakland are scrambling to move to Bangladesh, for kind of obvious reasons. (Its scary, language barrier, culture barriers, no extended support networks, flights are expensive if you're poor, etc etc.) I think it works the same way in reverse.
It's true but misses a broader picture. There are only ~0.5M homeless people in the US [1], or 0.1% of the population. What fraction of Bangladesh lives in that state? Being from the Indian subcontinent and having traveled extensively around the globe, I assure you that that is a much higher fraction and that the quality of life in the US is far far superior than what you'd find in a lot of third world countries.
[1] https://endhomelessness.org/homelessness-in-america/homeless...
A lot of people who can leave, do leave. I left, for example. However, there are a tonne of people who are super smart, but can't leave because of their ageing parents, or other reasons.
Leaving everything you know behind takes courage, and adapting to a new world, a new life takes a lot out of you. Not everyone wants to leave their loved ones. Furthermore, if you are older, it's even harder.
Funny story, one of the reasons I left Bangladesh is because I used to work for this company that paid me 1/6th of the salary someone else was making in a more developed Asian country. I was doing the same work, succeeding at it too.
However, when I wanted equal pay for equal work, they decided to not renew my contract. Back then, I was young, so I decided to apply abroad, an was luckily accepted. Not everyone can do this, because again, you have family, and responsibilities.
2 months into my new job, my old company begs me to come back, and offers me the salary that was more than I wanted, and an O1 visa sponsorship should I want to go to America.
There is no amount of money that would have convinced me to leave Florida. My family and my wife’s family is here. My children’s friends and extended support networks are here. This life is not worth losing for any pay raise. I’m willing to bet a very large number of quality engineer made the same decision I did.
The visa laws make you a second-class citizen (well non- citizen, really) and ensure that you cannot spend much time with them - there is a maximum limit on the number of days you can spend out of the country. Also usually they mean you cannot bring your grandparents. Hell, UK home office basically killed a woman because they denied entry to UK to her sister for an organ transplant. https://www.independent.co.uk/news/uk/home-news/leukaemia-pa...
You have to have relatives and friends that can look after your family, because every now and then they need help and you are not there to help them.
For many folks who have half-decent life at home, the trouble is not worth it. I have many friends from eastern Europe who have come to UK to study and went back.
Lastly, why is FAANG the ultimate benchmark? Some people develop safety and life-critical systems, land rovers on mars, etc. I hold them in higher regard.
And FAANG is the ultimate benchmark for salaries because they pay so much, not because they're held in high regard. In fact, the stories coming out of FAANG (FB and Apple especially) seem to show these are dystopian nightmare workplaces that you only work in because of the ridiculously high salaries.
Income is NEGATIVELY correlated with job satisfaction in SOME scenarios. Imagine the thought experiment: you get paid GREAT, but you boss is aweful. You decide to quit as soon as you find a job that let's you keep you current lifestyle. If it is hard to do that, you keep your job longer...and you have poor satisfaction.
To counter this, I got a 10% raise 6 months ago, and it was tots legit.
What is this feeling based on? You have to invest a lot of money, time and effort into paperwork before you can dream of migrating. One does not simply "choose" to move; it takes months or years of effort - not every talented individual takes this route, or even thinks it's worthwhile - there are a lot of trade-offs, even for the most naïve. I suspect this idea of talent=success is an instance of the Just-world fallacy (one way of reading what you said is that those who are talented have already been rewarded by FAANG jobs, therefore those who haven't yet are not talented, obviously)
More people with a higher level of technical skill will also enrich the community should you choose to participate.
There's no reason Joe Shmoe developer won't do this.
edit: typo
The "idea" of location based pay for developers is that you an have the same standard of living in Boise on less salary than in London. Whether this is true or not is subject to debate.
But what's not subject to debate is that, as you say, Bangladeshi garment workers do not have a standard of living that is okay. What do we do with the fact that our (in the USA or UK) cheap clothing comes at that "price"?
And this is Bad and should be fixed. Developed countries should push poorer countries into paying better salaries to their workers and improve their conditions. This would directly benefit "westerners" too, since it would reduce migratory pressures and get a more level-playing field in economic sectors that have been wiped from these shores -- some even in quite strategic sectors, like the PPE shenanigans last year showed.
Would that mean my plastic bullshit would get more expensive? Yeah, so what? Maybe this would reignite the debate on effective redistribution in our countries too, which was basically killed in 1989.
The fact that they are benefiting as a consumer because of location based salaries is another point against them. Pitting “closing down the ‘sweatshops’” (i.e. unemployment) as the only alternative for the workers is disingenuous. Another alternative is worker control over the factories. Yes OP as a consumer will loose some luxury as the price of consumer products rises along with the workers’ pay, but what natural law states that the OP has the right to that luxury at the cost of foreign workers?
The original point, you deserve the value of your work in salaries regardless of your location still holds. Even more so when it is applied to the global scale. And the fact that it isn’t applied on the global scale is just another fact pointing to the fact that we live in an unequal economy that exploits workers. Instead of rejecting this, OP should have reached the conclusion that there are alternative worker arrangements which would benefits workers globally.
> OP should have reached the conclusion that there are alternative worker arrangements which would benefits workers globally.
This is specifically what he DOESN'T want. What he's saying is that someone from Boise, ID shouldn't complain too loud about location-based pay, because taking the logic to its extreme would mean redistributing all this worker and consumer welfare with the rest of the billions of workers worldwide and, surprise surprise, that would actually suck to essentially every American, doesn't matter how poor.
So, basically: "Hey guys, don't rock the boat. We might be crew but you don't want the rowers competing for our place"
In my circles we have a saying that there is no such thing as an ethical consumption under capitalism. What the OP is basically saying is: “That is fine, unethical consumption is good actually. As long as I’m the one benefiting on other’s expense”.
> As workers united in the goal for international solidarity we should reject the notion of Location-Based Pay, not only because it devalues our own work, but primarily because this practice is causing mass poverty and underpay among our fellow workers in the poorer regions in the world.
Hmmmm... I can see how my vague words could have been read to imply that I advocate the opposite of what you suggest, or that I'm promoting a continuation of the status quo for my own selfish benefit. But that's not what I meant! I was merely trying to draw attention to the hypocrisy of wealthy Western software engineers complaining about "location-based pay" when few of us were complaining when the shoe was on the other foot.
I didn't offer much in the way of prescriptive conclusions because I don't know what the solution is; these issues are difficult and I'm just some random Elixir developer. But your suggested conclusion...
> As workers united in the goal for international solidarity we should reject the notion of Location-Based Pay, not only because it devalues our own work, but primarily because this practice is causing mass poverty and underpay among our fellow workers in the poorer regions in the world.
... sounds about right, and after reading all this commentary I wish I'd made a bolder statement than the handwavey words I went with. I think I'll write a follow-up piece next week.
Thanks for all this smart feedback.
Most African countries simply won't be able to comply, and the sad thing is that trading produce with the west is one of the only ways for them to escape poverty. So the people you aim to protect are left worse off.
And even if the statement is true, this statement might not hold with international trade as it does with local trade. Perhaps if local populations were allowed to trade freely among them self would be a superior option, then if the rich west were constantly under bidding and under paying.
To take an example. Angola trades a lot with rich countries (particularly with China), yet Angola has one of the worst dictatorships in Southern Africa, and has one of the poorest working class. International trade does not seem to be helping in that case.
On the loss side, we have allowed this despot regime to amass so much power (thanks to the economic growth) that they can take the following steps with impunity
1. ethnic cleansing of Uighur minorities
2. support of a rogue nuclear regime in North Korea
3. Subjugating more than a billion people with perpetual surveillance and authoritarian rule
4. Increasing risks of a strife with multiple neighbors - Japan (Senkaku), S. Korea (via N. Korea), Taiwan (claiming sovereignty), Vietnam (South China Sea) etc.
It feels like a net loss to me.
I’m sorry to say, but I’m little skeptical on how much bargaining power explains different pay gaps.
One cause of low bargaining power for this type of professions (characterised by low pay, relatively high education requirements, decent social status/respect, working with people, often majority female) is that in those positions "the market knows" that the strikers won't fulfil the only threat that matters, namely, simply abandoning that profession for a career path that pays more but is worse in other aspects (generally, unskilled or semi-skilled jobs with less social respectability and work conditions - e.g. painting jobs in construction, driving a garbage truck, etc; it generally would seem a downgrade for a teacher even with an increase in pay) and that theres a nontrivial niche of young people who are still intentionally studying for that profession despite knowing that the pay sucks, because they are motivated by factors other than money. The more people there are who are highly motivated to do that job for non-compensation reasons, the less bargaining power the whole profession has, and it is reflected in pay.
Or maybe low bargaining power is just another way to say easily exploitable in the current economic system. If that is the case I’ll subscribe to your theory, as a very similar theory was constructed by Karl Marx in 1867.
The power to strike is relevant as the capability for collective action does grant a somewhat higher bargaining power that they would have otherwise, other things being equal; but of course there are many professions which have a higher inherent bargaining power without even attempting to organize, simply due to having better alternative employment opportunities.
You don’t need a formal education to know whether you are being taken advantage of. Only people with formal education believe such lies.
I grew up in Sri Lanka, and there is a relatively small yet similar situation. Workers are paid $100-200, and have the jobs hanging in a thread leaving no room for negotiations.
There is a massive environmental impact as well. Those big companies often don't play by the rules, and often pollute the water ways, air, etc because who cares if they make money.
Do you really think Globalization should force everyone to move where their salary is worth more?
They have no obligation to pay more for your services than they think they have to, compared to alternatives on the market. And you have no obligation to charge less for your services than you can get from other "customers". Either of you can negotiate the price up or down, and the other is free to take it or leave it.
It's not about who "deserves" what. It's a simple negotiation, like every other business transaction.
The more valuable (and less replaceable) your services are, the more pay you can successfully negotiate for. I guarantee you there are plenty of people at these "location-based pay" companies who've negotiated for considerably higher pay than others in their location. Just as there are many businesses (e.g. Apple) who've found a way to charge more for their products than their competitors have.
So it's worth learning to negotiate. And, perhaps more importantly, it's worth learning to provide massive value that's hard to replace. Or accepting the tradeoffs if you choose not to.
Let's say you mould your skillset to fit perfectly into a commonly-open job description: front-end software engineer. Well great, the benefit is you have lots of jobs you can apply for, so you can easily "fire" one company to go work at another. The downside is you're now in direct competition with a million other people who've shaped themselves to have the same common skillset, so it's easier for companies to fire you. Competition drives prices down and makes you more easily replaceable. But it gives you some safety due to redundancy. That's often a reasonable tradeoff to make, but you should be aware you're making it. If you want the big bucks, it helps to be rarer, and to work at places and in roles where it's easier to demonstrate your value.
I’ve seen plenty of employees with deep context on codebase able to retain their SF salary as they’ve moved locations. For the business, it makes little difference where they work so they keep on paying, they’d rather not lose.
For new hires, it’s a different game. Global means a global talent pool to choose from, a bigger market. Sometimes a cheaper market.
Companies raise their salaries when they can’t hire talent they want at a price point. So know your worth, and be willing to walk away. Also offer something valuable that companies don’t want to walk away from.
I've read Never Split the Difference by Chris Voss [0] and found it interesting but I'm curious as to other reads folks might recommend.
0 - https://www.goodreads.com/book/show/26156469-never-split-the...
Also for context - just remember that actually negotiating already puts you in a good subset of people. Many people - including myself initially - are reluctant to negotiate. It's a learned skill.
If Person A is outperforming Person B, but is getting paid less because they happen to live somewhere else, you lose the ability to claim that you compensate people for performance without sounding like you're talking out of both sides of your mouth. Not only is Person A not going to be happy about that, Person A is not going to believe that compensation at your company is based on performance.
Companies that want to hire and incentivize the best people need to be congruent in their messaging around compensation and performance. Claiming that compensation is performance-based and then including a factor (location) that has no bearing on performance is incongruent and will not help to develop the right culture in this regard.
It’s really unfair whatever you do, and right now there is no good solution. Partially because there is no good way of understanding the value of an employee.
There is just so much money splashing around in investor driven companies right now because of cheap money that I don’t see it working out.
I also think investors provide more then money that is hard to overcome. They have a network you will only get access to if they get cheap investments and for some type of companies that is necessary.
This is the perception among many startups, but I think this is more perception than it is reality.
Exceptional engineers are several times more valuable to most startups than an average engineer, but almost all will hire an average engineer for $115k before they hire an exceptional one for $175k. There's no rational basis for this, but it is the path of least resistance. You won't need to defend hiring an engineer for $115k to cofounders or investors.
This is counter-intuitive, but the solution is to actually pay more for remote engineering jobs. When you do this, you're widening your talent pool to the entire world - and then you're selecting from the very top of the pool. We've been doing this for years, and it's been one of our most significant competitive advantages.
I also agree with your solution, but not sure how practical it is short term. Long term that is probably what will happen.
The really hard part is in starting new projects, or maybe that is just hard for me.
I think a lot of the discussion is assuming FAANG rates, and realistically, exceptional engineers at those companies should be getting paid absurd, outrageous amounts of money. However what you're talking about is a smaller company, and sure, you can hire two average engineers for only 2/7th more money than one exceptional person.
The unspoken advantage of remote teams is that employers can use the location pay disparity to their advantage. For example, we had pressure from executives to do more hiring in our international offices because employees were cheaper.
Abandoning location-based pay sounds good to people who feel they are disadvantaged due to location, but location-based modifiers suddenly become popular again when companies start moving compensation toward their cheapest location instead of toward their most expensive location.
The other advantage of hiring in cheap locations is that it's equally cheaper to provide large incentives to the best performers in those locations.
I could pay $150,000 for an average engineer at some of our US offices, and that employee would still be shopping around for their next 10% raise at a competing company.
Or I could pay $100,000 USD equivalent for a great engineer at some of our international offices, and that employee would be so far above market rate that they'd be doing their best work every day because they were so thankful for the opportunity.
I suspect HN's opinion on location-based pay might change over time as Americans realize that US salaries are the outlier on an international scale, regardless of which state or city you live in.
> I suspect HN's opinion on location-based pay might change over time as Americans realize that US salaries are the outlier on an international scale
The world's most valuable tech companies still do the vast majority of development work in their home countries, and the trend to keep core development at home has only accelerated in recent years. A lot of things would have to change - including that - in order for this belief to age poorly.
Also fwiw, we built our team fully-remote pre-COVID as well, with location-agnostic pay. It only becomes clearer that this has been the right move with each passing year, and we're continuing to lean into this as a result.
I will say, though, that this can depend on what type of company you're building. If your company's core competency is something other than software (e.g. sales), building an extremely high-performing engineering culture may not be the most important thing to your company, and the tradeoffs you have to make in order to do so may not be worth it.
Timezones. Also, lack of enough talent in other countries with similar timezones (Canada/Mexico) since talented folks there can easily move to the US on TN visa.
A lot of high-growth companies starting in the US[1], thus providing a BATNA to what your current job is offering.
Lack of regulatory hurdles to hire more in the US vs setting up shop in a different country and bring in more regulatory compliance requirements.
[1] This itself is due to other factors like: deep capital pools available for seemingly ridiculous ideas, lots of existing talent available to scale your company once there is a product market fit (all the current execs/senior people in tech), relatively less regulations etc.
Remote is great, but there’s something valuable about being in the same room when making decisions. The communication bandwidth really matters for small to medium sized startups.
I don’t have strong data to back this up, but an anecdotal evidence is how many unicorns SV spins up vs rest of the world. The concentration of talent + VCs + risk tolerating culture is what makes SV special.
If you're the only person in the world who can do what Facebook really needs done, they'll pay you $1M+ to do it from anywhere in the world.
There is one other thing that is a small factor in all of this. I'm not saying it is unsurmountable or anything but local/state/country taxes are a factor. We hired someone remote recently who was in Canada. We had to create a new company in CA just so we could pay this individual. For salaried/W2 style employment, there can be a non-trivial amount of extra legal/finance work for the company. Hiring local-ish avoids this. Obviously, having everyone on a 1099/Contractor style employment would avoid this too but most people want salary plus provided benefits. Again, a larger company may easily be able to absorb these costs but they aren't zero.
A worker sells their labor and a company purchases it.
When everyone lived in SF, a worker wouldn't accept a job paying below $100k because they wouldn't be able to afford to live. That same person in a cheaper state could negotiate a lower price, but most of the talent was saturated in SF. Now that everyone has left SF, there's no point in paying those prices if they can still retain you for a lower wage.
The corollary is that if you can reliably find and hire such people you’ll have a massive competitive advantage.
This is the same thing as:
>but also their perceptions of your options.
But I don't think that's about optionality. That's about the actual value of your skill, and its scarcity.
Optionality is more like: Google would probably hire you do CRUD apps because you went to Stanford and passed our Google-like interview when we hired you to do CRUD apps, so we will pay you what we think it costs for you to not go do that at Google. Dave over here went to SF State and was hired before the algo-interview craze; no chance Google will hire him, so we can and will pay him less even if he makes better CRUD apps than you do.
If I, your hiring manager, also went to Stanford I will pay you even more because I sure think I have high optionality! And if my manager went to Stanford then all the better because he will immediately understand why you need more than Dave. Which, in the end, is true: Dave's still here, right?
But it's still a stupid and arbitrary mechanism, and if you're negotiating you should treat it that way. It sounds very systematic and regulatory, but it's not. Just ask them for what you think they're willing to pay you, just like any other negotiation.
Local candidates are scarcer than remote.
Personally, I hate the resulting dynamic. Move to SF and the company basically subsidizes a million dollar mortgage. Move to Manila and your subsidized mansion could be $10k, 100 times less (maybe I'm exaggerating, I have no idea about real estate in the Philippines - but you get the idea). That's insane!
The worst part is that landlords get a huge cut of this, and I don't think they add a fraction of that value to society.
I hope that in the end, with the pandemic, it all balances out to two tiers: on-site and remote. I get that many companies still value attendance, whatever. I just hope that all remote positions balance out globally. It doesn't make sense to pay some guy in Utah twice as much as some guy from Honduras, if neither come into the office.
I've been working remotely since 2015 and the market has been gradually moving in this direction(at least in eastern Europe where I come from) - COVID-19 only speeded things up.
This assumes equal education, skill level, cultural norms and infrastructure. But these are often not equal. If your clients are in the US, hiring developers US side greatly reduces the chance of cultural misunderstanding and communication problems. Also timezone issues here too, for clients based on North America.
US higher education system is fairly strong, and not all countries are equal on that front. India for example, is known for degree mills and ways to "cheat" the system. Which is why US masters degrees are required for the most part. That is not to say there aren't incredibly smart people in every country, but it's not an even playing field and some countries have risks associated with hiring.
Another good example is infrastructure. I'm not sure how many times a developing world coworker has been blocked because of shoddy internet or inconsistent utilities.
These asymmetries will persist, remote or otherwise.
I think neither S.V. nor the market is rational.
You might say "but...but...the internet". Well, perfecting remote work is just the beginning. The unplanned/sponteneous interactions that lead to new relationships also matter. Maybe when we get that soviet internet that browses you.
> I think neither S.V. nor the market is rational.
I agree, and it's possible general "bullshit jobs" and Q.E./softbank bubble type phenomena dwarf the intrinsic value of cities. But still, those are orthogonal effects. Contrary to most American nostalgia, going rural does not defeat the bullshit.
>You might say "but...but...the internet". Well, perfecting remote work is just the beginning. The unplanned/sponteneous interactions that lead to new relationships also matte
Yes, I can totally get why anyone would pay a premium for someone who is physically present, or can be on relatively little notice.
But that only be relevant as far as "local or remote?", where the former gets a premium against the latter, and it shouldn't care about looking up the specific CoL of which remote location you're working from (so long as business hours are maintained). The issue is that location-based pay does do this.
Ultimately remote first companies that don’t do this will win the talent war and steadily push remote salaries up. Depending how successful they are it may also push major market salaries down over time.
PP was asking about why SV pays so much more in the first place. That's a related question but with different variables fixed constant.
Indeed, it's very stupid to so discriminate between different locals. And it's not even clear this is in the employer's interests besides the higher order effects of dominating labor: in simplistic first-order modeling pay scales like this only hinder the arbitrage between different remote locations that are equivalent in the big corp's eyes.
Of course it is possible to set up a tech company elsewhere and have lower operating costs—there are plenty of examples—but that doesn’t it’s a slam dunk; remote work is a trade off that does not work for every person or company, and talent pools and ecosystems matter a great deal.
There are two reasons why SV companies pay outrageous amounts.
1. Some companies have insane revenues. Google/Facebook lead the way but others are in this space as well. They can pay engineers huge amounts because they can afford it. These companies are rare and there aren't many outside of a few hubs.
2. Other companies run huge deficits and are funded by VCs. These companies pay huge amounts because their VCs want them to grow crazy fast and want them to hire top people, so they have to compete with the rich companies. The VCs are primarily located in a few hubs because they want to be able to physically stop in to their startups.
If a few companies weren't bringing in stupid high revenues, the entire HCOL compensation for the industry would collapse. It'd return to something closer to what we saw in 2005 before the rise of the megagiants with more money than God.
The companies I worked for in the 90s, well before goog or fb existed, had location-based salary tables.
There's nothing post-2005 about this.
The canned answer is that SV provides easy access to capital and talent. These are rationale incentives, although they may be overvalued and this is changing.
Companies can absolutely pocket the difference. I know a SV CEO who is building out his software team in Pakistan because college educated programmers are paid $6/hr and the talent is adequate
If the supply of dollars was limited, it would never have reached such critical mass.
But there is another downside of pay cuts for remote workers: A remote worker does not have access to the same market as someone living in a hot cluster like The Valley.
A real-world example from Europe: If I take my Berlin salary and live just 50km out of the city, I am easily one of the top-earners in that area. Naturally, I lose easy access to many offerings of that city, but that's part of the deal, I think. Now if I ever wish to switch employers, I can look in Berlin, but I am at a disadvantage if many companies insist on on-site work. If they don't, I compete on a much larger market with many more would-be employees. This problem should be reflected in payment, I think.
So from my, completely egocentric, perspective it would be ideal if companies demand on-site one or two days a week, so I can choose the best spot for living in a larger area, but still only compete in a limited market.
Pretty much all the surveys I see suggest that this will be the most common outcome. Maybe roughly 20% fully remote and 20% mostly back in the office. Though doubtless not uniform across companies. (I expect my company will tilt more towards remote given that we were relatively heavily remote pre-pandemic.) Which implies that most will probably remain in the orbit of a larger metro; many of the jobs aren't in the city anyway. And many people will want to stay accessible to a metro for other reasons.
I had about a 45 mile commute most non-travel days at one point for a while. (I did take the train some days.) It was pretty doable 1-2 days per week but wasn't sustainable on a daily basis.
It's a bad time to own city-centre commercial real estate.
I bet a lot aren't being open about how remote they will be also, to avoid putting people off.
It's also notable that now being someone with longer experience in working remote - especially managing remote teams - has suddenly become a very valuable skill.
While intriguing as an employee, this seems very pricey as the employer. Office space is expensive. Is it worth the cost given the low utilization? Would you really miss out on an excellent employee who cannot come in the 20% of the days others come to the office? How intriguing is it gonna be to hire someone who works the same time zone, is equally qualified but only costs 30%?
It’s not another downside, it’s the very reason the employer can reduce pay. They are betting your supply and demand curves are moving in such a way that you will be willing to accept a lower price, because you won’t have a better option.
A world of resort-town skilled works chained to their hegemon isn't just terrible for workers. It's a terribly inefficient market: a "sharded monopsony". The very unplanned interactions that allow hot-spot workers to change jobs is also a big reason cities are such dynamic economies in the first place.
https://rationalwiki.org/wiki/Not_as_bad_as
OPs sweat shop metaphor is also a little far-fetched since they are comparing relatively unskilled workers with specialized tech workers (specialization commands a higher price based on limiting supply.) I think we have every right to complain about companies exploiting workers. They --already-- rely on a disparity of information in salary negotiations to manipulate prices in their favor. I think these practices and others are highly immoral and lead to people being paid far less than they're worth.
The whole reason an "employee" exists is because they create more value than they cost. The only relevant factor is how much value they create (either in the form of eventual increased profits or eventual decreased costs)...location has absolutely nothing to do with that calculation. I.E. If a business could rent a money printing machine, the location of that machine doesn't matter....the only thing that matters is how much money it prints in relation to how much it costs to rent. Any argument from the business stating they should "rightfully" be charged less to rent the machine is merely a negotiation tactic intended to increase profits for the business owners.
If you work at a company that does this or is threatening to do this, I'd seriously consider making a move to one that takes the opposite approach. Any hint of this mindset from a company should be taken as a huge red flag.
Not true. Its a market. The upper bound on your pay is how much value you're expected to create. The lower bound is your breakeven point - where you're not sure if its worth going in to work or not.
The range in the middle is pure profit - its value created by your employment. If your income is close to your value to the company, you're capturing most of that profit in your pay packet. If your income is close to your breakeven point, your workplace is capturing most of the value of your employment. Where it lands is dependent on competition. If there's lots of capable software engineers and almost nobody hiring, then competition for jobs pushes wages down. If there's lots of jobs and not enough capable software engineers then competition for software engineers pushes our salaries up.
"Location based pay" assumes your employer is no longer competing with other SV-based software companies (because you don't live there). But your remote job is proof that you have remote work choices! And as more companies become remote-friendly, your company is competing for my time with all the other remote-friendly employers. (Which should push wages up). And employees are competing with everyone else who can apply for remote work (which is a larger pool of applicants).
This is conflating an irrelevant piece of data that has nothing to do with the business outside of them using it against you to negotiate lower pay. It doesn't make any sense to use this number in a "range" to calculate profit for a business.
Also, competing with SV-based companies is irrelevant as well since the same amount of competition exists currently. The amount of competition holds steady as long as the work-location flexibility offered across those companies is relative. And that's completely the choice of the business.
If I'm paying to rent a cash printing machine, I have no realistic claim to demand all cash printing machine renters charge me less because I all of a sudden decide to work with renters from other locations. Obviously, I may find other renters willing to accept less, but I have no claim to demand that renters immediately drop their rental rates.
One side needs to change their way of negotiating before this becomes equal.
The location based pay argument depends on if you're an average or superstar employee.
Average employees (e.g. building CRUD websites) will get location based pay because that's what the market dictates.
Superstar employees, people that are unique on the global scale, will get superstar pay, regardless of location. In the Spark world, there are few people that are able to understand the source code, optimize Catalyst plans, write huge data processing pipelines, etc. These types of employees won't see location pay adjustments.
Basecamp pays superstar rates for superstar employees.
Factory workers that perform "routine functions" earn location based wages.
The upper end of the biglaw salaries was capped because of an unspoken "cartel pricing cap". Big law firms don't want to compete for the upper-echelon talent.
Not sure if tech companies will be able to informally collude in such a manner to cap the upper end of the bimodal curve.
It was basically a death-march to see who'd stick it out long enough. Only a few would make partner anyway, so they needed to shed a lot of people to make their cost structure work, and so they'd work them into the ground and use who stays as the selection method at the lower end.
[1]https://www.cnet.com/news/apple-google-others-settle-anti-po...
It's all down to how well you are able to market yourself. Granted possessing actual competence makes that easier, but really, the world is full of competent, smart but not particularly pushy people who get ripped off.
Technically savvy folks with a low influencer score may get paid less.
Technically savvy folks who do not negotiate well may get paid less.
The modern market rewards folks based on their "basked of skills".
https://resources.sei.cmu.edu/library/asset-view.cfm?assetid...
He talks about the data processing framework he built that's ingesting "hundreds of terabytes, approaching a petabyte a day".
New technologies let small teams do tons of work.
Those skills are often tied to specific domains that are not quickly transferable so what talented engineer A does efficiently or makes them a superstar is specific to engineer A. Talented engineer B probably does something a bit different or has their own sets of expertise they're superstars at.
There are a lot of misguided organizations hiring on the wrong premise though, that there are developers who just churn out implementations at 10-100x speed so they can reduce their workforce. What they should focus on is engineering talent that makes sure they're tackling the correct problems and focus on the right solutions to those problems as opposed to something silly like developer velocity.
Well, not really but maybe 1/2
> Focus only on Programming Effort (limit the scope)
> This is for small programs that should not exceed normal capability
Yes, when you eliminate most of the sources of variation, there is a lot less variation. The most efficient developers aren't more efficient because they churn out boilerplate code faster.
That doesn't conform to my experience (European / working in the industrial sector / hiring developers but not a developer anymore myself) at all.
Pay is mostly based on the sector you work in and the origin of the company you work for. You will have an incredible salary if you work for an American web company especially a big one. You will have a fairly good salary in finance which might become an extremely good salary the closer you get to trading. Meanwhile, some of the guys working with me were experts in sensors fusion, embedded development and highly available systems with decades of experience and were paid peanuts (that was in the defense industry). They all stayed out of a mix of loyalty and the conviction they wouldn't find something as interesting somewhere else (probably right founded from what I have seen).
Meanwhile, I left and am now making double, in some cases triple, what some of my old coworkers are making, all because I'm in a hotter industry infused with VC cash, not because I'm any better.
And I absolutely miss it and understand why some of those people don't leave. The problems you get to work on and the access to classified data and close collaboration with so many world class research laboratories is unmatched. You'll never get that level of intellectual engagement working for a web company until you're in one of the handful of moonshot programs staffed by PhDs, but you will get money, so I chose money.
There also seem to be some areas where highly skilled workers will take a pay cut to work on something they love. This of course leads to lower pay in that field. A common example is the video game industry.
Your previous job sounds like it might have been affected by both lack of a money printer and lots of folks who take lower salary because they love the work
Specifically, the point of geointelligence is we're trying to gain a long-term strategic advantage over all other enemy and competitor countries. To the extent we succeed at doing this, the government itself doesn't earn a profit from it. Everyone else does. We try to tax them in order to pay ourselves, but people don't like taxes and they frankly don't understand the ways in which spycraft is benefiting them because all that ever gets publicized are our failures. When what we do works, you never hear about it.
I'd say superstar is probably 10 years minimum of experience. And even then it doesn't just come to a person. Most will forever be mid and that is ok
I agree that the pool of superstar devs is tiny.
But it sure as hell takes years of experience to achieve certain status
I doubt there are many superstars under the age of 28 minimum
Absolutely bullshit also designed to turn workers against each other to the ownership class's benefit.
We live and die by the quality of each other's abstractions. If everyone is writing shit, I can go it alone 1980s nolstagia style, or swim in molasses. If everyone else is writing excellent libraries, I am flying with a jet pack.
There is definitely attempts with certain bootcamps, anti-intellectual languages like Go, to beat programmers into submission. The "superstars" may do fine in the short term, but will not survive this trend long term.
Meaning...?
I generally agree with your class argument but don't see how Go fits into it, nor what an "intellectual" language would be.
I'm not a huge fan of Go (more of a Python/Rust person--to promote my bias) but I can't think of how it would be "anti-intellectual" (either). The statement was way out of place.
How can we tie compensation to ownership?
We've seen software die as the abstraction falls into disrepair. There's a huge numbers of frameworks to try and solve this, WINE, Dosbox, SCUMMVM, Dolphin.
Flying with a Jetpack is great until it runs out of fuel
Let the employer know how much you want the job. Know the details about the company. Practice answers to questions. Treat this like you’re training to win the US Open. You would be surprised how little effort most people out into preparing.
Also keep in mind that you won’t get every job you apply for and it might not even be your fault. When hiring managers are building a team they may be looking for a specific “personality or subtype” to fill out the team. Where If they had multiple head counts they would probably hire you but are holding out for the perfect fit.
My first job was 50k/year and I lost money just by getting to work (gas, fees, parking, etc). Told my boss and in 6 months I got a >50% raise to 80k/year + stocks + parking space.
Next job was 120k + stocks + remote for a company in the valley.
Each job hop will net you a pay increase similar to this. It'll also give you new perspective on software engineering.
My email is in my profile if you want to discuss in more detail!
Small trivial projects on github profile do not count for much. Contributions to some established OS project are great.
People who are really good can recognize each other.
At some point in the interview process they'll sit you down in the room with a couple of their other really good people, you'll "grok" each other and be hired. (If that never happens, decline the offer, they have no one and no clue.)
Those places are rare. But for the majority, my tip would be:
- Get comfortable with a couple of languages, learn good style, and get familiar with the toolkit.
- Learn the fundamentals of CS.
- Commit to some side projects.
- Seek out internships/work experience
- Do fairly well in school.
- Learn teamwork and soft skills.
I don't think any single/individual point above is enough to signal "awesome developer", but the sum of them will surely correlate with high potential.
I'm not surprised tho, remote work is still an embryo, I'm gonna keep pushing for what I want but we can't expect too much.
When I'm rich and successful I'm gonna pay a standard global rate for the each role. No bullshit country adjustments. The market will just have to eat it
You will be part of the market that’s eating it.
It’s no different than purchasing groceries from store A because they are cheaper than store B.
Paying people extra does not necessarily produce better product, at least not better enough to offset the extra costs.
If the goal is to give people a better life by giving them more money, that is better solved via wealth redistribution.
The latter can lead to “I’ll quit mentally but not actually” which is horrible for all parties. (I’m not saying that’s an excuse to underpay people “for their own good”, but I think anchoring pay to an employee’s actual market makes some non-zero amount of sense.)
The rebuttal to this argument is that if you’re selling a commodity product, then you’re going to get steamrolled when Walmart/Amazon/Aliexpress/Multinational company comes rolling through and offers a comparable option to your product at 50% less by arbitraging labor costs.
I don’t know anything about trapping people in a job they don’t like with a high wage.
Except for differences imposed by differential transaction costs, freely competitive markets have one price for a given good. If there's not a single, global rate for a nondifferentiated good, it means it's not a competitive market and a cartel or monopolist is imposing segmentation.
If there's some places where the supply (in the economic sense of the function relating price and quantity delivered) is restricted so nothing is delivered at the global market clearing rate, then that place just isn't a source of the good.
The benefit of segmentation for buyers isn't that they get to avoid being priced out of markets where you pay more for the same service, it's that imposing segmentation lets you reduce the price you pay to suppliers in low-cost regions to a level below the global market clearing price.
Much of the work of product development and marketing is creating differentiation (real and perceived). Is a Mercedes E-class different from Toyota Camry? Is 90% lean ground beef from Whole Foods different from 90% at Trader Joe’s?
Is economy class 21-day advance, Saturday night stay required travel different from a walk-up ticket out Tuesday back the same Thursday?
For this example, obviously they are different. The job of marketing is to justify the difference in price for whatever differences the Mercedes offers.
> Is economy class 21-day advance, Saturday night stay required travel different from a walk-up ticket out Tuesday back the same Thursday?
Yes, for the seller, guaranteed payment 21 days before is different than a volatile payment minutes before the goods expire.
Sure, and that's definitely an important phenomenon, but it is not really germane to hiring for a role and paying differently for the exact same role depending on where the successful applicant lives.
https://www.deirdremccloskey.com/docs/price.pdf
http://www.daviddfriedman.com/Academic/Price_Theory/Price%20...
I would say that software engineering labor is extremely differentiated?
Why not ask them to? Companies pay for people to get things like masters degrees all the time.
- you're making this up, and have no conception of what you'd do
- you won't be able to hire people from places where the cost of living is high, as your global rate will be lower than competitive salaries there
- you won't survive, as your competitors who do location-based salaries will be able to offer your customers more value for the same price, or same value for less price
You pick :)
Now, in practice, a fair number of companies probably don't have large systematic salary adjustments by US location, including remote generally. But they mostly do it by just not paying market rates in the highest paying markets like the Bay Area and, especially, not going toe-to-toe with the likes of Google and Facebook.
It even says at the end, "I’m not here to make any grand pronouncements about globalisation… My only point is that, when it comes to “location-based pay”, maybe we should be careful what we wish for." I take that as a pretty explicit "hey, this is difficult and I don't have a good answer".
There simply isn't enough value to pay them more. Software is the opposite. Each worker produces a lot of value so companies can afford to pay them more.
A few decades ago western countries were worried that Japan would take over the electronics market because they could produce much cheaper there. In reality Japan went up the value chain and Japanese products are just as expensive as in any other western nation.
Why? If your answer is “Because a T-shirt isn’t valuable”, then that’s a circular argument.
A T-shirt manufacturing employee’s wage is capped as some fraction as the value of that shirt to an end consumer times the number of shirts they can make in a year.
If you were a peasant back then you might have owned two shirts: your regular one that you wore every day, and a 'fancy' one for church, weddings etc.. When your shirt got too ragged you cut it up and tailored it into clothes for your children, or used the material to patch up holes in other clothing. When even those got too decrepit you'd use them as kitchen rags etc. until they literally disintegrated. Cloth was too valuable to waste!
We truly do live in a world of abundant excess in the modern era, and we should appreciate it.
We do, as in you and I, sure. But isn't the point here that those making things like mass-market t-shirt for very low wages are not sharing in that world of excess. At least not in an equitable manner.
Why is it that these people should work for low wages so that you and I can enjoy cheap T-shirts, but I'm not expected to produce websites and computer programs for low wages so that people can enjoy cheap business tools?
This is in large part driven by most website development being semi or entirely custom. (People who use Shopify to make storefronts or Facebook to make company landing pages don’t make the same amount as Shopify or Facebook devs.)
And when you start looking at why that is you get pretty awkward answers like: because of selectively enforced free market ideals where capital is free to move across borders but labour isn't. Which are ultimately backed up by military power.
Companies do this because they are not hold liable for the environmental damage done locally and by the transport, not even mentioning the low safety standards etc.
> [...] if I [...] make the shirt in [...] Bangladesh, you want to cut the price and reduce it to $20, because of “cost of living” for the workers
This is a strawman argument. If I am willing to pay $100 for a shirt, I would not demand the price be cut just because it was made in Bangladesh. Given a choice between a $100 SF shirt and a $99 Bangladesh shirt that are otherwise identical, I would buy the latter. I think many others would make the same choice.
The only times I can think of where I would discriminate by location are if:
1. I am trying to support a particular industry in a particular region
2. I am trying not to support a particular industry in a particular region
3. I am actually paying for the "Made in X" label rather than the shirt itself, for social status, prestige, etc.
At the margin, they are all equal because trade continues until the gains from trade are exhausted.
In many countries and U.S. states, laws guarantee that the cost of an employee to an employer is almost twice as much as what the employee is paid. In those circumstances, the potential gains from bilateral trade are not exhausted and people engage in that trade outside of the dominion of the state.
But if you're just the average developer, like most of us really are - the higher competition will surely make it harder to negotiate higher pay.
This might be true at the lower end close to minimum wage, but payroll taxes are a specific % (usually around 15% at the federal level, and the employee pays about half that) and insurance and other benefits are typically a fixed cost per head (15k to 30k per year at most of the places I've worked). The only thing that might be variable are things like 401k match. Once you get to six figure salaries, the fully loaded cost per employee is 120-130% of their salary.
Value created is the driver for the demand side. Yes, the supply side will differ regionally, but for a service that isn't differentiated by the region it comes from, that doesn't matter—the law of one price should, in a competitive remote hiring market, prevail equalizing wages for remote work. Firms trying to normalize location based pay are trying to short-circuit the law of one price—or at least slow the development of equilibrium by introducing friction—by way of creating artificial market segmentation, which can only work so long as the market is not competitive because of either a monopsony or an explicit or tacit agreement not to compete for labor.
The public discussion that passes for transparency and explaining to prospective workers isn't just about that, it's most signalling to other employers to get them onboard.
Considering the firms lowering the prices are currently paying far above the median in global wages, they’re doing the exact opposite of short circuiting the “law of one price”.
The whole reason for paying higher than median wage was the friction of being geographically located in high demand areas.
If the contract says "we can renegotiate if you relocate", that's not a contract I'd sign, but it's up to the company and employee to decide if that's an acceptable clause in the contract.
A contract which says "we'll pay you less if you move somewhere cheaper" must also say "we'll pay you more if you move somewhere more expensive" but then suddenly my employment incentivises my location. I wouldn't move from Warsaw to Bangladesh but it might make economic sense to move to Zurich. If it's in the contract that the employer must honour the movement, then they have unexpected cost recalculations to do. If it's not, and you're just hoping for a "good faith" agreement, again that's not a contract I'd sign, but others might.
I believe this is a key point in the argument. Currently, I see only one party having an upside but no downside.
A seller of labor that has multiple buyers can negotiate for more pay in places where they have lots of buyers for their labors (and their buyers can afford to pay).
A buyer of labor will not explicitly state this for obvious reasons, just like a seller of labor will not explicitly state they will accept lower pay if their situation changes, but every transaction in life is possible to be subject to negotiation.
I definitely agree that it's strange that the same labour is worth different amounts depending on point of origin, when the goods sold is essentially information. I don't like it, either. But employers are not beholden to the relocations of their employees, it's the responsibility of the employees to negotiate the agreement.
The average article/comment on HN is extremely confused about how compensation works. This is a huge problem because if you don't reason about comp well, you're guaranteed to make suboptimal moves for yourself.
In the example - does the author also expect to pay SF-level rent in Tulsa since "the value of housing to me hasn't changed?" Nope, because of the scarcity dynamic: if you HAVE to be in SF, you are forced to pay SF rent. If you can be anywhere, you can follow inexpensive supply.
If you understand that, you can understand the employer side. If I HAVE to have a SF programmer, I HAVE to pay them SF level rates. If I can have a programmer anywhere in the US, I can follow the supply. So I pay a Tulsa programmer a Tulsa salary. The fact that he once lived in SF is irrelevant to the equation.
I totally get why you don't want to hear that but that's how it is. It doesn't make sense to pay you more just because you were once in a pricier locale any more than you will pay more for rent just because you once did. I am making this clear because I find that it's important to understand reality you're operating in.
If you are with me so far on this argument, you can follow it to the natural conclusion of how you can make big bucks: don't be generic. If your biggest salary driver is your proximity to the office, it was always a matter of time. Instead, work on developing combinations of knowledge/skills/experience/network/etc that are valuable and unique.
That's always been my strategy and while I worry about many things in life, I don't worry about a Tulsa version of me driving my salary down (even if the version of me in Tulsa is me...)
The end goal of location based compensation seems to be encouraging everyone to live in a low cost area, and take a lower wage thereby saving the company money.
I can see why it makes sense to the company, but as an employee I wouldn't support the idea.
We may not have a software union, but the least we can do is be critical of ideas that will directly lead to paycuts.
I am not debating that part, just the reality part.
We are right now in a transition phase during which employers and employees are trying to find market equilibrium under these here conditions were remote work suddenly is a bigger option. I expect that we'll naturally arrive at a few different pay ranges for similar work that result in essence in different markets based on constraints required by the work. That might be based on a requirement to be in a specific location, time zone, country (for legal reasons), or unconstrained as long as the work gets done.
Ultimately I expect this to result in location mattering a whole lot less for most software job's compensation. This means much lower comp for folks in SF or NYC and much higher comp for folks in places that currently have low cost of labor like the middle of the US, but also Central and South America.
Remote work is gonna be the great equalizer. It's exciting to be able to work from more locations. On the other hand the dream of a silicon valley salary for folks who moved to Bozeman, MT will last a short time for the average developer. And salaries in SV will also adjust down as fewer jobs will require being there and now compete with developers in more locations.
Edit: typo
Interestingly, I interviewed with a company last week that has almost the entirety of their dev teams in Dublin.
Neither place has any obvious business reason to have development happening there, so I can only assume they are paying meaningfully less comp.
I hate that we have to do this, and I’m really looking for PEOs that charge less but they all seem to take a significant amount of capital so we’re starting to consider spinning up entities in order to scale more efficiently and take on lower operational costs. However, then we get back to having to hire within that country’s entity to get that benefit (Ireland for example).
Anyone know of cheaper PEOs or better ways? I want my team getting paid as much as possible because, at the end of the day, it’s the same cost to our business anyway.
I wish people would just honestly admit this. Pretending otherwise almost always leads to workers misunderstanding what is happening and getting underpaid.
That compounded with the fact that companies already look for ways to pay you less, this is just adding another reason. It's also important to bring up that the company will save money by not having as large of an office (or even having one), saving on any commuter pass subsidies, etc so just cutting wages for remote workers, puts more money in their pocket.
And what are they doing with all this extra money? Are they hiring a few more employees in those teams that have been begging for extra hands for years? Are they reinvesting in the company, giving more employee benefits, setting up funds for employee hardship, helping employees set up a remote work space, helping employees relocate? Or are they just using the money and doing stock buy backs, pocketing the extra change, and expecting people to continue working in the same environment as before, just from their bedroom?
If you’re working 100% remotely in the US, is there really no one in India who couldn’t do your job just as well? Are you sure? There’s a lot of people in India, and they all have a much lower cost of living.
(I don’t mean to single out India, it’s one of many countries.)
India has the raw materials to be super-competitive in a remote-primarily software development environment. You might single then out as they’re a place with one the best combinations of these raw materials and still a relatively low cost for daily living.
(My company is remote-forced right now and intends to go remote-first/primarily when COVID’s acute phase is behind us. I don’t think remote will be as terrible for wealthy countries if COVID is contained in 2021. Remote is hard and comes with its own set of drags. Once companies can get back together, I think you’ll see “remote but with monthly travel to HQ” or “1-2 days in office” dominate over “I never have a lunch with any colleague” modes of working.)
Their engineer/other salary being the same as places further away. I assume there is a cost of residency allowance for other UK cities that have a premium.
If you move away, that residency allowance is adjusted to where you work from. Thus the technical salary is ~~flat.
After all this allowance is a pass through to the landlords. Those whose parents onw London center digs do very well.
I am not sure how property taxes are levied in the UK, but one would anticipare the Lords would have long since levelled that via head taxes that are levelled in some manner?
Any UK people care to weigh in here? "
Reformatting for readability, sorry aurizon my brain was struggling.
Other cities don't usually get similar supplements, even places like Cambridge where housing costs can be really high.
Property taxes are called "Council tax" here, they're probably the most regressive tax in England (the rest of the UK have slightly different rules). The amount of tax depends upon both the local area and the value of the property in 1991. Everyone who's house was work more than £320k in 1991 pays the same rate. This means in Kensington, London someone in a swanky 250 sq.m. £8million house pays £2473 per year...as does someone in a £million apartment on the next street. The person a few streets over in a grotty 20sq.m £300k studio will be paying £962 per year.
As a Londoner, I find that hard to believe. London is a huge, diverse city with many industries other than tech, and the vast majority of London's population don't make anything close to an SF tech salary. If London was as expensive as SF then I know I wouldn't be able to afford to live here.
The reason we call it shit is because (before COVID) they're pretty much all pushed beyond capacity during the commuting hours, or practically all the time between the main tourist spots. Commuting in London is a truly hellish experience.
And that includes the commuter trains that are frequently delayed or cancelled while ticket prices increase above inflation every year.
The best thing that happened from covid is skipping the commute and saving the £300 a month it took to get to the office and back.
Whenever I looked at apartments online trying to find an equivalent lifestyle (30 minutes door to door commute, nearby parks and restauranta, 1 br 85 m^2 with good amenities) the rent always came out about the same as what I was paying ($1,840/month).
The difference being home in Oakland My hood was mostly single family homes with yards (and a few yuppy apartment complexes like mine). In London everything within that commute range seemed to be a concrete jungle, and I couldnt figure out how to find an equivalent neighborhood withot really going far away from the tech companies.
Whenever I visit london my dollar never seemed to stretch far and food / groceries / transit felt reallly spendy.
London pubtrans is clearly better than anywhere in the USA, that goes without sayyng, but was also more expensive (if I went to the office I think I paid $4 each way for the transbay bus, with a 5-10 minute walk on each end of my commute).
It’s a great city (except for the traffic. I would be terrified to ride a bicycle there), and one of my favorite things to do in life is smoke a spliff and walk down the camden locks trail.
The 30 minutes door to door commute is the problem if comparing, as London is huge. A 1 hour commute is closer to the norm. But a 1 hour commute on a train is very different to the same 1 hour if you're driving and can't spend a good chunk of it with your face in a book or watching Netflix or whatever.
In terms of housing, my current mortgage for a 3 bedroom terraced house with a garden in London is about USD $2k/month, but that does mean living further out from the centre than what you want.
For anyone moving to London, my tip is Croydon. It has an awful reputation which is mostly unearned (it's a very large borough, and very diverse, and it's reputation is pretty much down to scale and some small pockets of the most deprived parts of the borough), and so it's unreasonably cheap for how good transport links it has in to the centre. There are places in London I might prefer if money was no object, but money really would need to be no object, as up until maybe the 3-4 million pound range you'll get more for your money here than ost other places in town.
Working in London in 2007/8 it was common for senior developers to switch to contract work since it was fairly easy to at least double your salary that way (GBP 500/600 a day was about the going rate then IIRC.) At the time I remember traveling to the US and everything seeming very cheap at the 1.90 GBP/USD exchange rates pre Brexit and financial crash...
But even outside of the big tech companies, wages for software engineers are relatively higher in the US than the UK (90th percentile vs 75th) and the higher paid are paid more (2.6x the median at 90th percentile vs 2.0x the median.) If you compare median salaries / rents on pre Brexit and 2008 financial crash exchange rates SF and the Bay Area come out pretty similar.
In none of these have I made six figures.
Part of this is locale. Part of it is I'm not seeking out those Big Tech jobs. Part of it is the industries I've been working in.
Lumping the public sector in the midwest into "US tech workers" and claiming the entire pool is overpaid is the reality for a small set of industries in (what has been) a few geographic bubbles.
I don't think so. Most wealthy countries don't have jobs paying anything close to what Americans make. When you're talking about tech, the division is really just between America and everyone else. This is going to be really great for Canadians who don't want to immigrate to the states since there's almost no difference in talent, culture, or time zone compared to the USA but wages are about half as much at the top end.
Of course he's right about location based pay, too.
The thing that ties it together is negotiating position. Chances are if you're a firm that many of your employees will in fact be OK, implicitly or explicitly, to share the gains from relocating to a cheaper area with your company. If you move to a place where you have 20K lower expenses, it's reasonable to think you'll share some of that with your employer, if only because you find it inconvenient to find a new one.
It is of course true that you're as useful to the company as before, but it's a poker game. It's perfectly fine for you to insist on the same pay, but you'll have to run the gauntlet of your employer calling your bluff.
I foresee more movement on this issue. Different firms will try different policies, and different employees will try different jobs. We'll get some moves to read about shortly, once this has played out a bit. One thing is for instance simply representing you live somewhere other than where you spend your time.
Someone is going to find a friend in central London, NYC, or SF, and swap addresses with them. For instance if I live with my family in the suburbs, I could "swap" with some younger person living in town centre, and give them a piece of the action instead of my employer.
My colleagues here in the Netherlands do make the same, whether they are living in Amsterdam or a small village. So I guess location based pay is also about where you draw some lines.
Anyway, if my boss would tell me I'd be getting less when I move to somewhere cheaper, I'd say: Ok, bye! Next job. In another country, hmm, not so sure.
My answer to the first is yes. The second however is a bit more nuanced.
The first case is when employers find the best and brightest talent from all around the world and expect these employees to work together and deliver similar value. In this case I think globally fixed base salary * a cost of living index multiplier capped at 10-15% difference makes the most sense. You don't want the pay discrepancy here to be too large as these people work together on the same level. For example, using local market rates, a Bay Area employee will likely earn double someone in the EU for the same role.
The second case is when employers want to outsource work to a cheaper labor market. In this case, expectation is that the workers will not be of equal skill and/or the work can be done with little training. Another way to look at this, the relationship is more hierarchal. The HQ is managing the remote worker for work for example. In this case I think a competitive pay relative to the location's market rate make sense.
There are a couple problems.
The inequity of wages in Asia to those in "the West" are a temporary artifact that is slowly receding. Wages have been rising as has cost of living.
Location based pay says, I see you reduced your costs and I want to capture your increased profits. Increased efficiency is a normal mechanism for businesses to increase profits but you're an individual and you don't get to do that. More raw: I think I can get away with giving you less.
It reflects a growing problem in our society, that we are pulling up ladders to prosperity by reinforcing natural dynamics to exacerbate them (i.e. bigger slice). Often we're doing so in ways that reduces additive economic outcomes (i.e. smaller pie).
The challenge with location based pay is that this makes the offered salary less competitive and the labor more competitive. This increases the probability of turnover so those costs eat up the gained efficiency. However, the losses are booked in an illegible manner which allows them pay reducer's biases to avoid noticing them.
If a customer started paying me less than our previously agreed rate, I would stop working for them, and find a different customer.
Employment is no different. Don't get screwed every single time your employer tries to screw you.
Like my father used to say in his own version of English, “you don’t get nothin’ for nothin’”.
I can't speak for Zuck, but Sundar does. I work for Google. We also have local market indexed compensation (which I support, but not relevant to this point). If you move to a city with higher labor prices, you get paid more. I've seen it multiple times with people in my team. It's a total non issue, just paperwork. Very very standard.
(Yes, I know it's not really this simple. Just trying to provide some food for thought.)
Of course it has. Go read the definition of "value". It's the market price, or a fair return or equivalent value, relative worth, etc.
You are literally less valuable if you work in some podunk town where cost of living is half. They pay you more to work in SF because in SF you're more valuable. Because it's a market full of other engineers who all demand (and will actually get) more pay. The company would love to devalue you, but they can't in SF.
You have to remember that they aren't paying you relative to your worth to the products. They're paying you relative to the costs necessary to produce the products. They want to reduce those costs, and so they will reduce those costs. One of those is paying the market rate for an engineer. Paying over the market rate is just throwing away money.
Amazon is quite upfront about this, they pay based on cost of labor. I.e they pay what they need to get the staff they want in that area.
I honestly don't expect big changes--20% adjustments don't really qualify as "big." All the data I've seen suggests that most people will likely remain within at least a 1-2 day/week commute into an office.
At which point, SF and NYC would be low cost areas as well. This won't happen for various reasons but real estate is determined by demand of which employment opportunities are a big component outside of resort communities and similar.
"The reason for discontent and thoughts about unfairness is that people have very different ideas about what is fair. They base salary fairness on different things. Some think it’s fair to base salary on past performance, current performace, past performance and future potential, needs, equality, experience or current market demand."
> If you hire engineers when the market for engineers is tight, you might overpay compared to your existing employees. A Junior developer might end up with a higher salary than your senior guys.
It's on you to know how much your competitors might offer to lure away your senior devs, and deter it. If you wait for them to negotiate, you might lose some of them.
At the end of the day its supply/demand. When everyone worked in an office supply of great developers was limited. If you're remote suddenly the pool is larger. People used to live in low COL for other reasons not just cost.
You can argue that all the best developers used to live in the Bay Area, and if those people are distributed across the country the supply is the same.
Location just gets those in power what they want: higher personal comp and lower employee salaries.
This is the same industry that formed a "wage-fixing cartel" against their own developers and engineers.
I'm sure that they will do anything they think they can get away with.
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
> The defendants are Adobe, Apple Inc., Google, Intel, Intuit, Pixar, Lucasfilm and eBay, all high-technology companies with a principal place of business in the San Francisco–Silicon Valley area of California.
Pando had a story about the scope of the fraud:
> "Revealed: Apple and Google's wage-fixing cartel involved dozens more companies, over one million employees"
> Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.
https://pando.com/2014/03/22/revealed-apple-and-googles-wage...
There's a lot more coverage: https://pando.com/tag/techtopus/
Nike doesn’t offer “location based pay” in its factories. It doesn’t tell people in Bangladesh that they will be paid 20x as much in San Francisco, because they won’t be.
Companies will open engineering offices in say Texas or Florida and say “the job is software engineering. It pays $80k a year, not $280k. Take it or leave it” and eventually through attrition or “incredibly difficult decisions” end up closing down the San Francisco offices.
Remuneration is the equilibrium of what a company is willing to buy at and what the worker is willing to sell at. A worker will want a higher price and a company will want a lower price. If they agree at an equilibrium then an employment contract is signed.
Manufacturers have leverage to lowball the salaries of workers because if a worker declines to sell their labour at a low price, then the company can likely find other sellers because there is a large supply of unskilled labour.
But if the supply of a specialised labourer is limited and the company really needs it, then the company has to consider more carefully if they want to pass on the deal or if they want to buy the labour at a higher price.
If Facebook now chooses to pay lower salaries based on the cost of living of a worker's location, then that is their risk to take as they'll open themselves up to more competition. It's up to the remote worker to decide if they want to sell their labour to Facebook at that price or if they're comfortable to decline and look at their other options, which depends on the demand for remote workers of their particular skill set.
Disparity of human rights is arbitraged by national governments in free trade (ever wonder why free trade and not free movement?) agreements to allow profit at the national levels on both sides. That explains $10 T-shirts.
The reason that SV in particular currently has insane income disparity is because online advertising is a very inefficient market and FB and Google can still afford to set arbitrary de-facto salaries for tech workers. There is a mix of other market disruption and speculative investing that helps to keep the whole thing afloat. The trend in a healthy market should be for tech salaries to normalize with the rest of the world.
Now, why do companies still stick to location-based pay when many other companies are embracing remote work? I think that's just cultural inertia and eventually software engineers will be paid without taking their location into account. But that's not a good thing for everyone, because the salary at that point will probably be much lower than what people get paid in SF area today.
it did change a lot. Most low COL locations are the locations with comparatively bad job market and that means that by moving to such a low COL you're chaining yourself to that nicely paying remote job. You wouldn't risk to argue with your boss, to insist on your opinion, etc. and instead you're more probably going to become a complacent long-term employee, more and more becoming kind of office dead weight with each year. Different mindset makes a different engineer. Getting $600K at FB in SV is just getting your appetite wet, you're thinking about bigger things while getting the same $600K while living deep in Montana - well, it is a retirement, you've made it.
In this light, the idea of a location-based pay can be seen as a simple hack to neutralize this de-facto union. If people otherwise aren’t unionized, this hack gives employers back the sole power in the employer-employee relationship, which was what employers wanted from the start.
A good recruiter will try and negotiate up on your behalf, especially if their agency's fee and their commission is based on a percentage.
It’s already a burden for many of the people I know who work in the service industry or other lower paid jobs that don’t scale with median income. I’ve seen one major wave of gentrification push out families who’d been in their neighborhoods for generations, and I can’t imagine the impact it would have if Seattle tech workers distorted the market with SV salaries, all else being equal.
It’s not that I don’t want everyone to be paid their value, and I’m glad there’s increasingly an openness to more transparent wage information geographically. But I think something important is missing in the conversation and I think it could also be important to tech workers when negotiating their own comp: solidarity isn’t just looking out for one another, it’s also looking out for oneself.
I could imagine the fight against location based pay being a lot more effective if the fight was part of a coalition that supports and coordinates with much less privileged workers who are far more affected by huge capital influx in their communities.
Sure, some of the problem is that the new developments are almost all too expensive for current residents but I’m not sure how you deal with that. The common wisdom is more vacancies lead to a renter’s market but it hasn’t panned out. To the extent there are vacancies they’re all investment properties.
It’s overly simplistic to say build more housing.
Let's rewind two years. You work for a company that's headquartered in San Francisco. You live in Texas, in one of the suburbs of Dallas, as part of the company's small, but substantial, remote workforce. You've been paid well, but less than you'd be paid for the same position if you lived in San Francisco.
Now fast-foward to the present day. Many of your coworkers have moved out of SF to lower-cost areas. Your company has decided to adopt a location-based pay system. You look at the charts HR has put together, and find that if someone who currently lives in SF wants to move to your town, they'd get a 15% pay cut.
You think about this in reverse. You've wanted to live in SF for a while, but were turned off by high rents. SF rents have been down a bit because of COVID, and you want to give it a try. You contact HR and ask them if you were to move to SF, would you get an automatic pay raise due to the new location-based pay policy.
What does your company say? My guess would be they'd say no. They try to justify it by saying that there's no headcount available for hires in SF right now. But of course there's no "headcount" specifically allocated for people who want to move out of SF, but those employees are still free to move where they please, more or less.
So, big surprise: the "location-based pay" only applies when it benefits the employer.
If a person wants to live in Thailand so they can save more of their paycheck vs living in NYC where they could enjoy city life, that is a tradeoff for the employee to make and the employer should not care.
If the culture of software development remains primarily WFH, and it becomes too onerous for me to find a job that's actually an in-person, in-office role, I'll just leave, wasting all of the experience I've built up and contributing further to the supply issues.
It's just sad. Terribly sad. You want to sit at home and only look at a screen - that's cool, enjoy your dystopia. I'm out, I don't need this shit.
For smaller companies, I think fungibility is another way to look at it. Fungibility is sort of taken for granted at big companies because it needs to be there to grow past a certain size without imploding. But small companies can make a lot of money by accepting non-fungibility and keeping total headcount minimal.
What I think this means is that they'll probably be a lot more inclined to dismiss location-based pay because for a growth inclined company, it's basically a rounding error in their cost benefit analysis. You need capable people to do stuff /and/ work well with other people, it's hard to find them anywhere (even if you're looking globally). If someone's doing good work and you want to pay them more to incentivize them, it's not going to be a huge pain to get that checkbook control and the CEO is likely to implicitly sign off on it. The same can't be said for big companies.
For instance, most people accept that for the same job and all things being equal you should pay a black/white person the same wage. If there was a job posting that said ‘we pay this skin colour X and this skin colour Y because according to our analysis people with darker skin tones are willing to accept a lower wage’ there would rightfully be outrage. It would be unfair, while being a voluntary transaction which is profit maximising and in which both parties benefit.
I know you aren’t arguing for that though - we accept as a society that we shouldn’t pay people different based on race, but lots of people do believe that we should pay people differently based on where they were born and what visa status they hold. I personally think this view will change over time as globalisation and remote working continues.
Simply put, “It's a voluntary transaction” can never be a sufficient argument for why something ought to be legal.
Eg. I'd rather be a slave than starving on the road, I'd rather be dead than in some particular irreversible painful medical condition.
The only actions which are ethically wrong in my book are hurting someone else or damaging / stealing their property. Incidentally the government breaks these rules legally everyday (eg. taxation, wars, spying on people).
And you would throw it all away because of some personal libertarian principle? This isn’t only about what you would like to be able to do in any given moment, it’s what this ability does to society as a whole. Your ability to someday be able to sell yourself into slavery has some value (for the principle of the thing, if nothing else), but it is certainly not worth the above-mentioned effects on society.
But let's suppose I am hired, and I decide to move to another location because I am in a position to do so. Basically, the company using location based pay takes out one of the benefits I can derive from moving. Because I work for a company with location based pay I might not be able to move somewhere else until I quit that company! Especially as the company with location based pay probably isn't calculating in the expenses of moving, finding new schools, babysitters etc. all the extra stuff you need to do when you move somewhere new, which if you're making a lot of money for that area can be better handled because, guess what, money makes lots of problems more manageable.
So yes if you want to hire me you have to pay me something I can afford and you can afford, but if you want to change my pay based on if I decide to move somewhere cheaper later I don't think I could afford to tie myself to you like that.
These companies reps told they do it, to prevent inequalities. However this is a straight in your eyes lie. If I will go to Apple in my country, they won't sell it to me two times cheaper that in the US.
But the most important issue for me:
With proper salary I can invest where I live. I can hire people. Create jobs, support for foundations, pay more taxes.
All of this combined helps to lower inequality. When I have to earn less because I am from poor country, it just cements the inequality.
That is why I consider it an offensive lie, and an immediate deal breaker. Actually such companies are immediately blacklisted by me.
Because what they really say is that they want to hire me not because of my skill, but because I am cheap person from a cheap country.
It is not only about me. But also about employees from their countries. How should I feel if a company explicitly tells that it will fire local skilled professional to replace him with cheaper me. He has family too. It is not kind of a deal that interests me at all.
You see this already all the time, where new hires get higher starting salaries than experienced employees are getting. And then once you're in, some companies don't even bother to give inflation raises.
The industry average tenure is 4 years (and probably even less depending on your region). Maybe that can be doubled or tripled based on salary, but only if you're offering FAANG level golden handcuffs. If someone is going to switch jobs at some point regardless of a 10% bump, then you might as well just give them nothing, or cut their salary. And then i might imagine further that retention rates are already well know to plummet for those who switch to remote and move to a different city.
One other thing is: a company operating in an expensive market will itself be expensive. When they start paying the workers less, I doubt they will become less expensive. Basically somebody will just pocket this difference, most likely few at the expense of many.
If you accept the term "location based pay," you have basically handed your wallet to the "wallet inspector," and you are being hustled. It's just like "policy," or "pay scale," they are utter bullshit if you have something of value. The media people who write articles about whether "location based pay, is it good?" are literally just 20-something bloggers with zero life experience trying to get published, and their editors and publishers have a stake in promoting the idea that your work should be cheaper.
If you want to pay me based on location, I'm going to charge you based on location, because I know what kind of prima donnas people from the bay area <or insert region> can be and I charge a risk premium for having to put up with their nonsense. If that sounds offensive, why should using their perception of my housing situation as leverage be legit?
If you are looking at a role, you need a clear idea of the total comp you are looking for as a part of your own plan for your life. Comp isn't a reward for good behaviour unless you are a prisoner begging guards for privileges or an animal doing tricks for treats - it's earned from value. When an HR person tells you what they want to pay you, say, "that's interesting, thank you, here is the data I have on what this role looks like from sources x, y, z, and these are the criteria I am using to evaluate the total package value." Those X, Y, and Z sources and references are things I've written about here before.
Please, please, please, if you write code, read a book on negotiation.
> you have basically handed your wallet to the "wallet inspector"
By accepting location-based pay, you concede that your employer has the right to treat you like a child receiving an allowance; that your remuneration is based on the lifestyle that they think is appropriate for you, and not on the market value of your work. But your choice of lifestyle, your needs, etc, are strictly none of their business and it's exceptionally inappropriate for employers to act like your parents. Once you let these people "inspect your wallet," you are establishing an abusive relationship and will get hustled around the clock.
Its not about the location, employer should always try maximize profit, if they can get the same service with lower expense, they should.
I have worked with two kinds of employees that are willing to accept lower pay.
- those moving for a better lifestyle who have earned and saved considerably more elsewhere. I call these “working retirees”.
- those who have family sending them money to subsidize their cost of living in an expensive city.
But, I am saying, that if you accept an offer that is based on what your employer thinks is an appropriate lifestyle for you, adjusted to the cost of living in your area, and not on the value of your work, that will immediately establish what I consider is a particularly inappropriate relationship between employer and employee. Of course this happens all the time for many reasons, but what we're seeing now is employers inventing and normalizing yet another, new tactic to deploy when trying to get you to accept less compensation. It's just another trick. But what's particularly insidious about this trick is that what they're doing is openly laying claim to your lifestyle by saying that: suppose you're a senior developer, you are entitled to organic groceries, whereas a junior developer is entitled to conventional produce, regardless of where you live, that's what you deserve. But that's wholly inappropriate: your compensation should depend on what you produce, and your lifestyle should be none of their business. If I want to move to Thailand or the middle of a field in Nebraska and save money, that's none of their business. There is no "objective" lifestyle that a senior developer should be entitled to. But that's this new trick they are trying to pull, and it's nothing short of disturbing and creepy.
The same way employee should use whatever 'tricks' at their disposal to get a higher pay.
For a buyer, that means a lower price. For the seller, that means a higher price.
Not a single other factor matters.
I keep repeating this on HN whenever a comp conversations come up. Unless lotsofpulp's comment resonates deeply with your bone marrow level intuition of what gets you paid, you're totally missing the point (and making bad choices.)
If we can remove location-based pay as a negotiation tactic, merely by creating social disapproval because its 'invasive', and the like then that's wonderful for us as as employees.
Why shouldn't we work together to hobble employers at the negotiation table? They have enough power as it is.
The market value of your work depends, in no small part, on whether or not that work includes showing your face X days a week at an office in San Francisco.
However, that this not the argument these people are making. The argument I see time and again is that your compensation should be location-adjusted based on cost of living. And by making that argument, they are clearly saying you are—or are not—entitled to a certain degree of living, which is where it gets creepy, inappropriate and inevitably abusive.
And why do I say creepy? Because saying that a person does or does not deserve a certain lifestyle, and saying that they will or will not facilitate that lifestyle for you, crosses a boundary into your personal life that degrades you as an independent individual who is entitled to decide whether or not you do basic things like saving money. Instead of treating you like a person, they treat you and force you to conceive of yourself some sort of "lifestyle consumer." Sure, some people just have no leverage. But normalizing this way if thinking is going to lead us down an even worse labor path than we are on right now. Your employer is not your legal guardian.
Employees have no more reason to be concerned about the value of their work to employers than employers have to be concerned about the value of their pay to employees.
If you want to be logical about it the only thing that matters is the market. But both sides try to bring in irrelevant arguments in hopes of getting leverage in negotiations. Sometimes it even works!
There isn't one market. A remote SV developer should be able to command more if they can sell a connection to SV. Same for a FAANG company.. you can get paided more for being associated with a faang
Pay market rates. If you want people on location in SF, pay SF market rates. If you want people occasionally on location in SF, pay SF market rates. If you want people to travel rarely to SF pay local area rates to the nearest office the person lives by.
SF is neither the center of the universe nor where all the interesting problems/projects reside.
One change. For those you only rarely require to travel to any of your offices, pay the same regardless of where they live. All remote locations are the same as far as the company is concerned [1].
For a company with N offices, there are only N+1 locations as far as pay should go: the local rate in each of the N office's local area, paid to people who are required to be on location there more than rarely, and the rate for everyone else.
On those rare occasions when someone in the everyone else group is required to come to one of the offices, treat it like any other required business trip and the company pays for travel and lodging and food.
[1] to a first approximation. If the company needs a job to be done on a particular daily schedule, then there are two remote locations as far as the company is concerned: time zones where that schedule is reasonable, and everywhere else.
(i'm being ironic here, btw)
The point is that you as a company do not care where your remote workers are except perhaps they need to be in a timezone close to that of whichever office of yours they are working most closely with.
If you can pay remote workers what would be a good wage in El Paso or Tulsa or Boise and that is sufficient to get you enough good workers from such places to fill your needs, you don't care that it is not enough to get workers from Boston or Minneapolis or Chicago because you don't specifically need workers from Boston or Minneapolis or Chicago.
Say hi to Doc Brown for me, thanks.
- I have a family with children. Should I get paid more than an employee who lives alone? - I have a big house that has a large mortgage. Should I get paid more than an employee who lives in a cheap apartment? - I have purchased a yacht that requires maintenance. Should I get paid more than an employee who hasn't?
Sure, the last one is ridiculous, but honestly, they're _all_ ridiculous. The idea that your employer should be able to look at your expenses and judge which ones are valid and which ones aren't, and then adjust your pay "appropriately" is offensive on a deep level.
It truly is. I may have a passion for Alizé and Cristal and to afford that passion I may want to live in a rural setting. That’s my business. Who are these people to try and tell me that whether I live in SF or Nebraska, they’re only going to let me drink André?
If an employer has nothing to do with your lifestyle choices, then they won't pay for them. For a truly remote position, they won't pay extra if you life in NY/SF vs Nebraska.
However, I think the world hasn't adapted to that market economics yet, so in this time of transition people talk about location-based pay as a stopgap measure. Software development doesn't benefit from a centralized location, so in the future developers won't naturally live in big expensive cities and employers won't pay them wages that permit them to do so.
To be honest, I think the best thing would be for SW Devs to have a guild that aids in collective bargaining. Otherwise, the power balance will gradually tilt too far towards employers. Other professional jobs (e.g. medicine, law) have similar arrangements, and that's the only reason why pay can remain high in them.
Sort of like a worker’s union?
The language itself, "should I get paid" assumes a parental allowance relationship and we should get out of the habit of using it. "Get paid" is a day-labourers colloquialism. The form of the phrase itself defines you as the passive subject.
Bill for work, draw a salary, agree to compensation, accept consideration, negotiate a package, earn bonuses, settle invoices, sell services (not time), sell equity - do not "get paid" by anyone. It's a psychological impediment that keeps people poor.
Penniless immigrants come to the US and within one (at most 2) generations become the 1% exactly because they DON'T think the way you do.
Mindset is everything.
No one making these decisions actually has this idea. It's just more acceptable PR than "we're going to lower your pay because we think you will accept it because we think that you won't or you think you won't have better options."
Should you? No. Do you have to? Yes.
If you have a family of four, a yacht and a mortgage maybe you need to make - say - $200k/y. Cool. But what about some single guy with none of those things, he can work for $100k/y and make the same profit as you.
Are you saying he shouldn't use his competitive advantage over you to get hired?
This isn't about the employer. It's about the employee, and what their life allows them to work for.
So rather than compete in the job market based on your skill set and what value they bring to a company, you should instead focus on not starting a family and living as cheaply as possible in order to make yourself attractive to companies. I'm sure employers would love for you to center your life around making yourself as cheap to hire as possible, but from the point of view of the employee it sounds extremely unhealthy.
Maybe. I got into this market because i was able to apply at a much cheaper position, beating out other more skilled employees. I levered my lower pay to offset my lack of history in the market. Were there more skilled people applying? Definitely. Did they apply at a higher rate? Definitely.
Sure if you wanted to go to extremes you should live as cheaply as possible. But you could say that about anything. Instead, live how you want to live and expect to deal with that cost of living. You said it yourself, "skill set and what value they bring". What value you bring to a company is relative to what they pay you. If you cost $500k/y but your skillset is that of a junior engineer, do you honestly think your value is the same of a similar junior engineer working for $100k/y? Unlikely.
If you want to live in a city you are simply required to make more money than someone living in a rural environment. If i have a huge mortgage i can't work at walmart. I need to make more. These are all relative values based on COL, how much you spend, etc. This shouldn't be a controversial statement, in my view.
Mind you i'm very liberal. I believe in worker rights. But forcing everyone to be paid for insanely high COL SF rates seems bonkers. Absolute bonkers.
(off-topic) this reminds me of a job interview I had early in my career. The person interviewing me was one of the directors of the company and he asked me why I'd requested such a salary.
Initially I was thinking he'd want me to answer some bullshit about Bringing Value To The Company etc but he started probing about my personal life - do I have a wife/kids, what do I spent money on, how much is your rent, how much disposable income do you have and why do you want more.
Needless to say I wasn't impressed by this and decided to cut the interview short.
Except that it seems that there are a whole machine gun worth of bullets just in this HN thread.
(I actually took the job despite this because I wanted to get on the internet train, and I don't regret it. Also, it took me a bit over a year to take over that manager's role and make X2.5 of the original lowball salary)
Interesting choice to invoke market value to argue that the salaries that the market has settled on for remote work are too low.
The market value of work isn't the amount of revenue that the work brings in. If you think you can capture the full value of the work you do for yourself, you're always free to work as a solo entrepreneur instead of working a traditional job. That's kind of an upper bound on what the company could pay you, but the market value of the work is based on the number of employees the company needs and the number of qualified employees they can find. Remote work floods the supply with lots more available workers than they can find in any one city, so salaries for those roles go down. That's not treating you like a child, it's just how a market works.
However, what it does not justify is location-based pay. From the company's perspective, there is no significant difference between a remote worker in New York City or Birmingham, Alabama.
The “external factors” you speak of are the market conditions in which the market operates. You can change the external factors and the market will rebalance to a new equalibrium but that doenst mean the market was wrong before and correct now.
I think supply and demand is still a big part of the answer. By square mileage the potential locations where employees can live has grown by 200x by opening up to remote work anywhere in the US (napkin math, US is 3.8 million sq miles, bay area and tri-state area combined are ~20k sq miles). But obviously the number of available engineers hasn't expanded by nearly that much, engineers are much more concentrated in the areas where most of the jobs have been concentrated up until now. I.e. companies still can't afford to limit their supply to remote only, just as they increasingly can't afford to limit supply to bay area only.
Then there's also the perhaps more controversial issue of skill & experience. The most in-demand engineers are the people with experience at Google, FB, etc. and these people are concentrated in the places where these companies are. Ambitious people also have self-selected to live in these hot markets for years. You could argue that these proxy factors shouldn't matter and companies should be measuring skill directly, but as an industry we still haven't cracked that problem. So on average, a remote engineer in NYC probably is more valuable to most companies than one in Birmingham, Al. Like it or not, there's still a lot inertia to overcome here (and maybe even a little bit of validity to these patterns).
There are plenty of developers who speak great English in the EU, many natively in the UK and Australia and Canada.
Why are these not all getting heavily poached by SV?
Because SV value in-person developers, so have driven up the pay for developers in SV, but in Europe a mid-level developer is still on something like €40-50k.
Not too long ago, I remember threads on HN where people were saying that $200k or $250k wasn't enough for a SF dev and using real estate prices and general cost of living as justification. You can't have it both ways - either your general cost of living is taken into account in your salary (location-based pay), or it's not. If it's not, get ready for a market where the average senior developer makes $90-110k/yr, total comp.
If i live in a low COL area and i apply, why wouldn't i want the competitive advantage of being able to charge them half as much and make twice as much profit as my competition?
People outside the bay area can make a good living charging well below crazy SF rates.
This isn't even an argument to me. It's not even a discussion. Of course when you have a pool of talent, and that talent is competing for a single job, they will use every tool possible. If you can work for half the price of some SF guy paying massive SF rates, why wouldn't you use that tool?
Yea sure, i could make $200k a year - that would be neat i suppose, but it's insane imo. The number only exists because of SF specific problems. And i'm not in SF.
If you're aiming for $50k/y in profit after all COL, your required pricing is different in SF than it is in rural America.
If you live in rural America and compete at hiring with SF people, it's your competitive advantage to keep the same profit as them but negotiate a lower price. This increases your relative value in the hiring process.
Sure, i _could_ keep the same SF rates, but then my competitive advantage may just be my skill. If i want more than skill alone, i could lower my rates.
I'm not making less profit. I'm competing to get a job.
That is how you negotiate when you’re struggling to find a job. By doing this you’re admitting that you’re not going to be as good as the high CoL candidate so you adjust your price to make your offer more attractive to the company. That’s a terrible position to put yourself in (but entirely understandable if you can’t get offers otherwise).
If you’ve passed the same bar and the company is truly fine with remote, there no reason to accept anything less than what they would pay a local. Speaking from experience in several tech companies in the bay, a proven remote employee is just as valuable as a local and getting decent software people is fucking hard.
It’s unlikely as a candidate that there is even any competition for the position you are filling (as in not multiple candidates that have passed the bar being picked over). Talking you into cost of living adjustments or whatever bullshit is just salary negotiation, not competition with other engineers.
Get multiple offers if you have to, but there is literally no reason a company willing to pay Bay Area salaries can’t pay that to a remote employee. Accepting less is just letting them convince you your labor isn’t as good as Bay Area SWE labor.
Yup. That's what i said.
If you see no reason to negotiate, why negotiate? Set your price at what your think your value is. Don't indulge COL requirements of another location.
> It’s unlikely as a candidate that there is even any competition for the position you are filling (as in not multiple candidates that have passed the bar being picked over). Talking you into cost of living adjustments or whatever bullshit is just salary negotiation, not competition with other engineers.
As someone who hires, i disagree. Every one of our hires has been a debate on expected output when compared to cost. But we're a fully remote company.
edit: Oh, and we're not flush with VC cash. We also can't afford any SF employees for this reason. We're much more willing to hire a junior engineer if their priced accordingly. Likewise, if we hired someone at $250k/y, we'd expect twice the output of him/her - and that's unlikely.
I don't get why this is controversial.
Just because someone is charging $200k doesn’t mean they are worth it.
Companies previously established artificial constraints such as colocation that forced higher salaries. If colocation is no longer a requirement, it’s only natural the associated premium is going away. That is, if you want the benefit of living in, say India, then you’ll also have to incur the cost of competing against someone like Ramanujan (famous mathematician) rather than whoever just happens to be within commuting distance of Mountain View.
You are competing on price instead of quality. I'd rather compete on talent and keep the money, thanks.
The era of $400k total comp software development is going to end someday and more accessible remote work is only going to hasten it.
Well, the same argument has been made before regarding offshoring and so far that hasn't seemed to have spurred any major declines in total compensation.
Yes, but things are different this time (famous last words, I know). Prior to COVID-19, offshoring was competing with the convenience of having everybody in the same physical space. Now, with every tech company currently having nearly all of their staff working from home, they are learning to make the equivalent of offshoring work; they have no choice in the matter if they want to continue operating. It's a small, small jump from there to outsourcing to low cost of living regions or even real offshoring.
I'm not sure I buy this when the vast majority of these CEOs have magnitudes more money than they could feasibly spend even if they used a flamethrower. Honestly I don't see tech becoming less useful/profitable in the future, quite the opposite. As long as these $400k employees are netting people higher up a lot more, it isn't going to stop. One could argue that there's still room to pay the employees even more. (and let's be real, most people aren't getting $400k tc)
I feel like people saying "just move to a low COL area" have never actually lived and worked in a low COL.
If you lose your job or get fired, there's no one to back up that "half as much, x2 profit" unless you find remote work again, and then you're also at the mercy of whatever people feel they can get out of you. Without competing offers or local competition, you're at the mercy of the market.
People are underselling the competition that nuclei of talent can produce from top competing companies.
Ok hold up in what world does $250k in SV suck? Median household income here is around $120k last I checked. Making more than double that cannot be described as sucking, come on.
I'll believe this only insofar as $120k in the Midwest means you are "set" in the sense that you can max out your retirement, buy a home, have nice cars, etc. and basically live on autopilot from a financial sense.
This type of housing setup that would cost $300k in, say Dallas, will cost $2.5 million on the peninsula. Between property taxes, mortgage insurance, interest, and principal payments and a jaw dropping $140k down payment, that is a monthly payment of $14k or so.
Your take-home after taxes on 250k in the bay is probably around 160k, or 13.3k a month. Whoops, no “American dream” home for you.
Then again I would describe most of the houses here as somewhere between a hovel and a shack in terms of build quality. But I’m getting used to it after 6 years.
I would agree if it weren’t for the fact that this is still a completely reasonable expectation in most of the rest of the country.
Of course it’s going to cost a crazy amount of money. It’s not even an option in Manhattan, but plenty of people would disagree it “sucks” there.
In Manhattan thats the expectation. You’re in a super dense area filled with high rises. Life is good for apartment dwelling.
In Mountain View, you’re in a suburb that’s mostly single family homes that you’re constantly reminded you won’t ever be able to afford.
> How is it reasonable in the least to expect a big house with a garage and a yard
That’s the lifestyle of the peninsula. It’s reasonable to expect the lifestyle you are constantly surrounded by. Back to the Manhattan analogy, $250k absolutely would not be considered good money if it could not afford you the ability to live like the average property owner.
The Bay Area is a stark contrast between the people lucky enough to have purchased 10+ years ago + some FAANGs and everyone else. Everyone else is stuck in a terrible apartment telling themselves stories about how they’ll get out after making their money or whatever.
It’s nice living in a walkable apartment with no car in Manhattan (or nyc in general). It’s dreary AF on the peninsula.
No, it's not. Should you be able to afford a home in Beverley Hills? Should you be able to afford a home in San Francisco itself? 40 years ago that was the norm.
Yes, it is. The norm in cities in the US until very recently was that you could get a middle class job, buy a small home, raise a family, etc. This phenomenon of only being able to lick the boots of the homeowners near the good jobs is relative new.
> able to afford a home in Beverley Hills
We’re talking about the entire Bay Area, not a specific suburb. Anywhere within an hour commute of Google HQ is like this.
> Should you be able to afford a home in San Francisco itself? 40 years ago that was the norm.
Yes. It was the norm. Then the nimby dickheads stepped in and pulled up the ladder behind them by blocking everything they could and pushed through a very favorable proposition to existing homeowners (prop 13).
Your opinion might be that it’s fine to block out an entire generation from the bay and rent seek. I personally think that’s a shitty drag on society propped up by government created housing scarcity.
Also, people need to remember that "cost of living" is not actually one thing. It's not like I get a "living" bill once a year that I have to pay. Even in relatively cheap areas, there are some things that cost the same as or even more than they do in major metro areas. Don't do math based on some web-based COL calculator or even on housing prices and assume that it will apply across the board.
I have absolutely seen offers within the last six months where the candidate would be worse off financially despite living in a "cheap" place because the pay reduction was more than the all-in cost of living a similar lifestyle (yes, if you're willing to downgrade lifestyle you can offset this, but you can do the same thing in SF. Most people I've seen actually want to UPGRADE lifestyle with larger houses, more land, nicer neighborhoods, etc.).
Agreed entirely. It depends on what specifically we're discussing. I often look at hiring.
> If Google cuts your salary 50% because you move to a cheaper area, maybe that doesn't make a difference to you but it is free profit for Google shareholders. It makes it more obvious to people that the amount they are paid and the amount of marginal profit they earn for the company is WILDLY incommensurate, even for over-compensated Silly Valley engineers, and would be even moreso if you move somewhere cheaper and take a pay cut.
I wouldn't work somewhere that did this for this very reason. But there's a huge difference to paying someone based on their finances, and negotiating hiring pay. I'm just talking about hiring pay being negotiable.
And thats exactly how a company should operate - maximize profit while minimizing cost. And conversly, as an individual, you should do the exact same, which is get paid as much as you can for your work (or do the minimum amount of work for the pay you get). When both of those strategies meet in the middle, you get a paid job position.
I have become interested with the real value of software, and how getting rid of stupid high wages could be a great thing for the industry.
As an analogy, if a country has reasonably priced infrastructure workers (laymen and engineers) it can afford to build the infrastructure it's community needs. If you blow your annual budget building 6 miles of train line, you'll never have high speed rail. Real world example: Australia, one of the richest countries in the world, notoriously high infrastructure costs. While the rest of the world is speeding away with high speed rail, we could barely afford a two stop tram extension in the CBD.
Now have a think about all the software that doesn't get written because it's prohibitively expensive to make it, lots of boutique applications for specific needs, or local communities that need software to help with problems in their community. There are probably a lot of companies that could really do with an inhouse software team, but would never entertain the idea on account of the cost.
Also Australian workers are no doubt well paid compared with some, but compared with the U.S. or Western Europe? Taking into account cost of living etc.? Certainly engineers in Australia in general don't seem to be getting SV wages.
That being said, the original poster is a little bit off, as both Sydney and Melbourne have inner-city transport options and infrastructure that outcompete practically all American cities in that regard, and punches pretty damn well on a worldwide basis (behind only a few cities that are notable specifically because they are world leaders).
But many engineers can work in the Bay Area for 10 years to become a millionaire then move elsewhere, buy a house cash and retire early (or work a lower pay job if they feel like it).
This sounds good on paper, but what you’re saying is establish roots in one place and then rip them up (take your kids out of schools, away from their friends, leave your friends, hobbies, etc). 10 years isn’t exactly an in-n-out stint on an oil rig.
The situation in the valley developed in the 90s and 00s, so that companies could be located close to their investors. That was a time when remote work tools sucked and work practices forced people to be in the same office as the founders, so it made lots of sense that the proximity to capital spiked rents and comp to match.
But now, post-pandemic, remote work is the norm. The founders can relocate to the valley because investment finance is largely a relationship game and those are still way better done in person, but there’s no longer any reason the technical team needs to be located near the founders or even each other.
There is huge disparity in engineering salaries — if you work for a smallish company in a rural area you’re probably making $80k/yr for doing the same job someone in the bay gets $175+ for. Ideally it will work the other way around though — the folks making $80k are much more likely to jump ship for a remote job that pays $125k than the folks making $175k are to jump to the same job.
Of course, if organize via collective bargaining we can likely push that even higher, so listen to your union organizers.
When we think of SF software, we think of software created by a company whose core product is the software itself, especially when the end-users are individuals or other software companies.
This is quite a bit different than most software developed outside of the bay area. Most of it is either in-house stuff or industry-specific B2B stuff. In these situations, the software doesn't have to be pretty, it doesn't have to use cutting-edge tech to woo investors, resource utilization is much less important, and hell - it usually doesn't even have to scale. It just has to work. It just has to make someone's job incrementally better, and it'll be a success.
This software can be tremendously valuable, and creating it has its own unique challenges, but the job is indeed a bit different than software engineering in the bay, and the compensation is different as well.
But I do agree with you, it's high risk and there's a lot of luck involved. And it's much more important to find a job that's a good fit for you.
And my current job quite often has multiple teams from multiple employers/agencies from multiple time zones - even being able to have key meetings with all hand present would massively speed up - we could have avoided so many problems and delivered things months quicker.
They’ve actually seen a huge increase in productivity by moving to a virtual model during the pandemic — exactly because nobody is wasting 2 hours of their day waiting on elevators or waiting for meetings to start. People have more autonomy to block off their day and there aren’t the distractions present in a normal open office.
If I were to informally poll all of the product development organizations I work with, I would expect to see at least 90% of folks want to maintain the remote workplace going forward. They’ll still probably go back to some level of in-person work later this year, but the difference is that remote will still probably be the default for most folks. I don’t think we’ll ever get back to a model that assumes all or even most of the team is located in the same room — it’s just too much better to do things this way.
Trying to get things done properly is very hard if we could have even kickoff meetings with every one in the room and have printed designs stuck to the wall
And frankly most of the dev projects I work on are globally distributed anyway, so you’re never getting everyone in the same room to begin with.
A high local real estate price is a reason you can't profitably work for less and its something you can profitably express to an employer if they will take it into account in order to access the local labor market.
A lower local real estate cost is a reason you could work for less not a reason you ought to want to.
You absolutely should try to have it both ways to the greatest extent possible because they are too.
I am not sold on full remote working for most companies. I am not even convinced the little covid experiment demonstrated anything, as companies still benefit from employees knowing each others from before the lockdown. Long term the effects in term of productivity, employee morale or culture may be quite different. A compromise is having more local offices, but even then, everywhere I saw it before, it creates a “them” vs “us” between offices, people feel remote from the centres of decision, etc.
But -- and I feel like I'm alone in this -- my personal observation is that even for teams that knew each other before full time WFH I've noticed the teams _mostly_ are not doing new and challenging projects. There's a ton of work and small iterating possible in any company, but I notice all the challenging projects have been punted - or are moving very slowly.
My personal conclusion is that remote work does not, in fact, work well, at least for some types of projects. I can totally see UI-heavy stuff working out, for example, but not embedded or high complexity projects.
Raises tend to be percentage-based. The junior making 200k in SF may be worse off than the junior making 100k in Pittsburgh.
But the senior making 400k in SF is much better off than the senior making 200k in Pittsburgh.
Since Silicon valley is that one weird place where it takes five years for a junior to become a senior, taking that job in Pittsburgh is quite short-sighted.
Cost of living allowance/adjustment (COLA) was a retention strategy originally designed to give workers being transferred overseas and to large metropolitan areas more money, not less. You should do some reading up on HR practices if you want them to stop taking advantage of you.
My simple counter was that "if I save 20% of my salary per month, I will have 4k in the end of the year. If I take an €60k (net) job in Frankfurt and again I save 20%, I will have 12k". Why would I 'sell myself short' for 8k of savings per year? It only made him angrier because my narrative did not match his sales-pitch. I never got to work for Amazon (or anyone else in Bratislava).
Location matters.
If you want €100k then don't look in Bratislava.
If you want a 'slow calm life' (away from the madness of London/Paris/etc.) go to Bratislava or Ljubljana and be happy with the €40k.
> You can't have it both ways..
No but people love to complain.
PS/Addition: it feels like "bait and switch". It's like hiring me in Bratislava, giving me a small (net) salary and ask me to work from London. I wouldn't accept that. The employee would also feel cheated the other way around. And with that said this is my favorite cities' cost comparison: https://www.numbeo.com/cost-of-living/comparison.jsp
Many IT companies in Bratislava hire local people for local salaries... and then make them travel to other countries exactly 49% of the year (so they still pay taxes locally); the remaining 51% of time working for a foreign client remotely from a local office.
My friend had a job where he had to fly to a Western country every Monday morning, and fly back home every Friday evening, to maximize the number of working days within that 49% of the year. (This way you can work abroad for 36 weeks a year, instead of "mere" 26.) And of course he had to spend 8 hours working each Monday or Friday, so he left home on Monday soon after midnight, and arrived home on Friday shortly before midnight, so he basically spent the whole weekend sleeping. (He already quit that job.)
I'd argue that this isn't really what location based pay is worried about. In this case, you're being paid specifically be close to some location or collective building because your employer values that collectiveness. That's okay. That's the company communicating "we value the ability for you to be here, in person, with this group of people - so we're going to incentivize it".
The problem with location based pay is when an employer says, "You can work from anywhere you want, but we want to know where that is so we can pay you less". You provide them the same value from mid-city America as you do in rural America. They simply want to pay you less when they can.
No, you are compensated for how much someone doing the same work would demand.
I don’t understand why pepple keep repeating this. Obviously we are paid what they can get away with. We’re just trying to change what that is. If everyone starts accepting location based pay, we’ll be fucked in the long term.
Or, well. It’s strictly better for me if I get paid SF wages anywhere in the world.
There is, obviously, incredible incentive to defect. If you're going to demand 100% of SF wages, I can improve my lot by demanding 99%. Then the next SWE can undercut me at only 98%, and so on.
Like the original comment said, most programmers probably need to read a book about negotiation so that they can clearly communicate their skills and why they are not easily replaceable. Once you're established as an unique professional with an unique skill mix, you'll be compensated for how much the team to replace you would cost.
A candidate can't ask for an obviously uncompetitive salary, but they can ask on the high end for what a company expects to pay for an employee.
Setting aside that obviously, on an individual level, an employer will typically want to pay you as little as they can get away with, this isn't how location based pay works at a macro level.
Saying "You can work from anywhere you want, but we want to know where that is so we can pay you more" is an equally (in)valid statement since it's about pay distribution.
My friend who works remote makes just as much as I used to working in the office (when I was in industry). He's not getting "location-based" pay, so I'd say that "the market" has not unanimously decided on that quite yet.
No. If you have a monopoly on a skill/knowledge/certification/etc, then in theory you can extract rent from the business, potentially up to the profits of the business (well, profits less the returns required to cover risk of capital). The maximum you can earn is far more than the value you create.
You’re correct, but that’s not what’s happening here. Facebook isn’t paying remote workers uniformly less than in person workers. It is paying different amounts for different remote workers depending on where they live. That makes no sense given that, as you observe, there is a single national market for remote workers. The fact that Facebook can do that is an indicator that it either has market power in the employment market for programmers, or that we’re in an odd situation where the market hasn’t reached equilibrium.
In the end, employers are free to make whatever excuse they want to try to pay less, but I will respectfully decline to take a 50% pay cut to produce the same value for them :)
When looking at an individual employee's decisions, these policies don't seem to help the company. I think they only really make sense when thinking about populations, where people are less mobile and more fungible.
Local cost of living, if everyone is working remotely, has no bearing on the value you provide your employer. Discussing location based pay in that environment is rather absurd, is it not?
The difference now is artificial constraints within countries around locale are loosening, meaning locals can play the same game (and take advantage of similar bid/ask spreads personally). IT work in India happened because while super hard to get started/get over the bar, the wage differential was huge (between what a viable candidate would accept, and what the company was willing to pay). Multinationals who could get over the bar to take advantage of it have reaped trillions.
For jobs that are fundamentally local, it is different (plumber for instance). The number of those jobs is decreasing over time, however.
This will likely result in a 'reverse brain drain' as long as conditions persist, with rural areas benefitting from smart and ambitious people no longer being forced to relocate to a city to benefit. They'll pump money into the local economy.
For people already remote, they'll have more competition and will need to continue to differentiate.
For those in cities, well - it's gonna be rough.
Long term, it's likely that center of gravity will shift back to the cities - physical distance does have beneficial effects, and at least when there isn't a pandemic, it tends to override the other issues with city life (competition for space means high rents, noise, etc.). It might take awhile though.
If you're aiming for low/mid-level (generic) employee, you're eventually going to have a hard time competing with someone who can survive on less. It has been what is causing a lot of the angst in the middle and lower class (especially in manufacturing jobs), as their labor is easy to outsource in many cases to cheaper places.
> that your remuneration is based on the lifestyle that they think is appropriate for you
Often, these schemes happen because it's employees who have lifestyle expectations. "I'd love to work for your company, but I'm not cutting my standard of living." And that's reasonable. The raw amount of money means way less to most people than what it means for their lives. And straight cash compensation is only one factor in picking a job.
The truth here is that the Internet has caused context collapse in far more than work. Labor markets used to be local. They still mostly are, but for those of us lucky enough to be able to work remotely, that's changing. That's going to have knock-on effects in other markets (housing, food, education, etc) for at least a couple of generations.
As we jointly work out the new normal, I think it's worth starting with the assumption that people are not all complete assholes. Yes, by all means let's watch out for worker exploitation; there's a lot of it. But from what I've seen, so many policies are just well-meaning people tinkering with things that they inherited. We can be firm about negotiating for fairness without assuming everybody's out to get us.
i can’t understand this pov at all. unlike a child allowance, you can say no and court a different parent.
you are simply labor, and location based pay reflects this. the only ones complaining are those receiving less pay. it’s like when people complain (loudly) that “stealerships” add a markup above msrp for high demand cars, but the same people don’t complain about discounts from msrp for basic cars. if you don’t want the car at the offered price, move on!
Just about all benefits offered by employers, from maternity leave to health care, function as allowances for particular purposes. They pay a variable amount based on the varying needs of a workforce.
One could even relabel the location-based-pay as a "rent supplement". If everyone get the same pay but those paying crazy high rents get extra to ameliorate this, it sound better.
Which still isn't saying I like this idea. I don't think pay should be able to be easily translated to benefits and I think only things that are unalterably unequal, like health care and maternity leave, should be doled out as benefits.
But I don't think one can make the argument that "allowance" type pay is inherently offensive. I mean, one allowance thing that's totally reasonable is when employees have to go to conferences for a work and the employer gives them an allowance for the incidental expenses they're incur.
Understand and negotiate based off the value you provide, and what you can bring to the business. Chances are, your local cost of living has very little to do with that.
No, I'm just saying sometimes employers can reasonably take employee costs into account - health care, maternity leave, day care, etc. Not here, I agree employers should not consider this. But I think saying employers should never take variable employee costs into account is an argument that's wrong, so making that absolutist argument won't help the case.
It’s all negotiations. If you think it’s worth taking a $10k paycut for a $5k (for the business)/$12k (as an individual) health plan, then it’s win-win.
If you take a $10k paycheck because you live in Nebraska (and nothing else), and the Company is in SF? That’s just bad negotiating.
If the company is in Nebraska and only pays $10k less and can get plenty of takers locally - then they won’t get many people from SF, and they’re probably fine with that.
You claim that you should be paid based on market value. You are probably speaking about the pre-covid market value.
But once you open up to full-remote working... The market broadens immensely.
Your "competitors" in the market are not bay-area people anymore. It's the whole US. If your company has branches in other countries too (think FAANGs) and the workforce was already spread across timezone then now most of the world is filled with potential competitors for your job.
And now with a huge supply of workers, your market value decreases a lot.
And to be 100% honest: as an european, if you (an american) think you're worth 250k and your employer is thinking of firing you and offering me 125k for your job... Well good luck with your next job search.
Agreed, not just American, anyone roughly in the same time zone. There are lots of well educated people in Peru/Chile/Brazil that would work 24hrs a day for a $25k salary.
Of course, since there is more demand than supply of qualified workers, remuneration rises above that minimum. But as long as an Indian developer is "glad" to do the same work as you for 1/4 pay...
You're really not doing the HN user stereotype of entitled valley types any favors using very personal ego-centred words such as "offensive".
Over 25 years in tech, I've hired many dozen developers. Only maybe 3-4 of the candidates I've given offers to in that time have tried negotiating.
I've never given an offer where there wouldn't be at least some room for us to negotiate.
Meanwhile I always negotiate when I receive offers, and have usually ended up with substantial increases over the initial offer.
That was 15 years ago, people didn't talk about this stuff as much back then, and hopefully I'm wiser now.
Next time I have a salary negotiation, if ever, I'm definitely going to scour HN for advice and read some books.
I’ve hired many engineers. Neither myself, nor any cofounder has been insulted or angry by a counter-offer. Sometimes we said to ourselves “this is kinda high for someone at their experience level” and held firm or met in the middle, but most of the time if you ask you’ll squeeze at least 5K more out of it even if your counter was 30K higher than the offer.
The closest I've seen was someone with wildly out of line expectations (a developer who asked for basically the whole employee option pool to himself). Even then we gave a counter-offer (that he declined).
Personally I'd see it as a sign they're not someone I'd want to work for.
If someone takes it as some perceived slight that you've asked for a higher amount, then consider they'd probably be equally offended if you asked for a raise down the road, and then you'd be in a bad spot...
Of course being able to not worry about being turned down is a luxury we can't always afford.
(Also, I have at times thought I massively overshot, and kicked myself because they immediately accepted; you'd be surprised how much of an increase you can ask for sometimes)
part 1: https://haseebq.com/my-ten-rules-for-negotiating-a-job-offer...
part 2: https://haseebq.com/how-not-to-bomb-your-offer-negotiation/
It’s not a zero-sum game at all. Employees from wealthy countries can gain labor surplus through technology transfer a number of ways or even find business partners and employers.
Mutually beneficial exchange is the name of the game. It’s true that different folks achieve different relative success compared to their peers. That’s okay and good when it’s the product of honest just exchange.
Also, I guess YMMV but I haven’t found this approach to be very effective. Lots of companies will openly admit they just can’t compete with FAANG salaries for instance. The recruiter wants to sign you for the sake of their commission, but they lose people all the time and aren’t going to lose sleep over you walking away. Even if you really are 1 in a million, the recruiter is not incentivized to avoid missing out on those people at all costs. They’re incentivized to bring in a steady stream of pretty good people, and you’re still just one person.
I’m not saying there is no use in negotiating, but you’re basically hyping it up as if there is some magic incantation that will let you convince anyone to pay you whatever you want. I think that does a disservice to anyone looking for salary advice. In my experience, if you can get a 5-20% increase from their first offer that’s about all you can expect. You’re better off applying for higher paying companies from the beginning, and learning skills/playing the politics to get promoted to higher levels (e.g. senior, staff, principal engineer) where the comp you want is in band, rather than trying to turn a mediocre offer into an amazing one due to sheer force of negotiation.
Yeah. Anecdotally, many tech companies don't have big location-based pay differences across the US. But they mostly do that by not having offices or at least major offices in places like SV and NYC--and basically don't really try to salary match the big tech companies. I have a feeling that if you looked at most tech employers you'd see a lot more outflow to FAANG than the other way around.
The difference between their first offer and 15 minutes on the phone with the right attitude and tools is what a lot of people make in a year. On an hourly 1-year contract rate haggle, upping $10/hr is $20,000 in the contract value. I'd call that a valuable phone call and probably the best return on $15.95 anyone ever spent, especially because it was probably just for some cheesy ebook on negotiation.
Is that hype?
I may have to write that cheesy ebook. :)
But I suspect it's equally possible whether you're in a low or high CoL area, I haven't seen anything to suggest otherwise. It's unrelated to the issue of whether the company will pay you more in certain locations than others.
Comp is a retention mechanism that’s determined by supply and demand. Not a single reasonable company will be willing to pay you more that’s bare minimum to keep you to stay. Hiring isn’t about rewarding workers based on the value they provide, it’s about optimizing costs so you can maximize profits.
While location based term is a BS term, it is very real market mechanism. In your local market there’s less non remote companies than in high cost of living areas, that are willing to compete for you, so your price point is lower.
Feels like this reasoning changes for those starting in San Francisco or London, looking to relocate?
Hopefully they've learned enough about how much the company values them and how much it cares about them, that they don't just accept a relocation and whatever salary their company gives them. I'm not too hopeful though, given what working conditions they already accept while living in SF (or wherever).
That's definitely not true. Indeed, I think that's a pretty bad way to think about comp, leading to an adversarial employer/employee relationship.
As examples, consider Netflix, which is widely known for paying above market, or Gravity Payments, which changed their minimum pay to $70k/year: https://en.wikipedia.org/wiki/Gravity_Payments
I'm just about to post 3 new positions, and I have no interest in squeezing people on cash comp. I want people who are happy, relaxed, and feel like they're being treated well. And I also want a fair salary structure. Could I pressure bad negotiators and naive people and pay less? Absolutely. Will I? Fuck no. Maximizing shareholder value has been called "the world's dumbest idea". I wouldn't go that far, but it's certainly up there.
You can call maximizing profits maximizing shareholder value, and often they’re aligned. But it’s how businesses were always designed to work, long before stock markets. Is it fair? Most likely not, but it’s business 101, same as me writing reliable production code is engineering 101.
If that involves maximizing profits, then great, but if the owner enjoys doing work with happy, un-stressed people more than he does a few humdred extra dollars in his pocket, it’s clearly not (only) about optimizing profits.
[citation needed]
As far as I can tell, that's a modern, MBA-ish fantasy about the nature of business. I have small business owners in my family going back generations. Maximizing profit was not the goal. It was making a living and being part of a community. This is definitely not uncommon. See, for example, the writings of the late economist Alison Snow Jones: https://www.interfluidity.com/v2/1095.html
Who taught you this? If there's a specific historian pushing this narrative I'd love to know who it is, because on the surface this claim sounds absolutely outlandish.
That's not a counterexample of what the post you're replying to is talking about. Netflix feels they need to "overpay" to get the caliber of talent they want, and also to make it harder for it to be tempted to leave. At the end of the day it's what they feel to be the "bare minimum to keep you to stay" for the kind of people they want.
>> I want people who are happy, relaxed, and feel like they're being treated well.
Right, same thing. You want that because that's what strong employees demand and is your strategy for getting sustainable quality output out of them. If you were just a good guy, you'd pay MORE than that :)
I very recently learned a damned hard lesson in this. I believed in the product, I was given interesting problems to solve, there were good benefits, there was a good culture, I had stock options. The pay was shit, the options evaporated during a merger, and I want to buy a home.
Next round, I'm getting paid my worth and it's going to remote. "Believing in the product" is just a load of bullshit that C-suite spin to enrich themselves. They believe in nothing but their own bottom line, so why shouldn't you? Figure out what you are worth, what working conditions (overtime etc.) you can tolerate, and do good work for good money.
I don't know. I understand that, but on the flip side I got lucky and currently my equity is worth money. In SV equity can make up a large portion of your compensation, it shouldn't be ignored.
Sure, generally equity from a public company is worth more money. But equity at startups can still be valuable. A better conservative approach to startup equity would be to negotiate first for a good base salary and then negotiate for equity. VC-funded startups can pay well.
Don't count your chickens before they have hatched.
However, you have to look out for #1 and "interesting problems to solve" won't pay the mortgage, so you better make sure that despite how great the job is, you are paid at least the market rate.
With an actual objective look at it, I couldn't care less for any of the products of my past (or current) companies. However, I'm able to care about doing my best work for whatever the company is building but I also haven't had to contend with having to build stuff that I actively disbelieve in (like no advertising for example). I do like the fact that my companies have used reasonably recent technologies and at times also "too new technologies" - as in "the newest JS framework that nobody knows yet and that screws up all the time and you can't google for troubleshooting". So that keeps me interested enough. However, I am not someone that will work 80 hour weeks just because I am allowed to work on project X or with technology Y or because I "believe in the product". That's what many companies are trying to achieve. You believe in Facebook and their product, you get 'great perks' and are willingly staying at the office for way longer than you should for your own good.
The other end of the spectrum is unionized workers that will drop everything as soon as the clock hits 5p.m. And no I'm not talking Walmart cashier type work here. It can be understandable enough I suppose given how some companies treat workers but so far my companies have been treating me well enough.
My main contention with "believe in the product" is that it's a canned phrase that I've heard time and time again, to encourage employees to "pull through for our mission" through "sacrifice from your family that is appreciated." The only people who ever benefit from that are the C-suite; customers get broken software coded by broken developers and support has to break themselves fixing the mess. It's a meme, by the purest definition, and it seems to work: people (myself included) get riled up in cameraderi and put themselves and their family second.
If they truly appreciated our sacrifices, we'd have money in our bank accounts, not "belief in the product."
I quoted a figure that is usually reserved for the Thoughtworks of the world rather than individual contractors. They accepted without hesitation.
The project went well, and eventually ended in a support contract. Fast-forward ~2 years and there is a new head of procurement. In a conversation he balked at approving a purchase order for a large chunk of work that they want done this year and said something about wanting to negotiate closer to the work.
At the time I couldn't help think 'good luck with that'. If anything time has only strengthened my position. The only other person knowledgeable about the product at the company moved on to a new job. I'm the only person that now knows the domain (let alone the code base).
To your point, it's all about knowing the position that you're in. I'm not likely to be an asshole about it cough 2021 rate cough, but they're not likely to have success negotiating a better price either.
It's the kind of tit-for-tat moral whataboutism that really doesn't do much to solve either problem.
> I don’t have a good answer to this, but I buy Chinese- and Bangladeshi-manufactured clothes anyway.
But that doesn't mean we should avoid the more difficult discussion. I know that I'm privileged, and I figure I should focus on what I do, not what's done to me. I expected more commenters on this thread to take that position. As it is, the insistence on discussing what we are paid just makes us look like prima donnas.
But it should be just as easy to buy those as others. Right now everything is made China. It’s super hard to find made in [home country] stuff
I hate how this always comes up as if the hiring model is in any way balanced between an employer and employee.
I was once asked by a New York based company, at one of their remote offices, what I wanted for a salary. I said “$180k, what you’re paying for this position in NY”. They said “No. We know what you were making before, so we’ll offer you $5k over that.” It was never a negotiation.
In the other case, the company needs to accomplish something, believes you can do it, and you have a list of companies sending you offers.
Thats not so far fetched! Many of us hit that point in our careers.
So, 99% of the workforce? Or, 99.9999% if you consider that companies just don’t give a fuck unless you happen to be Guido van Rossem?
HR departments, who approve/deny pay changes, don’t care. My current company is being forced (with the approval of the board) to compensate high performers in alternative ways (like stock grants, or vacation time) if they’re outside of the “approved pay bands”.
I know someone who 100% qualifies for a title of “high performer” (they promoted him to a director a month after this) who would have had his pay cut in half if he moved away from his current location due to “remaining competitive with the local market”.
I usually politely sidestep the "what's your current salary?" with a "in rolling to accept at least x, but we can negotiate if both parties are satisfied and get to offers". If a recruiter insists, I tell them I have a personal rule to never disclose that. I think I have lost a single prospect, which likely was never real to begin with. Likely just fishing.
While I'm at it, I never mention who my current employer is either. I usually obscure it on my cv of I'm still employed. I also had a request recently to provide a scan of my passport on initial application, which i also declined.
Honestly, recruiters think they can ask for any and all personal information they want. If you have value, no one will drop you because of it.
Don’t worry, Equifax takes care of that for us. Both who you’re currently working for, and your current salary. It’s a service it offers to HR departments across the US.
One time they thought I worked on staff at the local zoo. Seriously.
It would be a waste of effort for HR. They don't have time for that I don't think. They want to get to a number not do forensics on your background.
>> I never mention who my current employer is either
Why is this? It's typically the most relevant information to a new position, and usually trivial to determine without you volunteering it.
Suppose you are just finishing a Ph.D. and took a few years off. Suppose you took a year or two to do freelance or work 1099. Suppose you went abroad to work for a year or two to take of your dying parent. These are all things I have run into.
Edit: One more good one. I've known people who won a green lottery or married an American citizen they met abroad. Showed up in USA with lots of skills having made much less in Eastern Europe.
That is not true at all. It only works if both parties have something of value that the other wants. It's always a negotiation, but the only thing that ever matters in a negotiation is the BATNA (best alternative to negotiated agreement) on both sides.
If your BATNA is unemployment and their BATNA is a minor delay getting someone almost exactly equivalent to you, then you'll take their offer and they'll politely decline if you ask for more. If your BATNA is one of a few other competing offers all of which excite you, and their BATNA is having to settle for someone who doesn't bring your particular expertise to the company, or worse, having to start their search over again, you're in a much stronger position to ask for more money.
You could be a resident of San Francisco but just rent a token shared bedroom with a bunch of people just to have an SF address, or even a UPS box, and actually be on working vacations in random houses across the country close to 100% of the time, and I'd say they shouldn't have a right to know exactly where you are through your journey, only what times you will be working. Everything else including location should be abstracted out if it's defined as a remote job.
This increases the burden on both the employer and employee.
Don't expense anything from the state you are in.
Have everything shipped to an address in California and forwarded.
This is the snail mail version of a VPN, and I'm not sure why people are downvoting me on a hacker site. Hacking the world is what we do. This is how we stand up for our privacy. If you use VPNs at all in your online life to conceal your location there is no reason you can't invent a VPN for packages and mail as well.
Remote workers should be allowed to move and live wherever they want as long as they can be online at hours that are useful for the company, and they should be treated as a black box that gets work done and paid according to what they get done, not where they get it done.
The issue is the current regulatory and taxation structures aren't built for that. You're encountering friction because of these current systems.
The way to properly address this js to overhaul the system itself, this is by legislation and having representation that is aligned with what you want.
"Hacking" around it isn't the way to go.
To take a coding analogy, you're currently frustrated with the limitations of the architecture, which is understandable and I emphasize. But adding hacky patches to get around it isn't the way to go.
Unfortunately architectural overhauls in society are slow and take a long time.
I strongly encourage you to get involved in any grassroots movement to further the way you want to the world to become.
I agree with this, but it will take decades, and I'll leave it to politics experts to deal with that. There are things I want to get done in my life, and I will get them done without needing to involve myself in that mess. If it needs me to move into another country or jurisdiction to get those things done, I'm open to that.
I respect those that want to go fight that battle, but everyone needs to pick their own battles to fight, and I have enough battles I'm fighting already.
> adding hacky patches to get around it isn't the way to go
I disagree. You should fix the architecture but you should also feel free to use hacky patches until the fix is done.
Meanwhile it isn't the taxation structure I'm arguing against, it's the salary discrimination by location.
If a company values my work at $X/year they should give me $X/year independent of all other considerations, and also give someone else who accomplishes the same exact work $X/year independent of other considerations.
I think even for privacy reasons it's perfectly reasonable to never give out your address. You can always give out a UPS box as your primary address.
You could also have 2 residences in 2 states or even 2 countries and have them both with weight=0.5 and no primary node.
The entire idea of a "residence" address is an invented notion and de facto optional. You could always be on the move in an RV for example and still go show up for remote work every day.
I work in Texas, with pretty low COL. The people who work in DC, NY, or SF all get paid more than I do. Should I get paid the same as them?
Our company also has people in India (some are outsourced, but we have many full time associates). Should I get paid the same as them?
What, then, is the value of my work? If I ask my employeer to disregard location based pay, how much do I get paid?
I feel like that's more true at a small-scale company than a large company with thousands of employees. Maybe the large company has already found those "hard-to-find skills".
Big companies tend not to have as many places where they need one person to wear many hats; so their hard-to-finds will tend to be finding deep experts, but there's probably not a lot of positions that really need that.
I feel like this entire discussion can be summed up in four sentences: "Feel like you're not making enough? Find another company that will pay you more. No one will pay you more? Keep adding skills until they do."
Everything else is just window dressing for the negotiating table.
Even if market rate price for developers in India was same as SF, to maintain its "output/$ per employee", the salary may differ.
For instance, a company whose main operations are happening in PST, engineers whose main hours are offset 13h30min are less valuable to the company than those with 0h0min offset.
Sending a PR for review or reviewing a PR from someone with more than 8h time zone difference usually means you have to wait a full day of turnaround time.
Now within a same time zone but different country (or even states in the US), the differences diminish but there are still local labor laws and taxes that affect what the ratio of "what the employee provides" vs "what it costs the employer"
So at the moment, people living in SF and [some remote town in the middle of california with fiber internet] should be paid the same, but, people in TX should not. (This only applies to 100% WFH companies whose majority of workforce is all in California)
Charging customers variable rates based on location is the de-facto norm amongst enterprise software vendors and most professional services segments, FWIW
The mistake I see in compensation discussions is to assume that abandoning location-based pay means everyone gets paid as much as the company's most expensive location.
In practice, prices for services start to trend toward the least expensive locations once location is removed from the equation. There's a reason why the price of electronics manufacturing went down when it moved to locations like China, not up when manufacturing in China became accessible to to the expensive locations.
It isn't an unreasonable argument. The author of the piece glosses over the level of preparation/skill and automated vs non-automated manufacturing[1] in their clothing worker argument. And of course the cost of goods for a shirt that cost $10 in labor vs one that cost $1 in labor won't retail for the same amount.
[1] Jobs that train "on the job" (erroneously called "low skilled") typically have a wider workforce to choose from and thus get more workers competing for jobs and thus and lower wages.
It seems we are in a vicious cycle of high salaries -> higher housing costs -> even higher salaries -> even higher housing costs.
To prevent the same problems elsewhere, it might seem useful to not increase salaries too much. But the real problem is that housing cost depends too much on what the buyer can pay.
- It's rare that employees in expensive areas do not get to work remotely - because there would almost always be someone of similar skill in a cheaper location to hire
- It's rare that a company that has in-office workers in an expensive area would hire someone working remotely - because they are certainly paying the local workers more than what would be considered normal for a remote worker... because those local people need to earn more to have the same quality of life. And if they hired the remote worker for that "normal remote rate", they would need to cut the pay of their local workers (otherwise they _are_ scaling pay based on location).
_(Note that certain "this is one of only a few people in the world that meet our criteria" situations would not follow the above)_
So it seems like either
- This world does not have in-office worker in expensive areas, or
- All areas have the same cost of living, or
- There is a hard split between companies that hire remote workers and those that do not.
Firstly, yeah negotiate based on (potential) value delivered. It's the best way for any freelancer to base their pay. But for an employee things get trickier. You see a freelancer is part of the gig economy - if at the upper end but still it's a gig - you negotiate per gig and move on from the bad ones.
But we hate the gig economy with a passion at the bottom end - it's exploitation - and a hundred years ago workers unionised (or sometimes less usefully revolted) in order to stop it.
And asking an employee to negotiate for their own salary at odds with their co-workers is how collective action gets strangled in the crib.
And let's face it, collective action in the US looks like it was strangled in the crib anyway.
So looking at the next ten years we have a real issue over how to pre/re/distribute the wealth the century will hopefully bestow. And solid collective action will be a significant and important part of that.
Grabbing the most value for yourself and to hell with the rest is not going to be the path to utopia.
So, to start with, put unions on the boards of major companies, have them elected by the employee / members - and start seeing questions like "why can't we vote for the other folks on the board"
That argument is not going to convince anyone who is able to twist a prospective employer's arm into paying them top dollar. Never mind utopia. I got mine!
But employment (or rather the thing that the vast majority of people get paid via, which is normal employment right now) is protected because the vast majority of people get paid cia it. we want most people to have a reliable income stream for social reasons.
Setting employee vs employee is not a good path for that.
Yes, everyone should learn about negotiation. And as the authors of Negotiation Genius point out, you're making the mistake most people make - only considering your BATNA and not considering the other party's BATNA.
Ask yourself what alternative Facebook has if you insist on a Bay Area salary while living in the Midwest. The answer will be "More than they had pre-COVID." This reduces your bargaining power. Allowing remote work has significantly increased their pool of applicants. For every one of you, there are probably over 10 people as good as you who are happy taking a 20-30% salary increase while still getting paid 30% less than SV folks.
While your advice is sound, you are only providing one half of the dynamic. One of the lessons in almost all negotiation books is to spend time understanding the position of the other side.
If you need someone in the same time zone who speaks English at a level that enables them to contribute work of the same quality and volume as a native speaker, you've really only added Canada.
If you discount the language requirement, you can add Central and South America.
Only if you discount both the language requirement and the time zone requirement can you add the rest of the world.
Time zone issues are a bit of a pain, but manageable. As long as you don't have to meet with them daily, you (or they) simply schedule the once-every-week-or-two-weeks meeting at a time that can work (a little earlier in the morning or later in the evening). It was quite customary to leave early or start late on some days to make up for having a 1-2 hour meeting in the evening or early morning. This is well understood.
To be clear: Those developers were "first class" employees - treated similarly to the ones in the US.
[1] Indeed, although their accents may have been difficult to follow, the reality is they understand a wider variety of accents than do most Americans, and so Americans complaining about their accent would be viewed as petulant.
Few good companies do things "based on price alone" That reasoning will not get you far.
Having said that, I did interview with an SV startup where probably over 50% of the employees were not in SV, so it may become the general trend.
It is a perfect strategy to save time reviewing resume’s today, and eliminate the need to in the future.
So go find what the negotiation wonks call your BATNA and then see if it's better than the paycut. If it is, now we're cooking.
1. How much do you value commuting by bike 15 minutes, instead of taking the tube for one hour? 2. How much do you value walking 15 minutes to the nearest forest, instead of being surrounded by highways, buildings and artificial parks? 3. How much do you value having a proper lunch break, instead of taking a sandwich in front of the computer? 4. How much do you value your male CEO regularly staying home with sick kids, instead of women getting that task by default? 5. How much do you value not having to see beggars and homeless people everywhere you look? 6. How much do you value living in a 9-5 culture, instead of a "constant death march" one? 7. How much do you value pedestrians being given priority, instead of a honk? 8. How much do you value breathing in fresh air, instead of getting smog alerts every week?
I could go on and on.
Once you put a value on all of the above, location-based pay actually makes sense. Maybe not based on your exact zip code, but when moving from a large city to a smaller city, or from one country to another, you get certain things "for free" that you might value more than total compensation.
In your book "I want to live in Sweeden. I am happy to give up 15% less. But I won't do it to somehow spite my company for paying more to its German employees."
He's be an idiot to think like that.
More likely you switched from a bad company to a good one.
Another way to look at it, if these social changes were to happen in Germany, would you expect salaries to go down as a result?
What is the supply of workers? All things being equal the company will pay the least amount possible.
What is the demand for those workers? All things being equal the worker will work for the company that pays the most.
When you move from San Francisco to Des Moines, Iowa you shift markets. If you move from San Francisco to “the metaverse” you shift markets.
Facebook may have moved from a small handful of people able to do a job to a whole world of people. You may have moved from a small handful of opportunities to a world of opportunities.
It’s difficult to predict how prices will change, but they almost definitely will, and it’s not a matter of “holding out” or “negotiating” in the long run.
I'm not really saying it's right, just that if a company is set up to be able to handle you working at great distance and cross timezone, then probably the outcome is that they can get it cheaper than you are.
And it's nothing new, it's just that we call it 'outsourcing' when they're Indian, and 'remote working' or 'digital nomadism' otherwise.
I'm no 'SJW', far from it; in my book the modern free market capitalist employer embraces remote work, but certainly doesn't pay SFBA rates through the nose for it.
(To go with such remote friendly trends though, CoV has also brought anti-globalism trends, so who knows, really! I'm quite looking forward to reading about what's happening, in ten or twenty years' time.)
When did we ever get the choice?
[0] Yes, we're hiring - https://spacelift.io/careers.html
Who is anyone to say one way or another? It's a negotiation between 2 parties. Employee will try to argue that value they bring is indifferent of where they are based and employer will try to argue that employees are a) less valuable when remote and/or b) more replaceable by other similar workers in those/similar locations.
Either part will try to call each other bluff.
Both will learn that it's ultimately expensive to take an absolute approach and likely to negotiate a middle ground.
I don't buy that remote-only companies benefit by being able to quickly arbitrage by hiring only from cheapest places because you can only remain truly remote when vast majority of your workers are all in various locations, not pooled together in certain locations.
Well, seen from one aspect we should. Clothes, gadgets, etc, should become more expensive, and those workers more well paid (let's ignore atm whether they'll still be given those jobs - perhaps jobs would move closer to the buyers in that case, though I doubt it).
This will discourage planet/society killing conspicuous or mechanical consumption of BS, and things like "fast fashion".
You may think I'm full of shit, and its within your right, but I the amount of time and resources you'll spend to find a good match for a factory worker at some assembly line, compared to that for a skilled software engineer with that's being paid 150k$, is not even remotely comparable.
And the value each bring to your company are not the same either. Perhaps you can make the argument that in both cases there are "plenty of fish in the sea", but I'd wager there's a lot less fish in the developer side of things.
I don't know, but it just smells like false analogies and I'm too tired to write about it ...
One of my coworkers did this.
If you're working through another company you could give an address to your actual employer without being resident.
> The label in my shirt says Made in China. Likewise for my jacket, and my jeans were made in Bangladesh. “Equal pay for equal work” is a nice idea, but I don’t think we apply it universally.
I actually heard that "record scratch" noise in my head. This is a totally different thing. Apples to oranges.
If an European or American textile worker moved to China but was doing the same work for the same company and the company tried to lower their salary that's the same problem.
If a company fires an European or American textile worker and outsources their job to China, that's not the same problem.
> Companies reduce your pay because they can.
And employees increase their pay because they can. There will always be at least a few companies that don't partake in this location-based BS, and the rest of the companies will have to compete with them somehow.
It begins with “maybe I’ll regret this if I move to London”, and then the rest of the post is about how it’s fine that enormous pay cuts are cool because they aren’t happening to the author.
I’m somewhat perplexed that an openly equivocating casual musing that openly features the author’s complete disconnection from the topic made its way to the front page of HN. It doesn’t really appear to have any substantive material to justify its position aside from uh, jeans?
It kind of reads like boilerplate ad copy but instead of selling you “Buy this iPod” it’s “It’s actually cool if your employer decides to keep $60k of your current salary for themselves because of your zip code “
However I think missing in this argument is an admission that SV wages are ridiculously inflated thanks to the playground of economics software tends to play in, which is what is causing this issue to crop up in the first place.
Regarding the widespread practice of locale-adjusted pay (it generally is not cost of living adjusted e.g. London is paid far less than SF despite a similar cost of living), it is a clear example of why the argument of “women can’t be paid less because companies would hire more women if they were cheaper” is simply false.
I don't need money, but I'm not going to work for anything less than what I can pull, and I pull a lot already.
t. remote worker
It isn't a given that people will work less at home, lone introverted developers may actually increase their output, or people who were freed from constant interruptions at their workplace. But people with family, especially with young kids, may really be way less efficient when working remotely.
Paying people more because they work at an office in a high rent area makes sense.
Varying what remote workers get paid based on where they choose to live makes zero sense.
In a distributed future (for tech at least), information re: my value to the company will also be increasingly available.
This availability of information + liquidity of talent will create a more perfect market where “what it takes for me to do the job” = how much value that job creates.
Who a.i to complain: I'm the person. Interviewing your company
If you're a great employee, you will still have people competing for you and I don't think this should concern you.
That makes the most economic sense for the company, as they can judge employees based on their local office, not the other global employees at that salary level. Also it's good to not have people in the same office doing ostensibly the same job with wildly differing salaries.
> Some call this unfair, and they’re probably right.
Agreed. But fairness rarely factors into business decisions.
> Why? My value to the company hasn’t changed! I am still worth the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company?
By moving to a low-COL area, you have proven to the company that you can't handle the high-stress high-stakes world of a financial center. The company usually has a bad idea of your worth. What do you think happens when you send them an indicator like this?
> If I worked remotely for Facebook and wanted to move somewhere central where rents are three times higher, would Zuck give me a raise? Somehow I doubt it.
No, but you can go next door and interview at Google the next day, and get bumped up to the standard big-city salary. So it's a pointless argument.
> Companies reduce your pay because they can.
Not only that, they have to to compete with all of the other companies that do it. They made a risk/reward assessment and decided that the ill-will toward their employees and potential resignations is worth the salary savings.
The rest of the article dives into comparisons with extremely impoverished areas, which I don't think are relevant for a discussion about remote work.
I hope location becomes something people talk about in negotiations like salary expectations and previous compensation. “Don’t tell them where you live until you get an offer.” “Get them to name a number before you say where you are.” “Recruiters who force you to tell them up front are a huge red flag.”
There’s a big list of questions you aren’t allowed to ask a candidate because while yes they do indicate that a candidate has a weaker negotiating position and therefore paying them less is “fair” in a market sense, we have collectively decided that exploiting that market disparity is unfair. So you aren’t allowed to ask it anymore. In other words, the market doesn’t define a “fair” wage. Fairness comes from elsewhere.
Hopefully “what city are you in” becomes an off-limits question ASAP. You live in a historically disadvantaged location? Great we’ll pay you less. I wonder what kind of disparities that’s gonna cause.
Am I crazy or is there perhaps a huge loophole here, at least in the short term, that nobody is talking about? Let's look at a senior engineer (E5) at FB on levels.fyi - $380k total comp comprised of $196k base, $30k bonus, $154k equity. If your base & bonus get cut by 50% by going remote but you keep the equity, that's still $267k a year so your total comp has only been cut by 30%. And hell you could make up a significant amount of that in taxes alone. For a staff engineer or manager at E6/M1 level it's even more dramatic - $578k total comp down to $436k, which is only a 25% decrease and just a stupidly high compensation for somewhere with a low cost of living where, say, you can buy the equivalent of a $3M silicon valley home for well under $1 million.
That being said, I can’t really think of a good argument for anything beyond pay based on in-office vs remote.
If it didn't exist, companies just wouldn't get any employees in San Francisco, nobody would be willing to work for the wage. Obviously they're not going to pay SF wages in the rest of the world. I mean a company like FaceBook could, they certainly have the means. But they wouldn't. The shareholders wouldn't let them, due diligence and all. They have to maximise their return to the shareholders.
If I would be earning what I do in Barcelona and living in SF I wouldn't be able to even pay the rent. If wages for the same jobs had to be the same everywhere, it would mean the lowest common pay would quickly become the standard. Effectively all IT jobs would be moved to India. Nobody would bother working in the US for that pittance so there'd be no point hiring for it.
So obviously cost of living factors into it. It makes sense that this goes both ways. Otherwise someone from SF moving elsewhere would be making a lot more than their local colleagues and that wouldn't be fair either.
In fact when I moved to Barcelona from Ireland (with the same company) my pay was reduced somewhat. I had to sign a new contract with the local entity against local conditions. It was a bit of a bummer but on the other hand, I did gain a lot of quality of life. Great weather. Free healthcare that's actually good. Public transport that actually works (so no more car expenses). In the end it was a good move.
If you fight against this you will only increase the race to the bottom (and to Asia). It's this very thing that keeps areas like San Francisco viable as an IT hub. If you're expecting them to honour the juicy SF pay everywhere you won't see that. Even if they do you'll be the first to get axed when budgets need cutting.
What you see in general is that pay is indexed to local standards so you get the same standard of living for the same job in each place. At least this is what my employer does. Which is fair enough in my point of view. Money is a means to live, not a goal on its own.
Would it really be fair to have people living in one place scraping pennies to get by and others living like a king while doing the same job?
As a consequence of US laws and the way the economy runs (US capitalism), companies are incentivized to seek cheap labor. They will pay the lowest price they can.
If person A and person B produce the exact same work but A will accept a lower wage, obviously the company will hire A.
If people are upset/perplexed/confused by this, I think the crux of it is: why do some people accept a lower wage? In this case it's ostensibly because some people live in lower cost of living areas.
Off the top of my head...
Possible new company costs:
- In theory a company could incur new costs based on where their employees are (e.g. you move to a different state; that changes how they compute taxes from your income, they may need to become aware of several new state laws, may need new licenses, etc.).
- The company may have made a deal with their HQ city, e.g. tax breaks in exchange for $X jobs. If they renege because everyone moved away, they may lose a lot.
- Maintaining widespread remote work is not free; not only IT setup (high availability, etc.) but a need to do so very securely. Probably at the very least new staff or contracts for this alone.
New company SAVINGS:
- Depending on how many people move, they may need MUCH less office space. This saves in rent in high-rent areas, air conditioning, coffee, cleaning or whatever else they have to count.
...Considering all of the above, the idea of a company scaling pay sounds like it should at the very least be negotiable. They clearly have some new costs but arguably also save a ton in the process! So does the employee. And it may be difficult to quantify the value of having a vastly greater talent pool, enabling the business to hire people that otherwise would not have wanted to move to SV.
I honestly don't see any other argument in the article, so apologies if this sounds like a strawman or a nitpick - this is definitely not intentional.
The comparison of overseas workers making so little for the clothes and other items we wear used to illicit a knee-jerk feeling of disgust and indignation, but then I remembered an acquaintance of mine back in college who made his business by renting rack space in retail stores in NYC to hang his clothing line he designed. They were made in overseas locations where he would fly to after he started making money to do quality control for his designs. When the corporate social responsibility thing started taking off with Nike and Kathy Lee Gifford's 'sweatshops', I asked him about it. He told me if he didn't produce his clothes there, the village where he employed a few dozen people would have no economy, and his product would not be able to be produced in the US/Europe.
I didn't truly understand this until I lived in SE Asia for eight years. I spent the last year living in a remote East Javanese rice-farming village where over half of the houses had dirt floors. I quickly gained an understanding that balanced my view. My in-laws and their families make $4-$7 a day working in the rice fields depending on the task they do. A neighbor got a job sewing either Gucci, or Michael Kors purses and handbags for $20/day. She's very happy, and her entire family is benefiting from her salary that is five times what she would make, and her working conditions are more comfortable than working in the sawa (rice field in Indonesian). She would be devastated if a CSR (Corporate Social Responsibility) group and incensed Westerners had her job move elsewhere or shutdown. The company might make a concession in this area to create good PR and continue their practice in their other locations, or they might shut it down (likely). I am not an economist, but I am also aware that some local economies have been ruined when false economies are setup i.e. disproportionate and artificially hiked salaries. Anecdotally I have heard some village in Pakistan was incensed that a "victory" for labor per a Western news article destroyed their life, and they were resentful at how the CSR effort affected them.
I think the solution is to grow local businesses and entrepreneurs. This usually occurs slowly when people like my friend in Java take their skill and knowledge of the products they have been making and start a similar or other business. I think this is the only true way to help these communities. Quick fixes or PR examples of a model setup by Nike or an other big company for PR purposes is just a show and cannot be a real changer.
> Let’s say you hire me for your company in San Francisco and pay me $150K … [blah blah blah, I provide that much value ...] But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of “cost of living”.
I've turned down a job very similar to that, twice, for much less money to work remotely. I like Sushi, but my wife makes good Italian and I get to eat with my family.
But now that $150,000 job is all-remote! And even if I was at 80% "San Francisco" pay, I'd be doing incredibly well where I live, so if I started negotiating salary for that job, my '20% above ADP-reported' is going to be a whole lot more palatable to the hiring manager, and he doesn't care that the next town over's name ends in "tucky". Worst part of it is that last time I checked, I live in an area that lands around the 5th highest cost of living.
I would accept a salary adjustment due to a move, personally, with research/negotiation to ensure that my new salary truly takes into account real costs that I will experience. And if I cannot accept my employers terms, there are now a whole lot of other companies who are hiring remotely. Like, almost all the companies. So I'll find one that does.
These kinds of programs will exist for a while, I bet -- some great employers will probably attract employees by offering a program like this (along with non-discriminatory policies around ... allowing you to move from a really cheap place to a really expensive place while compensating you accordingly).
But the vast majority who go "all remote" are simply going to start hiring wherever the cheapest talent to fill the need exists. If a 30-something mom/dad in North Dakota is just as capable of joining Teams calls/performing a mid-level QA job (you know, for the cloud-based web/mobile app...), but will do it at $36,000. Well, ...
Think "Off-shoring" at closer geographies/more common cultures (ok, maybe; some of ya'll city-folk ... need sunlight or something). Companies are good at not learning from past mistakes, so expect whole technology teams at some shops to be brought into a (virtual conference) room with HR reps while they sort out the details of their transition and training of their replacements.
Your "available talent pool" is ... big. And it now includes my wife. She left the workforce when she had children. She didn't return when they went to school -- it didn't make sense. Factor in child-care/extra car/insurance/fuel/non-optimal meals, 40 hr/wk equating to 7:00A-6:00P with commute and the "extra money left over" wasn't worth losing what we felt was basically the reason we work in the first place. And forget about landing one of those coveted remote jobs when you've been out of the work-force since before the iPhone came out.
Welp, that ended last month.
So dispensing with the doom and gloom, humanity has always figured it out in the past, we will again:
In my mind, this is "the first sign of what's to come". The whole equation on hiring/employment has been undergoing a lot of change, but I think the explosion in remote work stands to be the biggest disruption of my lifetime. If companies steadfastly refuse to adjust for cost of living, and only hire where it's cheap, expect people to move from cities. And it might be as simple as "rent goes down, people move back in". While many/most jobs cannot be performed remotely (manufacturing-related in particular), by moving all that can to remote-only the impact of "a large employer leaving a city" on a city -- in theory -- is far less.
You are prevented from living in certain places if you like certain kinds of work, today. Suddenly, for a lot of jobs, that's no longer the case. Staffing is the #1 cost for companies -- for a reason, it is a company ... it's entire value -- optimizing that cost (by reducing what you are paying people to do work -- I'm not trying to spin here). Maybe an extra hire can be made for the next project? Maybe, over time, the cost savings are so much (real-estate, etc) that it might make sense to take some of these other jobs that aren't very easy to do remotely and figure out how we can do them remotely, too? Maybe everyone stays home in their pajamas and rots away, we all die and fall into the dark ages, again?
It's been ... interesting? seems wrong ... being a part of all of this. The place I work handled things superbly; we continue to work remotely and ... everyone, as far as I can tell, is actually working. I hear about employers installing weird monitoring apps and such on their employees phones/work PCs and I think: sell the stock; clearly a lot of staff with nothing to do. My deadlines/expectations didn't disappear simply because the office did. I feel like I'm working a lot less some days -- I'm working more, I'm just spending no time on the road. Prior to my current job I had been remote for over a decade; I'd forgotten how much I enjoyed the benefits.
[0] I'm assuming that my area and the vast majority of the US, like Tulsa, would have paid $90,000 for said job.
[1] If I were paid San Francisco-equivalent salary for my work where I live, which isn't terribly low cost of living to begin with. ... I'd have my own lake house up north. Certainly wouldn't get out of time-share presentations so quickly and easily.
[2] We enrolled our kids in a charter all-virtual school when it appeared our district was going to go virtual. We figured a school with employees that had been doing this for the last ten years would fare better than our district's thrown together-in-a-week plans. Very few decisions ever end up in the "100%-the-right-choice" category, but that one sure did!
Insofar as living expenses - coming from New York I do not own a car so a place near good public transportation was important. I also wanted to live in a nice neighborhood that had other young professionals. This narrowed things down to two neighborhoods - one had a lot of theaters, bars, restaurants, art galleries etc. but had no decent supermarket within walking distance - the other did (and also had my bank and other convenient places). I went with the latter neighborhood.
The ballpark for a one bedroom in this neighborhood was $1400-1600, with square feet being one determining factor. Knowing that I would be stuck inside due to Covid I opted for more square feet and was looking for apartments around $1600. A very desirable two bedroom townhouse came on the market for $1700 which was $100 more than I wanted to spend, but it was so perfect I went $1200 over a year. I'm a software engineer, I can afford it.
I have a parking space in the building garage that I rarely use as I am from New York City and have yet to buy a car (I rent when needed). I have two bedrooms (one converted to a gym, as public gyms were closed for a while) and two bathrooms. I have a door on a tree lined street where twentysomethings walk by walking their dogs and such, another door goes to the apartment building. I have two parks nearby, one which is pretty nice where I jog when it is not winter. I am two blocks from my bank, a good supermarket, and several bars and restaurants. I have a washer and dryer in the unit. The place was built a decade ago and is all modern appliances. I am less than a ten minute walk from the train station. My office is actually moving next to my train station, but if it re-opens before the move my commute is less than half an hour. $1700 a month.
1000+ square feet, in-unit washer/dryer, first floor door opening to the outside, attached garage, walking distance to train, supermarket, bars, parks - it would be difficult to even find this in the New York metro area. Everything in New York City is at least double the price for something like this.
It's a nice place to hole up in and WFH during the pandemic, and not expensive. The reality is if I moved back to the NYC metro area at some point, I would be paying more for a smaller apartment with less amenities in a less desirable neighborhood that was farther from everything.
Especially talking to young (or entering middle age) married professionals who moved down - with the breadwinner earning $100-150k a year - they can afford to buy a nice sized house in a nice neighborhood, two cars, go on vacations etc. They can just live a nice comfortable life on $100k while the well-educated wife is raising two kids until they're grown more and she'll go back to work. The math would just be impossible to work out in New York, even on the salary of a programmer or PM or QA etc. who is getting paid well compared to the average Joe.
After the pandemic hit, my company slowly fired half the staff and replaced us with Russians & Belarussians for 1/5 the price.
Now it’s a buyer’s market and wealthy startups (including many ycombinator startups) are offering me 50-70% less than I made at my last job. Literally so little money I would have $800 leftover after child support and paying my dying mother’s mortgage.
I ask them, “do you understand that paying employees 60% less for the same work creates a toxic environment? You are already struggling with 18 month average turnover. If I take this job, I will quit in a month, without notice, if somebody offers me 5% more, since you view me as a commodity.”
It has disgusted me enough that I’ve left tech entirely and instead am about to buy an apartment building. I would rather be a rent seeking parasite than get paid less than interns and junior engineers with 2 years experience.
I told them they have 6 months to figure out what they want to do with me because I don’t like dropping projects just like that. They fought me the whole 6 months to keep my low pay.
In the last day of the 6 months, I went and offered my resignation and the manager smiled at me, with a lot of proud in his voice, informing me that they debated and my salary would go up to 80% market value.
It has disgusted me enough that even 200% would have made me leave.
The company may use it as an excuse, but you can choose to walk. When enough top level people refuse pay cut, the company will drop the charade quick. Even if just 10% of high performance engineers decide to walk, that would cause major disruptions in the roadmap and cost millions in development costs.
Simply demand higher salary and negotiate. The company will make adjustments to fill the in demand positions. Be prepared to walk away and find the company that will pay the higher salary.
There it is. The cost savings of giving workers a haircut because they moved to a place with low cost living is the TRUE driver from WFH-forever initiative.
Absolutely, it's not easy to unionize, organize, and work towards change, but we don't have to _just accept_ offensive payment practices, working conditions, and side-effects from globalism.