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Comment by adkadskhj | Hacker News Reader

Yea, i really don't get so many of the comments here.

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.

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The point is that the companies are making the same amount of revenue regardless of where you live. 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.

> The point is that the companies are making the same amount of revenue regardless of where you live.

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.

They could also hire more engineers or expand into new territory which requires additional (non-engineering) labor. The cost of living in the bay area seems almost an artificial constraint on the supply of labor at these companies

>. 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.

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.

You're assuming a highly optimistic scenario where you take an even pay cut but make out like a bandit. The reality is that a "fair wage" for many rural white collar workers is 40% of what you might make in SV, or even worse. Getting $250k in SV sucks, but try getting paid $50k in Cincinnati. Then imagine a scenario where there's maybe 2-3 local companies that hire, and they all collude on prices.

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.

> Getting $250k in SV sucks

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.

It was mostly sarcastic. I don't actually believe it's bad, that's just "average market rate" for senior/mid level engineer. Roughly translated, 250k in SV is 120k in the Midwest. Housing issues aside.

> Roughly translated, 250k in SV is 120k in the Midwest.

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.

That’s how bad housing is. If you grew up on the dream of a nice house with a garage and a big yard, $250k still doesn’t get you there in SV.

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.

As a European I think American expectations of a reasonable home size are completely ridiculous. Guess that’s a hidden immigrant advantage :D

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.

> As a European I think American expectations of a reasonable home size are completely ridiculous.

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.

How is it reasonable in the least to expect a big house with a garage and a yard in one of the most expensive places in 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.

> 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.

It’s reasonable to expect the lifestyle you are constantly surrounded by.

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.

> No, it's not.

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.

I think people are also assuming that the "market" rate for tech jobs in these "low COL" areas keeps up with the cost of living. I am here to tell you that it does not, in the cases I'm familiar with. Especially in the relatively hot "cheap" areas, outsiders moving in are driving housing prices up dramatically, but the pay rates have not increased the same amount. So if five years ago you could make 2X the profit, now it might only be 1.25X, and getting worse.

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.).

There is no nice way to say this anyhow, but it needs to be said to further the discussion that does in fact exist: this is thinking like a chump. Being a chump is not a competitive advantage, it’s being taken advantage of. I fully respect your right to sell yourself short, but please don’t present it as somehow economically sophisticated and potentially lead less experienced readers here to follow the same foolish path.

Not at all. It's playing the numbers.

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.

> advantage to keep the same profit as them but negotiate a lower price. This increases your relative value in the hiring process.

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.

> 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).

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.

It is actually more than likely to get 2x the throughput when paying for better talent. The bottom of the talent pool is saturated with coasters who never invest in learning. I am seeing way more than 2x. There is also a cumulative factor when you get most of your employess in that caliber. Lastly, there is a limit on what a low talent pool can achieve regardless of the numbers. 1,000 people with my physics skill won't invent the theory of relativity. 10,000 coasters can't invent page rank.

I think it’s disingenuous to assume everyone in SF is commanding higher rates because they are all super talented and not coasters. There are definitely tons of undervalued engineers in poorer or lower cost areas being overlooked to do this fallacy.

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.

> I'm not making less profit. I'm competing to get a job.

You are competing on price instead of quality. I'd rather compete on talent and keep the money, thanks.

Being a chump is living in the Midwest and asking for SV rates just because you think it's "being taken advantage of" to underbid someone else for the same work.

The era of $400k total comp software development is going to end someday and more accessible remote work is only going to hasten it.

It wont end, just be reserved for the elite, much like it is today. Few Average Joes are making that 400k total comp.

It follows from this that you think the future of software companies will be reaping even greater profits from massive payroll cuts. I doubt it.

> 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.

> "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.

> The era of $400k total comp software development is going to end someday and more accessible remote work is only going to hasten it.

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)

We're all somebody else's chump

I'd argue the opposite. The price of living rose to meet the means of the people who lived there. People in tech are highly paid because it is a workers' market where talent and special education and skills are generally required. If the industry could hire people who could do the same job remote at $50k per year this trend would have begun decades ago.

It did, didn't it? faangs have been moving development to the Midwest for at least 20years.

Look carefully at what is moving to midwest. Either projects that are in maintenance or non-tech workers.

Interesting! In the embedded systems arena it has been happening even longer than that, including developers. Maybe that explains part but not all of why webserver developers make double on average an embedded developer's salary, or last time I checked.

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