Comment by EMM_386 | Hacker News Reader

Comment by EMM_386 | Hacker News Reader

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> Did the value to Google of the work these people are doing suddenly go down? No, and not even if they were previously working from San Francisco and now working from South Lake Tahoe, or even Bumfuck Nowhere.

I'm a senior developer who has chosen to live both in expensive cities like New York, as well as rural areas.

I knew moving to the rural areas I'd make less in pay with the companies there, I accepted this because it also came with a lower cost of living. My skills grew but my pay was reduced. So was my rent.

Under your logic the local companies should compete with San Francisco salaries, because I "could" be making that much there. When I moved out of NYC I wasn't expecting other companies to compete with my former NYC salary, that would be absurd. The pay is high there because the cost of living is high, not because that is specifically what my talents are "worth".

Yes, the fact everyone is remote now is making everyone second-guess this assumption about pay and location. However, prior to remote work you got paid relative to the cost of living in your area. Programmers in Fargo, North Dakota made far less than programmers in Los Angeles, even with the same or greater skills.

Yes, actually, you've got it exactly right. They should compete with SF companies for the type of workers SF companies want to hire and who have the capability to work remotely. In fact, they do, implicitly, because, by and large, people who can make SF salaries don't generally apply to companies that exist in rural areas in the first place.

I keep hearing the trope of "people are paid the value of their work" come up, and it's completely false and absurd. People are paid the market clearing price (a.k.a. better or equal to the alternatives, given some reasonable amount of searching effort).

Yes, this means there are many engineers in SF that are actually/currently paid MORE than they would be in an efficient market (and there are many software developers in developing countries that are paid LESS than they would be in an efficient market). Right now there's enough money going around that nobody cares about market efficiency, but if we have an actual, deep recession in the sector, I expect all the music to stop (and the efficiency of the developer market to go up on the whole).

In software we can pretend to ignore these discrepancies, but it becomes patently obvious if you've ever dealt with international companies who discriminate based on nationality for people doing the exact same job (and not in software, where you can argue talent - literally the exact same job - two performers doing the same act in the same show. I've seen pay discrepancies of up to 2.5X or more for an American Expat in Hong Kong and a worker from the Philippines, for example). It's all about what your individual alternatives are.

You don't get it. This is actually the free market in action. People love to talk about the virtues of the free market, until they actually get one.

In a normal labor market, companies can pay based on geographic concerns because employees aren't mobile. In the case of engineers, designers, etc., these people can work from anywhere, including San Francisco. So, they always have the opportunity to make SF wages by working in SF.

But, the thing is, none of this changes when these same people move to Bumfuck Nowhere. The same companies are still competing for the same employees, who are capable of earning the same wages they were before. And, like it or not, SF is the place where a software engineer can maximize their net income after expenses. So, guess what? Companies in Bumfuck are now competing with companies in SF.

Remote work doesn't enable a truly free labor market, but it does significantly free things up.

Regarding people not being paid what they are worth, I know that. It's also bullshit, but that's another comment. And, as I said in another comment, you know that, I know that, and Google knows that, but there are lots of people out there who either don't know that, or just refuse to acknowledge it to themselves. And, if you're Google, you really don't want to open those peoples' eyes, because it reduces the information asymmetry about the process that you exploit in order to get people to work for less than they're worth.

> In the case of engineers, designers, etc., these people can work from anywhere, including San Francisco.

They can also work in Bangladesh. And unless you are thinking of standardizing pay for software engineers globally in any reasonable timeframe, this argument does not hold up.

What is an engineer worth? I have offshored to skilled developers at rates 1/5th the US rate, and they can do the same work.

The actual answer according to the free market would be to take every engineer of equivalent skill, globally, and find the average. That is what a software engineer is worth according to the market all of us are in.

And that's not SF pay.

Uh, I'm not an economist, but what you said doesn't make much sense to me -- isn't "the market clearing price" effectively the same as "people are paid the value of their work"? If the value that a software engineer can potentially produce is lower, then wouldn't the corresponding market clearing price would simply be lower for that person?

Maybe in a world where every software engineer is genetically engineered to have the same output then what you said about market efficiency would make sense, but this isn't that world.

The thing you said about price discrimination is not even related to what the OP said, and you simplified the problem a lot by reducing the problem simple monetary terms. The example you gave about expats is particularly flawed, because it's not unusual that expats are paid more for other values that they bring outside of the work they perform (for instance, academic institutions think of that as prestige in some Asian countries). We were all born unequal, if the market were so efficient there wouldn't be so many unjust things happening around the world.

No, since there is no good way to measure how much a person's individual work is worth (in software engineering). There are ways to do that in finance and sales - that's why the pay bands for those fields are so much wider.

I think the reality is the best engineers are probably worth on the order of multiple millions per year or more (assuming they are working at a place with leverage), and the average engineer is probably worth much less than they are making now. That's the power law we see with YouTube creators, for example. If people had reliable ways of identifying who is actually a really high performer, the pay bands might look more like that. The pay smoothing (since it's hard to make an accurate measurement of efficiency) actually benefits the average engineer over the super high performers.

Or they don't want to live on SF or California as a whole.

The pre-pandemic status quo is clear, but the point is that it doesn't need to be this way. Google can afford not to cut pay.

Also, because the employee is at home now they can allocate that office space and resources to someone else. They are saving on individuals working from home! They should be compensating for office equipment at home.

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