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Comment by heresie-dabord | Hacker News Reader

From TFA:

> my salary was around €120 000 per year [...] For The Netherlands this is a good salary, and you'll have a hard time finding companies that offer better and let you work from home full time.

For his country, he was well paid and worked from home 100% as well.

> But if I had instead lived in the Bay Area, I would've earned at least twice that amount, possibly even more. Not because I am somehow able to do my job better in the Bay Area, or because of any other valid reason for that matter, but because I would be living in the Bay Area instead of in The Netherlands.

He says it was "not fair" that he wasn't paid the same salary as people in a different country.

There are no Victim Points to be scored here.

The author has a poor understanding of economics.

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> The author has a poor understanding of economics.

Does he or does the company? If they had decent understanding of economics, they should have shut down their Bay Area operations?

Maybe because they have the budget to poach other Bay Area engineers?

Then why don't they poach similar engineers from the Netherlands and pay them half as much?

Did this argument just come full circle back to literally what GitLab is doing by paying engineers in the Netherlands less?

Regardless, it's silly to propose that engineers are interchangeable cogs in a machine and you can find perfectly identical talent anywhere. If that was true, companies would ignore all of these locations and skip straight to the cheapest country they could find.

But network effects matter, and hiring out of the Bay Area taps you into a different set of experience and networks than almost anywhere else in the world. I'm not suggesting that every Bay Area engineer is better than every Netherlands engineer, but the Bay Area talent pool really is unique and well connected in a way that's hard to find elsewhere.

But that's not what Gitlab is saying, that BayAreans are better workers. They maintain that they're merely adjusting for regional CoL, for the same person in the same position. They can hardly get closer to saying people are interchangeable cogs.

I see your point. There are more factors than talent being different in the Bay Area I think. I work for a Bay Area start-up in the Netherlands. They opened their office here for a specific talent. This talent can be found in the Bay Area too, and they can pay the salaries there too but the employees in the Bay Area don't stay that long compared to here. For the company this is a big issue because you keep bleeding out know how. So the reason they came here was a combination of the talent, affordabile salaries (100-150k for staff level), and employee loyalty. We had only 1 person left from a team of 25 people in 6 years while half of the people in the Bay Area office is left. Give us 40 holiday days, 40 hour work week and a decent salary we will stay.

I mean, if they could they would. Why have any engineers in the US at all when you can hire them at 1/2 to less in India, South America and even Africa?

Why would they? If they're getting more value out of the Bay Area employees than it costs them, why would they do it?

Employees aren't interchangeable cogs. It's funny how HN will complain about outsourcing and offshoring as doomed endeavors when they imagine their own jobs going to someone in a lower cost of living location. Any company that fires an expensive employee to replace them with a cheaper employee in a different location is making a huge mistake! Employees aren't interchangeable cogs!

Then as soon as the roles are reversed we're supposed to believe that the people in the more expensive location are easily replaceable. Any company that pays people differently is making a huge mistake! Employees are interchangeable cogs!

They can always change their multipliers if they think the employees they're hiring there are getting paid more than they're worth relative to other locations. And lots of companies mostly just shrug rather than getting into a bidding war with FAANG in particular.

I mean Bay Area puts you near the big tech companies which is an interesting talent pool; their knowledge, experience and connections will have value beyond the skills needed for their day job.

The Bay Area is probably their birthplace, best talent pool and main source of funding. Similarly, as it's the case in global governance, almost all nations have an office in New York, from where they are able to talk to each other and make use of their seat around the table at the United Nations.

They could have a much cheaper office in Vienna though - if the U.N. backdrop was a main motivator.

Not seeing too many international career opportunities here, sadly.

Gitlabs birthplace is the Netherlands actually, but they wouldn't be Dutch if they let that get in the way of profit making ;)

The Dutch and their history of sailing boats over the ocean... In these modern times, I believe it's about planting a flag on the land of the Vatican/Mecca of the digital tech industry.

I'd bet that GitLab, as an entity or corporation, felt mission-driven and empowered by settling not far from GitHub.

Your opinion on this topic is instantly disqualified when you just assume that the birthplace of Gitlab is “probably The Bay Area”.

Neither/both? It's one of those cases when people don't appreciate the the employer's and employee's interests are rarely aligned. I wrote some thoughts on this a while ago as I realised lots of people I encountered who've been in an individual contributor role their whole career haven't been forced to think about the opposite side of the arrangement: https://glenngillen.com/sensible-remote-compensation/

Thankfully where I work now (ockam.io) indexes to Bay Area salaries, irrespective of where people are based.

> The author has a poor understanding of economics.

Because as we all know the laws of economics are fair and just. Truly a business man who strictly follows the laws of economics would always compensate people fairly for their value delivered to the company.

In all seriousness, how does this make economic sense? The company is incentivizing that people move to areas with a high cost of living, but why exactly? What economic benefit does that bring to the company?

The only reason that's ever been explained to me is that the cost of competing for talent is higher in those areas than others. However someone's location is a poor indicator for talent potential, so why would you compete in high cost areas?

>However someone's location is a poor indicator for talent potential?

No it's not? If this were true, then economic hubs wouldn't exist. If someone is talented in field it's likely they will move to an economic hub that has jobs for their talents. If I wanted to open a trading firm I'd likely find the most capable candidates in Chicago, because thats where most of the jobs are today. There are certainly capable hires in Idaho, but how much time should a company spend looking for a needles in haystacks?

My anecdotal observation is that CoL multipliers for HCoL areas don't actually compensate fully for living in those areas. I had an opportunity back in the 90s for a job in the Bay Area and passed in part because the higher offer would have been a quality of life downgrade at the time.

> The only reason that's ever been explained to me is that the cost of competing for talent is higher in those areas than others.

You are looking for stability-based economics and wondering why your conclusions don't appear in reality. Well, it's because your economics are wrong.

They pay more there exactly because there is larger competition. And they hire there because that's where their money come from and where they started hiring before going global. If they reseted their hiring choices and had to do all of them again now with the current company, they would be better off hiring at cheaper places and not having anybody on the more expensive ones, of course. But the sheer absurdity of that conditional should be enough reason for you to see it won't happen.

> In all seriousness, how does this make economic sense? The company is incentivizing that people move to areas with a high cost of living, but why exactly? What economic benefit does that bring to the company?

It doesn't always bring an economic benefit to the company, which is why there are debates over companies calling employees back into the offices. That is almost always based on gut feeling and herd-mentality, than on any concrete data.

However, companies have to recruit from labor markets, and as such, they are bound by its vicissitudes. Despite the pandemic scattering many software people all over the country, the vast majority of competent software developers with cutting-edge work experience are still to be found in the Bay Area. Therefore, it makes sense for the company to insist that other hires also live in the Bay Area. Perfectly understandable. If the company is able to compete effectively for talent in the remote market and able to make it work (timezones and cultural differences do matter, even if it were possible to recruit remote workers easily), then it would do it, sooner or later.

> The company is incentivizing that people move to areas with a high cost of living, but why exactly?

Is it? Are you better off if you earn more but live in a high cost of living area? I hear about people working in SF for the big tech companies but living from a car because they can't afford to live there.

Two things:

1. GitLab (as with most other companies with geo-dependent comp) pays based on Cost of Labor--not Cost of Living. So if a market has crazy-expensive real estate but salaries haven't caught up (somewhere like Vancouver), you're out of luck.

2. GitLab is NOT encouraging team members to relocate to HCOL areas at all. In fact, while they encourage hiring in LCOL areas (there are target "location factors" for teams, so there's a bias toward hiring in lower-cost areas), the Handbook ( https://handbook.gitlab.com/handbook/people-group/relocation... ) states that "Relocations resulting in an increase in compensation must be approved by the team member’s direct manager, and location factor changes that are >.2 will require direct manager, VP as well as an eGroup Member approval."

TL;DR -- don't get hired in Iowa an expect to bounce to SF right away.

Not paying location-based salary is arguably more unfair.

If you pay the global median salary to everyone, people in high cost areas are screwed and you’ll never be able to recruit there.

If you pay everyone in your company the highest salary, people in low cost areas live like kings while their peers in high cost areas live a more modest lifestyle.

As a company you’re not out to solve global inequity, you’re out to hire good talent effectively and efficiently. Like leaving a 40% tip at a restaurant, overpaying the going rate on salary doesn’t really get you anything but feel goods at a certain point.

People living in high cost areas have chosen that.

It’s kind of like parking. If employees don’t pay for parking then an employer is subsidizing car driving over other options.

Did they? The typical person in the US lives within commuting distance from their mother: https://www.nytimes.com/interactive/2015/12/24/upshot/24up-f...

Yes, making a choice to "within commuting distance from their mother" is still making a choice.

What percentage of people under the age of 30 live with their parents to make ends meet?

Choosing between abandoning your family and maximizing your revenue isn’t exactly an even choice.

Living with others (parents, partners, etc) is something that decreases core costs of domiciling anywhere you go. That is an excellent method of maximizing revenue while not abandoning your family.

Otherwise, see The Complacent Class: The Self-Defeating Quest for the American Dream by Tyler Cowen.

https://www.amazon.com/Complacent-Class-Self-Defeating-Quest...

Actually, a company's attitude toward this problem has to be balanced. I live in a country where most international companies pay less than the US and even the EU average. The effect is quite easy to predict: they are not attractive to senior candidates (i.e., Nokia) and suffer from higher employee attrition (not right now, as the job market is pretty dead). I don't want to mention the effect on employee morale. Is it discrimination, as the author says? When you do exactly the same job in the same company, same department, same team, with the same output — then definitely it's discrimination. Does it encourage various xenophobic behaviors coming from better-earning employees - very rarely, but yes. Is it legal? — Yes.

>I live in a country where most international companies pay less than the US and even the EU average.

Can I ask which country?

Half of the EU?

chuckles That's On Me, I Set the Bar Too Low.

probably Poland

Balanced, sure, but not completely location blind.

Usually what I see is that remote jobs will offer a slight higher wage than the going rate in lower cost of living areas. That way you’re in a situation where moving to a higher cost of living area and making a more regionally average salary isn’t all that attractive.

> When you do exactly the same job in the same company, same department, same team, with the same output — then definitely it's discrimination.

But that’s my point as well: if you’re in San Francisco paying $5,000 a month in rent for an apartment and your coworker in Cambodia is also getting an SF salary living in a mansion with servants because your company is location blind that’s also a form of inequity.

What about having a family? If you pay everyone the same, those living alone or with a partner will live like kings while those with children will live much more modestly. Oh wait, we get 2k in tax credits per kid. I forgot that one is all good.

My point is, people are going to have different lifestyles that cost different amounts and give them different benefits. Companies should fuck off pretending they care about fairness or cost of living. Just call it what it is - competition-based pay. You pay someone in SF more because you are forced to by market conditions, and if you could, you would pay them less, with zero concern for their rent or mortgage. And since you CAN pay someone in Kansas City much less, they do.

We've already seen the prevalence of remote work change the equation. Many places now pay SF 110% and everyone else in the US 100%. The COL difference between SF and KC is not that 10 percentage points. Nor could you compensate someone for the discomforts - both political and meteorological- of having to live in Missouri, who God himself has abandoned.

> Oh wait, we get 2k in tax credits per kid

The guy who doesn’t have kids paid it indirectly in his social contributions. The next guy next to him too. And the next guy. And so on.

I think their point was that 2k is a joke considering how expensive a child is

Should it be more? Surely something one can think of when planning a child (or more)?

I was just pointing out what the author of the statement wanted to say, wasn't really going to argue about the point.

It's incredibly hard to budget for children though, you can't really foresee how much they will cost. One child eats little, one eats much, one is picky, one not, one likes soccer, the other one likes lego. Very hard to predict, except maybe year 1-2. But then one might be good with breastfeeding while the other might require formula and the cost of the first one is 0 while the second one could be very high

The other commenter is correct about my meaning, 2k/yr is rounding error for kid costs - at best it derays the increased cost of the "Family" health insurance plan.

And I'm not saying it should be more, I was more saying it in jest to help deter comments like "but you get tax kickbacks!". I do think that we should be doing more for children - free school lunches with no means testing, free childcare from birth instead of just when they enter the public school system, and so on - but the child tax credit is the most visible "kickback" so I made a joke about it to acknowledge it.

My point here, more generally, is that companies shouldn't be trying to play this game with "fairness". Just call it what it is - capitalism and the invisible hand of the free markets. If people have problems with how that system allocates capital, then do something about it, but don't try to pretend any of its machinations have any relation to notions of justice or fairness.

Very true. I mean even on my "platinum" healthcare coverage, it covers the gap of the deductible (which I know isn't exactly the same thing). Or looked at another way, it pays for 2.75 weeks of daycare.

(And I say this as someone not overly invested in that world - I have a 17 yo stepdaughter, and I am fortunate that in addition to my excellent healthcare, my company pays 100% of the premiums for my partner and kid, not just me).

That's not the way it works out in practice though. I've been a hiring manager and have had to see the impact these geo-based policies have on the salary of those in my teams. I work remotely and know how much it's hit me relative to my peers. Melbourne & Sydney are regularly listed in the list of most expensive cities in the world, yet Australia is almost always treated as one big market at the bottom end of the scale. I've had team members in Canada who are paid significant 6-figure amounts less than direct peers, if they moved ~1hr south they'd earn significantly more.

This is rarely about avoiding paying a FAANG engineer $500K and letting them work from Bali. They're weaponised in ways to give a plausible defence to why two people with the same role and experience are paid vastly different amounts for doing the same job.

How come it's okay for a company to say they don't give me a raise for increased costs of living, but it's okay for a company to pay less, because I live in an area with lower costs of living?

Because ultimately you have less bargaining power?

Besides, your alternative isn't making more money. It's not getting the job.

If it’s bargaining power, then it’s a power dynamic that may merit being called out, just like gaps in pay by other characteristics.

Some of those characteristics were given protection in law after enough noise was made.

Yeah this is an insane line of thought. You won’t fix pay, you’ll just see jobs stop existing by going this route. Market dynamics in labor are a good thing and you can change your location to benefit from them.

Of course pay is about bargaining power. How do you think a salary negotiation works? Why do you think a software engineer gets paid more than a nurse in most places?

Don't know why the company wouldn't give you a raise for increased cost of living? Plenty of companies will adjust pay based on location, including moving around. And plenty of companies adjust for inflation as well.

Of course any adjustment in pay needs to fit budget, so the company and line manager would need to have the budget to afford to. And there's probably plenty of companies that won't have this as an option or won't adjust for inflation, but there's also plenty of examples that do.

Your salary is a negotiation. Your company wants to pay each employee as little as possible. If you are unhappy with your salary you should look somewhere else. In fact, that is why companies pay people in expensive areas more. Those expensive areas have more available jobs so employees are more likely to leave. If you want those employees to stay you need to pay them more than employees who have a harder time leaving.

Approximate same work, approximate same cost of living, different salary.

What’s not to resent?

"Approximate same cost of living" is incorrect: https://www.numbeo.com/cost-of-living/rankings.jsp

I feel you have less empathy for a another worker and stressed that others are competing with you

It’s ok for enterprises to pay different prices/salaries in different locations yet individuals don’t get to do the same is a flaw in how we are taught what we can ask for

We are trapped in the matrix , need a red by pill

>But if I had instead lived in the Bay Area, I would've earned at least twice that amount, possibly even more.

why wouldn't he come here then? (he could have easily come on L1, great visa, spouse can work too, straight path to GC)

Also the social safety net in NL covers a lot of things you have to pay for yourself in the USA.

€120.000 a year puts him comfortably in the top 1% earners: https://www.cbs.nl/nl-nl/visualisaties/inkomensverdeling, but he complains he'd earn twice as much if he lived in an area where the cost of living is much higher?

I mean he lives in Amsterdam, which is more expensive than the rest of the country, sure, but nowhere near what it's like in SF according to https://www.numbeo.com/cost-of-living/rankings.jsp (Amsterdam is ranked 75, vs SF at 8), and I'm not sure if that index includes health care and social benefits like state pension, etc. Speaking of, that's only salary, ìt excludes stocks, bonuses, pension contributions, and other benefits.

Then there's accessibility; living in central Amsterdam means he can fulfill most of his daily needs and transport by bike. Can't get much cheaper than that.

TL;DR, he can move to SF if he wants to earn SF rates.

Women get paid 70% of what men do. So any woman who wants to be paid the same as a man has a poor understand of economics.

Debunked time and time again. The oft-quoted "70%" stat is referring to all men vs all women. Within the same job, the pay is much closer to 95%. Any difference is still worth understanding and closing, but there are plenty of pretty reasonable explanations for why a 5% pay disparity may exist between men and women.

If women have even roughly equal access to the same jobs, your point is a good one. If not, it is missing some nuance.

It’s fair to say both are. GP is strongly implying women get paid 70% for the same work (illegal in the UK at least) whereas P misses the subtlety that women don’t have equal access to the job market. Compare the rates of women in software engineering vs childcare. Then compare the salaries.

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