For tax purposes, that is already illegal. I.e. most (all?) states determine your residency based on where you actually sleep a majority of the year. My guess is that FB will base it on where you claim residency for tax purposes, so if you lie about it you're committing tax fraud.
In a round about way, is this not already illegal? If I live in Ohio but I represent myself to my employer that I live in NYC, am I not committing state income tax fraud against Ohio? NYC would probably love this since people who don't live in NYC and don't use its services pay NYC taxes, but Ohio would hate this because the person lives in Ohio and pays no state taxes.
EDITED:
Also, you could not get a driver's license in Ohio since you have to live there to get one. Forget about registering cars, owning property and paying for anything with a credit card in your own name.
Because by doing this you have misrepresented the truth in order to extract more money from your employer than you agreed (presumably, in your employment contract).
(As I commented elsewhere, whether you think paying by local cost of living is the right policy is valid to debate but isn't the point here.)
Did you prove you’re worth the salary or do they just have massively inflated salaries for everyone in a certain west coast US city because A bunch of huge technology companies failed to realise computers and the internet exist outside of said city and remote working is a very workable thing.
I’m not saying they should drop your salary if you move, but I also don’t think a lot of people hired at typical SV rates are actually worth that much, so much as they can’t afford to live there if paid less.
Proven that you are worth that salary in a given city. As tech companies realize they are no longer tied to SV they will also no longer have to pay the same high salaries to attract the large but overall still limited talent pool in this geographic area.
For every SF developer there is probably a just as good developer in Boise or Belarus willing to do the job for much less. Why should a SF developer who moves there make more?
People are worth a lot, but they become worth less monetarily as the talent pool grows in size.
But then you have to prove to NY that you were in FL. States like NY and CA will claw every dollar they can from you and if they see you're getting paid to an in-state address, good luck proving you weren't actually in-state. You likely won't be able to get back the money your company automatically deducted from your paycheck.
Not tax advice, so consult your own professional preparer:
NY state has first dollar claim if your employer says your job is in NY regardless of your physical address. If, for example, you live in NJ but commute into NY, you’re paying NY state tax with no opt-out. NJ credits residents for NY taxes but then gets their money via property taxes.
NYC is even crazier, with part time residents going so far as to take daily pictures of themselves with local papers to prove that they reside outside the city more than half the year to avoid NYC income tax.
You pay state taxes based on where you actually lived, not on where you say you lived, not on where you identify as having lived, not on what you perceive to be your main residence, and not on where you own a PO box. You pay state taxes based on where you actually lived, as in where your physical body was in space and time. And your employer obviously has this information for tax withholding.
No one registers a business address in Delaware to take advantage of their low taxes. Companies, like people, must pay state and local taxes based on their physical location.
I would imagine that because the company is withholding (and reporting) tax at a state level, you'd have to end up paying tax in whatever state you were claiming to live in anyways?
This makes sense in the hiring process, but once you've hired someone, it's a super dick move to lower their salary in spite of their performance. Seems like the sort of decision a robot would make.
This sort of scaling is simply a (rather flimsy) cover for the natural consequences of moving to remote work. If employees in the large metros have to start competing with workers from everywhere else, the salaries are going to start falling. A worker in rural Mississippi is going to expect a much lower salary than an equivalently skilled worker in Palo Alto, and a worker in Manila would expect even less again. Remote work puts significant downward pressure on salaries. This is simply an attempt to offset that. But if you think a hiring manager faced with having to choose between hiring somebody on a big metro salary vs a small rural one is going to be completely uninfluenced, then I’ve got news for you...
honestly as a front end dev, I don’t think what I do is that difficult and I’m overpaid. I feel a little nervous that with remote work I won’t be overpaid in the future
Jobs aren’t paid according to how difficult they are, they’re paid by supply and demand. Employers want to pay as little as possible, but they have to compete with other companies to hire staff from the finite labor pool. Employees want to be paid as much as possible, but have to compete with each other for the finite number of positions available with employers. Remote work simply means that for any remote position, employees will have more candidates to compete with, which will drive the cost of labor (salaries) down, especially if they’re competing with candidates willing to take a much lower salary due to living in a much cheaper place.
> Remote work simply means that for any remote position, employees will have more candidates to compete with, which will drive the cost of labor (salaries) down,
Remote works also means that for every desirable candidate, employers will have more competing employers to compete with, which will drive prices up.
What it really means is that both sides of the market will be larger and less segmented, meaning (1) there will be less opportunity for localized shortages and surpluses driving radically high or depressed salaries, and (2) the law of one price will be more relevant to labor prices for the jobs where remote work is normalized.
But you would expect the new one price to favor low cost of living candidates over high cost of living candidates. Especially where candidates in developed countries end up competing with candidates in developing countries. It’s unlikely that a dev shop in Bengaluru is going to start offering remote salaries that would be enticing for a US-based engineer, but the reverse would be completely expected.
> But you would expect the new one price to favor low cost of living candidates over high cost of living candidates.
I'd expect it to provide a greater surplus to lower-expenses candidates, as any common price does. That's not really favoring lower CoL.
> It’s unlikely that a dev shop in Bengaluru is going to start offering remote salaries that would be enticing for a US-based engineer, but the reverse would be completely expected.
Yes, for work that the skills required can easily be sourced anywhere, remote work is going to lead to natural price level much lower than the prices in the highest price segment of geographical segregate markets.
OTOH, where skills demanded are rare and not widely available, normalization of remote work just means its easier for more employers to join the bidding on that restricted set of employees with low transaction costs. So, for commodity labor it drives wages down to the lowest common denominator; for the most elite labor it drives wages up.
Like neoliberals free trade itself, it exacerbates inequalities.
What I'm interested in is that it's quite difficult today to find out how much you would be paid when you relocate. You need to jump through a lot of hoops to get the move approved in principle before you find out your new compensation. With this new system it should theoretically be fine to relocate anywhere, so if it is then you'd want to find out how much each area pays before you decide to move. Which means suddenly you know that guy who chose to go live in downtown SF is getting paid 1.4x more than you for the same job. The same is true today obviously, most big offices are in different areas and have different pay scales, but it's generally not as well known by the employees what those scales are.
What's the alternative if you're going to scale salary based on location while hiring? If you only scale while hiring, you'll encourage people to "move" to Silicon Valley for a month or two, then "move" back to their original location. There would be an enormous financial incentive for that behavior.
This happens where I work now, and only one person I know has done the Jump-ship thing and moved to a rural area.
It's easy to say "move to the bay, get a job with Facebook, move out" but getting a job with Facebook isn't easy, and moving is a ton of work. It's kinda like a problem that I really don't think would exist on a large scale. If the employee is worth X in the big city, they're worth X in the small city too, unless they were a shitty employee to begin with. In the end, the right people make the company, and if you're going to quibble over 10k of their salary, they should probably go somewhere else.
Then it seems the factor here is being close to the office. I can get this benefit. So why not base it on distance to the office? Within 2 hours? No pay change. 6-12 hrs and in the same timezone? Small pay decrease. Need a flight to get to work? Bigger decrease. And adjust your decrease on how important it is that you be physically present/in the same timezone. If you never need to be in the office, no change. If once a week, big change. While there's still issues with this, at least it is recognizing the aspect that there is benefit to being in the office (though it is not always needed).
So the employer punishes people that cannot afford to live close to the office? And on top of that, if they need to travel to conduct business, their pay is decreased? If I understand this right, it seems like a horrible idea, and I would not want to work at a place like that at all. If the company needs to hire talent that lives far away, why should they be punished?
> So the employer punishes people that cannot afford to live close to the office?
This already happens. If you aren't local, you can't even get the job.
> if they need to travel to conduct business, their pay is decreased?
Yes and no. If you're talking "I need you to go to China to meet with investors" no, if you're talking "we're having an all hands meeting on the first Monday of each month" then yes, but the employer is paying for your airfare and lodging as well.
> If the company __needs__ to hire talent that lives far away, why should they be punished?
Needs? Who said that? They just need employees. I'm talking about how much they need them in the office. If you don't need them in the office at all, then no pay differentials. But if you do need them in the office, well obviously there's different utility for that employee and should pay not reflect utility, as opposed to locality?
I mentioned in another thread the following scenario. Office in SF, one remote worker in Phoenix, another in NYC. How does the one in NYC have more utility than the one in AZ? (which is how pay works under current remote schemes) I'd argue it is easier/cheaper to get the AZ employee to the office. The AZ employee also shares the same time zone half the year and is only an hour off the rest of the year. How is that fair? So why not make it a function of distance and how much you are needed in the office rather than where you live?
Is it also a dick move to raise someone's salary if they relocate to a more expensive location but stay in the same role? (This is super common with international transfers, for example)
executive compensation is not handled the same as rank and file vanilla labor compensation - which SWEs are, despite (seemingly, most of) their world views to the contrary.
They would if he had a salary. Dorsey got in trouble with the Twitter board when he announced his plan to move to Africa, although he also doesn't have any direct compensation to cut.
Claiming residence in SF or NYC during the hiring process, then starting working somewhere else...
The best way about this is for FB to split the difference. Eg. if your average tc is 300k in SF, and it is 200k in North Carolina, if you decide to move there, you will be slotted down to something in between so it becomes a win win.
> Claiming residence in SF or NYC during the hiring process, then starting working somewhere else...
It would be a bit of a cat and mouse game. Companies can trace where you are working from VPN logins. I suppose you could VPN through San Francisco then VPN into your corporation’s network, but they probably monitor for use of common VPN providers. Plus during your meetings, etc, you coworkers would notice if you moved.
Whatever solution you use for your legal address could also provide a dedicated VPN and even mail scanning/forwarding. For example, renting a shared room in an apartment with 9 other roommates (one or two who live there full time), and use the premise Internet connection for a VPN server with a nice clean residential IP. Even more practical if there is an option to stay overnight occasionally, and your full-size residence is only several hours drive away. I can even see these type of arrangements arising naturally when roommates move out. Watch your MTU though!
One would imagine they would want your regular dev to be in cheaper locations (same TZ perhaps) and only very good dev in higher cost locations.
The land market cost moves on this could be huge if many companies do this. IMHO it could be bigger than any effect UBI might have had, as typically UBI would see lower earners flee high cost to new "marginal" areas with their UBI income. In this case it's mid to high earners who are suddenly able to flee the nest, which I feel could have a larger impact on land costs. Very interesting times.
You pretty much have to do this if you want to maintain different salaries in different geographic reasons. Otherwise people would be highly incentivized to move to SF/NYC for 6 months to get hired then move back to their cheap COL permanent location.
Personally I'd rather be paid less and avoid the stress of getting found out, plus it's not ethical. However life has shown me many people who would not share this perspective.
Honestly, people working out of the main office for their first 6mo-1y would probably a really advantageous scenario for all involved. The first year is when learning tools and culture as well as developing relationships is most crucial. I would say someone moving from in-office to remote has a big advantage over someone getting hired remote.
In some countries (at least in The Netherlands), it's also plain illegal to lower one's salary based on just location. In fact, over here lowering salary in general is difficult to do. But this being the US, I suspect it won't be much of an issue for Facebook.
Salary drops won't happen based solely off the cost of living. For example, based purely off the cost of living, you could move to a rural city in Iowa and only have a cost of living change in the $30 - $40k range (average SF rent being $3,700, high end Iowa rent being around $1k range). But your actual salary change will be in the $50-$100k range (based off stated numbers in similar articles).
yes, during hiring process for on site jobs based on local competition among employers and employees
if you are not competing locally, but with everyone everywhere salaries based on location become meaningless and only thing which counts should be productivity, why should be anyone having same productivity punished for being frugal instead wasting money?
by your logic they should go through your list of expenses, someone who prefer to buy Tesla over ford should get higher salary, someone who prefer to spend vacation in Europe instead of US should have higher salary, this is pretty insane discriminatory logic
When you sign an employment agreement, location is part of that agreement. If you decide you want to work in a different location than was agreed upon, that’s you indicating you want to amend the agreement.
Facebook isn’t saying: “you have to move and these are the terms”. Facebook is saying, “if you want to move here are the terms”. If you don’t like the terms you can always stay put or find a new job with terms you prefer.
Remote worker here: my home city was not part of the agreement. I don't know of anybody has "and I will only live out of X city" in their employment agreement.
If they're changing from office-only to remote, perhaps it's worth revisiting their contract, but we can't pretend that their place of living is incorporated into it somehow.
That said, your state and possibly your county/city probably need to be known due to nexus (state incorporation and tax issues) and personal taxes (potentially all locales).
I believe this is why FB says they will crack down hard on people who fudge this info — getting in trouble with the tax man could open a Pandora’s box.
I work remotely and my employment agreement actually states that "The workplace is determined in <my address>" in the first paragraph. Might be worth checking yours.
This is how prices are set. If you think labour is "value added less some employer fair cut", think again.
This also feeds directly into high land costs making industry less competitive or even infeasible, requiring for example offshoring.
This entire thing is quite interesting. For example you might want to live in the middle of nowhere out of choice, however it might be more economically beneficial, after you subtract rent costs, to live in a suburb or near enough to a major city to qualify for the higher pay due to the higher median salary. Or it may be the inverse, getting too close is a problem. Part of this would depend on how FB choose to compute this.
People are free to continue operating in the same capacity they were when first offered the salary (working in SV office). If they want to change that, then they are renegotiating the terms of employment and hence should expect salary adjustments.
How can/will the employer check whether the stated location of its emloyees is correct?
This is indeed a complex categorisation. What really defines my location in relation to remote work? Since I’m not bound to one physical location anymore I can split my time between different places. I might move every 6 months, what then?
Still, working remotely hasn't been around for decades, is it all so straightforward? From an EU perspective I can assure you it's a deep mess.
People have a different, long-term relationship with the tax authorities because 'you're not going anywhere' and this makes it possible to settle at a later time. Also tax authorities take action in retrospect specially because things are difficult to prove on-the-spot, but Facebook will need to pay you next month and next year you might be working somewhere else. How will they be able avoid over/underpaying you?
I'm guessing people will live in cheap places that are considered to be in the same region as expensive places. For example: live in Tracy or Fairfield or Hollister while collecting a bay area salary. Or live in Vancouver, WA while collecting a Portland salary. The latter is especially enticing as Washington has no state income tax.
In the long term though, if companies go remote I don't see how they can continue to have salaries based on cost of living. In a hypothetical perfectly frictionless economy with perfect competition, companies that pay salaries based on the value contributed by the employee would be more efficient and outcompete those that paid based on the employee's expenses.
The number of engineers isn't changing. If a bunch of engineers leave silicon valley, and some companies decide having people onsite is still critical, the bidding wars for the engineers who remain goes higher. All in all, I don't think much will change. If engineers refuse lower salaries, they simply won't leave the bay area -- keeping things in aggregate as they currently are.
I don't know how the US works, but in Canada I've had jobs where the employer took no taxes off and I had to pay them myself at the end of the year. I loved it, I can understand why many can't handle it though but the increase in cash flow actually increases your investment opportunities short term.
If this is true for the US too then Facebook is full of shit and using this as a weak argument for why they have to know if you snuck out of the city to go live in a cheaper area.
"Zuckerberg said Facebook will monitor adherence by checking where employees access its VPN. Facebook also uses its own apps' to track employee locations"
Allegedly because:
"Employees who attempt to wiggle around those compensation adjustments will be subject to “severe ramifications,” he said, as the company needs to account for employee locations to avoid violating tax laws."
Couldn't I run a VPN on my laptop into SF Bay then run a second VPN session in a VM to show I'm connecting from SFO? Seems there are ways to play the system.
This would be a spectacularly bad idea. Renting a PO box (or other front address) in a high cost location such as SF or NYC is going to open you up to tax liability there. At the same time, your actual legal state of residence is also going to want their share. You might get lucky, with your state of residence giving you credit for taxes paid in another state. But that’s not a given. Federal plus multiple states tax returns are a PITA.
But the biggest reason not to do it is that you’re presumed to be local: How many times are you going to “enjoy” paying walk up airfare from Raleigh Durham to SF because you need to give an in-person presentation the next day and you were assigned because you’re the only person on the team who isn’t remote?
I think the (perfectly sensible) idea is to keep "working" from SF to get a large bump in salary from Facebook (or others) that should more than offset the higher taxes.
It just happens that your living expenses dropped because you are now sharing space with a bunch of other developers in nano-flats (in a converted warehouse with a huge VPN relay pipe). In reality you are working from your second home (say, a vacation property at some cheaper place). I am sure it is somewhat irregular, but I am not sure it is illegal and while 100% against FB policy I do not think they can really act against you without FBI-style anti-employee snitching, which can easily backfire.
You should fact check your fact check. New York and California income taxes are based on residency. If you live in one of these states and work in a different state, then you will owe income tax to your home state. New York City also has its own income tax which is also based on residency in the city.
> Local taxes are owed based on the physical location the work is done.
Actually, state law varies; it's quite possible for taxes to be due in both the state in which work is done and the employee’s state of residence, or either one of those alone, or neither.
Facebook is afraid of a Facebook Boise office , Facebook Salt Lake City office, Facebook Houston office, etc. Their office locations are based on the political preferences of their board members and management. With no offices, they can't control the political makeup of the company.
It's the modern technological economy that produces the political culture of SF rather than the other way around. Marx' idiom of "all that is solid melts into air" is relevant here, tech and the modern urban economy aren't liberal by accident. They're liberal because technology and the logic of economic development itself erodes barriers.
The political and economic divide isn't some artefact that happened by accident and when all the tech people bring their capital and tech to conservative regions they'll see the light and become god fearing Christians, it's the regions that will undergo the same cultural change as any other region absorbed into the modern economy.
it's a process independent of the US or FAANGs. Doesn't matter if you go to Shenzhen, the UAE, Berlin or London. Wherever the global economy takes hold traditional values are pretty much torn apart because they're functionally incompatible.
Non-American Conservatives were much more aware of this than their American peers and are generally much more capitalism sceptic than conservatives across the pond. But you can full on expect that there'll be a very funny new political divide in the US as people start to realise how quickly economic modernisation erodes conservative values. It was already visible in 2016 if you listened to Bannon, say.
Your theory is easily proven wrong. Go to any tech office in high tech China. Notice how barriers have not been eroded, all the managers AND employees are Chinese, and some of the managers are required to be part of the Chinese Communist party. Where is the melting pot of liberalism in high tech China, or India, or Japan, etc, etc.
I've worked and lived in China. If you think China hasn't changed then you should have seen China 30-40 years ago when everyone was wearing the party uniform and carrying Mao's little red book in their chest pocket. And I mean that literally, not metaphorically.
Today you have women running companies, Starbucks and makerspaces in every city where people sit and talk in English. You've got to be kidding me if you think China hasn't changed, it has changed faster than virtually any other place. Beijing (the only city I can personally speak of) has a surprisingly large gay nightlife. It's astonishing how much that country changes even year to year.
Sure, it's not liberal in a political sense yet but it has liberalised dramatically, in virtually all aspects of life. Same goes for Japan, it's a much more open, global country now.
Salt Lake City and Boise are pretty liberal and both vote blue. Houston is overall pretty split, but has voted for a Democrat mayor for more than 30 years.
What "political preferences" are you suggesting Facebook is afraid of from that focuses on the 3 named regions?
Facebook managers, who a large portion of are foreign nationals, prefer foreign nationals manage US offices. US citizens might not be as in favor of that and probably prefer US nationals manage US offices.
That seems like a pretty outrageous claim. Do you have any evidence to support that? My friend works for FB Seattle and the "site manager" is definitely a white US citizen. What benefit would FB have from having "foreign nationals" run domestic offices?
I'm trying to interpret your comment as anything but xenophobic, but I'm having a really tough time doing so.
Just go look at your Seattle org chart. I never said there was a "benefit," just that foreign national managers prefer that foreign national managers manage US offices and that is why they fear offices in areas that don't adhere to this globalist orthodoxy that is in the bay area and Seattle. That should be self evident.
There is no "Seattle org chart." A given office may have a lead, but only small percentage of people in the office will report to the lead. In some cases the lead isn't even a manager.
Personally, across four teams and six managers, only one has been a non-citizen and he was a permanent resident from an anglosphere country. Looking around, pick a random manager and you'll probably find a white guy from the US.
Facebook's board and senior management doesn't seem to have a clear political bias from what I can tell. It would be bad for business if they did; a company that is ultimately seeking to attract the entire world onto its platforms needs to be able to operate across the political spectrum.
I’m currently living rent free at my parents place in Palo Alto. Can you imagine how much more Facebook would pay me than someone renting in a poorer neighborhood?
While the cost of rent is certainly one aspect of where people choose to live, it certainly isn't the only aspect. Tons of people choose to pay more to live in more expensive areas because they find them nicer to live in.
And people who want to retire early or buy rather than rent but still live in a nice area will flock to low income areas now that they don’t have to commute into the office.
How is East Palo Alto doing? Serious question, when I was still in SFBA I think the houses there were 2 times cheaper than across the highway and the joke was the weather forecast goes "Palo Alto sunny, East Palo Alto sunny, stray bullets". I was wondering if I should buy a rental house then (~2013)...
I presume there won't be an adjustment based on which specific city you're living in but more based on the general region. The Bay Area will likely have the same salary band all around regardless if you're in Oakland or Palo Alto. After all - once you do that then where is the line drawn? For instance, some areas of Palo Alto are much more expensive than others.
Maybe they should start scaling based on how much rent you have to pay. ;)
Well - if they did then I'd start renting a much bigger/nicer place instead of the hellish in-law unit I have. (Cheapest thing I can find in San Carlos) After all - they're gonna pay me more then, right?
Well, living with your parents is, of course, going to save you a lot of money. But you're living with your parents. I do wonder about the opportunity for fraud, though. I bet a lot of young developers will, all of a sudden, start living in their parents houses.
This will accrue many negative comments here. I have to say that I can understand the reasoning behind this. I think it’s fair. I would expect that they increase the salary if you move to a more expensive place.
my last company was a fairly global fortune 100. Our intranet had a hard list of salary adjustments they pertained globally for internal transfers per site. if I moved from a low COL area to SF, I got a 15% raise. SF to my office took a 15% hit. the transfer ratios were all (internally) public knowledge.
Cost of living and taxes are very real. CA income taxes are > 10%. Some states have 0% income tax. On that basis alone, CA employees should make 10% more than those places without income tax. Then there's cost of living, rent, etc.
You can legitimately earn more while being paid less by moving to a lower cost location.
Your salary isn't proportional to the value you create. It only has to be less than that value, but otherwise it's just determined by offer and demand.
People working remotely from Palo Alto are in the same labour pool as people working remotely from Eugene, Oregon... And the wierdo who lives in a goat farm in the middle of nowhere, Idaho.
The labour pool argument only makes sense if you commute into the office.
With remote work, everyone in the same country + timezone belongs to the same labour pool.
Companies that will treat the remote labour pool as uniform will trivially be able to outbid companies that underpay people in low COL areas, and overpay people in high COL areas. Why would I work for Gitlab, with its 0.66 COL multiplier for my town, and a 1.2 COL multiplier for NYC, when I could work for Foolab, which has an across-the-board 0.8 COL multiplier?
Given that situation, you'll quickly find that the only people working for Gitlab are people based in high COL areas. Instead of a money-saving technique, it becomes a money-spending technique, as they end up subsidizing employees relocating to the highest-COL areas.
So as people are able to earn more in remote locations our rates will go up with them.
I think most companies will end up paying local rates https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra... so as more companies start hiring remotely the rates will go up gradually. I don't think think that there will be many Foolabs that pay one rate.
Market rate is, in reality, a close enough proxy for COL. I'm happy to use the two concepts interchangeably. My point still stands.
Any firm that will provide an equal across-the-board wage, that's significantly below market rate in NYC/Bay Area, but significantly above market rate in low COL areas will eat your lunch, in terms of wage competitiveness among the latter group. They won't hire anyone from the former group - but just being in the bay area does not make you a better engineer.
You'll be stuck paying expensive people in high COL areas, that are doing the same work as cheap people in lower COL areas.
Why compete on the high-billing end of the salary curve, when you can compete on the low-billing end of the salary curve, for the exact same quality of talent?
"We won't pay NYC wages, but we will pay the rest of you better wages than our competitors" is a great pitch to employees[1]... While being a net benefit to your payroll.
[1] Except for those living in NYC, of course. But you don't have to hire them.
> That would restrict all your hiring to the lowest wage markets.
The talent quality is the same.
Some of those reasons in the link are directly contradictory, some are nonsense, and others are inapplicable to other firms (But sure, they may well make sense for Gitlab.)
> A concentration of team members in low-wage regions, since it is a better deal for them, while we want a geographically diverse team.
May be a priority for Gitlab, but that is not a priority for any firms that required people to relocate their butts to Silicon Valley, or that never supported remote work prior to Covid.
> Team members in high-wage regions having less discretionary income than ones in low-wage countries with the same role.
Seriously? Do team members with more obligations, like children enrolled in private schools, ailing parents, or overleveraged mortgages also get the same amount of discretionary spending as their less-burdened coworkers? Isn't choosing which zip code to live in discretionary? And why does this even enter the picture, when, as you claim, your wages are set by market, rather than by COL? The market doesn't care about employee discretionary income. There's nothing fair about market wages, just like there's nothing fair about the weather. They just are.
> Team members in low-wage regions being in golden handcuffs and sticking around because of the compensation even when they are unhappy.
This is an incredibly employee-hostile reason. "We don't want to pay you too much, because imagine if you ever become unhappy." Good lord.
> If we start paying everyone the highest wage our compensation costs would increase greatly, we can hire fewer people, and we would get less results.
This, however, is a fantastic reason. See my previous post on why it makes sense for a remote firm to not pay anyone NYC wages.
> If we start paying everyone the lowest wage we would not be able to attract and retain people in high-wage regions.
Why is this a goal of the firm? Scratch that - if that's a goal of the firm, that's fine. It's a weird goal, though. Companies typically don't go into business with the goal of attracting and retaining people in high-wage regions. They typically go into business to make a lot of money by solving problems for their customers. So, it's fine that this is a goal for Gitlab, but it certainly does not seem to be a goal of any company I've ever worked for, or am likely to work for.
You adjust wages up for employees hired in, say, non-NYC, who choose to move to NYC. How would doing so meet that goal? Is someone from Oklohoma who moved to NYC for a raise suddenly providing a diversity-of-skills-and-perspectives need that was unmet, prior to their geographic relocation? Are they now providing more value, that necessitates paying them more? If not, why was hiring in high-wage areas a goal in the first place?
Before I relocated to the Bay Area, I had never gone on call. Never diagnosed a system by only looking at graphs of metrics it emitted. Never ran experiments against tiny percentages of production traffic. Never had to maintain consistency while failing over between regional datacenters. Being here did make me a stronger engineer, because companies here are earlier adopters with tougher problems, and the scale to make solving those problems worthwhile, and people who have been studying them. Maybe someday these experiences will be evenly distributed among remote workers everywhere, but right now they're concentrated in the strongest labor markets.
People who relocate to hot labor markets are more invested in our careers than people who don't. Employers who pay extra to draw from hot labor markets have different problems leading to different skillsets. For better or worse, we're earlier adopters.
The change in salary is not in proportion to the change in an employees cost of living.
FB (and other companies, in all fairness) is saying "If the COL is half that of SF, your salary will be cut in half". Whereas the employee is looking at "I only spend 50% of my salary on living, the rest goes to paying off loans and investments", which results in a net loss in their after-COL loan payments and investment opportunities.
what difference does it make to work you provide for them?
by your logic they should have full access to your bank account to accurately adjust salaries based on your expenses, you ride Tesla? here is bonus for you. you ride ford? bad for you...
it's none of the company business where I live if I work from home and provide same results like anyone else
salaries based on location make sense only with on site jobs where employer has to compete with other employers in area and potential employees with other employees in area. with no such thing at work from home, the offered salary should be fixed strictly based on productivity/results regardless if you are frugal or wasteful and to be able to attract the talent compared to other employers
In practice this can't really be enforced. Say you were making $200k but then a law was passed that companies have to reimburse you for 20k of "home office expenses" per year. Guess what, now your salary is 180k + the reimbursement!
Oh, you're saying you could pass a law against that too? OK, then what happens to new hires. They're gonna get 180k. You can't really stop that.
At the end of the day, salaries will be set by the market. Companies are price takers just like employees.
Take care not to conflate the "market" which applies when it benefits me over everyone else, with "fairness" which applies whenever it benefits me over everyot else.
Take care not to conflate the "market" which applies when it benefits me over everyone else, with "fairness" which applies whenever it benefits me over everyone else.
The company claimed that they don't see this necessarily as a cost-saving measure because they plan on providing for home office equipment for permanent remote workers, kind of like how employees going to the office have monitors and keyboards provided for them.
Home office equipment is only a fraction of the company's potential savings from office rent or other operational costs. Some of those costs get passed on to the employee, like electricity or heating costs.
That’s pretty funny. I have an amazing home office setup, and even all that high-end kit cost a very small fraction of an FB engineer yearly salary. Are they planning on burning the delta by throwing in high-end telepresence hardware, or something?
The top end afaik is the Cisco telepresence gear used in eg the White House. There’s a spectrum in between, but $280 is definitely near the lower end. Maybe portal is really good, though?
But honestly, it could be the best teleconferencing gear, I’d never put a camera from FB in my home.
To be honest: all of the office equipment is a mere fraction of a month's of an engineer salary, providing the basic tools for your workers that is less than a month's salary is nowhere a "cost-saving measure", even less when you are saving on real estate...
Where I work we had a major effort to normalize salaries and make sure base salaries before localization were consistent across demographics. Most governments will do the exact same time. You have a salary band and step, and then get an additional % based on location.
Are we going to see a exodus of high-income newly-remote workers to lower-income locations? This seems devastating to cities that have become dependent on the economic power these workers bring, but at the same time, it could bring new life to poorer areas of the country.
If we’re moving to a remote first world, long term it will flatten out salaries regardless of location, but short term, companies will stop hiring in expensive locations as much.
When I moved from SF bay area to Austin, my employer didn't lower my salary, but for a few years my yearly increases were small compared to my performance review until my pay grade was right for my pay grade and location combination.
This was a nice way to do it because my salary has always been monotonically increasing, and I wasn't offended that my increases were small for a few years because I knew why it was happening.
This right here is the way to deal with the problem. Lowering a salary should only happen if someone is a fuckup or reduces the amount of work they have to do. Doing it over time like this is super classy.
I don't know, if the same job gets paid less in Austin then it's not really fair for someone who transfers from SF to Austin to make more than someone who was just in Austin all long. If someone moved from Austin to SF you'd just pay them less than a new hire in SF?
At Google they just openly adjust your salary if you move between cities; move from NYC to Atlanta and you'll take a bit hit, move back for the reciprocal instant raise.
This sounds great but I wonder how much of that was employer's discretion? I imagine your work was that valuable but perhaps a less productive engineer might get a different "package".
Regardless of the rational and pragmatic reasons behind salary adjustments for cost of location adjustments, a double digit X% cut would be very demotivating for most people psychologically.
People seem to be missing that this is entirely voluntary. Facebook isn't forcing people to accept a pay cut, just saying that if you choose to move then your salary will be cut.
This has been SOP at big tech companies for years. If you choose to move to a cheaper location, your salary will be adjusted to the new market rate.
I know plenty of people who have gone through this and nobody felt demotivated. They all chose to move and were well aware of the salary cut when they made that choice.
Not just big tech companies,it's SOP at most companies in pretty much all industries.
Very very few people would not be expecting a location adjustment to their salary with a major relocation. Especially when that relocation is entirely for the benefit of the employee, not the employer.
This is what everyone I know does but that's because they're all smaller companies and each individual is pretty valuable. At Facebook, each individual is just a statistic at the margin. They cease to operate as individuals and more as a market for lots of labour.
That can't be helped. If I had a 100k size org, I wouldn't hesitate to set (overall) compensation targets at regional top prices with instant adjustment.
some people just complain. if you're living in a rich neighborhood, they complain, if you live in a poor neighborrhod, they complain. wfh? complain. working in the office, not good either. because poor people and climate change and discrimination.
You're right, that there are plenty of people who will complain no matter what. I think its reasonable from the perspective of someone who's say, a schoolteacher in San Mateo of 30 years that has to live and commute from Richmond or Tracy?
Building lots more housing would be the best way to make things equitable at least.
High crime? I live in suburb 2 blocks from a forested area with trails in a nice area and I'm paying $700 a month in the SF/Bay Area.
The crime in the area I'm in is lower than most of the bay area because the area gets overlooked.
The downside is there are less high end food options, but still some pretty good options. Oh, and the allergies. I get allergies. Too much nature. But it's nice.
How far do you have to move to get a salary adjustment? There are very cheap places a 2hr drive from SF. If you move to Vacaville, does that lower your salary?
So this depends on how they compute this. If it's not that granular you might be able to live in a low cost location that is ranked as a higher cost location by the FB "salary grid".
Having that grid information would be very useful to an individual when negotiating.
The cost of living scaling doesn’t cover the entire salary. Only about 30% of my salary goes towards cost of living, more than half of it goes to savings. If my salary was scaled from Seattle to Spokane levels, my savings at retirement would be enormously impacted.
That sort of cost of living also doesn’t account for a huge amount of other things too. Having a holiday in Bali costs the same whether you depart from Spokane or Seattle (probably slightly more departing from Spokane actually, when you account for transport from Spokane to SeaTac). Buying a new 4K big screen costs the same in Spokane as it does in Seattle. Living in Spokane doesn’t make your kids college cost less either.
Agreed, that bestplaces COLA calculator is bizarre. On one hand I think it's great that it breaks down relative costs by area - like you say, it's clear the difference in cost between Spokane and Seattle is almost entirely due to housing.
But then it fails to take into account the percentage of income that actually goes towards housing. If you make 200k and move to a place where the primary difference is housing costs (say 2x housing costs), the adjustment should be up to about 250k (assuming housing ~25% of income), not 400k.
When you're talking at the levels that most engineering positions are paid pretty much anywhere in the US (even lower cost of living areas), you are unlikely to qualify for need-based aid anyways. A pay cut from (lets say) 200 -> 150 is significant, but I don't believe likely to qualify a student as "low income" by any means.
Stanford covers all tuition for parents whose income is $125k or less, and partial tuition for parents making more than that until some cutoff. Regardless, $150k would be getting you a decent bit of financial aid.
> Here in Washington, a Seattle salary of $150k is worth around $315k in Spokane. And that's in the same state.
Spokane and Seattle are on opposite sides of the state - 280-300 miles apart. I don't get what you're trying to get at. The distance is large enough to go through multiple states on the east coast. I don't think it's really an apt comparison since the two are nothing like each other. You could make this same comparison in CA with a SF Bay Area salary and even less distance apart. Here's one for you: https://www.bestplaces.net/cost-of-living/redding-ca/palo-al...
> Spokane and Seattle are on opposite sides of the state
All that matters is that Facebook consider them within the same CoL-adjusted region. If their CoL weighting is applied at the state-level (for example if Washington residents are to be paid at 80% the effective SF salary), then this is the real arbitrage.
Not just housing. Food, child care, services, bars, etc., are significantly cheaper. My kid’s private school an hour east of DC costs 1/3 less than the going right inside DC. Daycare is 30% cheaper. A cocktail is somewhat more than half the price.
As odd as it might sound, child care and private schools line up with housing prices in an area, so it can be ideal to think of them as the same category. Likewise utility bills can be inflated to.
Other costs are not much higher if at all. If you go to a bar in the financial district, that's usually a business expense so it's justifiably expensive. It's this way in all cities or towns with a large enough center though, so pricing come out somewhat equal. It's when you compare city center prices with outskirts of city prices where the difference starts to matter more.
I'm not surprised having setup a hosted GL instance. It's actually quite amazing how it mostly just works but when things go wrong between upgrades and migrations you quickly realize how complicated everything is under the hood.
digging into this, it doesn't seem to adjust for CoL but competitiveness of the market. Seattle and NYC have the same salary bracket, but NYC is by far more expensive. Nerd Wallet claims the city is between 37% to -6% more expensive depending on where you live (Manhattan vs Queens)
Wonder how that pays off for them in terms of hiring. Last time I was looking for a job, I put them near the bottom of my list because of the location-based scaling.
When we were still accepting applications we got 15,000 per month. I'm sure that this was so high because of all remote and that if we paid everyone SF rate that would have been even higher.
Same here. It’s interesting that they won’t know who never bothered to apply. A more typical company which doesn’t make their salaries public would notice if candidates repeatedly drop out of the hiring pipeline due to inadequate pay.
On the other hand they seem to be doing well as a business so recruiting evidently hasn’t been a big problem for them.
Yes, they're very open about how they descriminate and earn more off employees who live in cheaper areas... It's a very weird stance to take and always infuriated me. They adopt a policy of radical transparency in their descrimination. Quite shocking too in the amount of pride they take in it, truly the market leaders in virtue signaling and disonnance.
And for those who don't think there's a better way, take a look at Basecamp or Zapier's salary policies.
I wonder how you figure what counts as "Seattle," for instance. Does Tacoma count? It's a 40 min drive - people do commute to Seattle. Or is Tacoma under "everywhere else, WA"? It's a $50k/yr question despite the CoL difference not approaching that.
Right. I wouldn't mind moving back out to the redwood tree forest in Northern California, which can be as quick of a drive as 1 hour 30 minutes from SF, but realistically 2 or so hours.
All the other areas in CA it lists are super far away, but regardless I have a feeling it would count it as CA Everywhere Else, despite the prices out there not being far off from Silicon Valley.
If the scaling is proportional to cost of living I don’t think much would change. Why would an employee move away from a large city with amenities, culture, and the career advancement opportunities that come from being in an office for a drop in salary? The only advantage I can see to moving is if you’re starting a family and you don’t want to live in the city.
Facebook is basically telling its employees that they want them to come into the office.
Given that the difference between cost of living between the most and least expensive places in the US is in the $40,000 range, and salary drops are occasionally upwards of double that, no, the scaling is not proportional.
For example, I live in Montana. Most COL adjustments say that I'd need about $40,000 more a year to maintain my current standard of living, yet equivalent positions get about $100k to $150k more a year. If one of those poor folks in SF making $250k a year now wants to move to Montana, they can easily expect to be making $150k or less after they move.
Companies: We are paying you as little as we can get away with. Sorry that is just how capitalism works.
Employees: Sounds good. We will work as little as possible.
Companies: Wait a minute here. We are a family and a team. You need to support the team and the mission, even if that means working extra hours without extra pay.
I understand this, although I disagree with the notion that a job is worth "more" in a high rent area than it is in a low rent area. But that is a different thread.
That said, when my kids were in school there was a phenomena that "Cupertino Schools are the best public schools" so parents wanted their kids to go to those schools. Which you could do if you lived in Cupertino, but Cupertino has higher costs than say living in South San Jose. So creative parents would make their "home" one of the apartments run by a "friendly" landlord who would "rent" them an apartment for $100/month, and give them a utility bill with their name on it so that the student could claim Cupertino residency and go to Cupertino schools. Other scams involved people offering to pay the utilities for someone who lived in Cupertino so that they could get that precious document which saved them $8,000 a year or more on private school tuition.
Depending on the difference in salary, I would not be surprised to see some of that action going on with regards to people's "Facebook home"
As someone who grew up near Cupertino, these "scams" have been going on at least since I was in middle school decades ago. One of my classmates rented a small trailer at the top of the hills that was just technically in the school district. It didn't even have running water.
Although I think it's unlikely that you'd be prosecuted rather than just fired, it is most likely a criminal offence to obtain a higher salary by submitting false documents.
Ya, upon reflection, you're right. Agree it will be unlikely in most circumstances though especially since not only would the company have to press charges, the local DA would also have to decide to pursue the case.
"You are charged trying to get your kid into a good school through mail fraud"
Eh. Hard pitch for a DA to run with this case. I don't honestly see a poor family being prosecuted for trying to get their kid into a rich school due to their property line. The DA office wouldn't like these optics. Jury?? Not a chance. If it were rich kids taking advantage of a poor school - the DA would run with it.
That DA got elected by rich parents who paid high prices for their houses to get in a good school district. Do you think they want their school "ruined" by poor kids sneaking in illegally?
I saw similar scheming in DC Metro for high school sports. Live in high school X's area, but their basketball team is terrible? Rent the cheapest apt possible in high school Y's area and send your kid there to play ball. For a select few kids, it was worth full-rides at Big State U, so I can't hold it against them.
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[ 4.1 ms ] story [ 504 ms ] threadFrom my perspective, it's the same as registering your business address in Delaware to take advantage of their low tax rates.
So many people seem to think they've come up with clever workarounds to tax laws. It's almost never true.
EDITED: Also, you could not get a driver's license in Ohio since you have to live there to get one. Forget about registering cars, owning property and paying for anything with a credit card in your own name.
(As I commented elsewhere, whether you think paying by local cost of living is the right policy is valid to debate but isn't the point here.)
I mean, the vast, vast majority of FB employees can easily get jobs with other companies. If you don't like it, leave.
An employer never pays you what you're worth, they pay you the lowest possible salary they can get away with.
I’m not saying they should drop your salary if you move, but I also don’t think a lot of people hired at typical SV rates are actually worth that much, so much as they can’t afford to live there if paid less.
For every SF developer there is probably a just as good developer in Boise or Belarus willing to do the job for much less. Why should a SF developer who moves there make more?
People are worth a lot, but they become worth less monetarily as the talent pool grows in size.
So if you leave NY temporarily and work remotely from FL you will no longer have income tax while you are in FL.
NY state has first dollar claim if your employer says your job is in NY regardless of your physical address. If, for example, you live in NJ but commute into NY, you’re paying NY state tax with no opt-out. NJ credits residents for NY taxes but then gets their money via property taxes.
NYC is even crazier, with part time residents going so far as to take daily pictures of themselves with local papers to prove that they reside outside the city more than half the year to avoid NYC income tax.
Seattle would probably be a better choice, as a high-wage, relative low-tax city.
Flying back to the bay for 2 days a week is probably a reasonable CoL arbitrage if you only need housing for 2 days.
State tax authorities do not share this perspective.
Whether or not you agree that employees should be paid differently depending on cost of living where they reside, it isn't new.
Remote works also means that for every desirable candidate, employers will have more competing employers to compete with, which will drive prices up.
What it really means is that both sides of the market will be larger and less segmented, meaning (1) there will be less opportunity for localized shortages and surpluses driving radically high or depressed salaries, and (2) the law of one price will be more relevant to labor prices for the jobs where remote work is normalized.
I'd expect it to provide a greater surplus to lower-expenses candidates, as any common price does. That's not really favoring lower CoL.
> It’s unlikely that a dev shop in Bengaluru is going to start offering remote salaries that would be enticing for a US-based engineer, but the reverse would be completely expected.
Yes, for work that the skills required can easily be sourced anywhere, remote work is going to lead to natural price level much lower than the prices in the highest price segment of geographical segregate markets.
OTOH, where skills demanded are rare and not widely available, normalization of remote work just means its easier for more employers to join the bidding on that restricted set of employees with low transaction costs. So, for commodity labor it drives wages down to the lowest common denominator; for the most elite labor it drives wages up.
Like neoliberals free trade itself, it exacerbates inequalities.
It's easy to say "move to the bay, get a job with Facebook, move out" but getting a job with Facebook isn't easy, and moving is a ton of work. It's kinda like a problem that I really don't think would exist on a large scale. If the employee is worth X in the big city, they're worth X in the small city too, unless they were a shitty employee to begin with. In the end, the right people make the company, and if you're going to quibble over 10k of their salary, they should probably go somewhere else.
> So the employer punishes people that cannot afford to live close to the office?
This already happens. If you aren't local, you can't even get the job.
> if they need to travel to conduct business, their pay is decreased?
Yes and no. If you're talking "I need you to go to China to meet with investors" no, if you're talking "we're having an all hands meeting on the first Monday of each month" then yes, but the employer is paying for your airfare and lodging as well.
> If the company __needs__ to hire talent that lives far away, why should they be punished?
Needs? Who said that? They just need employees. I'm talking about how much they need them in the office. If you don't need them in the office at all, then no pay differentials. But if you do need them in the office, well obviously there's different utility for that employee and should pay not reflect utility, as opposed to locality?
I mentioned in another thread the following scenario. Office in SF, one remote worker in Phoenix, another in NYC. How does the one in NYC have more utility than the one in AZ? (which is how pay works under current remote schemes) I'd argue it is easier/cheaper to get the AZ employee to the office. The AZ employee also shares the same time zone half the year and is only an hour off the rest of the year. How is that fair? So why not make it a function of distance and how much you are needed in the office rather than where you live?
Claiming residence in SF or NYC during the hiring process, then starting working somewhere else...
The best way about this is for FB to split the difference. Eg. if your average tc is 300k in SF, and it is 200k in North Carolina, if you decide to move there, you will be slotted down to something in between so it becomes a win win.
It would be a bit of a cat and mouse game. Companies can trace where you are working from VPN logins. I suppose you could VPN through San Francisco then VPN into your corporation’s network, but they probably monitor for use of common VPN providers. Plus during your meetings, etc, you coworkers would notice if you moved.
The land market cost moves on this could be huge if many companies do this. IMHO it could be bigger than any effect UBI might have had, as typically UBI would see lower earners flee high cost to new "marginal" areas with their UBI income. In this case it's mid to high earners who are suddenly able to flee the nest, which I feel could have a larger impact on land costs. Very interesting times.
Probably not.
if you are not competing locally, but with everyone everywhere salaries based on location become meaningless and only thing which counts should be productivity, why should be anyone having same productivity punished for being frugal instead wasting money?
by your logic they should go through your list of expenses, someone who prefer to buy Tesla over ford should get higher salary, someone who prefer to spend vacation in Europe instead of US should have higher salary, this is pretty insane discriminatory logic
Facebook isn’t saying: “you have to move and these are the terms”. Facebook is saying, “if you want to move here are the terms”. If you don’t like the terms you can always stay put or find a new job with terms you prefer.
If they're changing from office-only to remote, perhaps it's worth revisiting their contract, but we can't pretend that their place of living is incorporated into it somehow.
That said, your state and possibly your county/city probably need to be known due to nexus (state incorporation and tax issues) and personal taxes (potentially all locales).
I believe this is why FB says they will crack down hard on people who fudge this info — getting in trouble with the tax man could open a Pandora’s box.
This also feeds directly into high land costs making industry less competitive or even infeasible, requiring for example offshoring.
This entire thing is quite interesting. For example you might want to live in the middle of nowhere out of choice, however it might be more economically beneficial, after you subtract rent costs, to live in a suburb or near enough to a major city to qualify for the higher pay due to the higher median salary. Or it may be the inverse, getting too close is a problem. Part of this would depend on how FB choose to compute this.
People are free to continue operating in the same capacity they were when first offered the salary (working in SV office). If they want to change that, then they are renegotiating the terms of employment and hence should expect salary adjustments.
This is indeed a complex categorisation. What really defines my location in relation to remote work? Since I’m not bound to one physical location anymore I can split my time between different places. I might move every 6 months, what then?
People have a different, long-term relationship with the tax authorities because 'you're not going anywhere' and this makes it possible to settle at a later time. Also tax authorities take action in retrospect specially because things are difficult to prove on-the-spot, but Facebook will need to pay you next month and next year you might be working somewhere else. How will they be able avoid over/underpaying you?
https://www.bloomberg.com/news/articles/2020-05-12/stranded-...
In the long term though, if companies go remote I don't see how they can continue to have salaries based on cost of living. In a hypothetical perfectly frictionless economy with perfect competition, companies that pay salaries based on the value contributed by the employee would be more efficient and outcompete those that paid based on the employee's expenses.
Your expenses don't matter to employers, but if the industry goes fully remote we'll no longer see labor markets with shortages and higher offers.
If this is true for the US too then Facebook is full of shit and using this as a weak argument for why they have to know if you snuck out of the city to go live in a cheaper area.
Salaries adjusted by region is pretty common. My employer does it. My wife's employer does it. Etc.
bundle that with a VPN as well.
"Zuckerberg said Facebook will monitor adherence by checking where employees access its VPN. Facebook also uses its own apps' to track employee locations"
Allegedly because:
"Employees who attempt to wiggle around those compensation adjustments will be subject to “severe ramifications,” he said, as the company needs to account for employee locations to avoid violating tax laws."
But the biggest reason not to do it is that you’re presumed to be local: How many times are you going to “enjoy” paying walk up airfare from Raleigh Durham to SF because you need to give an in-person presentation the next day and you were assigned because you’re the only person on the team who isn’t remote?
It just happens that your living expenses dropped because you are now sharing space with a bunch of other developers in nano-flats (in a converted warehouse with a huge VPN relay pipe). In reality you are working from your second home (say, a vacation property at some cheaper place). I am sure it is somewhat irregular, but I am not sure it is illegal and while 100% against FB policy I do not think they can really act against you without FBI-style anti-employee snitching, which can easily backfire.
Fact Check: false. Local taxes are owed based on the physical location the work is done.
Though there are many other reasons that this is a bad idea.
Actually, state law varies; it's quite possible for taxes to be due in both the state in which work is done and the employee’s state of residence, or either one of those alone, or neither.
See, e.g., https://www.americanpayroll.org/compliance/compliance-overvi...
The political and economic divide isn't some artefact that happened by accident and when all the tech people bring their capital and tech to conservative regions they'll see the light and become god fearing Christians, it's the regions that will undergo the same cultural change as any other region absorbed into the modern economy.
Non-American Conservatives were much more aware of this than their American peers and are generally much more capitalism sceptic than conservatives across the pond. But you can full on expect that there'll be a very funny new political divide in the US as people start to realise how quickly economic modernisation erodes conservative values. It was already visible in 2016 if you listened to Bannon, say.
Today you have women running companies, Starbucks and makerspaces in every city where people sit and talk in English. You've got to be kidding me if you think China hasn't changed, it has changed faster than virtually any other place. Beijing (the only city I can personally speak of) has a surprisingly large gay nightlife. It's astonishing how much that country changes even year to year.
Sure, it's not liberal in a political sense yet but it has liberalised dramatically, in virtually all aspects of life. Same goes for Japan, it's a much more open, global country now.
What "political preferences" are you suggesting Facebook is afraid of from that focuses on the 3 named regions?
I'm trying to interpret your comment as anything but xenophobic, but I'm having a really tough time doing so.
There is no "Seattle org chart." A given office may have a lead, but only small percentage of people in the office will report to the lead. In some cases the lead isn't even a manager.
Personally, across four teams and six managers, only one has been a non-citizen and he was a permanent resident from an anglosphere country. Looking around, pick a random manager and you'll probably find a white guy from the US.
When you remove the handful of outliers, you realize the vast majority of states have very close split, like 48/52.
So calling a state red when the split is 55/45 seems inaccurate.
https://investor.fb.com/corporate-governance/default.aspx
Best strategy is to find a high CoL area with a low taxes and low CoL subregions.
Maybe they should start scaling based on how much rent you have to pay. ;)
Here I come - $15000/month Woodside villa!
Enjoy!
lol
At the moment, they increase the salary if they require you to move to a more expensive place.
Why will they continue to pay you more if it's no longer required?
I don't think it's fair for businesses to extract more profit from me because I live in a cheaper area than my coworkers
You can legitimately earn more while being paid less by moving to a lower cost location.
If everyone paid for value, Intel and AMD would be getting almost all of my salary.
The labour pool argument only makes sense if you commute into the office.
With remote work, everyone in the same country + timezone belongs to the same labour pool.
Companies that will treat the remote labour pool as uniform will trivially be able to outbid companies that underpay people in low COL areas, and overpay people in high COL areas. Why would I work for Gitlab, with its 0.66 COL multiplier for my town, and a 1.2 COL multiplier for NYC, when I could work for Foolab, which has an across-the-board 0.8 COL multiplier?
Given that situation, you'll quickly find that the only people working for Gitlab are people based in high COL areas. Instead of a money-saving technique, it becomes a money-spending technique, as they end up subsidizing employees relocating to the highest-COL areas.
So as people are able to earn more in remote locations our rates will go up with them.
I think most companies will end up paying local rates https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra... so as more companies start hiring remotely the rates will go up gradually. I don't think think that there will be many Foolabs that pay one rate.
Any firm that will provide an equal across-the-board wage, that's significantly below market rate in NYC/Bay Area, but significantly above market rate in low COL areas will eat your lunch, in terms of wage competitiveness among the latter group. They won't hire anyone from the former group - but just being in the bay area does not make you a better engineer.
You'll be stuck paying expensive people in high COL areas, that are doing the same work as cheap people in lower COL areas.
Why compete on the high-billing end of the salary curve, when you can compete on the low-billing end of the salary curve, for the exact same quality of talent?
"We won't pay NYC wages, but we will pay the rest of you better wages than our competitors" is a great pitch to employees[1]... While being a net benefit to your payroll.
[1] Except for those living in NYC, of course. But you don't have to hire them.
For some considerations also see https://about.gitlab.com/handbook/total-rewards/compensation...
The talent quality is the same.
Some of those reasons in the link are directly contradictory, some are nonsense, and others are inapplicable to other firms (But sure, they may well make sense for Gitlab.)
> A concentration of team members in low-wage regions, since it is a better deal for them, while we want a geographically diverse team.
May be a priority for Gitlab, but that is not a priority for any firms that required people to relocate their butts to Silicon Valley, or that never supported remote work prior to Covid.
> Team members in high-wage regions having less discretionary income than ones in low-wage countries with the same role.
Seriously? Do team members with more obligations, like children enrolled in private schools, ailing parents, or overleveraged mortgages also get the same amount of discretionary spending as their less-burdened coworkers? Isn't choosing which zip code to live in discretionary? And why does this even enter the picture, when, as you claim, your wages are set by market, rather than by COL? The market doesn't care about employee discretionary income. There's nothing fair about market wages, just like there's nothing fair about the weather. They just are.
> Team members in low-wage regions being in golden handcuffs and sticking around because of the compensation even when they are unhappy.
This is an incredibly employee-hostile reason. "We don't want to pay you too much, because imagine if you ever become unhappy." Good lord.
> If we start paying everyone the highest wage our compensation costs would increase greatly, we can hire fewer people, and we would get less results.
This, however, is a fantastic reason. See my previous post on why it makes sense for a remote firm to not pay anyone NYC wages.
> If we start paying everyone the lowest wage we would not be able to attract and retain people in high-wage regions.
Why is this a goal of the firm? Scratch that - if that's a goal of the firm, that's fine. It's a weird goal, though. Companies typically don't go into business with the goal of attracting and retaining people in high-wage regions. They typically go into business to make a lot of money by solving problems for their customers. So, it's fine that this is a goal for Gitlab, but it certainly does not seem to be a goal of any company I've ever worked for, or am likely to work for.
You adjust wages up for employees hired in, say, non-NYC, who choose to move to NYC. How would doing so meet that goal? Is someone from Oklohoma who moved to NYC for a raise suddenly providing a diversity-of-skills-and-perspectives need that was unmet, prior to their geographic relocation? Are they now providing more value, that necessitates paying them more? If not, why was hiring in high-wage areas a goal in the first place?
Before I relocated to the Bay Area, I had never gone on call. Never diagnosed a system by only looking at graphs of metrics it emitted. Never ran experiments against tiny percentages of production traffic. Never had to maintain consistency while failing over between regional datacenters. Being here did make me a stronger engineer, because companies here are earlier adopters with tougher problems, and the scale to make solving those problems worthwhile, and people who have been studying them. Maybe someday these experiences will be evenly distributed among remote workers everywhere, but right now they're concentrated in the strongest labor markets.
"Does the value you create for the company depend on the type of car I drive?"
That might sound provocative. But where is the real difference?
FB (and other companies, in all fairness) is saying "If the COL is half that of SF, your salary will be cut in half". Whereas the employee is looking at "I only spend 50% of my salary on living, the rest goes to paying off loans and investments", which results in a net loss in their after-COL loan payments and investment opportunities.
by your logic they should have full access to your bank account to accurately adjust salaries based on your expenses, you ride Tesla? here is bonus for you. you ride ford? bad for you...
it's none of the company business where I live if I work from home and provide same results like anyone else
salaries based on location make sense only with on site jobs where employer has to compete with other employers in area and potential employees with other employees in area. with no such thing at work from home, the offered salary should be fixed strictly based on productivity/results regardless if you are frugal or wasteful and to be able to attract the talent compared to other employers
Companies taking advantage of this and thinking they can save money should think again.
[1] https://www.google.com/amp/s/www.nzz.ch/amp/schweiz/arbeitge...
My increase in electricity and internet usage should be covered.
Oh, you're saying you could pass a law against that too? OK, then what happens to new hires. They're gonna get 180k. You can't really stop that.
At the end of the day, salaries will be set by the market. Companies are price takers just like employees.
In French: https://www.tdg.ch/teletravail-les-employeurs-doivent-dedomm...
The company claimed that they don't see this necessarily as a cost-saving measure because they plan on providing for home office equipment for permanent remote workers, kind of like how employees going to the office have monitors and keyboards provided for them.
And if not shifting those costs, then seems like a windfall for accountants to deal with all the tax implications.
Or, an opportunity for a new wave of politicians to figure out how to implement tax and labor laws in such an environment.
But honestly, it could be the best teleconferencing gear, I’d never put a camera from FB in my home.
$179. Lol
If Facebook gave each dev a $15,000 computer setup then most will still be royally fucked by this policy.
I lived like that for a month (working on a fully remote company, but the majority of the people were on US timezones). It’s not for everyone.
Full story at 11.
Where I work we had a major effort to normalize salaries and make sure base salaries before localization were consistent across demographics. Most governments will do the exact same time. You have a salary band and step, and then get an additional % based on location.
I doubt all would cut someone’s pay because they moved.
Labour costs are not "value added less some 'fair' amount" that your employer keeps.
This knowledge would change the way people behave, and let them make very different political decisions. It would be earth shaking!
This was a nice way to do it because my salary has always been monotonically increasing, and I wasn't offended that my increases were small for a few years because I knew why it was happening.
At Google they just openly adjust your salary if you move between cities; move from NYC to Atlanta and you'll take a bit hit, move back for the reciprocal instant raise.
Regardless of the rational and pragmatic reasons behind salary adjustments for cost of location adjustments, a double digit X% cut would be very demotivating for most people psychologically.
This has been SOP at big tech companies for years. If you choose to move to a cheaper location, your salary will be adjusted to the new market rate.
I know plenty of people who have gone through this and nobody felt demotivated. They all chose to move and were well aware of the salary cut when they made that choice.
Very very few people would not be expecting a location adjustment to their salary with a major relocation. Especially when that relocation is entirely for the benefit of the employee, not the employer.
That can't be helped. If I had a 100k size org, I wouldn't hesitate to set (overall) compensation targets at regional top prices with instant adjustment.
Building lots more housing would be the best way to make things equitable at least.
The crime in the area I'm in is lower than most of the bay area because the area gets overlooked.
The downside is there are less high end food options, but still some pretty good options. Oh, and the allergies. I get allergies. Too much nature. But it's nice.
What?? How far out are you considering the Bay Area? Is that for a room or a place to yourself?
How far do you have to move to get a salary adjustment? There are very cheap places a 2hr drive from SF. If you move to Vacaville, does that lower your salary?
https://www.bestplaces.net/cost-of-living/spokane-wa/seattle...
Having that grid information would be very useful to an individual when negotiating.
That sort of cost of living also doesn’t account for a huge amount of other things too. Having a holiday in Bali costs the same whether you depart from Spokane or Seattle (probably slightly more departing from Spokane actually, when you account for transport from Spokane to SeaTac). Buying a new 4K big screen costs the same in Spokane as it does in Seattle. Living in Spokane doesn’t make your kids college cost less either.
But then it fails to take into account the percentage of income that actually goes towards housing. If you make 200k and move to a place where the primary difference is housing costs (say 2x housing costs), the adjustment should be up to about 250k (assuming housing ~25% of income), not 400k.
It would depend on how much of a pay cut you experience moving to Spokane, but that can certainly make colleges with extensive need-based aid cheaper.
Spokane and Seattle are on opposite sides of the state - 280-300 miles apart. I don't get what you're trying to get at. The distance is large enough to go through multiple states on the east coast. I don't think it's really an apt comparison since the two are nothing like each other. You could make this same comparison in CA with a SF Bay Area salary and even less distance apart. Here's one for you: https://www.bestplaces.net/cost-of-living/redding-ca/palo-al...
All that matters is that Facebook consider them within the same CoL-adjusted region. If their CoL weighting is applied at the state-level (for example if Washington residents are to be paid at 80% the effective SF salary), then this is the real arbitrage.
Other costs are not much higher if at all. If you go to a bar in the financial district, that's usually a business expense so it's justifiably expensive. It's this way in all cities or towns with a large enough center though, so pricing come out somewhat equal. It's when you compare city center prices with outskirts of city prices where the difference starts to matter more.
some of the location multiplayers makes the roles completely insane, scotland for example.
I'm not surprised having setup a hosted GL instance. It's actually quite amazing how it mostly just works but when things go wrong between upgrades and migrations you quickly realize how complicated everything is under the hood.
https://docs.gitlab.com/ee/development/architecture.html#com...
On the other hand they seem to be doing well as a business so recruiting evidently hasn’t been a big problem for them.
And for those who don't think there's a better way, take a look at Basecamp or Zapier's salary policies.
All the other areas in CA it lists are super far away, but regardless I have a feeling it would count it as CA Everywhere Else, despite the prices out there not being far off from Silicon Valley.
Facebook is basically telling its employees that they want them to come into the office.
For example, I live in Montana. Most COL adjustments say that I'd need about $40,000 more a year to maintain my current standard of living, yet equivalent positions get about $100k to $150k more a year. If one of those poor folks in SF making $250k a year now wants to move to Montana, they can easily expect to be making $150k or less after they move.
Employees: Sounds good. We will work as little as possible.
Companies: Wait a minute here. We are a family and a team. You need to support the team and the mission, even if that means working extra hours without extra pay.
- We're offering you whopping 3.5%. How cool is that?
- Do I hear it right that you want my contribution to your company be 3.5%?
- Blank stare.
That said, when my kids were in school there was a phenomena that "Cupertino Schools are the best public schools" so parents wanted their kids to go to those schools. Which you could do if you lived in Cupertino, but Cupertino has higher costs than say living in South San Jose. So creative parents would make their "home" one of the apartments run by a "friendly" landlord who would "rent" them an apartment for $100/month, and give them a utility bill with their name on it so that the student could claim Cupertino residency and go to Cupertino schools. Other scams involved people offering to pay the utilities for someone who lived in Cupertino so that they could get that precious document which saved them $8,000 a year or more on private school tuition.
Depending on the difference in salary, I would not be surprised to see some of that action going on with regards to people's "Facebook home"
But if you like to the government and get caught you can go to jail.
I wouldn't risk it if I worked for Oracle though!
Eh. Hard pitch for a DA to run with this case. I don't honestly see a poor family being prosecuted for trying to get their kid into a rich school due to their property line. The DA office wouldn't like these optics. Jury?? Not a chance. If it were rich kids taking advantage of a poor school - the DA would run with it.