This seems like a perfect example of why labor organization is important. Despite their (as i've seen on this site) extremely good bargaining position, workers in this company lack the collective ability to contest these changes (despite the fact that the value of their labor has not changed whatsoever.)
Also, I don’t want other people negotiating for me. Software Engineers are so high in demand that I believe I can do a better job negotiating on my own.
Because they don't want to hop jobs. Walking away from a transaction is the signal to the buyer and seller that there is something wrong with the price. If neither party walks away, then there is nothing wrong with the price.
How would negotiate around Adobe, Apple, Google, Intel, Intuit, Pixar, Lucasfilm and eBay colluding[1] with one another to keep engineer compensation below its market value if you were working for one of them?
Collective bargaining is a big win for the working class (and yes, that includes tech). Even though we get paid a good chunk in the USA, our overall benefit package is thin in comparison to other developed countries. Not to mention our healthcare situation.
Unfortunately, the scare tactics and propaganda of large corporations have won out in the USA. Folks hate collective bargaining with a passion.
> Even though we get paid a good chunk in the USA, our overall benefit package is thin in comparison to other developed countries.
What do you mean by this? I mean I guess I get less PTO than other countries, but I get way more pay. I could just take a month of unpaid vacation if I wanted to, and still make more than my European counterparts. Tech also gets great healthcare (unless you work for a startup or something I'd guess).
Not disagreeing that unions would probably be a net-positive for tech workers, but saying that tech in the USA gets a worse "benefit package" is pretty dishonest.
Parental leave, vacation, healthcare, retirement, are all typically better in other developed countries. I, like you, get paid a heck of a lot more than my friends in those countries, but if something happens to me (say I get caught up in a mass shooting or get cancer like most do) I'm going to be on my own (gofundme?). We're ruggedly individualistic to a fault.
Ultimately, I think we agree though, since you're saying it would be a net positive. The options you mentioned (taking unpaid PTO) are possible, but there are many employers who would then see you as unreliable (unless you're top level in terms of skill).
I also think it takes a great deal of privilege to say "I can negotiate so who cares". While I agree with you that negotiation is important (it's how I got my current salary), you should think about those who come from poorer / less secure backgrounds. These people often don't want to blow their chance, so they take whatever offer comes their way. It's kind of a "rich get richer" thing, where those with confidence (growing up with a well off family, hence a safety net) are the main ones negotiating. Do not underestimate the importance of a safety net when it comes to negotiating, even for yourself. One thing that keeps me at my 9-5 job is knowing I need healthcare and a place to sleep with electricity (I have a lifelong genetic condition, sleep apnea, which untreated will result in my untimely death). My family is abusive, narcissistic, and unreliable. Being so incredibly on my own, I'm extremely risk averse. I imagine others, who might need insulin or some other thing would be the same.
So ultimately, I find the "just negotiate" line to be at best naive, at worst unempathetic.
As EduardoBautista points out in an adjacent comment, everyone likes to believe they are top 10%, and are able to or will be able to command pay (and some measure of income security that can't be converted into a number) a few standard deviations higher than the mean.
The whole temporarily embarrassed millionaire, individual exceptionalism, hero worship is a quintessential part of American culture, one that definitely helps employers in their price negotiation with employees.
Exactly, I would be willing to bet a lot of these folks would be upset / embarrassed if they knew the a coworker they thought to be below them was in fact commanding a higher salary. Thing is, it's likely to be true.
You don't get paid what you're worth, you get paid what you negotiate. But the ability to negotiate is a privilege. I go into this a bit more in a sibling comment.
> The whole temporarily embarrassed millionaire, individual exceptionalism, hero worship is a quintessential part of American culture, one that definitely helps employers in their price negotiation with employees.
Which is ironic, because the same SAG-AFTRA that negotiates multi-million dollar contracts for movie stars is the same union that represents background actors and actors in infomercials.
I'm not talking about benefit packages or healthcare, I'm talking about the specific issue of cost-of-living based relocation pay cuts. I'm pretty sure that employees at e.g. Google are satisfied with their benefit packages and healthcare.
I will say that much of the reason I don't want to join a union comes from this kind of response, where advocates disregard discussions of specific policies in favor of sweeping statements about class issues. I don't think an organization trying to declare class warfare between software engineers and managers would be able to effectively represent my interests.
In any case not everyone works for FAANG, and even those that do can suffer unfair termination, various forms of discrimination, or other issues.
The reality in the US that productivity has outstripped wages since the 70s. This has been a huge and tragic net loss for general prosperity, because when wealth is concentrated and workers deal with debt and rent-seeking - from college loans, healthcare, high property prices, and others - the cost-of-entry for a viable small businesses becomes unreachably high.
Startups are not s substitute for small-but-profitable small businesses, some of which have the potential to become much larger businesses through genuine organic growth rather than investor goosing.
Unionisation isn't about your personal circumstances, it's about everyone's personal circumstances. Part of it is about keeping wages high precisely because this gives smart creative people to build new businesses if they choose to.
And before someone says "But what about wage costs?" - remember, you are paying inflated costs anyway, but with no benefit. You're paying them to people who tend to be extremely rich already - health insurance companies, banks, landlords, property speculators, and financial speculators.
If you pay them to workers you get the Fordist model of increased general prosperity with more people with more money being able to afford - and create - more of everything.
We gotta realize the interest of managers is to get us to work more for less. That being said if you wanna talk about specific policies union workers have better pay and benefits, and have better work places, not to mention gives us a political voice.
> This seems like a perfect example of why labor organization is important
I've just always seen life as "unfair" and "up to you to fight for what is right". A labor organization/union has always struck me as "too good to be true" and unrealistic.
You can fight for what you want more effectively when you fight collectively.
There also seems to be a popular misconception that unions prevent you from negotiating for yourself. Unions set salary and benefit floors, not ceilings. If you think you are a superstar negotiator, you're free to demand a higher wage than that floor.
Actors and football players have unions, yet also have an incredible wage disparity between the top and bottom end of the pay scale.
Unions representing professional athletes have in some cases agreed to maximum salaries for players (e.g. in the NBA) as a concession, so that isn't always true. Team salary caps negotiated in leagues without a salary max also depress player salaries.
Not sure how positive your interactions with unions were to hold this opinion, but that hasn't been my experience at all.
- Unions add more politics to an already increasingly political environment. I don't want to spend an hour or more every month in a meeting to vote on stuff I usually don't care about.
- Unions cost money, and while 200$/2 weeks (which is what one big union in my country charges) might seem reasonable to you, I don't like being forced to do anything.
- Unions usually end up with rules regarding who gets promoted and who doesn't. Broke your back working OT to help out the company? Well tough luck Martha came in one month before you and has priority on promotions.
- Unions make it harder to fire under performing employees. While that might fit in your ideal society, I prefer working with overachievers.
> - Unions add more politics to an already increasingly political environment. I don't want to spend an hour or more every month in a meeting to vote on stuff I usually don't care about.
Would you prefer these decisions to be made unilaterally, without any input from you? Because that's the status quo. If you are happy with these decisions being made unilaterally, don't vote. If you aren't, you have more of a lever than you do without a union.
> - Unions cost money, and while 200$/2 weeks (which is what one big union in my country charges) might seem reasonable to you, I don't like being forced to do anything.
I'm assuming most of that money is going into a strike fund. Having a strike budget makes your negotiating position much stronger, just like how if you don't live paycheck to paycheck, your negotiating position is much stronger.
If most of that money goes into administrative expenses, you may want to consider voting to reduce those expenses.
> Unions make it harder to fire under performing employees.
Unions require management to follow a process to fire employees, under-performing or otherwise. My wife worked in a union for 8 years, and plenty of poorly performing employees were fired during that time. The difference is that they weren't fired arbitrarily. You'd appreciate protection from that, if you were to ever be fired for political, personal, retaliatory, or just purely fabricated reasons.
If your management can't figure out how to document how an employee is underperforming, and to give them notice to shape up, I'm not sure your management can be trusted with anything.
> - Unions usually end up with rules regarding who gets promoted and who doesn't. Broke your back working OT to help out the company? Well tough luck Martha came in one month before you and has priority on promotions.
Did the union make those rules, or did management make those rules in an effort to control costs, and then blame it on the union?
Unions are democratic, by the way. If you don't like tenure-based promotion, vote to change it. You have no such recourse with a manager who arbitrarily promotes people they like.
Ahh yes the libertarian boogey man, unions. So you picked up a book or pamphlet about anti-union tropes and spewed them out here. Let's refute these statements 1 by 1:
- Voting on stuff monthly? Seems to be a really active union. Must be getting ready to strike and if that's the case why wouldn't they check to make sure they have broad support for one. Also, no one is literally holding a gun to your head. You can vote, vote no, or not vote.
- Don't know what union this is but dues I've seen are 1-2%. Whoever is getting paid $5000/week I'd like to join that union, too. Fine, maybe it's a really good union that charges 5%. I'd still want in because someone is taking home $2000/week.
- The word is seniority and this has nothing to do with unions. It's how factories from the very beginning have doled out promotions. Job for life and all that. Since most people don't want to be working the shit stirring tank how do you get promoted out the shit stirring tank? A simple metric the factories and offices came up and the union workers agreed to.
- Unions don't control this. But if someone gets fired for underperforming you know who's going to get a labor lawyer? The worker who's been paying dues to collectively have a lawyer on retainer. You see if I get fired, I get told I was a poor performer with no evidence. If the worker in the union gets fired there lawyer is going to want to see the evidence. And you'd be amazed at how poorly most companies document this. See the union doesn't keep someone from being fired. But it does make sure the firing is fair.
I enjoy at-will employment as well. But I’m young, healthy, and don’t do manual labour. But there are lots of shitty jobs out there with really great union negotiated health plans. I’ve heard over and over again how people stay in particular bad jobs simply because they or a family member need healthcare. For some it’s a matter of life or death and very much worth fighting.
> Unions usually end up with rules regarding who gets promoted and who doesn't. Broke your back working OT to help out the company? Well tough luck Martha came in one month before you and has priority on promotions.
Good. I don't want promotion to be a race to the bottom for whoever works the longest hours. If you're gonna try to get ahead of me by doing OT, screw you.
>A labor organization/union has always struck me as "too good to be true" and unrealistic.
remarkably ignorant. why doesn't the United States just send around one soldier as needed? Strength in numbers is how hundreds of species survive, this is pretty basic logic that extends into business and commerce as well.
White collar employees that are union members have higher pay[1], better benefits, more time off, and report higher life satisfaction[2] compared to their non-union peers.
The employees themselves are pretty divided though. Those staying in the high cost metros want to keep their higher salaries, those moving don't want the paycut. In discussions I've seen you can predict what people are doing pretty reliably.
We need labour organization to protest being paid only slightly less insane salaries? Honestly people are acting as if they are making minimum wage or something, everyone at these big companies makes over 100k, and most of them probably make well over 200k. That's more than enough.
Most folks expenses aren't dropping by 20%. I've been remote since March, but my rent/life/expenses (key) hasn't changed. If anything, I'm paying more now for utilities and food since I'm home all the time.
Honestly, I think rent in Zürich is less than sfba. It's just eating out that is more expensive, but supermarket food quality is so high people just cook more.
Yes, because saving a dollar is saving a dollar, no matter where you go.
Say I make $150k/yr after taxes in Silicon Valley and spend $6000/mo, which is about $72k/yr. Which means I save $78k/yr (and savings compound over time, as do pay raises).
If I relocate, I'm making $128k/yr after taxes and spending $4800/mo, or about $57600/yr. I'm saving $70k/yr, a whopping $8k/yr difference.
I also moved from SF to small town Illinois, and oddly enough my spending in SF pre-Covid and in IL now are about the same.
In SF, I had a rent controlled spot and lived with 4 roommates. It didn't matter much because I spent most of my time at work, and had access to a bunch of things in the city and the Bay on weekends. I also ate most of my meals for free at work, and I didn't own a car.
Now, in IL, I have my own 1BR apartment, a car, and spend a lot more on groceries and takeout.
Also, I'm getting a fundamentally different experience. I have more space, but I'd love to go back to city living when the pandemic ends.
I think a lot of the cost of living calculators assume you won't downgrade your living situations with roommates, smaller living spaces, etc, so there's a lot of situations like yours where expenses don't scale the same way someone who wants to live in a similar sized single family home in both areas.
If you make $200K, but spend $100K, then a 20% drop in expenses is $20K, and a 15% drop in salary is $30K. Overall you're out $10K even though the percentage drop in salary is lower.
> Letting someone take a San Francisco salary to Wyoming could be considered unfair to present and future remote hires in cheaper cities who might receive a lower wage.
I genuinely think that people who were thinking that this is not going to happen are disillusion. Their employers have one single and easy goal - maximize the shareholder value. So, no matter how humanitarian it would be to keep SF salaries to employees working from all around the world, nobody will sign the decision to do that, unless it's coming from the CEOs & boards & public markets. I would encourage everyone to look on how Gitlab is approaching this problem: https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra...
It probably gets more clicks if you talk about pay cut and tension, but if companies are expected to compensate for higher cost of living, shouldn't they be equally expected to take it away if a person moves to lower cost of living.
Moreover, let's assume the pay cut doesn't happen - what about the people who don't or can't move. Isn't this unfair to them.
Also, what about the gaming of the system. A person could ask for a higher salary saying they are in, or relocating to, the BA, then within a few months, or even days, of joining they move out.
SF engineers are getting payed well becouse there is a shortage of SF engineers that can afford to live in SF with lower wages. If for any reason the engineers doesn't have to live in SF anymore wages will equalize atleast over the domestic market.
More hysterical reporting from irrelevant mass media. Instead of using the perfectly standard "compensation adjustment," they went for the incendiary "pay cuts" to drive up traffic!
>It probably gets more clicks if you talk about pay cut and tension, but if companies are expected to compensate for higher cost of living, shouldn't they be equally expected to take it away if a person moves to lower cost of living.
If engineers are providing a tangible dollar value for their work, shouldn't they be paid what their work is worth and not paid relative to their cost of living?
That would imply that for identical work a person in SF would be paid the same as a person in let’s say India.
That is great for the person in India if they get as much as the person in SF. But, what about the reverse, would a person in SF be OK getting the same compensation as the person in India?
What about how much they can spend? Are the corresponding wages sufficient to live? You have to consider both cases, not just assume that everyone gets SF wages regardless of where they live.
And the impact on local economies when these high earners go to low cost of living wages places and buy all the real estate? Will the locals be driven out?
> Also, what about the gaming of the system. A person could ask for a higher salary saying they are in, or relocating to, the BA, then within a few months, or even days, of joining they move out.
Either the person needs to be in the Bay Area for the job, in which case the answer isn't "paycut" but "you're fired"; OR it doesn't matter where they live, so why even go through the COL rigamarole? Just offer the lowest possible amount that will get a qualified person from anywhere in the world into the seat. If your options are "200k for a person in the Bay Area" or "20k for a person from Russia" why would you pay 140k to someone in Kansas?
But this doesn't provide a justification for dropping the salary to match local COL of the remote employee. I realize that not everyone has this luxury, but more developers need to say "No, I'm not taking a pay cut". Firing someone is not free - there is a real cost to the company to hire a replacement.
It's probably worse for the economy for the company to have that extra revenue to use on hoarding or stock buybacks. The employees would spend it all over the country in a variety of ways. The companies should not cut salaries for the good of the economy.
> but if companies are expected to compensate for higher cost of living, shouldn't they be equally expected to take it away if a person moves to lower cost of living.
The rub is that remote employees in tech have no bargaining power. This is the main reason why companies can and will pay lower salaries.
There are so many tech jobs aggressively hiring, if someone feels slighted in their compensation, they only need to respond to recruiters or hit up a few of the 813 companies looking to hire on the latest [1] Who's Hiring? thread.
Yep pretty much this. And luckily this will definitely work because none of these companies have a history of making secret agreements not to poach each other's talent after making a 15% pay cut.
That’s true, but anecdotally it’s also the reason salaries are going down in the first place.
As companies expand to remote-first, nationwide hiring they’re realizing that they don’t necessarily need to pay SV premiums to hire good talent. There are plenty of talented hires around the country that are underpaid relative to SV but were previously geographically locked out of these companies.
In other words: You’re no longer competing against other SV people for these jobs. You’re competing against people across the country who would still be getting a significant raise if they worked for 2/3 of past SV comp.
This argument is a bit funky in that the lack of perks isn't discussed. On face value, yeah you'd be making less in WY vs. SF for CoL.
But while they've moved to WY, they're not getting catered 3 meals a day, free yoga classes, and the office space. There are real dollar values attached to that.
So if these SWEs get a pay cut, and a benefits cut...
Companies are getting a pretty solid deal in terms of possible labor disputes to contend with if elite SWEs who did this remote move aren't bringing this up.
My original point is just that the framing from WSJ doesn't capture accurate compensation factors well.
To your point: I think that's irrelevant/off topic. There's probably a theoretical % of employees who could go remote that in turn will make a company move office space or fire cooks. Otherwise, those are fixed costs and don't come into the picture here.
I don't think either % get hit for the class of SWE I'm referring too, so it's just lost benefits to the SWEs.
Well the company is still paying for the benefits they offered you, you just can't use them. I see both sides of the argument but we're in unprecedented territory here and in the end what's "fair" has little no to impact on the outcome of negotiations.
They're paying for the benefits still, but unless a certain % of SWEs go remote, there's diminishing costs per SWE to provide the benefits. You have to consider the scale the benefits "get provided at."
At a certain point, it costs the same to feed premium salad to 500 engineers as it does 575 engineers (no idea if this is the math, but conceptually yeah). A cook can make 600 or 700 gallons of soup without much difference or new purchases required: huge vat of soup is 2/3 vs. 3/4 full.
If the % of remote engineers hit a level such that cooks have to buy new soup bowls, idle hand cooks, or offices with cavernous empty halllways, then yeah, you're back under diminishing costs/eng and need to scale down.
Palantir did, as early as last year, to create an impression of belt-tightening among its employees in preparation for the IPO. Fired the kitchen staff, dropped the lease on its kitchen facility, and switched to Sodexo or someone like them to bring in hot meals. Made it much easier to cut contracts during the pandemic!
Has there been a section 119 update since the 2014 guidance? Also, I don't think free Yoga classes fall under section 119 — those will be taxed as income.
Well it wouldn't be 119 specifically, which seems to only refer to meals and lodging. But I found this IRS document [1] which gives a thorough overview of what fringe benefits are taxable. There might be an exemption in the section about athletic facilities (§132) [2] or perhaps there are circumstances where it could count as a de minimis benefit [3].
Disclaimer: not anything close to a lawyer, let alone a tax lawyer.
>>You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees ... The exclusion doesn't apply to any athletic facility if access to the facility is made available to the general public through the sale of memberships, the rental of the facility, or a similar arrangement.
> But while they've moved to WY, they're not getting catered 3 meals a day, free yoga classes, and the office space. There are real dollar values attached to that.
I’m a ‘remote’ worker (I actually live close enough to work in my office but choose not to), and while I don’t get all of the in-office perks, I do get other ones the office workers don’t. Home office allowance for things like monitors/printers/desks, ISP and cell phone are covered monthly, I get paid $0.54/mi when I do have to go into the office, and I don’t have to go into the office much.
All in all, I figure I make out about even on a $$ standpoint, and my lifestyle is much preferable to what I’d have if I had to commute.
Base salaries are one thing but what about cutting RSUs that aren’t vested? Is that normal? I’d take a base salary cut if my RSUs didn’t change. They outweigh base compensation over time anyway.
The whole paycut controversy seems a little strange to me. No one bats an eye when a company bumps your salary up if you move to NYC or SF yet if they bump it down when you move out surely that's the same thing right? Obviously there are edge cases but as a general principle that seems logical to me. Ofc it depends on how much each bump is etc. but on the surface a paycut while moving somewhere with lower cost of living doesn't seem radical to me.
Because bumping it down when you move out means the company thinks they have a higher probability of being able to replace you with a similar person from anywhere else and/or you have a lower probability of securing employment with similar compensation, which is a thought most people don't like to have.
I think if they actually split out the COL adjustment amount on the paycheck then it would be a much simpler conversation. But with most every company just making it a lump sum it feels like a demotion vs. a COL adjustment.
nitpick: it's not a "cost of living" adjustment these companies make when you change locations; it's a market rate adjustment.
The distinction is important when you end up in markets with high COL but low software engineer market rates (e.g., London), or how dealing with the expensive Bay Area can still make sense compared to midwestern metros--depending on the type of lifestyle you can live with, that is.
You're right that they are different. Unfortunately, the terms are often used interchangeably, which makes discussions around this topic difficult to have.
Part of the question is, why is market rate so location-dependent. COL is obviously a function of location, but it's much less obvious that market rate should be. In fact, if you assume that the market rate of an individual is based on the options available to them, and that individual has the option of moving to the Bay Area/Seattle and is just as happy to live there as anywhere else, then the Bay Area / Seattle rate, minus the COL difference, is that individual's market rate, regardless of where they actually live.
Of course some SE's in London don't have a visa to work in the USA, and others wouldn't want to even for a huge pay boost. But it's still quite fascinating that a location-dependent "market rate" materializes from this dynamic. In some cases it seems like location is used as a proxy for skill -- as though an engineer who opts to drive three hours south from Vancouver, BC to Seattle, WA is now a higher-skilled "Seattle dev" than they were three hours before.
If that assumption is taken away, then the fascinating thing is not that companies would pay less in areas like Vancouver or London, but rather that they are willing to pay such a high premium to engineers who live in Seattle and the Bay area.
It's hard to think of any explanation other than that very profitable companies (like Google and Netflix in the Bay area, and Microsoft and Amazon in Seattle) started there, and paid a lot for engineers to move in and join them in an era where remote work was rare; then, when remote work became common, the legacy of a location-dependent market rate created a self-sustaining expectation (Schelling point) that engineers in that area wouldn't work for less to compete with talent elsewhere, sometimes using high COL as an excuse. That might gradually be reversed as companies seek to reduce their payroll expenses, or it might not.
I think it ultimately comes down to the decisions of the marginal worker. Most people are not indifferent to where they live. In the Bay Area, as long as the tech industry continues to grow at a rate faster than new local graduates, you have to pay people enough to convince them to migrate. Since the cost of living is much higher, they will demand more to move. In senior roles, many employees will put more of a premium on being able to afford a decent house and be less willing to live with roommates or in a tiny apartment, and so you see the rates for senior employees are much higher in the Bay Area.
When the pay cut is to the point where it not only impacts your cost of living (maybe 2-3k/month going from SF -> Fayetteville, AR), but also digs in to your lifestyle, savings, and ability to afford "national" things, it feels more like a demotion than an adjustment.
According to one popular-remote-company, that is a 30% downward adjustment. If you were making 200k in SF (for many, that is low), that is a 60k pay cut. If we assume 30k was a "real" adjustment, that is a 30k difference in spendable income. That feels like a demotion.
We also know that many large-ticket items in life do not adjust for "cost of living" in the area that you live. College tuition, medical expenses, etc.
Over just a couple years that 30k/year difference is an entire college education for a child.
Which company is this? 30% is a ton. In senior roles, getting 10-15% raises considered a good “promotion”. 30% cut in pay would feel like taking two years backwards...
I don't want to call them out explicitly, but they're one of the largest all remote companies, and this information is ready available on their online (and googleable) remote compensation calculator.
This is definitely what I would consider as an edge case (at least I'd assume so). I agree that 30% seems aggressive but something like 10-15% seems more normal imo.
From personal experience speaking with larger companies (not FAANG, but larger "start-up"), I was always seeing an even larger difference. Think "~150-170 in Austin, 225-250 in SF". You may want to knock my negotiation skills, and perhaps you have a point there that I could have pushed their initial non-SF numbers up, but these were at earlier-stage discussions and sharing those numbers seemed "reasonable" to them. And this was Austin, a city which the aforementioned salary calculator only gives a -20% "adjustment".
Note that even that 30% is for a "large" AR city. Anyone else in that state is given a 37(!)% reduction.
In my opinion, which I've been trying to wrangle into a coherent blog post over the last couple of days, any adjustments like this should be an absolute-dollar-number figure. Percentages don't make sense at _either_ extreme. A 60k/year position with a 20% "move to SF" upward adjustment? That is unlikely to even cover the change in rent. 400k/year with a 20% adjustment? Calling that "cost of living" is bonkers.
> Which company is this? 30% is a ton. In senior roles, getting 10-15% raises considered a good “promotion”. 30% cut in pay would feel like taking two years backwards...
@nrmitchi is probably talking about GitLab and their “Compensation Calculator” [1].
The reality is that no, its not necessarily symmetrical. Rates will be set by market forces, not any concept of "fairness."
Clearly companies are willing to pay $200k+ for top talent.
"Cost of living" or however you want to break down that salary is irrelevant to what companies think employees are worth.
Unless the company is getting less value, they can stand to pay the same no matter where you are physically. Calling it a cost of living decrease is just kabuki for paying less.
If WFH continues, salaries should normalize across all regions but its yet to be seen what the value of top talent vs average employee is at a global scale.
> Clearly companies are willing to pay $200k+ for top talent.
In a market where the market equilibrium for that top talent is $200K+. There is no inherent virtue in a '$200k+' number.
> "Cost of living" or however you want to break down that salary is irrelevant to what companies think employees are worth.
Exactly. Companies care about the cost of labor, not the cost living. And if you are in a different geography with a lower cost of living, it is believable that the cost of your labor is less. Why is it surprising then?
>There is no inherent virtue in a '$200k+' number.
Indeed there is. It shows that the value gained by the employer is at least that of $200k+. It is not arbitrary and it is not wholly derived by supply. The cost of labor is set by the labor supply as well as the labor demand.
Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful.
A less abstract way to look at things is this. The cost of living boost is just a bait to work somewhere. There's no magic to it. Just because you took one deal doesn't mean you should so easily take the opposite deal.
> Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful.
The company tolerating remote workers changes the supply to the company.
The people moving immediately are seeing the first effect here, but if it becomes permanent, the people who don't move will inevitably get the same paycut. Why pay $200K for someone in SF when someone in Des Moines will take $140K, but wasn't willing to relocate five years ago?
>The company tolerating remote workers changes the supply to the company.
The crux is that the supply curve is not fully known. For argument's sake, you can imagine both that talent is distributed uniformly as well as imagine top talent was already pulled towards urban centers.
We don't know exactly what the answer is but one thing that does not make sense is that the supply is somehow linked to local cost of living.
You admit yourself that this current offer to relocate is artificial and not a product of the market reaching equilibrium, so why accept it?
The supply may not explode - maybe most talent was already tilted towards those expensive areas since that's where so many jobs were - but for any given employer in a given city, today's supply is a lower bound for their supply if they accept remote workers. It can only go up.
There's a potential scenario of now "company in cheap city X is willing to pay for SF talent, but couldn't convince them to relocate before, but can now hire them remote" that would also push up demand for top talent, but it seems much more likely to me that demand for top talent stays about the same while supply increases at least a small amount, which would push down wages.
I think I am understanding it, but you are merely repeating your points without addressing the economics that I am pointing out.
> Indeed there is. It shows that the value gained by the employer is at least that of $200k+.
Yes and so the value you generate for the employee puts an upper bar on what salary you can command, not a lower bar, which is what you seem to be implying.
> Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer.
It increases the supply available, because today, given the investments Google has made in setting up offices for ~30000 employees in the bay area, they have to fill that demand using employees located in the bay area. They don't have to do that if they can hire from anywhere, so the supply increases.
> Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful.
And they do! Google has employees around the world, and surprise, they do not get paid as much as they would have gotten paid in the Bay Area. Why is a Google engineer in Bengaluru who is hired by the same hiring process paid 1/3rd of what they'd get paid in MTV? And to preempt the usual HN racism against the quality of Indian engineer, the same Google engineer would be paid the MTV salary if they moved to MTV. This is not a hypothetical, this is literally what happens to the countless Google engineers who transfer from BLR to MTV.
Based on your logic, why is that engineer NOT paid the MTV salary today in BLR?
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I mean I am not even making a far-fetched claim. Bay area salaries are the highest in the world. They have to move down towards the average if some other salaries are going to rise because the engineer who lives in Randomville Alabama didn't have a Google office he could commute to and hence wasn't in the supply pool, but now is, can now compete for the Google job.
>Based on your logic, why is that engineer NOT paid the MTV salary today in BLR?
Indeed, perhaps that will be the case if there really is so much supply; if that's what the supply curve turns out to be.
But it makes zero sense to pin salaries to local cost of living other than to bait a candidate to live somewhere you want them to. Its not based on demand, its not based on supply.
> Unless the company is getting less value, they can stand to pay the same no matter where you are physically
Sure, they can "stand" to pay the same. But why would they. As you yourself said:
> Rates will be set by market forces, not any concept of "fairness."
Ie, companies are going to pay you as little as they can get away with. If the market-price for a good SF developer is $200k, and the market-price for an equally good Las Vegas developer is $100k, then your pay will trend towards $100k as soon as you move from SF to LV. Maybe inertia and your manager's largess will prevent it from being an overnight change, but that's the long-term trajectory you can expect.
You get your pay bumped if you have to move to SF to be in the office, because people would balk otherwise and they’d have no labor. Good luck trying to get your remote boss to give you a raise if you voluntarily move to NYC though, yet they’ll happily ratchet down your pay if you move to Iowa.
Remote work demonstrates that this is a national and/or worldwide labor market, so paying people based on where they choose to live makes no sense to me.
Agree. The value to the employer of two equally-talented and hard-working remote employees is the same. Why pay differently, and if you were paying different rates, I'd expect over time (a decade?) that differential would go away.
Salaries aren't determined by value (though that's often the cap) they are determined by supply and demand.
Open it up to WFH anywhere and your supply just went way up. Some random person in WY is likely willing to work for Google for much less than 20% below bay area salaries.
This is the fun reality that most FAANG Canadian offices have faced for years. Cross the border from Seattle to Vancouver, suddenly you're being paid much less for the same value provided.
And basically, it's market economics. The wage is determined by supply and demand in the labor market, not on the value provided to the company.
This is why it's important to have many competing employers rather than just 1 or 2 big ones. Competition for labor increases wages. Hopefully, as more companies accept full remote employees, we'll see that- a single huge market not defined by regions.
It's good for developers from developing world who are just as educated and just as experienced as their western counterparts. Global wage equilibrium is outright horrible for western developers
... for a while, but then theoretically there would be a massive amount of economic growth.
Of course that only works if people all do the free trade thing. US/China broke down because the US was globalist and China was nationalist and protectionist.
That's not clear from a historic point of view. In general the more participatory the economy, the faster quality of life improves overall.
While wages may drop for the west, that should be more than offset by the rate at which goods and services become cheaper and more plentiful. Protectionists often look at only one side of the equation.
Except the US already has basically free movement of goods and services.
So people are already reaping the benefits of cheaper and plentiful goods and services.
The last 2 years have begun to show the massive benefits of this. The US tariffs have led to a situation where today the US has the largest net trade deficit since 2006 and is paying subsidies of over $40bn simply to keep farming afloat in the Midwest. And there has been no gain in jobs within the US or any benefit whatsoever to those tariffs. The US consumer is only paying a lot more for products they were paying a lot less for a couple of years earlier making everyone here functionally poorer.
I generally agree that free trade is the way to go and we are reaping the benefits.
In the context of free-trade however: How would you handle the intellectual property issue, can you still have free trade with a state that does not treat IP in the same way?
Would be? Look at the manufacturing sector in the US since outsourcing started. It's an absolute shadow of its former self in terms of people employed and salaries.
Developer jobs need strong English, not native English. And with remote work becoming more of a thing they'd need strong written English, which is an easier threshold for lots of foreigners to clear.
I think devs (not just devs, everyone) should save aggressively for rainier days. If it's not offshoring it could be automation or just plain ol economic downturn that could kill scores of jobs in the coming decades.
Many companies have tried to move their development to India for example (I have a second hand anecdotal evidence from one) and it is not as simple as it seems.
There are huge cultural differences, meaning what is considered not acceptable in the west is common practice somewhere else like getting degree for bribes etc. You have to know how to navigate in such environment.
You may think that because your company employs people from multiple cultural backgrounds then the environment of the company is multicultural.
In reality the culture of the company is most likely following the protestant work ethics (it is my generalization, there are of course variations and exceptions).
Well, even in Canada / UK / Australia / Germany software developer salaries are about 50% less than in America. There's nothing in terms of workforce education or productivity dictating companies should pay the American 2x more. Offshoring is difficult for small companies to do (taxes, accountants etc) but any unicorn startup has the means to do it.
I think there was no real need to cut on costs for a lot of companies. If every startup can raise 100-200 million easily because of these very low interest rates, why would they care about trying to save 10 million dollars a year in wages? Money is not a problem for them. Who needed the headache of working remote, offshoring etc?
But now that some of them were forced to go remote and they saw productivity wasn't hurt, arguably maybe even improved (up for debate of course), they might rethink the whole issue.
The companies found in Silicon Valley have given me problems to solve that nobody I knew in Seattle had faced. Maybe someday experience will be evenly distributed, but the industry has been concentrating it here for a long time.
The company you work for is competing against companies from other parts of the world already. Except China I guess, because geopolitics. But certainly European, Indian, African ones.
It always reminds me of that line from Snow Crash, which is set in a future when "the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity".
There will be just as many jobs for just as many people. There aren't many places where software engineers are unemployed.
What's interesting is that there are places where people are paid much less because there's so little demand for labor there- if you're the only employer of software developers in 100 miles, you can pay a pittance. And at the same time, places like Silicon Valley pay a premium for labor because there's a shortage (let's not discuss the reasons around that- I don't feel the need to drink).
When the market is merged, it will be leveled. And I cannot imagine those who stay in San Francisco are going to benefit. But the brilliant developer who has been paid terribly at a small software firm in the middle of no where, who can't leave for other reasons, that developer is going to see their fortune changed for the better.
Places where current wages are low are going to see wage increases (because of higher demand / lower supply), which in turn will lead to an increase in costs of living.
Places where current wages are very high are going to see downward pressure on wages (because of lower demand / higher supply), which in turn will eventually lead to a lowering of costs of living.
Obviously that's valid in the "fullness of time". How long it can actually take for this new equilibrium to be fully realized is anyone's guess.
> Places where current wages are low are going to see wage increases (because of higher demand / lower supply), which in turn will lead to an increase in costs of living.
I'm not sure that there's so many SW people outside of the big tech hub areas so as to make such a difference. If they are more uniformly distributed across the country, their impact on each community will likely be negligible.
I seriously don’t understand the argument that a remote first world would lead to a move from larger US cities to smaller US cities.
If there is any mass movement that is gonna happen, why would it be from big expensive US city with a lot of different entertainment options to a smaller, still fairly expensive US city with almost no entertainment options as opposed to significantly cheaper non US large city with a lot of entertainment options?
Why wouldn’t people move to someplace in Mexico, or Brazil instead? If time zones are not an issue, why not move to somewhere in Asia instead, like Bangkok, Singapore, Kuala Lumpur, etc.
Because there's more to life than work and entertainment. There's language barriers, culinary familiarity, family ties, cultural familiarity, quality of schooling, levels of crime, etc. etc.
You are correct.
Moving to Seattle would grant me a 50k usd raise vs what I currently make.
The other issue besides getting paid less for the same value, is that the money doesn't get you as far as in the US, as the cost of living in Vancouver is high (more or less the same as in Seattle but in cad) and you have more taxes, so your 100k cad in Canada is much less than 100k usd in Seattle.
If you mention health insurance for the taxes, that's actually taxed to employers in BC, not employees, so it's not part of the taxes I pay.
If you're not in a place of privilege life is politics.
A old co-worker of mine couldn't get permanent residency for their legal partner. As a result rather than staying in the US they both moved back to Canada.
Honestly I don't blame them, sometimes I wonder if the US survives in spite of our political policies instead of because of them.
Privilege isn't a binary thing, it exists along many dimensions.
I'd hope you could understand that just because someone has a finite set of options doesn't mean they can't be impacted significantly by political policy due to society putting less value on who they are or where they come from.
That specific example is most certainly privilege. Being able to find gainful employment where you live is usually hard to come by. The overwhelming majority of people who _have_ to leave their home country in order to find work are definitely not privileged.
I would be curious to hear if the parent to your comment was talking about politics. They might instead be talking about the response to Covid-19, and the much larger death toll per million people in the US compared to Canada: https://www.vox.com/future-perfect/2020/9/9/21428769/covid-1...
Which, to be fair, is partially due to US politics. In that sense, making the choice to live in the US is letting one's life be run by politics, just in a different direction.
2020 is a mess, and I'm glad to be in a country with: a strong universal health care system; a strong social support system; politicians who do the right things, listen to experts; a society of people who mostly wear masks because it's the right thing to do- to sacrifice comfort in order to help others.
Is that politics? I don't think it should be. I think that if people in the USA consider those important things to me to be political, then you can add that to the list of reasons I'm glad to be in Canada.
Making such a decision doesn’t mean politics is running your life. What kind of society, part of which includes politics, you want to live in matters to a lot of people. For me the biggest luxury of working in tech is actually that pretty much anywhere I earn enough to be solidly in middle class which give me the freedom to weigh other aspects of work and life higher. Chasing higher compensation or climbing corporate ladders is more optional.
Fine, I'll bite: that is what people are referring to when they refer to "privilege". Politics has an enormous influence on just about every problem you might face, from whether you're paid enough, what "enough" is, how easily you can bargain for more, to the freakin' weather, and thereby food supplies, to whether your neighbour would face consequences for shooting you, or how easy it is for them to do so.
Either you don't realise how your problems are due to unfavourable (for you) politics, or you have very, very few.
I’m wondering if moving or not, due to the higher pay in the us, but I have gotten used to Vancouver (I’m not from Canada), and I’m wondering how life long term is here.
Buying a house seems to be the biggest issue here, in the us it would be easier with the higher pay, as well as getting retirement money, but well, it’s the usa.
Also, I could get citizenship in less than 3 years, which is tempting.
If I were weighing these options I’d just move to the expensive place, make the money, and then spend it later in the cheaper place. Moving for a job doesn’t mean moving for good, and your money works anywhere.
If you don't mind me asking a tangential question, how is the salary mapping from Seattle to Toronto for the same position/role. I am also thinking of moving out of the US and to Canada.
Thanks for the input. Seems like things have gotten a bit better. A few years ago someone I knew said they got around 90k cad for a 115k usd role. Still a huge drop! :(
Gross.
I think in the US (specifically Seattle), you can save more as you are taxed less, and cost of living is more or less the same, so 2k cad rent in downtown vancouver, 2k usd in Seattle, but you are taxed at 35/40% in Vancouver vs 24% I think in Seattle.
Also made a decision to leave the US (San Francisco) and miss it immensely. There's nothing comparable to bring surrounded by genuine techies, and the go big or go home attitude is inspirational.
Yes, the politics is in shambles and society is arguably falling apart, but at some point you need to decide what your impact on the world is going to be. If you believe you can fix tech in Europe, I applaud you, and that would be a worthy cause. I've learned that I function best in the fast lane, and that's in the tech hubs. Innovation requires lots of people bouncing lots of ideas off each other, and I don't think remote work is going to significantly compete with where the next innovation wave will come from.
I think you’re being too hard on Europe. There are tons of smart people on the Continent working on unique and interesting startup ideas. The only thing Europeans may lack is access to funding and resources.
I think that's exactly it. There are smart people everywhere who want to work on interesting ideas. But they will naturally congregate where the opportunity and resources exist and the bureaucracy doesn't.
Fixing Europe isn't about finding smart people to work on things. It's about preventing them from leaving. Ironically Covid might be helping that for a couple years.
> If you mention health insurance for the taxes, that's actually taxed to employers in BC, not employees, so it's not part of the taxes I pay.
There may be a tax on employers specifically labelled as some kind of health tax, but your health insurance coverage is being paid for out of general provincial government revenues and some (actually: a lot) of your taxes are absolutely going towards paying for health care.
Fees like the one you're talking about are just a way to shift some of the tax burden off of individuals.
BC income tax as well as federal income tax[1] by way of transfer payments from the federal government to the provinces specifically designated as being for health spending (the carrot&stick the federal government uses to regulate health care across the country).
Specific fees or levies for health care in canada are a drop in the health spending bucket.
([1] federal spending and taxing is more complicated than this and they are not coupled in the same way provincial spending and taxing are but that's not super relevant here)
> If you mention health insurance for the taxes, that's actually taxed to employers in BC, not employees, so it's not part of the taxes I pay.
You actually should take this into account as this is in fact a part of the expenses for the employer to employ you.
Different countries play it differently.
For example some countries in EU have health and pension insurance excluded from the salary such that employee only sees the income tax deduced from the salary.
In another countries employee sees half of the insurance and the other half is considered as "employer contribution".
How ever you split it, it is still expense.
This becomes self evident when you happen to be self employed.
Yes, both employer and employee taxes affect the tax wedge [0] and you should factor both in when calculating how much you are taxed as your employer 100% is factoring in the employer tax when calculating how much to pay you.
The WFH trend seems to be working out exactly as expected. What’s going to happen is wages in places like India and The Philippines will go up, wages in countries like the US, Canada, European nations... will go down.
The real lesson here is if an economic theory has to overcome the forces of supply and demand to work, then it’s not going to work.
The poor remote engineer team in an African country will definitely appreciate better income, however the Canadian one most likely not, while working remotely to the same company.
It seems clear that WFH will be much more of a thing post-COVID. If this is the case, then tech companies will be hiring new employees from all over, presumably at rates that are based on the candidate's location.
If this is the case, and employees in WY are being paid 30% less than employees in CA, then the company might end up having an implicit preference for turning over existing employees in favor of new/remote ones. Imagine managing a team with 10 employees and 2 million in total comp. Now you're told you have to make do with a 30% budget cut, due to bad earnings. It would be hard to imagine that you wouldn't consider the amount that would be saved by cutting more expensive folks versus less expensive folks.
Of course, at first the longer-tenured folks would be more valuable than their newer colleagues, based on institutional knowledge. But as this advantage fades, presumably more expensive employees would be put at a disadvantage in these scenarios.
And some companies will decide to pay everyone SF-based salaries, regardless of location. To my mind, that would have a similar effect on the company's finances as not price-discriminating when selling their product. Selling to a person? Same price as selling to a company! There are surely some cases where it would work out fine, but for some companies it could make the difference between success and failure.
The systems are so weirdly gameable though - I know a number of couples living with their parents for free to save money in very expensive parts of the country - they'll be paid top rates with no expenses vs. someone living in a poorer part of the country to be with family taking a massive paycut.
Others are living in the hubs they always have while renting out flats in cheaper parts of the country as side income.
The endgame is living in the cheapest neighbourhoods in SF/NY/London while working "remote" - the commute being bad in that part of the city doesn't matter anymore.
Maybe we can just show our rent checks for food at the company store.
If the situation was reversed, where poorer employees were living with their parents, people would be upset with the inequality too. Even more so if the ones who were not living with their parents got stabilized rent after 5 years, or bought property and saw their equity rise in value.
It's worse than gameable; it continuous to contribute to "discrimination" based on socioeconomic class.
Your exact example: If you were born into a wealth area, your family likely has extra space for you to live, and you will continue to be paid highly due to living in an "expensive" area.
If you were unlucky enough to be born into a poor area in a poor part of the country, you may have to move home to support your family due to a pandemic. They likely don't have extra room for you, so you have to find and pay for your own place. On top of that, you get your salary cut 50% as an "adjustment".
It is a side effect of a system where the already-well-off will be treated better.
Outsourcing generally has the same effect on a global scale - people in poor countries will get low salaries for doing the same work, which keeps those countries poorer than the rich ones.
It's the opposite. Outsourcing gives an opportunity for people in poor countries to earn money, bringing their wealth up.
Just look at Mexico and the US. In the US, auto manufacturing labor was paid $80k+. I don't know the exact numbers for Mexico, but it seems reasonable to assume people in Mexico typically work jobs that pay far less than $80k. Automakers go to Mexico and say we'll give you $40k to do the same work we are paying $80k for in the US.
For people in Mexico, $40k is a much better option than anything else available, so the people in Mexico jump at the opportunity to earn $40k, and are wealthier because previously they were earning less than $40k (by definition, otherwise why would they jump at the opportunity to earn $40k). People in the US are now earning $0.
Quality of life has increased for many, many millions around the world due to outsourcing, and one could make the claim quality of life (or at least security of income) has decreased for millions in the developed world. But this is arbitrage at work. Of course, labor arbitrage isn't the only type, there's also environmental arbitrage (which is bad for the world).
Tech libertarian types love the free hand of the market when they're making their inflated SV salaries. Not so much when it slaps them back down to earth.
I see a lot of commentary saying that these pay cuts are perfectly rational, because “of course” new hires would be given different rates depending on their cost of living. But for a purely remote firm, why would a cost-of-living adjustment exist at all?
In a pre-COVID job market with physical offices, obviously you need to pay higher rates for the same quality of employee in a major city. Someone must be hired, and the only available applicants are paying high rents, so the firm is forced to pay more if they want their offers accepted. Supply and demand.
But if the firm is purely remote, why tolerate this? Ignoring the issue of pay cuts for moves, why pay $200K for someone in SF instead of $100K for someone just as good in Pittsburgh?
If there were no friction to hiring/firing, and no difference in employee quality by location, the rational strategy would not to set wages based on the local cost-of-living. The wages should be set at the replacement cost of the labor. The firm receives no benefit from the employee choosing to live somewhere expensive. They should simply pay the same rate everywhere, and each employee can choose their city based on their own values and ability to pay rent.
My personal theory is that this is the scenario that many newly-remote-only firms are now in. They don’t want to pay employees different rates based on location, but their workforce is nonetheless mostly in an expensive city and expects to be paid accordingly, as per pre-COVID norms. What the firm would like to do is reduce wages across the board, but doing so would spark a backlash from workers who suddenly can no longer make rent. Thus they create the fiction of downward CoL adjustments, which only made sense pre-COVID, to concentrate the negative effects on the workers most willing to endure them — the workers suddenly paying less in rent. If remote-only remains permanent, firms will eventually fire or decline to replace staff in expensive cities, as the same work can be done cheaper elsewhere, until reaching an equilibrium where all workers are paid less and the firm no longer cares where they live.
Also these companies may not want to work remotely in the long term. If they thought remote working was just as effective, presumably they would have done it before. If employees move away, and the company calls everyone back into the office at some point, a good portion of the workers that have moved will quit. In a sense, paying them the SF rate even though they're remote is sort of paying them to be "on reserve."
I agree in general and actually wrote a similar comment regarding the pressure that will nudge companies in the direction of turnover in favor of remote/cheaper employees.
The only thing I'd push back on is
> The firm receives no benefit from the employee choosing to live somewhere expensive
They do benefit if there is a critical mass of employees in the same location and can have in-person meetings. There are definitely some industries/roles in which being physically together creates a competitive advantage. There are also benefits to time zone proximity, though these tend to be weaker (and it can be advantageous to have round-the-clock coverage).
From my point of view, the reason is that it's not a cost-of-life adjustment, it's a market rate adjustment. Companies pay a worker what is necessary for him to stay working for them.
Even a remote-first company is in competition with on-site companies when it comes to hire/keep workers. So they need to pay the local market rate for each worker, otherwise he'll go work for someone else in his area.
In the same way, they can afford to pay less to a worker moving to an area with a lower market rate, because he won't find a better alternative without moving.
> But if the firm is purely remote, why tolerate this? Ignoring the issue of pay cuts for moves, why pay $200K for someone in SF instead of $100K for someone just as good in Pittsburgh?
Well, I guess it depends on exactly how fungible you think employees are.
If you set a lower ceiling on the salary for a position, you're more-or-less excluding many of the largest concentrations of available labor from consideration.
For that matter, for more senior positions, you're possibly excluding the candidates that have the most relevant experience (depending on your industry) wholesale.
> The firm receives no benefit from the employee choosing to live somewhere expensive.
The firm may receive some benefit from the employee being embedded in a community that has a high concentration of practitioners, but that's a bit speculative.
When it comes to engineering (and software engineering in particular) many businesses are not shopping for the most cost-effective labor per-se, but for the best labor they can afford (or so they think).
There are a bunch of reasons for this, some of which are based on myths or misunderstandings, but what it comes down to is that so long as there is an extant belief that better candidates are clustered in particular regions, you'll see a salary premium for candidates located there.
I'm curious about the performance/success of remote-only on-boarding.
If I move to Wyoming, google can lower my salary by 25% because of "market" factors. However, can they replace someone on-boarded on-site for 5 years even at a "Mountain View" rate? I suspect it's a lot harder to integrate "covid" hires into company culture, group norms, and expected performance.
This would leave you with a more random process dependent on how good your interview process is at filtering, or how good your "online" training program is.
I think the effect of remote-only onboarding will be seen mostly in junior hires, since they do not have much experience in getting up to speed with a company's tech and its culture.
As a senior dev about to start a new remote position at a company that's still mostly non-distributed, I'm probably a little more nervous than I've been at previous first days, but I think the bigger risk is that I'm considered a more distant team member if ever there were cutbacks.
But I guess that's less of a risk if you can provide unique value in a specialized role.
If you have an office there, you should pay location-based rates at that office.
If you have remote employees, you should pay a standard remote rate, regardless of where someone is. Someone working remotely for a CA based company from NYT isn't adding more value than someone working remotely from Phoenix.
While pay is being cut if you choose to move to another location, pay is still higher than ever if you decide to move into HCOL areas like the Bay Area, New York, or Seattle. This is especially true for senior engineers with some years of experience under their belt.
This might be a great opportunity for many small startups. Big companies are too full of bloat to see this is a bad choice with even worse optics. Startups have the advantage of common sense and now need to only compete with much lower offers from larger companies. There's a bunch of startups that probably done care where or when you work.
I read "companies do this or that" but it's teams that make hiring decisions. Whether companies or teams are prepared for remote colleagues or not it's up to them.
Yes, pandemic has made everyone remote but we can't just ignore the fact that Bay area was paying premium because they wanted "locals" (or at least those willing to become locals). Otherwise why bother restrict hiring to a single region/country/continent?
I know that it feels anachronistic to fight remote teams right now, but the truth is, regardless of the merits of both form of working some managers/teams/companies have preference for one or the other, simple as that.
Employees also don't automatically become ideal remote colleagues overnight. So, maybe it is a good idea to attach a cost to the change from being in office to being remote so that the decision balances both ways.
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[ 4.1 ms ] story [ 252 ms ] thread[1] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
Unfortunately, the scare tactics and propaganda of large corporations have won out in the USA. Folks hate collective bargaining with a passion.
What do you mean by this? I mean I guess I get less PTO than other countries, but I get way more pay. I could just take a month of unpaid vacation if I wanted to, and still make more than my European counterparts. Tech also gets great healthcare (unless you work for a startup or something I'd guess).
Not disagreeing that unions would probably be a net-positive for tech workers, but saying that tech in the USA gets a worse "benefit package" is pretty dishonest.
Ultimately, I think we agree though, since you're saying it would be a net positive. The options you mentioned (taking unpaid PTO) are possible, but there are many employers who would then see you as unreliable (unless you're top level in terms of skill).
I also think it takes a great deal of privilege to say "I can negotiate so who cares". While I agree with you that negotiation is important (it's how I got my current salary), you should think about those who come from poorer / less secure backgrounds. These people often don't want to blow their chance, so they take whatever offer comes their way. It's kind of a "rich get richer" thing, where those with confidence (growing up with a well off family, hence a safety net) are the main ones negotiating. Do not underestimate the importance of a safety net when it comes to negotiating, even for yourself. One thing that keeps me at my 9-5 job is knowing I need healthcare and a place to sleep with electricity (I have a lifelong genetic condition, sleep apnea, which untreated will result in my untimely death). My family is abusive, narcissistic, and unreliable. Being so incredibly on my own, I'm extremely risk averse. I imagine others, who might need insulin or some other thing would be the same.
So ultimately, I find the "just negotiate" line to be at best naive, at worst unempathetic.
The whole temporarily embarrassed millionaire, individual exceptionalism, hero worship is a quintessential part of American culture, one that definitely helps employers in their price negotiation with employees.
You don't get paid what you're worth, you get paid what you negotiate. But the ability to negotiate is a privilege. I go into this a bit more in a sibling comment.
Which is ironic, because the same SAG-AFTRA that negotiates multi-million dollar contracts for movie stars is the same union that represents background actors and actors in infomercials.
I will say that much of the reason I don't want to join a union comes from this kind of response, where advocates disregard discussions of specific policies in favor of sweeping statements about class issues. I don't think an organization trying to declare class warfare between software engineers and managers would be able to effectively represent my interests.
https://www.inc.com/suzanne-lucas/did-steve-jobs-lower-your-...
In any case not everyone works for FAANG, and even those that do can suffer unfair termination, various forms of discrimination, or other issues.
The reality in the US that productivity has outstripped wages since the 70s. This has been a huge and tragic net loss for general prosperity, because when wealth is concentrated and workers deal with debt and rent-seeking - from college loans, healthcare, high property prices, and others - the cost-of-entry for a viable small businesses becomes unreachably high.
Startups are not s substitute for small-but-profitable small businesses, some of which have the potential to become much larger businesses through genuine organic growth rather than investor goosing.
Unionisation isn't about your personal circumstances, it's about everyone's personal circumstances. Part of it is about keeping wages high precisely because this gives smart creative people to build new businesses if they choose to.
And before someone says "But what about wage costs?" - remember, you are paying inflated costs anyway, but with no benefit. You're paying them to people who tend to be extremely rich already - health insurance companies, banks, landlords, property speculators, and financial speculators.
If you pay them to workers you get the Fordist model of increased general prosperity with more people with more money being able to afford - and create - more of everything.
I've just always seen life as "unfair" and "up to you to fight for what is right". A labor organization/union has always struck me as "too good to be true" and unrealistic.
There also seems to be a popular misconception that unions prevent you from negotiating for yourself. Unions set salary and benefit floors, not ceilings. If you think you are a superstar negotiator, you're free to demand a higher wage than that floor.
Actors and football players have unions, yet also have an incredible wage disparity between the top and bottom end of the pay scale.
- Unions add more politics to an already increasingly political environment. I don't want to spend an hour or more every month in a meeting to vote on stuff I usually don't care about.
- Unions cost money, and while 200$/2 weeks (which is what one big union in my country charges) might seem reasonable to you, I don't like being forced to do anything.
- Unions usually end up with rules regarding who gets promoted and who doesn't. Broke your back working OT to help out the company? Well tough luck Martha came in one month before you and has priority on promotions.
- Unions make it harder to fire under performing employees. While that might fit in your ideal society, I prefer working with overachievers.
- Unions often ignore individuals because "the majority aren't affected by that scenario"
Would you prefer these decisions to be made unilaterally, without any input from you? Because that's the status quo. If you are happy with these decisions being made unilaterally, don't vote. If you aren't, you have more of a lever than you do without a union.
> - Unions cost money, and while 200$/2 weeks (which is what one big union in my country charges) might seem reasonable to you, I don't like being forced to do anything.
I'm assuming most of that money is going into a strike fund. Having a strike budget makes your negotiating position much stronger, just like how if you don't live paycheck to paycheck, your negotiating position is much stronger.
If most of that money goes into administrative expenses, you may want to consider voting to reduce those expenses.
> Unions make it harder to fire under performing employees.
Unions require management to follow a process to fire employees, under-performing or otherwise. My wife worked in a union for 8 years, and plenty of poorly performing employees were fired during that time. The difference is that they weren't fired arbitrarily. You'd appreciate protection from that, if you were to ever be fired for political, personal, retaliatory, or just purely fabricated reasons.
If your management can't figure out how to document how an employee is underperforming, and to give them notice to shape up, I'm not sure your management can be trusted with anything.
> - Unions usually end up with rules regarding who gets promoted and who doesn't. Broke your back working OT to help out the company? Well tough luck Martha came in one month before you and has priority on promotions.
Did the union make those rules, or did management make those rules in an effort to control costs, and then blame it on the union?
Unions are democratic, by the way. If you don't like tenure-based promotion, vote to change it. You have no such recourse with a manager who arbitrarily promotes people they like.
- Voting on stuff monthly? Seems to be a really active union. Must be getting ready to strike and if that's the case why wouldn't they check to make sure they have broad support for one. Also, no one is literally holding a gun to your head. You can vote, vote no, or not vote.
- Don't know what union this is but dues I've seen are 1-2%. Whoever is getting paid $5000/week I'd like to join that union, too. Fine, maybe it's a really good union that charges 5%. I'd still want in because someone is taking home $2000/week.
- The word is seniority and this has nothing to do with unions. It's how factories from the very beginning have doled out promotions. Job for life and all that. Since most people don't want to be working the shit stirring tank how do you get promoted out the shit stirring tank? A simple metric the factories and offices came up and the union workers agreed to.
- Unions don't control this. But if someone gets fired for underperforming you know who's going to get a labor lawyer? The worker who's been paying dues to collectively have a lawyer on retainer. You see if I get fired, I get told I was a poor performer with no evidence. If the worker in the union gets fired there lawyer is going to want to see the evidence. And you'd be amazed at how poorly most companies document this. See the union doesn't keep someone from being fired. But it does make sure the firing is fair.
And if you’re a software engineer, it’s usually not hard to be frugal enough to save up enough to have the luxury of saying that.
We really need country-wide social safety nets, not attempts to force companies to retain people they don’t want.
Good. I don't want promotion to be a race to the bottom for whoever works the longest hours. If you're gonna try to get ahead of me by doing OT, screw you.
remarkably ignorant. why doesn't the United States just send around one soldier as needed? Strength in numbers is how hundreds of species survive, this is pretty basic logic that extends into business and commerce as well.
Flying seems impossible too, but yet planes take off every day.
[1] https://www.bls.gov/opub/mlr/2013/04/art2full.pdf
[2] https://journals.sagepub.com/doi/10.1177/0160449X16643321
A company should be allowed to pay for the ‘supposed’ benefits that human interaction brings.
Seafood, well, Switzerland is a landlocked nation. There aren't any good surfing spots either, but skiing is 1.5hrs to the slope by public transport.
Say I make $150k/yr after taxes in Silicon Valley and spend $6000/mo, which is about $72k/yr. Which means I save $78k/yr (and savings compound over time, as do pay raises).
If I relocate, I'm making $128k/yr after taxes and spending $4800/mo, or about $57600/yr. I'm saving $70k/yr, a whopping $8k/yr difference.
I moved to Seattle from a way lower CoL area, but even with the way higher rent, I was saving more dollars/year.
In SF, I had a rent controlled spot and lived with 4 roommates. It didn't matter much because I spent most of my time at work, and had access to a bunch of things in the city and the Bay on weekends. I also ate most of my meals for free at work, and I didn't own a car.
Now, in IL, I have my own 1BR apartment, a car, and spend a lot more on groceries and takeout.
Also, I'm getting a fundamentally different experience. I have more space, but I'd love to go back to city living when the pandemic ends.
If you make $200K, but spend $100K, then a 20% drop in expenses is $20K, and a 15% drop in salary is $30K. Overall you're out $10K even though the percentage drop in salary is lower.
It gets worse if you have a $300K salary.
I genuinely think that people who were thinking that this is not going to happen are disillusion. Their employers have one single and easy goal - maximize the shareholder value. So, no matter how humanitarian it would be to keep SF salaries to employees working from all around the world, nobody will sign the decision to do that, unless it's coming from the CEOs & boards & public markets. I would encourage everyone to look on how Gitlab is approaching this problem: https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra...
Moreover, let's assume the pay cut doesn't happen - what about the people who don't or can't move. Isn't this unfair to them.
Also, what about the gaming of the system. A person could ask for a higher salary saying they are in, or relocating to, the BA, then within a few months, or even days, of joining they move out.
If engineers are providing a tangible dollar value for their work, shouldn't they be paid what their work is worth and not paid relative to their cost of living?
That would imply that for identical work a person in SF would be paid the same as a person in let’s say India.
That is great for the person in India if they get as much as the person in SF. But, what about the reverse, would a person in SF be OK getting the same compensation as the person in India?
What about how much they can spend? Are the corresponding wages sufficient to live? You have to consider both cases, not just assume that everyone gets SF wages regardless of where they live.
And the impact on local economies when these high earners go to low cost of living wages places and buy all the real estate? Will the locals be driven out?
And so on.....
Either the person needs to be in the Bay Area for the job, in which case the answer isn't "paycut" but "you're fired"; OR it doesn't matter where they live, so why even go through the COL rigamarole? Just offer the lowest possible amount that will get a qualified person from anywhere in the world into the seat. If your options are "200k for a person in the Bay Area" or "20k for a person from Russia" why would you pay 140k to someone in Kansas?
It could be because of language, timezone, cultural difference, taxes, regulation, ... Or it could be they're simply wrong.
I do believe, however, that it's a bit more nuanced than "onsite" and "remote". Not all remote places are equals.
The rub is that remote employees in tech have no bargaining power. This is the main reason why companies can and will pay lower salaries.
[1] https://news.ycombinator.com/item?id=24651639
As companies expand to remote-first, nationwide hiring they’re realizing that they don’t necessarily need to pay SV premiums to hire good talent. There are plenty of talented hires around the country that are underpaid relative to SV but were previously geographically locked out of these companies.
In other words: You’re no longer competing against other SV people for these jobs. You’re competing against people across the country who would still be getting a significant raise if they worked for 2/3 of past SV comp.
But while they've moved to WY, they're not getting catered 3 meals a day, free yoga classes, and the office space. There are real dollar values attached to that.
So if these SWEs get a pay cut, and a benefits cut...
Companies are getting a pretty solid deal in terms of possible labor disputes to contend with if elite SWEs who did this remote move aren't bringing this up.
My original point is just that the framing from WSJ doesn't capture accurate compensation factors well.
To your point: I think that's irrelevant/off topic. There's probably a theoretical % of employees who could go remote that in turn will make a company move office space or fire cooks. Otherwise, those are fixed costs and don't come into the picture here.
I don't think either % get hit for the class of SWE I'm referring too, so it's just lost benefits to the SWEs.
At a certain point, it costs the same to feed premium salad to 500 engineers as it does 575 engineers (no idea if this is the math, but conceptually yeah). A cook can make 600 or 700 gallons of soup without much difference or new purchases required: huge vat of soup is 2/3 vs. 3/4 full.
If the % of remote engineers hit a level such that cooks have to buy new soup bowls, idle hand cooks, or offices with cavernous empty halllways, then yeah, you're back under diminishing costs/eng and need to scale down.
Disclaimer: not anything close to a lawyer, let alone a tax lawyer.
[1] https://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf
Up to date html equivalent for 2020 is at https://www.irs.gov/publications/p15b#en_US_2020_publink1000...
[2] from the html link:
>>You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees ... The exclusion doesn't apply to any athletic facility if access to the facility is made available to the general public through the sale of memberships, the rental of the facility, or a similar arrangement.
[3] https://www.irs.gov/publications/p15b#en_US_2020_publink1000...
I’m a ‘remote’ worker (I actually live close enough to work in my office but choose not to), and while I don’t get all of the in-office perks, I do get other ones the office workers don’t. Home office allowance for things like monitors/printers/desks, ISP and cell phone are covered monthly, I get paid $0.54/mi when I do have to go into the office, and I don’t have to go into the office much.
All in all, I figure I make out about even on a $$ standpoint, and my lifestyle is much preferable to what I’d have if I had to commute.
For most tech company salaries, that can buy you all the meals and yoga you want.
Anyone who has relocated experienced this?
The distinction is important when you end up in markets with high COL but low software engineer market rates (e.g., London), or how dealing with the expensive Bay Area can still make sense compared to midwestern metros--depending on the type of lifestyle you can live with, that is.
Of course some SE's in London don't have a visa to work in the USA, and others wouldn't want to even for a huge pay boost. But it's still quite fascinating that a location-dependent "market rate" materializes from this dynamic. In some cases it seems like location is used as a proxy for skill -- as though an engineer who opts to drive three hours south from Vancouver, BC to Seattle, WA is now a higher-skilled "Seattle dev" than they were three hours before.
If that assumption is taken away, then the fascinating thing is not that companies would pay less in areas like Vancouver or London, but rather that they are willing to pay such a high premium to engineers who live in Seattle and the Bay area.
It's hard to think of any explanation other than that very profitable companies (like Google and Netflix in the Bay area, and Microsoft and Amazon in Seattle) started there, and paid a lot for engineers to move in and join them in an era where remote work was rare; then, when remote work became common, the legacy of a location-dependent market rate created a self-sustaining expectation (Schelling point) that engineers in that area wouldn't work for less to compete with talent elsewhere, sometimes using high COL as an excuse. That might gradually be reversed as companies seek to reduce their payroll expenses, or it might not.
Very well put.
According to one popular-remote-company, that is a 30% downward adjustment. If you were making 200k in SF (for many, that is low), that is a 60k pay cut. If we assume 30k was a "real" adjustment, that is a 30k difference in spendable income. That feels like a demotion.
We also know that many large-ticket items in life do not adjust for "cost of living" in the area that you live. College tuition, medical expenses, etc.
Over just a couple years that 30k/year difference is an entire college education for a child.
From personal experience speaking with larger companies (not FAANG, but larger "start-up"), I was always seeing an even larger difference. Think "~150-170 in Austin, 225-250 in SF". You may want to knock my negotiation skills, and perhaps you have a point there that I could have pushed their initial non-SF numbers up, but these were at earlier-stage discussions and sharing those numbers seemed "reasonable" to them. And this was Austin, a city which the aforementioned salary calculator only gives a -20% "adjustment".
Note that even that 30% is for a "large" AR city. Anyone else in that state is given a 37(!)% reduction.
In my opinion, which I've been trying to wrangle into a coherent blog post over the last couple of days, any adjustments like this should be an absolute-dollar-number figure. Percentages don't make sense at _either_ extreme. A 60k/year position with a 20% "move to SF" upward adjustment? That is unlikely to even cover the change in rent. 400k/year with a 20% adjustment? Calling that "cost of living" is bonkers.
@nrmitchi is probably talking about GitLab and their “Compensation Calculator” [1].
[1] https://about.gitlab.com/handbook/total-rewards/compensation...
Clearly companies are willing to pay $200k+ for top talent. "Cost of living" or however you want to break down that salary is irrelevant to what companies think employees are worth.
Unless the company is getting less value, they can stand to pay the same no matter where you are physically. Calling it a cost of living decrease is just kabuki for paying less.
If WFH continues, salaries should normalize across all regions but its yet to be seen what the value of top talent vs average employee is at a global scale.
In a market where the market equilibrium for that top talent is $200K+. There is no inherent virtue in a '$200k+' number.
> "Cost of living" or however you want to break down that salary is irrelevant to what companies think employees are worth.
Exactly. Companies care about the cost of labor, not the cost living. And if you are in a different geography with a lower cost of living, it is believable that the cost of your labor is less. Why is it surprising then?
>There is no inherent virtue in a '$200k+' number.
Indeed there is. It shows that the value gained by the employer is at least that of $200k+. It is not arbitrary and it is not wholly derived by supply. The cost of labor is set by the labor supply as well as the labor demand.
Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer. Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful.
A less abstract way to look at things is this. The cost of living boost is just a bait to work somewhere. There's no magic to it. Just because you took one deal doesn't mean you should so easily take the opposite deal.
The company tolerating remote workers changes the supply to the company.
The people moving immediately are seeing the first effect here, but if it becomes permanent, the people who don't move will inevitably get the same paycut. Why pay $200K for someone in SF when someone in Des Moines will take $140K, but wasn't willing to relocate five years ago?
The crux is that the supply curve is not fully known. For argument's sake, you can imagine both that talent is distributed uniformly as well as imagine top talent was already pulled towards urban centers.
We don't know exactly what the answer is but one thing that does not make sense is that the supply is somehow linked to local cost of living.
You admit yourself that this current offer to relocate is artificial and not a product of the market reaching equilibrium, so why accept it?
There's a potential scenario of now "company in cheap city X is willing to pay for SF talent, but couldn't convince them to relocate before, but can now hire them remote" that would also push up demand for top talent, but it seems much more likely to me that demand for top talent stays about the same while supply increases at least a small amount, which would push down wages.
I think I am understanding it, but you are merely repeating your points without addressing the economics that I am pointing out.
> Indeed there is. It shows that the value gained by the employer is at least that of $200k+.
Yes and so the value you generate for the employee puts an upper bar on what salary you can command, not a lower bar, which is what you seem to be implying.
> Not only does a an employee's location not change the employers' demand, the moving also does not change the supply available to employer.
It increases the supply available, because today, given the investments Google has made in setting up offices for ~30000 employees in the bay area, they have to fill that demand using employees located in the bay area. They don't have to do that if they can hire from anywhere, so the supply increases.
> Moving or not, the employer could always find a new employee abroad if supply was indeed plentiful.
And they do! Google has employees around the world, and surprise, they do not get paid as much as they would have gotten paid in the Bay Area. Why is a Google engineer in Bengaluru who is hired by the same hiring process paid 1/3rd of what they'd get paid in MTV? And to preempt the usual HN racism against the quality of Indian engineer, the same Google engineer would be paid the MTV salary if they moved to MTV. This is not a hypothetical, this is literally what happens to the countless Google engineers who transfer from BLR to MTV.
Based on your logic, why is that engineer NOT paid the MTV salary today in BLR?
————
I mean I am not even making a far-fetched claim. Bay area salaries are the highest in the world. They have to move down towards the average if some other salaries are going to rise because the engineer who lives in Randomville Alabama didn't have a Google office he could commute to and hence wasn't in the supply pool, but now is, can now compete for the Google job.
Indeed, perhaps that will be the case if there really is so much supply; if that's what the supply curve turns out to be.
But it makes zero sense to pin salaries to local cost of living other than to bait a candidate to live somewhere you want them to. Its not based on demand, its not based on supply.
Sure, they can "stand" to pay the same. But why would they. As you yourself said:
> Rates will be set by market forces, not any concept of "fairness."
Ie, companies are going to pay you as little as they can get away with. If the market-price for a good SF developer is $200k, and the market-price for an equally good Las Vegas developer is $100k, then your pay will trend towards $100k as soon as you move from SF to LV. Maybe inertia and your manager's largess will prevent it from being an overnight change, but that's the long-term trajectory you can expect.
Open it up to WFH anywhere and your supply just went way up. Some random person in WY is likely willing to work for Google for much less than 20% below bay area salaries.
And basically, it's market economics. The wage is determined by supply and demand in the labor market, not on the value provided to the company.
This is why it's important to have many competing employers rather than just 1 or 2 big ones. Competition for labor increases wages. Hopefully, as more companies accept full remote employees, we'll see that- a single huge market not defined by regions.
Of course that only works if people all do the free trade thing. US/China broke down because the US was globalist and China was nationalist and protectionist.
While wages may drop for the west, that should be more than offset by the rate at which goods and services become cheaper and more plentiful. Protectionists often look at only one side of the equation.
So people are already reaping the benefits of cheaper and plentiful goods and services.
The last 2 years have begun to show the massive benefits of this. The US tariffs have led to a situation where today the US has the largest net trade deficit since 2006 and is paying subsidies of over $40bn simply to keep farming afloat in the Midwest. And there has been no gain in jobs within the US or any benefit whatsoever to those tariffs. The US consumer is only paying a lot more for products they were paying a lot less for a couple of years earlier making everyone here functionally poorer.
In the context of free-trade however: How would you handle the intellectual property issue, can you still have free trade with a state that does not treat IP in the same way?
Many companies have tried to move their development to India for example (I have a second hand anecdotal evidence from one) and it is not as simple as it seems.
There are huge cultural differences, meaning what is considered not acceptable in the west is common practice somewhere else like getting degree for bribes etc. You have to know how to navigate in such environment.
You may think that because your company employs people from multiple cultural backgrounds then the environment of the company is multicultural.
In reality the culture of the company is most likely following the protestant work ethics (it is my generalization, there are of course variations and exceptions).
What's interesting is that there are places where people are paid much less because there's so little demand for labor there- if you're the only employer of software developers in 100 miles, you can pay a pittance. And at the same time, places like Silicon Valley pay a premium for labor because there's a shortage (let's not discuss the reasons around that- I don't feel the need to drink).
When the market is merged, it will be leveled. And I cannot imagine those who stay in San Francisco are going to benefit. But the brilliant developer who has been paid terribly at a small software firm in the middle of no where, who can't leave for other reasons, that developer is going to see their fortune changed for the better.
Places where current wages are low are going to see wage increases (because of higher demand / lower supply), which in turn will lead to an increase in costs of living.
Places where current wages are very high are going to see downward pressure on wages (because of lower demand / higher supply), which in turn will eventually lead to a lowering of costs of living.
Obviously that's valid in the "fullness of time". How long it can actually take for this new equilibrium to be fully realized is anyone's guess.
I'm not sure that there's so many SW people outside of the big tech hub areas so as to make such a difference. If they are more uniformly distributed across the country, their impact on each community will likely be negligible.
Companies were definitely overestimating the need/benefit for this locality but that doesn't mean it is now zero.
If there is any mass movement that is gonna happen, why would it be from big expensive US city with a lot of different entertainment options to a smaller, still fairly expensive US city with almost no entertainment options as opposed to significantly cheaper non US large city with a lot of entertainment options?
Why wouldn’t people move to someplace in Mexico, or Brazil instead? If time zones are not an issue, why not move to somewhere in Asia instead, like Bangkok, Singapore, Kuala Lumpur, etc.
If you mention health insurance for the taxes, that's actually taxed to employers in BC, not employees, so it's not part of the taxes I pay.
But you know what? I'm not living in America. I'm not living in America in the clusterfuck that is 2020.
I consider it money well spent.
A old co-worker of mine couldn't get permanent residency for their legal partner. As a result rather than staying in the US they both moved back to Canada.
Honestly I don't blame them, sometimes I wonder if the US survives in spite of our political policies instead of because of them.
Hoping from country to country with your pick of jobs isn't privilege?
I'd say it's the opposite. Those without privilege are the ones that don't have that option.
I'd hope you could understand that just because someone has a finite set of options doesn't mean they can't be impacted significantly by political policy due to society putting less value on who they are or where they come from.
That’s a luxury 99% of the world doesn’t have. Hell, I’d guess almost half of Americans can’t do that.
Which, to be fair, is partially due to US politics. In that sense, making the choice to live in the US is letting one's life be run by politics, just in a different direction.
2020 is a mess, and I'm glad to be in a country with: a strong universal health care system; a strong social support system; politicians who do the right things, listen to experts; a society of people who mostly wear masks because it's the right thing to do- to sacrifice comfort in order to help others.
Is that politics? I don't think it should be. I think that if people in the USA consider those important things to me to be political, then you can add that to the list of reasons I'm glad to be in Canada.
Either you don't realise how your problems are due to unfavourable (for you) politics, or you have very, very few.
Yes, the politics is in shambles and society is arguably falling apart, but at some point you need to decide what your impact on the world is going to be. If you believe you can fix tech in Europe, I applaud you, and that would be a worthy cause. I've learned that I function best in the fast lane, and that's in the tech hubs. Innovation requires lots of people bouncing lots of ideas off each other, and I don't think remote work is going to significantly compete with where the next innovation wave will come from.
Fixing Europe isn't about finding smart people to work on things. It's about preventing them from leaving. Ironically Covid might be helping that for a couple years.
I've met a lot of European founders... in the Bay Area. The stories they told me were eye opening.
There's so much regulation and red tape that one company's 5th employee had to be filling government grants and filing for tax exemptions full time.
There may be a tax on employers specifically labelled as some kind of health tax, but your health insurance coverage is being paid for out of general provincial government revenues and some (actually: a lot) of your taxes are absolutely going towards paying for health care.
Fees like the one you're talking about are just a way to shift some of the tax burden off of individuals.
Editing to add some specifics:
- when implemented it was estimated the health tax would replace the $2.6bn from fees previously collected with $1.9bn of tax revenue: https://tricitieschamber.com/backgrounder-employer-health-ta...
- BC health care spending $21.5bn in 2020/2021: https://vancouversun.com/news/politics/b-c-budget-2019-healt...
Specific fees or levies for health care in canada are a drop in the health spending bucket.
([1] federal spending and taxing is more complicated than this and they are not coupled in the same way provincial spending and taxing are but that's not super relevant here)
You actually should take this into account as this is in fact a part of the expenses for the employer to employ you.
Different countries play it differently.
For example some countries in EU have health and pension insurance excluded from the salary such that employee only sees the income tax deduced from the salary.
In another countries employee sees half of the insurance and the other half is considered as "employer contribution".
How ever you split it, it is still expense.
This becomes self evident when you happen to be self employed.
[0]: https://en.wikipedia.org/wiki/Tax_wedge
1. One market in each city that has companies in it that require that the job be done in the office.
2. One huge market for doing the job remotely.
The real lesson here is if an economic theory has to overcome the forces of supply and demand to work, then it’s not going to work.
Most US employees at FAANG could easily relocate to Canada, if they wanted to, but the opposite is far from true!
If this is the case, and employees in WY are being paid 30% less than employees in CA, then the company might end up having an implicit preference for turning over existing employees in favor of new/remote ones. Imagine managing a team with 10 employees and 2 million in total comp. Now you're told you have to make do with a 30% budget cut, due to bad earnings. It would be hard to imagine that you wouldn't consider the amount that would be saved by cutting more expensive folks versus less expensive folks.
Of course, at first the longer-tenured folks would be more valuable than their newer colleagues, based on institutional knowledge. But as this advantage fades, presumably more expensive employees would be put at a disadvantage in these scenarios.
And some companies will decide to pay everyone SF-based salaries, regardless of location. To my mind, that would have a similar effect on the company's finances as not price-discriminating when selling their product. Selling to a person? Same price as selling to a company! There are surely some cases where it would work out fine, but for some companies it could make the difference between success and failure.
https://news.ycombinator.com/item?id=24765398
Others are living in the hubs they always have while renting out flats in cheaper parts of the country as side income.
The endgame is living in the cheapest neighbourhoods in SF/NY/London while working "remote" - the commute being bad in that part of the city doesn't matter anymore.
Maybe we can just show our rent checks for food at the company store.
Your exact example: If you were born into a wealth area, your family likely has extra space for you to live, and you will continue to be paid highly due to living in an "expensive" area.
If you were unlucky enough to be born into a poor area in a poor part of the country, you may have to move home to support your family due to a pandemic. They likely don't have extra room for you, so you have to find and pay for your own place. On top of that, you get your salary cut 50% as an "adjustment".
It is a side effect of a system where the already-well-off will be treated better.
Just look at Mexico and the US. In the US, auto manufacturing labor was paid $80k+. I don't know the exact numbers for Mexico, but it seems reasonable to assume people in Mexico typically work jobs that pay far less than $80k. Automakers go to Mexico and say we'll give you $40k to do the same work we are paying $80k for in the US.
For people in Mexico, $40k is a much better option than anything else available, so the people in Mexico jump at the opportunity to earn $40k, and are wealthier because previously they were earning less than $40k (by definition, otherwise why would they jump at the opportunity to earn $40k). People in the US are now earning $0.
Quality of life has increased for many, many millions around the world due to outsourcing, and one could make the claim quality of life (or at least security of income) has decreased for millions in the developed world. But this is arbitrage at work. Of course, labor arbitrage isn't the only type, there's also environmental arbitrage (which is bad for the world).
In a pre-COVID job market with physical offices, obviously you need to pay higher rates for the same quality of employee in a major city. Someone must be hired, and the only available applicants are paying high rents, so the firm is forced to pay more if they want their offers accepted. Supply and demand.
But if the firm is purely remote, why tolerate this? Ignoring the issue of pay cuts for moves, why pay $200K for someone in SF instead of $100K for someone just as good in Pittsburgh?
If there were no friction to hiring/firing, and no difference in employee quality by location, the rational strategy would not to set wages based on the local cost-of-living. The wages should be set at the replacement cost of the labor. The firm receives no benefit from the employee choosing to live somewhere expensive. They should simply pay the same rate everywhere, and each employee can choose their city based on their own values and ability to pay rent.
My personal theory is that this is the scenario that many newly-remote-only firms are now in. They don’t want to pay employees different rates based on location, but their workforce is nonetheless mostly in an expensive city and expects to be paid accordingly, as per pre-COVID norms. What the firm would like to do is reduce wages across the board, but doing so would spark a backlash from workers who suddenly can no longer make rent. Thus they create the fiction of downward CoL adjustments, which only made sense pre-COVID, to concentrate the negative effects on the workers most willing to endure them — the workers suddenly paying less in rent. If remote-only remains permanent, firms will eventually fire or decline to replace staff in expensive cities, as the same work can be done cheaper elsewhere, until reaching an equilibrium where all workers are paid less and the firm no longer cares where they live.
The only thing I'd push back on is
> The firm receives no benefit from the employee choosing to live somewhere expensive
They do benefit if there is a critical mass of employees in the same location and can have in-person meetings. There are definitely some industries/roles in which being physically together creates a competitive advantage. There are also benefits to time zone proximity, though these tend to be weaker (and it can be advantageous to have round-the-clock coverage).
Even a remote-first company is in competition with on-site companies when it comes to hire/keep workers. So they need to pay the local market rate for each worker, otherwise he'll go work for someone else in his area.
In the same way, they can afford to pay less to a worker moving to an area with a lower market rate, because he won't find a better alternative without moving.
Well, I guess it depends on exactly how fungible you think employees are.
If you set a lower ceiling on the salary for a position, you're more-or-less excluding many of the largest concentrations of available labor from consideration.
For that matter, for more senior positions, you're possibly excluding the candidates that have the most relevant experience (depending on your industry) wholesale.
> The firm receives no benefit from the employee choosing to live somewhere expensive.
The firm may receive some benefit from the employee being embedded in a community that has a high concentration of practitioners, but that's a bit speculative.
When it comes to engineering (and software engineering in particular) many businesses are not shopping for the most cost-effective labor per-se, but for the best labor they can afford (or so they think).
There are a bunch of reasons for this, some of which are based on myths or misunderstandings, but what it comes down to is that so long as there is an extant belief that better candidates are clustered in particular regions, you'll see a salary premium for candidates located there.
If I move to Wyoming, google can lower my salary by 25% because of "market" factors. However, can they replace someone on-boarded on-site for 5 years even at a "Mountain View" rate? I suspect it's a lot harder to integrate "covid" hires into company culture, group norms, and expected performance.
This would leave you with a more random process dependent on how good your interview process is at filtering, or how good your "online" training program is.
As a senior dev about to start a new remote position at a company that's still mostly non-distributed, I'm probably a little more nervous than I've been at previous first days, but I think the bigger risk is that I'm considered a more distant team member if ever there were cutbacks.
But I guess that's less of a risk if you can provide unique value in a specialized role.
If you have an office there, you should pay location-based rates at that office.
If you have remote employees, you should pay a standard remote rate, regardless of where someone is. Someone working remotely for a CA based company from NYT isn't adding more value than someone working remotely from Phoenix.
I feel there's a dichotomy at play here. This tweet may sum it up best: https://twitter.com/whrobbins/status/1315767934816452608?s=2...
Replace overstated with overpaid, and understated with underpaid
Yes, pandemic has made everyone remote but we can't just ignore the fact that Bay area was paying premium because they wanted "locals" (or at least those willing to become locals). Otherwise why bother restrict hiring to a single region/country/continent?
I know that it feels anachronistic to fight remote teams right now, but the truth is, regardless of the merits of both form of working some managers/teams/companies have preference for one or the other, simple as that.
Employees also don't automatically become ideal remote colleagues overnight. So, maybe it is a good idea to attach a cost to the change from being in office to being remote so that the decision balances both ways.