[UncleMeat]

> why not just keep salaries the same and then you select from a larger pool of candidates (this should give you a pretty good pick, but you're still limited by when waking hours overlap).

Because you make less profit if you pay the outrageously high SF salaries. Bay Area salaries are incredibly high because there is outrageous competition for the top engineers and there are a lot of rich companies local to the region who can afford high salaries. They aren't able to hire a bay area engineer at 2/3 pay because that hire can go somewhere else.

If you are one of the early ones to the remote-game then you aren't competing with other bay area companies for an engineer in Tulsa. You are competing with local Tulsa businesses, which don't tend to make the gazillions in profit or VC money needed to afford to pay engineers 300k+. So you don't lose as many candidates when you say now you are paying 150k. So you make more money.

Over time this difference could even out as more and more companies become remote-friendly or remote-first and there are no more local job markets. But this isn't going to end with bay area salaries for the whole world outside of a very very small number of companies and very top performers who can command high pay.

[godelski]

How does this address a office in SF and a remote worker in NYC making more than a remote worker in Phoenix? Both workers are remote. How does the NYC worker provide ~2x utility to the company compared to the AZ worker (remember, both are remote).

[Spivak]

They don’t! Which is why in this new remote world the applicant in Phoenix has the advantage because they’re able to accept a lower salary because of CoL.

None of this makes any god damn sense in regards to adjusting the pay of people that move but it doesn’t matter in the long run because such practices are still governed by market forces. Facebook can try and predict what someone is willing to accept based on their location and renegotiate based on their available options but it’s not infinite leverage.

[UncleMeat]

People aren't paid by their utility (if that were true, employees at highly profitable companies would be paid a lot more). They are paid the lowest amount that either the market (or other forces - like unions) will bear. A remote worker in Phoenix doesn't have as many options as a remote worker in NYC when it comes to switching jobs a getting a high salary. So the company pays the NYC dev more since they need to pay more in order to retain that person.

I'm absolutely certain that there are some 10x engineers in Bangalore that are getting paid peanuts because they can be exploited and don't have as many options. That's the nature of capitalism and why many see it as an extractive system.

[war1025]

> in Bangalore that are getting paid peanuts because they can be exploited

The thing about Cost of Living is that poor schmuck in Banagalore may well be living like a king off those wages compared to his other options.

I made a pittance in west coast tech terms, but here in Iowa that means I own my house outright, I have a wife that doesn't need to work, and I have three kids.

From what I read on here that is a pipe dream for many of the same west coast tech people.

I'll take Iowa.

[sbacic]

> Bangalore that are getting paid peanuts because they can be exploited

Um, that's not what is happening. I can't vouch specifically for Bangalore, but if you can work fully remotely, the savings in taxes and COL are ridiculous - so much, in fact, that it doesn't make /financial/ sense to move to a high COL for anything less than FAANG salaries (and even then, it depends on what you want out of life).

I'm talking about €300-500/day income.

If I were to be optimistic, I'd say that Facebook's employees won't even feel the reduced salary - but SF government and landlords certainly will.

[UncleMeat]

Sure. But you'd be able to take home even more money if they were paying SF salaries. It is a fine arrangement as it stands but the big companies are extracting a greater percentage of your labor since they can afford to pay you less and you will accept less.

[sbacic]

In principle, yes. But things are not always so clear cut. In certain European countries, there is a special tax regime that lets you pay very little tax as long as you stay under a specified limit (the highest is, AFAIK, €100k/year and 15% tax).

In such a scenario, you're better off trading a lower salary for more free time (if possible, of course) as a large portion of a higher salary would be eaten up by higher taxes and/or COL (if you had to be relocate).

In essence, you're making less in absolute values but you're /much/ better off in relative terms (say, per hour).

[godelski]

People are paid by utility, but it isn't the only factor. You don't pay a line cook to be a surgeon. Utility is obviously the dominant factor.

> A remote worker in Phoenix doesn't have as many options as a remote worker in NYC when it comes to switching jobs a getting a high salary. So the company pays the NYC dev more since they need to pay more in order to retain that person.

So the premise of this is that these people are working remotely... why wouldn't the Phoenix person have the same opportunities to switch jobs as the NYC person if both are able to work remotely? That's kinda rejecting the premise of the scenario.

[UncleMeat]

Utility will put a cap on whether the business can exist. Employers won't willingly pay above your utility. And if they could get you to work for free they sure would.

The Phoenix person and the NYC person don't have the same opportunities because the huge majority of tech jobs still don't support fully remote positions. So the Phoenix person has all the fully remote jobs (many of which adjust salaries down) and all the local Phoenix business. And the NYC person has all the fully remote jobs and the gazillions of local NYC jobs.

Your employer doesn't know that you'd never want to work for a local NYC company or whatever, so they operate under the assumption that they have tighter competition for your labor.

Some day, if lots and lots and lots of remote work is available, this effect will shrink and that will either pull remote salaries closer together or people in LCOL regions will still be willing to accept lower pay and the HCOL people are in trouble.

[gridlockd]

> Utility is obviously the dominant factor.

Supply and demand is the dominant factor in pricing. Utility is barely quantifiable in most cases. A personal computer has immense utility, a Rolex has very limited utility. The latter is in very short supply and in high demand, that's why its prices are high.

Now let's take a software engineer at Uber versus a nurse at a random hospital. The software engineer is part of a scheme that keeps destroying capital, his utility is negative. The nurse on the other hand may prevent decades of lives lost every day. It's not that hard to become a nurse though - more people are capable and willing to do it, so the supply is large. The cherrypicked software engineer on the other hand, is quite rare.

> why wouldn't the Phoenix person have the same opportunities to switch jobs as the NYC person if both are able to work remotely?

They have the same "fully remote" options, but not the same "onsite" opportunities. If you work remote, of course you're going to want to optimize your cost of living, because you'll be competing with people who will do the job for less money.