[screye]

At a practical level, the industry will pay you the least amount of money for which you will accept the offer.

In SF/Seattle, if they do not add the COL multiplier, your wages are low enough, that you might reject the offer. On the other hand, it is quite unlikely for a person to able to find another competitive offer, even if their salary is significantly lower than their colleague who make less.

At an ideological level, this poses a much bigger question. Are employees paid a proportional amount to the value they bring to their organization ?

I would say no. I do not believe every talented European is 40% as capable as the average developer in the US. I do not believe that the same software engineer that made $10k in India, suddenly brings 10x as much value due to a 1 year masters, once they move to the US.

Everything points towards companies historically paying employees not the salary they deserve, but the salary they will accept. As long as remote employees continue accepting these lower salaries, they will continue to be paid lower salaries.

It is a chicken and egg problem, in that sense.

[winter_blue]

> I do not believe every talented European is 40% as capable as the average developer in the US. I do not believe that the same software engineer that made $10k in India, suddenly brings 10x as much value due to a 1 year masters, once they move to the US.

Exactly.

The salaries in some countries (e.g. India) are so low that it befuddles me. In smaller cities in India, software engineers actually make closer to around $4K a year, and new grads with no experience start at around $2.5K a year.

Compare that to the new grad pay rate of $180K+ at Google. Also, a close friend of mine at Google makes over $400K.

In some cases, the pay gap is literally 100X. E.g. in the US, it's $400K, and in India, it's $4K.

Why?

This pay gap makes no sense.

And, you're right. As soon as the same dev from India comes over to the US (and gets a Master's or directly comes on an H1B), their pay goes from $4K to $200K. (Another friend of mine moved here from India, and is making over $200K now.)

Why are salaries so far apart, even with all the tech we have today? Doing remote work over the Internet is so easy.

Makes no sense..

[deepakkarki]

People starting at $4K are the ones who work for consultancies like Infosys, Wipro, et al. There is a reason why they're paid so less. They're usually graduates from terrible engineering colleges who have no real engineering skills what so ever. They undergo a 6 month training period before they can even start working.

My friends in Google India on the other hand make close to $50K/yr. My friends in Google MTV make $200K/yr. So the difference is 4x, not 100x.

[winter_blue]

> My friends in Google MTV make $200K/yr.

I'm guessing he's L3? SWE L3 averages 180K in Google.

My friend at Google is SWE L5 (which averages 350k), but he's at closer to 400K because Google's stock price appreciated considerably since he joined.

> Google India on the other hand make close to $50K/yr

Regardless, $50K in India is actually quite high. Many, many large US tech companies are happy to pay peanuts. The average for a large tech company is probably between around $10K/yr to $20k/yr USD, which in my opinion is horrifically abysmal. (Not to mention, I know of companies that hire people in India's neighbor Pakistan, and they are paying them around $400 USD per month, i.e. less than $5K/yr.)

The numbers are frankly quite absurdly low.

[bboygravity]

> Why are salaries so far apart, even with all the tech we have today? Doing remote work over the Internet is so easy.

I've struggled with the answer to this myself as well.

For some reason people leading companies decided that they want their employees to sit in an office. Even when there's 0 reason for it.

The best explanation I can come up with is plain old stubbornness with a hint of craving for human connection. The madness of crowds: everybody does it this way, so it must be the only way.

As a contractor I offer clients a 30 % discount on my hourly rate if they let me work remotely. Which is always possible. None of them care about the discount.

In the case of my clients most decision makers are around pension-age. The CEO at the last company I worked at didn't know what the possibilities of a VPN where until the pandemic hit. They didn't have the bandwidth capacity to let people work from home, because they had refused to pay a few thousand bucks for a company to lay fiber to the office a few years prior while the road was opened up. "Our internet connection is fine."

This was a tech company building equipment for physics experiments.

Business leaders literally have a hard time imagining the possibilities of the internet in 2020. It's still 1970 for a lot of people.

[tmaly]

> Everything points towards companies historically paying employees not the salary they deserve, but the salary they will accept.

You hit it on the head. This is exactly what is happening. This is why people job flip every 2 years to increase their salary. Getting good at negotiation is critical if you are job searching.

[wmeredith]

I don't think this is an ideal state of affairs, but what's the alternative? Why would a company pay more? Have you ever gone to purchase an item or pay for a service and tried to give more than what was on the price tag or accepted quote? I have once or twice in my life, but it's certainly not a regular occurrence.

[tmaly]

I think it is basic economics supply and demand for the most part. There is also imperfect information and the need for good negotiation.

Look at collectible cars or houses high demand areas. People are going to pay above asking price.

I think the same is true of very talented individuals. I was seeing compensation figures of 1M+ for C++ developers that can design high speed trading systems last year. I think AI researchers are able command higher compensation due to the lack of supply.

[kyteland]

To me COL adjustments are a proxy for the underlying metric of replacement cost. Employers are not going to pay someone more than the cost to replace them. For a lot of professionals this is dictated by their local employment market and COL is an easy way to approximate this.

However not every skillset is tied to local markets. My own job is fairly niche and the hiring pool is on a national level. If I moved to a low COL area my employer would have no leverage to reduce my compensation because they couldn't replace my skillset at that price. But that means the converse is also true. If I moved to a high COL area I would be laughed out of the room if I asked for more money. They could easily replace me for the current price regardless of where I chose to live.

[wikibob]

Would love to hear about your niche area if you can tell us about it a bit

[jdm2212]

> In SF/Seattle, if they do not add the COL multiplier, your wages are low enough, that you might reject the offer.

That's not quite it. In SF/Seattle, you'll have either high-paying opportunities you can take instead if you're in software.

Plenty of people who aren't in software live in SF/Seattle and accept very low pay despite the high COL.

[jbob2000]

Salary is about how easy you are to replace, and nothing else.

Remote workers are easy to replace because you can go all around the world to find someone to do the work. Why pay COL to someone in Mississippi when you can pay much less for someone in India?

[bboygravity]

>Why pay COL to someone in Mississippi when you can pay much less for someone in India?

I can think of some reasons:

timezone,

because you're looking for someone who can do the job well. That's not "someone in India" at the very least that's someone qualified enough in India (definitely not the same hourly rate),

language/accent/cultural awareness/ease of communication/market awareness (I'm saying this as a non-American non-native English speaker),

availability of high quality tools in house/lab that the Indian counterpart can't get his hands on,

And so on.

PS: the low COL world is larger than India. There are options such as (Eastern) Europe that are full of highly educated tech people without jobs and... well.. the rest of the world? Why always India?