[giantandroids]

> “If you want to get paid New York rates, you work in New York. None of this ‘I’m in Colorado . . . and getting paid like I’m sitting in New York City,’” he said.

This is interesting. I wonder if companies will start to try and tier wages according to where the possible new hire resides.

[alexives]

This is definitely done already. GitLab (where I work as an engineer) has done it for a number of years. They used to publish the numbers and ranges for every role/location but they made it internal only a year or so back for reasons that I can't remember. You can still see the old calculator thanks to the internet archive - https://web.archive.org/web/20200606161551/https://about.git...

I don't want to debate whether this is the best approach in terms of treating employees fairly, but it certainly seems to have it's advantages for the company - they get to save money by hiring people in places with a lower compensation rate.

[danenania]

Apart from saving money, another aspect of their reasoning iirc was that paying a single rate would create a very lopsided team in terms of geography: the company would be offering the “best” salary to employees in the lowest cost of living places, and so the incentives would lead these places to be dramatically over-represented relative to higher cost of living places. That’s the theory anyway.

I haven’t heard people in favor of geography-agnostic salaries address this concern, which seems legitimate from the company’s perspective. I suppose there are tradeoffs either way.

[throw_away]

> paying a single rate would create a very lopsided team in terms of geography

> the incentives would lead these places to be dramatically over-represented relative to higher cost of living places.

vs. the not-at-all-lopsided and equally-represented status quo, where everyone lived in the same high-cost-of-living city?

[pksebben]

So much this. I'm still hoping for the work-from-home revolution's best possible side effect: the leveling of the political playing field as safe districts get flooded with politically urban expats.

[danenania]

Unless a company limits its hiring to the US, the entire country can be described as “high cost of living” in terms of the incentive I’m describing.

Imagine a company offering a simple 100k geography-agnostic salary for an engineer. They’ll get some junior-to-mid-level candidates applying from lower cost of living places in the US, sure, and they’ll also get a lot of excellent senior applicants from India, Eastern Europe, Latin America, etc. If they hire based only on merit, they likely won’t be hiring from the US at all.

[throw_away]

Imagine a company paying people what they are worth rather than what they can get away with.

[danenania]

That’s not even close to the status quo for most distributed companies—-it definitely isn’t for Gitlab.

[osswid]

But why is this bad? Let people choose how to spend their money how they want. On geo, on food, on trips, on saving..on whatever. Pay them for their work, let them allocate their spending as they wish for their own priorities. Why does it matter where they live, or where groups cluster? Seems like a fear-driven response.

[danenania]

It's not bad in absolute terms, but to me it's understandable that globally distributed tech companies might want some portion of their workforce to come from tech hubs, or their home countries, or just to have a certain level of diversity in terms of where people are from, instead of primarily selecting for people from low cost of living places. It's not only about saving money, and I don't see how "fear" has much to do with it either. These incentives are real and could have a huge effect on the culture of a company.

[goblin89]

> the company would be offering the “best” salary to employees in the lowest cost of living places, and so the incentives would lead these places to be dramatically over-represented relative to higher cost of living places

What’s the concern here, exactly? If you’re hiring into a remote team, and you locate an employee who possesses the requisite qualifications, integrates well into the team, fits the culture, is available during the hours required, proves themselves trustworthy, etc., — just hire them. If your business is doing well, the extra calculation on whether we can pay this hire less because of where they live seems disingenuous; chances are, the savings convert into bonus money for someone in upper management regardless.

(If you’re strapped for cash—bootstrapping or not willing to trade control for investor money—chances are you’re already not offering competitive rates to residents of costly areas anyway.)

My guess is that the companies that see it as a problem either (1) don’t have a strong remote culture, or (2) are trying to compensate for suboptimal hiring practices (e.g., candidates from more affluent areas tend to possess some qualities the company wants but can’t select for directly).

[seanp2k2]

This; I’ve also heard it pitched as not wanting to inflate labor costs in other markets, but like…since when do companies care about that? It seems like an excuse made after the fact to try to justify paying people less for the same exact work. I don’t actually believe that companies are suddenly concerned with leveling the playing field and not pricing other smaller tech companies out of the talent market.

[Volundr]

> chances are, the savings convert into bonus money for someone in upper management regardless.

This has not been my experience working at the Director level. Maybe it's the lack of C in my title, but in my experience it's much more likely I find a way to save a few 100k, pats on the back are given, maybe a call out in a board meeting, then that money promptly gets allocated to another teams budget, and I'm unable to obtain raises or bonuses for the people who made it happen.

[seanp2k2]

+1 this is already being done at some large tech companies.

[throwawaysea]

It is frustrating and illogical. Why do companies think they can do this to individual workers instead of just trading money for value? Imagine if a company suggested doing this in a B2B contract - it wouldn’t work and it would look absolutely absurd:

“Oh your company is in Backcountry Town, Flyover State? Well we will pay 20% less for your widgets then.”

[throwaways885]

There's two reasons IMO.

The first is that being in-person is valuable to many companies, enough so they're willing to pay a significant premium for it. If you're remote, then you get less.

The second is that it's all about negotiation. Companies by and large have the upper hand here, and would pay much lower wages if they could. FAANGs do not pay 2-300k salaries for fun, but because of the local competition.

Software developers are finally getting a taste of what the average citizen has to deal with compensation-wise, no wonder people are reacting badly.

[aaron-santos]

> The second is that it's all about negotiation. Companies by and large have the upper hand here, and would pay much lower wages if they could.

Employee wages are roughly bounded below by the cost to keep them alive, and roughly bounded above by the profit they produce. As for leveling the playing field between labor employers, there are known strategies for pooling labor's leverage. The gap is in convincing labor that those strategies are a net positive from them. For people who think that when they are hired that they are going into negotiations on equal footing, this is easier said than done.

[tayo42]

Don't we have more competition for employers now though. That's what I don't get. I have a whole world of companies to work remotely at, judging by my inbox alot want me. They will of course have to give me a pay increase to move. this seems logical to me but not to hr departments. Or even morale, is making your employees unhappy worth 30k a year.

[jjav]

> Why do companies think they can do this

They don't think they can, they know they can. So of course they will.

And from the employee side it's not a bad deal either so many people are happy to take it. Sure I wouldn't love a 20% pay cut, but if I can get a 50% reduction in cost of living by taking a 20% pay cut, that's a large raise effectively.

[lordnacho]

But that is what happens via negotiation, isn't it? Just like people in lower cost countries can accept lower pay and sometimes do, there are firms with lower cost bases that can accept lower offers for their widgets and sometimes do so.

Inflexible entities either find someone willing to pay up or they have to find something else to do.

[CleverLikeAnOx]

Outsourcing is an attempt to do exactly that.

[reallydontask]

The British civil service has London and National salaries.

I think based on your home address but not sure.

[helsinkiandrew]

And in academia and many large companies with standard rates of pay - “London Weighting”

[kelnos]

This is already happening. Even existing employees who moved to a lower cost area during the pandemic have seen their salary cut at many employers.

[speedster217]

Yep that happened to me when I moved to be closer to family

[wrs]

“Start to try?” Many, many companies do this.