[patorjk]

> The company set up an internal calculator for workers who left the expensive areas of San Francisco and New York to calculate how much their pay would be cut if they did not return

If you moved based on what the calculator said and then they cut your pay that's pretty messed up. I don't think the workers should expect to be paid the same as higher cost of living areas, but transparency in how these calculations are made should be available to them (especially if the rates can change year-to-year).

[abofh]

> I don't think the workers should expect to be paid the same as higher cost of living areas

Why not? You're paid to create value for your employer. If (and let's handwave and say if) you're creating the same amount of value in location A as location B - why shouldn't _you_ get to pocket the difference in the cost of living?

I'm all for arguing about value creation by having spontaneous meetings and interactions that are easier when people are relatively closer together - but cost of living should have no bearing on what an employer compensates you for my labor - your ability to create value is literally the only thing that should matter.

[ketzo]

To play devil's advocate: someone who is in NC (or a lower cost-of-living area), if they're paid the same as someone in the Bay Area, is effectively being paid more for doing the same work.

Their purchasing power is significantly higher; their dollars are just worth more. We're not talking small amounts, either – a difference of 25% or more in purchasing power is easy to find when you're comparing CA to the South. [1]

So, when you look at it like that... why shouldn't Google pay less? Even a 10% pay cut would amount to Southern workers still making an effective 15% more than their Bay Area counterparts.

Again: I'm playing devil's advocate here. In another comment on this thread, I totally agree with you: the argument of "same work, same pay" is very hard for me to dismiss, and I really don't have any argument against it. I just think there are very convincing arguments in both directions.

Edit: another counterargument for anyone who is stridently in the "same work, same pay" camp: What if you were working at a job in North Carolina, and your company told you that you needed to move to New York in order to keep your job, and they weren't going to give you a pay raise? Do you still feel that "the same work deserves the same pay"?

https://taxfoundation.org/real-value-100-state-2019/

[fennecfoxen]

> To play devil's advocate: someone who is in NC (or a lower cost-of-living area), if they're paid the same as someone in the Bay Area, is effectively being paid more for doing the same work.

They're paid the same in fact, they just spend it poorly (on expensive Bay Area real estate, mostly, but also other services the area makes more expensive.) Why should Google help subsidize SF Bay Area real estate? Historically, the answer is just, "because so many employees are here and we like them here", but will that cut it going forward?

[ketzo]

> they just spend it poorly

What are their other options? It's pretty hard to work in the Bay Area and not spend money on Bay Area real estate. Remote work notwithstanding.

Yeah, yeah, avocado toast and Teslas, etc. etc.; but you can't argue that simply being a human in San Francisco costs more than it does elsewhere, lifestyle aside.

[fennecfoxen]

One other option you may have noticed, as key to the purpose this thread, is to work in North Carolina, and not in the Bay Area.

[ketzo]

i.e. move to a place where their dollar goes further, so that they are effectively paid more.

The argument that "the same salary is worth more in NC" is still pretty convincing to me.

[TheDong]

It's true that a dollar is different to a different person, but I don't buy this argument.

To google, who is paying its workers, the dollar is the same no matter where you work, if you're working remote either way.

> someone who is in NC (or a lower cost-of-living area), if they're paid the same as someone in the Bay Area, is effectively being paid more for doing the same work.

Yes. This is true. Also, someone who lives in a small apartment and doesn't own a car is paid more, even within just the bay area. Someone who has a child and pays for childcare, or a parent in a nursing home that they pay for, is getting less purchasing power for the same salary.

The cost of living varies by location, but also by lifestyle, life circumstances, and many other things. What things do we change it for? The exact same argument you make above could be used to argue that we should pay workers with a child more, workers with college loans more, or workers who choose to live in downtown SF vs the outskirts of oakland more.

On the other hand, making the pay identical for the same work done, irrespective of life circumstances and location, is straightforward and has none of these weird questions associated with it.

[ketzo]

I don't think your argument quite works in this case.

> Someone who has a child and pays for childcare, or a parent in a nursing home that they pay for, is getting less purchasing power for the same salary.

This is not what purchasing power means.

It's true that different people have different lifestyles and different costs of living, but even given that fact, different areas simply have different purchasing power outside of that.

To be a little clearer:

Bay Area worker A lives in a 1BR apartment with no car.

Bay Area worker B lives in a house with a kid.

A and B have different costs associated with their lifestyles, but their dollars go just as far. A just has more money left over. If A has a kid, or decides to get a house, they will end up in (roughly) the same situation as B.

Meanwhile, North Carolina worker C lives in a 1BR apartment with no car. They have a lot of money left over.

But if C decides they want a house and a kid, they will still pay less than B does, and less than A would have to pay to upgrade.

Do you see what I'm getting at? Workers in a lower-cost area simply get more for their salary, independent of their life choices.

[TheDong]

> Workers in a lower-cost area simply get more for their salary, independent of their life choices.

I would argue that where you live is about as much of a life choice as whether you have a child.

Is "I live in oakland vs downtown SF" a life choice, or is that independent of life choices? That seems like it has the same tradeoff more or less as living in SF vs NC, but doesn't have a change in pay because it's "close enough" to SF still.

> different areas simply have different purchasing power outside of that.

I agree that avocado toast is $15 in SF and $8 in NC, so you do have different purchasing power. This applies less and less to stuff though. The latest PS5 or a month of a c5.xlarge AWS instance for your side project or month of netflix all cost the same no matter where you live.

Why do we care about the cost of living wrt location though, and not wrt any other factors? I choose to live in NC, so things cost less. Why pay me less?

I didn't choose to have some illness that maxes out my deductible each year, but I get paid the same total amount as my coworker without this illness, and thus my effective salary is lower. My cost of living is higher because of this immutable characteristic (a health problem), which is far less a lifestyle choice than where I live.

There are many factors that change the effective value of a dollar to a worker, and it seems quite weird to care about location only, and nothing else, from the perspective of "fairness".

To be clear about my opinion as to why this happens: I don't think this is actually about CoL or financial fairness, as you seem to espouse. IMO, it's entirely about competing with other companies for the same talent pool, and those other companies currently being either local, or also doing CoL adjustment. That's the only thing that makes sense (that it's done because everyone does it). This also neatly explains the Oakland/SF split being different than the SF/NC split.

[CogitoCogito]

> To play devil's advocate: someone who is in NC (or a lower cost-of-living area), if they're paid the same as someone in the Bay Area, is effectively being paid more for doing the same work.

Would you apply the same reasoning to two people both living in the Bay Area? The cost of living of different people in the same area isn’t the same. Should Google decrease your pay if your mortgage is lower than your coworkers’?

[gwern]

> To play devil's advocate: someone who is in NC (or a lower cost-of-living area), if they're paid the same as someone in the Bay Area, is effectively being paid more for doing the same work.

"Erratum: Utility Monster Georg, who derives trillions of utilons from every dollar paid and accounts for 99.999% of our compensation expenses, was an outlier and should not have been included in our HR planning."

[ketzo]

this is killing me, is this is reference to a webcomic? maybe xkcd or smbc?

[gwern]

https://knowyourmeme.com/memes/spiders-georg

[aidenn0]

The fact that not all remote workers live in low cost of living areas implies that there is some additional value to living in SF vs NC.

Thus the workers in SF aren't being paid less, but choose to spend the pay on the bay area lifestyle

[ghaff]

Well, there's some stickiness to locations. Partners, children in school, social networks/family, even just liking the area (which I can see in the case of the Bay Area versus many LCOL areas notwithstanding the cost).

I live in a moderately HCOL area--although not in a particularly expensive part of it--and have no desire to move for essentially a one-time moderate windfall.

[aidenn0]

If enough people "just like the area" then the HCOL has priced in that fact.

I'm in a HCOL area because my in-laws are no longer fully independent, so I get that this isn't everything, but I would suggest that a lot of bay area residents are there because they either like the area directly, or like the opportunities living there affords, in which case the HCOL is justified.

[zelphirkalt]

It all depends on how specific one sees the statement of "paying for value created". One could also argue as follows:

If an employer wants the work done _from and in location X_, the location is part of the value created. If they want employees to work in location X, then they will have to pay according to location. If employees decide by themselves, that they want to relocate, assuming that remote working is possible, or that the employer has offices in the new location, then that is their own decision, with all the consequences, including getting more or less out of their wages in the end.

[UncleMeat]

But it isn't based on Cost of Living.

Somebody working in Raleigh-Durham is paid considerably lower than somebody working in "Remote-NC." In fact, the Raleigh-Durham office currently pays the least of any location in the US because their equity calculations are also affected.

[s3r3nity]

> You're paid to create value for your employer.

This pretends that there isn't a market for labor, with its own supply curve.

For example, the relative value you generate is not enough to value your wages. Else Marketers and Sales teams would make MUCH more than engineers. But for a given level of quality, there are a lot more marketers that can do as good of a job, and the elasticity is low (e.g. skills are "easy to learn" or develop in a short time frame) - hence why marketers tend to be paid lower than the average engineer with same level or years of experience. In the latter case, engineers are in short supply and supply elasticity is high (you can't just move from barista to engineer overnight.)

[lotsofpulp]

> why shouldn't _you_ get to pocket the difference in the cost of living?

When I pay $x for something, I pay $x because I am betting I will not be able to get that something for less than $x. If I think circumstances have changed and I can now get that something for less than $x, then I will try to get that something for less than $x.

I might fail, or I might succeed, but at any given time, it seems prudent for me to be shopping around for the best price for me.

I assume others also behave in the same manner.

[takk309]

Can't the reverse be argued? Why should they pay you more than the value of your work just because you live somewhere expensive?

[muro]

The company doesn't pay cost of living, but cost of labor. Living in an expensive place doesn't imply high salary (case in point - London). Thus, if another employer pays better, people leave and your current employer needs to pay accordingly. If none pay better, what option do you have?

[jbay808]

For a real example, one of my friends worked at a FAANG in Vancouver. When he asked for higher pay, the FAANG told him he would need to move to Seattle or else, by internal policy, they wouldn't be allowed to pay him more.

So instead of working-from-home in Vancouver, he moved 200 km south to work-from-home in Seattle, and now they pay him more. (Cost of living is lower, too.)

Strange, if you ask me.

[jjav]

> You're paid to create value for your employer.

Not quite. You're retained to create value for the company, but you're not paid based on that value. You're paid based on what it takes to keep you there and not quit. In some (many?) cases that may be far lower than the value you create.

[pandaman]

When you buy something expensive, do you search for a deal, maybe look for another vendor with lower price, or pay the maximum price you can find? If former, then why do you do this, you are going to get the same value from the goods so why pay less than possible? If latter, then I'd like to help you - anything you want to buy I can offer at 3x maximum price you could find, guaranteed.

[sleepydog]

I don’t think employers should adjust for cost of living. But I do think that As long as remote work is not universal, an employer in location X will have to compete with other employers in and around that location, in pay, benefits, or otherwise.

[lhorie]

> why shouldn't _you_ get to pocket the difference in the cost of living?

I mean, the logic clearly doesn't work because if you instead ask "why shouldn't the employer pay the same low salary in both locations", the argument immediately goes right back to cost of living being different. For the argument of pay correlating to value creation to hold, it must hold in both scenarios, not just the one you happen to like more.

This goes further than tech salaries. By all accounts, the people in a factory that built the device you're using to be on HN right now should also be paid bay area level figures since they clearly are a very important part of the supposed value creation you're partaking in. But if they did, your computer would cost $500,000 instead of $5,000. And your shoes would similarly cost a fortune, and probably your mangos and pretty much everything else too, which is effectively the "low" salary scenario I brought up above, except with more zeros on the right side of the price tags. So something's gotta give, and taking the pay-for-value-creation argument to a logical conclusion frankly doesn't seem all that appealing.

[danaris]

(Disclaimer: No real numbers were harmed in the making of this post.)

If an employee doing Job X in San Francisco is worth $500k/yr to Google, then paying an employee doing the exact same job in NC $250k/yr because the CoL is lower there is padding Google's profits at the expense of the second employee—and, indirectly, all employees in the sector, because that depresses market rates.

As I said in another post, I don't care about what's "efficient", or what makes Google the most money. I care about how they treat people.

Google and its execs would not have their lives change in any meaningful way if they were to pay everyone who does Job X the same that they have to pay to attract people to that job in the Bay Area. But it might change the lives of some of their employees, and of employees of other tech-sector companies, if they were making an extra $100k, $50k, or even $10k/year.

[lhorie]

> at the expense of the second employee—and, indirectly, all employees in the sector, because that depresses market rates.

It feels a bit out of touch to say that when they literally do make top-of-band salaries compared to other local companies even after pay cuts. As others have brought up, $250k in NC is pretty darn good pay.

We're not talking about a company squeezing out their janitors where an extra 1k/mo might mean they can quit a second night shift job or afford insuline or whatever. We're in "I want to be able to afford a Ferrari instead of a Tesla" territory. And I don't think I'd be alone in thinking that the latter is harder to sympathize with.

Your argument boils down to "pay me more", and I already took that to its logical conclusion: yes, of course you want to be paid more, get in line. Everyone wants to be paid more, but if that happens, then through the magic of inflation, everyone loses. What people really want is to be paid more while everyone else doesn't, because that's the only way that they get to keep the purchasing power of their money. And forgive me if this is too brutally blunt, but that's just selfishness masquerading as social justice.

[UncleMeat]

I think that most of the complaining about location based pay at Google has been dumb, but this one is actually people getting screwed.

Folks were initially told one number and then it was adjusted to a much lower number. They were the only group in the US that had their equity refreshes adjusted down. And people working at the actual research triangle site are paid a lower rate than people working remotely in the rest of NC, which has a lower cost of living than Raleigh-Durham. The people at the Raleigh-Durham office are the lowest paid engineers at any location in the US right now. Lower than "middle of nowhere Montana."

[khc]

from the article, google isn't lowering anyone's existing pay, but is lowering future new stock grants

[UncleMeat]

Entire teams were relocated to the Raleigh-Durham area. People were told that they'd get a 15% pay cut to salary but instead got a 25% cut to both salary and equity refreshes. No other location in the country was cut in this manner.