[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.