[ehnto]

I don't disagree that it's silly but the common misconception is that salary is based on some kind value exchange, it's not. Salary is the minimum amount of money it will take to get someone to work for you. Of course there are exceptions, but most salaried workers are not the exception.

Maybe that price gets driven up because of HCOL, or maybe it gets driven up by market competition, or skills scarcity (putting the employee in a position of bargaining). But it also gets driven down by the opposite effects. In the global market there are people with lower costs, lower market competition, but the same skills, and they are going to accept a much lower amount.

Take insane wages in SV as a great example, HCOL causes people to not accept lesser amounts, as does market competition. The fact that someone is getting paid more in SV is not because they add more value, it's because they won't accept any less.

[ithkuil]

And cost of living is also driven by how much local industries can pump up the salaries.

In a way it's a system designed to extract the most of the value generated by a local industry, "taxing" it at every layer, first you give some money to a engineer that then has to part a good chunk of it for rent and then even plumbers get their cut (who in turn spend it elsewhere), etc.

The key insight here is the word "local" in "local industry".

As the industry itself starts to be less local, this mechanism breaks down.

[stavros]

People making this argument forget it works both ways. Why would I go to the company that does COL adjustments and pays me less than the one that doesn't?

[ehnto]

That still works in the worldview I laid out, because you simply won't accept less. I guess part of my point was that it's not a bout COL specifically, it's about how low people in the market are willing to accept. If you have high COL you simply can't accept less, and if you have low COL but are in a spicy market, you don't have to accept less if you don't want to.

[stavros]

Sure, but I can replace "high COL" in your sentence with "like to drive Ferraris" and it is equally valid, and I don't think anyone will claim that the employer has to pay for my Ferrari affinity.

[rchome]

If you absolutely must get paid in Ferraris, you can go ahead and reject any job offers which don't offer them. However, the market of labor which must be compensated with Ferraris is non-existent, so employers don't have to offer this benefit to compete for talent. Everyone has a COL however, so employers do need to adjust for it to attract employees in a given location.

[jstx1]

> Why would I go to the company that does COL adjustments and pays me less than the one that doesn't?

All other things being equal, you don't have a reason to accept a lower offer but that's completely separate from the question of COL adjustments. If the best offer you get is from a company that has a COL adjustment policy, well... that's still the best offer that's available to you.

[stavros]

I agree that it's completely separate, but I didn't make the argument, others did (on the demand side). I'm merely rebutting it.

[LAC-Tech]

It has nothing to do with cost of living. At all.

I live in New Zealand, cost of living here is insane. Local salaries are not.

[checker659]

I live in Kathmandu, Nepal. Same here. A cousin of mine in Seattle bought a similar sized home for less than what one of my relative spent in Kathmandu.

[ihateolives]

Care to elaborate, share some details? This is really interesting comparison. What does N amount get you in Seattle and what in Kathmandu? How about other things, is this for general COL or just real estate? Because real estate prices often have life of their own, not always tied to, say, price of bread.

[LAC-Tech]

Americans really don't know how good they have it.