[rtlfe]

> Your pay is based on the cost to hire your replacement.

That's not necessarily true. Many fully remote companies hire from anywhere and pay location-adjusted wages. So it's a roll of the dice whether the replacement makes more or less than you.

[contravariant]

What exactly is the rationale there? Why wouldn't companies just hire the people willing to work for a lower salary?

[chrsig]

because it's not the only factor in hiring? competency and likelihood to succeed in the role does still play a role

[contravariant]

Sure, but why is a company willing to suddenly pay more for someone depending on where they live? I get that competency and likelihood to succeed play a role, but if you have those I don't see why location should play a role at all.

I'm not saying they should give more/better offers to people in 'cheap' locations, I'm saying location shouldn't influence the offer at all.

[arlattimore]

Many companies can't hire people in 'any' location due to how their legal entities are setup in different countries, how many of them they may or may not have and possible complications with tax etc.

Once you get past that basic hurdle, you might find that the company is willing to pay more because they want a given skilled worker to be co-located with the team they will be joining to increase productivity which might come at a higher price than hiring into a different location but potentially trading off worker and/or team efficiency.

[derefr]

> you might find that the company is willing to pay more because they want a given skilled worker to be co-located with the team

That's making a big assumption — that the team is in an HCOL area, such that "colocated with the team" is synoymous to "costs more."

There are a lot of companies who are headquartered in LCOL areas of the world; but still do location-adjusted pay, such that they might be paying someone working remotely from an HCOL area more than they pay the local team.

[closeparen]

Competence is a continuous spectrum. People in its upper reaches are disproportionately likely to have already moved to talent hubs where their earning potential is highest, or to have acquired their competence working at companies there (and put down roots). Because they are still in talent hubs & have access to those markets, you cannot get them for less than talent-hub pay.

So you either: a) write off every candidate who is still in talent hubs, b) pay way above everyone else's competing offers so that your universal salary is also competitive in talent hubs, or c) pay based on location.

[matt_attack]

Hence it being the cost to hire/pay your replacement not just cost to hire anyone.

[jbay808]

But this is a discussion about location-based pay, not competency-and-likelihood-to-succeed-in-the-role-based pay.

I don't think the OP would feel demotivated after learning their company pays competent employees more.

[imtringued]

Companies want to hire the best in a given market not necessarily the best in the world.

[RestlessMind]

I don't see how that contradicts GP's point ("Your pay is based on the cost to hire your replacement.")

[rco8786]

No way. No company in the world is just hiring anywhere and paying whatever the living wage happens to be at that location.