[dlokshin]

Because demand is less. The wage is still dictated by supply and demand. The supply is probably less, but the demand for that labor is far less. The demand for an engineer in the midwest is higher than the demand for an engineer in Thailand because there are less time barriers, language barriers, etc.

A house in Palo Alto, CA costs more than the exact same house in Dexter, Michigan. If they were made of the exact same materials on the exact same size of land, you wouldn't expect them to cost the same either.

[nanidin]

I don't think the house comparison is a good example - a house in Palo Alto can only be utilised in Palo Alto. A remote worker could work from anywhere and produce the same output, regardless of location.

Pay levels based on location seem like a good way for companies to "save" money by providing a convenient excuse to pay someone less for the same work.

[hga]

When you factor in the cost of living it's not an "excuse".

If, after the obligatory expenses like housing and food, the employee has more after tax dollars to spend on whatever he wants and in many ways a higher quality of living (better housing, better control over crime although that's looking to change WRT California, etc.), is he getting cheated as you imply?

I've lived in the Boston area and the D.C. area for a dozen years each, and have now moved back to my smallish home town in SW Missouri ... the differences are staggering.

Look at imroot's policies: https://news.ycombinator.com/item?id=7568217

Officially the same pay, but the people in California get an extra 1K/month for their higher living expenses. Heck, the Federal government does this for civil servant compensation.

Flip side: if the company is nasty, it'll tie up it's outside of California employees with non-competes---although that could be a bit tricky, given that it would get no support in the California state courts. How would you establish jurisdiction in the employee's home state?

[vonmoltke]

That is correct. I, living in Dallas, am willing to sell my labor in Dallas for a lower price than I am willing to sell my labor in Palo Alto. Thus, a company in Palo Alto can save money by hiring me in Dallas to do the job. There is nothing inconsistent about this.

[nightski]

Price should be based on the value you are providing to your clients/employer. Not your expenses.

[bane]

If only the price of my house was based on the value I provide my employer.

[nightski]

What does this have to do with anything? The amount you paid for a house is based on it's value to you. Same as your employer and it's employees. I live in the midwest - a cheap place to live. But I charge SV rates because of the value I provide my clients. I don't have to charge "less" because I live in a cheap area. It is irrelevant.

[dlokshin]

I meant it in this sort of comparison: if you uproot the house, and drop it in Palo Alto on the same size plot of land it's worth more. If the programer gets up, and moves to San Francisco, his labor is also worth more. Same person, same house, different demand (and supply).