This is one of the things that's always bothered me.<p>Let's say you hire me for your company in San Francisco and pay me $150K. You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value. In other words, the company will (eventually) make more than $150K per year off my contributions to the company.<p>But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of "cost of living".<p>Why? My value to the company hasn't changed! I am still <i>worth</i> the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company?<p>As remote working becomes more and more acceptable, we're going to start to see companies like Twitter and Facebook competing nationwide, not just in Silicon Valley. An engineer in Oklahoma will now be in a market that includes all of the big giants, and not just the local banks or whatever. Likewise, Twitter and Facebook will be competing against each other in the lower COL areas like Oklahoma! And not just SF startups, but competing against NYC and London startups as well.<p>This whole area is really fascinating to me, but the "you get paid differently depending on where you live" thing has always struck me as bizarre and one-sided in favor of the businesses and not the people in high demand, like good software engineers.
People should be warned that working remotely has been career suicide for as long as I've been in tech.<p>Being "out of sight, out of mind" from management generally means you're passed over for promotions, and often the first to get cut during layoffs.<p>It's just human nature. It's easier to layoff the person that's been working from across the country (or another country) than it is to layoff the person at the desk next to you that you've worked beside for years.
This shouldn't come as a surprise to anyone who knows the general compensation strategy for all the major tech companies.<p>They don't pay based either on value added or cost of living (which is why compensation is higher in the Bay Area compared to London).<p>They pay based on market rate where the target is something like 95th-percentile based on market surveys they do. Presumably this hits some sweet spot in acceptance rate vs cost. Employee compensation is a <i>big</i> ticket item for these companies on the balance sheet so they're highly incentivized to put a lot of thought into their setups.<p>Additionally if we truly go fully remote salaries will almost certainly go down just looking at the supply change alone. Previously these companies only hired<p>* A) People who met the hiring bar<p>* B) People who were willing to relocate to one of office location<p>If you remove B you've massively increased the available talent pool.
We're a remote-first company and went through this same discussion when we began hiring people in different cities, not just in the USA but all around the world. What we found is that any approach to setting salaries has to balance the following factors:<p>* Pay people enough to live comfortably<p>* Pay people enough that they accept our offer vs competition<p>* Pay people in a way that feels fair<p>* Pay people in a way that is transparent<p>* Pay people in a way the company can afford it<p>* Pay people in a way that there isn't a risk of huge fluctuations (e.g. currency fluctuations)<p>Without a doubt the best solution is to pay every employee as if they live in San Francisco, what we call "single-city." That gives high marks on every dimension above...except that it's extremely expensive for the company. Basecamp.com can afford this but I doubt most companies can.<p>We ultimately went with a formula where we look up the average salary for your title in NYC (the USA's most expensive city), multiply it by some multiplier (to make sure we pay systematically above market), and discount it by the cost of living in your city compared the cost of living in NYC.<p>When we can afford it, we'll move to a single-city model based on San Francisco.
I've been mostly reading the WFH debates here on HN and this seems to have come as a shock to many advocates. You know, companies already had offices in different places you could already move out of SF to elsewhere and this was part of the deal. This isn't anything new, there was never the option of taking your Bay Area salary and living it up in Laos.
Many comments have pointed out that pay is determined by the cost of replacement.<p>For employees at an office in SF (or Seattle or NYC or London or anywhere else), the relevant cost is how much they have to pay to get someone else in that same city. Hence, for non-remote workers the pay has to be high in high cost of living places.<p>Many people seem to think that when the same principle is applied to remote work, that means the pay should depend on the cost of living where that particular remote worker lives.<p>Is that actually the correct application of that?<p>If a remote worker in, say, Tulsa, OK quits and the company wants to replace them with another remote worker there is no reason they need the replacement to be in Tulsa, OK. It should be fine from the company's point of view if the replacement lives in Boise, ID (which has a lower COL than Tulsa), or Salt Lake City, UT (about the same COL as Tulsa), or Spokane, WA (higher COL than Tulsa).<p>So why should they offer more for workers that happen to live in Spokane, about the same for those in Salt Lake City, and less for those in Boise?<p>It seems to me to make the most sense from the company point of view to consider all remote workers to be essentially in the same location, and how much they pay should be what it takes to attract the number of qualified remote workers that they want to hire.
Cue to the horde of new startups that will be 100% remote and eat Zuckerberg's lunch.
Remote will be the new open space, with all the buzz words, feel good stories and even the blind eye towards its obvious defects.<p>Seriously, everything is documented, you can grow without worrying about floor space, you get access to a larger pool of talent, you are probably imagining more.<p>Current managers may not like it, but hey it is okay to be old, leave it to the young to innovate.
This is no surprise, I commented earlier on this with another company but figured I can re-use it here:<p>Both me and my Wife's company have pay bands based on geographical region(most employees know nothing about this and most companies employ these salary COL changes for relocation) and certain regions you can take a big pay cut. Say your salary in the bay area is 100k for example, move to the South, say Florida and it typically drops 30%(typically as low as they chop your salary) so your new salary is 70k, Denver area is 15% paycut etc. These numbers change somewhat from company to company but they do exist for most companies and should be factored in.
Facebook and Palantir both used to pay people up to $10k/year to live within a mile or so of the office, since the cost of living in SF & Palo Alto & Menlo Park was <i>so</i> much higher than the rest of SFbay. I don't know if they still offer that perk, but I can attest that the increased costs of rent within a mile of those offices would, at that time, burn up that entire $10k and then some, relative to the rest of SFbay.<p>Are they right to do this, given that it's probably a contributing factor to increased rents? Probably not. But I bet it was negotiated with the cities to try and reduce emissions and parking requirements, too.
In other words you can work remotely but stay close to home base? Imagine how a Facebook developer could live in a place like Detroit or New Orleans?<p>Have you seen the house you can buy for under a $1 million in Detroit!<p><a href="https://detroit.curbed.com/maps/most-expensive-homes-sold-detroit-2017" rel="nofollow">https://detroit.curbed.com/maps/most-expensive-homes-sold-de...</a>
Always two sides to the same story. As a software engineer, of course I think I should make the same regardless of I'm on-site or remote. As a founder, of course I'm not going to pay someone who works on-site vs. remote the same. It's a never ending debate.
I have a job in a tech center and I make a great salary because of competition for my services, in NY or Seattle or SF or where ever. Right now I'm working from home entirely. If I'm in Seattle and I work from my cabin 100 miles from Seattle, no one will know assuming I have internet. Taxes are the same too afaik (no local or state taxes). Presumably this is okay with everyone.<p>How much working away from my supposed seattle job (that doesn't even exist right now) do I get before I am not working in Seattle?<p>Suppose I saved so much money from my seattle job that I bought a weekend condo in another state, in Oregon. If I go there many weekends, I think I can still keep my seattle lifestyle (there's some matter for the oregon tax court to decide I guess). But am I still "working in Seattle"? Now suppose I go from my cabin near Seattle to a cabin on the other side of Washington state. Or I go spend 40% of my time in my Idaho cabin (boy, I have a lot of cabins, they are so cheap with my Seattle salary ;-)). When do I stop being a Seattle employee and become a whatever employee?<p>If I have 3 houses in states with the same "no income tax" like in Seattle can I live 51% in Seattle and split time in the other places and still be a seattle employee? Obviously I'm trying to point out the arbitrariness of these policies.
I've been getting paid SV salary to work remotely for SF/SV companies for a while now. This is just companies treating engineers as a cost center - showing true colors.
I mean, it's not something that isn't expected. I also think it's fair in a way.<p>I'm curious to see how many engineers will be interested. For example there is a company, quite famous, already known for the remote working that wanted to make me an offer, but it implied me opening a company in my country so that they can pay me because it was to complicated to have me directly in the payroll.<p>What I mean is that the law is still not prepared to support this worldwide.
This feels like a "welp we need to cut some pay, let's see who takes the bait".<p>Cost of living should not dictate your value to the company. If you're an engineer supporting x number of users worth y dollars, it literally does not change what you bring to the table whether you do the job in SF or Birmingham.<p>Yes, they could hire cheaper in Birmingham, but they can't hire _you_. If you have a proven track record of doing incredible work, then you should be paid accordingly. What you pay in rent/mortgage/etc is none of the company's business.<p>I would argue that if you're a SWE and you go along with this, you're complicit in the wage fixing that this industry has had to grapple with for ages now. Demand to be paid what you're worth or walk.<p>(And yes, I get that some people can't afford to be choosy. Those of us who can, should be, though.)
<a href="https://news.ycombinator.com/item?id=23261394" rel="nofollow">https://news.ycombinator.com/item?id=23261394</a> in the other thread, there are a myriad of people thinking that there won't be.<p>Excitement about moving to Iowa while making 150,000 was very premature.
An interesting thing about Facebook comp thus far has been that their pay bands for engineering were the same across the United States assuming wherever they had an office (unlike other large companies like Microsoft and Amazon). For reference check out <a href="https://www.levels.fyi/company/Facebook/salaries/Software-Engineer/" rel="nofollow">https://www.levels.fyi/company/Facebook/salaries/Software-En...</a>. Pay cuts would come as a pretty hefty change to those who have already moved or relocated.<p>At the same time, this is now an employers market. With remote work taking stride, pay cuts feel inevitable – why would companies pay top dollar for talent they have broader access to and who are willing to accept less. We'll have to wait and see how new offers start looking come August.
The thing about remote work is.. it could become a global marketplace now for talent.<p>The big companies could get to off-shore again in a global remote-first re-jigging.
All the justifications of "salaries are just supply and demand" are evil to me (not that I'm saying facebook's choice here is evil). Yes, they'll often pay you the least they can get away with. They'll also treat you as badly as they can get away with.<p>Treating people as badly as you can get away with is <i>not</i> good, even if it's a natural product of supply and demand.
I suspect that eventually we may see a realignment to "utility" based pay rates as opposed to location. The old rates of SV may wind up their own tier in Work From Home who can demand that rate successfully.<p>Of course that depends upon proper judgement and valuation of employees and prospective employees.
If this is a leading indicator that remote work is going to become mainstream, I am anxious at the prospect of new grads / junior engineers' ability to get their foot in the door.
The Administration owns the land and property. They need the high salaried employees to stick around town to pay the exorbitant rents.<p>I hope that helps tie things together for you.
Companies that sells Hardware sell it at the same everywhere despite the cost of living.<p>Why isn't this the same for employees? We need to call out this bullshit.