Remote work threads have been the biggest cliché of HN since the pandemic (and were one of the bigger ones already), and arguing about location-based salaries has been the biggest cliché of remote-work threads lately. So normally this follow-up post would get a moderation downweight (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...). But I'm lessening the downweight because it seems to me this bit may count as SNI (Significant New Information):
Employees who attempt to wiggle around those compensation adjustments will be subject to “severe ramifications,” [Zuckerberg] said, as the company needs to account for employee locations to avoid violating tax laws. Zuckerberg said Facebook will monitor adherence by checking where employees access its VPN. Facebook also uses its own apps' to track employee locations, according to CNBC [...]
This is a very subjective thought experiment and I'm sure you could make all kinds of arguments against it but here goes...
Imagine person A lives in an area with a high cost of living and gets full salary. Person A is able to purchase a house at a high valuation relative to the national average. Person B in a rural area is able to buy perhaps as nice a house on a smaller salary in a below average market.
Now look at the options available to these two people when they want to move. Person A sells at market rate or perhaps a little below and can move to a lower cost of living with a relatively large pile of cash. Person B has no such option. The real estate market arbitrage is available to person A and not to person B.
The salary of person A looks like it produces options and upward mobility. The salary for person B seems to have more limitations.
Yep. With these "cost of living adjustments" it's almost always a better move long term to live in the higher COL area, especially if you are living inexpensively and saving the vast majority of your money. I save more per year than I would gross working as an engineer near my hometown...
Although I will say, person B in your scenario has potentially more upside on their housing equity, and they do potentially get a higher standard of living short term. Of course, there are aspects of standard of living such as public transportation, good public schools, people in your area you'd like to date/be friends with that person B may not be able to buy.
99% of the things I want to buy are dirt cheap. The other 1% are expensive to the point where they are unaffordable for almost everyone. Think about something like a $120k 3d metal printer. Those things are actually possible to buy if you move to SV.
I’ve done the budget calculations based on my own personal spending and found that outside rent, the majority of what I spend money on costs essentially the same no matter where I live (if you normalize out taxes).
In the US, state and local taxes can cause a huge variance. Certain states are in debt for multiple tens of thousands of dollars per taxpayer more than other states, and those taxpayers will have to pay far more for debt service.
This whole FB thing is actually more nuanced than people talk about:
1) It's only for senior engineers
2) US only right now.
Essentially, this is a play to increase senior retention. California is pretty much unaffordable for most people who weren't pre-IPO or very good at saving.
Therefore, the trend is for more senior people to leave, and move to cheaper places. By allowing remote for seniors, FB have a good shot at keeping people for longer, which is incredibly important for large engineering driven tech-co's as the churn in tools/frameworks/approaches is really high, and keeping people who remember Tool version -2 is super high leverage when they come to consider tool version + 1.
I've always assumed these companies liked the senior rotation in order to keep seniority (and wages) lower. It also likely has the effect of keeping average age lower, which would make for an interesting disparate impact lawsuit.
I foresee the bar being raised for those wanting to enter a high COL city in the future. I’m already noticing an emphasis on companies wanting to hire more outside of the Bay.
This is absolutely 100% true. And people considering the pros/cons of high COL+high salaries vs low COL+a lower salary should very much consider this when making their choices.
And it's not just about the cost of housing. That $1000 phone you cary: it'll be a higher % if your salary if you go for the latter choice instead of the former. Same thing for many many other purchases you will want to make.
I find that people don't think about this enough. To their detriment.
Bingo. In a high COL area, you have the option to retain a significant surplus of your exchanged labor if you trade off COL for inconvenience, which adds up to compounding gains over time. And as your thought experiment proves, the real move is to relocate after a substantial tranche of that money has been earned, at which point the lower earnings are no longer as much of an issue.
Another way I've been thinking about it over the past few days is that this also makes side project optionality significantly more attractive. If you can make a side project that makes XX% of your BigCo T1City pay, the point at which you're making top 50% percentile low COL MRR could become significantly lower than if you planned on remaining at that BigCo in BigCity forever.
I agree, but want to mention another variable that throws a wrench into things:
The longer it takes for one to accumulate that substantial tranche, the more entrenched they become in their home city (family, friends, community) and the more challenging it is to move.
Looking at average sales values from the low point in ~2010 and today's high, there's about a $700k difference (looking at SanFran city).
So, yeah, if you timed perfectly on an average house or higher, you'd have $200k+ of income to report. But, anybody who bought an average home within 5 years is going to be below the $500k threshold.
Either way, you still walk away with $500k tax-free. Which is still a massive pile of cash by any measure, contrary to the post to which I responded.
Traditional economic theory should handle liquidity in pricing.
That is it would be a weird market where prices were artificially high for houses you couldn’t sell quickly. The price would just lower and the rent should follow.
I’m experienced enough to believe markets don’t follow traditional models, but in this thought experiment at least liquidity isn’t an interesting new unknown variable.
Here's a thought experiment. Let's say an employer is based out of downtown San Jose, and employs people on-site. Would it be reasonable for them to adjust salaries depending on what city an employee lived in? The average rent for a one-bedroom apartment is $3,291 in Mountain View, but $2,390 in Morgan Hill. If an employee moved from Mountain View to Morgan Hill, would the employer be justified in reducing the salary of the employee to adjust for the fact that the (on-site!) employee now lives in a lower cost-of-living area? (Let's assume that other CoL factors are not more expensive in Morgan Hill than Mountain View, which I feel is a safe assumption).
Would it be justified if the company was fully remote?
What about if the employee moved to Sunnyvale? The average rent is $3,016; a smaller difference, but still cheaper than Mountain View.
To answer your thought experiment: salaries aren't dictated by justifications or fairness.
Silicon Valley firms don't pay high salaries because employees have to pay a high cost of living, they pay the high salaries because if they don't, some other company will pay it and the employee will leave.
They pay the salary that they need to get people to come work. The cost of living is an OUTCOME of this calculation, not the input. The CoL is lower in Morgan Hill because people living there have to commute further to get to their jobs, so fewer people want to live there. You can figure out the price people put on commute distance by comparing housing prices based on distance from work sites.
The really interesting thing will be to see how CoLs in the country change when commute distance is no longer a factor in home prices.
I don't think they are going to need it, because the actual problem is going to be the opposite; this will drive down developer salaries. Having to be local to Silicon Valley really limited the supply of good developers; only so many people can physically live in the area, so increased demand can't be met with increased supply indefinitely. This drives prices up. If everyone is remote, suddenly the supply of available developers goes way up for these firms. The supply of developers available to them goes way up. Sure, they have to compete with firms everywhere in the world now, but that is fine for them; the global market is not nearly as strong a seller's market for developers as it is in Silicon Valley.
I'm not sure that the example is similar to the current topic: rent is cheaper than Morgan Hill largely because it takes an hour to drive to lots of workplaces. People are choosing between paying higher rent in Mountain View and paying with their commute time in Morgan Hill.
It's arguably a different scenario from someone attending VC from their $400K, 5-bedroom mansion in Raleigh, NC.
But that's also sort of the point, isn't it? When you are dealing with a remote worker, the commute time doesn't matter. You don't need to consider paying geographical based salaries, because the location isn't relevant. There is no "paying with commute time."
You just need to pay the amount that enables you to get the workers you need. The "fair" thing to do is to pay people without regard to location and let them decide for themselves whether it is worth it to live in a HCOL area or not.
Well, in an ideal, completely efficient market for remote workers, of course the "fair" thing to do is to pay for enough salary to hire the best people in Prague or Bangalore. People can decide whether they want to live in San Francisco with that salary. Most people can't, so naturally there will be a diaspora spreading out to low-cost areas, and rent in SF will drop until the area can be "competitive" again.
But this dry description involves a ton of economic/social upheaval, which we (the society) really wouldn't like to deal with, especially right now. (Not to mention a "completely fair market" is an illusion: you can't just fire your entire team on the bay area and hire replacements from Bangalore.) So a compromise is reached, where companies try to keep people they have now at roughly the same price they're paying now, with ugly, stop-gap measures to dissuade people from getting ahead of the equation.
I'm not saying we should thank Facebook - it's behaving completely in its own interest - but people who complain that this isn't "fair" might want to answer what's their position on the logical conclusion of a "fair market" for remote workers.
Right, but they know they don't have to pay that remote worker as much to keep them, because that remote worker doesn't have as many options with where to work... or at least, that was the case before EVERYONE became remote workers.
Companies always pay as little as they need to in order to retain the talent pool they feel is required to do the job they want. They aren't going to pay someone more than they HAVE to out of fairness.
If all companies are remote and competing for workers everywhere in the world, you will see geographic salary discrepancies disappear... slowly.
> You just need to pay the amount that enables you to get the workers you need.
That depends on where these workers already live or are willing to live. You can't get enough applicants from Silicon Valley if you pay too little, you get way more remote applicants than you need if you pay too much.
> The "fair" thing to do is to pay people without regard to location and let them decide for themselves whether it is worth it to live in a HCOL area or not.
That's just not how pricing works. If I can work from anywhere without even having to commute, I'll be willing to do that for far less money. I don't think that's unfair at all, after all my quality of life will be as good or better.
What I don't get about these ideas is that isn't the factor "how much do you need to be in the office?" If you don't need to be in the office, why not just keep salaries the same and then you select from a larger pool of candidates (this should give you a pretty good pick, but you're still limited by when waking hours overlap).
If you only need to be in the office once a month, dock a little as now you have to cover travel and lodging.
It really seems like the factor of pay should be based on how important physical presence is, not on where the person is. Because otherwise I don't see it as a rational thing for a headquarters to be in SF and an employee in Arizona to get paid less than an employee in NYC. There's more advantages for the company for having your employee(your average programmer, at least) be in AZ rather than NYC. You need them in the office? A whole lot easier/cheaper to get that AZ employee there.
> why not just keep salaries the same and then you select from a larger pool of candidates (this should give you a pretty good pick, but you're still limited by when waking hours overlap).
Because you make less profit if you pay the outrageously high SF salaries. Bay Area salaries are incredibly high because there is outrageous competition for the top engineers and there are a lot of rich companies local to the region who can afford high salaries. They aren't able to hire a bay area engineer at 2/3 pay because that hire can go somewhere else.
If you are one of the early ones to the remote-game then you aren't competing with other bay area companies for an engineer in Tulsa. You are competing with local Tulsa businesses, which don't tend to make the gazillions in profit or VC money needed to afford to pay engineers 300k+. So you don't lose as many candidates when you say now you are paying 150k. So you make more money.
Over time this difference could even out as more and more companies become remote-friendly or remote-first and there are no more local job markets. But this isn't going to end with bay area salaries for the whole world outside of a very very small number of companies and very top performers who can command high pay.
How does this address a office in SF and a remote worker in NYC making more than a remote worker in Phoenix? Both workers are remote. How does the NYC worker provide ~2x utility to the company compared to the AZ worker (remember, both are remote).
They don’t! Which is why in this new remote world the applicant in Phoenix has the advantage because they’re able to accept a lower salary because of CoL.
None of this makes any god damn sense in regards to adjusting the pay of people that move but it doesn’t matter in the long run because such practices are still governed by market forces. Facebook can try and predict what someone is willing to accept based on their location and renegotiate based on their available options but it’s not infinite leverage.
People aren't paid by their utility (if that were true, employees at highly profitable companies would be paid a lot more). They are paid the lowest amount that either the market (or other forces - like unions) will bear. A remote worker in Phoenix doesn't have as many options as a remote worker in NYC when it comes to switching jobs a getting a high salary. So the company pays the NYC dev more since they need to pay more in order to retain that person.
I'm absolutely certain that there are some 10x engineers in Bangalore that are getting paid peanuts because they can be exploited and don't have as many options. That's the nature of capitalism and why many see it as an extractive system.
> in Bangalore that are getting paid peanuts because they can be exploited
The thing about Cost of Living is that poor schmuck in Banagalore may well be living like a king off those wages compared to his other options.
I made a pittance in west coast tech terms, but here in Iowa that means I own my house outright, I have a wife that doesn't need to work, and I have three kids.
From what I read on here that is a pipe dream for many of the same west coast tech people.
> Bangalore that are getting paid peanuts because they can be exploited
Um, that's not what is happening. I can't vouch specifically for Bangalore, but if you can work fully remotely, the savings in taxes and COL are ridiculous - so much, in fact, that it doesn't make /financial/ sense to move to a high COL for anything less than FAANG salaries (and even then, it depends on what you want out of life).
I'm talking about €300-500/day income.
If I were to be optimistic, I'd say that Facebook's employees won't even feel the reduced salary - but SF government and landlords certainly will.
Sure. But you'd be able to take home even more money if they were paying SF salaries. It is a fine arrangement as it stands but the big companies are extracting a greater percentage of your labor since they can afford to pay you less and you will accept less.
In principle, yes. But things are not always so clear cut. In certain European countries, there is a special tax regime that lets you pay very little tax as long as you stay under a specified limit (the highest is, AFAIK, €100k/year and 15% tax).
In such a scenario, you're better off trading a lower salary for more free time (if possible, of course) as a large portion of a higher salary would be eaten up by higher taxes and/or COL (if you had to be relocate).
In essence, you're making less in absolute values but you're /much/ better off in relative terms (say, per hour).
People are paid by utility, but it isn't the only factor. You don't pay a line cook to be a surgeon. Utility is obviously the dominant factor.
> A remote worker in Phoenix doesn't have as many options as a remote worker in NYC when it comes to switching jobs a getting a high salary. So the company pays the NYC dev more since they need to pay more in order to retain that person.
So the premise of this is that these people are working remotely... why wouldn't the Phoenix person have the same opportunities to switch jobs as the NYC person if both are able to work remotely? That's kinda rejecting the premise of the scenario.
Utility will put a cap on whether the business can exist. Employers won't willingly pay above your utility. And if they could get you to work for free they sure would.
The Phoenix person and the NYC person don't have the same opportunities because the huge majority of tech jobs still don't support fully remote positions. So the Phoenix person has all the fully remote jobs (many of which adjust salaries down) and all the local Phoenix business. And the NYC person has all the fully remote jobs and the gazillions of local NYC jobs.
Your employer doesn't know that you'd never want to work for a local NYC company or whatever, so they operate under the assumption that they have tighter competition for your labor.
Some day, if lots and lots and lots of remote work is available, this effect will shrink and that will either pull remote salaries closer together or people in LCOL regions will still be willing to accept lower pay and the HCOL people are in trouble.
Supply and demand is the dominant factor in pricing. Utility is barely quantifiable in most cases. A personal computer has immense utility, a Rolex has very limited utility. The latter is in very short supply and in high demand, that's why its prices are high.
Now let's take a software engineer at Uber versus a nurse at a random hospital. The software engineer is part of a scheme that keeps destroying capital, his utility is negative. The nurse on the other hand may prevent decades of lives lost every day. It's not that hard to become a nurse though - more people are capable and willing to do it, so the supply is large. The cherrypicked software engineer on the other hand, is quite rare.
> why wouldn't the Phoenix person have the same opportunities to switch jobs as the NYC person if both are able to work remotely?
They have the same "fully remote" options, but not the same "onsite" opportunities. If you work remote, of course you're going to want to optimize your cost of living, because you'll be competing with people who will do the job for less money.
Why is it a surprise? The moment the employee is willing to hire remotely the employer is competing against people willing to make half or less, since they don’t care to live where you decide to live. Hilarious right? Same happens when minimum wage goes up. Imagine it goes up to a livable $40/hr. Now these high school kids are competing with people with college degrees for the same job.
I'm not sure this makes sense. Did I not include these people? Wage as a function of distance, right? I didn't say that everyone gets paid the same. And is it not more advantageous for the employer to be able to select from a larger pool of candidates?
> Imagine it goes up to a livable $40/hr. Now these high school kids are competing with people with college degrees for the same job.
Do they? This doesn't mean that every job that pays under $40/hr (which is pretty high! You must be living in the Bay) becomes $40/hr and jobs higher do not go up as well. But rather now those companies have to compete (you can compete in ways more than wage, especially if it is $40/hr!). High school kids may have to compete with people with college degrees for things like McDonalds, but now an engineering firm like Boeing (who pays less than $40/hr for starting salaries in most locations) has to compete with McDonalds. The competition doesn't work only in one direction.
Of course, I'm sure that there's a upperbound to how well this works though, and I wouldn't be surprised if it was under $80k/yr
> Imagine it goes up to a livable $40/hr. Now these high school kids are competing with people with college degrees for the same job.
A lot of these predictions seem based on assuming nothing else changes when the minimum wage changes. Realistically you're not going to have college grads applying for highschool-kid jobs, you're going to see college grad jobs paying more.
How long did you flip burgers for? Depending upon the location/business, it means standing on your feet in a hot environment for hours. They've hopefully gotten better, but plastic gloves are also murder on the hands.
Maybe less challenging mentally, but physically way more demanding.
It sounds horrendous. In a reasonable world horrendous jobs like flipping burgers and scrubbing toilets would be far more rewarded than fulfilling jobs like writing code.
My own history of jobs involved delivering f pizzas for a small firm (great, very little pressure, just listen to radio all night), and stacking shelves in a corner shop (I lasted 3 hours)
You literally couldn’t pay me to stack shelves, and I in turn rarely go to shops, I won’t support such a terrible environment.
Flipping burgers and scrubbing toilets can be done by literally anyone. On the other hand, the demand for people who can code like you remains high.
This is the reason why investment bankers make bank. Granted, many of the "signals" are dubious, but the people who can _actually_ do the work of a MD are extremely low.
Companies pay as little as they can get away with. Fair enough. But when their workers are remote, those companies are competing with every other company that's willing to hire remote workers. On the other hand, SWEs are notorious for accepting low pay. So in summary.... who knows how it would shake out?
I am simultaneously one of the highest paid people in my peer group, and according to the ranks on HN "low paid".
There is an extreme disconnect between what people in tech seem to think of as normal wages and what the country as a whole (even college educated sectors) considers normal wages.
My comparison is usually nurses who have an actually hard job where people's lives are on the line (and lately their own lives). If someone thinks that software developers are notorious for accepting low pay, I can't imagine what they think of nurses. The worst thing that happens in my day is that I might have to battle bombastic management or know it all whipper snappers in order to get my way :-) (Well, to be fair, as a contractor for a company in the travel industry, my biggest stress is making sure they don't get the impression that paying my invoice is optional...)
Low pay compared to hedge fund managers. Both can (in massive scale organisations) swing massive amounts of money to the company. Neither does it reliably.
> Would it be reasonable for them to adjust salaries depending on what city an employee lived in?
Companies pay people less in LCOL areas because the local competing offers they receive are lower and they don't have to pay as much to outbid the competition. Not because they actually care about how much you're paying in rent. If two suburbs are in the same metro area, then they are part of the same local hiring pool so there is no reason to offer different compensation based on the average local rents.
Companies already effectively do this, but frame it as a perk for those who live close. IIRC Facebook and Palantir paid 10k to people who lived within 1 mile of the office.
Or better yet, what if they moved to Stockton? A 1-bedroom's $1200/month there, and it's still technically within commuting distance from the bay area.
Everything is factored in the real estate price: the weather, the school district, the night life, the ethnic grocery stores, crime rate etc. and last but not least, the opportunity to change to a new job with much higher comp.
Real estate, while not as liquid as stock market, is quite efficient in my opinion.
The lawsuits around this are going to be amazing. African American developer has kids and moves to Georgia to be near family; receives steep pay cut compared to white developers who move to Connecticut to do the same.
And how does Facebook decide what the cost of living in your area is, anyway? The more data-driven Facebook makes that calculation, the more delicious the law suit gets. For example, DC is a fairly high cost of living Metro area, but there are some nice suburbs in PG County 30-45 minutes east of the city that are quite affordable. They’re also predominantly African American. Does Facebook set your salary based on living in the DC metro area, or do they drill down further and cut your pay for living in PG County? I can’t wait to see what happens.
The rational way to do this would be for Facebook to take into account COL when setting salary for non-remote work, and to not take it into account when setting salary for remote work.
Why? Because if they are specifically trying to fill a spot in Menlo Park they are going to have to pay enough to attract people who live within commuting distance of Menlo Park. If they are trying to fill a Seattle spot they need to pay enough to attract Seattle workers. And so on.
If they are trying to fill a remote spot then they should be largely indifferent to where that person lives. For remote work they only need to set pay high enough to get the number of people they want from the entire country.
If they set remote pay at a level that makes them attractive to people in Georgia but not to people in Connecticut, and at that level they can find all the remote workers they want, why should they care that Connecticut engineers aren't applying for remote Facebook jobs?
> If they set remote pay at a level that makes them attractive to people in Georgia but not to people in Connecticut, and at that level they can find all the remote workers they want, why should they care that Connecticut engineers aren't applying for remote Facebook jobs?
Presumably because there are not enough people in Georgia alone who meet their hiring bar to fulfill their staffing needs. So they also need to hire people in HCOL areas with better competing offers and more leverage to demand more money from them.
> Presumably because there are not enough people in Georgia alone who meet their hiring bar to fulfill their staffing needs
I kind of doubt this. Many of the people I went to Georgia Tech with immediately moved to the Bay Area for CS jobs. I'm pretty sure that school alone can supply quite a bit.
Then they need to raise the amount enough to attract more people. They can pay different people different amounts, but the amount should be based on what they need to attract them and not take location into account. Eg if the higher amount raises the number of applicants in the lower cost of living area too, then they shouldn’t go “oh, but you’re in the lower cost area so your offer is lower”
Ie raising the offer raises the applicants, where those applicants are should not matter.
> They can pay different people different amounts, but the amount should be based on what they need to attract them and not take location into account.
But what if you need to pay someone in topeka less to attract them than someone in NYC?
Specifically, if we think about the idea of a market, and assume some jobs won't be remote, the dev in NYC will have a larger market (remote jobs + onsite jobs in NYC) than the topeka dev (remote jobs + onsite jobs in topeka). This is actually the same way things are now.
What is so unethical about a company choosing to pay you (in the case of facebook, well above) market rate in the market you choose to reside in?
The only thing I’m arguing is that if my location doesn’t matter to the job, then the location I’m in shouldn’t matter to the salary equation: only what you’re willing to pay for my skills and what I’m willing to accept. Tax or other legal issues aside, once I’m employed remotely, it shouldn’t matter to you if I then decide to leave my expensive NYC apartment to live for a fraction of the cost in some rural town (assuming I have adequate internet etc). The employer shouldn’t then say well your cost of living is now lower, so we will pay lower. I’m still the same person providing the same value.
If the company wants to save money, then why were they willing to pay more just because I lived in a higher cost of living area, rather than looking for people in the lower cost of living areas to begin with?
Employers pay more when there are more competitors in the same labor market paying more. Right now that depends on where you live because most positions are not remote and candidates already relocated looking for valuable experience and better offers. If that changes, then Bay Area and New York offers might no longer be much higher (maybe they won't even cover the cost of living here).
I mean, sure, that sucks for people in the local labour market, but if you cannot find work that covers your cost of living, then you either have to change your work or lower your cost of living. This is the same in any type of work, in any location. For example, you might make enough money running a small town bakery, then big office opens up, local cost of living rises (like it has in San Francisco, for example) and suddenly you can’t sustain yourself anymore. You either have to do something else or move somewhere else.
My point isn’t that things don’t have an effect, just that companies want to embrace remote, that location shouldn’t be coupled to compensation, outside of implicitly due to locations effect on what an employee would accept. The employee can then make a decision on their own worth and values and choose whether they would rather do their location-non-specific work from a high cost place (that presumably has other benefits[1]) or if they would rather move to a low cost place. This shouldn’t matter to the company and shouldn’t have any impact on how they value the employee.
[1] If there is no benefit to living in a high cost location, for a given individual, then its not exactly smart ir prudent for them to stay there and keeping the prices high (due to higher demand) isn’t benefiting anyone. (Proximity to friends and family is, of course, part of the equation). I can’t expect my career of choice to pay me more just because of my personal choices or preferences, though. Why should one employee subsidize another employees lifestyle?
> This shouldn’t matter to the company and shouldn’t have any impact on how they value the employee.
Your mistake is thinking that compensation is solely based on how much they value the employee. Companies only need to pay enough to outbid the competition, and the amount of competition for workers is a lot higher some places than others.
Think of it in basic supply and demand terms - the amount that a company "values" an employee only reflects the demand curve; the other half the equation is the supply curve, i.e. how much a company has to pay to beat out the competition and persuade employees to work for them because all the other options are worse. The supply curves are shifted right in LCOL areas, which drives the equilibrium prices down.
It would be interesting if they also figured in the cost of providing office space, food, etc when recomputing remote workers’ pay.
The rule of thumb I’ve heard is that workers cost about 2x their salaries, with the additional money going to HR, taxes, IT, morale budgets and facilities. Facilities is the biggest of those costs.
(This completely ignores stock based compensation.)
Yes this makes total sense to me. The pay bump in SF is to get sufficient good people in SF, which the company cares about because it has an office there and needs local people. That rationale evaporates for remote work.
Honestly my whole life I have basically been rolling my eyes whenever people complain of discrimination. "Why would a company pay more for less? They'd be eaten alive by competitors that don't". But here we have the whole industry saying they are gonna pay people less based on nothing more than living in black neighbourhoods. And gloating about how people don't have negotiating leverage.
I do the same type of eye roll and I think it still applies here.
Unless "the whole industry" create a salary cartel, the free market will adjust for this salary imbalance quickly.
If there's a guy living in a black neighborhood that does the same job as a guy from a white neighborhood but for less, who would you hire? So will everyone, and the salaries will eventually match.
This is even more true in a world of mostly-remote workers where social interactions are reduced.
It's not actually based on CoL... it is based on comparable salaries in the area (which of course is highly correlated with cost of living). The distinction is important, though; they pay the salary that gets a worker to stay and not go to another company that will hire them.
Companies, and many agencies in the federal government, already do this..
As long as the same policy would equally apply to all races, there is nothing wrong with making COL or salary adjustments based on where an employee moves.
Nah. Pay is, and will continue to be, based on market rate. If they offer you 150k in Georgia and that's near top of market for your skill level, even though if you were in SV you'd make 250k, then you're still being paid well. No discrimination. If they offered a black person 150k and a white person 250k for the same job in the same place, that's discrimination.
> The lawsuits around this are going to be amazing.
No. They won't. This isn't anything new. GitLab as a company does this. My company does this. US Federal Government does this. It's not controversial. HN is the one making it controversial. YOU are making it controversial by bringing race into it.
If you have clear salary bands ("SWE III makes base 100k to 150k") and clear location bands ("NYC is 35%, Westchester County is 29%, Monroe County is 8%) then it's completely fair.
> And how does Facebook decide what the cost of living in your area is, anyway?
You could use the same scales the US Federal Government releases. You could base it on the average cost of living. Lots of data-points. Every state and local government collects this data for various reasons. Hell, Walmart and other large Grocery Stores most likely do this as well to localize prices properly.
US FedGov location pay is based on federally-dictated work site, not where the employee resides. Adjusting salaries based on employer location demands is non-controversial, and based on different job requirements in
Paying people less because they live where lots of black people live (and race and other protected classes in US employment law do correlate with cost of living), when the employer requirements do not differ on whit, is not the same thing.
Yeah. It's based on work site, but they define down to the county what the location adjustment is. But the same thing could be used for remote workers. I strongly assume the remote work positions that exist would pay based on the county where the worker resides.
If these large tech companies just used the US GS Scale's locality adjustment, it would be super easy and non-controversial.
> But the same thing could be used for remote workers.
It wouldn't be the same thing if it wasn't based on job-required worksite. They don't pay you based on where you live (which is quite often a different county than the work site), but where you are assigned to work. If you have no assigned worksite, as is the case with remote work, there'd be no basis for the adjustment.
> If these large tech companies just used the US GS Scale's locality adjustment, it would be super easy and non-controversial.
> Sure. If you're working from home your work site is where you live.
Unless your employer assigns your residence, it's not a difference in job duty.you are being paid for, so is not analogous to being paid for employer-assogned job site when analyzing disparate impact.
Never heard of a company punitively adjusting COL downward without being explicitly in contract, like with US Fedgov. Finance had people leave NY all the time for Midwestern and Southern states with the same company keeping their NYC paychecks.
The employer deciding what "the market" is to set "market rate" to a conveniently lower number isn't reasonable. If you're hiring remote-first, you're not competing in a local market.
The employer deciding what they're willing to pay employees is eminently reasonable. Most of these companies are NOT going remote first, they're just _allowing_ remote work.
Google adjust salary based on location. I moved from the Bay Area to the Seattle area, and took a small paycut. And it's not directly COL, they are paying 'market rate' (or, some multiplier based off that) for the area.
it's extremely common (I did some consulting and offices had salary multipliers based on high/mid/low-cost locations). I've been quite surprised at the reaction from HN on the topic
Common, but something in initial employment agreement. This sounds like it is being forced on employees. If so, thus my reticence to seeing this practice as acceptable. If not, my mistake.
It’s likely these employees’ initial employment agreement was to work on-site in the Bay Area office.
If they want to move away from the Bay Area and work 100% remote, they’re being offered that option - that’s a change in the contract itself, in their favor, which they don’t have to take if they don’t want to.
What's being forced upon me? If I continue to work as before, nothing changes. Working remote full time wasn't an option in my initial employment agreement either, so it does not seem like that agreement applies to this situation.
That's my question ultimately. What the reporting sounds like is if you work from outside SV, even if fully remote, you are subject to an unagreed-upon wage reduction. Simply because a pandemic has forced employers to bend doesn't mean employees are forced to do so.
That said, I recognize the difference between ideal and practical reality of the situation. Employees at tech firms typically have little individual negotiation power, but an employment agreement typically can't be amended at the whim of one party. I'm not saying you see it that way, just an outside observer here.
There are no initial employee agreement terms being amended and I'm a bit confused on how it could be interpreted that way. The initial agreement still holds, but FB is extending an additional option that was not offered originally for the employee to change their location to work fully remote, at which point he/she would be subject to the wage multiplier based on market.
If you have to go into the office to work, and you get sick with the coronavirus, then you should sue Facebook.
And if you die, then your spouse should file a wrongful death lawsuit against Facebook.
Why? Because all that could have been avoided if Facebook allowed you to work remotely.
You can also claim that the patterns in the central air conditioning circulation, is what caused you to get sick with the virus.
It’s fascinating that the country is forcing people to go back to work, when the crisis is not yet over. In fact, it’s even more dangerous now, than it ever was, with the super high infection rate count.
It's not being forced on anyone. People are free to continue working in SV and presumably receive the same salary they were before.
If they decide to move elsewhere that's a substantial and meaningful change from the agreement they entered into for the job. Of course their compensation will change.
I feel this comment so deeply. I spent all of my late teens and early 20s doing music in the US. I lived in a van or on a bus and only went ‘home’ for a few weeks consecutively at the most, and that was maybe three times a year. The world is viewed in a fundamentally different nature by those who are nomadic, and the rest of society has a very tough time dealing with those nomads.
Yea, I lived in East Africa for a bit and learned a lot about the struggles between the nomadic pastoralists and settled farmers. Also in Europe with the Roma people and their struggles.
I mean, I guess nomadic vs settled is probably a spectrum, with most of us not falling at anywhere near yhe extreme poles. Yet, yes, I feel you.
I moved from PA to NM last year. From PA's perspective, PA remains your domicile until you take steps to permanently establish a new residence somewhere else. Other states may or may not take the same position.
Those steps include, but are not limited to: buying/renting property as a primary residence, registering a car, registering to vote.
South Dakota lets you establish tax domicile with no state income tax instantly. You need to show a receipt from a hotel or campground that you spent a night in the state. You also get a new driver's license and open a bank account. That's it. What stops me from setting up a remote workstation in SD, logging into work through VPN from there, and living wherever I want? :)
Once the pandemic lessens, I am switching my domicile from California to SD and semi-retiring away from Bay Area. I will have a legal presence and a computer in that area, but I will not live there.
There could be a business opportunity in setting up remote workstations in high rent areas to comply with these requirements.
Multiple states can consider you to be domiciled there, and you are liable for state taxes in each.
There is no constitutional protection that prevents you from having to pay multiple resident state taxes, though in practice, it doesn't happen often. NY is notorious for claiming people are still residents after they have left-one factor is spending any part of 183 days in state, but another is intent and emotional attachment.
Typically when you live in another state for 3 or more months you “establish residency”. Not declaring this properly on your state income taxes is tax evasion.
Lying to your company about residency and tax evasion to receive more money is fraud.
So it sounds like you’re going to have an interesting time either committing fraud or flying back and forth constantly to pull this off?
I bet if you were hired by a company while living in a lower COL city for market rates in that city, and then moved to the Bay area you’d be advocating for getting a COL adjustment to afford Bay area rents.
Considering fraud and tax evasion schemes to avoid the exact same adjustment in the other direction is ridiculous and selfish. If everyone did what you did housing rates would skyrocket in those cities like the Bay area and create even more housing crisis and displacement.
they should hire you under different contract where you are responsible for your taxes, not the employer, something like freelance contractor, not familiar with US law
lowering salaries because company must adjust your taxes is lame excuse
What's different here is presumably the scale the policy is being applied at, which creates the likelihood that significant groups of employees will be able to demonstrate disparate impact. For it to be a problem, there need to be enough remote employees in "favored" and "disfavored" {location,compensation} buckets to make a case. Gitlab is presumably not there yet.
USG pays flat rate globally.
They then plus up a COLA allowance based on high-cost areas, special circumstances, etc. But the base rate is a flat rate for a given position.
You can pay 'less extra', but not 'less', generally. Which I'm sure is what FB and others will technically do.
There's a HUGE difference between paying in a locale based on COL and lowering an existing salary for a remote worker simply because they might have lower COL.
If you relocate at Google or Facebook, or any large company, they will adjust your salary for the new office you move to. If you move from SF to Upstate New York, you need to update your address with HR for tax purposes, and they would most likely adjust your salary under this plan.
I moved from Austin to Seattle and my salary was adjusted up. If I move back it would adjust down (which is weird, because Austin is almost as expensive as Seattle now).
What you’re talking about is different pay for different localities for physical jobs. This practice does have a disparate impact on African Americans. (Part of the large pay gap between African Americans and whites is due to the fact that they disproportionately reside in low cost southern states.) Nonetheless, we accept the practice, partly out of inertia, and partly because of market principles. Companies must pay more to recruit the same level of talent in a place with high cost of living. So long as companies insist on co-located staff, that market economics provides a legitimate justification for salary discrimination.
Extending the principle to remote work removes the comfort of accepted practice. We don’t have preconceived notions of what’s “fair” when it comes to remote work. It also removes the insulation layer of market dynamics. Companies need to pay more for talent physically located in an expensive metro area, just as they need to pay more for rent, etc. But when you remove the rationale of having your workforce all in one place, that also undercuts your rationales for paying different amounts in different locations. By paying more to remote workers who want to live in Connecticut versus Georgia, Facebook is subsidizing the lifestyle choices of some developers. But those lifestyle choices are heavily affected by race. (58% of African Americans live in the south, versus 27% of white Americans. One of the major trends of demographics in the US right now is a reversal of the movement of African Americans from the south to northern cities.) And as a result, that subsidy will have a significant disparate impact based on race. Under Facebook’s policy, you’ll have otherwise similarly situated developers being penalized in racially disparate ways for their individual housing choices.
Moreover, so long as Facebook presumes that developers need o be co-located, Facebook has a legitimate economic reason to locate in San Francisco or Austin. It’s easier to recruit good developers there. Any incidental contribution to disparate impacts on groups that happen not to live in those places yields to the economics. But when you abandon that principle, you’re standing pretty naked. For remote work, what legitimate reason does Facebook have to subsidize certain developers’ consumptive habits? I prefer to live near the water—should Facebook pay me more money as a result?
According to the Supreme Court, this type of "disparate impact" claim would probably not be accepted[1]:
> Additionally, the Court outlined the contours of an important defense to a plaintiff’s prima facie case, namely that “policies are not contrary to the disparate-impact requirement unless they are artificial, arbitrary, and unnecessary barriers.” Businesses must be given “leeway to state and explain the valid interest served by their policies,” and should be able “to make the practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system.”
> Further, the Court cautioned, as it did in Wards Cove and Ricci, that when a defendant offers a legitimate business justification, a plaintiff cannot sustain a disparate-impact claim if it cannot prove “there is ‘an available alternative … practice that has less disparate impact and serves the [entity’s] legitimate needs.’” The Court’s decision appears to create a more lenient standard for defendants than the standard the federal government has proposed, in line with the Court’s holding in Wards Cove.
> In a disparate-impact claim, a plaintiff may establish liability, without proof of intentional discrimination, if an identified business practice has a disproportionate effect on certain groups of individuals and if the practice is not grounded in sound business considerations.
> The Court emphasized the plaintiff’s burden to establish a “robust” causal connection between the challenged practice and the alleged disparities. Further, a defendant’s justification is “not contrary to the disparate-impact requirement, unless … artificial, arbitrary, and unnecessary.”
Paying more for people physical located in Palo Alto can be justified by a “sound business consideration.” The company isn’t discriminating based on location, per se. It is simply bidding in a labor market. It just so happens that those bids need to be higher to recruit workers for a physical office in San Francisco than elsewhere.
With remote work, that “sound business consideration” disappears. You no longer care whether the person is physical located in San Francisco. So why should the company pay more for such workers? Justifying the policy as “necessary” and “not artificial” becomes more complicated than with in-person work.
Because companies cannot force people to live in cheap COL places so they can pay them less? If the best person for the job lives in SF then the best person for the job lives in SF.
Where is this assumption that equalizing pay across regions is a race to the top, and not to the bottom, coming from anyways?
But the new Facebook policy isn’t merit based (“best person for the job”). If the “best person for the job” happens to want to live in Atlanta, she will get paid less than the marginal candidate who happens to live in San Francisco.
You seem to be overlooking why geographic discrimination in salaries exists in the first place. As tzs points out in a sibling comment, it’s because when Google has an office in Mountain View, it doesn’t just care about hiring the Nth-percentile employee. It has to pay enough to hire the Nth-percentile employee who wants to live in Mountain View for that salary. Where the worker is located matters because Google has decided that it’s office should be in Mountain View, and further that it wants to have its teams under one roof. That economic justification doesn’t exist for remote workers.
You've convinced me that there will be lawsuits on this issue. But do you think there will be lawsuits where the plaintiffs win (and not just an isolated win here and there, but mass wins that force large policy changes by employers)? That still seems fairly far fetched to me.
When I moved from SF bay area to Austin, my employer didn't lower my salary, but for a few years my yearly increases were small compared to my performance review until my pay grade was right for my pay grade and location combination.
This was a nice way to do it because my salary has always been monotonically increasing, and I wasn't offended that my increases were small for a few years because I knew why it was happening.
This right here is the way to deal with the problem. Lowering a salary should only happen if someone is a fuckup or reduces the amount of work they have to do. Doing it over time like this is super classy.
I don't know, if the same job gets paid less in Austin then it's not really fair for someone who transfers from SF to Austin to make more than someone who was just in Austin all long. If someone moved from Austin to SF you'd just pay them less than a new hire in SF?
At Google they just openly adjust your salary if you move between cities; move from NYC to Atlanta and you'll take a bit hit, move back for the reciprocal instant raise.
This sounds great but I wonder how much of that was employer's discretion? I imagine your work was that valuable but perhaps a less productive engineer might get a different "package".
Regardless of the rational and pragmatic reasons behind salary adjustments for cost of location adjustments, a double digit X% cut would be very demotivating for most people psychologically.
People seem to be missing that this is entirely voluntary. Facebook isn't forcing people to accept a pay cut, just saying that if you choose to move then your salary will be cut.
This has been SOP at big tech companies for years. If you choose to move to a cheaper location, your salary will be adjusted to the new market rate.
I know plenty of people who have gone through this and nobody felt demotivated. They all chose to move and were well aware of the salary cut when they made that choice.
Not just big tech companies,it's SOP at most companies in pretty much all industries.
Very very few people would not be expecting a location adjustment to their salary with a major relocation. Especially when that relocation is entirely for the benefit of the employee, not the employer.
This is what everyone I know does but that's because they're all smaller companies and each individual is pretty valuable. At Facebook, each individual is just a statistic at the margin. They cease to operate as individuals and more as a market for lots of labour.
That can't be helped. If I had a 100k size org, I wouldn't hesitate to set (overall) compensation targets at regional top prices with instant adjustment.
The company claimed that they don't see this necessarily as a cost-saving measure because they plan on providing for home office equipment for permanent remote workers, kind of like how employees going to the office have monitors and keyboards provided for them.
That’s pretty funny. I have an amazing home office setup, and even all that high-end kit cost a very small fraction of an FB engineer yearly salary. Are they planning on burning the delta by throwing in high-end telepresence hardware, or something?
The top end afaik is the Cisco telepresence gear used in eg the White House. There’s a spectrum in between, but $280 is definitely near the lower end. Maybe portal is really good, though?
But honestly, it could be the best teleconferencing gear, I’d never put a camera from FB in my home.
Home office equipment is only a fraction of the company's potential savings from office rent or other operational costs. Some of those costs get passed on to the employee, like electricity or heating costs.
To be honest: all of the office equipment is a mere fraction of a month's of an engineer salary, providing the basic tools for your workers that is less than a month's salary is nowhere a "cost-saving measure", even less when you are saving on real estate...
In practice this can't really be enforced. Say you were making $200k but then a law was passed that companies have to reimburse you for 20k of "home office expenses" per year. Guess what, now your salary is 180k + the reimbursement!
Oh, you're saying you could pass a law against that too? OK, then what happens to new hires. They're gonna get 180k. You can't really stop that.
At the end of the day, salaries will be set by the market. Companies are price takers just like employees.
Take care not to conflate the "market" which applies when it benefits me over everyone else, with "fairness" which applies whenever it benefits me over everyone else.
Take care not to conflate the "market" which applies when it benefits me over everyone else, with "fairness" which applies whenever it benefits me over everyot else.
It is generally-expected behavior for an automaker to shift production to the cheapest labor market. Well, maybe not the absolute cheapest. Cost of goods transport, e.t.c. also factor in. But it doesn't surprise anyone for manufacturers to open factories in locations that lower their costs. It's an obvious thing to do.
So it has always baffled me that tech companies do the exact opposite. They motivate the most skilled people to leave low-cost areas and move to the most expensive. They pile them in higher and higher and keep driving their own labor costs through the roof. And VCs exacerbate the problem by refusing to fund anything in less expensive locations.
It's easy to dismiss this as irrational. But is it really? Are there benefits to this that are so huge they outweigh the costs?
If you could pay $10,000,000 to move 1000 devs to Kingman, AZ, then cut their avg salary from $250,000 to $150,000, why wouldn't you do that? What is the downside to saving $90,000,000 after moving expenses in the first year alone?
The obvious first argument is reduction in the standard of living would cause the talented to refuse. I'm sensitive to this, but also skeptical. People making 150 in Kingman would improve their SOL.
I could be wrong, but I think there are more important factors. I think there is too much money at stake for these employers to have not thought it through. When a common behavior looks insanely irrational, it is more likely that you haven't seen all the variables.
Companies that require skilled labour don’t move to places with cheap labour. They move to places with abundant skilled labour that’s available at a reasonable cost. Or, they spend money training and equipping the available labour. There’s no way around it.
If you think building cars is unskilled labour I can only assume you've not owned anything newer than a Leyland P76, and managed to miss the whole "Japanese car makers eating the US and British industries" thing.
Auto workers have a skilled tradesman classification and other classifications and most aren't skilled tradesmen. They still perform pretty complex tasks. It's just a term, like how in insurance contracts you'll read "Act of God". That doesn't mean that State Farm is a theistic organization that believes that supernatural beings are imposing earthquakes upon us.
> So it has always baffled me that tech companies do the exact opposite.
The primary inputs to the tech industry, especially but not exclusively consumer software industry, are culture, trends, and of course software engineering labor. All of these predominantly generated by cities, and among those, the big cities of the world.
The inputs to auto manufacture are materials, skilled manual labor, and schematics. The schematics like software, are a product of culture, and trends, and engineering research, all of which are cultural objects predominantly produced by major urban hubs. That is why auto manufacturers still design their cars in cities.
That doesn't mean that software can't be developed remotely or in cheaper COL places. But its most likely be to be designed in proximity to major cultural centers.
No, because you're missing out on that the specific culture matters. Cities produce culture in a certain sense, but they don't all produce the same culture.
There's a reason that the major tech hubs in the US are liberal cities, and more conservative ones generally don't have a strong tech sector.
Exactly, culture matters a great degree for creative work. If there were a big untapped reservoir of cultural input for tech firms being underutilized, it would be invested in. You see this a bit in secondary tech hubs like Boulder or Austin, which by dint of their history have some of whatever culture and skillsets the tech industry needs.
Big cities and metropolitan areas are generators of their flavor of culture, and that influences the kind of work objects that the local labor pool can produce.
Many of the cities on GP's list are actually major tech hubs (Tokyo, Sao Paulo, NYC, LA), and many of the other cities (Cairo, Mexico City, LA) are major creative centers for other industries especially media/entertainment industries for their respective spheres of orbit.
That's sort of a subset of the real answer: the in-demand talent that the companies need so much of are usually left of center, and relatedly appreciate some things that are more common/better in left-er areas: public transport, decent public universities, support for biking/walkability, friendliness to cultural/ethnic diversity, friendliness to LGBT people, stronger social safety net.
There are things that liberal areas are worse at, of course: housing costs are usually higher, they're not as accommodating to religion, taxes are higher, some regulations can be stifling. But most techies are less concerned with these latter things than the former.
Comparing the direct population of Columbus OH to SF is silly; it ignores the huge amount of the surrounding area, as SF proper is rather small. Some quick Googling says the Columbus MSA is ~2 M people, and the SF+San Jose MSAs are 5-7 M people.
Some quick Googling says that Phoenix metro is about 5M people.
Meanwhile, the bay area is the #1 highest COL in the continental U.S. Phoenix is ~#29.
If the argument is that tech requires a big city, I think Phoenix qualifies. If this is a hangup for you, consider Philadelphia: 5-7 M people, #21 COL.
It is obvious to me that population size is not why tech giants gravitate to SF or Seattle. (I'm confident that the high COL is also not the reason.)
Tucking 1000 employees into Houston and 1000 into Charlotte and 1000 into Toronto, then saving $200,000,000 per year seems very attractive to me. And if relocating 3000 makes sense, why not 10000?
There's obviously enough good reasons that they haven't done it. But from my seat in the balcony of the ignorant it seems awfully strange from an industry that prides itself on disrupting stale thinking.
> Tucking 1000 employees into Houston and 1000 into Charlotte and 1000 into Toronto, then saving $200,000,000 per year seems very attractive to me. And if relocating 3000 makes sense, why not 10000?
There are plenty of companies in the tech industry who already have done this - how many times have you heard about someone told by their employer that they will have to relocate to X and take a pay cut, or lose their job?
These are, however, companies whose M.O. is cutting costs to the bare minimum to increase margins. You can probably think of many that fit this model. This nearly always means they are no longer focused on growth or product innovation.
Even growth-focused companies have already moved a most of their operational and support to lower cost-of-labor areas, well before COVID19. But very few tech companies have their creative functions in those areas.
Part of it has to do with capital, but a fair portion is due to network effects.
As an example; in Boston, if you are looking to setup a Biotech shop you need to throw a rock down the street and you'll hit someone involved in the industry. In Louisville, KY? Forget about it, yes there are some folks who are in the field but as a whole?
Perhaps the location is only a side effect, while the true reason is the low supply of qualified coders. Why do corp lawyers command $400-600/hour? Why not to just hire a lawyer in India for $40/hour? Why not to hire a cheap accountant in Phillipines? Ah, right, the cheap options cost more in the long run and those who are competent have migrated to the US and now command the same 600/hour.
> The obvious first argument is reduction in the standard of living would cause the talented to refuse. I'm sensitive to this, but also skeptical. People making 150 in Kingman would improve their SOL.
There are two problems with your reasoning here:
1. What counts as standard of living or quality of life varies according to the individual.
For example, the bay area has excellent weather, a ton of ethnic/cultural diversity, very solid restaurant scene, lots of interesting nature nearby to explore, the area around SF has passable public transit, some bits have decent biking/walkability, and there's excellent options for international travel. Never heard of Kingman, but based on it being in Arizona and cheap, it's probably substantially worse on all those metrics.
Sure, you'll be much more easily able to afford a nice big house in a good school district, and for some people that's of paramount importance. But not everyone; some people value the things I listed above more, and don't mind living in an apartment.
2. You also have to think about it from a long-term perspective. If you settle down in the bay area, yeah the housing situation is awful, but you don't have to worry too much about your particular company going under or treating you like garbage one day, because there are a ton of other tech companies you could switch to.
If you move to a random non-techie city where your current employer is the only employer of note, then that means settling down there puts you in an awkward situation: you're now tied down to them. Switching companies may well mean moving again, which could be awkward if you've put down roots.
Coming from a country(Poland) that may well be treated as one large outsourcing company (with the notable exception of CDPR and its whopping 1200 employees) here's my prediction on how this is going to play out:
Salaries of remote employees will initially be made much lower according to some woefully inaccurate estimate of cost of living, but from that point on they will increase at a considerably faster rate than normal.
Within a decade they will stabilise at a visibly lower than SV, yet still high level representing the true difference in cost of living - or actually - "cost of deciding not to live in SV".
Eastern Europe experienced an amazing advance in IT compensations when the west figured out that the software engineers there are no worse than their local counterparts.
In the case of SV's surroundings it's obvious that the engineers are talented, so I believe this process should be starting just now.
Overall it's not that bad, because with time any incentive to move back to the high cost of living area fades.
You won't be driving Teslas to work(chiefly because you won't be driving), but you'll enjoy a standard of living higher than a person employed in a local company, and that is nothing to sneer at.
SV people are used to being able to afford a model S. Going to european level salaries (not being able to afford even a model 3) is going to be somewhat of a shock.
This makes sense in the hiring process, but once you've hired someone, it's a super dick move to lower their salary in spite of their performance. Seems like the sort of decision a robot would make.
What I'm interested in is that it's quite difficult today to find out how much you would be paid when you relocate. You need to jump through a lot of hoops to get the move approved in principle before you find out your new compensation. With this new system it should theoretically be fine to relocate anywhere, so if it is then you'd want to find out how much each area pays before you decide to move. Which means suddenly you know that guy who chose to go live in downtown SF is getting paid 1.4x more than you for the same job. The same is true today obviously, most big offices are in different areas and have different pay scales, but it's generally not as well known by the employees what those scales are.
This sort of scaling is simply a (rather flimsy) cover for the natural consequences of moving to remote work. If employees in the large metros have to start competing with workers from everywhere else, the salaries are going to start falling. A worker in rural Mississippi is going to expect a much lower salary than an equivalently skilled worker in Palo Alto, and a worker in Manila would expect even less again. Remote work puts significant downward pressure on salaries. This is simply an attempt to offset that. But if you think a hiring manager faced with having to choose between hiring somebody on a big metro salary vs a small rural one is going to be completely uninfluenced, then I’ve got news for you...
honestly as a front end dev, I don’t think what I do is that difficult and I’m overpaid. I feel a little nervous that with remote work I won’t be overpaid in the future
Jobs aren’t paid according to how difficult they are, they’re paid by supply and demand. Employers want to pay as little as possible, but they have to compete with other companies to hire staff from the finite labor pool. Employees want to be paid as much as possible, but have to compete with each other for the finite number of positions available with employers. Remote work simply means that for any remote position, employees will have more candidates to compete with, which will drive the cost of labor (salaries) down, especially if they’re competing with candidates willing to take a much lower salary due to living in a much cheaper place.
> Remote work simply means that for any remote position, employees will have more candidates to compete with, which will drive the cost of labor (salaries) down,
Remote works also means that for every desirable candidate, employers will have more competing employers to compete with, which will drive prices up.
What it really means is that both sides of the market will be larger and less segmented, meaning (1) there will be less opportunity for localized shortages and surpluses driving radically high or depressed salaries, and (2) the law of one price will be more relevant to labor prices for the jobs where remote work is normalized.
But you would expect the new one price to favor low cost of living candidates over high cost of living candidates. Especially where candidates in developed countries end up competing with candidates in developing countries. It’s unlikely that a dev shop in Bengaluru is going to start offering remote salaries that would be enticing for a US-based engineer, but the reverse would be completely expected.
> But you would expect the new one price to favor low cost of living candidates over high cost of living candidates.
I'd expect it to provide a greater surplus to lower-expenses candidates, as any common price does. That's not really favoring lower CoL.
> It’s unlikely that a dev shop in Bengaluru is going to start offering remote salaries that would be enticing for a US-based engineer, but the reverse would be completely expected.
Yes, for work that the skills required can easily be sourced anywhere, remote work is going to lead to natural price level much lower than the prices in the highest price segment of geographical segregate markets.
OTOH, where skills demanded are rare and not widely available, normalization of remote work just means its easier for more employers to join the bidding on that restricted set of employees with low transaction costs. So, for commodity labor it drives wages down to the lowest common denominator; for the most elite labor it drives wages up.
Like neoliberals free trade itself, it exacerbates inequalities.
When you sign an employment agreement, location is part of that agreement. If you decide you want to work in a different location than was agreed upon, that’s you indicating you want to amend the agreement.
Facebook isn’t saying: “you have to move and these are the terms”. Facebook is saying, “if you want to move here are the terms”. If you don’t like the terms you can always stay put or find a new job with terms you prefer.
Remote worker here: my home city was not part of the agreement. I don't know of anybody has "and I will only live out of X city" in their employment agreement.
If they're changing from office-only to remote, perhaps it's worth revisiting their contract, but we can't pretend that their place of living is incorporated into it somehow.
That said, your state and possibly your county/city probably need to be known due to nexus (state incorporation and tax issues) and personal taxes (potentially all locales).
I believe this is why FB says they will crack down hard on people who fudge this info — getting in trouble with the tax man could open a Pandora’s box.
I work remotely and my employment agreement actually states that "The workplace is determined in <my address>" in the first paragraph. Might be worth checking yours.
Is it also a dick move to raise someone's salary if they relocate to a more expensive location but stay in the same role? (This is super common with international transfers, for example)
They would if he had a salary. Dorsey got in trouble with the Twitter board when he announced his plan to move to Africa, although he also doesn't have any direct compensation to cut.
executive compensation is not handled the same as rank and file vanilla labor compensation - which SWEs are, despite (seemingly, most of) their world views to the contrary.
You pretty much have to do this if you want to maintain different salaries in different geographic reasons. Otherwise people would be highly incentivized to move to SF/NYC for 6 months to get hired then move back to their cheap COL permanent location.
Honestly, people working out of the main office for their first 6mo-1y would probably a really advantageous scenario for all involved. The first year is when learning tools and culture as well as developing relationships is most crucial. I would say someone moving from in-office to remote has a big advantage over someone getting hired remote.
Personally I'd rather be paid less and avoid the stress of getting found out, plus it's not ethical. However life has shown me many people who would not share this perspective.
What's the alternative if you're going to scale salary based on location while hiring? If you only scale while hiring, you'll encourage people to "move" to Silicon Valley for a month or two, then "move" back to their original location. There would be an enormous financial incentive for that behavior.
This happens where I work now, and only one person I know has done the Jump-ship thing and moved to a rural area.
It's easy to say "move to the bay, get a job with Facebook, move out" but getting a job with Facebook isn't easy, and moving is a ton of work. It's kinda like a problem that I really don't think would exist on a large scale. If the employee is worth X in the big city, they're worth X in the small city too, unless they were a shitty employee to begin with. In the end, the right people make the company, and if you're going to quibble over 10k of their salary, they should probably go somewhere else.
Then it seems the factor here is being close to the office. I can get this benefit. So why not base it on distance to the office? Within 2 hours? No pay change. 6-12 hrs and in the same timezone? Small pay decrease. Need a flight to get to work? Bigger decrease. And adjust your decrease on how important it is that you be physically present/in the same timezone. If you never need to be in the office, no change. If once a week, big change. While there's still issues with this, at least it is recognizing the aspect that there is benefit to being in the office (though it is not always needed).
So the employer punishes people that cannot afford to live close to the office? And on top of that, if they need to travel to conduct business, their pay is decreased? If I understand this right, it seems like a horrible idea, and I would not want to work at a place like that at all. If the company needs to hire talent that lives far away, why should they be punished?
> So the employer punishes people that cannot afford to live close to the office?
This already happens. If you aren't local, you can't even get the job.
> if they need to travel to conduct business, their pay is decreased?
Yes and no. If you're talking "I need you to go to China to meet with investors" no, if you're talking "we're having an all hands meeting on the first Monday of each month" then yes, but the employer is paying for your airfare and lodging as well.
> If the company __needs__ to hire talent that lives far away, why should they be punished?
Needs? Who said that? They just need employees. I'm talking about how much they need them in the office. If you don't need them in the office at all, then no pay differentials. But if you do need them in the office, well obviously there's different utility for that employee and should pay not reflect utility, as opposed to locality?
I mentioned in another thread the following scenario. Office in SF, one remote worker in Phoenix, another in NYC. How does the one in NYC have more utility than the one in AZ? (which is how pay works under current remote schemes) I'd argue it is easier/cheaper to get the AZ employee to the office. The AZ employee also shares the same time zone half the year and is only an hour off the rest of the year. How is that fair? So why not make it a function of distance and how much you are needed in the office rather than where you live?
In some countries (at least in The Netherlands), it's also plain illegal to lower one's salary based on just location. In fact, over here lowering salary in general is difficult to do. But this being the US, I suspect it won't be much of an issue for Facebook.
yes, during hiring process for on site jobs based on local competition among employers and employees
if you are not competing locally, but with everyone everywhere salaries based on location become meaningless and only thing which counts should be productivity, why should be anyone having same productivity punished for being frugal instead wasting money?
by your logic they should go through your list of expenses, someone who prefer to buy Tesla over ford should get higher salary, someone who prefer to spend vacation in Europe instead of US should have higher salary, this is pretty insane discriminatory logic
Salary drops won't happen based solely off the cost of living. For example, based purely off the cost of living, you could move to a rural city in Iowa and only have a cost of living change in the $30 - $40k range (average SF rent being $3,700, high end Iowa rent being around $1k range). But your actual salary change will be in the $50-$100k range (based off stated numbers in similar articles).
This is how prices are set. If you think labour is "value added less some employer fair cut", think again.
This also feeds directly into high land costs making industry less competitive or even infeasible, requiring for example offshoring.
This entire thing is quite interesting. For example you might want to live in the middle of nowhere out of choice, however it might be more economically beneficial, after you subtract rent costs, to live in a suburb or near enough to a major city to qualify for the higher pay due to the higher median salary. Or it may be the inverse, getting too close is a problem. Part of this would depend on how FB choose to compute this.
People are free to continue operating in the same capacity they were when first offered the salary (working in SV office). If they want to change that, then they are renegotiating the terms of employment and hence should expect salary adjustments.
Claiming residence in SF or NYC during the hiring process, then starting working somewhere else...
The best way about this is for FB to split the difference. Eg. if your average tc is 300k in SF, and it is 200k in North Carolina, if you decide to move there, you will be slotted down to something in between so it becomes a win win.
> Claiming residence in SF or NYC during the hiring process, then starting working somewhere else...
It would be a bit of a cat and mouse game. Companies can trace where you are working from VPN logins. I suppose you could VPN through San Francisco then VPN into your corporation’s network, but they probably monitor for use of common VPN providers. Plus during your meetings, etc, you coworkers would notice if you moved.
Whatever solution you use for your legal address could also provide a dedicated VPN and even mail scanning/forwarding. For example, renting a shared room in an apartment with 9 other roommates (one or two who live there full time), and use the premise Internet connection for a VPN server with a nice clean residential IP. Even more practical if there is an option to stay overnight occasionally, and your full-size residence is only several hours drive away. I can even see these type of arrangements arising naturally when roommates move out. Watch your MTU though!
One would imagine they would want your regular dev to be in cheaper locations (same TZ perhaps) and only very good dev in higher cost locations.
The land market cost moves on this could be huge if many companies do this. IMHO it could be bigger than any effect UBI might have had, as typically UBI would see lower earners flee high cost to new "marginal" areas with their UBI income. In this case it's mid to high earners who are suddenly able to flee the nest, which I feel could have a larger impact on land costs. Very interesting times.
>Zuckerberg said Facebook will monitor adherence by checking where employees access its VPN. Facebook also uses its own apps' to track employee locations, according to CNBC
So all I need to do paycheck arbitrage is to use a VPN with private residential IP (yes, that's a thing), and a rooted/jailbroken phone that does location spoofing?
It's Facebook. You already know they use hundreds of sources of information to track and categorise people. Zuckerberg and CNBC just mentioned two.
That said, I expect you can fool Facebook for a while with high probability. You might need to commit fraud and/or tax evasion to do so, so that raises the bar.
Question: can you even work at Facebook without having an account and using it?
The biggest risk of leak would be during usage of their services like their app and/or website on personal devices. If you can work there while only using their issued work laptop it would be pretty easy to contain by sticking it behind a VPN router.
> It's Facebook. You already know they use hundreds of sources of information to track and categorise people. Zuckerberg and CNBC just mentioned two.
To be fair I once interviewed at Facebook and to my surprise the CV the recruiter pulled was one I’d applied with three years ago, so the system isn’t all that foolproof.
Yes but on the other hand this anecdote highlights their talent for maintaining a dossier of your personal information spanning not only many types of sources but also many years.. :) / :(
I really just need a closet in SF with my own gear and off to the races.
It's a shame slavery doesn't exist any longer. I'd sell myself to a company owned by a shell company I control in a state where slavery is illegal and siphon all my income that way.
Really? I'm a dev (although not at Facebook) and I travel for work several times a year. Also, all of the remote employees I've worked with have traveled to the office occasionally.
dunno i’ve been fully remote for 6 years now. Many reasons people get together. Several times a year is my experience. Would be a tough pill to swallow to have to secretly travel to town, get a hotel, all on my own dime. What a huge stress & pain in the ass.
edit: In fact, “get the team together quarterly” is, last I heard, pretty standard guidance for distributed teams. I think it’s a fair assumption if you have little experience working remote. There’s more travel involved than you think though.
Is it possible to nest VPNs, i.e. connect to a VPN in the location of the preferred fake home, then connect to Facebook's VPN through that? I genuinely know enough about VPNs to know if this is possible or not.
That's only an issue if the use of a non-jailbroken/rooted phone is a requirement for doing the job. "I like my phone rooted/jailbroken" is a plausible excuse already.
Employees who attempt to wiggle around those compensation adjustments will be subject to “severe ramifications,” [Zuckerberg] said, as the company needs to account for employee locations to avoid violating tax laws. Zuckerberg said Facebook will monitor adherence by checking where employees access its VPN. Facebook also uses its own apps' to track employee locations, according to CNBC [...]
(See https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu... about SNI.)