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.
