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.
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.