It is interesting that the Slashdot crowd was fairly universal in panning the idea of paying people less if they lived in a low cost area. In my 17 years as a designated "teleworker" at a SV megacorp, they adjusted compensation ratios. This meant that they didn't reduce my salary when I moved from an expensive city to a cheap mountain town, I just didn't get raises for a few years because my comp ratio was too high. I don't understand why people would rail against this kind of policy. It certainly didn't motivate me to move back to an expensive city.
I'm not sure how well this would work out for those geo-arbitrage digital nomads, but I don't think that companies should be particularly accommodating that corner case.
I don't understand this take at all, it's effectively saying that your pay should be driven by your needs as opposed to the value you create. I can see companies deciding that in-person value is different than remote, but where you are remotely doesn't matter. Especially in the same timezone. Working remotely from Kentucky vs Brooklyn makes no difference to the company, so why should they pay them differently? Do you ask people what their net worth is, and then pay high-nw people less since they clearly don't "need" it? What about DINKs?
I think companies will only get away with this as long as the supply of remote work is low. Once you start to see hard-to-recruit people leaving for higher paying remote work at another company rates will go right back up. Geo-Arbitraging digital nomads are only a corner case because most people don't realize it's an option. Once it becomes the norm then what?
Your compensation is driven by several factors, the two biggest being how much value you generate and how easy you are to replace. It has nothing to do with your needs. Even Google's official compensation policy explicitly notes that cost of living is not a factor and only local competition density is.
The reason these adjustments are being made is because the whole world isn't remote yet. The engineer in Brooklyn could more easily go get a better offer at a Wall St job then the person in Kentucky.
People who believe that we're all going to be remote and keep our Bay Area/NYC compensation levels are laughably naive. It is possible that, your compensation relative to your cost of living might improve, but long term we will see equilibrium end up closer to average remote compensation than average BA/NY compensation.
It's true employees might more easily switch jobs, but hiring remote adds a LOT of candidates to a companies hiring pool as well (which is why they're doing it). Furthermore, a push for a stronger remote technical culture with more async communications, more documentation, etc is inevitably going to make the outsourcing efforts of the 2000s a lot more viable. There's still time zones and language barriers, sure, but remote work solves several other challenges.
Finally, even if your current employer keeps your compensation the same, you have to question how it will affect your next job search.
People seem to be thinking that they are going to take Bay Area compensation and go settle in the middle of the country and live like a king. Short term that may happen, but long term it's an absolute guarantee that tech compensation stagnates or goes down because the supply of the labor pool increases so much with remote candidates. That's a major rationale for companies going remote in the first place.
An element that is often missing from the conversation is the opportunity cost of the employee. A significant portion of a worker’s compensation should to go paying his opportunity cost. I think that despite similar productivity and the recent rise in remote work, an employee’s opportunity cost is reduced if they move to a remote mountain town.
It happens because pay is balancing employee demands with company number needed. Employees in lower cost areas will very often accept lower pay. It's still often very high pay for that area. I grew up in oklahoma where median entry pay for tech is roughly half of bay and fb is way above median pay in the bay. So to many people from back home even if fb gave an offer 30-50 percent less it'd still be much better than most local options. While I expect more companies being remote to put some pressure on salaries upward I do not expect it to ever be equal to hcol areas. I expect it'll converge to like 20-30 percent lower. Noticeable but still massive gain for those places.
The primary factor that defines compensation is competition; the market-clearing wage is a supply/demand thing - ask yourself whether junior developer productivity is that much higher now than a few years ago despite soaring pay.
Your value-added just represents a ceiling on how much its rational to pay you in some sort of vague career-adjusted terms; the vast majority of people don't even have jobs where that can be measured. Even those where it looks simple (say, sales) are actually much harder than you'd think.
This actually happened to one of my former teams. We lost 50% of the team in the space of a few months. As far as I know everyone got 10%+ raises from value-focused employers over the regionally paid company.
> I don't understand this take at all, it's effectively saying that your pay should be driven by your needs as opposed to the value you create.
Yes? Do you imagine a skilled programmer living in India gets paid the same for the same work as a skilled dev living in Indiana?
Look, I'm all for less exploitation of workers, but I don't see how it's suddenly outrageous for American workers to experience employer relationships the same way those in India, Australia, or Vietnam do.
Your pay is driven by your political status. It has nothing to do with value generated or with needs.
If an employer is defining it according to your needs, that's a sign you have relatively low status. It's not a sign that the employer is correct.
This is partly why remote has huge potential benefits for employers. Committed remote means huge savings on office space. But it also lowers the chances of collective political activity, including unionisation.
For new hires I suppose it's okay but to adjust the pay of an existing worker whose output remains the same afterwards because they relocated is a bit insulting to me. It's a pay cut, not a "COLA".
This is irrelevant, though. You aren't paid based on your output, you're paid based on how much you cost.
Think of how much you pay for water. In place A, you might pay $0.02 per gallon of water. You move to place B, and they only charge $0.01 gallon of water. Are you going to keep paying $0.02/gallon? The value that the water provides to you hasn't changed, but why would you keep paying $0.02 when you could get it for $0.01?
In FB's view, you aren't any different. Even if you provide the same value, there's no reason to keep paying you $300k when they could pay you (or someone who replaces you) $150k.
My experience with these kind of dislocations is that your HR department starts tracking your target number internally based on your new circumstances and you don't see any pay rises until that number exceeds your actual.
I think it would be reasonable to pay people extra if they live in an expensive place, and the company actually needs them to be in that place. Like maybe they have to be able to get on site at short notice, so they need to live right by the office, or the data center.
The CoL adjustment is max 15% within the US. If you’re moving out of SF or NY to a lower CoL area, you’re making bank just on the taxes, much less CoL.
It is interesting that the Slashdot crowd was fairly universal in panning the idea of paying people less if they lived in a low cost area. In my 17 years as a designated "teleworker" at a SV megacorp, they adjusted compensation ratios. This meant that they didn't reduce my salary when I moved from an expensive city to a cheap mountain town, I just didn't get raises for a few years because my comp ratio was too high. I don't understand why people would rail against this kind of policy. It certainly didn't motivate me to move back to an expensive city.
I'm not sure how well this would work out for those geo-arbitrage digital nomads, but I don't think that companies should be particularly accommodating that corner case.