This debate has come up at my place of work recently: Should the area where someone lives impact their salary if they are working as a remote employee? Should someone be paid less if they move to an area with a lower cost of living, even if they started in an area where they were making a higher salary?
Ask HN: Should a remote employee’s salary be tied to their physical location?
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Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#2Does your company base it's product price on cost or value when selling?
Should employees be thought of differently?
My answer is No, they should not have to take a pay cut based on location.
Another thought, if you do cut their salary, what does that do to loyalty and retention? Will you be paying more in the end to replace good people?
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#3Yes, and it should also be tied to their spouse's income, their sex, gender, age, and skin color, to keep things fair. Perhaps their sibling's/ancestor's income too. Make sure you account for all these factors to keep things equal.
But if you're not able to account for all these factors, why not determine what an employee at a given level is worth to the company, and pay that amount to anybody who can successfully communicate & do the work, regardless of their circumstances or physical attributes?
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#4Does your company base it's product price on cost or value when selling? Should employees be thought of differently? My answer is No, they should not have to take a pay cut based on location. Another thought, if you do cut their salary, what does that do to loyalty and retention? Will you be paying more in the end to replace good people?
It's rare to find a large national or international business that doesn't price differently based on location. This sometimes is due to taxation difference but mostly due to regulatory differences that effect the cost to deliver. Even companies that have flat list prices, what you'll find is that discounts are offered based on a number of factors with economic location being one.
If location was the only factor that changed then I would a agree that the companies monetary exchange for work value should be the same. It's very rare that when making a move like this that location will be the only factor that changed.
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#5Only if it’s reviewed for cost of living adjustments each year IMHO. In Texas, DFW used to be cheap. It’s on par with Austin now.
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#6Does your company base it's product price on cost or value when selling? Should employees be thought of differently? My answer is No, they should not have to take a pay cut based on location. Another thought, if you do cut their salary, what does that do to loyalty and retention? Will you be paying more in the end to replace good people?
It's rare to find a large national or international business that doesn't price differently based on location. This sometimes is due to taxation difference but mostly due to regulatory differences that effect the cost to deliver. Even companies that have flat list prices, what you'll find is that discounts are offered based on a number of factors with economic location being one. If location was the only factor that…
If you sell a physical product, this is often the case. When I sell license for access, I charge based on value, not how much it costs me to deliver. Even physical products, which have not been commoditized, see value based pricing.
When a person moves, what other factors are effecting the company which justified the reduced salary?
If someone did that to me, is be looking for new work while grumbling doing old work. So if you do this and lose the employee, does it actually cost the company more?
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#7No. Scaling income with CoL is just subsidizing the housing costs of people who want to live in more desirable locations.
If someone wants to spend part of their compensation on living in a nice area, fine. But if someone else would rather take that compensation and live in a lower CoL area then let them.
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#8I see the point of taxes being raised, so that's fair, but really I'd expect that, before taxes and other required benefits and deductions, the salary being offered should be the same. I can't see how one could reasonably rationalize that one worker is delivering less value to the company simply because they live somewhere different than the other.
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#9No that makes no sense. The only reason it used to be that way is because companies had to pay a living wage for employees that lived near their offices.
There’s no good reason to hire from HCOL areas over others now so there’s no real reason for companies to pay extra.
Re: Ask HN: Should a remote employee’s salary be tied to their physical location?
#10They should be the same, because they provide the same value to the company.
Also, there are trade-offs to where one lives.
I probably don't need to list the up and downsides of urban living to this audience, but living in a rural area, you:
- Definitely can't get by without a vehicle, if you live some distance from a city
- Fuel for that vehicle
- Goods and services tend to cost more
- Less convenient access to museums, parks, gyms, etc.
- Often more money is needed to maintain real estate.