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Ask HN: Local vs. remote salary gap

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Re: Ask HN: Local vs. remote salary gap

#21

Post by ryanSrich »

zaroth wrote: post #20
ryanSrich wrote: post #17

Earlier quoted context omitted.

What doesn't seem fair is that if I move from San Francisco to Kansas City to save money my pay goes down. I'm not doing anything differently. I'm still working the same amount of time, doing the same level of work.

Dollars simply aren't worth the same in San Fran as they are in Kansas City. Your pay is actually not "going down" in an economic sense. Taxes are part of it. If overall state taxes (property, local, state, sales, and other fees) is 25% of your gross in CA, and 15% of your gross in MO, companies can reasonably expect to pay less in MO for the same work. Another way to think about it, what percentile does your pay fal…

But you're still emphasizing a personal decision that I choose to make. Don't worry about what I do outside of work or where I live.

Worry about the quality of the work I produce for you and then pay me for it.

I completely agree with you in regards to a dollar being very different in SF as compared to KC, but that should have no relevance to how much I get paid.

> Your pay is actually not "going down"

Yes my pay actually is going down. I would literally be brining in less money. What I choose to do with that money should not matter to my employer.

Re: Ask HN: Local vs. remote salary gap

#22

Post by Rapzid »

ryanSrich wrote: post #17
bgun wrote: post #15

Earlier quoted context omitted.

We try to equalize net pay taking into account a reasonably consistent standard of living. As mentioned above, equalizing gross salary across geographies where employees have dramatically different purchasing power doesn't feel fair and takes a toll on morale. If you move often and work remotely, it seems to me that salary renegotiation would become as routine as any number of other tasks you doubtlessly encounter.

What doesn't seem fair is that if I move from San Francisco to Kansas City to save money my pay goes down. I'm not doing anything differently. I'm still working the same amount of time, doing the same level of work.

Just do not accept a pay cut. Really, if a company needs someone they will pay what makes sense. They may want to pay you less because reasons, but if your their man you can get the pay you seek or just look on.

Re: Ask HN: Local vs. remote salary gap

#23

Post by rudyfink »

izolate wrote: post #14
bfwi wrote: post #6

Earlier quoted context omitted.

As I read this, Buffer doesn't pay remote employees less. Rather, you're payed more if you work from expensive cities (eg. Hong Kong), than if you work from cheaper cities (eg. Bucharest)

I've never understood or agreed with this approach. Your lifestyle choices should have no bearing on your salary. If somebody reduces costs by choosing a cheaper city to live in, it should be regarded as any other frugal activity. That is, an independent and completely personal affair. I understand the cost saving benefit from an employer's perspective, but since that's not me, I've chosen my side.

I've seen two general explanations. I'll present them without comment, though I recognize there is plenty of room for that on both: 1) it's considered easier to justify internally, since the worker in the more expensive area is being paid at a closer to market rate for their market (rather than above rates in their market); or 2) the management of the organization is usually located in the more expensive area and internally evaluates rates there as the baseline (and the remote rate(s) as the negotiated special cases).

Re: Ask HN: Local vs. remote salary gap

#24

Post by michaelt »

ryanSrich wrote: post #12

It's very interesting to read that most companies change salaries based on location. I'd like to hear from someone in a senior level position explain the reasoning behind that. I think that it would make the most sense to pay someone what they are worth, regardless of location. As a remote worker who moves quite a bit I'd be constantly having to renegotiate my salary.

Let's say market rate for a programmer in San Francisco is five times the market rate for an equally good programmer in Bangalore.

Why would you hire one guy in Bangalore and pay him five times market rate, when you could hire five guys and pay them exactly market rate, and presumably get a bunch more work done?

(Obviously it isn't quite this simple, programmers are special snowflakes who cannot be substituted, it's worth paying more for talented people who get more stuff done, larger teams have greater management and communication overheads, remote workers will be in inconvenient timezones etc but my point remains even if you decided to hire three guys at 60% above Bangalore market rate)

Re: Ask HN: Local vs. remote salary gap

#25

Post by crpatino »

ryanSrich wrote: post #12

It's very interesting to read that most companies change salaries based on location. I'd like to hear from someone in a senior level position explain the reasoning behind that. I think that it would make the most sense to pay someone what they are worth, regardless of location. As a remote worker who moves quite a bit I'd be constantly having to renegotiate my salary.

Definitively not a "senior level position" guy, but let me give it a try.

There is no such thing as what you are worth.

Let's assume that it is possible to asses your BaseWorthIndex, which would include such factors as your technical skills, people skills, general experience, relevant industry experience, motivation, work ethics, etc. You will notice that even this base index will not be a constant over time (in general, you learn as your career moves forward, but you may also pick up vices), nor will it be the same for all positions for which you are a potential candidate (industry experience and motivation may vary widely from one position to another).

If you want to consider that your TrueWorth is the amount of value you add to your company by direct result of your labor, you have to consider that this is proportional not only on your BaseWorthIndex, but on a number of force multipliers that your employer provides (or fail to provide). Doing the same excellent work for an obscure IT department in some random enterprise, for a high tech big corporation, for a SV startup or for a non profit results in very different outputs, and that more often than not these are out of your control.

In a sense, the employers with bigger multiplier factors want to bring in the best talent, and should pay above average salaries, industry-wise, but it's not required that this extra factor has to be directly proportional to the value added by your position.

If on the other hand, you want to define your TrueWorth in terms of a ratio between your BaseWorthIndex vs average BaseWorthIndex for your industry, you are in similar problems. Being (noticeably) above average means you may command above average salaries, but it does not mean an arithmetic proportion will be calculated; after all, our BaseWorthIndex is a fiction and it would be extremely hard to measure.

Then there is the issue of cost of living. Since as we discussed before, your compensation is not defined in absolute terms but relative to your peers, the issue of how much does it take to make a decent living at your current location comes to play. Take into account also that this is an asymmetric market and that you are always at disadvantage. I have seen more than one good friend and colleague been lured to NYC or SV/SF on the promise of plump returns, only to find out that cost of living lets them in worse conditions that what they had already achieved locally.

Re: Ask HN: Local vs. remote salary gap

#26

Post by dankoss »

programminggeek wrote: post #18

I think there is something sort of foolish about the fact that across the board employees are basically not allowed to mention real numbers regarding how much they make or even things like the industry average pay. Read these threads and you almost never hear anyone mention real numbers because they are terrified of either being fired or having their peers realize what a good/bad deal they've made. Yet, in a lot of p…

I'd suggest the reason people don't want to talk about how much they make is that it's a reflection of their self worth, and there's always someone who can anonymously claim to make more.

Re: Ask HN: Local vs. remote salary gap

#28

Post by michaelt »

programminggeek wrote: post #18

I think there is something sort of foolish about the fact that across the board employees are basically not allowed to mention real numbers regarding how much they make or even things like the industry average pay. Read these threads and you almost never hear anyone mention real numbers because they are terrified of either being fired or having their peers realize what a good/bad deal they've made. Yet, in a lot of p…

  Companies probably don't want people to know what other
  people make because it gives the individual leverage to 
  negotiate. We as developers are terrible at negotiating 
  and don't want to admit it.
If you're a developer who is good at negotiating, it's a whole lot easier to negotiate a $20,000 raise for yourself than to negotiate the same raise for everyone on the same pay grade.

If I make the company $200,000 that funds my $20,000 raise right there - if it's just a raise for me. If I have to fund the same raise for 100 other guys before I can have one myself, funding that will be about 100 times more difficult.

Re: Ask HN: Local vs. remote salary gap

#29

Post by tinco »

izolate wrote: post #14
bfwi wrote: post #6

Earlier quoted context omitted.

As I read this, Buffer doesn't pay remote employees less. Rather, you're payed more if you work from expensive cities (eg. Hong Kong), than if you work from cheaper cities (eg. Bucharest)

I've never understood or agreed with this approach. Your lifestyle choices should have no bearing on your salary. If somebody reduces costs by choosing a cheaper city to live in, it should be regarded as any other frugal activity. That is, an independent and completely personal affair. I understand the cost saving benefit from an employer's perspective, but since that's not me, I've chosen my side.

People don't (usually) pick a city to live in because of the cost of living, it is simply a good/bad side effect. Family/friends/job opportunities are what really affects the decision to go live somewhere. From that perspective it makes sense as an employer to try and give all your employees a chance of the same living standard, regardless of city choice.

Also, from a employees perspective if you feel you're getting a lower wage than someone who is of less value to the company, you can always try and renegotiate your salary.

Re: Ask HN: Local vs. remote salary gap

#30

Post by TheCoelacanth »

GFK_of_xmaspast wrote: post #4
nedwin wrote: post #2

It's relatively common for their to be a gap between local and remote developers. Buffer have been incredibly transparent about their approach to this: http://open.bufferapp.com/introducing-open-salaries-at-buffe...

Incredibly transparent about their low-ball salaries.

It seems like instead of being low across the board, their base salary is too high and the premiums for expensive locations and for experience are too low. For instance, a junior engineer working in Manilla is making a killing while a lead engineer working in San Francisco is getting horribly low-balled.
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