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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?

#61

Post by BeetleB »

kyriakos wrote: post #38
s1t5 wrote: post #28

Earlier quoted context omitted.

> determine what an employee at a given level is worth to the company Nobody does this. It's not even possible apart from the most contrived cases. Salary is determined by a number of factors none of which have anything to do with the employee's worth to the company.

I agree that it's not happening but this is how it should be happening.

I believe that s1t5 is trying to say no one does it because it is very hard to do.

Especially in a bigger company, where the work you do is tied to so many others' work in the company (sales, etc) - how do you expect them to figure out what the value of the work you did is, vs your teammates, let alone vs all the non-SW folks involved?

Example: You could have done a great job, but someone further down the pipeline screwed things up and the product never got released, and your code is never reused. This is a case where your work produced no value to the company (through no fault of your own). Should you get paid $0?

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#62

Post by hysan »

The question feels too open ended in the sense that there is no baseline premise on how the adjustment is being made. Cost of living varies greatly, can change at different rates, and if you're talking about the US, there are some aspects of your pay that aren't directly reflected in your salary - health benefits.

Let's take that latter point as an example. Health care plans differ per state and you are usually better off having your health care plan be from the state you are living in. At all the companies I've worked at, the plan is usually from the state where they have their HQ and subsequently, most employees. If you live in a branch office, that means your plan isn't as useful to you (this actually factored into comparing similar offers to me recently).

Now an employee moving knows the risk and how this will affect their coverage. For a company to adjust their salary based on where they live, how will they take this into account? Are they going to do a per-state/per-city level analysis of say, how their provider network coverage differs? Then pay you more if your coverage is worse off?

I'm not a risk taker, but I'd be willing to bet that most debates won't take something like this into account. However, this and many other factors matter a lot in determining what is considered "fair" compensation for a given area. If the premise of what a fair adjustment is cannot be established, then I believe that this isn't even a debate because the hypothetical reduces to, "what excuse can we use to cut someone's pay?"

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#63

Post by johnminter »

In my opinion one should be paid a rate commensurate with what you produce for your employer. If you choose to live in a remote location where your salary goes further, you should be able to enjoy that outcome. It should be no surprise any adult that employers will pay the least they can. When they do that, employees vote with their feet. Good employers count the cost of turnover and generally pay what is required to keep their productive employees. Large systemic changes upset the "normal case". My friends (and their managers) left at the company from which I retired took pay or hour reductions to get through the covid-19 issue. Nobody liked it, but there were few options at the time.

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#64

Post by R0b0t1 »

air7 wrote: post #27

Higher salaries are not compensations for higher CoL but rather both are a result of more demand to live in a certain area (partially because of there being many jobs but that's unrealated). If a company wants to attract talent in an area with a lot of competition it has to raise its salary offers. And rent goes up in the same way. So no, it's fair (in some sense) to offer people different salaries based on their loc…

The issue is when the companies aren't trying to attract people. If the work can be done remotely they typically want to pay less based on local CoL.

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#65

Post by BeetleB »

mandelbrotwurst wrote: post #39
s1t5 wrote: post #28

Earlier quoted context omitted.

> determine what an employee at a given level is worth to the company Nobody does this. It's not even possible apart from the most contrived cases. Salary is determined by a number of factors none of which have anything to do with the employee's worth to the company.

> "none of which have anything to do with" This is hyperbole, right?

Not by much. Salary is mostly decided by supply and demand. These are tied to your worth to the company, but very loosely.

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#66

Post by R0b0t1 »

cameronbrown wrote: post #31
R0b0t1 wrote: post #7

No. 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.

But we're not paid by CoL, rather, the job market. If I move to a very small but expensive village, I'm not going to get paid more than being in London. Silicon Valley is just a weird edge case where there's so much talent in one place that it's affecting CoL. Regardless, there's always going to be a premium on in-person talent.

Yes and no. If a company wants to pay less they typically calculate their reduction based on CoL. But I agree that it is doubtful they'd ever pay more.

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#67

Post by bboygravity »

bradstewart wrote: post #47
bboygravity wrote: post #32

Earlier quoted context omitted.

> 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? Sounds good to me. I'd be a retired millionaire at age 30 something if any of the companies I've worked for (remotely or otherwise) followed that l…

> I'd be a retired millionaire at age 30 something How do you know what value the companies would assign to those factors?

They assign to those factors whatever you can convince them of as an employee/contractor during your interview :)

In case you're fixing an existing problem, the cost of the problem is often roughly known (like in my example). Lost clients due to the specific bug, current clients threatening to leave, sunken/running R&D costs without a solution, missed sales/tenders where clients mentioned the bug as a reason, long term damage to the brand, etc. You might be able to roughly extrapolate that into the future.

In case you're working on a new product or general improvement it can be impossible to measure how much your contribution was worth.

Hence, employees/contractors are usually valued by the hour or by the amount of equity they own and not actually by their value to the company.

In some industries it is possible to be valued exactly by the value you saved. A common example that comes to mind: a lawyer who does pro bono work.

Another example in engineering: filing warranty claims for failing (very expensive) products. You could negotiate to get a percentage of every successful claim. I've heard of people making millions that way in aerospace. Apparently companies in aerospace for whatever reason often don't claim warranty when they're entitled too. Keep in mind that large companies in some industries really really don't care about a couple of deci-millions here and there because their turnover is in the billions and they have "better things to do" :D

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#68

Post by elmerfud »

verdverm wrote: post #6
elmerfud wrote: post #4

Earlier quoted context omitted.

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.…

I can see factors that effect company to potentially be taxation compliance and employee regulatory compliance to be a big factor if the move was to a different state/jurisdiction. A very quick example is that some states require that accrued time off is an earned benefit and must be paid out when it expires or you quit. Other states do not. There's many such compliance issues to worry about with an employee.

Additionally, moving also usually accompanies lifestyle changes as well. Is the timezones the same as other, will collaboration be the same as it was before? If travel is required will they still have the same access to do so? Will internet access be the same or stable as before?

There are many factors, perhaps the only change is the physical location and everything else is equal but it's almost needs to be determined on a case by case basis.

Re: Ask HN: Should a remote employee’s salary be tied to their physical location?

#69

Post by rz2k »

In a well functioning labor market, employee should earn more than the minimum they would accept to do the job and employers should pay less than the employee is making the firm.

Who gets what share of that surplus value from the transaction is a negotiation. Arguments about what's fair and other normative statements are definitely an effective way to influence those negotiations.

If an employee does something to earn a company a lot more money, they're not automatically entitled to that additional income, but they have a lot more room to negotiate their compensation. The same goes for assumed changes in an employee's reserve price.

Even from a purely self-serving perspective, it is worth considering that offending employees or colleagues is liable to change morale and output before they leave. Additionally, the rising acceptance of remote work doesn't just mean that there are new considerations about living expenses, it means that companies aren't just competing with local companies for talent. That star employee who has just moved to a cabin in the woods could very well have more options in 2020 than they did in 2019.

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