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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?

#71

Post by deepakkarki »

winter_blue wrote: post #45
screye wrote: post #21

At a practical level, the industry will pay you the least amount of money for which you will accept the offer. In SF/Seattle, if they do not add the COL multiplier, your wages are low enough, that you might reject the offer. On the other hand, it is quite unlikely for a person to able to find another competitive offer, even if their salary is significantly lower than their colleague who make less. At an ideological l…

> I do not believe every talented European is 40% as capable as the average developer in the US. I do not believe that the same software engineer that made $10k in India, suddenly brings 10x as much value due to a 1 year masters, once they move to the US. Exactly. The salaries in some countries (e.g. India) are so low that it befuddles me. In smaller cities in India, software engineers actually make closer to around…

People starting at $4K are the ones who work for consultancies like Infosys, Wipro, et al. There is a reason why they're paid so less. They're usually graduates from terrible engineering colleges who have no real engineering skills what so ever. They undergo a 6 month training period before they can even start working.

My friends in Google India on the other hand make close to $50K/yr. My friends in Google MTV make $200K/yr. So the difference is 4x, not 100x.

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

#72

Post by munificent »

"Should" is one of those words that means less and less the more you look at it.

One way to define it is, "Do employees like it?"

If you accept the premise that markets are good at finding optimal prices where "optimal" means "greatest aggregate satisfaction of all participants", and you believe that the job market is relatively efficient, then it means you can trust the job market to answer your "should" question for you.

(It's OK to not accept these premises, of course, or to partially accept them. Personally, I think the job market is somewhat efficient. There are lots of both buyers and sellers. There is a fair amount of information available to all participants. However, switching costs are pretty high, which artificially disincentivizes job hopping.)

You might assume that employees would not like it because they'll get paid less in a cheaper area. But employees in more expensive areas will get paid correspondingly more. And, if your goal is to maximize total happiness across all employees, you'll probably find that yes, it makes sense for salary to vary based on cost of living.

Another definition is "Is it good for society?" In other words, what incentives does this choice create, and do we like the consequences of incentivizing that?

Salaries that do not take cost of living into account are essentially pay raises for living some place cheaper and pay cuts for living some place more expensive. That incentivizes people to move to cheaper areas.

That could be a good thing for the US. Ever since our ag industry automated and our manufacturing industry moved overseas, we have lost most of the forces pulling people towards smaller cities. The result is an increasing concentration in a few metro areas not designed to handle that population. This in turn creates a bunch of knock-on effects: greater homelessness, greater economic sorting where people rarely interact with people outside of their economic level, and increasingly painful commutes for lower income people.

An incentive to mitigate that and encourage Americans to move out of the big cities could be a good thing.

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

#73

Post by JoeAltmaier »

munificent wrote: post #72

"Should" is one of those words that means less and less the more you look at it. One way to define it is, "Do employees like it?" If you accept the premise that markets are good at finding optimal prices where "optimal" means "greatest aggregate satisfaction of all participants", and you believe that the job market is relatively efficient, then it means you can trust the job market to answer your "should" question fo…

Pay raise and pay cut are not justified descriptions. Given folks can live where they like, its simply a choice of where you want to live, vs what you can afford.

I agree that work and location will be decoupled for information workers, because the modern world is going that way. Its just something we'll have to adapt to.

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

#74

Post by SketchySeaBeast »

graerg wrote: post #48
SketchySeaBeast wrote: post #8

I 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.

>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. I can definitely _see_ how one could make that argument. In some cases there is absolutely value that comes from in-person interaction. I'd argue it's far less than the salary difference between someone in Little Rock, AR and the Bay Area, though. If an…

You're right - there could be value in a local worker - but I'm assuming we're comparing two remote workers.

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

#75

Post by vsareto »

bboygravity wrote: post #32
newsbinator wrote: post #3

Yes, 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 co…

> 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…

Sadly, companies basically have no obligation to pay out for this kind of contribution since you basically gave it to them for free. You're kinda working for 'exposure bucks' in this regard.

If you somehow save the company (provably), do you get to own the company? Likely not, although most of the lower employees probably would vote for that if it meant they kept their job vs. the company dissolving.

But companies can do this too: "If we hire you and you make a simple mistake and leak our database or something, do we get to charge you millions in potential damages?" At some point it goes to a court.

Maybe you just have to get adversarial and say "I can save you tens of millions and you should give me a million dollar bonus if it works, but if the bonus is not in writing, I won't give it to you".

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

#76

Post by kyteland »

screye wrote: post #21

At a practical level, the industry will pay you the least amount of money for which you will accept the offer. In SF/Seattle, if they do not add the COL multiplier, your wages are low enough, that you might reject the offer. On the other hand, it is quite unlikely for a person to able to find another competitive offer, even if their salary is significantly lower than their colleague who make less. At an ideological l…

To me COL adjustments are a proxy for the underlying metric of replacement cost. Employers are not going to pay someone more than the cost to replace them. For a lot of professionals this is dictated by their local employment market and COL is an easy way to approximate this.

However not every skillset is tied to local markets. My own job is fairly niche and the hiring pool is on a national level. If I moved to a low COL area my employer would have no leverage to reduce my compensation because they couldn't replace my skillset at that price. But that means the converse is also true. If I moved to a high COL area I would be laughed out of the room if I asked for more money. They could easily replace me for the current price regardless of where I chose to live.

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

#77

Post by happytoexplain »

newsbinator wrote: post #3

Yes, 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 co…

Fully half of your post is a sarcastic rant.

>why not determine what an employee at a given level is worth to the company, and pay that amount to anybody

Because the same salary may be worth the same amount to the company paying it, but it is not worth the same amount to different people receiving it. Among two equally valuable people, one may accept and one may decline due to salary's differing value to them based on environmental factors. This is obvious to businesses, and is generally accounted for (fairly or unfairly).

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

#78

Post by bboygravity »

winter_blue wrote: post #45
screye wrote: post #21

At a practical level, the industry will pay you the least amount of money for which you will accept the offer. In SF/Seattle, if they do not add the COL multiplier, your wages are low enough, that you might reject the offer. On the other hand, it is quite unlikely for a person to able to find another competitive offer, even if their salary is significantly lower than their colleague who make less. At an ideological l…

> I do not believe every talented European is 40% as capable as the average developer in the US. I do not believe that the same software engineer that made $10k in India, suddenly brings 10x as much value due to a 1 year masters, once they move to the US. Exactly. The salaries in some countries (e.g. India) are so low that it befuddles me. In smaller cities in India, software engineers actually make closer to around…

> Why are salaries so far apart, even with all the tech we have today? Doing remote work over the Internet is so easy.

I've struggled with the answer to this myself as well.

For some reason people leading companies decided that they want their employees to sit in an office. Even when there's 0 reason for it.

The best explanation I can come up with is plain old stubbornness with a hint of craving for human connection. The madness of crowds: everybody does it this way, so it must be the only way.

As a contractor I offer clients a 30 % discount on my hourly rate if they let me work remotely. Which is always possible. None of them care about the discount.

In the case of my clients most decision makers are around pension-age. The CEO at the last company I worked at didn't know what the possibilities of a VPN where until the pandemic hit. They didn't have the bandwidth capacity to let people work from home, because they had refused to pay a few thousand bucks for a company to lay fiber to the office a few years prior while the road was opened up. "Our internet connection is fine."

This was a tech company building equipment for physics experiments.

Business leaders literally have a hard time imagining the possibilities of the internet in 2020. It's still 1970 for a lot of people.

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

#79

Post by munificent »

JoeAltmaier wrote: post #73
munificent wrote: post #72

"Should" is one of those words that means less and less the more you look at it. One way to define it is, "Do employees like it?" If you accept the premise that markets are good at finding optimal prices where "optimal" means "greatest aggregate satisfaction of all participants", and you believe that the job market is relatively efficient, then it means you can trust the job market to answer your "should" question fo…

Pay raise and pay cut are not justified descriptions. Given folks can live where they like, its simply a choice of where you want to live, vs what you can afford. I agree that work and location will be decoupled for information workers, because the modern world is going that way. Its just something we'll have to adapt to.

> Pay raise and pay cut are not justified descriptions.

That's why I said "essentially". :) Compared to the alternative where salaries are location independent, it functions as a change in salary.

> Given folks can live where they like

Switching costs for moving are relatively low for young, healthy, childless renters, but are much higher for many others. Not wanting to move away from family (who may also be providing free childcare for you), not wanting to move away from close friends (who studies repeatedly show are critical for mental health), not wanting to disrupt your child's or partner's education, needing to find a buyer for your old house, finding a new house to buy, being underwater on your loan, not wanting to change doctors while in the middle of a long-term or chronic illness, having a hobby or passion that is highly location dependent, etc.

Moving is hard. Anyone who thinks it isn't likely hasn't put down roots enough to realize the benefits that accrue from not moving.

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

#80

Post by wmeredith »

tmaly wrote: post #57
screye wrote: post #21

At a practical level, the industry will pay you the least amount of money for which you will accept the offer. In SF/Seattle, if they do not add the COL multiplier, your wages are low enough, that you might reject the offer. On the other hand, it is quite unlikely for a person to able to find another competitive offer, even if their salary is significantly lower than their colleague who make less. At an ideological l…

> Everything points towards companies historically paying employees not the salary they deserve, but the salary they will accept. You hit it on the head. This is exactly what is happening. This is why people job flip every 2 years to increase their salary. Getting good at negotiation is critical if you are job searching.

I don't think this is an ideal state of affairs, but what's the alternative? Why would a company pay more? Have you ever gone to purchase an item or pay for a service and tried to give more than what was on the price tag or accepted quote? I have once or twice in my life, but it's certainly not a regular occurrence.
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