Our vision for location-independent salaries at Buffer • Hacker News Board

Re: Our vision for location-independent salaries at Buffer

#11

Post by Mave83 » Wed, Mar 02, 2022, 8:01 AM UTC

Why does it make sense to pay different per location?

Because you should pay equal. If you just use the same number on the payslip, some get more than others. It's like with currency. There is no reason to pay everyone 10k of their local currency, as that won't make sense. But paying 10k of the same makes none as well as for some this means they can have butlers, and other only get a bed under the next bridge.

Payment should be equal in Terms of living standard. Otherwise they are not equal.

Re: Our vision for location-independent salaries at Buffer

#12

Post by ehnto » Wed, Mar 02, 2022, 8:03 AM UTC

stavros wrote: post #4

I completely don't get location-based pay. I provide you with some work, that's worth some amount of money. Why does my location change the value of my work? Do I suddenly become better if I move to SF? I get that some people have arguments for it, I just entirely disagree that any of them are valid. Whether I'm in a city that costs a lot to live in is no more the responsibility of my employer than whether I like to…

I don't disagree that it's silly but the common misconception is that salary is based on some kind value exchange, it's not. Salary is the minimum amount of money it will take to get someone to work for you. Of course there are exceptions, but most salaried workers are not the exception.

Maybe that price gets driven up because of HCOL, or maybe it gets driven up by market competition, or skills scarcity (putting the employee in a position of bargaining). But it also gets driven down by the opposite effects. In the global market there are people with lower costs, lower market competition, but the same skills, and they are going to accept a much lower amount.

Take insane wages in SV as a great example, HCOL causes people to not accept lesser amounts, as does market competition. The fact that someone is getting paid more in SV is not because they add more value, it's because they won't accept any less.

Re: Our vision for location-independent salaries at Buffer

#13

Post by Leherenn » Wed, Mar 02, 2022, 8:11 AM UTC

stavros wrote: post #4

I completely don't get location-based pay. I provide you with some work, that's worth some amount of money. Why does my location change the value of my work? Do I suddenly become better if I move to SF? I get that some people have arguments for it, I just entirely disagree that any of them are valid. Whether I'm in a city that costs a lot to live in is no more the responsibility of my employer than whether I like to…

It's not about the value you produce, that part is your compensation ceiling; it's about supply and demand. Cost of living is directly correlated with average pay in an area. If you are aiming as an employer to be in the top 10% of compensations, then that value will change based on whether the area average compensation is 50k or 150k (assuming a roughly similar distribution). Sure, you could pay the people from the low compensation area the same as the people from the high compensation area, but why would you? It would cost you a lot more while not meaningfully changing your recrutement pool since you are already at the top.

So, they pay less based on location because they can, your alternatives to a 70k salary are 50k salaries, and they know that. On the other hand, in the high paying area, the alternatives to that same 70k salary are at 150k, so you would never hire anyone. I think the more interesting question is why companies hire people at 150k when people at 50k exist (but this is a different question which has already been discussed plenty of times around here).

Re: Our vision for location-independent salaries at Buffer

#14

Post by SamReidHughes » Wed, Mar 02, 2022, 8:13 AM UTC

tr4389 wrote: post #5

I really hate location-based pay. Why should people from East Europe or Vietnam subsidize rich people in SF? If you can not afford your rent talk to city hall, get a van or change city! Do not export your problems to other parts of the world!

It's the employer capturing the surplus value, not the coworker.

Re: Our vision for location-independent salaries at Buffer

#15

Post by nightski » Wed, Mar 02, 2022, 8:15 AM UTC

Mave83 wrote: post #11

Why does it make sense to pay different per location? Because you should pay equal. If you just use the same number on the payslip, some get more than others. It's like with currency. There is no reason to pay everyone 10k of their local currency, as that won't make sense. But paying 10k of the same makes none as well as for some this means they can have butlers, and other only get a bed under the next bridge. Paymen…

Presumably if you are in a higher cost of living area you chose to live there because you obtain a higher standard of living (otherwise one may want to re-think that decision). Why should that be subsidized by your peers? Maybe I should get a raise to buy video games?

Re: Our vision for location-independent salaries at Buffer

#16

Post by chrischen » Wed, Mar 02, 2022, 8:15 AM UTC

Mave83 wrote: post #11

Why does it make sense to pay different per location? Because you should pay equal. If you just use the same number on the payslip, some get more than others. It's like with currency. There is no reason to pay everyone 10k of their local currency, as that won't make sense. But paying 10k of the same makes none as well as for some this means they can have butlers, and other only get a bed under the next bridge. Paymen…

I think location dependent pay doesn’t make sense, but on the employee side it means they must now compete for the same job in a location independent way. Either way salaries will probably equalize (get lower).

Re: Our vision for location-independent salaries at Buffer

#17

Post by lostdog » Wed, Mar 02, 2022, 8:15 AM UTC

stavros wrote: post #7

randomsearch wrote: post #6

Earlier quoted context omitted.

Well if your employer is based in NYC and they expect you to come to the office then presumably they can’t pay you Indonesian median pay. How is that hard to understand? If you’re talking about remote, maybe the argument stands up more, but I’d add that if a remote worker adds less value to the company (which I believe as a rule to be true, like for like), then you would pay them accordingly by that reasoning.

> If you’re talking about remote I am, as the post is too. > then you would pay them accordingly by that reasoning. Okay, but still none of these arguments means that one remote worker should be paid differently from another remote worker.

Typically your pay reflects the company outbidding other offers. If you are able to work locally for large tech companies (in SF or NYC), then you get higher offers, which even the remote companies need to outbid.

Re: Our vision for location-independent salaries at Buffer

#18

Post by SamReidHughes » Wed, Mar 02, 2022, 8:16 AM UTC

lmm wrote: post #8

stavros wrote: post #4

I completely don't get location-based pay. I provide you with some work, that's worth some amount of money. Why does my location change the value of my work? Do I suddenly become better if I move to SF? I get that some people have arguments for it, I just entirely disagree that any of them are valid. Whether I'm in a city that costs a lot to live in is no more the responsibility of my employer than whether I like to…

> Do I suddenly become better if I move to SF? You probably do - you're probably hanging out with other programmers more, maybe you can meet up with colleagues sometimes - or, even better, suppliers and clients. And you have more options for other employers, so you can capture more of the spread as producer surplus rather than consumer surplus.

Also, with a large pool of developers, employers get better matched with employees, creating more value. (At least this is true hypothetically. Maybe it was true before 2012.)

Re: Our vision for location-independent salaries at Buffer

#19

Post by chrischen » Wed, Mar 02, 2022, 8:17 AM UTC

nightski wrote: post #15

Mave83 wrote: post #11

Why does it make sense to pay different per location? Because you should pay equal. If you just use the same number on the payslip, some get more than others. It's like with currency. There is no reason to pay everyone 10k of their local currency, as that won't make sense. But paying 10k of the same makes none as well as for some this means they can have butlers, and other only get a bed under the next bridge. Paymen…

Presumably if you are in a higher cost of living area you chose to live there because you obtain a higher standard of living (otherwise one may want to re-think that decision). Why should that be subsidized by your peers? Maybe I should get a raise to buy video games?

People should call it “lifestyle based pay adjustment.”

Re: Our vision for location-independent salaries at Buffer

#20

Post by firstplacelast » Wed, Mar 02, 2022, 8:18 AM UTC

Mave83 wrote: post #11

Why does it make sense to pay different per location? Because you should pay equal. If you just use the same number on the payslip, some get more than others. It's like with currency. There is no reason to pay everyone 10k of their local currency, as that won't make sense. But paying 10k of the same makes none as well as for some this means they can have butlers, and other only get a bed under the next bridge. Paymen…

That seems ridiculous. If I buy something from an online store, I pay the same no matter where I live. I might pay more in transit costs/taxes, but I have personally never seen prices change for the actual product no matter where my shipping address is, which I put in last after seeing the price and adding it to a cart - and I use a VPN half the time, too.

Companies are purchasing labor (a product). Trying to undermine the costs because they have inside knowledge on how the meat is made (or where the meat is made) is just them using their leverage to extract a better deal. Totally normal tactic, they do this in every facet of their business. Employees should also grab as much leverage as possible from shopping their product (labor) to competitors or banding together with others (union/guild/etc) to get the best deal.

tl;dr It makes rational sense for companies to want to pay different per location. It makes rational sense for employees to say "cool, but no." There are many examples of price not being location-dependent in our capitalist system, at least many I have experienced at a consumer level. But maybe you are onto something and online consumer stores should all start changing the base prices once they see your zip code/state/type of credit card (I'm positive there are already some out there that do things along these lines).