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Our vision for location-independent salaries at Buffer

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Re: Our vision for location-independent salaries at Buffer

#21

Post by rahimnathwani »

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…

Salaries don't differ because of cost of living. They differ because of supply and demand.

A software engineer in SF probably has a higher BATNA than one in Delhi. Not in every case, but in most cases. So the amount you'd need to pay her to accept is higher than the amount you'd need to pay the engineer in Delhi.

You could decide you'll pay them both the same. Or you could decide you're not willing to pay SF salaries and will only hire people outside the US.

But, even if you do this, would you be willing to pay every employee at each level the same amount as the highest paid employee at that level?

If the answer is 'yes', what's the most expensive city you've visited? How much was a typical restaurant meal there? Do you pay that amount at every restaurant you visit, wherever in the world you are? I mean, the value of each meal is the same, right?

Re: Our vision for location-independent salaries at Buffer

#22

Post by bryanrasmussen »

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?

>Presumably if you are in a higher cost of living area you chose to live there because you obtain a higher standard of living

right, or you were born there and have obligations and connections that keep you from saying well I am going to move now because my computations indicate that will be the optimal result!

At any rate, if I am in a higher cost of living area and your company will only pay the wage that fits the lower cost of living area that obviously means I will not work for you, and I think that is the case for anyone working in higher cost of living areas. So if you want to hire someone in higher cost of living areas you will have to handle that situation. And then we come back to the considerations that the parent poster said.

Re: Our vision for location-independent salaries at Buffer

#23

Post by bryanrasmussen »

firstplacelast wrote: post #20
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 undermi…

>If I buy something from an online store, I pay the same no matter where I live.

that is probably incorrect. Lots of places charge different based on location.

Re: Our vision for location-independent salaries at Buffer

#24

Post by awb »

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…

> Why does my location change the value of my work? Do I suddenly become better if I move to SF?

Plumbers charge more in SF than in rural Idaho.

A plumber that moves from Idaho to SF starts charging more because 1) they need to to compensate for the high cost of living and 2) to keep up with market rates.

SF would have no plumbers if they all thought it was immoral to charge more than their counterparts in Idaho for the same work.

And SF would collapse economically if all salaries in all industries across the city were suddenly paid based on a national average, independent of cost of living.

Re: Our vision for location-independent salaries at Buffer

#25

Post by ithkuil »

ehnto wrote: post #12
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…

And cost of living is also driven by how much local industries can pump up the salaries.

In a way it's a system designed to extract the most of the value generated by a local industry, "taxing" it at every layer, first you give some money to a engineer that then has to part a good chunk of it for rent and then even plumbers get their cut (who in turn spend it elsewhere), etc.

The key insight here is the word "local" in "local industry".

As the industry itself starts to be less local, this mechanism breaks down.

Re: Our vision for location-independent salaries at Buffer

#26

Post by tails4e »

I have to say I am constantly amazed at how high silicon Valley renumeration is. 600k to 1M would get you a lot of engineers pretty much anywhere else. Even if we don't look at the higher end, 200k is very common it would seem, and that would get you 2x engineers is Europe. Im in Europe and I've seen the quality of engineering is no different; the SV engineers perform the same (and some much worse), but still hiring plans favour SV typically. Can someone explain why, especially for publically traded companies that are typically very tight on budgets?

Re: Our vision for location-independent salaries at Buffer

#27

Post by vladvasiliu »

awb wrote: post #24
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…

> Why does my location change the value of my work? Do I suddenly become better if I move to SF? Plumbers charge more in SF than in rural Idaho. A plumber that moves from Idaho to SF starts charging more because 1) they need to to compensate for the high cost of living and 2) to keep up with market rates. SF would have no plumbers if they all thought it was immoral to charge more than their counterparts in Idaho for…

Right, but that's because if you live in SF, you need the plumber to physically be in SF. A plumber in [far away, cheap locale] is of no use to you, even if for free.

If this hypothetical plumber had a hypothetical way of traveling to SF for very little money and time, and would hence be able to charge much less than the local plumber, while having the exact same skills, which would you choose, and how much would you pay? If this hypothetical plumber now moved to SF for [reasons], would you pay more for his exact same service?

Re: Our vision for location-independent salaries at Buffer

#28

Post by user_named »

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…

Different locations have different pricing. If you want to hire in a specific location you will need to pay the local price.

Re: Our vision for location-independent salaries at Buffer

#30

Post by dgellow »

bryanrasmussen wrote: post #23
firstplacelast wrote: post #20

Earlier quoted context omitted.

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 undermi…

>If I buy something from an online store, I pay the same no matter where I live. that is probably incorrect. Lots of places charge different based on location.

Isn't it mostly due to different taxes, or when the product is in part manufactured locally (so different costs)?
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