If a company knows how to get choose a USD200k engineer in SF and get a good return for the company off that engineer, then why wouldn't you pay USD200k in all areas?
USD200k is a good carrot where I live, so you would be able to attract the best engineers living here (with far less competition and far less churn).
I get it that SF has network effects, but good remote engineers also tap into the same network.
Because they don't have to. Peoples' expectations of salary are likely in line with their local job markets, so even great developers living in a rural area will likely either accept the average base salary for their locale, or move to SF for the larger payday (and all of the expenses that come with it).
The only real reason for zip-code adjustments would be some labor-related, CONUS, or state laws that I'd be unfamiliar with.
If I deliver the same business value as a Silicon Valley engineer, and you're paying me less, I'm getting arbitrage'd.
We have a few options. 1. Negotiate better salaries. This is only possible when the purchasing price of the next best developer also increases. This already happens in the Bay area market. It is happening slower outside the Bay. 2. Start own our business. We hire the best developers at a higher rate which raises the market rate for a developer. This is happening in the Bay but much more slowly outside. 3. Move to a better geographic market. A lot of people who can chose this.
Developers probably can't exploit/correct this market because we have no way of directly/quickly making profit from the price difference.
I would love for developers to capture a larger share of the value they create. Does anyone have any ideas on how to restructure the incentives of the market to make this happen? (Cooperatives?)
I mean companies that you don't transition to remote but start off as remote and are treated as a first-class employee the whole time and that the workflows are remote-friendly.
If you're willing to buy a $2 million property in Palo Alto, would you pay $2 million for the exact same property in West Mississippi?
To a company an employee is a commodity investment only - no matter what the culture manifesto says. There are a lot of factors that determine who gets paid what.
If they can get those other people to join paying 100k, why wouldn't they want to save 100k per engineer?
Companies pay you what they need to in order to get you to join and unfortunately, market rates are still largely decided by location.
I see this in my field where I work remote and most people in my field work in NYC or London. My gross income is way lower than my former classmates who settled in NYC. However I have a bigger house, equally good school and childcare for 1/10th the annual cost etc. Don't see why I should get a salary that reflects the massively inflated cost of living in a city that I don't live in. Instead I think it should be about targeting a quality of life commensurate with the contribution made & scarceness of the skillset. The cost of providing that quality of life will vary dramatically between someone living in a rural area vs San Francisco and so should the pay imo.
1) Value that employee brings to the company
2) Value that company brings to the employee (mostly, but not exclusively, salary)
3) Alternatives available for both the company and employee
I don't see a good reason to expect this (admittedly simplified) model to change with remote work arrangement.
Is it equivalent to a 30% pay cut? Probably not. Is it worth at least 15k a year (post tax, so more like 20k minimum) at the absolute minimum? Yes.
Median SF 1 bedroom rent: $3,690 / mo [2]
That's a difference of $29,772 / yr. Post-tax.
[1]: https://www.businessinsider.com/rental-prices-are-soaring-ar...
[2]: https://sanfrancisco.cbslocal.com/2019/03/05/median-1-bedroo...
That's why Bay Area companies don't usually offer Bay Area salaries for remote workers around the world. And also why Croatian companies don't hire remote workers in San Francisco :)
Edit: Fair enough. There are companies that pay everyone SF level salaries but you can also find companies like Gitlab - 100% Remote but they explicitly downscale from SF salaries based on location.
https://about.gitlab.com/handbook/people-operations/global-c...
Some stats:
- Not just "Remote but in the US"
- 1,000+ employees
- 40+ countries
- Local holidays
- Co-working Space stipend, if you want it
- Almost nobody goes to the offices we do have
- Everything is written down and x/referenced: GH, email, Slack
- Zoom for face to face
- Engineering All Hands: Usually twice a year, once EU, once US
- You work on your own Timezone, expecting otherwise is ridiculous
My point wasn't to say that Stripe should do one thing or the other regarding location-adjusted alaries. I was asking the previous commenter why he indignant that the question be asked of Stripe at all, as if it were irrelevant.
I also don't think it's practical.
Here in Germany at least, the address of residency is used in so many contexts (health insurance, pension schemes, tax things etc.) that I doubt this would go unnoticed very long.
For example the city you live in determines which regional tax office handles your income tax, and I'm pretty sure it's easy to notice for a company if some of the income tax goes to an address that doesn't match the employee's city.
I'm pretty sure the dublin and singapore stripes are paid much lower than their sf counterparts. How are they going to resolve this for the remotes?
Not poking at stripe, but generally as I think of remote work, I think we're probably to going to think of true value based salary scales (you are creating X$ of value, therefore you are to be paid a fraction of that) as opposed to geo based scales (you may be an icpc world finalist living in Kathmandu but you will be paid 1/10th of a boot camper from SF because 3rd world).