> I work remote and get a fair market rate (for the value I add, not based on where I live)

Unfortunately there are two misconceptions here: 1) that companies pay based on added value and not on replacement cost, & 2) that "a fair market rate" does not vary with location, when in reality different locations have different labor markets.

The reason SV companies pay so much is because their candidates expect it, and part of why they expect it is the high cost of living in the area. A company that pays less than average will get worse/fewer candidates, thus a local labor market. For a remote company, paying an SV employee the same rate as a midwest employee is to effectively compensate the latter much higher, and what's fair about that?

Companies pay what you can negotiate with them. This is based on value add, and alternatives on both sides of the table. If you can pitch the value you create, you can get paid accordingly.

It's very hard to quantify the marginal business value given by a single employee, especially if they're just starting in the position.

Economics is driven by scarcity - supply and demand. Companies have no financial incentive to pay us any more than it would take to hire a replacement. They're in the business of making profit, which necessarily means paying people less than the business value they add, and if a company wants to be very profitable, the only way is to pay substantially less than the value received.

So even if you pitch based on value add, you're really just signaling that you have top skills which are in short supply, and they'd better pay you more or else some other company will. They have no obligation or incentive to pay commensurate with value add, only to pay just enough to keep getting the value add.

Out of curiosity, how long has your company been in existence for? This seems like something a more established company could do more easily.

It's a startup. I actually find it to be the case that early stage companies are more willing to do remote work. In part because it's a way for them to broaden their options.

Of course, but I think a large part of the incentive for startups to do that is so they can hire high-quality engineers who aren't in SF, so that they don't have to deal with the crazy cost of living expenses when paying salaries, and of course their own costs for living in SF and renting/owning office space there.

So I think I would expect most early-stage remote startups to pay salaries which account for an employee's cost of living (rather than paying a full SF salary whether you live in SF or Montana). But maybe I'm wrong.