What boggles my mind is that a seemingly large number of companies, who are priced entirely out of the market in SV, still try and compete there, rather than opening an office in Salt Lake City, Atlanta, etc.
Plenty of local talent, and the low end of the SF payscale is fiercely competitive in any of the above, largely because the cost of living is half-or-less of anything in the Bay.
You won't have to pay Google-in-Mountain-View competitive wages, sure, but you do need to be competitive against the general tech market, inclusive of SV remote companies.
Assume a reasonably skilled, experienced software engineer. According to Indeed's Salary Search[1], in San Francisco, they could reasonably expect to hit an annual salary of USD 170k at Companies That Are Not Google, whereas in Salt Lake City, that number drops to USD 90k.
USD 90k is well below the bottom of the market in the Bay, and is near-as-makes-no-difference half of what our hypothetical engineer would make in SF.
In terms of raw-cost-of-living, sure, those numbers work out. However, people do like to also build up their savings account, and that's where things fall apart.
Post-tax, the SF salary will net you USD 110k. Your annual cost of living will run you somewhere around USD 77k. In Utah, you'll net USD 64k post-tax, and your annual living expenses will run you somewhere around USD 48k.
Rent is 70% higher in SF, and cost-of-goods is 20% higher, but you also don't need to own a car or pay for car insurance, both of which you will need in Salt Lake.
In SF, our hypothetical engineer will be able to bank USD 33k annually, more if they contribute to a 401(k) or other tax-deferred savings vehicle. In Salt Lake, that number drops down to USD 16k per annum.
That's a massive gap, which is often similarly reflected in long-term compensation -- e.g., the engineer in SF might see USD 100k+ in annual stock options, whereas the one in Salt Lake will probably see half that.
To be competitive on salary, that Salt Lake company would need to lay USD 120k on the table. That's 30% less than in SF -- plus all the other operational savings -- but not "half", which is what "market" seems to be at present.
It is apparently tough to find "quality talent" say some here; I did get a job offer with a nice compensation package in just two weeks when I recently started applying places and the word I heard was that it was competitive on employer's side.
Offshoring is what is happening and will accelerate. Search the article for 'Toronto'.
I have sympathy for cash poor startup founders, but offering substantial equity works wonders. Like a real amount, not something that rounds to 0. It's hard to feel bad for someone who wants to keep all the upside and not pay a good salary. Someone making 500k elsewhere should be a key hire, so spend or dilute yourself accordingly.
It's a short term vs long term balance. As an American you should want US to remain dominant in the startup ecosystem. Restricting startup access to skilled workers is counter-productive in the long run, even if it serves your short-term interests.
One would assume that the business still pays taxes, bills, rent etc.
It's still a net gain to the economy, especially when the alternative is for the work to go overseas.
Unironically yes. Thats is what they should do. If you pay below market wages, well sucks to be you, I don't care if you complain.
But to give an actual good face alternative, they could hire lower skilled employees from non-traditional backgrounds, and train them up.