If anything, if the twitter trend follows, FAANG salaries will lose heat. For the majority of the employees, a good chunk of the paycheck goes to housing costs. Wider WFH adoption will ease the overly localized housing demand, even with several days of WFO, longer commutes will be much more tolerable and the housing spread will increase. That would mean acceptance of lower salaries and lowering of housing costs over time.

One competing factor; as the seniority increases, the say on WFH policies increases, also the possibility of housing ownership increases (whether as primary residence or also with rental properties). That creates a perverse incentive to not let people go away in aggregate. Not saying individual managers will think this way explicitly, but might have an indirect influence.

Edit:

- Previously I stated 22k as H1B + green card numbers. In reality 22k was H1B only and 6k was green card. Source: https://www.myvisajobs.com/Visa-Sponsor/Google/225093.htm

I went studied CS in Idaho and know many of my peers took significantly lower paying jobs than they are qualified for so they could remain in the area. I'm certain at least some of them would rather work for larger companies with higher salaries and better benefits (and more prestige), if it didn't mean moving into the BIG CITY and leaving their friends/family behind.

In reality, it's probably a mix of both.

For your second point, the delta of the “higher salary” is important. US ranks the highest in sofware engineer salaries globally, which means for most countries coming to US as a software engineer will mean a much higher increase in salary than within US. If that delta offsets the perceived cost of leaving friends and family behind, they it is rational to take the offer. In other words, non-US candidates need to be hurting much more than US candidates to lose access to friends and family to not take the offer. In fact they already do, they lose access to their culture and their language unless they are from anglosphere. They still take the offers, so the income differential must be more than adequate to make the transition. Additionally, individual cost function of losing access to these things will differ. Many people will actively seek a challenge away from their friends and families to take up new opportunities and experiences. Your friends seems to have not.

Thanks for your detailed response, though. I understand what you're saying more clearly.

For out-of-US hires, Facebook will actually get you a Canadian work visa, and have you work in Canada for the 7 month wait, and potentially for year if you don't get picked in the lottery. The strategy for multiple large firms is to bring non-US workers to Canada first, and then try to move them over to the US, since US immigration law is extraordinarily restrictive compared to most countries.

[1] The company applies for the worker in March of the year, and if the individual is picked in the lottery, they get to start working for them in October.

If they aren’t wage fixing!

Is your employer really going to decrease your salary after the fact? Can you file taxes in your lower cost of living state after you lock in your high SF comp package and never notify your employer but still pay your taxes in the state you moved back to?

Note: I don't condone illegal behavior just thinking of edge cases that benefit us tech workers.

Good luck with all of that.

That said there’s probably a bunch of laws around faking residency for tax purposes which id imagine has some hefty consequences.

Google pays for cost of labor, not cost of living. While related, it isn't the same: for example, Google London pays much less than NYC, and Tokyo even less than that; yet Pittsburgh pays only slightly less than NYC despite being far and away the cheapest of the 4.

I believe Google's competitors tend to follow this model more than cost of living, especially internationally.

Falsifying this, to my knowledge, is not only a bad idea, but could easily be a termination-level offense and could be illegal.

While I certainly don’t think it’s ethical to do so, I did wonder the same thing - would companies start putting measures in place to verify you’re working from the same general area as your initially provided address? Eg, sifting through VPN log files to geo locate IP addresses etc.

What's stopping people is largely that

a.) if you aren't in the office, you miss out on critical opportunities, and if you aren't in the office too much, your boss may decide you're not worth keeping. (Officially, Google has a "if you don't show up for 3 days in a row without telling anyone you're considered to have voluntarily resigned". Unofficially this gets bent by high-performers all the time, but legally they can do it.) This is also why ambitious people at the satellite offices - NYC, Pittsburg, Seattle - move to Mountain View, because the high-priority projects require facetime and rarely go to remote employees.

b.) Hopping on a plane to make a meeting gets old really quickly, and also pretty expensive if you aren't pre-IPO. I know people who would commute from LA -> MTV, Uganda -> MTV, Seattle -> MTV, or do frequent business trips from Zurich or Sydney -> MTV. They hated it. You think the commute on 101 sucks, try adding the TSA to it.

If you introduce any amount of latency by executing the encoder/decoder pair, you'll have to subtract double the latency from your ping-allowance.

If you try to have correctly-lipsynced audio in a video call, I only know of one setup to offer similarly-low video latency: a rolling-shutter in the camera, a line-by-line display (CRT should do well), and up-to a few lines algorithmic delay for e.g. running non-buffering JPEG (8x8 DCT and an online entropy coder (no pre-analysis for optimal Huffman tables or such) to save like 80-90% bandwidth). Analog TV camera+screen hardware should also work, but it's really inefficient and not easy to emulate with digital hardware.

The other companies, who pay on value of output, will agree with that statement. As far as I know, most companies fall under cost of life approach rather than value of output.

I think most companies fall under "what's the minimum we can get away with?"

>what is needed to retain employees and keep churn rates down to acceptable rates

Ultimately, this value depends on the location. Assuming identical salaries, it is more expensive to retain someone for 5 years in NY than in Nebraska, because the person in Nebraska making $200k+ lives like royalty, and whereas NY would be a different story.

I also conveniently assumed that global 40k headcount increase was sufficiently representative of the US headcount increase, even though it inflates the denominator. It's the nature of back-of-the-envelope calculations to be convenient.

I do agree that this expectation that one sitting in Ohio will command the same salary working for a FAANG company is just wrong. Very likely, the companies will adjust their salaries based on where the person is.

This is really only true for certain segments of the population. In my early to mid 20s, I moved cross country numerous times. Now I hope I never have to move again. And if I did, it wouldn't be to the Bay Area or Seattle.

So I'm not sure your statement that "more than half of new employers[sic] are supplied internationally" is true, because the H-1B numbers include renewals.

It turns out to be fairly difficult to recruit engineering talent in the United States outside of major metropolitan areas. It also turns out that when tech companies start to hire people in a new city, the cost of living in that city rises substantially -- again, Austin in particular comes to mind.

In the end, if tech compensation decreases substantially I don't think it will be because of remote work, but rather because the recession will kill a lot of startups and the same amount of engineering talent will be chasing a smaller number of jobs, thereby giving employers more leverage.

That is inevitable if more housing is not built. If demand rises and supply doesn’t, or rises slower than demand rents and house prices rise. Or you could be like Tokyo with population growing 50% over the last twenty years and flat housing costs.

I find it interesting you chose to defend Austin against an attack that wasn’t made.

Of course, I also think there may be more than housing supply at work to explain why cost of living increases in a place that starts to see a new uptick in tech hiring. I’m not sure if anyone has studied and documented the extent to which increased tech hiring in a new location leads to a surge of new people trying to live in that area before cost of living begins to increase. If that isn’t the case, and cost of living and goods starts increasing before population does, it seems likely there’s more than housing supply to blame— perhaps all the existing property and business owners start raising prices to get some of those sweet tech dollars in their pockets?

My point was, responding to a comment that “housing costs are rising in Austin” by explaining it as “price rises are inevitable if you don’t build enough housing” is a very misleading statement. Maybe that is a true statement, but Austin does not satisfy the antecedent so it says nothing about the situation here. Unlike in many places, the housing is being built here, yet the prices are still rising significantly and forcing many out or into homelessness.

So clearly development is not a sufficient condition for keeping housing prices in check. Like you say, it could instead be totally driven by the job market. Or maybe development is a necessary condition, along with other things such as subsidized/public housing, job programs, etc. We have to move beyond armchair economist statements that are basically “har har har it’s supply and demand duh”, that don’t even capture all the straightforward/first order economics of all the various buyers and sellers of housing (demand for what type of housing? What type of housing supply is allowed to be built? etc.), much less the second order effects tangential to the economics. Your speculations are on the mark here, and we do need good studies that look at exogenous shocks to try to tease out cause and effect, along with lots of small-scale experimentation by governments.

Finally, I don’t know enough about Tokyo to comment in any way on that part of the post, so I did not.

I think it’s interesting that we both seem to have read the parent and GP posts quite differently. You read that the parent was responding to a post that said housing prices are rising in Austin. I read that the parent was responding to a post that said FAANG companies are hiring in new areas to cut costs, and cost of living seems to increase wherever tech starts hiring (and Austin was just a city that came to the GP’s mind as an example of this phenomenon). Yes, the parent’s comment about housing supply was a rather shallow retort that I think we both agree provides little insight and comes up too often as if it possesses sufficient explanatory power on its own—but they weren’t quite suggesting what you responded to.

To put it into a different space, what I found interesting and pointed out was that your comment read like others we’ve probably both seen where Programmer A says Erlang has a great concurrency model that enables developers to easily build fault-tolerant distributed systems, and Programmer B comes along to argue that the idea that Java doesn’t allow you to build fault-tolerant distributed systems is crazy. The idea was never suggested by A in the first place, so B’s response stands out.

Anyway, this has been fun. Thanks. Apologies for my original response coming off the wrong way.

If a company starts a new office in Austin and they had one in the bay, now they are realistically only tapping the additional talent in Austin. There isn’t a huge chunk of people willing to relocate to Austin that wouldn’t relocate to the bay.

Removing location restrictions all-together is a completely different ballgame because it opens the entire country up, not just one city.

I don’t really buy the argument that there is a major untapped pool of talent living outside major cities — if there is, what have those people been doing for work until now? It hasn’t been easy to have a good career in tech in rural areas, for example.

I would add, though, the defense industry. My city has a huge talent pool of engineers, software and not, employed in the defense industry. Many have top academic qualifications and long experience. The tech industry struggles to recruit them mainly because the tech employers in the area offer more or less equivalent pay and significantly inferior benefits (leave, retirement, etc). On a cost-of-living basis, at least at entry level, I would say the FAANG companies offer inferior pay and benefits - coming from someone who left San Francisco to work in this area and make, cost of living adjusted, twice what I made in SF, with significantly more paid leave.

My point is that it feels like part of the tech industry's recruiting problem is that there is a tendency to look, for recruiting, only within the tech industry and within its established centers. I have had offers from Bay Area and NYC companies for remote work which I have declined because their pay was actually below what I can get from local companies here, I think because they viewed this area as advantageous primarily due to low cost of labor. The cost of labor actually isn't as low as they think, and I suspect in part because their salary analysis did not incorporate what I can make in 'adjacent' fields like cybersecurity R&D and fundamental CS R&D, which are major sectors here compared even to the bay area in terms of per capita employment.

Or let me put it this way: this city is considered to have a total dearth of the tech industry, defined as startups and explicitly software companies, and it is largely ignored by tech recruiting. Yet, the third largest employer in the city is a science and engineering R&D institution with extensive software divisions, the second largest employer has large software and engineering sections although their employment numbers also include general labor, and the second largest employing industry in the area after services is defense, and the primary defense work in the area is currently shifting from aerospace engineering to software and systems engineering.

I left that industry and have actually been working for various startups in the area. I am often asked for recommendations to fill openings, and I have plenty, but the startups generally do not offer sufficient pay and benefits to dislodge them from a very comfortable career with a level of benefits, not to mention job security, rarely seen in the tech industry.

To put it another way, do you currently see pay adjustments based on housing costs for employees living in SF? Have you ever heard of differences across employees simply because one of them has a more expensive house?

There are plenty of tech companies paying great salaries in the bay because they have to, otherwise they would just go work for someone else. On the other hand, if you lived in Oklahoma you aren't going to say no to $LOCAL_OFFER+10k just because bay area salaries are $LOCAL_OFFER+90k.

As long as this disparity exists, I forsee bay area salaries and CoL still being high. Until companies move headquarters out of the bay, the trend will continue.

There is no rational reason for Google to pay bay area salaries for Indiana employees - will they really say no if Google offers 300K instead of the 500K they would get in the bay area? Sure, the person could reject it to make a statement, but most people would gladly take a salary that would buy them a small castle.

All FAANG needs to do is to beat local salaries by a significant margin to get well qualified employees - that would still make these people WAY cheaper than bay area employees.

Yep, that's exactly what a Google recruiter told me - they try to pay at the upper end of the _local_ market.

For example, my paycheck literally has withholdings for California every two weeks.

Strange reply. I'm not talking about injustices. I'm saying a company would be pretty dumb to pay someone more just because of where they chose to live. Profit maximization and all that.

You should ask yourself: do I want to hire people who decide relocating to Silicon Valley would be good for their career, or those who can't or won't?

Google made $65 billion in 2014[0], and had ~20k engineers[1], which puts the number per engineer at $3.5 million. [0] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... [1]https://www.quora.com/How-many-software-engineers-does-Googl...

That's only the case if skilled engineers are fungible entities with a smooth supply/demand curve. That is absolutely not the case.

Yes, it's commonly referred to as "cost of living adjustment."

The rational basis is that the employer sees strategic value in having a physical presence in a given locale, and are willing to pay a premium to have employees actually located there.

Note that I've been working remotely full-time for years, and never plan to go back. I am, however, under no illusions that my salary is a permanent thing.

I think you missed the point I was making. Have you seen two employees living in the same city, with one paid more because he decided to buy a more expensive house?

I'm aware that there are regional differences, but they can be explained by factors like different productivity levels. This discussion is different - it's about the same employee living in two different locations.

Dude in Indiana doesn't have that opportunity. You'd say but Internet, but things like motivation, inspiration, innovation comes from a certain external factors (which we still haven't figured out).

That's why even with massive internet penetration, it's the tech hubs that keep pumping winners and hits

The argument is that people in lower cost-of-living areas are willing to work for less, a public company's main motivation is profit, and companies lower their profit by paying employees more than is required to hire and retain them.

I am voluntarily transferring from Google SF to Google London and I am taking a significant salary cut. London isn't really any cheaper to live in, but you can hire good developers for much less in Europe.

I live and work out of St. Louis at the moment, and I've spent a bit of time evaluating FAANG salaries in relation to the cost of living in their relevant areas. While in most cases it seemed I could maybe get 1.5x to 2x my St. Louis salary, I was looking at around a 5x increase in housing costs alone. It never made any sort of financial sense to make the move (as much as I would've liked to).

Of course the most sensible approach would be to offer just above market rate in whatever the local market is. That can be awfully hard to determine though. It's much more a function of local supply and demand than anything that correlates to cost of living.

They said local companies will have to compete with FANG salaries. To your point these would likely be cost of living adjusted, but would almost certainly be higher than the current average in most Midwestern cities.

Not every online conversation has to be a fight with winners and losers.

I'm not claiming they can't, but their intention isn't proof either way.

2. That's not the point: we're talking about a hypothetical shift where top software engineering talent is fleeing the bay area. If that talent moves to Ohio, and there is no cheaper alternative of similar quality, Google might not have a choice.

Again, not pretending like I know what's going to happen. My point is that big-tech doesn't have total power in setting prices. If at any point in the last 20 years they could have hired qualified engineers in Ohio for $100k they would have already done it.

Can't have it both ways. SV pays top $$ because of 1) top notch skills and 2) cost of living. Now you are taking #2 away - so things will ease a bit

Again, if companies could find good talent at cheaper prices in Ohio they would. Existing talent moving around does not increase the amount. It's not a given that market rate will decrease.

Is your employer really going to decrease your salary after the fact? Can you file taxes in your lower cost of living state after you lock in your high SF comp package and never notify your employer but still pay your taxes in the state you moved back to?

Note: I don't condone illegal behavior just thinking of edge cases that benefit us tech workers.

https://www.postbulletin.com/more-northwest-pilots-accused-o...

Yes. I have remote working friends who've been required to take a pay cut because they moved.

1) If company like Twitter is saying: "From tomorrow our default is work from home, but you all get 20% salary cut". This will be essentially a salary cut, nothing more. If let's say Facebook says WFH=on-site developers from Twitter will be flowing to Facebook because of 20% salary cut

2) In order for everyone in FAANG to say simultaneously that we have to cut salaries 20% simply because it is WFH now - there should be a strong evidence that productivity in remote workers is 20% less and they will need to hire 20% more engineers to have the same amount of work done. If it is not correct then companies have incentive to drive this number down to 10% or 0%

3) FAANG and overall Valley residents must also consider the long term effect on their community. I doubt that Silicon Valley will survive going 100% virtual and concentration of innovation can be lost if people go 100% remote. So they might impose 10-20% cut on a premise that they want to create a community on-site. Not sure how C-suits evaluate such factor.

Overall I suppose if companies go WFH by default they will need to reevaluate their incentives structures to be competitive.

Perhaps Twitter is leading the pack in an industry-wide pay cut? I hope not, but that seems to be what the rest of the workforce has experienced in recent months.

My full time job is producing video for YouTube. My revenue from ads is a straightforward calculation: I get 55% of whatever advertisers pay YouTube/Google to run ads on my channel.

Despite having posted record growth in every other positive metric, overall revenue (read: advertiser spending) has tanked in recent months.

Facebook. Google. Twitter. YouTube.

They are all internet advertising companies. And if my personal observations are any indication, I suspect they may be hurting for cash right about now.

I guess the employer could have some contractual terms requiring your address to be at some location. I’ve never seen that though.

If COVID-19 really helped people to work from the Ouachitas at reasonable salaries, it would be completely awesome. But we're a long way from that. I love remote work and would like to see more people do it. But the past history of epidemics (e.g., 1918, the 1665 London plague, etc.) indicates people will go back to previous behavior--favoring urban areas--once the crisis passes.

There are a lot of us out here in the middle who want that.

I get your skepticism, but I'm going to hope against hope that telepresence technology will continue to improve and make that possible.

Pandemics historically have not had a big impact on the political economy unless they kill an enormous number of people. The Black Plague in the 1300s is an example.

Working remotely from another country is easy. Paying somebody in another country is not easy at all. Even with specialized providers it is a substantial hassle. Without it you pretty much better give up - the chances you get all the payments, taxes and paperwork right is minimal, and that country's tax/regulatory authorities would be more than happy to fine you and/or your workers if you don't. In the best case, in worse case they might just seize your money intended for payroll and keep it until you figure things out.

(I know it's not quite that simple, but I think it's interesting to think about.)

In point of fact, the US mortgage interest deduction is highly regressive. It favors those who can afford a down payment on a house over those who can't, who by definition will be poorer.

If the sales tax applied to buying a house, it would be quite progressive. It could even only apply to the cost of the house less some amount (say, $100k) which would make it even more progressive.

One you exchange the money - where an advantage can be gained - then it can be considered a sale and thus taxed. A sale does not necessarily need to be towards consumption.

But, if such a system was in place, the money would be taxed during the purchase of the investment vehicle. A sale is a sale. Unless the money is literally stuck in a mattress, it is going to be taxed upon doing anything useful with it. If it is simply stuck in a mattress for all of eternity, one is really no further ahead. Money only has value when you can use it to facilitate a sale; and when there is a sale there would be a tax.

I think if it's widespread it would be a little of both with some extra effects to consider. Not only will FAANG organizations get a wider pool of applicants which will drive down salaries for FAANG orgs, AND other businesses will how have to deal with the fact that their technology workers are part of a much larger market than they were previously, which will drive up salaries for those workers remotes, but there could be some very interesting delayed effects. How many FAANG workers now would opt to move farther away and keep their position, which will depress (that is, realign with reality to some small degree) the real estate market in areas like Seattle and San Francisco? What does that do to salaries later (likely a much smaller effect, but maybe non-negligible)?

Telecommuting has been hailed as one aspect of saving the suburban and rural life for a long time. Maybe we'll actually see some of it now.

What happens if there's a net reduction in people living in San Francisco and surrounds over 10 years, say 10%? I mean, it sounds unlikely, but so didthe idea of so many people staying inside for months at a time, and everyone switching to telecommuting so fast. All these things are related, and with major changes in one, relatively rapid change in things that related to it can be expected. At this point I'm actually thinking it's possible we could shift to UBI of some sort, and just a few months ago I didn't see any way that could happen without a major economic disruption, but hey, we've already got that.

Rural California is also pretty red and not as friendly to outsiders. I have a friend who grew up on the rural coast. He basically drove around on trails and shot guns for fun.

If that’s your thing more power to you but most tech workers I’ve met aren’t into that.

For now, most big companies have enough cash and are primarily focusing on making sure workers are not going crazy rather than on turning out new software. Give it another 3-4 months though and those companies will have to pivot back to real development which may be harder than they expect if WFH is still practiced en masse. My 2c.

This does not work with remote teams. There, a manager needs to have a longer-term plan, parcel work in a larger chunks, clearly write the tasks and minimal thresholds ("this task is done when you can confirm X"). The manager then sees when someone is blocked, what tasks are getting behind, etc.

This setup is actually better for the worker bees, too, who get clearly identifiable tasks and are not tracked on how they spend their time as long as their task is completed on time.

"Never lose your edge."

How about, enjoy your free time. Enjoy your friends and family. Work hard at your job, but maintain the division.

This hyper-productivity porn is a net negative. There is competition in this industry, but nowhere near enough to leave talented engineers fearing for anything. Not on a near time-horizon, at least.

The employee's local cost-of-living will factor into the comp.

If the person in Oklahoma pays $1k per month for a 3,000 sq ft home with a 1Gbps fiber connection.... why work full-time at all, or exclusively for one employer?

If they offer to raise the person getting 125k to 400k if they move to an expensive area, then at least it's fair :shrug:

If it doesn't matter where you are to work for the company then why does it matter if you're even in America.

- Some anti-WFH person, probably

There are downsides to working from home, it's silly to dismiss them as mindlessness from the other camp.

I wonder how that effect virtualizes.

In a remote-first culture, those meetings still happen, even though it needs some more effort to facilitate those situations. It's when the team is split between onsite and remote that remote contributors have a disadvantage and might even miss out on important things going on.