"Cost of Living" adjustments are a red herring, what they really are is really "competition density".

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.

FAANG doesn't determine salaries based on cost of living, but cost of labor, which maps to your concept of "competition density".

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.

> FAANG doesn't determine salaries based on cost of living, but cost of labor, which maps to your concept of "competition density".

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

the rational reason would be they want to hire those people. Hiring top talent is a very competitive thing. Your avg dev at a small company in a small town might or might not be as good as that person who made it in sf. If 100k people leave sf and a good number of them keep their high salaries (or almost) then guess what, those companies will hire people from the other companies that cut pay too much.

If you're working remotely, then you just tell <big tech company> you live in NYC/SF. If they still offer a subpar salary, then you get an offer at <big tech company #2> and bid them against each other. Salary negotiation is a two-way street. Companies that hire remote workers care more about results, which has nothing to do with the cost of living in your location.

Are you implying to lie about where you actually live?

If they're doing something as absurd as using it as a negotiating tactic to pay you less, then yes.

But companies report your salary and withhold income for local taxes. How would that work?

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

Doesn't matter. An employee in Google London is paid lesser than the employee in Google SF. So while you can cry about injustices and rationality, salaries will likely be paid based on cost of living and even geography (based on London example).

> So while you can cry about injustices and rationality

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.

They'll pay more to people living in SF because those people have better alternatives and can negotiate harder, and the factors that cause that are the same factors that make housing in SF expensive.

You would have to pay me more if competing employers are willing to pay me more. Right now that depends on which job market I live in. Remote wages seem relatively lower, which isn't surprising when few companies have embraced remote yet.

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?

Yeah. Google makes like a million dollars per engineer, so it's either "make less money on this engineer than you'd like" or "don't hire this engineer and make nothing". It would be stupid if they were doing it for no reason, but competition is higher for engineers in SF.

Got a link for your ‘Google earnings per engineer’ $1 million figure?

Not OP but the $1m figure doesn't really matter. Their point is google makes $x per engineer, you can make $x - (large number) or $0. Whether it's $1m or $10m, it doesn't change the fact.

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...

> 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.

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

No but they will pay them less.

Paying person A less than person B means paying person B more than person A.

if a lot of top companies let people work remotely, then it will be a new competitive world for remote workers too. that hasn't happened yet, but it could.

> do you currently see pay adjustments based on housing costs

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.

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

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.

The employees are in a different negotiating position. Google pays them as little as they can get away with.

If living in a nicer house caused engineers to have more job opportunities at higher salaries, then Google probably would pay you more for living in a nicer house.

Yes. All the time. Its standard practice to pay more at high cost of living areas. I've not worked at a company with offices in different cost of living areas that did not do this.

Dude in SF is more likely to bump into other dudes in SF and talk about system design, math or AI or competition or best practices or stacks.

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

> Just want to point out that there's no rational basis for this argument

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.