If the cost of living adjustment were “perfect” then it wouldn’t encourage employees to live in any particular place, right? Presumably the whole point is to give each employee the same “effective compensation” for their particular place of residence. Of course, it’s not so easy to agree on what the ideal method of cost of living adjustment would be.

A "perfect" CoL adjustment can't exist. If it's fairly applied across distinct individuals then it won't be perfect for some of them, and if it's applied consistently to a fixed individual that person has enough tweakable parameters to warp the situation to their advantage and actually prefer one location over another. E.g.:

(1) Bob is optimizing long-term savings, and Joe is optimizing purchasing power for nearby activities like bars and restaurants. After subtracting other comparable expenses, any salary surplus strategy which is a "perfect" cross-city CoL adjustment for Bob will when applied to Joe cause him to prefer a cheaper CoL location because his dollars will go further. Supposing the employer doesn't have power to discriminate based on such preferences, no fair CoL adjustment is perfect for both individuals.

(2) Bob is still optimizing long-term savings. MegaCorp chose a "perfect" CoL adjustment based on Bob's preferred standard of living, but the multiplicative nature of price increases in a high CoL city means that Bob can save a ton of money with a mild decrease in his standard of living. He's incentivized to live somewhere more expensive because doing so will maximize his potential savings with minimal impact elsewhere in his life. If the employer isn't discriminating based on what's paid for rent and other expenses, the CoL adjustment is gameable.

The thing is that even if the cost of living adjustment was perfect, that still incentivizes living in a high cost of living area.

It's much easier to move from an expensive city to an inexpensive city than vice versa since your savings will go much further in the inexpensive city.

Compensation should be adjusted to value created not expenses incurred.

Then some of my coworkers should pay the company.

Ha, spat my coffee out at that one

Most of tech either isn’t remote or hasn’t been for very long, so strong candidates with large scale prod experience are still concentrated in markets where these skills are most valued and attainable. If you want those candidates, you have to compete with offers from local big tech.

> strong candidates with large scale prod experience are still concentrated in markets

As I keep asking when this comes up, if this is true then why are salaries for FAANG engineers so much lower in London? London, as you may know is 100% not cheap, and yet salaries there for FAANG tech people are approximately 50% of those in SF/US.

Because in the UK (where all of my ancestors are from) they don't value software engineers like they do in the US.

In the 1990s we were paid and managed like accountants. When the Web went mainstream, Bay Area VC companies created a sudden shortage which slowly spread.

ISTM that the main cultural difference is that UK companies consider developers as cost centers, not profit centers. Therefore, the bean counters have an incentive to either eliminate us or consider us as interchangeable cogs in the system.

But FAANG do. So why don't they raise salaries?

> I think Facebook is simply creating more problems for themselves by bothering with this.

This was always the policy, they paid wages based on the market. They did, however, pay identically in all of their US offices (prior to Covid) which is perhaps why people are surprised about this (entirely normal and expected) practice.

Given that I don't live in the US, I don't like this policy, but it's been around forever basically, at all large tech companies.

> If you're willing to pay more for identical work because your employee chose to live somewhere more expensive, you're encouraging your employees to live in the most expensive places.

I think the salary adjustments aren't so extreme that you're actually indifferent from living in an expensive place. Also, most employees aren't unattached 20 year olds. I choose to live in a high cost area because my family is here and this is where I grew up.

> On the other hand, if you offer a fair wage for the work done regardless of location, your employees get better value by living somewhere inexpensive, which lowers the required compensation for the same employee.

Would you be okay if the 'fair wage' was based on a global developer workforce? For instance, median programmer salary for the UK is ~$41k while the US is $74k, not to mention salaries in developing countries. Everyone assumes that fair consistent salaries will just take inflated San Fransisco levels and apply them globally when in reality, its more likely that we readjust all salaries based on lowest cost of living.

This works great until they start offshoring jobs to countries where software engineers make less than the total median American wage. Then do we all hope Polish or Indian immigration services approve us for a work visa?