> Personally, I avoid companies who adopt this practice.

As do I. The value of my labor doesn't change because I walked 5 blocks away into another ZIP code with significantly higher/lower costs of living.

The only reason this flies is because most engineers have little to no ability to individually negotiate away such nonsense, while employers are happy to collude with one another to enforce these pay scales.

It doesn't make sense to go the zip code route, of course. It's too granular, to the point that even if "COL" changes zip code to zip code there's too much variance to make that meaningful unless your only view of "COL" is what it costs to rent a 2BR1BA apartment. If you pay everyone the same wages, you're immediately excluding people who live in VHCOL areas unless you pay VH wages, and spoiler alert, you almost certainly don't. If you're not competing with FAANGMULA-etc. on cash comp, you're not in the right ballpark.

But guess what, you can still pay the person in Vietnam or India or Belarus or Oman a very strong regional wage and free up cash allowing you to offer a competitive VHCOL salary. There's no realistic reason to pay someone in eastern Europe $400k TC.

> But guess what, you can still pay the person in Vietnam or India or Belarus or Oman a very strong regional wage and free up cash allowing you to offer a competitive VHCOL salary. There's no realistic reason to pay someone in eastern Europe $400k TC.

In my experience with working with foreign developers, specifically those in eastern Europe, real talent can easily command SF-level compensation from companies that pay SF-level compensation in the US. Employers often get what they pay for when they think that outsourcing means that they'll get equivalent quality work, just with lower costs.

FAANGMULA – what ULA stand for?

Uber Lyft AirBnB

IMO these acronyms have reached the point where they don't really serve a purpose.

I've never seen FAANGMULA used anywhere except ironically, my earlier comment included :)

Labor should be compensated for the value created, not the least they will accept.

It's a nice thought but it doesn't have any bearing on reality. No other market in the world works that way. A company wants to charge as much as it possibly can. A person in need of a service wants to pay a company as little as possible. There's sometimes a range where those two values overlap and that person can become a customer. It's all about perceived (not actual) value, which is heavily influenced by marketing and sales.

If you can't tie your actions directly to cost savings or revenue increases you're just blowing smoke up your manager's ass about value created anyway. It's all hand-wavey negotiation and negotiation is almost entirely based around leverage.

Oh I thought it was a marketplace.

Salaries aren’t high in the bay because houses are expensive. Houses are expensive because salaries are high. There happens to be a concentration of talented and highly compensated people there. That doesn’t mean they will settle for less elsewhere.

So early startups should get money from their workers?

I’m not sure how you arrived at that conclusion. If you go to the very beginning I’m sure many startups get money from employee #1, AKA the founder. But even in an early stage startup why hire someone that isn’t delivering value?

Agreed. At the end of the day you pay X for job Y. Adding a "where you live" variable makes no sense in the context of the work required for job Y.

> At the end of the day you pay X for job Y.

Common misconception but it’s not how markets work.

You pay whatever it takes to get candidates onboard, but you ideally don’t pay more than necessary. You definitely don’t pay everyone more just because one of your employees lives in SF.

This is more intuitive if you think of any other market you might personally operate in. Would you expect your local car mechanic to charge you twice as much as the other local shops just because they also have a location in San Francisco? No, you’d just go to the next mechanic who charged local rates. You aren’t interested in paying more than necessary and neither is your employer. It’s not nefarious, it’s just rational acting.

The difference is, most tech companies aren’t selling the product/service exclusively in the region that the worker is working in, so the cost of the product/service, say for example Amazon prime, is the same nationwide despite the differences in cost of living, but the employees are paid regionally.

Basically: most tech companies don’t adjust the price of their product for the region they are selling it in, but adjust the salary of the people making the product based on the region they live in.

> so the cost of the product/service, say for example Amazon prime, is the same nationwide

Correct, but you’re forgetting that labor is also one of the product/service costs for a company. They treat it like a market, just as you would if you were hiring someone to work on your car or house.

It’s called the labor market because it’s literally a market. Expecting companies to completely disregard the market aspect and just pay the maximum amount for everyone regardless of their actual cost is wishful thinking.

As an engineering leader who has done a reasonable amount of hiring in the heart of silicon valley, every single negotiation tactic provided by a candidate who received an offer (when we hired for on premises) was along the lines of "I need more / should be given more salary because of Cost of Living".

Some might say there's a power dynamic, and it's just an excuse used by a candidate to negotiate higher - but at the end of the day that is what I heard every single time, without fail, when someone wanted to negotiate their salary.

If that's the case, then it does definitely indicate to me that "where you live" is a variable, and an especially important variable.

I'm not so in-the-know w/rt pay: are there a lot of companies that _don't_ do regional pay?

Nuance is required here I think; with regard to working remotely - I've been working remotely now for 14 years. In my albeit limited experience (6 different employers, ~60 interviews) companies that were hiring remote before 2020 offered pay at the same rate/range as if they were hiring locally from their home base. I didn't run into a company that adjusted pay for geographic location until 2019. After 2020, I saw a marked increase in the practice. So much so that it became one of my first questions for recruiters/screeners. The entire industry view of remote work has now changed, and it at least appears that ideas around comp are as well.

Remote workers in the US in cheap cost of living states are the new offshore workers, with less legal hoops to jump through because they’re US citizens.

Most companies don’t have set salaries in practice anyway, so it ends up being whatever they successfully get away with.

So in practice, yes, but companies aren’t so deliberate about it as to have it in policy.

It depends what they mean by pay. Everyone company I know will absolutely do base salary for your region, while stock grants will be pretty universal between regions within countries.

Depending on the company sometimes the differences in base salary will be very minimal, say $225k in Ohio versus $250k in SF.

There are a lot of companies that don’t adjust salaries when engineers go remote, but they also only let engineers they are committed to keeping go remote in the first place.

Not a great example.

An engineer that started on-site with regional pay that now went remote does not equal “we’re a company that hires remote worldwide and we don’t adjust to regional salaries”.

A good example would be a company that hires new staff in multiple countries and continents that pays everyone regardless of their location.