We discriminate pay on job role, on job level, on performance. We discriminate on length (tank crew), eyesight (pilots). That is not Discrimination however, because it lacks a historic asymmetric power balance.
The main difference with GitLab is that a) they are completely remote, b) they are called "GitLab" in every country instead of creating subsidiaries with different names, and c) they have made the "mistake" of making the payment differences entirely transparent. They were absolutely not forced to do that, but they did it nevertheless, and they should be applauded for that.
Obviously there is some correlation with pay vs cost of living as it helps people determine what they are willing to accept, but it is not the primary mechanism companies are using.
Also companies who pay the same regardless of where you live are still not paying based on cost of living.
As you are almost certainly aware, the majority of racial problems in the US boil down to the very simple fact that black people are on average of low socio-economic standing; and if there is one thing the US system is geared against its any person of low socioeconomic standing.
Put succinctly:
You might consider that its ok to pay differently based on if you’re in Los Angeles or Bryan, Ohio- but would you feel the same if pay was different depending on if you lived in Inglewood vs Santa Monica?
That's not true of California and Ohio in general.
Interesting perspective, I don’t think I agree though.
No, it isn't. And you are trying to tie racial issues to pay issues via correlative methods, instead of causative.
[0] - https://www.marc.org/news/economy/history-racial-discriminat...
[1] - https://www.investopedia.com/the-history-of-lending-discrimi...
[2] - https://www.theguardian.com/us-news/2020/may/10/move-1985-bo...
remote.com is a good counterexample here: https://remotecom.notion.site/Total-Rewards-Glossary-ec96c10...
location-based pay is (generally) a product of how much the employer can get away with rather than the operational cost etc...
That’s not to say this couldn’t change in the future (sometimes it’s good to ignore the current “how” and incentives / reality). But it’s useful to be realistic. There’s also something to be said for companies taking the risk and hiring in other countries. This increases knowledge (not to say the company is “better” but it probably has some reasons for why the local talent joins), sows the seeds for future companies there etc.
The hiring market is a market, though.
You're bidding on talent.
If you have an infinite budget you can just outbid everyone, everywhere and get whoever you want. Companies like like Netflix do something like this.
If you don't have an infinite budget, you have to start making compromises. You can try to pay everyone according to the highest possible local salary you might compete against, but now you're arbitrarily paying more than you need to everywhere else. Could be fine if you have unlimited budget, but most companies don't.
So you could try to set a median pay that's higher than the LCOL targets but lower than Bay Area salaries. Now you're attractive to some talent, but other people won't consider your company because it pays less than their alternatives.
Location-agnostic pay is one of those things that sounds great when your company has limitless money (or feels like they do, as in ZIRP), but most companies at scale realize that they're either missing out on certain talent pools or spending unnecessarily to acquire people.
In the case of GitLab, the author was making a great compensation for their location. If the author had zero knowledge that other employees were getting paid more, would they have even cared about their own compensation?
This is the difference. I don't see it as arbitrarily paying more than I need to. I see it as paying people the same for doing the same work. My goal is not to pay as little as possible, or even to pay a high rate relative to their local market.
I can't look at someone in Romania doing the same job as someone in Chicago and tell them I'm paying them less because they're in Romania.
I completely understand that this is not economically optimal, and I love capitalism. I just have no interest in saving money this way.
> So you could try to set a median pay that's higher than the LCOL targets but lower than Bay Area salaries. Now you're attractive to some talent, but other people won't consider your company because it pays less than their alternatives.
Salary is only one part of comp. Comp is only one part of what makes a company attractive.
That's a trade-off you might be willing to make, but I hope you understand that not every company is willing to write off the entire talent pool of the US.
(As a point of reference, the only two countries that Google pays comparably to even the cheapest parts of the US are Switzerland and Israel.)
The company I work for paid high-mid US salaries before going remote. It has continued paying high-mid US salaries after going remote, just expanded to hiring from more locations.
So before we had access to the talent pool of one metro area in the US. Now we have access to the talent pool of all of the US besides a few very HCOL locations (which we didn’t have access to before anyway), and also most of the rest of the world. Our costs are the same as before, but hiring is easier and we can often get a higher caliber employee to fill an opening.
As the guy you replied to said—it was about expanding the talent pool, not about saving money.
Talent being "better" is too subjective to really quantify, though.
Something like 15% of devs worldwide are in the US, so if you don't want to play ball, you're losing a nontrivial chunk of the total talent pool (even without accounting for timezone affinity or English fluency).
If you think paying market rate for a Bay Area dev is overpaying, are you exclusively hiring devs in Argentina (with the rapidly-devaluing peso)? You can get 10 devs for the price of one person based in SF! Even paying Amsterdam's market rate is drastically overpaying in comparison to the areas with the lowest cost of labor.
There are great engineers everywhere, but this line of reasoning misses why talent hubs exist in the first place. It's more likely a qualified individual will line near a talent hub along side other companies that demand those skills. A better question to ask is how much time & effort will a company put in finding a qualified candidate outside of the talent hub.
For example, Apple has a similar problem with regards to manufacturing in China.[1] Do talented tooling engineers exist in the US? Of course. Is Apple going to spend 5 years trying to hire 100 tooling engineers in the US, or spend 6 months hiring the engineers it needs in China?
[1] https://twitter.com/mariocavolo/status/1747599350438437364
I agree with the other commentator who said: It's not stupid to pay a location-based salary, but please don't pretend it has anything to do with fairness. It's not about being fair - it's about the company trying to save money by getting a discount on employees when that discount is available.
I'm pointing out that location-agnostic salaries are often trading one segment of the global talent pool for another, since what I've seen in practice is more like "everyone gets paid 80% of a Bay Area salary".
There are plenty of levers to pull that are not salary, and not based on geography.
If you're remote, IDK why you would want to pay that premium.
Is that a problem?
If no: congrats you used your $$$ very efficiently.
If yes: Determine why (language, time zone, quality, regulations), and raise the price point until you are appealing to employees that satisfy those.
"Overseas" is a symptom.
What positions are you looking for, and how many for each? What are the requirements of those positions?
"Native English speaker" or "live within 50 miles of headquarters" are possible requirements for a particular position, if those are important.
Whatever the requirements are for your positions, you'll pay the least possible market rate to achieve it.
This is a direct consequence of people wanting WFM but not understanding the implications.
Going into an office gives employees pay leverage due to cost of living in that locale (assuming they live in a top pay market, SF/NYC/etc).
But if you have an entire Remote company & culture, now - companies can hire in any locale and pay lowest common denominator (even if that locale is half way around the world).
Remote work turns everyone into effectively an independent contractor competing against all other talent from all around the world.
In office means you’re mainly competing against other people in your locale.
A senior dev got paid the same, be it in South Korea, Brazil, Romania or New York City.
B2B contracts are a thing. It's very common for many devs that work remotely for other companies.
There's also companies that offer something like "Payroll as a Service".
Still B2B is superior in every way, and can often net you much more money than just being an employee due to being able to leverage tax-optimizations.
> my salary was around €120 000 per year [...] For The Netherlands this is a good salary, and you'll have a hard time finding companies that offer better and let you work from home full time.
For his country, he was well paid and worked from home 100% as well.
> But if I had instead lived in the Bay Area, I would've earned at least twice that amount, possibly even more. Not because I am somehow able to do my job better in the Bay Area, or because of any other valid reason for that matter, but because I would be living in the Bay Area instead of in The Netherlands.
He says it was "not fair" that he wasn't paid the same salary as people in a different country.
There are no Victim Points to be scored here.
The author has a poor understanding of economics.
Does he or does the company? If they had decent understanding of economics, they should have shut down their Bay Area operations?
Employees aren't interchangeable cogs. It's funny how HN will complain about outsourcing and offshoring as doomed endeavors when they imagine their own jobs going to someone in a lower cost of living location. Any company that fires an expensive employee to replace them with a cheaper employee in a different location is making a huge mistake! Employees aren't interchangeable cogs!
Then as soon as the roles are reversed we're supposed to believe that the people in the more expensive location are easily replaceable. Any company that pays people differently is making a huge mistake! Employees are interchangeable cogs!
Regardless, it's silly to propose that engineers are interchangeable cogs in a machine and you can find perfectly identical talent anywhere. If that was true, companies would ignore all of these locations and skip straight to the cheapest country they could find.
But network effects matter, and hiring out of the Bay Area taps you into a different set of experience and networks than almost anywhere else in the world. I'm not suggesting that every Bay Area engineer is better than every Netherlands engineer, but the Bay Area talent pool really is unique and well connected in a way that's hard to find elsewhere.
Not seeing too many international career opportunities here, sadly.
I'd bet that GitLab, as an entity or corporation, felt mission-driven and empowered by settling not far from GitHub.
Thankfully where I work now (ockam.io) indexes to Bay Area salaries, irrespective of where people are based.
Because as we all know the laws of economics are fair and just. Truly a business man who strictly follows the laws of economics would always compensate people fairly for their value delivered to the company.
In all seriousness, how does this make economic sense? The company is incentivizing that people move to areas with a high cost of living, but why exactly? What economic benefit does that bring to the company?
The only reason that's ever been explained to me is that the cost of competing for talent is higher in those areas than others. However someone's location is a poor indicator for talent potential, so why would you compete in high cost areas?
No it's not? If this were true, then economic hubs wouldn't exist. If someone is talented in field it's likely they will move to an economic hub that has jobs for their talents. If I wanted to open a trading firm I'd likely find the most capable candidates in Chicago, because thats where most of the jobs are today. There are certainly capable hires in Idaho, but how much time should a company spend looking for a needles in haystacks?
You are looking for stability-based economics and wondering why your conclusions don't appear in reality. Well, it's because your economics are wrong.
They pay more there exactly because there is larger competition. And they hire there because that's where their money come from and where they started hiring before going global. If they reseted their hiring choices and had to do all of them again now with the current company, they would be better off hiring at cheaper places and not having anybody on the more expensive ones, of course. But the sheer absurdity of that conditional should be enough reason for you to see it won't happen.
It doesn't always bring an economic benefit to the company, which is why there are debates over companies calling employees back into the offices. That is almost always based on gut feeling and herd-mentality, than on any concrete data.
However, companies have to recruit from labor markets, and as such, they are bound by its vicissitudes. Despite the pandemic scattering many software people all over the country, the vast majority of competent software developers with cutting-edge work experience are still to be found in the Bay Area. Therefore, it makes sense for the company to insist that other hires also live in the Bay Area. Perfectly understandable. If the company is able to compete effectively for talent in the remote market and able to make it work (timezones and cultural differences do matter, even if it were possible to recruit remote workers easily), then it would do it, sooner or later.
Is it? Are you better off if you earn more but live in a high cost of living area? I hear about people working in SF for the big tech companies but living from a car because they can't afford to live there.
1. GitLab (as with most other companies with geo-dependent comp) pays based on Cost of Labor--not Cost of Living. So if a market has crazy-expensive real estate but salaries haven't caught up (somewhere like Vancouver), you're out of luck.
2. GitLab is NOT encouraging team members to relocate to HCOL areas at all. In fact, while they encourage hiring in LCOL areas (there are target "location factors" for teams, so there's a bias toward hiring in lower-cost areas), the Handbook ( https://handbook.gitlab.com/handbook/people-group/relocation... ) states that "Relocations resulting in an increase in compensation must be approved by the team member’s direct manager, and location factor changes that are >.2 will require direct manager, VP as well as an eGroup Member approval."
TL;DR -- don't get hired in Iowa an expect to bounce to SF right away.
Besides, your alternative isn't making more money. It's not getting the job.
Some of those characteristics were given protection in law after enough noise was made.
Of course any adjustment in pay needs to fit budget, so the company and line manager would need to have the budget to afford to. And there's probably plenty of companies that won't have this as an option or won't adjust for inflation, but there's also plenty of examples that do.
If you pay the global median salary to everyone, people in high cost areas are screwed and you’ll never be able to recruit there.
If you pay everyone in your company the highest salary, people in low cost areas live like kings while their peers in high cost areas live a more modest lifestyle.
As a company you’re not out to solve global inequity, you’re out to hire good talent effectively and efficiently. Like leaving a 40% tip at a restaurant, overpaying the going rate on salary doesn’t really get you anything but feel goods at a certain point.
Can I ask which country?
Usually what I see is that remote jobs will offer a slight higher wage than the going rate in lower cost of living areas. That way you’re in a situation where moving to a higher cost of living area and making a more regionally average salary isn’t all that attractive.
> When you do exactly the same job in the same company, same department, same team, with the same output — then definitely it's discrimination.
But that’s my point as well: if you’re in San Francisco paying $5,000 a month in rent for an apartment and your coworker in Cambodia is also getting an SF salary living in a mansion with servants because your company is location blind that’s also a form of inequity.
My point is, people are going to have different lifestyles that cost different amounts and give them different benefits. Companies should fuck off pretending they care about fairness or cost of living. Just call it what it is - competition-based pay. You pay someone in SF more because you are forced to by market conditions, and if you could, you would pay them less, with zero concern for their rent or mortgage. And since you CAN pay someone in Kansas City much less, they do.
We've already seen the prevalence of remote work change the equation. Many places now pay SF 110% and everyone else in the US 100%. The COL difference between SF and KC is not that 10 percentage points. Nor could you compensate someone for the discomforts - both political and meteorological- of having to live in Missouri, who God himself has abandoned.
The guy who doesn’t have kids paid it indirectly in his social contributions. The next guy next to him too. And the next guy. And so on.
It's incredibly hard to budget for children though, you can't really foresee how much they will cost. One child eats little, one eats much, one is picky, one not, one likes soccer, the other one likes lego. Very hard to predict, except maybe year 1-2. But then one might be good with breastfeeding while the other might require formula and the cost of the first one is 0 while the second one could be very high
And I'm not saying it should be more, I was more saying it in jest to help deter comments like "but you get tax kickbacks!". I do think that we should be doing more for children - free school lunches with no means testing, free childcare from birth instead of just when they enter the public school system, and so on - but the child tax credit is the most visible "kickback" so I made a joke about it to acknowledge it.
My point here, more generally, is that companies shouldn't be trying to play this game with "fairness". Just call it what it is - capitalism and the invisible hand of the free markets. If people have problems with how that system allocates capital, then do something about it, but don't try to pretend any of its machinations have any relation to notions of justice or fairness.
(And I say this as someone not overly invested in that world - I have a 17 yo stepdaughter, and I am fortunate that in addition to my excellent healthcare, my company pays 100% of the premiums for my partner and kid, not just me).
It’s kind of like parking. If employees don’t pay for parking then an employer is subsidizing car driving over other options.
Choosing between abandoning your family and maximizing your revenue isn’t exactly an even choice.
Otherwise, see The Complacent Class: The Self-Defeating Quest for the American Dream by Tyler Cowen.
https://www.amazon.com/Complacent-Class-Self-Defeating-Quest...
This is rarely about avoiding paying a FAANG engineer $500K and letting them work from Bali. They're weaponised in ways to give a plausible defence to why two people with the same role and experience are paid vastly different amounts for doing the same job.
What’s not to resent?
why wouldn't he come here then? (he could have easily come on L1, great visa, spouse can work too, straight path to GC)
It’s ok for enterprises to pay different prices/salaries in different locations yet individuals don’t get to do the same is a flaw in how we are taught what we can ask for
We are trapped in the matrix , need a red by pill
I mean he lives in Amsterdam, which is more expensive than the rest of the country, sure, but nowhere near what it's like in SF according to https://www.numbeo.com/cost-of-living/rankings.jsp (Amsterdam is ranked 75, vs SF at 8), and I'm not sure if that index includes health care and social benefits like state pension, etc. Speaking of, that's only salary, ìt excludes stocks, bonuses, pension contributions, and other benefits.
Then there's accessibility; living in central Amsterdam means he can fulfill most of his daily needs and transport by bike. Can't get much cheaper than that.
TL;DR, he can move to SF if he wants to earn SF rates.
Just because these traits are not protected by US law does not mean that they should not be valued. They are also traits of human diversity and discriminating based on those traits is still discrimination, just not discrimination against US-protected classes.
I suppose what you're getting at is that you can't change your race or skin colour, but you can change your location. That isn't really the case if you're Ukrainian, or just from a country with a weak passport.
This is why women who want to get pregnant don't get hired in the USA (extra costs associated with postnatal (ETA: maternity) leave). And yet that's not okay. So your basic rule of thumb is not quite comprehensive.
All companies will take advantage of maximizing their profit or reducing cost, but it's a slippery slope once a subjective metric to determine value is used.
I for one live in a "low" CoL, but my AWS bill is just the same as a person in NY, SF or Geneva, should I also expect a discount because "my income is lower"? Or is it only fair to be billed equally, because the value all of us get is the.same ?
Turn the tables, if a dev in India, Romania or Mexico is delivering the same value as one in the US or UK should (s)he be paid any less ? Why ?
This argument falls apart when you consider that some projects have zero or negative value. Developers who work on these projects still get paid and we obviously don’t have to write a check when we make a mistake that costs the company money. Nobody actually likes “delivered value” compensation except under hypothetical circumstances where they imagine it can only increase their pay.
The hiring market is a market. Supply and demand drives compensation.
Delivered value isn’t one of those forces driving supply and demand. It sets the maximum an employer can pay someone and still get an ROI, but that’s it.
> Turn the tables, if a dev in India, Romania or Mexico is delivering the same value as one in the US or UK should (s)he be paid any less ? Why ?
Because it’s a job market and you’re bidding for candidates against their other options.
If you’re house shopping and you find an identical 3 bed, 3000 sq. ft. house in all of those markets, would you expect to bid the same for it? Of course not.
The sooner we accept the realities of job markets and supply and demand, the sooner this all makes sense.
Null hypothesis would be that on average the null/negative value projects would be evenly distributed.
...Then why is the company running that project?
Look at it this way: What if the developers were only paid after the product broke even and starts "delivering value". You think you're going to get a lot of developers signing up to work on a new project that might only pay them if they stick with it for a few years and it succeeds due to reasons that include things out of their control (like sales cycles, market moves, etc.)?
Uncertainty is fine; is mean that if the expected value[0] is below zero it's a terrible idea to do it.
> Look at it this way: What if the developers were only paid after the product broke even and starts "delivering value". You think you're going to get a lot of developers signing up to work on a new project that might only pay them if they stick with it for a few years and it succeeds due to reasons that include things out of their control (like sales cycles, market moves, etc.)?
Empirically yes; what you've described is close enough startup employees with low cash and high stock payments.
Yes, and when you are hiring remote, the market is "everywhere."
No need to divide that market up by people living in a city, people owning a sports car, people with large amount of medical debts, etc.
"bidding for candidates against their other options"
Then he goes on about projects having negative value and also paying employees until value is delivered.
His model is to exploit every possible loophole to make it all work and shift the most risk from management to employee.
Yes, assuming it's all legal (which it often isn't, pushing the limits like this)
Where should the line be drawn ? Pay based on what car I drive because it's less|more expensive ? What school my kids go to ?
I'm almost waiting for salary adjustments base on diet! Hell why not, veggies 'are less|more expensive'?
Here's your mistake. Companies have never and will never pay for delivered value. They pay the least they can to get an acceptable candidate. The difference is important, and the mentality that companies are paying for delivered value rather than the minimum acceptable amount leads to these mistaken conclusions often.
As for why? Because their goal is to maximize profit of course. Why pay more when less will do? The overseas dev should be paid less because their opportunity costs are much lower, so they accept a lower wage.
For example, now I live in the US and although my salary is about twice what it was in England, my lifestyle remains about the same, worse in some aspects, and better in others. I'm almost certain OP lifestyle would have taken a hit living in Bay Area, even with a higher comp.
And this is simply comparing income, not accounting for many other variables (social benefits, taxes, culture...). In fact I'll probably take a big hit in comp to move back to Europe so that I can live a more comfortable lifestyle.
I think you have to get the actual content from the Wayback Machine now.
Gist was that many Armenian families tended to be miffed at the amount of financial assistance their relatives who had moved to America tended to send back, particularly upon learning of their apparently high salary amounts.
Article then goes on to describe how American society tends to nickel-and-dime its members to death from every direction.
More broadly, the article was a fascinating outsider’s look at our culture and lifestyle.
Things they mentioned as being different from Armenian life:
* You pay federal taxes and state taxes to a myriad of different agencies with different limits or starting points on all of them. Property taxes, vehicle registration taxes, sales taxes, etc.
* The US is more focused on being procedurally fair (you have rights that must be ennumerated to you upon being arrested, etc) but not on being just (he mentions child neglect for latchkey kids, mandatory sentencing, a woman accused of kidnapping for trying to take her child away from his abusive father with a custody agreement)
* Poor federal safety net
* Suburban housing and little mixed-use zoning leads to required cars, homogeneity of America, lack of walkable anything
* Individualism (not knowing all your neighbors; he mentions that in Armenia if you had a test for a tumor multiple friends would take off work to weep in the waiting room with you; the idea of being an automaton in your company rather than a human with emotions)
As for location, the motivation is stated here, and in my opinion, it really makes sense: https://handbook.gitlab.com/handbook/total-rewards/compensat... Imagine they would pay Bay Area salaries everywhere including Philippines or Ukraine. People there would be in "golden handcuffs" and burn out instead of changing job when it's time to go. This would produce terrible results for both the company and people. And of course, if they chose to pay some kind of world-median salaries, then they wouldn't hire people in California or London at all.
There are other controversial things said about product managers being unneeded, and that the company shouldn't have more than 100 developer for a product.
I think it's pretty clear that the author is a great autonomous engineer who would be happy and very successful in a (relatively) small startup. Maybe if not for the tax rule changes waiting, he would have left the company earlier, and would write a happy article about his experience there.
This gets us back to the location-based rates again by the way:). Imagine how difficult it would be for the author to leave the company if in addition to stocks, he would have had $300k compensation in Amsterdam.
Good ol' "we can't pay you that much, because what if we wanted to stop paying you that much. It'd be bad for you if we handed you this pile of money, you might hurt yourself. We're helping you by keeping it to ourselves, trust us."
EDIT: and one more thing to add here: as an employer, you usually prefer to hire people whose motivation is not only money. You want to work with people who like the job and their colleagues. The current market practice is to pay local rates. Thus any company that pays much more, has to address the challenge of filtering out people with "incorrect" motivation.
You're saying that as if companies retaining employees is a bad thing. Stock options are already a form of widely used "golden handcuffs". If people want to keep working somewhere, compensation should only be one decisive factor among many others.
> And of course, if they chose to pay some kind of world-median salaries, then they wouldn't hire people in California or London at all.
Why not? People in London or California would have to compete by the same criteria as people in Ukraine or the Philippines. This is only a good thing, as it opens up the talent pool to a global market.
The point of fair compensation is not about giving everyone the _same_ salary. It's about removing the location aspect from affecting compensation, and making it more of a merit-based system.
Especially for a remote-first company like Gitlab, where people are free to work from anywhere. It's ridiculous that employees are encouraged to live in countries with high compensation just to take advantage of this system, and are penalized for working from countries they actually want to live in.
Not to mention that it makes the lifestyle of a digital nomad much more complicated. What if I want to live 3 months in London, and 3 months in the Philippines? That kind of lifestyle would involve messy contractual changes and salary adjustments.
This system makes no sense, and is a remnant of traditional corporate structures. Of course companies love it, because they can get the same quality workforce by hiring internationally for much cheaper. Offshoring is an old corporate tactic, and needs to be abolished. It's shameful and hypocritical that remote-first companies like Gitlab still cling to it.
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Taking a look at the article you linked, it's quite clear:
> If we start paying everyone the highest wage our compensation costs would increase greatly, we can hire fewer people, and we would get less results.
Translation: it would cost us more to hire quality people everywhere, and we'd rather hire them cheaply.
> A concentration of team members in low-wage regions, since it is a better deal for them, while we want a geographically diverse team.
Thinly veiled diversity claim. The same thing happens with the current system, where people are encouraged to concentrate in higher-wage regions. Removing this only gives them the freedom to live anywhere.
> Team members in high-wage regions having much less discretionary income than ones in low-wage countries with the same role.
So? Since when is a company concerned about how much "discretionary income" employees have? Your only job is to compensate people fairly for the role based on their abilities.
> Team members in low-wage regions being in golden handcuffs and sticking around because of the compensation even when they are unhappy, we believe that it is healthy for the company when unhappy people leave.
Addressed above. This is BS, since you already give them golden handcuffs in the form of stocks, perks, benefits, etc. Compensation shouldn't be the only "handcuff".
> If we start paying everyone the lowest wage we would not be able to attract and retain people in high-wage regions, we want the largest pool to recruit from as practical.
Again, entirely backwards. It's not about paying everyone the "lowest" or "highest" wage. It's about paying everyone fairly for the role and their experience/merit. You don't need to choose either Bay Area salaries or Ukraine salaries, but come up with your own compensation structure.
Buffer has been doing this for a long time now, and they have cost-of-living location bands, but have removed two of the lowest ones in 2022[1]. I would go a step further and leave only the highest band for people who want to live in the most expensive regions in the world. But then again, since you've made yourself more attractive for world-class talent, it's likely that you won't have a large concentration of people living in these places anyway. So there's your diversity.
And even if you remove the entire concept of location bands, and people in these expensive regions get paid less than other opportunities in their region, they'd likely still want to work for you because you give them much more than just a fair salary, right?
All I read are excuses the company made up to avoid just saying: we want to hire talented people and pay them less. At least have the decency to be honest about it.
[1]: https://buffer.com/resources/location-independent-salaries/
> Your only job is to compensate people fairly for the role based on their abilities
So it's about definition of fairness. You think it should be some universal measure regardless of location, they think it is a good market rate. And job markets in each country even after COVID are still different, that's why a "fair" amount differs across locations.
One more important consideration here is local laws regarding taxation and employment. People in EU get less than in the US, but generally it is much more difficult and expensive to fire them as an example. Would it be fair if a person with employment-at-will contract who can be fired tomorrow with zero severance and has 14 days of vacation had the same salary as the person who has 30 days of paid vacation and minimum severance or notice period of 6 months?
I agree that it's a somewhat complicated issue, but there are solutions to it if the company wanted to solve it. Besides, these cases are rare and not many people will choose to live this way, so it's not the most pressing matter in this discussion.
That would be absurd.
But what if they paid Philippines or Ukraine salaries everywhere instead? They wouldn't hire Bay-area engineers. Okay. And maybe the offshore has too much language/timezone friction. Okay. So choose a different price point, whatever is the cheapest to get engineers who match your condition, regardless of what their steet address is.
At the end of the day, it winds up being a choice between
- Pay someone based on their location - People in lower COL areas complain, but are (in theory) being paid an amount with the same buying power as someone in a higher COL area (being paid me) [1]
- Pay the same regardless of location - People lower COL areas are making more buying power, but people in higher COL won't even work for you; because it's not realistic to pay the higher COL amount to everyone [2]
There's no solution that makes everyone happy.
[1] Not really true, since it doesn't account for a lot of factors; such as retirement savings, etc.
[2] Not strictly true but, if you pay the higher COL amount to everyone, then you can hire fewer people for the same amount of money.
If you’re hiring for some specific niches or need very senior people, removing candidates in hcol tech centers from your search pool could make it a lot harder to hire. Like imagine saying you want to hire a great US political lobbyist but you can’t hire anyone who lives in DC. It would be tough right? The dynamics in tech aren’t as dramatic but there’s still some of that effect.
I’m not saying an alternative strategy couldn’t work, but there are good reasons companies want to be able to hire in hcol markets.
Okay, so you'll pay more for those niches or seniority. At whatever price is competitive with the market as a whole.
You don't need to include location. I'm sure people who drive fancy cars need more money too, but I'm not gonna pay more for that.
Exactly.
Compare it to something else, like paying people more if they own a sports car.
I'd suggest the author thinks yet a bit more about this. "color of the skin", "gender", "location of living", I'm sure the author can figure out what differentiates the first two from the latter. For a start, one could think about which of these things one is able to change. Or you might ask the question: which of these things have actually something to do with my job? And yes, location matters: the company usually needs to create a subsidiary in the country of the employee, get familiar with their judicial and tax system, then there's also the issue of time zones, travel cost to company meetings, etc.
Don't get me wrong: one can surely discuss whether differentiating pay based on location is OK or not. However, comparing this to discrimination because of skin color or gender will not help this discussion at all, as in effect the author is comparing GitLab to a racist and sexist organization, which will end any discussion fairly quickly.