Why would you hire one guy in Bangalore and pay him five times market rate, when you could hire five guys and pay them exactly market rate, and presumably get a bunch more work done?
(Obviously it isn't quite this simple, programmers are special snowflakes who cannot be substituted, it's worth paying more for talented people who get more stuff done, larger teams have greater management and communication overheads, remote workers will be in inconvenient timezones etc but my point remains even if you decided to hire three guys at 60% above Bangalore market rate)
If you move often and work remotely, it seems to me that salary renegotiation would become as routine as any number of other tasks you doubtlessly encounter.
Taxes are part of it. If overall state taxes (property, local, state, sales, and other fees) is 25% of your gross in CA, and 15% of your gross in MO, companies can reasonably expect to pay less in MO for the same work.
Another way to think about it, what percentile does your pay fall into for similar jobs in San Francisco versus Kansas City. If being paid $120k as a 5-yr Rails Developer in San Francisco puts you at the 50th percentile, move to Kansas City and all of a sudden that same $120k could put you in the 80th percentile (numbers are totally made up). Assuming developers aren't actually smarter in CA than MO, your percentile pay shouldn't change.
Worry about the quality of the work I produce for you and then pay me for it.
I completely agree with you in regards to a dollar being very different in SF as compared to KC, but that should have no relevance to how much I get paid.
> Your pay is actually not "going down"
Yes my pay actually is going down. I would literally be brining in less money. What I choose to do with that money should not matter to my employer.
Don't forget that if you earn less money in the same country then you'll pay proportionally less taxes. Made up numbers: CA = 120k gross -> 80k after tax. Another state: 100k gross ->70k after tax; Difference in cost of living: 10k). Now you are breaking even. Of course, totally made up numbers.
And as an extra, for every extra dollar you have in a cheaper state, you can do more with it than in CA.
Sure, I would love to make the same kind of money in the cheapest corner in the world but companies aren't there to make us rich; they are there to have a business! If you want to try to convince company to pay for what you produce instead of paying a fair salary, try contracting instead (and be good at selling yourself)
1. If I make more than approx $106k a year, I cap out on paying FICA. 2. As far as I know, everything I buy at places like Amazon costs the same regardless of where I live (with in the US). 3. Many financial incentives are provided as a percentage instead of a raw dollar amount e.g. 401k's are usually matched by percentage, raises are often a percentage increase.
There is no such thing as what you are worth.
Let's assume that it is possible to asses your BaseWorthIndex, which would include such factors as your technical skills, people skills, general experience, relevant industry experience, motivation, work ethics, etc. You will notice that even this base index will not be a constant over time (in general, you learn as your career moves forward, but you may also pick up vices), nor will it be the same for all positions for which you are a potential candidate (industry experience and motivation may vary widely from one position to another).
If you want to consider that your TrueWorth is the amount of value you add to your company by direct result of your labor, you have to consider that this is proportional not only on your BaseWorthIndex, but on a number of force multipliers that your employer provides (or fail to provide). Doing the same excellent work for an obscure IT department in some random enterprise, for a high tech big corporation, for a SV startup or for a non profit results in very different outputs, and that more often than not these are out of your control.
In a sense, the employers with bigger multiplier factors want to bring in the best talent, and should pay above average salaries, industry-wise, but it's not required that this extra factor has to be directly proportional to the value added by your position.
If on the other hand, you want to define your TrueWorth in terms of a ratio between your BaseWorthIndex vs average BaseWorthIndex for your industry, you are in similar problems. Being (noticeably) above average means you may command above average salaries, but it does not mean an arithmetic proportion will be calculated; after all, our BaseWorthIndex is a fiction and it would be extremely hard to measure.
Then there is the issue of cost of living. Since as we discussed before, your compensation is not defined in absolute terms but relative to your peers, the issue of how much does it take to make a decent living at your current location comes to play. Take into account also that this is an asymmetric market and that you are always at disadvantage. I have seen more than one good friend and colleague been lured to NYC or SV/SF on the promise of plump returns, only to find out that cost of living lets them in worse conditions that what they had already achieved locally.
I think that it would make the most sense to pay someone what they are worth, regardless of location.
As a remote worker who moves quite a bit I'd be constantly having to renegotiate my salary.