
Paying Remote Employees Fairly - rmason
http://blairreeves.me/2020/05/22/paying-remote-employees-fairly/
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olivierduval
I think that the article is missing a major point: cultural and soft skills
!!!

In a ideal world, coding would be just using some fully specified langage to
implement some fully specified specification or feature. However, in real
world, a lot is left implicit and the programmer (not talking about more
client or contractor facing position, like project manager) will fill the
blanks with its own culture...

And that's the moment where living in India, Turkey or US will make a
difference ! Not on specific coding skills but on a more general cultural
appropriation

In fact, after a lot of offshoring, some companies brang back the jobs in the
country because the friction were annihilating the cost gains

So I don't think that the worker pool will grow that much, internationally.
However, the competition will grow more inside the different countries,
between urban and countryside... and it will be a race to the bottom : why
would any company pay 20, 30, 50% more for the same job ?

~~~
achow
> _In fact, after a lot of offshoring, some companies brang back the jobs in
> the country because the friction were annihilating the cost gains_

That's because the offshore companies have engineers who are paid probably
~1/25th of the salary than the 'in shore' ones.

If the salary parity is 1:1 (or adjusted for cost of living), then there would
not be any problems with 'off shoring'. The evidence is in the overseas R&D
Centers of USA product companies that are already prospering in places like
India, East-Europe, etc. These companies are in the league of Microsoft,
Google, Amazon, Adobe, Intuit, Oracle,.. and then some from well funded valley
startups. The 'culture' or 'soft skills' does not seem to be issue as these
organizations are making global products.

And above is actually happening now with employees who are getting much less
salary (because they are CoL adjusted) even though output and talent are at
par. These employees are working out of these locations because of family
reasons, or waiting for the right time to emigrate (kids, school, college
etc.).

When the salary parity is at 1:1 in any location, for many (if not all) valley
area or major USA metro area may not hold any more charm.

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wan23
All of this talk about what companies should pay is missing the point. The
market determines what salaries will be. Someone good enough for Facebook is
good enough for a number of bay area companies that would pay top dollar, so
Facebook has to make competitive offers. If someone lives in a place where she
doesn't have access to those other high offers, then she should expect to make
somewhat less. It has nothing to do with what people deserve or their value to
the company.

~~~
achow
I guess you are missing the point.

When remote becomes norm, isn't it the case that it would not matter whether
the employee is in California, Utah or in Thailand?

So when a rockstar employee of FB decides to work out of Sydney (because sea,
sun, fun) at same salary (because remote is norm); what happens when a
recruiter finds another great talent at same or some other city in Australia?

~~~
JMTQp8lwXL
Businesses hire you with the understanding you'll be working in a specific
timezone-- being remote is irrelevant. If you go half way across the world and
your team is 12 hours ahead of you, standups (and other synchronous tasks)
become impossible. If you need something from that teammate, you send a
message, and wait 24 hours for a response. It obliterates collaboration and
slows the business down.

~~~
mping
12h is maybe too much but I have worked with people from +/-4h, what you want
most of the time is a decent overlap between all team members. Besides there
are some roles such as SRE that need people 24/7 around the world

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kaikai
> Where you live is, and has always been, a consumption choice.

What? Most people live near where they’re born. For people with family,
friends, spouses with jobs and children with schools, moving is not a simple
matter. Even setting aside social networks, most of us only have one passport
and at max a couple languages. Where we live is NOT strictly a consumption
issue. I dont think the argument against COLA is as black and white as the
author says.

~~~
em-bee
within one country, one as large as the USA in particular still has plenty of
options to choose where you live.

but i agree with your point.

when people are moving, for many it's not a consumption choice, but a
necessity in order to find work, because there is none where they are.

if they can, most people will choose to work from where they are.

and in fact remote working does enable more people to do so.

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afinlayson
Be careful what you wish for ... businesses aren't there for your benefit,
they are there for theirs.

And this assumes that everyone can work equally well remote or don't have
advantages to working at an office.

Personally the "Water cooler" moments give me plenty of original ideas and
have resulted in new product ideas and explorations.

~~~
topkai22
Having been fully remote for 4 years now, I've had plenty of water cooler type
conversations with other remote employees- humans are social creatures, and
with an experienced fully remote work force we end up socializing remotely,
including coming up with cool Gonzo ideas.

I'm not arguing it's a 1-1 trade off, but it also doesn't go anywhere near
zero.

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cheerlessbog
In a simplistic free market model, both employer and employee aim to optimize
their gain.

The employer sets their wages only as high as necessary to attract, motivate
and retain, and hires whoever provides the most value over that cost. Wages
are not set based on value provided to the company, but by maximizing the
spread between cost and value.

On the other side of the table, the employee wants to optimize the combination
of their income (after-COL) and other aspects of the job they value which may
include their location.

I just made this model up. Assuming it is reasonable, if living back home near
the grandparents, likely with a lower COL, has a higher value to them than
commuting in a tech hub, it is possible for the company to pay lower wages,
and still be equally attractive to labor that is equally valuable. And given
it is possible, they will do that.

Evidence : remote developers exist today and they are typically paid local
market rate.

~~~
tom_mellior
There is no proper market without all market participants having proper
information, and salary information about your peers is typically very spotty.

Evidence: I might be just as productive as a colleague working on the same
project in the same company with comparable qualifications, and I would never
know if they made 10% more (or less) than me.

~~~
cheerlessbog
Job seekers have some competitive salary information though : if they can
obtain multiple offers, or the salary is advertised.

~~~
tom_mellior
... which is why most companies don't advertise salaries. Not even where I
live (Austria), although it's required by law.

~~~
cheerlessbog
I said offers, not ads. It's pretty common to interview with several employers
at a time.

~~~
tom_mellior
Fair enough, I misread this. Still, that only gives you a very linited amount
of information, and nothing about what existing employees at those companies
make.

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throwaway713
There’s a difference between what may be “fair” and what economics (and the
law) allows. Is it fair that teachers are paid $40k? Is it fair that _anyone_
is making over $10 million a year? Is anyone really worth that much?

Cost of living adjustments occur because companies can get away with it.
That’s pretty much all there is to it. They have additional leverage when a
potential employer wants to live in a particular location and that puts the
potential employee at a disadvantage.

That said, I actually think most of these companies would prefer to pay
everyone equally if they could get away with it as well, because ultimately
they will cost the company less in labor. But they can’t at the moment. All
the talent is concentrated in just a few spots and much of this talent does
not want to move. In a hypothetical world where remote work really takes off,
location will no longer matter. No company is going to pay someone twice as
much just because they want to live in a nice location. It’s simply that this
is what is required by companies _at the present time_ to keep the employees
that they value and have already invested in.

It would be interesting to run some simulations where you vary the desire of a
workforce to work remotely and see how it changes the pay required for maximum
talent retention. Since widespread remote work is new, we’re not anywhere near
an equilibrium yet.

~~~
gpapilion
I feel like this is a major part of the equation. The employee in a tech metro
area has non-remote options, and the remote only employee in a non-tech area
does not. The company has to compete in every market, and since the majority
of employees are concentrated the high cost market gets its price while the
low cost market looses out.

Remote still has a host of issues to work out, mostly with time zones that
make it less desirable for single geo employers.

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sacks2k
I don't think you have to fight for employers to give you less money. As
remote employment becomes more of the norm, there will be reductions in
overall salary.

~~~
NotSammyHagar
It's all about competition and the ability of companies to attract workers to
work they way they want. There's a cost of living in hiring workers and
competition pressures. There's a lot of competition for workers in the bay
area, that drives up what you can get as a worker (if company x paid much less
you'd go somewhere else that paid more). It costs more to live there but is
that cause or effect of so many workers. If facebook didn't pay enough to
afford to live there then you wouldn't work there. I imagine this happens in
NYC yet plenty of people manage to survive on way less than I could.

In the article he says it's not fair to pay more in SF or similar cities but
that's somewhat subjective. Since I currently live in a tech city I want them
to pay me more, it partly covers the cost of living here.

The author wants more equal pay, to not depend on where you live, I want to be
able to move to a random location and work remotely and still get paid the
same. But how far out do I live before fb pays me less? You could already be
paid a SF salary (in many companies) and commute to work a few days a week and
work from home. Big companies probably already have people in every state and
many locales. The economy is a barrier to this for smaller companies, having
to have a local taxation and perhaps some business licenses plan.

I think at first big cos will reduce pay if you move outside the big city, but
they will struggle to define it in a way that satisfies people. Then there
will start to be competition for remote workers picking up salaries. But I
still expect they'll pay more for people working in big cities because workers
there will resist salary deflation.

~~~
jiofih
Or, as the author hinted at, they will simply stop hiring in big cities - why
would they want to spend more?

Then you’ll have the “choice” of living with the lower salary or moving out.

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tom_mellior
Somewhat relatedly, I wonder how Facebook's approach would work in purely
practical legal terms. If Alice works at Facebook right now, she presumably
has a contract specifying that (a) she earns X money per year, and (b) she is
expected to come into the office daily. I guess Facebook can relax (b)
unilaterally, since this doesn't put Alice in a worse position than before.

But how can they change (a) unilaterally? Is Facebook just threatening to fire
everyone who doesn't accept a worse offer? If it is, how will this fly outside
the US, where most places have proper labor laws? Will this formally be an
offer from Facebook to "relax (b) _if_ you agree to modifying (a) according to
our wishes"? Even that might be difficult in places with strong worker
protections.

~~~
diebeforei485
Working from a totally different location (instead of a home location within
daily commute distance of the office, which is all that the shelter-in-place
laws would require) would be a breach of contract.

Based on media reports, Facebook is voluntarily relaxing that location
requirement unilaterally only until the end of the year.

Reducing salaries can be done any time for any lawful reason, and change of
location is a lawful reason.

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naveen99
It will even out. If remote work becomes first class, employers in fly over
states will start competing for the best remote devs also. I had been looking
for an on-site developer in Houston, but now I am willing to do remote and pay
more for a higher skill developer from the Bay Area.

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bobbytherobot
The other factor I'm not hearing in this conversation is that there is a
third-party in why the Bay Area has so many high paid tech jobs: the VCs. I
know of multiple startups orignally based elsewhere who were pressured to move
their company to the Bay Area by the VC. I suspect there are many ways in
which the VCs have an invisible hand in creating the Bay Area market.

I don't know how to unwind the VC intanglement when talking about
compensation. I do think it should be part of this conversation.

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kgin
I think this is based on a misunderstanding of how wages are set. It's never
been about an abstract fairness.

If it was based on any sort of abstract fairness, there are a lot of
professions that would be making more than they currently do.

You get paid as much as it would take to replace you with another qualified
worker. That's it.

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agensaequivocum
While I, as a remote employee, certainly want to be payed the same as my
colleague in similar roles. But I am certainly not entitled to this; and if
the company so choose, it is their right.

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Traster
>Yet in every software company I’ve worked for, almost everyone’s job could be
– and sometimes was – done perfectly well online, remotely. Yes, all of them:
product, engineering, design, ops, marketing and more. Even skeptics of remote
work know this, deep down. And right now, we are seeing a real-life proof of
concept for this fact that everyone has sorta known for a long time. Remote
teams work just fine. The doubters have been conclusively proven wrong.

This is just a ridiculous premise. This guy has no evidence that remote
working is actually as productive as in-office working, and just asserting it
is ridiculous. I've been remote working for around 3 months now, and I would
say roughly half the people I work with are _desparate_ to go back into the
office. They're less productive, they're less happy, core parts of their job
just aren't being done at all. Where's the evidence this is working at all?

Frankly it's just bullshit to try and make this claim without actually
thinking about this in detail make me think its probably not worth hearing
about his baseless speculation about what life is like in the magic remote
working lollipop unicorn kingdom.

>the flip side of “why do employees in cheaper areas need as much money”
becomes, rather, why does the company need people in San Francisco?

Or maybe it says something about your assumptions that you think copmanies
have had an opportunity to save enormous sums on salaries for decades but just
didn't bother. When actually, when we see companies look to cost-save they
stop people working from home, they tend to actually try and consolidate their
employees into fewer, bigger offices because it cuts down on communication and
travel ineffiiciencies and lets them get economies of scale.

I just personally think it's ridiculous to try and make out like companies are
still going to pretend COVID is happening in 2 years when we have a vaccine
and there's no longer the same motivation to allow people to work from home.
Not least because the way most companies have had to allow people to work from
home has been unplanned and disorganised - so companies aren't even going to
be comparing good WFH best practices with the office environment.

~~~
xenithorb
I think this is the wrong time to be judging remote work. It's being used out
of necessity during one of the most stressful and anxious times in this
generation's history.

Of course people want to get back into the office when they've been stuck at
home for months, possibly with their souse and children. Of course people
aren't their most productive when they're preoccupied with a deadly virus, or
threat thereof, or getting toilet paper.

As a remote worker of 5 years myself I was concerned when this all started
that it would leave remote work in general in a bad light as the masses were
involuntary thrust into adapting, and this unfortunately seems to be coming
true because we're not taking into account the humanity of the entire
situation.

