
Ask HN: Local vs. remote salary gap - reinhardt
Any info or insight on how common is it for companies that have both local and remote developers to offer different salary ranges based based on the employee&#x27;s city&#x2F;state&#x2F;country? I am talking about regular full time remote employees ala 37signals, not lowest bidder outsourced contractors.
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patio11
Anecdotally, companies which I've worked with set bands based on local market
conditions and allocate you within the bands on a roughly cross-company
performance basis. e.g. 10 levels of engineers, level 3 engineers in NYC and
Bogota are roughly comparable in skill level but the ones in NYC make quite a
bit more.

Mostly for internal sensibilities of fairness, it is generally the case that
e.g. level 3 engineers in Bogota working at the company would earn above-
market for their skillset in Bogota. The companies tried to strike a balance
between "We want to pay them equitably with our employees in high-cost US
locales.", "We want to retain them versus other offers.", and "We do not want
to give them golden shackles by e.g. paying grossly more than any employer in
their low-cost locale."

This assumes functioning remote cultures and regular, full-time, full-class
employees. Consultants obviously do things differently. (And any consulting
client which made reference to Nagoya FTE rates in a negotiation with me would
have gotten a firm handshake and non-specific pleasantries _immediately_.)

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ChiperSoft
Preface: this is purely anecdotal.

I've worked at two companies where I was explicitly told that I was being
given a lower offer because I was working remote instead of relocating. Both
companies offered to pay me more if/when I decided to relocate.

Both companies had lousy policies regarding remote employees that left me
feeling like a second class citizen within the organization. Poor
communication practices, poor or absent advancement opportunities. Both jobs
ended around the 8 month mark.

By comparison, two other companies that I've worked remotely made me excellent
offers, had awesome policies, great communication, and provided merit raises.
At those places I felt like I was on equal footing with all other staff.

So, anecdotally, yes, there can be a gap, but any company that is likely to
pay you less as a remote developer probably isn't going to be a good company
to work remotely for.

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programminggeek
I think there is something sort of foolish about the fact that across the
board employees are basically not allowed to mention real numbers regarding
how much they make or even things like the industry average pay.

Read these threads and you almost never hear anyone mention real numbers
because they are terrified of either being fired or having their peers realize
what a good/bad deal they've made.

Yet, in a lot of public institutions like Universities, public schools,
salaries are a lot more transparent.

Companies probably don't want people to know what other people make because it
gives the individual leverage to negotiate. We as developers are terrible at
negotiating and don't want to admit it.

Anecdotally, in Lincoln, NE I've seen developers paid anywhere from $25,000 to
$120,000, but most range in the $35,000 - 65,000 range. I believe most devs at
UNL or the state of NE fall between 45k and 65k, but some can be a good bit
higher.

What gets me is if a dev in the midwest who would normally get paid $60,000 or
so, how much should they get paid as a remote worker for a startup in SF? In
SF I assume a dev costs $120,000 or more, so if you were being hired there
what is the right number to ask for?

In a truly remote work environment, does it really make sense to pay
dramatically less or more just because of where someone lives? Is someone's
relative value decided by their location or by their skills and abilities?

~~~
michaelt

      Companies probably don't want people to know what other
      people make because it gives the individual leverage to 
      negotiate. We as developers are terrible at negotiating 
      and don't want to admit it.
    

If you're a developer who is good at negotiating, it's a whole lot easier to
negotiate a $20,000 raise for yourself than to negotiate the same raise for
everyone on the same pay grade.

If I make the company $200,000 that funds my $20,000 raise right there - if
it's just a raise for me. If I have to fund the same raise for 100 other guys
before I can have one myself, funding that will be about 100 times more
difficult.

~~~
dnt404-1
totally true that negotiating for oneself is very easy than the rest of the
team. back when i was working (before taking studies), it was easy to get my
pay raised, however later as i became team leader, and when i tried to raise
the pay for all of my team and that never really went through.

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crdb
We pay the same (and offer a Singapore visa if they change their mind). The
method is pretty simple: we pay X amount of money and get Y (or more) amount
of code "value" back, and try and keep Y/X relatively stable.

Works out well for those living in cheaper cities, but it does suck a bit if
you're in a high tax country/state, since Singapore's tax rate is in the
single digit percent.

~~~
nomadpdx
This is exactly the comment I was looking for. So many folks on here that are
resistant to the idea of paying everyone equally for the amount of value they
bring to the team.

~~~
davewasthere
It's quantifying that value that is the difficult part. Delivery of x amount
of lines of code would be a terrible metric for example...

~~~
crdb
I'm not saying it was the only predictor, but we did have a candidate who
solved the application task with a quarter (1/4!) of the code submitted by the
next best, whose submission was already beautifully succinct. So, number of
lines of code CAN be a meaningful predictor ;)

More seriously, I agree with you. I don't think performance is quantifiable
with parametric methods, you just have to allocate a fair amount of mental
effort to the problem. For example, a "maintenance guy" who enjoys breaking
other people's code, fixing holes and doing tests is extremely valuable, but
not someone that is easily sold to non-technical management, nor that is very
visible; at the same time, without some builders to work with, his salary is
wasted.

We get away with it because we have a carefully selected (around 3 man-month
of just recruiting) small team (10) of experienced developers from a small but
strong and mature community (Haskell) on a well defined problem (fix and
improve a large e-commerce platform). I shudder to think of the magnitude of
the problem for a much larger company with much larger teams, like Google or
Microsoft.

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nedwin
It's relatively common for their to be a gap between local and remote
developers.

Buffer have been incredibly transparent about their approach to this:
[http://open.bufferapp.com/introducing-open-salaries-at-
buffe...](http://open.bufferapp.com/introducing-open-salaries-at-buffer-
including-our-transparent-formula-and-all-individual-salaries/)

~~~
GFK_of_xmaspast
Incredibly transparent about their low-ball salaries.

~~~
nilkn
The salaries are low for San Francisco but high for most of the country. The
people working remotely are getting a great deal, provided they're using the
opportunity to live cheaply. The people working locally in SF not so much.

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WalterSear
They are low, even figuring in the locality pay.

~~~
nilkn
I'm not sure I agree. Take the $88k salary for the frontend engineer. See if
you can go get that salary with little experience out in Springfield, MO or a
place like that. You'll be very lucky if you get $60k. I think you
underestimate how much salaries plummet in truly cheap areas. You're probably
thinking of "cheap" areas that aren't actually cheap at all, like Houston or
Austin.

~~~
WalterSear
I'm in SF, so I little expereince with the salaries in those places. It may be
that it's their 'cost-of-living' difference that is at the heart of the issue.

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jimmy5804
A bit late to this discussion, but I'll provide a comment from the employer
side. Employment is a market, and it has market-based dynamics. Most of the
developers here are (understandably) looking at this from a cost-perspective -
"I should be paid what value I provide" etc. That's not how it works. Just
like products aren't priced by what they cost, employers don't value
developers by the value they add.

Instead, developers are priced by companies at what the market will bear just
like any other product. If a $40k salary in Bangalore will get them X quality
of developer, and they need $120k in SF to attract the same quality of
developer, then that's what the policy is. The policy might be disguised
behind cost-of-living etc., but it's really market-based pricing.

In the same vein, keep in mind that it _costs_ a company more to hire someone
in an expensive area. So if developer skill was the only issue, why would
companies _want_ to hire locally if it costs more? The answer is If developer
skill was the only thing at issue, no developers would ever get hired in SF
because there's plenty of great developers elsewhere for less money. The
reality is that having people local adds significant value, all other things
being equal, so companies are willing to pay more for local people.

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ktavera
I make the same remote as I did as an in-house senior developer. But I will
note that when I was interviewing for remote opportunities I came across a lot
of cases where the salary was different for remote and on-site employees. Even
signing bonuses of $10k or so to come in and work from the office.

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quaffapint
I'm in a big financial institution in the US and we have many remote and many
local workers in the IT side. The only difference in pay (that I know about)
is they might pay local more in some areas because the cost of living, and
often the wages, are higher in that area (like San Fran). Only bummer is
they're slowly doing away with the remote working.

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ryanSrich
It's very interesting to read that most companies change salaries based on
location. I'd like to hear from someone in a senior level position explain the
reasoning behind that.

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.

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bgun
We try to equalize net pay taking into account a reasonably consistent
standard of living. As mentioned above, equalizing gross salary across
geographies where employees have dramatically different purchasing power
doesn't feel fair and takes a toll on morale.

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.

~~~
ryanSrich
What doesn't seem fair is that if I move from San Francisco to Kansas City to
save money my pay goes down. I'm not doing anything differently. I'm still
working the same amount of time, doing the same level of work.

~~~
zaroth
Dollars simply aren't worth the same in San Fran as they are in Kansas City.
Your pay is actually not "going down" in an economic sense.

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.

~~~
ryanSrich
But you're still emphasizing a personal decision that I choose to make. Don't
worry about what I do outside of work or where I live.

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.

~~~
ploureiro
Check your bank account in the end of the month. It's going up!

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)

~~~
doug11235
But here are a couple of things to consider.

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.

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yesimahuman
Something I've noticed is that for projects that are publicly visible (i.e.
open source), remote workers can often command higher rates as they work more
like a contractor. The independence is a trade off for the quick ramp up.

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throwawaybsacct
I worked remotely as a sysadmin for an internet security startup in SF for
almost 3 years. I made $45K/yr because I was living and working in Oklahoma.
My co-workers living in SF doing the same job as me were making 2-3x more.

