
Market Rate is for Lobsters - mjbellantoni
https://ernie.io/2015/12/05/market-rate-is-for-lobsters/
======
slackstation
It's funny that the term "Market Rate" is used but, the actual market is never
really mentioned.

Ann is paid $170,000 in the Bay Area because that what all the other
developers of her caliber are willing to exchange their time and expertise
for.

A company would pay Ann $50,000 if it could. They only hire people who they
think they will eventually make more from their labor than they will pay the
person.

If you are Google, you will make roughly $1M per employee currently. For
Software Developers that number is even higher, for Sr. Software Developers
that number is even higher. The fact that how you get paid and how much value
you generate don't have much of an effect on each other is basic capitalism.

What's smart is to be Ann, get a $170k salary and move to Costa Rica and keep
the $170k because at the end of the day, she wouldn't have been hired if she
didn't make more than $170k of value for the company.

~~~
pravda
>Ann is paid $170,000 in the Bay Area because that what all the other
developers of her caliber are willing to exchange their time and expertise
for.

Well...sort of. Ann is paid $170K because Bay-area companies have bid up the
cost of Bay-area developers to $170K.

Ann doesn't really have a say in this, and it has nothing to do with how much
value she adds to the company (although obviously a company wouldn't fork over
170K if she didn't add at least that much value to the company).

Now if Ann moves to Costa Rica, she is now a Costa Rica-based remote
developer. And I suspect that Costa Rica-based remote developers have not been
bid up to the same level as Bay-area based developers. So her employer would
certainly be justified in seeking a downward salary adjustment.

~~~
toomuchtodo
An interesting experiment would be a job board that stripped out names and
locations, and only listed skills and accomplishments of technical hires. The
goal would be an auction system to determine what "market rate" truly is for
each role, with externalities filtered out.

This would mean hiring companies would need to accommodate remote workers; are
they willing to for the cost benefit? My experience says no (except for <100
companies that are remote first).

~~~
pravda
I would think that if there were a worldwide market for developers, salaries
would come down.

The Bay area seems to have a positive-feedback loop going on. Highly-paid
programmers have bid up the cost of housing to astonishing heights.

So when companies want to attract more developers, they have to offer even
higher salaries, which lead to housing costs being bid up even more.

~~~
simoncion
> The Bay area seems to have a positive-feedback loop going on. Highly-paid
> programmers have bid up the cost of housing to astonishing heights.

This... is not the primary driver of the insane housing costs in the area. A
survey from a year or two back found that tech workers make up ~8% of SF's
population.

For a variety of reasons, [0] it's nearly impossible to build new housing in
San Francisco. I get the impression that the situation is similar in much of
the Bay Area.

In San Francisco, for the past decade or so for every new unit of housing
created, roughly five people have entered the city. [1]

Add supply to take care of the backlog _and_ meet expected medium-term demand,
and you'll see prices stabilize (and maybe return to less-insane levels).

[0] The _least_ of which is Rent Stabilization. :)

[1] You _could_ make the argument that "If noone was able to pay the insane
prices, the prices wouldn't be insane." This is true, but -frankly- there are
_lots_ of _very_ highly-paid people out there. As far as "highly-paid" people
go, tech workers really aren't all that highly-paid. :) (I know of decent-to-
good engineering sales [2] folks working at bigcos that make between 2 and 10x
what I understand mid-level Google engineers to make.)

[2] That is, salesmen that _also_ have a technical background, can handle
crunchy sales and configuration questions, and can even do _real_ , deep
troubleshooting of the product they're selling.

~~~
toomuchtodo
> That is, salesmen that also have a technical background, can handle crunchy
> sales and configuration questions, and can even do real, deep
> troubleshooting of the product they're selling.

I'm in the wrong business.

~~~
simoncion
> I'm in the wrong business.

 _nod nod_

If you've both the people _and_ technical skills required to do engineering
sales, you're probably seriously limiting your earnings by remaining a
programmer.

~~~
toomuchtodo
If one was so inclined, where would one start looking for these sorts of
roles?

~~~
simoncion
The folks I know of that do this work for large companies that do a _lot_ B2B
or enterprise stuff. They effectively lucked into the positions. Most started
as programmers but -at some point- got noticed by their managers as having
really good people skills, -whether through a stint in regular sales, non-
front-line tech support, or just interactions with coworkers in the office-
but one went from pure sales to engineering sales because of his side projects
and general technical aptitude.

Sadly, I forget what these positions are _actually_ called. Best of luck in
your hunt! I hope you find and fill such a position and are both happy and
richly rewarded in it. :D

~~~
randomname2
Presales, Technical Sales, Sales Engineers

------
dmd149
A lot of these issues only arise if you're assuming you need to create some
sort of master pay system that is "fair." We all know in practice that
decisions like pay can be based on the environment at the the time of hiring,
or other random variables.

For example, an engineer may get hired at a time when there is a high supply
and relatively low demand, and is only able to negotiate a salary of $100k. 5
years later, because of the relative shortage of engineers, a junior engineer
is hired at $130k, while the the more senior engineer is now only making
$120k.

Of course, trying to come up with a master system to adjust for something like
that will be impossible, as this article points out (using a hypothetical move
from a higher cost location to a lower cost location). The company will not
adjust the senior engineers salary until he puts up a fight and comes in with
competing offers.

What this suggests is perhaps that the most effective and fair system is no
system at all, one that remains dependent individual actors (or businesses)
trying to get the best deal that they can for themselves. This is, in
practice, what is happening now, but we wouldn't have any expectation of every
company trying to create some sort of formula to determine what is "fair."

This means sometimes that you will be hurt by environmental factors (say you
quit or get fired in a down market in your field), but other times you may
cash in (maybe the senior guy at your company quits and you have the
opportunity to leverage that into a much higher salary for doing his job).

Trying to make some master system that is "fair" and will work in all
circumstances just seems silly. The market is perhaps a good arbiter of value
on a broad scale over long time periods, but in more localized environments
and shorter time spans, it is far more random. Thus, the best personal system
in my mind is one in which we can take advantage of the randomness when
possible, and learn to handle the inevitable downsides as well.

~~~
NateDad
It's this kind of thinking why I have left several jobs and immediately got a
20% more money at my next job - the company I was with didn't keep up with
market rates. It's ridiculous, because my knowledge of their software makes me
worth MORE than someone with the exact same skills and background who is new
to the team. It is this short sighted "try to save 20k a year" that causes so
much turnover at companies. If you have a good engineer, give them raises
constantly, or they'll just leave for a new job that pays them more. The 20k
you might save is WAY less than what you'll pay to get a new dev who doesn't
have nearly the same institutional knowledge as the one you lost.

~~~
dmd149
I think it's great you were able to get 20% pay bumps just by moving. Are you
saying this is a bad thing? Did any of those companies end up being a better
experience than the companies you had just left?

~~~
NateDad
I'm saying it's bad for the company. They lose my institutional knowledge and
have to pay the costs of getting a replacement, simply to try to save a
relatively tiny amount of cash by not paying me more and hoping I don't
notice.

~~~
dmd149
It's true they lose institutional knowledge, but it's possible they get
someone better to replace you (you in the general sense). I think these shake
ups are generally good for an industry as a whole, even though it may (or may
not) be good for any individual company.

------
tyoma
Discriminating based on location for 100% remote work is opening up a big can
of worms. Since in this case physical location isn't material to the work,
paying less based on location could be inadvertently discriminatory. For
instance, do localities with low pay just happen to correspond to where
certain ethnic minorities live?

Other parts of the Buffer payment formula simply illegal. The practice of
paying people more for each dependent [0] violates many localities' (e.g. Cook
County, IL [1]) anti-discrimination ordinances.

0\. [https://open.buffer.com/transparent-
salaries/](https://open.buffer.com/transparent-salaries/) 1\.
[http://www.jmls.edu/clinics/fairhousing/pdf/cook-county-
huma...](http://www.jmls.edu/clinics/fairhousing/pdf/cook-county-human-rights-
ordinance.pdf)

~~~
knughit
He does health coverage which is worth more to employees with dependents ,
provided by most employers, avoid the anti-discrimination laws?

~~~
tyoma
Benefits like healthcare coverage are usually explicitly exempted. For
example, see the relevant law in the State of Alaska:
[http://www.touchngo.com/lglcntr/akstats/statutes/title18/cha...](http://www.touchngo.com/lglcntr/akstats/statutes/title18/chapter80/section220.htm),
specifically section (c).

------
NateDad
I work remotely from outside Boston, a friend at work is remote from Argentina
(I find the parallel to the article interesting). I make more than he does by
a significant amount (very roughly similar to the salaries in the article).

I actually don't know what would happen if I moved to Argentina. I presume my
salary would get dropped. Maybe not.. depends on if I can convince someone
else to give me an offer at my previous salary for remote work... but then
what of my Argentinian friend?

I think all developers _should_ get offered the same amount independent of
location. As remote work takes off (and I think it will...), this will become
the norm. Why? Because of how market works. If Google will pay me 170k to work
from my house, then smaller companies need to start competing with that.

Ironically, the big companies are still way behind on this. I work at
Canonical... our devs are all fully remote. I have people from nearly every
continent working on my project. There's very very little friction to remote
teams, except sometimes you need to talk to someone who's asleep. But that
honestly is not usually that bad. You keep close teams in similar time zones
and everything just works out. We use hangouts and irc and email... hell, the
disincentive to have useless meetings probably saves us more time than we
spend working around the relatively small problems remote work introduces.

(also, I'm kinda glad to get away from whiteboarding crap... a whiteboard is
not a good tool for pretty much anything in development... a shared text
window is almost always superior)

~~~
kspaans
I agree that your gross pay is higher, but I'm curious if your net take-home
pay after "expenses" is still higher? I use scare-quotes because while it's
easy to compare things like tax and rent, it's harder to compare food and
entertainment (where cheaper costs may entice someone to eat out more
regularly). It's hard to make a strictly apples-to-apples comparison, but I
think it's a worth looking at whether you would take home more or less by
working in Argentina. (The general "you", not suggesting that you have to
consider moving to Argentina. :P)

I think the article puts things a little unfairly by saying only "Option 1:
Ann's pay is reduced". Yes that is what's happening, but if Ann knows what her
compensation will look like in Buenos Tiempos, she should be able to figure
out roughly if she will take home more money by moving there.

------
jrs235
Commenter on the story has an excellent point: "An even more absurd, but
equally "market rate" scenario would be to pay Ann more because she wants to
and has chosen to drive a luxury car, but to pay Sofia less because she
chooses to take public transportation." \- Philip Hallstrom

~~~
klochner
That scenario would only be "market rate" if the market put a higher price (
_market price_ ) on luxury-car-driving engineers.

In that case it would likely not seem absurd because presumably there would be
some extra inherent value in luxury car drivers (e.g., uber drivers).

~~~
jlarocco
> That scenario would only be "market rate" if the market put a higher price
> (market price) on luxury-car-driving engineers.

That's the point actually. Driving a luxury car is equally as irrelevant as
location. There really isn't a good reason for a company to reward employees
for how those employees spend money outside of work.

~~~
hueving
But the location isn't irrelevant and that's the entire point that this
article blindly misses. The company may not care that their developer is
living in Silicon Valley, but there are a lot of companies that do care and
will pay high salaries for him/her. Either the company competes and offers a
high salary as well, or it just doesn't get to hire developers from Silicon
Valley. It's basic supply and demand.

If you're buying a car and it comes with a high power engine that you don't
care about, you still have to pay the premium for the engine. You can't pay
less because you tell the seller that you won't utilize the extra power. The
car has a higher market price because there are people that will pay extra for
the high power engine.

~~~
rspeer
> Either the company competes and offers a high salary as well, or it just
> doesn't get to hire developers from Silicon Valley. It's basic supply and
> demand.

This statement is still correct and less loaded if you remove the words "get
to".

I have no idea why a fully-remote company would want their developers to live
in Silicon Valley so much that they would pay a premium for it. Why even
bother being fully-remote then?

~~~
hueving
The company doesn't want the developer to live in Silicon Valley. The
developer already does and that means any company that hires him/her will have
to pay that premium because his/her market value is higher.

~~~
mikeash
The problem with this is that it sends unpleasant signals to the other
developers.

If the SV developer's value to the company is the same but they get paid more,
then you're saying to all the other developers who work there, "You produce
enough value that we could pay you this much, but we don't want to. We prefer
to pay you less, simply because we can."

This is, of course, their right, but that sort of thing tends to make people
unhappy, and unhappy employees tend to be unproductive, and then gone.

~~~
rspeer
I'm asking something simpler than that: why would the company pay a Silicon
Valley salary _at all_?

Several people here are taking it as a given that a technology company _has_
to hire some quota of people from the Valley.

------
Alex3917
Hiring strategies like this are often used as a legal pretext for paying women
less than men. Economists call this the 'marriage monopsony.'

The idea is that because men on average earn more money, or at least did until
recently, women generally move when their husbands get a new job. This means
that men are able to compete for the best wages in a global market, but women
are only able to compete for the best wages in their local market. Which,
depending on their industry, often means only a handful of options, and thus
severely limited bargaining power.

See also:

[http://econpapers.repec.org/paper/izaizadps/dp7343.htm](http://econpapers.repec.org/paper/izaizadps/dp7343.htm)

~~~
cperciva
_until recently, women generally move when their husbands get a new job_

In academia we usually refer to this as the "two-body problem". It sometimes
results in a spouse earning less because they can't negotiate as effectively;
on the other hand, it also often results in a spouse being hired who wouldn't
otherwise have been. Statements like "I'd love to work here, but my husband
will need to find a job too... can you hire him as a lecturer?" are far from
uncommon.

------
patio11
Cost-of-living adjustments are pretty de rigeur for global operations which
hire out of a particular social class and want consistent ability to staff
locations important to them regardless of variances in local cost of living.
Consider, for example, megabanks.

Many software companies hire remotely and are rediscovering this. We don't
_need_ , as a function of the business, to have someone in e.g. central Tokyo
and central Kansas, but it turns out that we often end up having that, or the
strong possibility of that given the ex ante distribution of individual
candidates.

Almost every distributed shop I worked with has a formal or informal
discretionary bump in "the formula" to accommodate high-cost-of-living
candidates. It is generally closer to $10 ~ $20k rather than "double."

American companies used to (and some foreign companies still) adjust salaries
based on family size, too, which was also primarily a way to maintain access
to desirable candidates for non-managerial work who had gotten an early start
on family formation. (This was subsequently illegalized in the US, AFAIK, but
"city in which you live" is not in general a protected class in US labor law.)

~~~
johnnyo
If you look at the linked Buffer formula, they are explicitly paying 3k/year
per dependent, which I thought was not legal in the US

~~~
pravda
Why wouldn't it be legal?

It is somewhat weird though. I think it would make more sense to pay employees
with dependents less.

~~~
jzwinck
Paying more to people with more dependents effectively discriminates against
several classes which are protected in the US:

\- Those who for medical reasons cannot have children.

\- Those who for (lack of) religious reasons do not have lots of children
(families with 6+ children have a different distribution of religious beliefs
than the overall population).

\- Homosexuals.

On the other hand, paying less to people with dependents (why?) effectively
discriminates against:

\- Heterosexuals.

\- People who for religious reasons have lots of children.

\- Disabled dependents (not a protected class in the US, but maybe it should
be!).

------
tptacek
Wait, is it actually lawful to advertise salaries that vary with the size of
employee families?

That seems like a really, really bad idea.

~~~
simoncion
> ...is it actually lawful to advertise salaries that vary with the size of
> employee families?

I'm no expert on labor law, but why wouldn't it be?

~~~
knughit
Housing law clearly bans that sort of thing for tenants. I can imagine labor
law being similar.

~~~
simoncion
Housing law bans _increasing_ rent based on number of children. I'm fairly
certain that -at least in SF- it doesn't prohibit the _reduction_ of rent for
each child present in one's family.

Why would labor law ban the _increase_ of one's salary based on size of one's
family?

------
princeb
I was about to write a long economic essay on why this can't always work out,
but I think the main thing here is that he is talking about a distributed
team. in which case, (I presume that) the location has very little advantage
unlike a company that is let's say based in Sillycon Valley with sales efforts
there as well elsewhere in the States, or development work that relies heavily
on collaboration (as opposed to top down direction).

In which case, realistically Ann should get paid the same amount as Sofia. No
problem hiring all Sofias if Ann's situation in Sillycon Valley does not
confer any benefit to the company at all.

~~~
henrikschroder
Agree, it's a contrived example.

The reason Ann can ask for $170k a year is because there are _other_ companies
in Silicon Valley that are _not_ distributed companies, and that are competing
for her, because they can't hire Sofia's.

If this company hires her anyway, despite not getting any benefit from her
location, the company is making a stupid decision. They shouldn't hire her,
they should hire two Sofia's elsewhere instead.

Salaries are both compensation for work performed, but also the cost of
accessing certain labour markets. If you want to hire a bus driver in
Manhattan, that person is going to cost you a lot more than hiring a busdriver
in Hicksville. Not because there is a difference in skill, but because you
need to pay a premium to get access to people who can work in Manhattan.
Silicon Valley works exactly the same way, you need to pay a premium to access
its labour force. And if you don't need access to it, don't pay the premium!!

------
paulddraper
The remote work market will trend towards location-independence.

Differential pricing cannot last in a fungible market. The companies that
offer $100k and get $300k value from each employee will eventually out-compete
those that offer $100-200k and get $300k value.

It's the same mechanism behind free markets defeating other forms of
discrimination (I use this in the general, non-legal sense). If most companies
pay women less because that's the market, eventually the non-discriminating
outliers will do better and the market adjusts to the more efficient reality.

The timing may be unknown, but the movement towards a non-discriminating
equilibrium in fungible markets is not.

------
lopatin
I actually think that Option 1, where Ann has her salary lowered after moving
out of the valley is the most reasonable way to handle remote compensation. In
other words, as an employee you get compensated by the quality of life that
you can afford (how many goats you can buy regardless of what city you live
in) instead of by some metric of how many dollars you are worth to the
company.

The way I look at is that employment is a mutually beneficial agreement. Both
parties should have the option to end the agreement when some part of the
situation changes. When Ann moves and for some reason thinks that it's unfair
that she won't be making an SF salary in Ohio, she can leave the company. Same
goes for the employer when an employee moves from Ohio to SF. Saying "you're
working remotely and we will pay you Ohio market rate but if you move to SF,
we cannot afford that, so you will either have to accept Ohio market rate in
SF or leave to find another company that will pay you SF market rate" sounds
like the only fair option to me.

~~~
paulddraper
If you buy your goats from the local market, they are more expensive in the
valley. But if you buy them from Amazon, they are the same across the US.

Where are you buying your goats?

------
abannin
Changing pay based on location seems to be creating a strong incentive for
fraudulent behavior. I'll tell the company I'm living in San Francisco whilst
living Buenos Aires. If they ever ask, I'll say that I'm traveling for a
month. Cost of living adjustments makes a lot more sense when the employee
must be physically present.

------
amlgsmsn
>What happens next? More importantly, what should happen?

>So, we punish Ann for moving by reducing her salary?

I don't see a problem with reducing Ann's pay. If rent is only $300 instead of
$3000 the pay should reflect that.

If that sounds like a problem, imagine that the company pays rent or for hotel
stay for visiting employees. If hotels cost $400 a night in SV and $40 a night
in Argentina, should the company pay $400 a night in Argentina in order to
'equalize the pay'?

~~~
solidsnack9000
> I don't see a problem with reducing Ann's pay.

It does seem odd that an employer can use a person's lifestyle as a basis for
adjusting their pay. Almost a violation of privacy.

~~~
rtpg
It does look bad in the "reducing salary" aspect, but if you're asking someone
to come to SF I sure hope there's a major premium so you can afford your half-
an-appartment

~~~
solidsnack9000
If you're asking them to move to SF, yes. But if they choose to move to
SF...should they get a raise?

------
sokoloff
Option 1 seems the best of those constrained choices.

Until global and remote work is the norm and as productive as on-site work,
there is a local market. And the local market is one of the factors you're
competing within/against (employee/employer perspective).

Setting one market wage worldwide as an employer ensures that you'll not get
much (any?) talent from the high-cost locations.

~~~
icebraining
_Setting one market wage worldwide as an employer ensures that you 'll not get
much (any?) talent from the high-cost locations_

I don't see why; it just means you have to set the global wage equal to the
ceiling, not the average of all local market wages.

~~~
morgante
As an employer, you're then leaving a ton of money on the table by paying
people substantially more than their alternative offers.

~~~
NateDad
That's only true so long as everyone else is only paying local market rate.
Once a company starts offering people in Argentina SF-level pay... that
company now will get every single qualified developer in that location that
they want. So now other companies have to start offering similar wages, or
they only get second tier devs. It's called competition.

~~~
morgante
Sure, but as a company there's not really any incentive to do so.

I could accomplish a similar effect by merely offering 50% more than the
prevailing Argentinian developer wage while still realizing substantial
savings over SF rates.

~~~
NateDad
...until someone else offers 55%, then you offer 60%... until it reaches
equilibrium at approximately 100% (and I understand real life is a lot more
complicated than one single salary number)

------
morgante
I think it depends to a large extent on whether you're paying for results or
time.

The remote contracting market, especially for fixed rate contracts, is not
driven by locations. It's driven by who in the globe can do a particular job
at a particular price, and there's a wide variety in how much that translates
to in "goats" for different developers.

Traditional remote jobs are still driven mostly by paying for a fixed amount
of time working on the job per week. As such, they're not hiring for a "job to
be done"—they're hiring you as an individual. To do that, they just need to
pay more than the next best option, which is frequently determined by the
local labor market.

Given that, option 1 makes a lot of sense, with the catch that you have to
have a clear policy so it's known ahead of time. Also realize that Ann might
try to get a better replacement offer and then you'll have to match to the
"new" market for that location.

------
mahyarm
Employers are customers that pay for semi fungible services. And like all
people and organizations they will try to get the best price they can get.
They want a certain amount and level of service and will try to pay the
minimum to get it. Just like a person will try to get the cheapest plumber who
is skilled enough for their needs.

------
hueving
The author is failing to understand basic supply and demand. Just because the
company doesn't care that the developer is in Silicon Valley doesn't mean
there aren't a ton of companies that do care and will pay a large salary for
it. Either you compete with those companies and offer a high salary, or you
will just exclude yourself from higher silicon valley developers.

Just because you don't value location doesn't make the location premium any
less real. The simple fact is that there is a lot more demand for developers
in the bay than there is in South America.

A company could certainly overpay the devs outside of SV so the numbers look
the same, but it's fiscally irresponsible.

------
lewisl9029
One of the replies to a Buffer employee's comment caught my attention:

> Perhaps you are (inadvertently) either using location as a lever to underpay
> employees, or using it as an excuse to overpay people you like but perhaps
> do not justify the cost for the business?

I think this hits the mark. Companies that push heavily for remote work
generally aren't doing it because they genuinely care for the benefits it
brings employees. They're pushing for it because it saves them money over
operating with an entirely local team (when local means a high market-rate
area like SF), precisely because they can discriminate based on location when
negotiating salaries.

------
prewett
I'm curious what this guy's view of free markets is (for/against). A
competitive global market should end up with the situation he complains about
(developers in low-income countries being paid less). Buyers (companies) will
try to buy as cheaply as they can, and sellers (employees) as expensive as
they can. Developers in "Buenos Tiempos" can't charge SF prices, because all
the other developers would be happy to work for 10% less than SF prices,
resulting in a downward spiral.

In a non-free market, such as a command economy, prices could be set by
someone(s). But he doesn't like the idea of an arbitrary entity (the company,
in his case) setting the number of "goats" (living standard) you get paid. He
wants developers to get to negotiate that. But they already are, and globally
developers and companies have settled on the prices we have.

I suspect that some analysis would show that developers want a certain
standard of living globally, and beyond that, they are pretty happy. I'd love
to be paid the living standard of a millionaire, but I'm also okay to be paid
what other developers are getting paid. Until all of us decide refuse anything
less than living like millionaires, we'll get paid a middle class salary.

------
rdl
The military solves this by having "Basic Allowance for Housing" and COLA
multipliers be VERY specific to "duty station". Those absolutely do change if
you move, and are separate from "salary", so it's not perceived as the same
thing as reducing salary on move.

------
rch
I think the formula makes more sense if you look at MRR from the perspective
of workers in each market.

Salary may naturally vary by location, but wealth accumulation (in dollars,
not goats) should be the same for equivalent contributors across the
distributed organization.

~~~
rubyfan
I think that was the point the author was making. It's not the employers
decision on your location adjusted wealth sccumulation opportunity, or how he
puts it _how many goats you get_.

He's basically advocating for global market value. The side effect here is
that individuals are free to maximize their wealth by choosing to live where
they can best maximize their wealth. This allows the individual to chose what
is valuable to them - dollars/goats or the intangibles of a location, e.g.
sunshine, culture, freedom, family, etc.

This makes some sense for the individual where you have global scarcity. This
enhances the competition for the individual's skill where geography in many
cases presents a real barrier. For example in non-distributed workplaces you
are essentially up against a sort of implicit collusion to minimize rates, the
local market demand for your skill.

------
redguava
There's an important thing that is not covered here. Currency fluctuations.

Assuming you pay people in their own currency (which is useful to make sure
they don't pay unnecessary fees, and also that they get a consistent pay each
month). How do you keep salaries consistent globally?

Do you adjust them each month to compensate fluctuations? Sucks for those that
just got a pay cut.

I don't know the answer, I think the way Buffer does it is the best of the
options I've come across so far. I'd like a better solution.

------
chris_b_
Slightly unrelated, but I find the scaling factor based off experience
interesting. Speaking as a junior, I am convinced that in 2 years or so when I
would probably be classed as intermediate I will be worth far more than 10%
more than I am now. Beyond that, I work at the moment with people who would be
in the advanced/master range who are I think are definitely worth more than
20/30% more than me.

------
facepalm
Come to think of it, supposing a company is OK with remote workers, why would
they hire somebody in an expensive location?

