
VMware Cuts Pay for Remote Workers Fleeing Silicon Valley - ra7
https://www.bloomberg.com/news/articles/2020-09-11/vmware-twitter-cut-pay-for-remote-workers-fleeing-bay-area
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lykr0n
Yep. Just like relocating between cities while at the same company will cause
your payscale to adjust.

Look at the US Federal Government, or most state governments. There is X Pay
for the position, and then that pay has a modifier based on location & cost of
living. A GS 8 makes $41,310. That's their base Salary. Now in Seattle, that
comes out to $52,472. In Albany, NY it's $48,696 due to locality.

Not controversial at all.

~~~
mulmen
Exactly, this is like HR 101 right? These companies didn't even have to deploy
a new payroll system, let alone invent anything. If HR people spent more time
innovating and less time at conferences they'd figure out how to cut your pay
when you log in on vacation.

I have never in my life worked for a company that had an office _and_ no
remote workers. There's always someone in Montana or something. This is not
new, at all.

~~~
client4
Haha hi from Montana.

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mgh2
Scarcity of workforce is artificially created by rich countries, where talent
can be discriminated due to location and citizenship. Now that you can hire
internationally and remotely, talent is no longer confined to rich locations,
thus democratizing opportunities for workers from poorer countries. A lose
from the rich is a gain for the poor.

~~~
selfinvariant
There is a lot of complexity for a US-based company around hiring people
internationally: 1\. Security. How would you prevent your monorepo being
copied out to competitive companies in a foreign region or get snooped by some
local government officials? 2\. HR/Payroll. If you want to be compliant with
local laws you will need to create local business entity. Would that make
sense to do if you only have one employee in the country? How expensive that
setup is going to be? 3\. Somewhat obvious cultural/language/timezone
difference.

There were a lot of conversations about moving jobs to India in early 2000. It
didn't happen - I think primarily for reasons that I just outlined. I don't
see what's different this time.

~~~
ido
For number 2 - I worked for many companies outside my current residence and
none of them needed to create a German business entity to hire me, I was
simply hired on a freelance basis & given a higher wage to compensate having
to pay my own insurance & taxes.

~~~
selfinvariant
(Edited for clarity)

Sure, and it's a good point that I think companies should consider instead of
downright rejecting this option.

There are implications though: \- What about equity grants? A lot of comp in
SV based companies is based on equity (both liquid/illiquid). If you are
hiring someone on a pure cash basis vs other people who are not - what kind of
dynamic / incentives that will create?

I'm very curios about hearing your experiences working in freelance capacity
for a US based company though, it sounds like something I would like to do at
some point (as of hiring someone), and would really appreciate the ideas

~~~
ido
That was basically my experience, I wasn't given options only paid a normal
salary ~25-30% higher to compensate me paying for my own health insurance,
unemployment insurance, misc taxes etc.

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Uptrenda
The cost of living in a city reflects its overall desirability: the job
market, access to education, safety, and so on. If you're living in an amazing
city where you have every amenity at your doorstep but a much higher cost of
living -- then you should eat those costs in the same way you would moving to
a better apartment. Conversely, why should someone in a --worse-- location
have their salary --reduced-- to reflect the same ratios when they're not
gaining the benefits of living in the more desirable location?

If I suddenly started living in a tent or sleeping on a park bench should my
salary also be reduced to reflect the lack of rent and utilities I'm paying?
What if I change my diet so I'm only living on rice and cans of beans? I could
reduce my 'cost of living' there too. Better not pitch these ideas to VMWare.
They might sell it as 'minimalism' and list it as a benefit.

~~~
yoav
Cost of living is not personal to a person it’s an average to get basics of
food cost and housing in an area.

Not everyone has the privilege to just move whenever they want.

To use your example: if you got paid a Montana salary and already lived in SF
and had ties where you were unable to move cities you would be forced to move
into a tent because that’s what you would be able to afford. (I’m just using
Montana and tent as examples I’m not checking actual figures for this analogy)

Adjusting salaries based on cost of living is making sure that people are not
forced to move to a different city in order to afford the same size apartment
and amount of food.

Your outlook makes dollar amount equitable, but a dollar is only useful when
you try to spend it on something. That same tent and rice costs 10x more in
one place vs another place.

COL based salary adjustment makes the purchasing power equitable. The real
output of the dollar you’re given. Which is more equitable in my opinion.

I was once asked to move to SF for a job and given a 20% bump compared to
Toronto salaries so I could afford it. The same apartment actually costs 4x in
sf so I’m paying 2x for half the space here. If I hadn’t had my pay adjusted
for cost of living I’d struggle to pay rent here and my visa requires that I
live within 75 miles of the city for 6 years.

~~~
vecinu
> I was once asked to move to SF for a job and given a 20% bump compared to
> Toronto salaries so I could afford it

Just to dwell on this point for a bit, I think your offer was not equitable.
When I was offered to leave the GTA for SF I received a 50% pay bump with the
knowledge that it would be closer to 200% in a few years.

Fast forward 1.5 years and that's exactly what happened. A few years later and
the pay bump was closer to 300% and I'm happy it worked out the way I
imagined, otherwise like you said, it would not have been worth it.

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geodel
So companies are finally telling employees: Take a pay cut or take a hike.

Now putting aside that "scarce talent" or "skilled engineer" myth most
companies are just fine working with half ass CRUD app peddlers. And they are
about as much in demand and as much a commodity as crude oil in 2020.

~~~
drewcoo
I wondered how long until "remote work" became the new "talent scarcity," an
excuse to pay less.

Programmers like us are not commodities, though, or we'd be worth as much in
one location as another, given we can work remotely. And we could be traded
(like pro athletes). We are service agents more like cleaners or restaurant
waitstaff.

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gnicholas
If someone moves from CA to a state with no state income tax, the savings from
that piece alone could make up most of the salary difference. If your gross
pay is cut by 15% but your post-tax pay is only 5% lower, you've still got way
more earning power in WA, TX, NV, or FL.

~~~
thehappypm
Where do all the taxes collected by California go?

I live in Massachusetts and we have a substantially lower overall tax burden.
We also have the best public schools in the country, and the highest rate of
health insurance, due to our very generous MassHealth program. What is
California doing with their tax dollars?

~~~
rmk
California revenues are about $425 billion.

Medi-Cal covers 1 in 3 residents. $100 Billion per year program (or about 23%
of the revenues). $25 Billion a year for government employees' _pensions_ and
retiree health (note that this is _not_ current govt employees! BTW, that's
gonna continue growing without bounds). $78 Billion on education (K-12).

These together account for a huge chunk of the money. Very little on
infrastructure spending and such (the roads are worse than third-world those
in third-world countries here).

BTW, folks like Zuckerberg (the 1%) contribute roughly 50% of the revenues! If
the market takes a hit, CA hurts _real bad_.

~~~
dragonwriter
> California revenues are about $425 billion.

California State General Fund + Special Funds revenue for FY 2030-2021 were
estimated in the most recent budget revise at $182.278 billion. Not sure where
you got $425 billion from.

> Medi-Cal covers 1 in 3 residents. $100 Billion per year program (or about
> 23% of the revenues

This is misleading, because only $38 billion of the $113 billion annual Medi-
Cal costs comes from State revenue; $47 billion from state + local revenue and
$66 billion comes from federal funds.

> $25 Billion a year for government employees' pensions and retiree health
> (note that this is not current govt employees! BTW, that's gonna continue
> growing without bounds).

Current pension + retiree health be benefits are paid out of contributions
from when employers were working and investment returne thereon by the
retirement system, not current revenue (current contributions come from
current revenue, in part, but are part of program cost.) The only part that's
really separate for retirement is state payments to pay down existing unfunded
liabilities.)

> the roads are worse than third-world those in third-world countries here).

No, they aren't. They aren't even worse than Mexico.

> BTW, folks like Zuckerberg (the 1%) contribute roughly 50% of the revenues!

The top 1% household income threshold is ~$475k, Zuckerberg’s income is around
30,000× that.

The people who are around the top 1% are, by income ratio, far closer to
beggars on the street than they are to Zuckerberg.

~~~
rmk
These figures are a few years old. You can't seriously consider 2020-2021
figures, considering how all economic activity has essentially been shut down
for a solid 3-6 months. Revenue has plummeted.

Revenue numbers I quoted included the federal contributions, not CA alone. You
can split hairs all you want about general fund vs. other subdivisions, but
the fact remains that CA is an insane boom-and-bust state (it has been that
way for the majority of its history) as far as its fiscal picture goes.

~~~
dragonwriter
> You can't seriously consider 2020-2021 figures, considering how all economic
> activity has essentially been shut down for a solid 3-6 months.

FY 2018-2019, completely pre-shutdown (July 2018-June 2019) was $214 billion
in revenue.

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disgruntled101
And just like that your manager has decided that your work is now less
valuable despite meeting the same KPIs, adding the same value and sacrificing
the same amount of your lifespan to make him rich.

~~~
steve_taylor
Engineers are paid according to their scarcity, not so much their KPIs. Remote
work changes the supply and demand situation in favour of employers.

~~~
jackyinger
I don’t really buy that argument. I doubt that there are lots of skilled
engineers out in rural places just waiting to be tapped by remote work.
Skilled talent clusters around the jobs.

I suppose there’s the international aspect, but that isn’t what is going on
here.

~~~
sp332
You're going to be shocked when you realize the number of people who don't
want to move to San Francisco. There's a smaller but still substantial number
of people who don't want to deal with living in any dense metro area. There
are even plenty of people who don't want to move very far from their friends
and family at all.

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jeffbee
This is a wealth transfer from landlords to companies and doesn't really have
a lot to do with the workers.

~~~
jeremynixon
Companies to landlords, but yes.

~~~
jeffbee
How? They had to pay more because the employees had higher housing costs,
because of artificially scarce housing in SF. Now the employee gets the same
pay net of housing, the landlords (as a class) get less, and the company keeps
the difference.

~~~
CinchWrench
I think you and the parent are just talking past each other and you really
agree on the same thing.

I don't see this as a new wealth transfer though, I see it as the cessation of
an ongoing wealth transfer. I think the parent does too.

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wiredone
In other news, companies have been paying salaries based on cost of living
expenses since the dawn of time.

I see this less as a "cutting" pay and more "rehiring you in another state at
your relevant salary tier".

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sjg007
Eh, it won't last. There will be enough competition for engineers that
salaries will rise again. Also this won't apply to talent the company doesn't
want to lose.

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purplezooey
This is comical in an environment where pay raises don't even track (or barely
track) inflation, and then only if you are in the "top 10% of achievers". All
of a sudden HR departments are economists and experts in adjusted living
costs. Executive staff, of course, is exempt.

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emerged
and now remote workers will flee VMware for companies which pay them normal
salaries.

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Dopameaner
Seems reasonable. I wonder what would be consequences for this? and how
significant will it be when more companies do this.

Will services that are based entirely on Silicon Valley charge less? Real
Estate will be lower? Less trafic

