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New Remote-First Formula and Updated Salary Calculator (buffer.com)
123 points by polysaturate 10 months ago | hide | past | web | favorite | 159 comments

Wow, this is really terrible. This looks like a PR explanation for why they're slashing everyone's salaries. A cursory glance shows everyone either staying the same or dropping.

> One of the toughest decisions we made with the new formula was to remove the annual 3% loyalty increase given to teammates for each anniversary from their start date.

> We looked at a lot of options and in the end decided to remove it as it created an unsustainable, compounding affect on pay.

3% is at or just above inflation. If you can't afford to give these raises, you will see severe wage stagnation and, hopefully, a mass exodus of employees elsewhere.

This is delusional. How does someone have the nerve to put a paragraph like this in a blogpost about how they're giving almost every employee a paycut?

  The question on everyone’s mind was “Can we afford this?” and “is this sustainable?” When we sought input and advice from those outside of Buffer we also were asked, “Why would you pay your team members with more generosity than you need to?” As it turns out, our answers are: Yes, Yes and because we believe it’s the right thing to do.

except the CEO and the director of people. their salaries magically stayed exactly the same

Yes, but I assume the SF scale is indexed to that annually (ie: the bay SF pay will go up itself probably more than 3% anyway).

That is a very salient point. I don't recall it specifying when the SF prices are recomputed, but maybe we should give them the benefit of the doubt here.

You might be reading the table wrong? Last column is their adjusted baseline, 2nd column is their baseline+options+dependents.

Comparing with [two years ago](https://open.buffer.com/transparent-salaries/) it looks like engineering at least has about 35% turnover, but everyone is up in salary - some by quite a bit if they've relocated.

I know this is cynical, but this really just reinforces my suspicion: the open salary thing is actually an attempt to underpay through a formula that's presented as objectively fair. Over time, it ends up gravitating your workforce towards average or below-average performers. There's no room for top talent here, because there's no subjectivity in this formula.

If you're a fantastic dev (or whatever), why would you work here when other companies will pay you a lot more?

As worker in Eastern-Europe, their salaries look totally awesome to me. You'd be surprised for this money how many good people you could find.

Let me be clear: from one perspective, I get paid a ridiculous amount of money for what I do. I push buttons and think for a living. I spend a few hours per day doing it, I really enjoy it, and I can do it anywhere in the world from my laptop.

It's crazy that someone is willing to pay me $100k / year, and I'm super grateful for that. Really.

However, that doesn't mean that $100k / year (or whatever the minimum I'd be excited about) is the market rate. If ten other companies would pay me $300k, then I should go work there, right?

There's no speed limit. Just because someone is willing to pay you way more than you ever dreamed doesn't mean you should shun any more than that. Do your best and go to where you're valued the most.

I get that, my point is that with their "lower" salary I could get the best of both worlds like staying in my current city (Budapest) and earning as much as a good CEO here.

I get offers from companies, but if the job/product is boring, a higher salary does not justify the switch for me.

I don't disagree with you, I tend to gravitate towards a high pay :) We will soon have a salary formula refactor too, but I think the raise might be a rounding error compared to remote pays.

There are other considerations. Most countries in Europe have lots of government services that offer non-monetary advantages. You have to buy most of those things in the US.

There's no free lunch. Instead of giving the employee the money, much of it is handed directly over to the Government (then a bunch more directly from personal income taxes).

If you choose to forgo those things while in the US, there is a monetary advantage. If you choose to buy them yourself, you will probably find your final income level to be very close to the same as in Europe.

Serious question: I'm curious what you're talking about for high-income professionals?

If I'm making six figures as a dev in the US, I probably have fairly generous benefits, including healthcare, vacation, parental leave, retirement plan contributions, disability insurance, etc. And I'm probably paying less in overall taxes than most Europeans (though it really depends).

Of course, I don't have the safety net things that lower-income Europeans do, but I almost certainly don't need them.

So what would the equivalent person in the EU making half as much be getting from their government that I'm not getting from mine?

(Btw, this isn't an argument for the US approach being better overall, but just which system is better for the selfish high-income professional)

> Of course, I don't have the safety net things that lower-income Europeans do, but I almost certainly don't need them.

You say that now while everything is up. Imagine getting run over by a car and not being able to work anymore, i bet you would be better off in a european country in that case, but of course it makes no sense to consider a worst case scenario like that.

However, many things are not great for high income people. Let's say you earn 6k EUR/month in Germany, that leaves you with 3.4k net (if you quit Church tax). A considerable amount (500 EUR) goes to state pension which everyone expects will be almost nothing when our generation reaches that age and the healthcare is pretty basic, but you could change to private insurance and save some money as long as you are young.

I believe competition between the Tech giants is just so much bigger in the US, that everyone in their vicinity has to match those crazy salaries to even have a chance. That is not really the case in Europe. Spotify, Soundcloud, Zalando etc. all lie in the 50-90k EUR range i would assume. I don't really know what can be earned at Facebook/Google/MSFT in Europe though.

I have 6 weeks of vacation a year (2 years out of uni) and 240 days of paid (75% of normal pay) parental leave (480 days in total for both parents). How's your vacation and parental leave in comparison?

A lot of white collar professionals get 3-6 weeks of vacation. That parental leave is eye-popping though. I know a bunch of professional women who got 3-6 months, which I think is regarded here as pretty generous.

But my larger point stands: the average cost per worker for those benefits is only maybe 10% higher than the cost in the US for our reduced benefits. So why are salaries 50% lower?

I think it does not stand.

in US 6 weeks of paid vacation is still rare in professionals. 3 is common. So you're using 3-6 while in europe there is guaranteed 6. This is apples and oranges.

Besides: this is in addition to the sick time. Sick time is paid and you don't use vacation time for that in europe. How is that in US? Can you get additional 4 weeks paid sick time? Can you get 8?

Then in addition you have this perks in US as long as you work as professional in top companies. While the real difference in terms of health care is after this work. Last I check, average age at FANG is below 30 yrs in USA! Wow! So imagine you're 45, you dont work at google/etc: then at low impact events or maybe even medium events if you dont have family healthcare is comparable (your savings cover it). But at high cost/high impact situations or medium ones if you have full family, you're not covered (add to this highest in the western world cost of healthcare in US). While it's state funded in europe also at the high cost level (read cancer therapies and all the things like). This is big difference for last 40 years of live.

And then you have mentioned maternity: that alone (and most of people have families in any place of world) from family perspective is a huge difference financially AND child development.

p.s. and there is cost of living. in US alone you can easily have it in SanFran at 1.77x of US average - you can imagine how it scale to the other parts of world? Sauce: https://www.wolframalpha.com/input/?i=cost+of+living+index+S...

Because EU tech companies are not really comparable to SV companies, capital is not that easily available just for the sake of growth. I guess there is a significant difference in business mindset. SV companies are in the game since the 70s.

There are simply much more well funded companies in the US, desperate to find good candidates, thus driving up salaries.

What's also interesting to consider is that developers here seems to be fine with earning close to non tech jobs employees. You can do really well in many industry sectors. As a bus driver in Germany you can earn $31,435 which already buys you an ok level of living.

Vacation in Europe is _much_ nicer than here. I started with my company with 3 weeks, the equivalent role in Europe has something like 5 weeks at start.

That’s not really much nicer, is it? That’s 2 weeks, which is an extra cost to the company of 4%. Hardly explains the huge salary discrepancy.

What does it have to do with the openness of the formula/salary data if another company pays more?

> there's no subjectivity in this formula

Yes, there isn't. Because subjectivity in favour of someone, is to the detriment of another employee (because the budget is limited). It just usually happens to be the case that the employers somehow "magically forget" to communicate this to the employees. So you are basically kept in the dark in two different respects: 1st regarding how your skills compare to others 2nd regarding how your salary compares to others

Basically this is just a spineless, sneaky tactic that employers like to use. Because the less information you have, the lower the chances that you can make a well informed decision about your job change.

Because subjectivity in favour of someone, is to the detriment of another employee (because the budget is limited)

This is not how salaries work. Companies don't have a pool of $x for y employees. They try to hire every employee at as low a cost as possible. If you accept a salary at $10,000 below what they were willing to pay for that role, it's not like you can rest easy knowing that the other employees will get that money. That $10k is now additional profit [1].

Anyway, you can think this system is unfair and that we should have another one, but this is the one we have now. So you can work at below market rates for companies like Buffer, or you can go get a higher salary at companies that don't do this.

1. This seems like an argument in favor of more worker-owned companies, which I think are fantastic. I think we should have a lot more of them, and I'd like to better understand why we don't.

> I'd like to better understand why we don't.

My view: most workers just want a paycheck and at the end of the work day leave work at work. That isn't compatible with running a company. Besides, even in worker-owned companies an implicit hierarchy emerges and gains its own inertia until eventually "ownership" is technically true but doesn't mean much.

I'm not talking about "holacracy" or some super-flat structure. You can still hire management to run the company, but the employees get the ultimate profit from the company.

Member-owned cooperatives are interesting for some of the same reasons, and seem to work well in many cases.

Just wondering why we don't have more of these structures.

Tradition is very hard to change. It would take a major, visible demonstration that those proposed structures give a big advantage over those that don't.

It's worth trying, though.

Sorry but I beg to differ. That's exactly how it works. The financial officer/controller simply allocates $x for y employees.

And they do this calculation in every quarter, adjusting it if necessary.

I don't even understand how can you think it works differently???

They may set the upper bound like that (although you greatly exaggerate how common and simple it is), but you’re insane if you think that they won’t hire anyone for less if they can, and that they’ll then redistribute those savings across all the other employees. Ha!

Hiring is supply / demand like anything else, and companies are trying to minimize their labor expenses and maximize profit, not spend a certain fixes amount (and no less!) on labor.

Noone said that they won't hire anyone for less if they can.

Don't put words in my mouth, because that's sg that only YOU said.

And, no, it's not exaggeration. It's common sense.

Not every company/product needs "top talent" to work, and I could definitely see Buffer being one of them. Why should a company pay extra for top talent if all they have are mundane problems?

They probably shouldn't be paying massive salaries and should leave SF, because they operate in one of the most expensive and competitive parts of the country, maybe world.

Initially when I saw this open salary approach and especially the calculator I was intrigued. But you cannot make salaries into a formula and get 100% good results.

The approach Basecamp (37signals) has with picking a location, then paying people based on 95% percentile (top 5%) market rate regardless of where they live is just much easier to explain to employees than some arbitrary multiplier thing that just leads to endless discussions.


I think a multiplier is fine as long as it's for where the person actually lives, and is based on the actual overall COL as opposed to "well this isn't SF or NYC we we're automatically chopping 15-25% off your salary lolol"

i find cross country comparisons that lead to multipliers very hard and often arbitrary, because of differences in taxes, social security, health insurance and of course the exchange rate.

Why do companies continue to pay out higher salaries to devs in high cost of living areas? In this case, their payscale pays out 30-50K more in high cost living areas vs low cost areas.

Rather than blow revenue rewarding bad life choices, offer to move them to an area with lower costs of living. Do that for only 10 employees and you have 300-500K EVERY SINGLE YEAR to re-invest into your company. In practically any other industry, this kind of saving would be obvious.

Because if you do that, they'll find another employer that doesn't force them to move.

Living in a high cost area is not a "bad life choice".

I moved out of a high CoL area to somewhere I actually enjoy living. And brought the salary band with me.

No chance I'd work at Buffer, given they'd halve my salary because of my zip code. Other remote jobs don't. No brainier.

They state they pay 85% for Average CoL area and 75% for Low CoL area. So they wouldn't halve a developer's salary who moved from San Francisco to somewhere else. Working in San Francisco gets 100%. Now I don't know how their SF salaries compare to other companies though.

@imsofuture said they'd halve their salary, which is likely true. Every remote salary calculator I've ever used, even being generous with my qualifications and the vague dropdowns like "below average or above average experience" gives me a rate 15-40% below what I'm making now, even for the next level up.

There are plenty of skilled software developers in rural and suburban parts of nearly every country. I find it hard to believe the folks in San Francisco are that much better than the folks in Atlanta that it warrants ~2-3x the salary (using the Gitlab calculator as I can't see the Buffers apps since Drive is blocked at work) for an identical role.

Cost of living in the bay area is insane right now. You won't find a single family home under 1 million dollars on the peninsula or the entire south bay with the exception of deep east san jose and east palo alto (but even that is changing rapidly). I would bet that most of the salary adjustment is due to the housing crisis.

In general, CoL differences at relatively high salary levels are absolutely dominated by housing prices.

Most likely, they have found that some really good developers want to live in specific places with really high standards of living and since they are good, they could easily get a job somewhere else and stay in the city they want to.

Not everyone is willing to just move for a job if not necessary.

It takes quite a good dev to generate 50K more valuable than another dev in another area. There are cases where that is true, but it's not universally true. In this particular case, there's a baked-in assumption that a beginner dev in SF is worth more than a senior dev in a low-cost area.

I feel like you are using salary to measure worth. A junior dev in SF isn't significantly better than junior devs elsewhere; but the salaries are higher in SF, so if you don't match the salaries, you can't hire any junior devs.

> so, just hire in low-cost areas!

The company execs might be based in a high-cost area (because of family ties, property ownership, etc.), and also might not be ready to eat the cost of running a remote organisation.

I think this is the answer, if management is based in high-cost area, then the formula will include a bias for them.

I don't think it's bad, it would be bad if they didn't have a better salary because of their location.

Does that mean they will hire people from the bay? No it doesn't mean that either. The formula could actually force them to hire people from cheaper places.

I don't agree with this sentiment. There's something to be said for competition, closeness to hustle and bustle of an industry, and the sheer learning-by-osmosis that happens in an area densely populated by a certain industry. As much as I think that senior devs are needed in the industry (I've been in startups without the proper amount of them and it's terrible), there is a lot to be said for the benefits of being a young developer embedded in an industry hotspot.

I've never lived in SV, nor do I want to -- there are areas of the US that pay SV prices with lower cost of living and progressive citizenship/policies, which I'd rather not name since then whoever's reading this would move there -- but the assumption that a "senior" dev in a low cost area is more valuable than a "beginner" dev in a high-cost area like the valley rests on a bunch of things that often are untrue/shaky at best.

- How do you even determine senior vs. beginner? Years of experience? Successful projects? Breadth of technology knowledge? depth of technology knowledge? interaction/propensity to share knowledge with team members?

- What has this senior dev in low-cost area been exposed to? What about the junior developer? If I asked them to solve a problem, which can imagine the widest breadth of possibilities? which can imagine the most stable/future-proof possibilities? This can come down to the person almost as much as the years of experience.

- What frameworks/tools/language are you talking about? (this seems like it may not matter, but if you're measuring contributions to a codebase, a developer with 1-2 years of experience in purely golang is going to be better/likely faster at grunt work maintaining an API in golang where the design choices have mostly already been made). Higher level refactorings and architectural work will likely be out of their reach for months/years to come as they mature, but if what you really needed was someone to put out fires with code that isn't terrible, 1-2 years will often suffice. It wouldn't take the senior engineer very long at all to learn the new language but they'll also have to spend some time unlearning old habits -- of course they'll also be bringing good habits that you may not already have as well, but happily dealing with grunt work and over-working yourself because you're "super psyched" is usually not something senior engineers will do -- newcomers/greenhorn often do this, however.

They aren't more valuable, they just have a better bargaining position due to availability of other high paying jobs near them. The value an employee generates doesn't directly determine their salary; it is more of an upper-bound. Their salary is mostly determined by what the employer's next best option of employee is and what the employee's next best option of employer is.

So pay the really good developers higher based off of what they deserve to get paid, not where they live. The problem is that there are bad developers who want to live in expensive places and great developers who prefer to live in non-expensive places.

I’ve learned that having a presence in the Bay Area has had a significant impact on the success of my company. We raised tens of millions of dollars in funding with ease, scaled from 10 to 150 employees (half of which being software engineers) in 3 years, and were acquired by a multi billion dollar company (the company was involved in the original rounds of funding). The acquisition involves most employees continuing to live in the bay and simply driving to a new office location one town over. All of these things just don’t seem possible if the company didn’t employ people in one of the most expensive areas in the country.

I don't see the causation in your argument. Can you elaborate? It looks like you are only implying that there is an impact, but I fail to see how.

How about just pay them to the value they bring? Why did location ever play a part?

If the dev works on a rarely used admin app, surprise, you pay them lower.

Surprise, they quit to move to SF and get paid 3x as much.

This creates perverse incentives among your employees. Now every employee is fighting to work on the "moneymaker" applications. And I don't really believe that a company will be able to accurately assess the value that every application used brings it.

Employees already jostle to position themselves on the projects they think the leadership values more.

That has nothing to do with whether leadership can accurately assess the value of the projects and applications that are developed in general (a point I agree with you on).

The weakest link in the chain. If a company's working on a bad project that will never contribute, it's good to kill it. If you work on a money-center, that's obviously good, but if you work on the thing that allows the money-center to continue to be a money-center, that's just as good even if not as obvious.

If your devs are located in a bigger city, you can have an office located in that bigger city. If you have an office in a bigger city, you can recruit easier since there's more devs in a bigger city.

If your devs are in a bigger city, there's a good chance they went to the bigger university in that bigger city. If you have devs from a bigger university you can more easily recruit from that bigger university.

If your office is in a bigger city, you can have more relevant personell in that bigger city such as sales and marketing. If you have sales and marketing in a bigger city, you can reach the customers in that bigger city. A bigger city has more customers than a smaller city.

If you have your devs in a bigger city, you can recruit devs from different industries in that bigger city. Bigger cities have more industries present, meaning you can bring in devs with different skillsets.

Basically, discouraging devs from living in big cities can be a very bad idea because. Opportunity costs are real costs.

Big city != HCOL

The Dallas metro area is larger than the SF metro area (and so are the individual cities), but Dallas's COL is half as much as SF's.

Edit: For that matter, just to ward off the (valid) point that the SF metro area doesn't include most of SV, the Dallas metro area is larger than the SF and SJ metro areas combined. San Francisco-Oakland-Hayward and San Jose-Sunnyvale-Santa Clara have 6,172,302 people combined as of the 2010 Census, while Dallas-Fort Worth-Arlington has 6,426,214 people.

You've got it backwards. They're paying people in low cost of living locations less not the other way around. If you frame it that way the economics make a lot more sense; one of the reasons places like SF and NYC are so expensive is because everyone wants to be there for all the jobs. Competition is high and salaries adjust accordingly. Also, speaking from experience (biased toward the financial side of things), you save money just on the talent differential alone hiring in tech hubs vs taking advantage of cheap real estate in a less trafficked area.

Explain to a dev that "we don't pay SV devs more, we just think you're worth less".

You don't have to be on-site, so the real market is nationwide (if not international). Companies simply pretend it's limited so they can pay less.

That's true in theory, but rarely in practice. Committing to enabling remote work is nontrivial and doesn't suite every team nor every employee.

And that still doesn't solve the talent issues; highly skilled professionals congregate in areas with amenities (culture, like minded people, access to top notch medical care, access to schools, access to public transportation, etc) so even if you're remote you're still competing for the high CoL people at high CoL prices.

That may be true to some degree, but if a dev makes 150K in Tennessee, they'd have to make 450K+ in SF to keep the same standard of living.

Are SF medicine or schools 3x better? Is public transportation 3x better? Is the culture 3x better?

I think not.

You can get comparable things in cities with a fraction of the living cost which self-evidently shows that people are paying too much for what they are getting.

Finally, if I'd rather live somewhere without any of those perks and pocket the money instead, should I be told that I can't? Should my decision be held against me?

Having grew up in the south, I'd say 3x is a drastic under sell of how much better going west or to the north east.

Unfortunately for people in your position, companies know that your options are limited. Large supply of people that want to live away from jobs and pocket the difference compared to the number of jobs available => lower prices.

> 3x better?

Yes, and more, with the possible exception of schools (it's hit and miss here, same as anywhere).

Why do people view it as "high CoL salary earners make too much" instead of, "Why do they pay low CoL workers so little?"

Why do companies continue to under pay employees in lower cost of living areas by not paying them as much as their counterparts in higher cost of living areas?

The real key is to unify all the smaller markets into one big market. When everyone has to compete with everyone (rather than being the big company in the small market) salaries will go up everywhere except high-cost areas due to market pressure.

Both negative (taking away) and positive (adding) responses are beneficial to devs.

If if a company chooses to raise everyone's salary, Awesome! Now companies that lower salaries must compete.

If a company chooses to lower everyone's salary, Awesome! Devs in high-cost areas will be forced to move which will unify the market at which point devs in traditionally lower-wage areas will now be able to compete in a larger market and negotiate for more pay.

High-pay software developers aren't going to tolerate living in a place where there's exactly one employer willing to pay them what they're worth. They give up way too much negotiating power to do so. It's much more in their interest to live somewhere that they can walk out the door of Facebook on Friday and in the door of Google on Monday.

I'm going to target in on "bad life choice", most people end up where family are, especially if they have kids, schools are good, jobs are available. I don't think anyone who works remote starts in Nashville then goes to NYC on some thought they could get a salary increase to cover.

I don't think anyone who works remote starts in Nashville then goes to NYC on some thought they could get a salary increase to cover.

I may be misunderstanding what you're saying, but people definitely move from places like Nashville (where I live now) to places like SF and NYC (where I'm moving next year) to increase their salary.

No one pays devs mid-six-figures in Nashville, but you can make that in SF and NYC (not easily, but possible).

That makes lots of sense if you're working onsite in those places. I think the parent was saying that if someone is already working remotely, it seems odd to move to a high CoL area to increase their remote salary vs. staying put and just finding a better-paying remote job.

Another company that does open salary calculations is Gitlab:

https://about.gitlab.com/jobs/developer/#compensation (this is a random developer job, you can check out other positions @ https://about.gitlab.com/jobs/)

Here's the feature ticket: https://gitlab.com/gitlab-com/www-gitlab-com/issues/831

Disclaimer: I don't work for Gitlab, but I am a pretty biased rabid fan.

I'd love to work for Gitlab but it's a shame their salary ranges are insultingly below market. I'm a lead/senior developer right now. I could go to Gitlab with a promotion to manager and even at the top of the advertised range (my locale, manager, and "above average" experience which is generous) I'd be looking at a pay cut in the high teens as far as percentage. Senior developer with everything else the same is upwards of a 40% cut. That's just ridiculous and I have a feeling it's pushing away a lot of otherwise talented technical folks. I'm not even in an expensive locale (still eastern US though), I can't imagine they have anyone working from San Francisco using this formula.

Edit: It seems the COL is pegged to NYC but averaged for the entire state if you're not in one of a few select major metros. Someone who lives in Atlanta will make the exact same as someone living in rural Georgia? Come on.

This is ~30% under market.

Yes, that's what I get also. The calculator is way off. I can't imagine them holding employees for more than a few months or year.

The calculator has San Francisco at >60% higher pay than Seattle because of a "rent index". That's disconnected from reality.

For senior position, you get 150k USD more in SF than in Eastern Europe. The rent difference is not even close to 150k USD...

Not directly about GitLab, but concerning their calculator

Comparing Toronto (and much of Canada) in that tool to elsewhere was kind of depressing. Especially as the average salaries I've been shown ritually start higher than most places are willing to offer. I find companies who build out those calculators usually work with the most conservative data.

A big marker in their calculation was a rent price index given as a comparison to New York average prices as a benchmark.

Some external data points to Toronto rents sitting around $1300 for a 900 sqft unit[0]. Local city data puts an average 1 bed unit at ~ $1800 - $1920 (~ 700 - 900 sqft) — this spans to areas outside of the downtown region.[1a,b] You can also easily pay much higher than average in Toronto, depending on which part of the city you're living in.[1c]

Gitlab's NYC has a baseline index of 1 and Toronto with a rent index of 0.426. Brooklynn apartments come in around the same[2a,b] as /just slightly higher than Toronto.

Am I missing something? The interpretation seems grossly flawed, and it's used as justification all over the map for lowering salaries, or keeping them low. Has anybody worked on the provability of this kind of data being used, and how? Taking an average rent across a metropolis seems to make all kinds of assumptions that aren't even close to real-world.

Maybe it would be more honest to perform regular price-scrapes of apartment listing websites, putting together a custom index. Couple that with a model that looks at keywords, locations, and even photos for applying quality of life metric that could influence the outcome of the learning. I wouldn't expect every company running this program to put together something like that, but employing such a service would likely yield very different results, no?

Can somebody with more experience in this area weigh in?


[0] https://www.torontorentals.com/blog/wp-content/uploads/block...

[1a] http://www.cbc.ca/news/canada/toronto/rent-toronto-canada-1.... [1b] https://blog.padmapper.com/canadian-rent-trends [1c] https://condos.ca/toronto/yorkville

[2a] https://www.timeout.com/newyork/blog/map-of-average-rent-by-... [2b] http://blog.nakedapartments.com.s3.amazonaws.com/blog/wp-con...

Rubbish for the UK (Bristol) I was paid more straight out of uni than I would get now 4 years later.

There is a lot of typical HN negative analysis in this discussion. Let's step back and applaud the fact that this is open. Who else does that? People don't do it because they are afraid of this type of negative analysis. This is a very cool comparison for those who don't have concrete numbers to take into HR. Thanks for sharing Buffer!

Maybe they should be afraid of this negative analysis. You don't get a pass on bad decisions just because you're making them openly.

From my cursory glance, I have a bunch of problems here:

1) Most egregiously, it looks like they're slashing a bunch of salaries. Not the CEO, of course, but a lot of others seem to be going down. I would be immediately headed for the door in that scenario. Talk about a way to keep only the poor performers who can't get another job.

2) Related to the above, what signal does this send to future hires? "We'll pay you $X based on this fancy formula...until we decide to change the formula and slash your salary by 20%."

3) Large COL adjustments make no sense to me. So I work for a remote company and choose to live somewhere cheaper and they think that the value I'm providing is less? The end result of this is that remote devs get screwed on average, while the best remote devs avoid companies like this, rightfully so.

4) I didn't look very carefully, but they definitely seem to be underpaying in general. An advanced engineering manager (mobile) in a HCOL area gets $145k? I'm a senior mobile developer and I'm pretty confident I could significantly outearn the CEO if I lived in SF or NYC.

> 3) Large COL adjustments make no sense to me. So I work for a remote company and choose to live somewhere cheaper and they think that the value I'm providing is less? The end result of this is that remote devs get screwed on average, while the best remote devs avoid companies like this, rightfully so.

Ya I don't get this logic. High COL areas are high because there are _lots_ of perks living there. It is much more desirable to live in SF than to live in East BF Mississippi. You are basically rewarding someone by living in a high COL.

When selecting remote jobs, I'm looking for compensation for the value I bring. The dollars I earn from my value should be up to me how to spend them: living in SF with all of the glorious food and such or living somewhere cheaper and saving money to retire earlier but having to pick between Applebees or Fridays (vomits).

> living in SF with all of the glorious food and such or living somewhere cheaper and saving money to retire earlier but having to pick between Applebees or Fridays (vomits)

Come to Dallas. You get to enjoy low COL (while it lasts) and have your pick of Sichuan, Thai, Indian, Vietnamese, Mexican, barbecue, etc. restaurants.

We all like to tell ourselves that we are impactful and in the top 1%, but most of us could not land a job for $300k total comp. It would also be a mistake to pay us that much. Negative growth of your runway chart is a quick way to get into the fatal pinch.

Those Buffer salaries are quite reasonable for engineers. If you're not looking at them hungrily, then may I suggest you're probably not the customer here? And by "customer" I mean "competent engineer who never bothered to put together a portfolio or play the interview treadmill cycle game and is therefore making ~$100k total comp."

Those people exist. And contrary to what the vocal monitory says, they don't kill your company if you hire them. Matasano proved that.

I don't think $300k is "top 1%". Maybe top 20%. I'd rate myself no better than being at the lower end of the 60th to 80th percentile: I'm slightly better than average, at best and on a good day. My all-in compensation is around (but more than) $200k, and I work at a relatively unknown public company with ~300 employees. I can easily get ~$50k-$100k more if I wanted to play the "code monkey interview" game simply by refreshing myself on leetcode for a bit and finally acquiescing to the recruiters from FB, Amazon and Google that ping me every so often during the year, following up with Lyft, Uber or Netflix, or even leveraging myself into a smart startup.

$300k isn't even top 1% nationwide for all jobs (that's $390k).

We obviously can't all be the 1%, but I think it's probably more the top 10% who could make $300k? Maybe that's optimistic and out of touch, though.

At any rate, my point isn't that this will kill Buffer, but I suspect it'll be a drag on their performance over the long run. Who knows though. And I don't really care; it's not my company.

What I care about is whether I'd go work for them or advise others to do so. And my answer would be no. I think you can make more with a little bit of effort. And even if you can't, I think working for a company that won't yank the rug out from under you with a paycut like this is worth a premium.

It's probably mistaken to say that 10% of the software engineering workforce could become millionaires within 3.3 years if {condition}, for all values of condition ruling out survivorship bias.

Also $300k total comp translates to $450k fully-loaded cost to the employer, meaning you can only hire four of those engineers before you burn through $2M funding per year. Are you sure that's worth it?

It's probably mistaken to say that 10% of the software engineering workforce could become millionaires within 3.3 years if {condition}, for all values of condition ruling out survivorship bias.

Have you ever earned $300k in a HCOL? Because I have (NYC) and you're doing very well if you get to save $100k of that. If you're single, by default you lose $120k to taxes, so then you need to keep your budget under $6700 / month. Which isn't really that hard, but most don't. Granted, tax-advantaged retirement savings and other things can change the math here, but my point is that it would take more like 8-10 years (depending on market growth), not 3.3.

And my point wasn't that 10% of engineers are doing that, but just that they are capable of getting that kind of job with some effort. If all 10% of them tried, that would push the market down, so I'm really just talking capability, not whether 10% of devs could all be simultaneously making that.

Finally, I'd like to see a breakdown of the $300k to $450k number. The premium that employers pay to get to fully-loaded cost isn't a fixed percentage, it goes down as comp rises. So yes, it might cost $120k fully loaded to employ an $80k engineer ($40k on top of their salary), but why does it cost $150k for someone making more?) The cost for office space and healthcare are two of the biggest costs of employing someone, and they're relatively fixed, right? $450k might be realistic, just seems high to me.

And my point wasn't that 10% of engineers are doing that, but just that they are capable of getting that kind of job with some effort. If all 10% of them tried, that would push the market down, so I'm really just talking capability, not whether 10% of devs could all be simultaneously making that

There's an old Feynman quote:

"All the time you're saying to yourself, 'I could do that, but I won't' -- which is just another way of saying that you can't."

I used to feel the same way as you. But actions are all that matter, not beliefs. It was materially impactful to let go of the notion that "people could if they tried" and flip to "some do, some don't, and if they don't, they won't until proven otherwise." It turns out to be a handy general rule about people, not just this one scenario.

You might be right about total comp. But $350k vs $450k is rather quibbling: the main cost to the employer is a $350k burn rate.

And in Buffer's situation, it's all about averages, not outliers. If you're hiring 10 engineers, being more generous than Buffer's salaries seems like a mistake. After all, Buffer is proof that the market will bear these.

I think what's happening is that Buffer is one of the few companies willing to publish the data, so suddenly everyone is watching and analyzing them. But these kinds of tough decisions are routine.

It's very important to avoid http://www.paulgraham.com/pinch.html as a company. The company has to focus on not dying, since that's the way to win.

On the other hand, it's worrisome that there are no outliers at all. A fair market should look closer to a J curve rather than an even distribution. But everyone will just need to get used to the idea that some engineers will make $300k and others $100k. That is fair, because that $100k engineer could not easily get a non-$100k job, or else they would have done so. (Conversely, that's why the $300k engineer is making $300k: because they put effort into making sure they can get another one if they need to.)

That seems to explain your reaction pretty well, right? You balked because you're one of those $300k engineers that has a lot of options. Most don't.

EDIT: Actually, the distribution of engineering salaries seems pretty good: http://www.wolframalpha.com/input/?i=96917++101331+106709+10...


There aren't any outliers, but it's not linear, which is a good sign.

So much to analyze here, but I would just say one thing: I think that the majority of devs in the US don't know or believe that there are tens of thousands of their peers making 2x - 5x as much as them. I routinely see people here on HN essentially refuse to believe that there are devs in SF getting $300k to $500k at Google/Apple/Amazon/Facebook/etc. So maybe it's more that they don't know it's an option as opposed to not being able or willing to do so?

> Large COL adjustments make no sense to me.

In the past I've been interviewed by several startups which when the point for salary negotiations came asked: "What do you _need_ to earn?". Somehow some companies (if not even most companies overall) seem to think that that's an acceptable line of thinking, and Buffer seems to be one of them. Their "dependent grant" seems to go into the same direction: "Oh you have a dependant? Then you naturally _need_ to earn more."

> I'm pretty confident I could significantly outearn the CEO if I lived in SF or NYC.

Yes you could. But not for a company the size of Buffer.

Here's the thing a lot of us often forget to realize: The value you bring to the company is proportional to the value the company extracts from the market.

Can your code improve Walmart's revenue numbers by 0.001% per year? Awesome, that's worth $4,858,700 based on Wikipedia numbers. I'm pretty confident you can get a gigantic salary with those results.

Can your code improve Buffer's revenue by 3% per year? Awesome, that's worth $468,000 according to their dashboard[1]

That's still a lot of money and I don't know if Buffer would negotiate because they like to use their formula. My point was that the value of your contribution can be orders of magnitude different for the same amount/quality/level of work and skill.

[1] https://buffer.baremetrics.com/

I've had recruiters in NYC and SF reach out to me with roles paying $250k+. Some of those were with (funded) startups smaller than Buffer. But in general, you're right: the best pay is found at bigger companies.

So what?

The fact that Buffer can't compete with market salaries for top talent isn't my problem, it's theirs.

> Large COL adjustments make no sense to me. So I work for a remote company and choose to live somewhere cheaper and they think that the value I'm providing is less? The end result of this is that remote devs get screwed on average, while the best remote devs avoid companies like this, rightfully so.

Well, that depends where the company is headquartered and how much the local employees make.

Let's say the company is headquartered in SF, and the local employees make an SF-typical salary. If the company pays all remote employees what they pay their local employees, then that's a very nice deal for remote employees in low COL areas. If the company uses COL adjustments for remote employees, then employees located in lower COL areas take a pay cut, and your argument holds.

But imagine if the company was instead located in a low COL area like Phoenix and the local employees make a Phoenix-typical salary. If the company is paying all remote employees what they pay their local employees, then remote employees in high COL areas won't make enough money to live on. So in this case, using COL adjustments for remote employees is the only way for it to be worth it for people in high COL areas to consider working for them.

> but they definitely seem to be underpaying in general

Interesting that you say that. I can't speak for US area, because I live in Europe. Looking at the Spain salary, which is about 110k seems pretty good to me. Working as a senior frontend dev in my area (which has similar costs of living as Barcelona) gets you payed about 30-40% less than that.

I would not applaud if my company would decide to make my salary open.


The information asymmetry puts you at a competitive disadvantage as a candidate when you start looking for your next gig. California law prohibits employers from asking, but Buffer is nevertheless releasing the data publicly. It's terrible corporate behavior.

On the other hand, this is great material for both internal and external recruiters to start poaching away Buffer employees to orgs that have the budget to pay them market rate.

"I see you're making ~20-30% below market rate. Would you be interested in talking about a new role?"

Not everyone wants their family and friends to be able to look up their salary. Or to know that they're the lowest (or highest) paid person in their department, etc.

STLtoday keeps a database of how much the teachers make in the Missouri school systems, while its not entirely accurate when you talk to teachers (sometimes the data is super stale, sometimes they have other 'responsibilities/commmities' that offer more money) I always felt wrong being able to look at it when they could not look at mine.

They're public employees, paid with everyone else's tax dollars. That's why you get to know their salaries.

That has not made it hard for the government to take employees tho.

Agree. I get the need for public accountability for government salaries, but I feel like having the data be anonymized would be better. The public needs to know the salary distribution, but not what Susan Baker made last year.

I disagree at this point. Anonymization is not perfect and it introduces less accountability while also increasing the costs of maintenance and auditability.

Pure FUD. Millions of people have their salary in the open in the US, from CEO's to government employees. If you wish to pay for your privacy go ahead, but price transparency can only help the workers.

How is this FUD? I'm telling you that I don't want that. A lot of people don't want that.

We have CEOs and government employees who have public salaries for the specific purpose of public accountability, not just because we're curious or because we're entitled to know the price of everything at all times.

Now, a world with perfect price transparency in the labor market might make sense, but two points:

1) We don't have that universal transparency now, so being the 1% of firms that does (or their employees) can put you at a disadvantage. Why do you think some places are passing labor-friendly laws that make it illegal to ask what previous salary was?

2) Price transparency doesn't have to mean that we get those prices from an "objective" formula that has no room for flexibility based on the facts and circumstances of each case, right? How is this different from mandatory minimum sentencing guidelines, or whatever?

I think that price transparency would probably help the average worker by bringing low performer salaries up and high performer salaries down, and it would probably harm overall productivity by harming incentives. But I'm not an economist.

I don't know why this being open is a laudable thing. I just honestly don't see any value at all for the wider world looking in. I'm sure at some point there was an ideal or a vision here but it seems misplaced to me.

This is interesting. One implication is that if I was in the dating market, I’d be worried my date would google me, find that I work for buffer, and instantly know how much I make. While that information isn’t exactly super important or secretive, I just think I’d rather reveal that kind of info on my own terms.

They could just check Glassdoor. You should assume average salary for your position is public info.

I'm not sure I agree with some of these figures. Vancouver and Nashville are somehow considered to have similar cost of living.


Why??? Openess in work culture is great! Telling the whole world about how much each individual earn is a slap on their privacy... Just because you can, you shouldn’t. Be ready to welcome attrition.... Let me post the link of this page on each employee’s linkedin fb accounts...lol.. anything in the name of innovation.

I strongly disagree with cost-of-living-adjustments when employees have the choice of where to live. People shouldn’t be punished for living in less expensive places.

If your company is willing to pay you more for living somewhere else even if they don’t gain anything from it, it means they’re underpaying you right now.

Salaries don't reflect the worth you're providing to the company (unless you're part of a worker-owned collective that disperses annual profit). Salaries are the lowest amount the company thinks it can pay you. If they had a higher budget and you failed to negotiate effectively for a higher salary, then I feel it is not the company's fault if you think they should have offered more.

Vote with your feet. If you think you would be paid more in SF, what is stopping you from packing up and moving? That's what's lowering your salary.

Yes, but COL is not a great measure of it. My experience is that people us COL as a way to prevent envy and disgruntling.

I say let people be envious.

That's not really realistic though. How could I convince someone to pay me $250k in Minneapolis when the market is supporting 115-150k?

In a world where remote is an option, there really shouldn't be large differences in salary. In negotiations, the party who can most afford to walk away has the advantage. If there were a real dev shortage, devs would be in that position, but they aren't.

SV (and other markets) basically refuse to hire remote (and often refuse to relocate employees). This splits the market up into mini-markets where the slight oversaturation of devs allows the local market to dictate prices (under-saturation would boost salaries even in a small market). This is born out with the fact that those who do work remotely seem to have higher salaries for a given experience level (their market is much bigger and more diverse).

The obvious answer is unions. Joint negotiations would yield immediate effects. No large company could survive even a day or two of IT strikes without extreme losses. Unlike other jobs, you can't simply replace your staff because most of a company's software IP is held in the heads of its employees and is far too complex to decypher before the losses occur.

Well, that sounds more like different employers than a "cost-of-living adjustment". Sure, you probably can't get a local employer to pay what a Bay Area employer pays, but if your employer is a Bay Area employer and they'd be willing to pay you 40% more if you worked remote from NYC than if you worked remote from Minneapolis, then yes, you should have more leverage there. Probably not enough to actually get the raise, but enough to make the conversation more interesting at least.

You pay salary in regards to the market the employee is in, not where the company is located. Google/Facebook have a lot of offices in the EU and pay competitive salaries, but they are still a lot lower than in SF obviously.

Recently there was a discussion about salaries in SF. And the numbers there were much bigger. What gives?

If you're talking about the triplebyte data (https://triplebyte.com/software-engineer-salary), Buffer's SF salaries seem comparable.

That only reports base salary, making it worse than useless.

If you're applying to non-public companies where the stock isn't liquid, it's very hard to compare different packages across companies.

Benefits are another story, and I'd love to see triplebyte release some data about those.

Not to mention all the public companies that don't Grant stock or significant bonuses.

Many people, myself included, find base salary the most meaningful indicator.

For every company that uses perks as a cash replacement in a healthy way, there's another that expects you to overlook poor absolute numbers in favor of wishy washy things like illiquid equity and coldbrew kegs.

Unless your stock is very liquid, cash is king. Everything else is a distant second.

If I worked somewhere that tried to rationalize why they were cutting all of the employees salaries but leaving the executive salaries in-tact, I would leave immediately.

I like the idea of transparent salaries, but does a "transparent" formula ever become so convoluted, and open to gaming, that the company may as well just not bother?

It can be argued that not disclosing salaries is a way to suppress wages; an asymmetry of information. Is open salary information where "everyone at the same level gets the same salary, but there's some gotchas" another way to do the same thing?

It certainly goes hand in hand with a good culture, which is also one of the strong point of Buffer.

Their transparent webapp thing[1] is really nice to play with btw, it feels like a no bullshit vibe for newcomers as well as current employees.

It makes me think that these "formulas" will probably not age well with time. They're already at their version 3, which would probably not be a good formula at the early days of the start up and will probably not be a good formula in 3-5 years.

Somehow related, I remember having something like these to rank posts on one of my boards (similar to the weight ranking of HN). I had:

* time influence negatively

* number of upvotes and downvotes in the comments influence positively

* number of heavy posters influence positively

* number of upvotes for the post influencing positively

It was really tricky to tweak, in the end with the website scaling up I was constantly tweaking the formula. I don't think there is a "always work" formula.

[1]: https://buffer.com/salary

That helps, thanks.

I think the formula makes very little sense. If someone comes and says " i want more than that" will Buffer turn away a candidate they like because it doesnt fit? They are unlikely to do it, and they should definitely not do it.

What it does do is attract all the people that find those salaries public to be higher than the ones they have now. Im sure they get plenty of applicants on this measure alone.

> We’re looking at other ways to recognize loyalty such as profit sharing, 401K matching, bonuses based on profitability, dividends, and future stock buyback programs.

So, yeah, ti doesn't make much sense in practice. But it's nice to have the numbers open.

It's a matter of degree: non-transparent salary "formulas" (to the extent that they are at all formulaic and not just based on random stuff like negotiation) tend to be much, much more convoluted and inconsistent than this.

I have to wonder if they've ever run into 'call me when your formula matches my number' (in nicer / more convoluted words). In that case a simple transparent table would save them a lot of time and blog posts.

Whoa $121k in Spain that's a superstar salary for a programmer there.

Average for programmer according to glassdoor is 35,000 euro = ~42,000 usd.

It seems odd that places in very low COL areas, particularly internationally, are getting 3-4x median salary for the same role, while places in rural/suburban US will be at or just slightly above median for that geo area.

I can't talk for Spain in particular but keep in mind that employer's social contributions can be pretty hefty in Europe. And working remote for an american company is opening a bag of hurt regarding taxes and banking.

For instance that guy making $128k in Montpellier in France, that's €108k right now. Assuming he works 45 weeks that's a daily rate of 480€. Not crazy for an experienced developer.

yeah thought the same. 100k USD is next to impossible for a web developer in Berlin for example, and salaries for devs in Barcelona are considerably lower than here, maybe a max of 80k USD. That guy is living like a king.

Berlin is a bit odd because of the huge changes in the last few years in companies starting offices here and the influx of VC funding.

SoundCloud for example, had a bunch of engineers earning around that. Probably all laid off now, though.

There are companies on StackOverflow jobs openly advertising €80-90k for senior developers now, and occasionally over 100k for specialist roles like ML or performance sensitive development in C++.

yes i am sure those salaries are possible for certain specialties in high demand, but in this case we are talking about Senior Web Developers. I think for pure devs without a lead or other management role, it's hard to get more than 75k EUR or 90k USD, and in BCN i have the feeling it is at least 10k less.

Did you check stack overflow jobs? What people are currently earning and what people are openly offering now has diverged quite a bit just in 18 months or so. It’s hurting the smaller companies with less budget and it’ll only get worse when Google opens their big office.

I have recently talked to some HR people and been looking myself, so that is just the feeling that i got. You mean the Google Campus in Kreuzberg ? Will they really employ a lot of people there ? Sounded more like something similar to the Factory

European software developers seem to be insultingly underpaid. I suspect it's more cultural than economic, and relates to the relative status of the profession in the EU.

I know the total costs of an employee are higher in the EU, but are they really 2x - 4x? Top companies in the US offer pretty robust (expensive) benefits, including healthcare. What would make the total cost of a dev in the EU getting paid $42k equal to the total cost of a US employee getting $121k (and total cost of $150k - 175k)?

In Germany employee costs are roughly 1.5x of gross, i would guess it's similar in Spain.

That’s not drastically different from the US, especially where gross is under $100k.

Applause from Slovenia to Buffers' Croatian developer! I'm sad to see actual reduction with this new 3.0 salary scheme. One would also need to factor in another 10-12% loss this year, which is depreciation of USD vs. EUR (HRK)

Am I to believe that the cost of living in Spain are 85% of San Francisco? I am Spanish and it is nowhere near, it'd be more like 20-50% depending on where in Spain.

What's an advocate in this context? It's their biggest department, bigger than marketing?

Pretty sure that's their customer support team.

I am a fan of open salary models inside the organisation, but don’t see the value in sharing it publicly. It’s something we implemented at the non-profit I co-founded and it has increased the sense of ownership and buy-in from everyone on the team. One reason for not sharing the actual amounts is that non profits generally pay less than for profit companies and I don’t want our team to be pegged to their non profit salary when they decide to move on.

Salary transparency leading to lower salaries... I had been led to believe to expect the opposite.

The transparency is great.

Here's a question: why doesn't Buffer pay the "low CoL" developers more? It doesn't seem right that "low CoL" workers get paid so little compared to their peers.

I agree. The first step to fixing or avoiding a problem is knowing it's there.

It's great to be able to have a little more understanding of what companies are thinking when they try to judge an employees value based on location rather than... value provided to the company.

I think the dynamics are pretty interesting. Forgive me if this seems like a not so humble brag, but I'm remote and paid way more than anyone at buffer. I also have a pretty decent network of remote friends at my company and at other good companies.

With that in mind I can tell you that the practical effect of Buffer's policies is that they have decided to self-select for developers who are currently underpaid and historically have not had their pick of good jobs. Because otherwise they'd be taking a pretty big paycut to work at buffer and, while possible, it seems unlikely that social media management is a dream job for many developers.

So the entire open policy, no matter it's surface intent, is basically a policy to grab sub-par talent. Especially insecure talent who is willing to buy into "radical transparency".

Meanwhile, my base is pretty close to their CEO's compensation, but I live in a low COL area. It turns out that the marketplace is competitive enough right now that it's a viable bargaining technique to say "pay me X, where X < Value provided" and some companies will, without arguing (as if the argument made any sense at all) that many people in your zip code make < X.

I guess that was a really long winded way of saying that buffer has implemented policies that self-screen out the best developers, which is fine. You probably don't need the best developers to send tweets on a schedule.


Posting like this is not OK and we'll ban you if you do it again. Could you please read the guidelines and then comment only civilly and substantively? Vacuous, uncivil flamebait is exactly not what we're here for.


Unhelpful if you're a female: PDF https://www.cfa.harvard.edu/cfawis/bowles.pdf

Even trying to put yourself in a position to negotiate doesn't work: PDF https://pubsonline.informs.org/doi/pdf/10.1287/orsc.1110.069...

I appreciate the citations.

>"Unhelpful if you're female"

3.7 billion women in the world, and not a single female is successful in negotiating a higher salary?

Of course not. In fact, when comparing men vs women at the same level, company and profession, wage differences disappear. So there's obviously women that are quite successful in negotiating their salary. https://www.economist.com/blogs/graphicdetail/2017/08/daily-...

And the initial point is that you don't want (or even need) the crutches that the average person requires (transparency).

You're not average. You can find a way to negotiate more that plays to and exemplifies your strengths.

You have desires for your life (e.g. travel or a family or a cool hobby) - push hard, demand more for yourself and don't apologize.

Open salaries = communism? wat.

The article provides zero reference suggesting their employees did not negotiate for a higher salary.

I have seen plenty of times that people who thought they were the tough negotiators turned out to be on the low range of pay when we discussed salaries. Information is always good.

Probably the worst comment I have seen on HN. Almost feels like r/TD.


So if I'm worth 500k a year to Buffer they will not be able to pay that to me. So stupid.

So if I'm worth 100 million a year to Google they will not be able to pay that to me. So stupid.

Spoiler alert: There's a very large chance that you're not worth $500k to Buffer.

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