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Zuckerberg says employees moving out of Silicon Valley may face pay cuts (cnbc.com)
153 points by SREinSF 11 days ago | hide | past | web | favorite | 223 comments

Can we consolidate?

It seems like they're divergent enough to keep separate. Last I checked, at least.

This is one of the things that's always bothered me.

Let's say you hire me for your company in San Francisco and pay me $150K. You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value. In other words, the company will (eventually) make more than $150K per year off my contributions to the company.

But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of "cost of living".

Why? My value to the company hasn't changed! I am still worth the same amount as I was before! The only thing that changed is where I choose to reside. What difference is that to the company?

As remote working becomes more and more acceptable, we're going to start to see companies like Twitter and Facebook competing nationwide, not just in Silicon Valley. An engineer in Oklahoma will now be in a market that includes all of the big giants, and not just the local banks or whatever. Likewise, Twitter and Facebook will be competing against each other in the lower COL areas like Oklahoma! And not just SF startups, but competing against NYC and London startups as well.

This whole area is really fascinating to me, but the "you get paid differently depending on where you live" thing has always struck me as bizarre and one-sided in favor of the businesses and not the people in high demand, like good software engineers.

The $150k is not what your work is directly valued at, but rather an agreement of what it'll take for you to drag your ass to San Francisco, which is objectively a bad place to live if you're a human that has to make budgets, and come to work at Facebook.

Also yes, if Facebook starts to hire remote workers, then your value will drop because they now have the access to a pool of workers who don't want to drag their asses to San Francisco and can pretty easily settle for less since their rent doesn't require them to bleed money.

> The $150k is not what your work is directly valued at

Indeed, presumably you are worth more than that to them. It's a pretty naked cash grab to cut salary in response to a location move, and somewhat illogical considering they moved their HQ to the bay area in the first place. If it's objectively bad and expensive, why not move your HQ to Austin or San Antonio or Portland?

> if Facebook starts to hire remote workers, then your value will drop because they now have the access to a pool of workers who don't want to drag their asses to San Francisco and can pretty easily settle for less since their rent doesn't require them to bleed money.

For now. It remains to be seen if bay area rents are high because of tech salaries, or if tech salaries are high because of rents. Likely they feed back into each other. And as a worker in SF, you have access to all the same remote opportunities.

All business decisions are cash grabs.

Not all, but businesses with that attitude are worth trusting about as far as you can throw them.

Amen. Anyone running a company who opts to put it in San Francisco or Silicon Valley at this point is issuing a big F-U to employees.

And this pay-cut policy is bullshit. If employees are allowed to work offsite, then that site should not be dictated. It's a win/win, because although the employee saves money, so does the company. And thanks to Trump and Republicans, employees can't even deduct the money they spend on electricity, office equipment, and rent.

I have heard so many people justify companies locating in the Bay are due to the talent found in the area. While that may be true I have a hard time believing that companies would not be able to recruit in cheaper large cities like Austin, Dallas, Chicago, Philly, Etc if they offered Bay Area money.

100% of the jobs I turn down are ones wanting me to move to the Bay area. I get paid the same already as my peers in the Bay and don't have to live there.

i'm kind of super interested (also scared) in the effects FAANG companies allowing remote workers will have. sure, maybe salaries at FAANG might decrease as supply/competition rises, but then all of the other companies that arent FAANG now have to sort of raise the lower boundaries of their pay since they cant just say "well you can go ahead to move to SF if you dont like it". Are we looking at lower high end of the spectrum but a higher median?

It seems like the top end would drop a lot more than the median would rise. Given the poaching it seems clear SF has a scarcity of developers that satisfy FAANG, and scarcity drives price up radically. If remote work becomes more widespread, the scarcity condition would presumably evaporate.

Socially speaking it could be a very good thing. Many of the big challenges we are facing (wealth disparity, political polarization, housing crunch) can be tied to the gross disparity in economic opportunity between places like SF, Austin, NYC, vs everywhere else.

Those companies already hire all over the world for the scarce, high dollar engineers. I don't think top end compensation will drop while those companies are monopolies. Most of those salaries balloon because they poach people from each other.

The amount of remote positions FAANG offer is tiny compared to other companies. If they open up to hiring the majority of positions as in office or remote the salaries will drop a lot for the Bay area. They will be more inline with the other companies in the Bay that hire in office or remote as options for almost any position.

You have to consider that FAANG companies already outsourced work to companies that use both offshore and remote employees. Policy changes aren't necessarily as big a deal as they seem, or at least they aren't what they seem, because they concern the direct hiring practices only.

If the company was hemorrhaging money on employee salaries by being based in SF then why wouldn't they simply move the company somewhere else?

Greater supply of employees, and potentially greater attraction TO employees.

Sure, they have to "import" employees, but importing 10% of the workforce in the Bay Area at X cost is apparently more appealing than importing 98% of employees to Tulsa at Y cost.

(Relatedly; Tulsa's not exactly a small place, but if you think the influence of "big tech" is bad in a larger metro like the Bay Area, I'd HATE to see what it would look like to bring a deluge of 'outsiders' into a much less populous region)

Tulsa is not geographically limited and has enough empty space for practically unlimited build out (similar to bay area or LA in 50 years ago). Tech in Tulsa will cause construction boom but not bay area house prices.

I hear DC/VA/MD with the contractor industrial complex is a good example

The bay area offers a guaranteed supply of qualified employees.

A tech firm in Boise might not be able to hire and Elixir developer at any price.

In SF, there will be employees as long as you have cash. Not so elsewhere.

> A tech firm in Boise might not be able to hire and Elixir developer at any price.

I think the timescale matters. If it became known over a period of years that some company was paying $1mm for Elixir devs in Boise, loads of folks would consider learning Elixir and moving to Boise.

Also, they might not even want to hire for such a thing.

There are plenty of businesses that don't need to be on fancy infrastructure or use the coolest new language for their backend.

Going old school is hard too. Not many COBOL programmers in New Jearsy.

Because the Bay Area is one of the only places where the supply of potential employees is high enough to meet the company's demand.

You mean to tell me that companies in the Bay Area never pull employees from schools outside of the Bay Area? I get the feeling there is a much more valuable reason for being based in the Bay Area than that.

Of course, it's not so cut and dry. It's sort of cyclical IMO:

- There are already a ton of existing technology companies in the Bay Area, and also a ton of employees.

- Students from schools around the country who are interested in tech might plan to move to the Bay Area due to the number of companies there.

- If your company doesn't hire in the Bay Area, it may miss out on the chance to hire the employees in the groups above.

The end result is an abnormally high supply of technology workers in the Bay Area. I'm not saying that's something intrinsic to the location, it seems to me it's more a result of recent circumstances.

So no tax or media related incentives to being in the Bay Area? You don't think it's worth more to Google to say: "Our headquarters are in SF" rather than: "Our headquarters are in podunk MT"?

I wouldn't be surprised to find out that 90% of the reason FANG companies operate in large metropolitan areas has almost nothing to do with employees and everything to do with global image.

That does not make a lot of sense to me. Google did not open a Seattle office because it enhanced their "global image", but because the presence of Microsoft, UW, Amazon, and a generally thriving tech scene meant that they would gain access to lots of experienced engineers who might be unwilling to move to California. Now they employ thousands of people up here. Facebook did the same thing; they also have a large Seattle office, right down the street from Amazon. Apple has a Seattle office too, focusing on machine learning. Not quite up to a thousand people yet, last I heard, but they have plans to grow. Lots of ML going on in Seattle.

When Intel acquired the AI startup I worked for a couple years ago, they built us a downtown office, much bigger than our team currently needed. Why? Because there are lots of AI people in Seattle who will not move to California, and Intel wants a chance to hire them. But it's still a very small office compared to Intel's global footprint; it does not affect their "image" at all. It's just a practical way of gaining access to Seattle's engineering talent.

It is a simple virtuous cycle. The presence of good jobs draws people who want to work in the field, and the presence of people with experience draws the companies who want to hire them. Geographic concentration is efficient.

Would that image or media related incentive exist without the huge amount of tech work in the Bay Area? My point is that the pull of the Bay Area is cyclical - supply of tech workers fuels the SV image which fuels more supply of tech workers. I think it all started with tech workers though.

If Stanford or another incubator of tech innovators was in podunk MT, then we would be discussing that location instead.

Yes, look at all the AI growth at Carnegie Mellon, University of Waterloo, Tallinn, Estonia - any relatively well-managed metropolitan area can position itself as an "innovation hub", the US West Coast certainly doesn't have a monopoly on it.

I think you're agreeing with my point? Those areas are hubs for hiring too, for the same reason? Albeit not to the same degree as the Bay Area.

Ever notice how competing drug stores are frequently on the same intersection? You might think they would try to be far away from each other.

That's certainly true at my parent company (Accenture) - we're (in a completely neutral way) a completely different animal than "Silicon Valley unicorn", but we still have a huge gleaming building in SF because it projects a particular image.

If they did that then they'd have to give everyone at the company a pay cut. They don't want to do that. They'd rather use these pay cuts to bully individual employees. If they went after everyone at once then they'd have a problem.

It means you’re adding at least that much value to the company - or at least that’s what whoever is hiring you thinks.

why does it bother you? you're thinking like some individual laborer in a weirdly abstract sense, not like the person paying them. hint: you aren't paid based on your worth, you're paid based on, in general, the lowest that your employer can afford to pay you to not leave for a competitor.

capital on the aggregate always tries to get labor to work for the lowest possible price that they can. that's why negotiations go on between workers and employers. that's why if you don't negotiate, you get bowled over.

software engineers seem to think that they are this ultra elite labor class whose "value" is somehow tied completely to their intrinsic skills. that all goes out the window when software engineers begrudgingly accept massive pay cuts to take their insanely comfortable salary and lifestyle to a low COL area. that ought to tell you everything you need to know about your intrinsic "value": you lose immense power when you don't live in a place where you can quickly and easily get a job with a competitor.

if software engineers learn anything from this, it's that they are being paid a premium to essentially not change companies.

It's not about where you live. It's supply and demand. Those companies artificially limited their supply and provided a ton of demand within their narrow market. They are now opening up to new markets and spreading out the demand accordingly.

Forced analogy time: It's like if I decide I'll only buy peaches from the organic farm down the road. They charge $20/lb. I calculate that I get $21/lb worth of utility. The Farmer is happy.

A few years later I decide that purchasing organic peaches online for $15/lb fits the bill, and utility dropped slightly to $19/lb but still better in comparison. The farmer is no longer happy.

The part that doesn't make sense though is keeping the employees that live in SF, or paying an employee more if they choose to relocate to SF.

Tech companies typically do increase your salary if you move to a higher CoL area.

>The part that doesn't make sense though is keeping the employees that live in SF, or paying an employee more if they choose to relocate to SF.

The buyer (Facebook) may not be playing all their cards. They may very well intend to reduce SF employee headcount, but want to experiment, and so saying otherwise will allow them to do it in a slow, controlled manner.

Relocating for most people is actually a bigger deal than it may seem.

I personally have no problem with it and did just that at least once, but after returning I asked around and most if not all of my friends and family would not do the same even for - and this was especially shocking to me - 4x the salary.

Apparently flexibility is rare and sought after.

Was that 4x the salary truly 4x, after subtracting out the costs of living?

I got an offer for an on-site job in London the other day, that would technically be ~1.5x salary boost - and ~5x the salary I had the last time I worked for a local company. But after subtracting out the costs of living, it turned out it would be effectively a 3x salary decrease, and at the same time a significant degradation in the standards of living. Turns out, London isn't a particularly friendly place for a couple with a toddler to move to.

Given that it was Zürich where CHF = PLN looking at sticker prices(with exceptions), my cost of living as a percentage of salary actually went down since I was renting a room instead of a whole apartment.

In terms of what I could nominally save every month the difference was enormous.

But yeah, with a child on board I would definitely have to get something larger paying somewhere in the order of 25-35% of my salary. But that's just CHF = PLN again, so no increase here.

> it turned out it would be effectively a 3x salary decrease

What do you mean by 3x decrease? X/3 ?

Right. Bad phrasing. I meant X/3. I.e. after subtracting the essentials, I'd be able to afford 1/3 of good and services equivalent to what I could afford in my current location on previous salary.

If you're only being offered 1.5x your salary to move to London, then assuming you're in Poland, your current salary is very high for your region.

The salary I referenced is high for the region in general (and I had it on a remote contract with an US company, though in hindsight, it was under market rate), but not necessarily for our industry, for the position I would be otherwise aiming for locally.

From my calculations, London works out quite well if you're single and willing to sacrifice heavily on the living space. It also works out a-OKish for two-income families with children at kindergarten age. Not so well with a toddler; I was shocked to discover that daycare costs more than rent on a two-bedroom flat west-side.

A lot has changed over the years here.

My friends in Warsaw are pulling anywhere in the range of $55-65k per annum before taxes - that's at corona rates, which knocked close to 8% off our currency's value.

I moved to the Bay Area for a 2.5x increase in TC and none of my former coworkers followed up for referrals

Later I asked one of them if they wanted to know the salary range difference preferred not to think about it

Lowering salaries all of a sudden for a large % of their workforce who are currently very productive, would be a bad move, destroy value instantly that would take long to recover. It makes sense to pay to keep that value, at least for a while, and let market dynamics slowly do their thing.

This is a fundamental Microeconomics supply-demand pricing question: Do you sell an item based upon the cost to produce it, or the price customers are willing to pay for it?

Employment is no different. There is a struggle between buyers of your employment, and you (the seller) of your time/expertise. If those prices overlap, then there is a spectrum of possible transaction prices that can occur.

As you can imagine, if there are many buyers, and few sellers, then the price is driven to an auction level where buyers must compete with one another for the employee. If there are more sellers than buyers, then the price is driven down towards the cost of that employee (and associated education).

Typically we exist in the middle where negotiation tactics dominate where within that range the price settles. That's why there are policies such as "don't share your salary" - to create information asymmetry favoring the employer. ...and why people with poor negotiating skills typically earn significantly less than those who demand more.

Generally, when demand for employees is high, companies try to make the market less efficient by creating hurdles to employees leaving (like the agreements between tech companies not to "poach" employees from one another), and bonus programs that vest over multi-year periods.

This is relevant today because allowing employees to work from home greatly increases the supply of potential employees (both domestically as well as internationally), thereby forcing employees to accept closer and closer to their cost-basis. By microeconomic principles alone, it would be surprising if this didn't significantly drive down tech wages.

This is exactly right. I'm surprised that so many people, who are otherwise highly educated and intelligent, struggle with this concept.

There's no universal rule of "fairness" saying how much a company should pay you. It's not dictated by COL calculations and logical questions of value.

The company looks at you and your competitors (alternative candidates), and puts forward a number they think is high enough for you to accept, but not so high that they could snag an "equivalent" candidate for a lower price.

You win that battle not by whinging about COL adjustments, but by eliminating your alternatives (metaphorically speaking, of course). If the company truly needs what you do, and you're the only one who can do it, then you set the terms.

Let me preface by saying this policy is a serious threat to my compensation - so I hear you loud and clear!

That said: this is the reality and, as unfair as it sounds from the employee's perspective, it makes perfect sense. Facebook does not pay Bay Area compensation to its employees in other parts of the world. It should be no different for those in different COL areas around the US.

Not only does this suck for current employees, but new hiring will be a nasty wake-up call. If a candidate in a different city thinks they'll cross their arms and demand Bay Area pay, there will be multiple other qualified candidates in that city & around the country more than happy to accept a competitive offer tied to their COL.


Exactly this. I work for a FAANG and live in Texas. If employees leaving the bay area could leave and maintain the same level of pay, I'd expect a bay area salary as well. With the lack of a state income tax and relatively low housing costs I'd be living like a king! According to NerdWallet's COL calculator I could pay off my house after a year with just my salary increase.

Edit: And if I moved to the bay area I would absolutely expect a COL increase

In the big picture, wages are set by how much it would cost to replace you with an equally-qualified worker.

In a location-agnostic situation, this would mean "how much it would cost to replace you with an equally qualified worker anywhere in the United States?" (Or world, really, but let's stick to US for now)

What Facebook is probably signaling with this location-based cut is that this is the direction they are headed. They can't afford to immediately cut their Bay Area workers' salaries to this US-average-number (because they would lose their current workers faster than they can replace them) but they are not going to give preference in the future to Bay Area workers and will not pay new Bay Area workers higher salaries unless their physical presence in the Bay Area is explicitly needed.

I always see comments like this from individual contributors. I'll give you the managers perspective.

You may be worth $150k, any one individual engineer could be worth multiples of that!

Look at your entire engineering team, from best to worst. Is not there some inflation of salaries in the SF Bay area? The bootcamper that is making $110k out of bootcamp? Are they really 73% as effective as you?

The marketing person down the hall? Do you contribute more then that person today? Yeah, probably. Without marketing to get the word out and sales to actually bring in the cash, how much would your contribution be worth?

You have to look at the whole system as a manager. And yes we pay the bootcamper $110k because we hope they'll grow into be a great engineer like you.

You’re acting like the company is assigning value to people and paying them accordingly. That’s not how it works.

Pay is determined by the labor market.

Substitute wizzle for “senior engineer”, and wozzle for “bootcampers” or “marketing”.

Facebook pays $150k for wizzles because that’s what it costs to get good ones. It pays $110k for wozzles because that’s what it costs to get good ones.

People (reasonably) want a specific combination of wizzles and wozzles, for growth, different roles, etc.

At no point does Facebook assign a price for wizzles based on their expected individual contribution. Maybe there are some “market makers” in some industries, but I don’t think it applies in tech.

Well said, totally agree with the way you phrased it.

> I always see comments like this from individual contributors.

Tangent, but did I miss some trend here? Over the recent months, I've started to see the phrase "individual contributor" being used pejoratively, at times almost like a swear word. Is it now a label that's assigned to bad employees or something?

As an IC, I didn't read it that way. It seemed like a pretty clear case of "you are presenting an IC's perspective, allow me to present a manager's perspective". Two views of the same issue. It didn't seem to assign more value to one than the other.

That has absolutely nothing to do with what he said which is in no way linked to its status as an individual contributor.

The real point is it's not about what you are "worth" but about your market value. If you are away from Silicone Valley where you could find a similarly paid job, your options are more limited. That's a loss of bargaining power and Facebook thinks they can get away with paying you less.

I'm disappointed that all the replies to this sentiment are "lol, it's supply and demand". I mean, maybe that's it but it's not a very useful thing to think about.

As someone who's run two remote companies now, I have struggled with this dilemma as an employer. Because I agree with you, if a person is worth $x to the company, their location doesn't change that.

The flip side, though, is that I also want people to be on relatively equal footing. Not everyone can move to optimize their relative adjusted income, and the problem with a salary number is that it doesn't reflect status. An entry level SF salary will get you a house + a lake house in Oklahoma. A person who owns a vacation home is living an entirely different life than someone with a roommate in Oakland.

If you _don't_ adjust salaries for cost of living it makes that even worse, because suddenly you're probably paying less than someone in SF or NYC needs, more than what most people need in other states, and paying a crazy high localized salary to someone in Vietnam.

All that said, we're doing the same salaries regardless of location. And I'm still not sure that's the right choice.

"Not everyone can move to optimize their relative adjusted income"--

Yes and not everyone can get married, and have a partner to share the load with either. So does that mean a bachelor and a married man should be paid different salaries?

Not everyone can find the time to run a side business. So should those who can be penalized?

You pay your employees what they are worth to the company and forget entirely about what they are and are not capable of doing outside of the company because it's really none of your business. If that means you can't find employees because you aren't willing to value an employee correctly than your company will fail, end of story.

Single and married folks with families get paid differently. We pay ~3-4x more for healthcare for people with families than individuals.

You've sort of dismissed my point, though. The dilemma is that salary choices create friction within companies. It's not as simple as "pay what it takes to get someone" and "it's none of your business" because it does, in fact, have repercussions on how well a company works.

> Single and married folks with families get paid differently. We pay ~3-4x more for healthcare for people with families than individuals.

They get paid differently, or they cost their employer differently?

What's the difference?

“Gets paid more” means single employee makes $100k, employee with a family makes $150k.

“Costs the company more” means they are both paid a salary of $100k, but the healthcare insurance for the employer with a family costs $50k extra.

It costs the company more. It also provides value benefit to an employee with a family. I'm not sure that distinction really changes anything. :)

An important distinction.

Without getting into what's right or fair, the reality is that it supply & demand that defines price setting behavior (in this instance, the company is optimizing for its consumer surplus)

Maybe another way to think about it is when some innovation drove the price of a car down by 10% (because production costs are lower, the car maker makes the same profit). Would you say "Hey I was happy paying the car full price for the value it provided me, so let me pay its old, full price, I'd be happy to do that"?

Of course, programmers in Oklahoma are not idiots either..

They know that not only does the company have a wider choice of employees - the employee has a wider choice of employers.

They also know SV companies pay more then $90K, and if they already have a decent gig they will not 'settle' for what they could get at a small company. They may not ask for the full $150K - but they are going to ask for say $120-125k. End result is salaries will start to homogenize around the country.

P.S. We've seen this in AZ as more tech comes in, salaries have been getting closer and closer to SF.

AZ salaries, when factoring in COL, are more than most tech jobs in California. This is leaving the allure of non-valued startup options but on average the salaries I’ve seen (yes, n=1) are in the realm of the upper curve of Bay Area salaries .

Do you have some reliable data you can share on AZ salaries?

Glassdoor is obviously not reliable.

I actually haven't looked for a job locally in 3-4 years. I'm currently working remotely for a SV company.

I did do a few interviews with AWS for a TAM/Engineering type role earlier this year. They had no quibbles with $175K. I actually lost interest when I found out it was a 25% on-premise role at client facilities. If I had known everyone would be working remotely now, it might have been different.

Based on Levels.fyi data for salary by level, how much would the level for that role have paid in the Bay Area?

yeah - I honestly think phoenix metro is a great place to live. Salaries are good, CoL is still fairly low (though its gone up quite a bit in the last 10 years), and there seem to be more opportunities all the time.

TMSC dumping $12B into the phoenix economy over the next 9 years would only make things sweeter...

Are you in AZ? Can you share some first hand numbers on salaries by level there over the years?

> You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value.

You are in for some surprises then. Companies don't pay you just in relation to the value you deliver. Most companies pay the least amount required to get the value you deliver. Now if you are competing against engineers who are willing to accept lower salary due to low CoL in another area, the company would offer less.

Offcourse, that is not how things should be.

> if you are competing against engineers who are willing to accept lower salary due to low CoL in another area, the company would offer less. Of course, that is not how things should be.

Why shouldn't it be? The market uses prices to signal things you should and shouldn't do. This particular price signal is saying, "move away!" If you don't have another, stronger signal that overrides it, it is not an efficient use of resources, and society suffers a dead-weight loss.

Why should all the software engineers all have to cram into Silicon Valley, pay California income taxes, and bid up the prices on a housing supply which remains wholly inadequate for the region? If tech stopped paying the California premium, the companies would see higher profit, their customers would see lower prices, their engineers more disposable income.

I would love for programming jobs to be available in every major city in the nation. Sure, the Mission is pretty cool, but there's hundreds of other cities in the US that have some pretty cool stuff too.

That is how thing should be.

Let say I shop for a gadget. I pay for that gadget not because the value it deliver but the least amount required to get the value it deliver.

Sure, if you think human beings should be treated like disposable gadgets.

Well, if your labour is not, in fact, fungible it won't behave on the market as if it is fungible. You'll see this often for people paid a lot doing a single role for 30 years. Given the probability of a good replacement hire, they can't actually be replaced. Given their unique knowledge of that company, they're worth 50% to another. You'll also see this at startups where people will move from place to place keeping their income. But the median Facebook engineer's labour is fungible. It doesn't really matter which engineer is there so long as there is an engineer there.

And human beings are not being treated as disposable gadgets. Their labour is behaving like any other good in the market. There are some specifics but for the most part it is true.

There's no should to this. It's merely observational truth.

I think it is a mistake to conflate the intrinsic value of a human with their point-in-time value as labor in a business relationship. They are very different things.

In a business relationship both parties need to find a price point that is mutually satisfying. If there is no agreement that doesn't mean that either party is treating the other like "disposable gadgets".

And the system is not static, value from both parties perspective changes over time, which means the mutually satisfactory price point can also change or even evaporate.

Is the price of a disposable gadget not based not the price of the labor that went into it? They're both subject to the same forces.

This is the difference between being an owner and an employee.

As an owner, your work is valued by the income it brings to the business. As an employee, your work is valued by the amount it cost to replace you with another qualified worker.

What's the insight here? Since customers pay the business (read the owners) the least amount it costs them to replace the company with another qualified business.

If you do work as an owner, your work is valued by the market value of the result of your work.

If you do work as an employee, the only thing that matters is the market value of your labor, regardless of the result. It doesn't matter how much business value you add.

How can it be otherwise when it "should be"? I get that it is vexxing to the workers in the high COL area but why would it be done otherwise? How could it even work otherwise within the constraints. The only reason to pay more for higher COL jobs is if they get more utility.

You pay the extra cost to hire people in an expensive market (e.g. a high CoL locale) because you want a part of the talent pool. Now, is the talent pool in SF uniquely amazing, full of 10x developers compared to the 0.5x developers everywhere else in the world? Or is SF simply such a large talent pool that it's hard to staff your business without an office in SF? I'll let you decide.

I kind of understand where you’re coming from and as an employee I agree... but on the other hand when you relocate from TUL to SFO you expect a COLA, right? Why would COLA only apply one way?

If the company honestly didn't care where you lived and you took it upon yourself to move to SF, you wouldn't get an adjustment.

But if the company needs you in SF, then they'll need to pay what it takes to hire someone in SF, regardless of where you lived before.

It's only a cost of living adjustment to you. To the company, it's what they have to pay to get an SF worker. It just happens to be higher than what you were making before.

You are appealing to a concept of justice. Zuckerberg sees it a different way: how little can he get away with paying? If he can make a profit paying you $150K, he can make even more paying you $90K. He'll take it if he can. Whether he can depends on whether you have competing offers. If the economy tanks, maybe you won't.

If all their employees work from home, that's going to tend to equalize the salary levels across regions, and the number they settle to likely isn't going to be the SF Bay Area number.

You're not being paid based on your value to the company. You're being paid based on the minimum they can pay you to get you to work there.

If you move to Tulsa, you're minimum goes down because they know there are fewer opportunities for you to work in Tulsa.

As remote work becomes more prominent, then your salary would probably go back up as there will be more jobs for you in Tulsa. But it probably won't go back up to SF levels because everyone else has that opportunity too.

employers pay their employees based on supply and demand, not based on value. the supply and demand is historically based on a geographic locale.

one could argue this is how you make your own purchasing decisions.

now, with remote workers, this becomes interesting and not as clear cut.

i'm not making a judgement on whether this is fair or not (that's a whole other topic), but rather just pointing out how the calculus is generally made today.

> Why? My value to the company hasn't changed! I am still worth the same amount as I was before!

Do we have stats about he difference of hours between remote and non remote employers? I thought the main goal to have those big tech campus is to have dev stay longer at work.

If you are remote you will work less and then your value decrease

Being remote means you always have access to work, thus often resulting in you working much more than you would in an onsite only role.

Wages aren't set based on a calculation like "how much is this person worth?" — that just sets the max salary. Companies want to pay their workers as little as possible; they can just get away with lower salaries in other markets than they can in San Francisco.

> You've made a calculation: my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value.

Part of that value calculus was that you are willing to relocate (or already reside in) the Bay Area. In other words, if the company offered only $90K and still required you to live in the Bay Area, you and most other qualified candidates would balk at the offer.

> The only thing that changed is where I choose to reside. What difference is that to the company?

Clearly the company is betting that if you walk away instead of accepting the pay cut, they will be able to find another qualified candidate among the now much larger talent pool they are able to court with remote work.

Salaries are mostly driven by how hard it is to find an employee, not the value they produce. If the model is to hire someone to be in the office, you obviously need to pay based on your location and local cost of living to be attractive. Completely logical to pay $300k in SF and $90k in Tulsa.

Now, if you really go all in with distributed workforce, the problem becomes "why pay $300k for the guy in SF while I can hire the 'same' guy in Tulsa for $90k?"

Instead of the guy in Tulsa being upset that they're not being paid as much as their buddy in SF, it's the one in SF who should wonder if they'll be able to keep their salary at $300k for long.

> my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value

Now change the second "is" in that sentence, to "was".

Offer and demand are (largely) what determine your salary. The value you create is what sets a ceiling to that price.

It's that simple. FB becomes willing to hire people who live anywhere, and stops believing that candidates in SF or other expensive locations provide more value. They will have a way larger pool of candidates, and they will likely find people who provide just as much value for FB (sorry to burst any bubbles here) but are willing to do so for less money than currently happens.

This just shows that companies are on the look to exploit their workers as much as possible, i.e., to make them work for the lowest salary possible for that particular job. It really bothers them that you may take home more money than they can possibly get away with paying you.

I think that some people in SF aren't probably worth SF salary. They are viable due to people used to working in co-located env and to having some superior peers. Also laws require equal pays for similar position in many countries.

Opening remote might make market more competitive. Speaking for myself, living outside US: I am able only to command 1/3 of SF salary(top in my market) although I could easily replace many people working in FB, earning much more than I do. Only if they were hiring in my city. (Pretty sure as had offers from Amazon, Gooogle etc. but they would require moving or local projects weren't interesting).

That's one way to give the middle finger to your employees, lower morale, and have them underperform. Businesses do stupid things like this all the time, against their own interests just to save a little money. Another example is not giving even inflation adjustment raises. The employees will respond accordingly and lower performance, work less, try less. Not enough to get penalized, just enough to stay in the boundaries. Or they'll leave. It's especially stupid to do this to remote employees for obvious reasons.

Employment is a market, similar to many others. As long as there are a significant number of companies that want you to show up in an office, choosing to live in an area with fewer employers puts you in a different cohort with a lower market-clearing price.

Also, the value you deliver to your employer will change whenever there’s a substantial shift in your working relationship. To the extent that your job requires collaboration, working in the same timezone as your peers has obvious benefits, for example.

Maybe presence in the office, to teach others in the office, is (supposedly) work $60k in the example above? (Seems silly to me, but that's what the management could claim.)

> But now if I decide to move to Tulsa, OK, you want to cut my pay and reduce it to 90K, because of "cost of living".

See if it makes more sense going the other direction. Imagine you started in Tulsa making $90K. After a few years facebook wants you to move to SF. Would you still be happy with $90K in SF since that's what your worth to facebook? Of course not, you'd want cost of living adjustments.

I think the 150k is “the value you bring to the company” adjusted to “the location the company forces you to be at”.

If they demanded you to be in SF, one can guess a part of your comp was to adjust for crazy costs of living there. If you move away, that is adjusted.

Having been an expat, there are purchasing parity tables that are used in these relocations.

Imagine you were hired on Tulsa money and then forced to move to SF on the same amount...

They can’t pay you less than your worth as a remote engineer. I’ve contemplated moving back to the valley but keep getting offered nearly as much money to work remotely from Arizona. If Facebook wanted me to work for less the answer is .. no.

On the other hand if I worked for Facebook I would strongly consider taking a payout if it meant I didn’t have to work in their open floor plan from hell environment.

Compensation can be structured with both fixed and variable components.

The fixed portion covers basic needs: Shelter, food, transportation, healthcare, etc...

The variable portion is typically performance based. Usually RSUs or stock. Could also be a cash bonus.

Moving to OK will reduce basic needs and fixed comp, but variable comp could remain unchanged.

More employees living in OK could mean more profit, hence more cash bonus.

> one-sided in favor of the businesses

Remember how Adobe, Apple, Google, Intel, Intuit, Pixar, Lucasfilm, and eBay colluded to suppress wages of Software Engineers?


Remember how Facebook (the subject of this thread) chose not to?

FB was at least a few years away from growing into a Public company when all this went down.

> I am still worth the same amount as I was before!

True, unless the company thinks you're more valuable by having you on-site.

> my value to the company is greater than $150K, and $150K is a price you're willing to pay to leverage that value.

It's more about competition than value you're providing. In SF, you'll find another 6 figures very easily not so much in the middle of nowhere.

Actually no one can precisely predict how much an employee is going to net for the company - companies lose a lot of money in bad hires. You are being payed according to a scale that works out to keeps costs down, as much as possible for a specific cost center.

Your value to the company is relative to the job market you are competing in.

You might be worth 90k in the SF market, but in a global market, competing against cheap labor and other regional bureaucratic regulations, your value will be less.

> "you get paid differently depending on where you live"

If I'm relocating to SF from middle of nowhere where I got paid 80k, without a cost of adjustment increas I can't afford SF.

"Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks..."

The rent you pay into the SF housing (renter) market is half your value.

You pay the Administration that owns that real estate a large portion of your salary.

> has always struck me as bizarre and one-sided in favor of the businesses

Companies exist to extract the highest amount of profit from their employees.

Someone probably used the argument that "you can reduce costs due to salaries" when pitching this to Zuck. They should have cited the rental savings instead.

> Likewise, Twitter and Facebook will be competing against each other in the lower COL areas like Oklahoma!

The market should recover when this new reality matures. Lots of engineers are currently willing to relocate and the current market is still incredibly competitive. Good talent is hard to find and easy to lose. That will not change.

Its also meaningless for stay-at-home employees. How exactly does the distance to your house, affect your pay? Why?

These companies already have CoL adjustments based on whether you live in the Bay area, Boston or Austin.

And the dev in Eastern Europe is wondering why is the dev in San Francisco getting 10x as them.

The dev in Eastern Europe may do well to be reminded that the dev in SF is losing almost all of that on costs of living, and may actually be worse off in terms of disposable income (relative to its purchasing power in the area).

That might be true for someone that spends most of their income, but if you're attempting to save (to FIRE or something else), you'd be much better off in SF, since your post COL-adjusted take home is still significantly better.

10 years of working in SF and saving frugally, and you can go to the aforementioned places in Eastern Europe to retire for life. The engineer in Eastern Europe cannot do the same.

90k for an Oklahoman is a bit overpriced if you ask me ;-)

The $150K is so you can have certain lifestyle there but not save enough to leave and become competition, it's the cost of labor reproduction. In Tulsa your cost of reproduction would be lower, paying you too much might allow you to leave the shackles of capitalism.

thats not how the free market works. im not sure where people got the strange concept they are paid what they are worth to the company. or that they are paid based on how hard they work.

its literally just supply and demand like everything else.

People should be warned that working remotely has been career suicide for as long as I've been in tech.

Being "out of sight, out of mind" from management generally means you're passed over for promotions, and often the first to get cut during layoffs.

It's just human nature. It's easier to layoff the person that's been working from across the country (or another country) than it is to layoff the person at the desk next to you that you've worked beside for years.

It is only suicide for in-company promotion tracks.

It has no effect on your career if you learn to not depend on in-company tracks for your success.

That's not just a matter of learning. The kinds of things you can achieve are different. If you want to become a director of some big engineering organization one day, you'll need to build up your position within the companies you work and not just your personal brand.

WFH only works in theory when the economy is booming. In a recession WFH employees are going to the be first ones on the chopping block.

"I work for Silicon Valley Inc, NameOfCompany division"

Having worked remotely for decades, and survived a few layoffs, I beg to differ.

If your job security rests on the boss seeing your face, many currently unemployed people will tell you, its not very secure.

I agree with you. Anyone working in a big enough company should already know the difference between being at HQ where you are near senior leadership, and being anywhere else.

I think small team and good manager/team lead will mitigate this.

Disagree that what you wrote constitutes "career suicide".

- Being targeted for layoffs says more about the company you work for and less about your own career.

- Passed over for promotions is again saying a lot about the company, and many folks who work in offices still have to change jobs to get career advancement.

I, for one, believe that cultivating remote work competencies that hedge against either of those things is a valuable career skill. It means you can't schmooze your way in person through career growth, you have to do it by demonstrating real value to companies that will value you fairly.

i think therse a good subset of people who dont really care that much about their careers. atleast from my experience working at fang. they just like the high pay and WLB and dont seem to care about being promoted or advancement.

> good subset of people who dont really care that much about their careers

Caring too much is a bad bargain. The companies don't care too much about you and me

I think OP is talking about people caring about their own careers (i.e. growth, promotions etc).

Again, not everyone wants to progress all the way to the top in their careers. The higher you go, the more your job changes into helping people help people help people do the actual work, which isn't all that appealing if you chosen a particular career because of the lower-level work being done.

It's like in Star Trek, with this common advice to given to captains on the show by their friends/colleagues: never let yourself be promoted to admiral, because you'll be taken off the starship and put behind a desk to push paperwork, and that is just boring.

"never let yourself be promoted to admiral"

This makes me think of Eisenhower, who I only found out recently apparently never saw combat, yet pretty much went to the top in his career and then became President.

Whether paperwork is boring or meaningless is a subjective value judgment. What if it's the paperwork for planning D-Day?


The paperwork isn't necessarily meaningless. But for someone who feels best being "out there", where interesting things happen, being dragged back all the way to HQ to forever watch the things they loved from the distance - that's soul-breaking.

Working fully remote also means your hunt for your next job is really difficult. One of the upsides of working in a tech hub isn't just the job you have, but the next job you can find.

Often times a single person in a group working remote can cause problems. It's only when the entire team is remote at the same time, either entirely or partially on the same days, does remote stop becoming a concern in the ways you mention.

Teams tend to do better when they're sharing remote or sharing coming in. Teams tend to do the best (ymmv) when they're full remote but are local, so they can come in as much as they want to meetup when it is beneficial to do so.

Truth. Funny that so many people are disagreeing with this.

I’ve worked at many companies with remote employees as well as being remote myself, as well as companies that were fully remote.

Unless everyone is remote , and there is no office then it is career suicide.

You will forever be the “remote guy”. You won’t be involved in discussions involving direction of the company, product, etc because those happen in person - let alone considered for any kind of promotion.

Counterpoint, it allowed me to be more productive and invest time into learning and career growth that otherwise wouldn't been spent in meetings or commuting.

Except the case when you are considerably cheaper than the people working at the desk next to your boss.

I think it's actually the opposite and I'd be wary of moving remote full time quickly at the moment. The face time with your boss while the rest of the team is remote would be hugely beneficial to your career.

Again, as I stated above...I've had the totally opposite experience. I've been promoted and survived layoffs multiple times while working 100% remote.

I understand and certainly see where that could be the case, especially for steady-state companies. All I'm saying here is that in the context of the current situation, where you have companies transitioning from non-remote to remote, it's likely in your best interest to wait a bit while the company has to deal with how to evaluate/train/communicate with a mostly remote workforce. In the worst case you have to deal with the office for another year or so with no change. In the best case, you are better positioned for a promotion/raise. Either way, you will learn how others are managing remote work throughout the year.

I'm on the long-term-remote path, but I want to see how this plays the rest of the year before making the jump.

Nothing wrong with being cautious...

While you're waiting, you might start planning _how_ you will work from home. A good home setup can make all the difference, and can involve expenses like good office chairs, desk, computer, upgraded internet service, etc.

Might be a good time to look around the house what you need, where you're gonna put it, etc.

Even if this were true in the past, this would certainly be changed with the more level playing field of more and more people working remotely.

I'm __guessing__ that Facebook will have fully remote teams and orgs where this is less of a problem and will have ample opportunities to come to HQ. They fucking send their interns to other offices multiple times during an internship!

This shouldn't come as a surprise to anyone who knows the general compensation strategy for all the major tech companies.

They don't pay based either on value added or cost of living (which is why compensation is higher in the Bay Area compared to London).

They pay based on market rate where the target is something like 95th-percentile based on market surveys they do. Presumably this hits some sweet spot in acceptance rate vs cost. Employee compensation is a big ticket item for these companies on the balance sheet so they're highly incentivized to put a lot of thought into their setups.

Additionally if we truly go fully remote salaries will almost certainly go down just looking at the supply change alone. Previously these companies only hired

* A) People who met the hiring bar

* B) People who were willing to relocate to one of office location

If you remove B you've massively increased the available talent pool.

> If you remove B you've massively increased the available talent pool.

i'm not convinced this is the case. maybe by a bit...but massively? if you look at all of the places that all of the top paying FAANG companies are located--lets keep it within the US for simplicity's sake--you've got basically all of the major cities with the top talent. I'm not really picturing THAT many brilliant developers that fall under the bucket of: a) really smart and able to pass FAANG interviews b) not willing to relocate if they did get a huge offer

sure there are plenty of outliers, but my gut feeling tells me that MOST of the talent that really cares enough and wants to be at FAANG are already living in most of the tech hubs currently. i dont think the surge of competent applications will be that meaningful statistically speaking.

not sure if i communicated myself clearly here, sort of rambled.

I suspect you are right and most of the top talent is in major cities but even then most faang jobs are in the bay area. Anecdotally (and with all the caveats that go with that) I wanted to work for a faang but turned them down several times until an opportunity came up in DC. I have other friends in cities like NYC and Chicago in the same boat. They dont want to leave their current city and even if there is a faang presence it may be small (chicago) or their area of focus doesnt match with the teams in their local faang office (nyc)

>I'm not really picturing THAT many brilliant developers that fall under the bucket of: a) really smart and able to pass FAANG interviews b) not willing to relocate if they did get a huge offer

What about anyone that wants to own a home before they are 40? Even on FAANG salaries its very difficult to buy when millionaires are snatching up fixer uppers for $1M+ all cash.

Every person I work with is under 40 and everyone that wants to own a home, does. SF and NYC are not the only tech hubs in the US.

>SF and NYC are not the only tech hubs in the US.

Also confused. I agree with your point. My comment was responding to a person who couldn't imagine people who wouldn't move to SFBay for a FAANG level salary/job.

You can just move to any of the other big cities that have big offices. It is easier to get a job in SF, but if you are good enough you will have no problem getting a job there.

I don't understand. I agree. What is your point? We're talking about why people may not be interested in moving to the Bay Area...

I'm confused - are you saying you work with people under 40 within SF and/or NYC and they all own homes? I'm pretty surprised...

Even local remote work could get a larger talent pool. Say you live in the outer sunset, or marin, or something. Getting down to facebook's headquarters could be a massively long commute. Hell, imagine commuting from SF to apple HQ. Allowing remote work lets people in one part of the bay area work in the whole bay area. There's a ton of talent in the bay area that's soul-suckingly far from these companies offices.

Except now, employees have a much wider range of companies to work for.

And there is still a shortage of tech. workers...

I foresee tech salaries meeting in the middle

We're a remote-first company and went through this same discussion when we began hiring people in different cities, not just in the USA but all around the world. What we found is that any approach to setting salaries has to balance the following factors:

* Pay people enough to live comfortably

* Pay people enough that they accept our offer vs competition

* Pay people in a way that feels fair

* Pay people in a way that is transparent

* Pay people in a way the company can afford it

* Pay people in a way that there isn't a risk of huge fluctuations (e.g. currency fluctuations)

Without a doubt the best solution is to pay every employee as if they live in San Francisco, what we call "single-city." That gives high marks on every dimension above...except that it's extremely expensive for the company. Basecamp.com can afford this but I doubt most companies can.

We ultimately went with a formula where we look up the average salary for your title in NYC (the USA's most expensive city), multiply it by some multiplier (to make sure we pay systematically above market), and discount it by the cost of living in your city compared the cost of living in NYC.

When we can afford it, we'll move to a single-city model based on San Francisco.

I run a remote-first company and follow a single-city model. But that city isn't SF.

I don't really know what city it is, but we pay people with the same experience doing the same work the same pay regardless of where they live.

I understand that this means that I probably can't afford someone in SF, but I also know that there is no way I was poaching from FAANG anyway, and there is plenty of good talent not in SF.

So I get high marks on all the criteria, as long as they don't live in an expensive city. It's a tradeoff I'm willing to make.

As we get more successful, I can move everyone up to match the more expensive cities.

How do you do the cost of living adjustment? I've used a few just for fun before and have gotten wildly different results for NYC vs Chicago (+21%, +51%, +75%) from the first few listed on Google.

Take the median? Look in more detail how they calculate the values and pick the one that makes the most sense?

the problem with cost of living averages is that they don't take into account different living standards.

cost of living is largely driven by cost of property and rent. places with lower living standards are much cheaper than others. even within the same city. if the majority of people in a city accept those lower standards then the average goes down. But if you want to have the same nice apartment that that your colleagues in more expensive cities afford then your cost goes up.

this is especially noticeable in large asian cities where the majority of people live in cheaper housing than what a european standard would consider acceptable.

for example the salaries gitlab offers for china make it hard for any expat to work for them because they don't take this into account:


(i am picking out gitlab because they have this nice calculators that makes their pay very transparent)

I've been mostly reading the WFH debates here on HN and this seems to have come as a shock to many advocates. You know, companies already had offices in different places you could already move out of SF to elsewhere and this was part of the deal. This isn't anything new, there was never the option of taking your Bay Area salary and living it up in Laos.

It was an option to live wherever in the United States though. Every place I've worked remotely based in SV/SF has paid accordingly despite me and the other engineers not living there. Startups & BigCos alike.

The more interesting question is not whether that was your experience but what the aggregate data might say about that.

It seems to me that companies that don't make that adjustment are spending a lot more on labor than they need to, but it may be that for certain types of businesses that it just doesn't make a difference in the overall financial picture.

There are very few businesses/industries that have a revenue/employee (or profit/employee) ratio like high-tech companies. And so fine-tuning employee compensation geographically may just be lost in the noise of their operations.

I doubt that practice is consistent across other business types though and it also suggests that employees at these businesses should be asking for even higher compensation!

You were getting $400k+/yr living in BFE? I'm surprised. How did you manage that? I've never really seen that happen with companies I've interacted with but I've heard of things like it here and there...

Many comments have pointed out that pay is determined by the cost of replacement.

For employees at an office in SF (or Seattle or NYC or London or anywhere else), the relevant cost is how much they have to pay to get someone else in that same city. Hence, for non-remote workers the pay has to be high in high cost of living places.

Many people seem to think that when the same principle is applied to remote work, that means the pay should depend on the cost of living where that particular remote worker lives.

Is that actually the correct application of that?

If a remote worker in, say, Tulsa, OK quits and the company wants to replace them with another remote worker there is no reason they need the replacement to be in Tulsa, OK. It should be fine from the company's point of view if the replacement lives in Boise, ID (which has a lower COL than Tulsa), or Salt Lake City, UT (about the same COL as Tulsa), or Spokane, WA (higher COL than Tulsa).

So why should they offer more for workers that happen to live in Spokane, about the same for those in Salt Lake City, and less for those in Boise?

It seems to me to make the most sense from the company point of view to consider all remote workers to be essentially in the same location, and how much they pay should be what it takes to attract the number of qualified remote workers that they want to hire.

Cue to the horde of new startups that will be 100% remote and eat Zuckerberg's lunch. Remote will be the new open space, with all the buzz words, feel good stories and even the blind eye towards its obvious defects.

Seriously, everything is documented, you can grow without worrying about floor space, you get access to a larger pool of talent, you are probably imagining more.

Current managers may not like it, but hey it is okay to be old, leave it to the young to innovate.

They dont have to buy $30 a day worth of food/snacks. No foosball table maintenance costs. Air conditioning/heat on and on it goes.

Working remote for less money is probably a fools game once you consider the cost of your home office and lost perks.

Companies know this and are playing it smart by saying it's a benefit and therefore should pay _less_

This is no surprise, I commented earlier on this with another company but figured I can re-use it here:

Both me and my Wife's company have pay bands based on geographical region(most employees know nothing about this and most companies employ these salary COL changes for relocation) and certain regions you can take a big pay cut. Say your salary in the bay area is 100k for example, move to the South, say Florida and it typically drops 30%(typically as low as they chop your salary) so your new salary is 70k, Denver area is 15% paycut etc. These numbers change somewhat from company to company but they do exist for most companies and should be factored in.

Facebook and Palantir both used to pay people up to $10k/year to live within a mile or so of the office, since the cost of living in SF & Palo Alto & Menlo Park was so much higher than the rest of SFbay. I don't know if they still offer that perk, but I can attest that the increased costs of rent within a mile of those offices would, at that time, burn up that entire $10k and then some, relative to the rest of SFbay.

Are they right to do this, given that it's probably a contributing factor to increased rents? Probably not. But I bet it was negotiated with the cities to try and reduce emissions and parking requirements, too.

This perk at fb was halted in 2008 precisely for the reason you mention above - it raised all the rents suitable for employees at the time within that perimeter by $1000/mo.

(Source: I worked for fb)

Henry George had something to say about this!

Similarly, I always hear people talking about how tech companies should pay their contractors higher wages to account for the cost of living in the Bay Area. But given that the largest expense there is rent, that has the same problem: if there are more people looking for housing is greater than the number of available units, all you've done is changed who gets housing, and number of people with housing remains the same.

In other words you can work remotely but stay close to home base? Imagine how a Facebook developer could live in a place like Detroit or New Orleans?

Have you seen the house you can buy for under a $1 million in Detroit!


the unit tests I could write from home there... oh my god.

Solve for the equilibrium. Market salaries at the top hubs will eventually go down, and salaries outside them will rise.

Always two sides to the same story. As a software engineer, of course I think I should make the same regardless of I'm on-site or remote. As a founder, of course I'm not going to pay someone who works on-site vs. remote the same. It's a never ending debate.

> As a software engineer, of course I think I should make the same regardless of I'm on-site or remote.

Yup, this is super tricky.

Even if the company pays me the same, I don't make the same whether I live in SF BA vs in Denver (13% income tax in CA vs 5% in CO). Additionally, I don't need to make the same whether I live in SF or in Denver. I would spend 5% less purely because a similar house in a similar suburb with similar schools costs 25% less to rent in Denver than in SF Bay Area. In other words, with no discernible drop in quality of life, I could make 10-15% less than in SF BA and live a similar life in Denver.

This isn't even considering quality of life improvements (which are subjective) or the cost of buying (which is also more subjective but also has to factor in risk, appreciation etc)

> I'm not going to pay someone who works on-site vs. remote the same.

Sound like you'll be bringing lower quality remote engineers into a lower quality remote environment. Don't be surprised when that strategy blows up.

I am actually not a founder of any sort. I just mean if I put myself in the shoes of a founder. But true story, I am working at a successful startup that started from a Wordpress blog with a bunch of remote workers from Prague.

Funny how no one was complaining when they got a 50 to 200% raise by moving there. It just makes sense - why would you pay more than necessary?

I have a job in a tech center and I make a great salary because of competition for my services, in NY or Seattle or SF or where ever. Right now I'm working from home entirely. If I'm in Seattle and I work from my cabin 100 miles from Seattle, no one will know assuming I have internet. Taxes are the same too afaik (no local or state taxes). Presumably this is okay with everyone.

How much working away from my supposed seattle job (that doesn't even exist right now) do I get before I am not working in Seattle?

Suppose I saved so much money from my seattle job that I bought a weekend condo in another state, in Oregon. If I go there many weekends, I think I can still keep my seattle lifestyle (there's some matter for the oregon tax court to decide I guess). But am I still "working in Seattle"? Now suppose I go from my cabin near Seattle to a cabin on the other side of Washington state. Or I go spend 40% of my time in my Idaho cabin (boy, I have a lot of cabins, they are so cheap with my Seattle salary ;-)). When do I stop being a Seattle employee and become a whatever employee?

If I have 3 houses in states with the same "no income tax" like in Seattle can I live 51% in Seattle and split time in the other places and still be a seattle employee? Obviously I'm trying to point out the arbitrariness of these policies.

I've been getting paid SV salary to work remotely for SF/SV companies for a while now. This is just companies treating engineers as a cost center - showing true colors.

I mean, it's not something that isn't expected. I also think it's fair in a way.

I'm curious to see how many engineers will be interested. For example there is a company, quite famous, already known for the remote working that wanted to make me an offer, but it implied me opening a company in my country so that they can pay me because it was to complicated to have me directly in the payroll.

What I mean is that the law is still not prepared to support this worldwide.

This feels like a "welp we need to cut some pay, let's see who takes the bait".

Cost of living should not dictate your value to the company. If you're an engineer supporting x number of users worth y dollars, it literally does not change what you bring to the table whether you do the job in SF or Birmingham.

Yes, they could hire cheaper in Birmingham, but they can't hire _you_. If you have a proven track record of doing incredible work, then you should be paid accordingly. What you pay in rent/mortgage/etc is none of the company's business.

I would argue that if you're a SWE and you go along with this, you're complicit in the wage fixing that this industry has had to grapple with for ages now. Demand to be paid what you're worth or walk.

(And yes, I get that some people can't afford to be choosy. Those of us who can, should be, though.)

> Yes, they could hire cheaper in Birmingham, but they can't hire _you_.

Unless you move to Birmingham. Now they can hire you. And if you want to live there then you'll probably take the offer because it will still be better than the local options in Birmingham.

Employee pay has always been about "what does it take to get them to work here" and not value to the company.

If there is something in Birmingham that you value, then you'll be willing to take a pay cut to be there.

_Some_ people will do that, like the aforementioned "can't be choosy" cohort I noted in my original comment.

For all the talk about abundance of engineering talent, talk to anyone who's actively had to hire in the past six months and it's a complete slog of unqualified candidates. I would find it hard to believe that engineering talent (_especially_ at FAANG level) is in a market position that doesn't afford them negotiation power. One or two people doing this is certainly nothing, but if enough do it, then it makes a potential difference.

I'll be very curious to see how FBs staff handles this come Jan 1. Probably disappointed, I'm aware... but curious nonetheless.

> talk to anyone who's actively had to hire in the past six months and it's a complete slog of unqualified candidates.

That's always been the case. When I did interviews at Netflix, people who had resumes that said "Senior Engineer" for five years couldn't do fizzbuzz in their favorite language.

Yes, if enough really talented people all get together and demand higher wages, they might stay high. And some stellar performers will demand high wages regardless of where they are.

But the truth of it is that most people are not stellar performers. They're good engineers who can get work done. And they will demand median salaries.

Median salaries will probably shift towards an equilibrium below SF salaries and above {pick your favorite small town in middle America}.

> Cost of living should not dictate your value to the company.

Your "value" to the company depends a lot on your compensation and your compensation depends on the marketplace for other developers with similar skills.

I struggle to see the mental leap many are making here.

Are you stating that cost of living impacts your skill level? In some cases that may be true but I think for what most are discussing here the causation would be the other way.

Growing up in a poor area may effect your skill level but moving as an adult from a high COL to low COL area should have minimal impact.

To me it makes more sense that each developer would command the salary that corresponds to their skills, and then adjust their COL in order to be comfortable.

> Are you stating that cost of living impacts your skill level?

Not at all. If all things are equal except the cost of living difference then a company can get X units of value at a discount by hiring the person with the lower cost of living at a lower salary. The discount is equal to the cost-of-living difference.

Of course in the real world things are rarely "equal" except for cost-of-living and so the effect is only going to be seen in the aggregate.

> company can get X units of value at a discount by hiring the person with the lower cost of living at a lower salary.

So the hiring process should favour low salaries rather than cost of living?

If that is the case then you can easily replace cost of living adjustments with candidate salary expectation.

"market rate" is a metric that incorporates candidate salary expectations and geographic cost of living adjustments as well as many other things such as tax considerations?

Your salary isn't based (at least directly) on your value to the company. It's based on how little they can get away to pay you for the service they want you to provide.

If you move somewhere with a lower cost of living, then chances are you're willing to accept a lower salary. If you truly provide some unique value you may have enough negotiating power to keep your salary, otherwise they'd look for a replacement.

https://news.ycombinator.com/item?id=23261394 in the other thread, there are a myriad of people thinking that there won't be.

Excitement about moving to Iowa while making 150,000 was very premature.

I will gladly take some amount of a pay cut to move out of the Bay Area, but obviously it's very dependent on how much that is. 15% less to live in Lake Tahoe? Yea, I'd probably do that. 50% to live in Seattle? Obviously not.

An interesting thing about Facebook comp thus far has been that their pay bands for engineering were the same across the United States assuming wherever they had an office (unlike other large companies like Microsoft and Amazon). For reference check out https://www.levels.fyi/company/Facebook/salaries/Software-En.... Pay cuts would come as a pretty hefty change to those who have already moved or relocated.

At the same time, this is now an employers market. With remote work taking stride, pay cuts feel inevitable – why would companies pay top dollar for talent they have broader access to and who are willing to accept less. We'll have to wait and see how new offers start looking come August.

That won't change if you're an employee working in an office with a local team.

Remote only roles will be billed differently.

The thing about remote work is.. it could become a global marketplace now for talent.

The big companies could get to off-shore again in a global remote-first re-jigging.

It will already take a while for companies to absorb the change of distributed organization in the US. Opening to the world brings yet another set of challenges: taxes, employment regulations in each country, timezone differences, cultural differences, etc.

I know FANG are really good at propaganda, but I don't see them going overnight from "good work can only be done with everyone in the office" to "well sure, one guy in SF, one in London, and a third in Sydney", no big deal, just jump on the zoom" without looking completely ridiculous.

I keep remembering how we'd just meet over video rather than shlep all the way to the other end of Google's Mountain View campus.

If the direction is to go full / mostly remote, I believe most companies will insist on ensure that working hours mostly overlap with US business hours. So I think the big winner here will mostly be tech workers based in South America.

At my previous job at a SF based ad-tech company, I was the lone SF based engineer. Boss was in Australia, rest of the engineering team was in South america.

All the justifications of "salaries are just supply and demand" are evil to me (not that I'm saying facebook's choice here is evil). Yes, they'll often pay you the least they can get away with. They'll also treat you as badly as they can get away with.

Treating people as badly as you can get away with is not good, even if it's a natural product of supply and demand.

I suspect that eventually we may see a realignment to "utility" based pay rates as opposed to location. The old rates of SV may wind up their own tier in Work From Home who can demand that rate successfully.

Of course that depends upon proper judgement and valuation of employees and prospective employees.

How do new hires get trained remotely, and will it be as effective? It's a problem I just thought about.

At my company, they fly you out to train with your boss/senior dev for a week-long intensive. After that, it's easier to get the rest of the knowledge transferred remotely. But I have no doubt you could train someone remotely if you put a little more planning into it (automate environment setup, good written documentation, good video chat software).

If this is a leading indicator that remote work is going to become mainstream, I am anxious at the prospect of new grads / junior engineers' ability to get their foot in the door.

The Administration owns the land and property. They need the high salaried employees to stick around town to pay the exorbitant rents.

I hope that helps tie things together for you.

Which administration?

Companies that sells Hardware sell it at the same everywhere despite the cost of living.

Why isn't this the same for employees? We need to call out this bullshit.

Many companies will have different pricing models in different countries.

See https://steamdb.info/sales/ as an interesting exercise in arbitrage

Interesting. Thought Facebook didn't screw over its own employees

seems they are getting inspired by Amazon

Just drop the salaries further and force them to move to the poorest areas of the country?

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