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Paying Remote Employees Fairly (blairreeves.me)
64 points by rmason 2 days ago | hide | past | web | favorite | 38 comments

I think that the article is missing a major point: cultural and soft skills !!!

In a ideal world, coding would be just using some fully specified langage to implement some fully specified specification or feature. However, in real world, a lot is left implicit and the programmer (not talking about more client or contractor facing position, like project manager) will fill the blanks with its own culture...

And that's the moment where living in India, Turkey or US will make a difference ! Not on specific coding skills but on a more general cultural appropriation

In fact, after a lot of offshoring, some companies brang back the jobs in the country because the friction were annihilating the cost gains

So I don't think that the worker pool will grow that much, internationally. However, the competition will grow more inside the different countries, between urban and countryside... and it will be a race to the bottom : why would any company pay 20, 30, 50% more for the same job ?

> In fact, after a lot of offshoring, some companies brang back the jobs in the country because the friction were annihilating the cost gains

That's because the offshore companies have engineers who are paid probably ~1/25th of the salary than the 'in shore' ones.

If the salary parity is 1:1 (or adjusted for cost of living), then there would not be any problems with 'off shoring'. The evidence is in the overseas R&D Centers of USA product companies that are already prospering in places like India, East-Europe, etc. These companies are in the league of Microsoft, Google, Amazon, Adobe, Intuit, Oracle,.. and then some from well funded valley startups. The 'culture' or 'soft skills' does not seem to be issue as these organizations are making global products.

And above is actually happening now with employees who are getting much less salary (because they are CoL adjusted) even though output and talent are at par. These employees are working out of these locations because of family reasons, or waiting for the right time to emigrate (kids, school, college etc.).

When the salary parity is at 1:1 in any location, for many (if not all) valley area or major USA metro area may not hold any more charm.

The interesting dynamics don't happen when you're outsourcing for the cheapest labor, just for cost savings

But when every job can be remote, suddenly, a company in the middle of nowhere can get access to great technical leaders.

One of the jobs of a great technical leader, is to make the work simpler for the rest of the team. And now the company returns on being able to hire lesser skilled employees becomes greater.

I'm sure there are other places to be affected by such changes and second-order effects, so i wonder: where will the opportunities lie in a remote-first world ?

> Where you live is, and has always been, a consumption choice.

What? Most people live near where they’re born. For people with family, friends, spouses with jobs and children with schools, moving is not a simple matter. Even setting aside social networks, most of us only have one passport and at max a couple languages. Where we live is NOT strictly a consumption issue. I dont think the argument against COLA is as black and white as the author says.

within one country, one as large as the USA in particular still has plenty of options to choose where you live.

but i agree with your point.

when people are moving, for many it's not a consumption choice, but a necessity in order to find work, because there is none where they are.

if they can, most people will choose to work from where they are.

and in fact remote working does enable more people to do so.

All of this talk about what companies should pay is missing the point. The market determines what salaries will be. Someone good enough for Facebook is good enough for a number of bay area companies that would pay top dollar, so Facebook has to make competitive offers. If someone lives in a place where she doesn't have access to those other high offers, then she should expect to make somewhat less. It has nothing to do with what people deserve or their value to the company.

I guess you are missing the point.

When remote becomes norm, isn't it the case that it would not matter whether the employee is in California, Utah or in Thailand?

So when a rockstar employee of FB decides to work out of Sydney (because sea, sun, fun) at same salary (because remote is norm); what happens when a recruiter finds another great talent at same or some other city in Australia?

Businesses hire you with the understanding you'll be working in a specific timezone-- being remote is irrelevant. If you go half way across the world and your team is 12 hours ahead of you, standups (and other synchronous tasks) become impossible. If you need something from that teammate, you send a message, and wait 24 hours for a response. It obliterates collaboration and slows the business down.

12h is maybe too much but I have worked with people from +/-4h, what you want most of the time is a decent overlap between all team members. Besides there are some roles such as SRE that need people 24/7 around the world

The rockstar's locally inflated salary goes down of course.

The interesting thing to ponder - an employee would not not be obligated to tell HR where one is working from. So company keeps paying $xyz irrespective whether the employee is in in Sydney, Singapore or Sacramento.

That means when remote work is a norm salary shouldn't go down when the employee moved to Sydney from SF.

> an employee would not not be obligated to tell HR where one is working from

Unfortunately, that’s not how payroll taxes work. You absolutely need to provide your employer with your real address. If you move out of state (or out of the country) there are very real tax liability issues that they will need to address. If you work for a decent company, they may even help you address your personal tax liabilities too.

A lot of remote FTE contracts I've come across not only demand your updated address during the duration of your employment, but also for 3 or so years after.

Suppose that Facebook found in a particular country it could legally pay women less than men for work of the same value. Should it do that?

Be careful what you wish for ... businesses aren't there for your benefit, they are there for theirs.

And this assumes that everyone can work equally well remote or don't have advantages to working at an office.

Personally the "Water cooler" moments give me plenty of original ideas and have resulted in new product ideas and explorations.

Having been fully remote for 4 years now, I've had plenty of water cooler type conversations with other remote employees- humans are social creatures, and with an experienced fully remote work force we end up socializing remotely, including coming up with cool Gonzo ideas.

I'm not arguing it's a 1-1 trade off, but it also doesn't go anywhere near zero.

I think the sweet spot is transitioning to remote after 2 or 3 years onsite. You have enough relationships and context that you can be more effective.

In a simplistic free market model, both employer and employee aim to optimize their gain.

The employer sets their wages only as high as necessary to attract, motivate and retain, and hires whoever provides the most value over that cost. Wages are not set based on value provided to the company, but by maximizing the spread between cost and value.

On the other side of the table, the employee wants to optimize the combination of their income (after-COL) and other aspects of the job they value which may include their location.

I just made this model up. Assuming it is reasonable, if living back home near the grandparents, likely with a lower COL, has a higher value to them than commuting in a tech hub, it is possible for the company to pay lower wages, and still be equally attractive to labor that is equally valuable. And given it is possible, they will do that.

Evidence : remote developers exist today and they are typically paid local market rate.

There is no proper market without all market participants having proper information, and salary information about your peers is typically very spotty.

Evidence: I might be just as productive as a colleague working on the same project in the same company with comparable qualifications, and I would never know if they made 10% more (or less) than me.

Job seekers have some competitive salary information though : if they can obtain multiple offers, or the salary is advertised.

... which is why most companies don't advertise salaries. Not even where I live (Austria), although it's required by law.

I said offers, not ads. It's pretty common to interview with several employers at a time.

Fair enough, I misread this. Still, that only gives you a very linited amount of information, and nothing about what existing employees at those companies make.

There’s a difference between what may be “fair” and what economics (and the law) allows. Is it fair that teachers are paid $40k? Is it fair that anyone is making over $10 million a year? Is anyone really worth that much?

Cost of living adjustments occur because companies can get away with it. That’s pretty much all there is to it. They have additional leverage when a potential employer wants to live in a particular location and that puts the potential employee at a disadvantage.

That said, I actually think most of these companies would prefer to pay everyone equally if they could get away with it as well, because ultimately they will cost the company less in labor. But they can’t at the moment. All the talent is concentrated in just a few spots and much of this talent does not want to move. In a hypothetical world where remote work really takes off, location will no longer matter. No company is going to pay someone twice as much just because they want to live in a nice location. It’s simply that this is what is required by companies at the present time to keep the employees that they value and have already invested in.

It would be interesting to run some simulations where you vary the desire of a workforce to work remotely and see how it changes the pay required for maximum talent retention. Since widespread remote work is new, we’re not anywhere near an equilibrium yet.

I feel like this is a major part of the equation. The employee in a tech metro area has non-remote options, and the remote only employee in a non-tech area does not. The company has to compete in every market, and since the majority of employees are concentrated the high cost market gets its price while the low cost market looses out.

Remote still has a host of issues to work out, mostly with time zones that make it less desirable for single geo employers.

Somewhat relatedly, I wonder how Facebook's approach would work in purely practical legal terms. If Alice works at Facebook right now, she presumably has a contract specifying that (a) she earns X money per year, and (b) she is expected to come into the office daily. I guess Facebook can relax (b) unilaterally, since this doesn't put Alice in a worse position than before.

But how can they change (a) unilaterally? Is Facebook just threatening to fire everyone who doesn't accept a worse offer? If it is, how will this fly outside the US, where most places have proper labor laws? Will this formally be an offer from Facebook to "relax (b) if you agree to modifying (a) according to our wishes"? Even that might be difficult in places with strong worker protections.

Working from a totally different location (instead of a home location within daily commute distance of the office, which is all that the shelter-in-place laws would require) would be a breach of contract.

Based on media reports, Facebook is voluntarily relaxing that location requirement unilaterally only until the end of the year.

Reducing salaries can be done any time for any lawful reason, and change of location is a lawful reason.

Very few employees in the US have a contract that meaningfully binds the employer to anything. What contract that exists can usually be terminated or modified at anytime.

The other factor I'm not hearing in this conversation is that there is a third-party in why the Bay Area has so many high paid tech jobs: the VCs. I know of multiple startups orignally based elsewhere who were pressured to move their company to the Bay Area by the VC. I suspect there are many ways in which the VCs have an invisible hand in creating the Bay Area market.

I don't know how to unwind the VC intanglement when talking about compensation. I do think it should be part of this conversation.

I don't think you have to fight for employers to give you less money. As remote employment becomes more of the norm, there will be reductions in overall salary.

It's all about competition and the ability of companies to attract workers to work they way they want. There's a cost of living in hiring workers and competition pressures. There's a lot of competition for workers in the bay area, that drives up what you can get as a worker (if company x paid much less you'd go somewhere else that paid more). It costs more to live there but is that cause or effect of so many workers. If facebook didn't pay enough to afford to live there then you wouldn't work there. I imagine this happens in NYC yet plenty of people manage to survive on way less than I could.

In the article he says it's not fair to pay more in SF or similar cities but that's somewhat subjective. Since I currently live in a tech city I want them to pay me more, it partly covers the cost of living here.

The author wants more equal pay, to not depend on where you live, I want to be able to move to a random location and work remotely and still get paid the same. But how far out do I live before fb pays me less? You could already be paid a SF salary (in many companies) and commute to work a few days a week and work from home. Big companies probably already have people in every state and many locales. The economy is a barrier to this for smaller companies, having to have a local taxation and perhaps some business licenses plan.

I think at first big cos will reduce pay if you move outside the big city, but they will struggle to define it in a way that satisfies people. Then there will start to be competition for remote workers picking up salaries. But I still expect they'll pay more for people working in big cities because workers there will resist salary deflation.

Or, as the author hinted at, they will simply stop hiring in big cities - why would they want to spend more?

Then you’ll have the “choice” of living with the lower salary or moving out.

People have been claiming this since wipro was working out of a garage :-P Haven't seen it yet, don't really expect to see it. Top tier salaries may come down a bit, but I think salaries in lower CoL areas will go up.

There's still a shortage of tech workers, and the 'remote craze' gives workers access to more employers as well. The power dynamic is not all one sided.

(I say this as having lived/worked remotely thru the last 'off-shorting' craze...anecdata is anecdotal)

I think this is based on a misunderstanding of how wages are set. It's never been about an abstract fairness.

If it was based on any sort of abstract fairness, there are a lot of professions that would be making more than they currently do.

You get paid as much as it would take to replace you with another qualified worker. That's it.

It will even out. If remote work becomes first class, employers in fly over states will start competing for the best remote devs also. I had been looking for an on-site developer in Houston, but now I am willing to do remote and pay more for a higher skill developer from the Bay Area.

While I, as a remote employee, certainly want to be payed the same as my colleague in similar roles. But I am certainly not entitled to this; and if the company so choose, it is their right.

>Yet in every software company I’ve worked for, almost everyone’s job could be – and sometimes was – done perfectly well online, remotely. Yes, all of them: product, engineering, design, ops, marketing and more. Even skeptics of remote work know this, deep down. And right now, we are seeing a real-life proof of concept for this fact that everyone has sorta known for a long time. Remote teams work just fine. The doubters have been conclusively proven wrong.

This is just a ridiculous premise. This guy has no evidence that remote working is actually as productive as in-office working, and just asserting it is ridiculous. I've been remote working for around 3 months now, and I would say roughly half the people I work with are desparate to go back into the office. They're less productive, they're less happy, core parts of their job just aren't being done at all. Where's the evidence this is working at all?

Frankly it's just bullshit to try and make this claim without actually thinking about this in detail make me think its probably not worth hearing about his baseless speculation about what life is like in the magic remote working lollipop unicorn kingdom.

>the flip side of “why do employees in cheaper areas need as much money” becomes, rather, why does the company need people in San Francisco?

Or maybe it says something about your assumptions that you think copmanies have had an opportunity to save enormous sums on salaries for decades but just didn't bother. When actually, when we see companies look to cost-save they stop people working from home, they tend to actually try and consolidate their employees into fewer, bigger offices because it cuts down on communication and travel ineffiiciencies and lets them get economies of scale.

I just personally think it's ridiculous to try and make out like companies are still going to pretend COVID is happening in 2 years when we have a vaccine and there's no longer the same motivation to allow people to work from home. Not least because the way most companies have had to allow people to work from home has been unplanned and disorganised - so companies aren't even going to be comparing good WFH best practices with the office environment.

I think this is the wrong time to be judging remote work. It's being used out of necessity during one of the most stressful and anxious times in this generation's history.

Of course people want to get back into the office when they've been stuck at home for months, possibly with their souse and children. Of course people aren't their most productive when they're preoccupied with a deadly virus, or threat thereof, or getting toilet paper.

As a remote worker of 5 years myself I was concerned when this all started that it would leave remote work in general in a bad light as the masses were involuntary thrust into adapting, and this unfortunately seems to be coming true because we're not taking into account the humanity of the entire situation.

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