I find it kind of amusing (and annoying) that employers like to play the salaray game as it fits their needs.
I got interviewed a few times, and some stated that they cannot pay the salary I was asking, because i don't live in a high-density, high-cost-for-living area, while others argued that they have to respect their local salaries, which are below what I would expect in my area. I'm yet to meet the employer that can truthfully deduct the cost-for-living from the compensation they are offering. It should be about the value I bring to the company, not where I live.
Also, from my personal point of view, it's the time I'm saving for myself, not the money. Electricity is quite expensive nowadays, and my standing desk and audio/video equipment also wasn't payed by my employer.
What annoys me the most is that there are still companies out there stating that remote is "complicated". It's different, and you need to adjust your processes, but it's not "complicated".
//edit: fixed typos and added a/v equipment to my ramblings
> It should be about the value I bring to the company
Your salary has never been even related to the value you bring the company. That is just the absolute maximum they're willing to pay. Your salary is the lowest your company thinks they can pay to get a suitable employee. They pay remote workers less because there are remote workers willing to work for less, simple as that.
I think it defies belief that the highest-paid CEOs bring so much value to their company that it covers their salaries and other compensation. They are, to me, a clear indication that compensation rates are only loosely correlated to value.
There is some correlation, don't get me wrong, but it looks like people are generally undervalued at the low end of the compensation spectrum and overvalued at the high end.
> new guy got hired and they;re making 10k more than me and I've been here 5 years
Your mistake is to assume that you (being there 5 year) is doing your work well and over the expectations, becoming an important piece to your team. Important enough that your manager wants to secure you as part of the team. Maybe you are just average. Regardless of being 2, 5 or 10 years there.
> Your mistake is to assume that you (being there 5 year) is doing your work well and over the expectations,
You're willing to go the extent of accusing people you never met nor have any idea who and how they are of being incompetent at a job you don't even know just to preserve your cognitive dissonance.
> Important enough that your manager wants to secure you as part of the team.
Straight out of college I worked at a place where they handed me a 1 year contract where I was paid below market rate. When I was reaching the end of my contract I asked for a meeting to review my salary. I had a meeting but it's outcome was a firm "we want you here but we will only offer you the same pay". I sat on that and on the day before my auto renewal would kick in I handed my resignation. I was immediately pulled into a meeting with my manager where they promply offered me over 20% pay hike.
Do you honestly believe I only gained importance the moment I resigned? They were the same people who said a few days earlier in no unclear terms I was not getting a raise.
The most ridiculous aspect of your unfounded personal belief is this idea there's this universal performance evaluation law where every manager and every boss is binded to hand over rigorous pay adjustments reflecting anyone's performance, and that there is no such thing as being exploited. Back in the real world, the whole economy revolves around people trying to get more value while paying less, and there's a almost universal pressure to not only eliminate any kind of leverage from employees but also make them perfectly replaceable cogs in their machine. You are pressured to not discuss salary with your peers, let alone other employees. You get what you are paid, and you should feel happy for it. If you work hard that just means your boss is getting more returns over his low investment.
Personal attack and flamewar comments will get you banned here. If you'd please review https://news.ycombinator.com/newsguidelines.html and not post like this to Hacker News again, we'd appreciate it.
Just reading how you write, I can Tell you: you are an average, lonely, angry and spoiled dev. IMO, Twitter is a better place for you to voice such rants.
For sure I assume that everyone did their homework and found a great company to work. That's the step 1! The step 2 is to be the best version of you. That's the most important factor on your salary, assuming the step 1!
Personal attack and flamewar comments will get you banned here. If you'd please review https://news.ycombinator.com/newsguidelines.html and not post like this to Hacker News again, we'd appreciate it.
Edit: we've asked you more than once before not to post like this. If you don't want to be banned on HN, we need you to heed these warnings.
You are so funny for thinking that. What existing employees earn is irrelevant. It is as simple as you need X now and it costs Y. Without X you possibly don't have a company anymore which costs 10 000 times Y.
> Important enough that your manager wants to secure you as part of the team
I guess that can happen. I suspect in the majority of cases, you keep your shitpay even if you become a supremely efficient pillar.
Employers are not friends, they're businesses who thinks like psychopaths, so manage your expectations and get as much money as you can from them. You need them but they need you, so get the juice and move on when it gets hairy.
I don't assume that we are friends, but your manager knows who performs and who doesn't. So it's matter of saving his own head. So, become effective and expert and so you will always be able to get your salary corrected..and if doesn't work, you are ready to go out and search for something new
No no, you stick around, reduce productivity, find suitable job offers for each of your coworkers and also show the offers to your employer. Then when the company descends into chaos and the building is pretty much on fire they still wont pay :)
that's how the new generation is solving this problem. Not showing up on time on meetings, not participating on meetings, not preparing good tickets to work on, but expecting good tickets to come off the trees, always complaining, not delivering... yup that's what we see everywhere.
Long long before the cloud and smart contracts I was fooling around with a DSL with the mission to measure what was consumed precisely (cpu cycles, kb*s worth of memory, storage, read/write, bandwidth) so that anyone may exchange the idle cycles of any computer for currency.
It was identified as a stupid idea from the start but I was curious what kind of concessions it involves. Like you cant just call a useful method anymore, it has to be known what it costs precisely given the exact work load.
It didn't take long for my mind to be blown by the completely insane overhead. Counting consumption of system resources is consumption too! While exact calculation is not very complicated every step of the way I felt tempted to just estimate it. Sorting out micro transactions in a secure way???...
Eventually I got distracted by the parallels with our society. Job agencies here charge 95% of the salary earned but the administrative overhead hardly ends there! The real cost is hidden in the estimated stuff. After all the taxes and subsidies are calculated someone at the tax office has to repeat the calculations. In some almost fixed percentage of cases mistakes are made and it takes judges, lawyers, law makers, lobby groups. Tons of expensive transactions along the way.
Before you can even get to work there are licenses, permissions, diplomas, certifications, health and sanity checks.
If your job is to dig holes one would think it involves little more than a pair of good boots and a shovel. End of the day you want a shower, a good meal, a roof over your head and some guarantee you don't have to dig holes the entire year round. (We are mistaken to think people in poorly paid grunt work are interested in trying to make ends meet.)
If you have just 20 people digging holes their performance becomes extremely measurable. They know exactly how good they are at their job. Rewarding them involves such an enormous clusterfuck of fuzzy params which may accumulate to 10 fold their salary (or more!) that their performance becomes irrelevant to their reward. The cost of accounting for it would be much larger than the cost of poor performance.
What we can do is reward their boss or their supervisor. We do that to maintain the illusion that every bit of overhead needs to be there. It is all there for a reason ofc, it is a legacy system slowly migrating from manual paperwork to automation.
You could have a very simple government app like Uber so that those who dig holes may dig holes. Customers and hole diggers can review the quality of the holes themselves. Contractors can use the API to have expensive fast holes, cheaper slow ones, an all you can eat rate or a hybrid between the 3.
But that is not going to happen, in stead we build machines to dig the holes, deploy even more administration, engineers, designers, repair shops etc lots of complicated skills required and the hole diggers can get social support while looking for other work which involves even more circus of estimates portrayed as measurement.
Some sub set of the bean counting is incredibly important and their work makes modern society what it is. Don't ask me to measure it tho.
Simplicity has its appeal. We could build monasteries where each monk maintains 1 module. If it worked for kung fu why not for array sort?
In another hand, employees try to do as less as possible for the money they get. How many devs get hired as senior dev, because their experience (in number of years) but then turns out they are code monkey ready to really work 3 hours/day? Nobody is perfect and nobody is saint.
While it is true, the best you can do is vote with your feet. I have had the situation where I was offered "locally competitive salaries" (not in the USA though), and every time I've rejected it I had a 50%-100% better offer within few weeks . There ARE companies that will pay better and independently of your location, you do need to be good though (as in companies are proactively seeking you out) and keep searching.
A good indicator is the finances of the company. If you are going to be another cog contributing marginal value, for whatever reason that is, then it's going to be difficult to argue for better salary (thought they MIGHT give a higher salary, to everyone, like e.g. Google). If you can however have a big impact and they have good revenue or funding, then it's a lot easier to argue for higher salaries: "so you are making $300k MRR or just raised $5M of VC money with 4 employees? And you have more tickets and bug fixes to improve growth and reduce churn that you can feasibly do? Great, let's talk how I can effectively help to slash those tickets and then we can discuss my compensation*".
* though if the company is crushing it so much, and specially because your marginal tax rate might be already at 50%, evaluate asking for some Stock Options/RSUs/etc.
I’m really surprised that nobody has set up address as a service yet so that you can claim for example to live in New York by virtue of an address auto command “a New York salary”.
There’s plenty of virtual office / forwarding address services, but claiming you live at one when you don’t for a pay gain risks (1) fraud against your employer; and (2) tax fraud (if eg in a different city / state / country).
What’s the definition of where one lives? For example what if you wanted the NYC salary and you rented out a bunk bed for $50/month and traveled around the country while working remote?
Cities definitely don’t have the resources to track you down and I’m not sure employers especially larger ones have any mechanisms in place to keep track. I’m not advocating for this just surprised it’s not more well known. Though I suspect it’s common and just not talked about much for obvious reasons. Certainly there are also jobs that require you to physically work from a given state as well for example.
How do so called digital nomads handle it from a tax perspective? Do they maintain a residence for tax purposes? Is that any different?
Whether something is illegal is different from whether it's easy to enforce. It's hard to say how likely they are to enforce this, but you're definitely taking a risk by pretending to live somewhere.
What makes it more problematic is that it's not just tax offices that would be interested in finding out. The company you work at may also get in trouble with the tax office as they pay employment taxes too, so they are probably interested in the fact that you're deceiving them. If your manager suspects you're not being truthful and follows up with HR this could easily get you in trouble. As remote work becomes more popular, it becomes more likely that companies will pay attention to this.
Knowing all of that, I'd find it quite hard to justify playing these games. It just seems like asking for trouble, with a pretty good chance of getting it.
Legality is different than enforcement, but the two aren't totally separate.
For example, it's de facto not illegal to drive 5mph over the speed limit on the highway. No police officer will pull you over for that unless they have some other prior reason. So in that sense, lack of enforcement has made the practice legal.
>How do so called digital nomads handle it from a tax perspective? Do they maintain a residence for tax purposes?
They probably have a "permanent address" at a friend's house or through some service. And it's probably technically fraud. That said, the US is not really setup for citizens not to have a permanent address in one state--even if just for things like driver's licenses. You can do things by the books for tax purposes but I suspect a lot of people moving around don't.
Wonder if it's meant to be like it is with professional sports, where players on a visiting team often have to pay taxes in the state of the home team.
In US, it is relatively easy to commit fraud. The question is: what happens if you get caught. Is it a slap on your wrist or a catastrophically failure (termination, prison time)
You can, for example, get employed at 10 companies and then outsource all the work (someone got caught doing it and it was in the news).
If you want to cheat, you can, but you probably should not be discussing it on hacker news.
(1) and (2) are separate. The IRS/state department of revenue won't care, and they won't tell your employer. Say you live in HCOL, actually live in LCOL, and at the year claim a refund from HCOL and file properly with LCOL.
You can just say plans changed and you moved in the case of an audit. You could tell your employer the same thing. Much harder to dock someone's salary once they've started working.
> The IRS/state department of revenue won't care, and they won't tell your employer
California FTB very much cares if you are collecting SV salary but are not paying CA taxes by living in LCOL areas. Unless you are a CPA, please do not spread lies.
The state of California can only tax you for the time you lived in California. Now, they may well throw a fit and try to claim you don't live out of state and use your employer information to substantiate it. But legally, they would not be able to keep you from getting a refund and paying elsewhere.
That article is mostly about business income or investment income like sale of real estate in California. It does not apply to people living outside of California and earning wages from California based companies. Imagine all the Tesla employees in Texas and other states. They would all be paying California income tax, which is of course not the case.
Your employers makes you sign some document about your place of residence in order to determine your salary. If you say California there, then I am sure CA-FTB will have standing when they come after you for unpaid taxes. Or, you might be perjuring yourself in some way. (IANAL so won't commit to the exact legal definition of that word).
My state's DMV is able to identify postal addresses that are not physical residences. My guess is that they get this data from USPS, which requires remailing services to register their business. Wouldn't be surprised if the DMV also checks for how many people at a given address have applied for a government ID and if it exceeds a particular threshold, flag it for investigation.
Yea but you could legally run a bunk house or even just keep a spare bed “available” for someone for $50/month or something and they “live there”. Not saying it would be worth it per-se but definitely ways around that for anyone who is willing. The government can’t regulate something like that very well.
IANAL. Let's say you do that trick of renting a bunk in state X and actually go live in another state Y. Now what if your employers does not want any ties with the state Y and hence avoids establishing a nexus there? By your actions, state Y has a reason to come after your employer since their employee lives in Y (by how Y decides its residency requirements). Pretty sure a legal battle will ensue with you branded as a liar and a deceiver. Depending on how pissed your employer is, it might even go on your personal records which can haunt you next time someone runs a background check while hiring you.
Or, for a different perspective, someone won't pay you a premium because you want to live in Manhattan because they don't actually care where in the country you live.
I'm not a lawyer, but this seems illegal on its face. Just from a tax perspective for the government, I feel like people would immediately start trying to game it for taxes.
I don't know if it matters but I have a limited company and am an employee of said company, which means I deal with taxes on my own and can perform work for (almost) any company in the world - I just invoice them like any supplier. Maybe this is the future? Though some companies would rather you were their employee I suppose.
> I have a limited company and am an employee of said company, which means I deal with taxes on my own and can perform work for (almost) any company in the world
which means you're a contractor, rather than an employee. I do think this is a better way tbh, as you can potentially own all of your healthcare costs, and optimize your taxes properly. And you can probably charge a lot more as a contractor, to make up for the lack of job security etc.
It might be a better idea for high income people. But it is often used to take advantage of regular employees.
It is a poor reflection of our tax system that running your own entity that you then pay yourself out of can have lower taxes than simply earning money as an employee.
I don't get a lot of tax optimisation (my home country makes it really hard to do anything useful) but I DO have a much easier time getting better-paid work from the US. Otherwise I'd need to go through something like oysterhr.com, boundlesshq, etc.
I think an awful lot of employers would prefer you were a contractor; in the USA at least, it is the IRS/government that prevents this from happening more by putting the fear into said employers that they will be fined and forced to pay back taxes for anyone improperly classifying people as contractors when they are in fact employees.
Are contractors taxed less than companies in the US?
In France, companies also like to contract out a lot, either to "freelance" or regular outsourcing shops.
The reason I put freelance in quotes is that there's no such thing here, legally. You have to have some form of company, through which you invoice the client.
But then, whenever you want to get the money out of the company to pay rent and eat, you'll be hit by, more or less, the same taxes the employer would pay. For a given unit of work, it's not cheaper to contract out, there's no real tax loophole.
As far as I know, the state doesn't really care. It may even prefer it, since contractor rates are usually higher than salaries, so they get to get more tax.
The only situation where it would crack down on this is if the would-be employee complained. Since this is considered a "precarious" arrangement, if the contractor can prove that they're basically an outsourced employee, they can ask to be converted to an actual employee and the state will back them up.
Contractors are taxed at a higher rate, or really, the same rate, but in an employee situation, the employer must pay half of the tax.
However, depending on what you do, people can end up paying less in taxes overall as a contractor because you have more flexibility for deductions. There are very little options for an employee to deduct any expenses in the US, whereas, a contractor could potentially deduct the cost to commute to an office, their cellphone and home internet (if used for work) and even a portion of their rent/mortgage for a home office.
It was the tax reform act of 1986 that removed the "safe harbor" provision for engineers and computer professionals.
In the city where I currently live, lots of small businesses try to claim that their employees are contractors. Those businesses depend on the ignorance of their workers.
Incidentally I like this because it makes it easy for American companies to give me money (I do not live in the US). Though I also have to give an accountant more money to deal with SS/public pension contributions and US/Irish totalization agreements.
There's a way to make RSUs behave more like Stock Options for tax purposes for private companies in this particular example [1]. It's not exactly the same, but for the sake of delaying paying taxes on a risky on unsellable stock, they are virtually the same (at a liquidity event they DO behave totally different, but they are basically the same at vesting events).
So yeah, you do need to learn about the different examples. It's something people just talk about in the valley and ultimately/generally is where the "high compensation" from tech comes from. In other countries/cities people don't even know what any of these things are.
RSUs are US taxable at vesting as ordinary income, so that doesn't really help, no. Stock Options are complicated, but if you follow the right procedures and timelines, can end up taxed as capital gains, which is roughly half the tax rate, although there's a lot more risk there.
> It should be about the value I bring to the company, not where I live.
That's like saying the price of goods and services should be about the cost of producing them. No no no: the price is about what buyers will bear. In the same way, salaries are about what the worker will bear.
If there is an arbitrage lever to maximize profit, any business will use it.
Except the market ain't going to bear it, not for a long time anyway.
If I am a CEO of a remote-first company and it truly doesn't matter for me where the employees are located it makes no sense to overpay for labor in high cost of living area.
So if there's a company A that pays $X in high COL area, and $X/3 in a low COL area. And then there's a company B that pays $X/2 everywhere. Then people from the low COL area would go to the company B, and people from the high COL area would go to the company A. As a result, company B gets the same results 2 times cheaper.
Repeat this process enough times and the salaries will be equalized. Of course it's not immediate, there are companies rigidly set in their ways; there are people who won't move no matter what; there is limited supply of both companies and workers; etc, etc. But eventually the market forces will do their thing.
I run a remote-first company, and this is basically how we do it.
We don't give people different offers based on where they say they live.
Rather, we have a salary range for a job, and we look for people who are attracted by that salary range. This usually means people in SF, NYC, and other high COL cities disqualify themselves, so we end up hiring many people outside of tech hubs.
In other words, if you simply stop hiring in the top 20% COL cities, you can hire talent at significantly less salary ranges simply because we're not competing with Google, Amazon, etc in Silicon Valley or NYC.
Which allows us to hire a greater quantity of people. E.g. 2 engineers at $150k instead of 1 engineer at $300k.
But the key to this is not making a salary decision based on location. Instead, just set a salary range and you'll find what parts of the country people are willing to work at that range.
One thing I don't like that is a bit specific to my own situation about most companies that aren't really remote first, but switched to it due to circumstance is that to them remote means - "you will literally always be located at XYZ address and do all your work from there".
I have my home address, but I actually only spend maybe 4-6 months of the year physically located there. This kind of pisses off most employers due to the tax situation as well as them treating it as if I'm gaming the system by being physically located for much of the year in lower cost of living areas (though sometimes I've even gone to higher cost of living areas for months at a tiem).
A situation like this where the salary doesn't really depend on location so it wouldn't be treated like I'm actively trying to game anything would actually be preferred in my situation, and to many others I know as well.
> A situation like this where the salary doesn't really depend on location so it wouldn't be treated like I'm actively trying to game anything would actually be preferred in my situation, and to many others I know as well.
Exactly. We've had multiple employees move to different cities/states during their tenure. That wasn't a problem with us (from an employer perspective) and there was also no expectation that salary would be adjusted in response to a move, since location wasn't factored into the original offer in the first place.
"As a result, company B gets the same results 2 times cheaper" - that's just an assumption. If I turn it around, it sounds - "people on average in high COL area do the same work two times faster than in low COL area".
If you're paid $300k/year it's probably some kinda fancy faang job. How productive you are in that environment doesn't necessarily translate into productivity in others. And vice versa.
Beyond that, highest paid people I know aren't paid well because they're 5x as productive, they're paid well because they solve really hard problems - the types of problems you don't run into at most companies.
To use an analogy: neurosurgeons aren't expensive because they're really good at "doctoring". Even if you had all the $$$ in the world you wouldn't consult one for a sprained ankle.
The assumption they're claiming lunarhustler made is that engineers in Silicon Valley and engineers in (say) Utica, NY work at approximately the same speed and quality.
The assumption dorwi's asking you to make is that moving to Silicon Valley somehow makes you work twice as fast, or that only engineers who work twice as fast live there.
Basically, lunarhustler is making the assumption that humans who can program end up at roughly the same quality no matter where they live or how much you pay them, while dorwi is making the assumption that how much you are paid is directly related to your productive output.
There are reasons to want to live in a high COL area that attract people to live there regardless of job prospects alone. If you want to hire young smart people who're into culture and nightlife and not having to drive everywhere, the best will be in expensive cities.
There are places in e.g. Europe where a young smart person can live like a king on their American tech salary, while still putting off most of it into savings... I assure you the culture and nightlife aren't bad there either.
May I ask how big your company is? And how many senior (as in, actual VPs, Directors or Architect level) employees you have? In my experience, I found all these candidates to be present in HCOL areas and the real good ones had plenty of options paying HCOL comp.
For run of the mill junior-ish employees who are treated as disposable cogs by my company, your strategy worked effectively. So we ended up with junior employees in LCOL or foreign countries (mostly Canada and Mexico) and senior levels in SFBA / NYC.
> But eventually the market forces will do their thing.
After you're necessity for that market equalization is long gone.
We're in a situation where the wealth class can literally wait it out for more than a generation for market conditions they prefer to normalize. The Market is manipulated and owned, and not by us. The tipping point is past, and the majority of society has yet to realize, our only hope at this point probably requires violence and capital destruction, sadly.
> We're in a situation where the wealth class can literally wait it out for more than a generation for market conditions they prefer to normalize.
It might be there are people who are able and willing to burn money for a long time. Sure as hell it doesn't stop me the startup founder to set whatever salary ranges I believe are efficient.
Not quite sure what you mean. Normal people in the western world are richer are better off than ever before. The same goes for people in South Korea or Singapore, countries which have recently joined the rich world.
"Normal people in the western world are better off than they were at any/nearly any given time in the past."
and
"There is a staggering amount of wealth inequality in the western world right now, and there are very concerning signs about what it is doing to our politics, economy, and culture."
Global inequality has been going down at a tremendous rate over the last few decades. (Mostly by China and to a lesser extent India going from dirt poor to middle income.)
Not sure what you mean 'what it is doing to our politics, economy, and culture.'? All those are doing ok as far as I can tell. At least not worse than in the past.
I'm talking about inequality within the developed nations—specifically, the US (I believe it also affects the UK; I don't feel qualified to talk about such effects beyond that, due to lack of information).
As for what's happening with our politics...if you can't see that the current situation is wildly different than it was 40, 20, or even 10 years ago, then I'm sorry, but you have not been paying close attention. We have people proclaiming themselves as actual literal neo-Nazis storming the Capitol building in an attempted coup, in open collaboration with certain members of Congress and the wife of a sitting Supreme Court judge. And while some of the people involved in the Jan 6 coup attempt are, indeed, being convicted as they should be, to my knowledge, none of the politicians who are complicit have been publicly investigated. This is not normal, it is not healthy, and while it is not entirely due to the increasing wealth inequality, to claim that that has no part in the level of polarization today and the rise of extremism...well, it would be an extraordinary claim, and thus require extraordinary evidence to support it.
I mean, yes, this is true, but it doesn't follow that times never actually get worse.
This is a case where, at least in certain respects, times are provably getting worse than they were before.
If politics are too fuzzy and nebulous for you, look at generational economics: I don't recall the precise figures off the top of my head, but the baby boomers are still holding wealth vastly disproportionate to their share of the demographics, and younger generations have vastly less income and wealth than they did at the same time in their lives, while over the same period, prices of many important things—like homes, health care, and higher education—have all risen much faster than the rate of inflation. The kind of house that someone working minimum wage could have afforded in 1960, they'd now need a white-collar job (probably requiring a college degree) and several years of savings to buy.
You can't just handwave all of that away as "eh, people have complained about times getting worse since the Ancient Greeks".
"Being a scientist, I had to check the math. Turns out it's even worse. You could have made $53,000 (£44,000) a day or $20 million per year since Jesus was born and still not make the profits Shell did in 2022." - Prof. Katharine Hayhoe, Climate Scientist, Chief Scientist @nature_org
, Prof @TexasTech
That doesn't disagree with what I said. With remote, employers get leverage over workers and they will use it to push down their salaries. HCOL workers will eventually have to bear the new levels.
There is no real equilibrium in markets, only forces that push constantly in one direction (maximizing profits, lowering costs, increasing capital efficiency).
Strategy only works for so long and for small companies. Then you will have to adjust. Salaries and the employment market are highly dynamic and competitive. No strategy works forever.
Employers are the buyers of labour. If food prices depend on what the consumer can bear, then labour prices should depend on what the employer can bear. And most of them can bear a lot more than they're currently paying.
It is a market. Employers and consumers will pay what they have to be satiated. If they can’t afford that, they’ll have to make do with less. If something is priced too high and there are viable alternatives, they’ll consider those alternatives.
"Market" is just another way of saying "Power differential."
Most corporate cultures are inherently authoritarian, with money being used as a proxy for power.
Empirically there is plenty of evidence that given a choice, many businesses would rather maintain the power differential and complain about "lack of applicants" than increase pay and suffer a corresponding diminution of authority.
Stock is an even more specific proxy for power, which is why stock options that have real value are usually reserved for those at the top of the hierarchy.
This is also why remote working is unpalatable. Even if it increases productivity it also enhances worker autonomy and reduces the power differential. That's not acceptable in an authoritarian culture.
Attitudes to remote work can be a useful indicator of how central hierarchy is in the culture.
> Empirically there is plenty of evidence that given a choice, many businesses would rather maintain the power differential and complain about "lack of applicants" than increase pay and suffer a corresponding diminution of authority.
Why does any company every pay more than the legally required minimum, then?
if you have 0 employees and nobody will work for you until you raise your pay to three times the legally required minimum, you raise because otherwise there is no power differential.
If you have 10 employees and you want to hire 3 more but to do that you have to increase their pay by 25% in relation to others then you might decide not to because this decreases power for everyone (should they find out what you're paying these others)
> "Market" is just another way of saying "Power differential."
Oh come on. This is a cynical or Marxist take, but it's pretty obviously untrue. A flea market, farmers market, FB marketplace doesn't have a substantial power imbalance. A market may have a power imbalance, but it is not required. People can exchange goods/services at equal power, and routinely do so. And if I understand economics correctly, that's the purpose of a "free" market: no artificial power imbalances.
This is an important point: according to Adam Smith, a free market is a market without power imbalances, a market on which everybody can trade as equals, with transparency. He was fully aware that companies would try to dominate the market, make it less free, form cartels, and generally conspire against the interests of consumers, workers and other smaller players on the market. He even suggested that workers may have to get organised in order to counter the power imbalance posed by corporations.
It's only later laissez-faire and neoliberal capitalists that turned "free market" synonymous with a lack of regulation and a playground for the biggest and most powerful companies.
This depends on the worker... if we're talking about a job that 'anyone' can do, sure... worker is replaced within a week, and the worker might need more than a week to find a new job.
But a professional in a small team, usually witha bus factor of 1? This means a hard time finding a new employee + months of training, while the old worker probably found a new job before they even quit at the first one.
But if the current employee turned around and asked for double their wage their current employer would say no - they have leverage in that they can walk away and it would cause a lot of hardship for the company in the short term, but it's amazing how little the company is willing to part with to ensure that that employee stays.
Some companies care, and people don't leave because of that. Some don't care, and people leave. Nobody writes a blogpost saying: "i got a raise so I didn't quit", because noone reads that... a blog post saying "company has huge profits, only offers small raise, so I quit and find a better job" is a whole different thing.
> Nobody writes a blogpost saying: "i got a raise so I didn't quit"
There are plenty of blogposts from the other side, about "never give a raise to a flight-risk, because their loyalty is already shot". The business strategy is to quietly hire a (typically cheaper) replacement, then fire the uppity employee.
That is the big fundamental problem of employer-employee relations. They hold more power and it's easier for them to organise with other employers without anyone being aware of it. The only way to balance that is for employees to also get organised. Or ban corporations, I suppose.
> though you have to admit in basically all situations the employer has more leverage than a single employee
This depends on how happy/able the employee is to leave to find an alternative.
A while ago I was at a trade fair in Germany and happened to see an advert from a jobs website, it read (roughly translated): "Hate your job ... ? It's your own fault!" (ie that you've not yet left the job you claim to hate...)
the employer has more leverage in who they choose to hire and what they choose to pay - but potential employees hold all the leverage about where they choose to work and the amount they are willing to accept.
I do not think so. Transaction costs for employee are small - several months of lost pay (before finding new employer), which would be mostly covered by severance pay or unemployment insurance anyway. Transaction costs for employer depends, they generally pay for lost productivity during training-in period and lost institutional knowledge in case of high-knowledge workers.
Must be nice being wealthy. Most people can barely go a single month without a paycheck.
> severance pay or unemployment insurance
Lol. In the UK, severance pay is one week per year of service, i.e. nothing. Unemployment insurance typically covers only specific costs, like mortgages, and can be significantly expensive.
And this is quite good compared to what happens almost anywhere outside of Europe.
> Transaction costs for employer depends
For any well-established business with significant redundancy, these costs are minimal. Only small companies suffer significantly when losing an employee.
> Must be nice being wealthy. Most people can barely go a single month without a paycheck.
Not necessary wealthy. For people with median pay, it is more about financial responsibility. According to EU-SILC data more than half EU population has financial reserves for at lest three months.
> Lol. In the UK, severance pay is one week per year of service, i.e. nothing. Unemployment insurance typically covers only specific costs, like mortgages, and can be significantly expensive.
Here in Czechia it is 2 months notice period, then severance pay is 3 months (for > 2 years of employment), and then 5 months of government unemployment benefits on ~half pay. So 10 months to find a new job.
> For any well-established business with significant redundancy, these costs are minimal
Even in large businesses you can have small teams with domain experts, losing them can be costly.
it is not about what they 'can' bear, it's about what they are willing to bear - it is not the same thing - the company can decide what they are willing to bear, and the employee can decide what they are willing to work for. Doesn't sound like a problem that needs fixing.
Wow, how have I not heard of this framing before? So then, are there equivalent analogies to the laws of thermodynamics? An equivalent entropy as an arrow of time?
Not really. In vaguely thermodynamic terms, businesses are very open systems. Thermodynamics doesn't have to say very much about systems far from the equilibrium.
Because it's stupid to go to a huge amount of effort to figure out your exact unit cost to reduce prices to when customers are prepared to pay more, and cost structure usually isn't linear enough to make this practical anyway.
It's like asking "why shouldn't workers work for subsistence income instead of asking for more money?": the obvious answer is "because the only reason they would consider doing so when they don't have a choice"
For the same reason that you don't want to earn the exact minimum you need to survive. You want more/better. So does the person selling the widget; so why charge the absolute minimum for their widget if they can get more for it? That extra money goes towards their "more/better".
There's also risk in producing "them" (goods, services, research), not just cost. If you want the price of your producing work to be the price of goods derived from your work, then be a shareholder, not an employee.
Because that's labor theory of value which is Marxism and marx is just some guy.
Arguments against will be that value "is" what people are willing to pay for them, which is some combination of supply and demand, but I find this just too simple. Technically it's true that the "value" of something is the price someone last paid for it, but then we get situations where we say a Bitcoin is worth 40k usd or whatever tf the price is right now. And then suddenly its value is 20k, and if you ask why you'll get thirty answers, all wrong. Maybe the price was 40k to someone and 20k to someone else, but the value? Nah. And the price alone tells us basically nothing.
The interesting thing for me is the third person. Me, in this case, to whom Bitcoin is worth 0, or less than 0 because I would consider it a labor cost to own a Bitcoin (figuring out a wallet or whatever). How does someone to whom a Bitcoin is worth 40k then then around and say "Bitcoin is worth 40k" to someone like me?
To capitalists trying to nod their heads and say ah the price is high, supply must be down or demand must be up, I say, good luck predicting human behavior, that usually goes great.
For me though I agree with you, the value of goods is some combination of their production costs, in any meaning of the word "value" that matters.
"But what if someone spends an entire lifetime of labor producing a single widget nobody wants? Clearly demand plays a part in value!" I don't know, go away. Why would that happen? Sure, ok, also include in value calculus that hopefully people only make things that people actually want. (the capitalist argument here is, the profit is to be found in the margin between cost to create and the price set by desirability - to which I say exactly, profit should be eliminated)
Edit: someone else had a comment they deleted talking about how profit is necessary so as to have surplus to save in case of equipment failure, I'll paste my response here cause my thumbs put in the labor so by golly I'll get the Payout
Traditionally, are profits sequestered to be used as savings like that? In my experience the equipment breaks and both companies go bankrupt because the executives in the c corp spent the profit on themselves already and are happy to just go find a new investment.
Actually in my experience the other company, the co-op, doesn't go bankrupt, because the workers are smart enough to safeguard their well being with rainy day funds. This might be one of the reasons coops are repeatedly shown to be far more resilient than traditional companies.
There is no global "value", there is no global "worth".
There is bid price, ask price, and last sale price.
Do they indicate "value" to the specific people making those transactions, bids and asks? Sure. Does it have to be the same for everybody? No, and that's why trade happens.
IMO OP is right on the money with the labor theory of value. If the value is what offer and demand agree on, exploitation disappears, in Marx's theoretical model.
While I am not an expert, I remember reading about it on "The Classical School: The Turbulent Birth of Economics in Twenty Extraordinary Lives", by Callum Williams. It made sense to me.
While linking to the sources is useful, I would appreciate any argument correcting the above since, as I said, I am not an expert and it makes perfect sense to me.
>If the value is what offer and demand agree on, exploitation disappears, in Marx's theoretical model.
This is not true; Marx's model of exploitation (known to modern economists as the Profit-Exploitation Correspondence Model (PECP)) does not concern itself with what demand and offer agree on within a labor negotiation. Marx says that workers do not sell their labor, they sell their labor-time (e.g. X units of time/goods) during which they exercise their labor-power. The discrepancy between the value of the time and the value produced during that time is where this 'exploitation' comes in.
The idea that exploitation is a matter of opinion or agreement adds a moral or justicial spin to what Marx considered to be a fact of the capitalist economy. Whether the people involved are happy with the situation or agree to it does not change this discrepancy of value or its representation in money.
> The discrepancy between the value of the time and the value produced
I am thinking how can one value this time. If it is valued by the market (how much someone is willing to pay for it) we would end up with the same problem, no?
No, what people will pay for the product in a market it's the price. Marx talks about the "value", which is different than price. The price is equal the value only in very limited and simplified models. Offer and demand will change the price, but not the value, for example.
What is the "value"? Well, the prices cannot be explained only in terms of offer and demand (a society with an offer of 100 pens and demand for 100 pens and offer of 100 planes and demand for 100 planes still would not sell pens and planes for the same price) nor entirely because of the price of raw materials (because this only postpones the explanation: from where came the price of the raw materials?). It also cannot be explained only based on subjectivity, because there exists a number, which is a very objective measure, representing the price if you balance offer, demand, assume competition and discard several perturbations. The "value" tries to explain this basis value that later will became the price and show objectively and numerically how the wealth is produced and distributed.
This "value" is measured by Marx as the quantity of labor socially necessary to produce the product. Given a car, the value represented by a car can be measured by the mean time necessary for the workers to produce that car in the industry plus the value transferred by the machines and tools used by those workers (whose value came from the workers that produced these machines and tools). Both manual and intellectual work need to be taken into account and you can also assume that some complex tasks or more intense work can produce more value than simple tasks in the same time.
Given this, you can compare the value produced by a worker with the value of the things that the worker can buy with its salary. This is how Marx measures these things and shows the exploitation in the society.
Value produced can be measured as the price of commodities sold. Thus there is a clear difference between the cumulative price of commodities a worker produces in an hour and the amount they are paid for that hour. The difference is appropriated by the owner of the means of production (the capitalist) as profit.
The capitalist wants to pay as little as possible per hour, but will on average long term not be able to pay less than the cost of living. Capitalists pay just enough so that workers as a class reproduce themselves (so there are more workers), but less than the value the workers produce.
Correct, Marx talks about exploitation the same, whether of wood or labour power.
Marxism is explicitly amoral, it does not concern itself with that is morally right. It is a social science that analyses the contradictions within the material world and their consequences.
People go hungry and homeless. This is visible today.
This is literally why one function of the state is to act as a non-market-participant so it can provide a safety net. There are some things markets can't and shouldn't try to do.
Yes! I can't wait for food production and distribution to be put in the hands of government officials. Access to food is going to be equalized so hard!
The market has been taking care of it for too long, we're getting too fat, we need a few decades of food controlled by the police to get back into shape.
Being fat can be a sign of malnutrition. Americans aren't just fat because they eat too much, many are fat because they live in food deserts or have no time to cook and no access to affordable healthy food.
You're not helping your argument with this example imo.
Very much this. It makes the process of salary negotiation completely tied to perception rather than reality, which isn't necessarily bad for the employee. It just means that the justifications for a higher salary need to change from "your salary offer is too low because it shouldn't depend on where I live" to "your salary offer should be higher because I can improve your business in x, y and z"
Also, the expectation by employer that by paying an average salary they get 100% performance has to change. Employees can optimise for pay or life depending on what the company is willing to offer.
Until the moment companies once again collude to drive and hold prices down. Suddenly those competitors aren't too low after all and the "tried and true" isn't so useful.
Corporations have enough staff that they can lay off hundreds or thousands of workers without a single worry. They can hold out not paying you the rate you want for much longer than you can afford not paying your bills and eating. Eventually, you will accept a lower salary and if you don't there are plenty of others who will. The vast majority of all employed people have next to no leverage compared to the companies that hire them and companies know it.
You need only one company to not go along to hoover up all the great talent.
The large problem with the collusion before was that the 3-4 that already paid top of the market salaries colluded to keep them the same. It doesn’t mean they weren’t still top of the market for someone with a given level of experience.
No because the pool of workers at that company vs the others combined is small. This in turn will make entry in that pool excessively competitive which again will serve to drive down the wages in that pool. Once the tiny pool is saturated they might as well benefit from entering with the others in agreement as well.
> I got interviewed a few times, and some stated that they cannot pay the salary I was asking, because i don't live in a high-density, high-cost-for-living area, while others argued, that they have to respect their local salaries, which are below what I would expect in my area. I'm yet to meet the employer that can truthfully deduct the cost-for-living from the compensation they are offering. It should be about the value I bring to the company, not where I live.
It's mostly about what you can negotiate to be fair. Refusing to pay you more is their way of telling you they don't believe you can get something better than what they offer where you are which is legitimate. They will reassess if you show them a better offer from a competitor if they really want you. A big part of negotiation rests on your best alternative to what's being negotiated.
> It's different, and you need to adjust your processes
So you actually agree it's complicated from a company point of view.
> Refusing to pay you more is their way of telling you they don't believe you can get something better than what they offer where you are which is legitimate.
Except when they collude to drive down wages or pay for laws to make it harder for workers to organize keeping them weak. Also "where you are" has been made irrelevant for many workers because they can get employment anywhere without going anywhere. That means what's really being said is that they don't believe you can get something better than what they offer anywhere.
Employees could collude too, saying "we refuse to work for anything less than X$".
Except that employees would do the same thing that employers do all the time and walk across the line as soon as someone offers them a compelling deal, even if it isn't at the "collusion" price.
The cost of living thing is a mess. I think it will get sorted out as it becomes clear remote workers can and do still get offers. The current thinking seems to be “if you live in a low cost area, that means there is no competition for you”. Which used to be true, and is not true.
And there are tons of just dumb things in remote work policy today. My company does cost of living adjustment based on the state you’re in. So if you were to move to a high cost city in a low cost state (Bozeman, MT), it’s a brutal effective pay cut. But if you move to low cost city in an expensive state (Yreka, CA), it’s a huge effective pay raise. Despite, theoretically, the employer getting the same value.
I think these will sort themselves out over time, but it’s annoying in the short term.
During the hiring process Gitlab literally reclassified my city based off of data from a free crowd sourced website with about 10 data points. They struck their original offer and reduced it by ~10k just as I'd passed the final round.
They refused to even talk about it, even as I protested they'd wasted so much of my time and I was about to sign. I walked away and found a much better paying job elsewhere.
Unethical, but could you seed the crowd sourced site with datapoints that increase the cost of living data, increasing the offer they'd make you next time?
This is great. Let’s all pick some random town on the beach in Costa Rica, pump it up to Manhattan-level cost of living in the crowdsourced DB, apply to Gitlab.
Even companies that try to be more granular than the state level can only do so much. Even if you leave out my relatively nearby major metro, I bet there is 2x difference in housing prices across the suburbs/exurbs/smaller cities around the area based on school systems, how rural towns are, and other factors.
> What annoys me the most is that there are still companies out there stating that remote is "complicated". It's different, and you need to adjust your processes, but it's not "complicated".
I’ve worked remote and managed remote teams for a long time. I would say it is indeed more complicated.
You may not struggle with remote work and may do fine interacting remotely, but that’s not true for a lot of people. It’s very common to hire good engineers into remote positions and discover that they can’t focus at home, they misinterpret digital communications, or that they just wanted a remote job because they read somewhere that they could work 2 hours per day and nobody would be able to tell.
The obvious retort is that you just need to hire “right”, but that’s not an easy thing to do.
It isn't more complicated, it is just different. Here, let me hire for an office instead...
"You may not struggle with office work and may do fine interacting in person, but that’s not true for a lot of people."
I have people who do far better at home than in the office, and some on the other end of the spectrum. People come in all sorts of shapes and sizes and finding the right people is the same challenge regardless.
What is hard is tooling and setting up processes that work for remote people. The world is at the start of figuring that out at scale and there is lots to learn. But hiring is always going to be the same game, finding the right people for the role and its requirements.
If I were hiring for an oil rigger it would not be more complex than hiring for a great developer. It will definitely be different, but all recruitment is different and sees different challenges. But it's always going to be about knowing what to ask, knowing your industry, and doing your very best to find a process that selects fairly and efficiently. Remote work hiring is just a different challenge that we are all just getting used to. People are hard problems to solve.
> finding the right people is the same challenge regardless.
Are you claiming that the complexity of managing in-office is usually, roughly the same as managing remote teams? I'm asking towards magnitude/degree, not if both are sometimes true.
If not, you are stating the obvious: "People come in all sorts of shapes and sizes"
In my experience, more people struggle with remote than in-office. I've found a lot of satisfaction in returning to a primarily in-person team for this reason. But that's just my experience, an anecdote. Not everyone should be like me, and I'm not saying everyone should return to the office or that WFH is bad. What I am frustrated about is that it seems like many people take dogmatic pro-WFH positions and do not acknowledge the nuance of these issues.
I am saying exactly the obvious: "People come in all sorts of shapes and sizes", this is the nexus of the original comment.
Case in point, you struggle with WFH, others thrive. I just don't see any problems with employees not enjoying WFH as being significantly more complex than, say, an issue with someone struggling to get into the office on time. Or being stressed out by a stupidly long commute, or having no time with their children. And so on. There are pros and cons abundant that pretty much level it all out.
I see the nuances. That's what I meant by stating "it's different": I'm currently working with an all-remote team. And it's awesome. Sure, there are moments where I miss them (in terms of in-person interaction), but once in a while we come together and do team building. And that's great.
You really need a team of like-minded people w/r to remork work. They started working as a company with people from different company locations forming "a team". And after Covid started, they realized it's perfectly fine to add people to the team that do not sit in offices.
Thinking back, at my past employer, we had a subsidiary in another city, and failed to work with them. It would have been so much easier if we'd been able to do that. But management didn't like it, so it didn't work.
My company allows fully flexible work, but due to the nature of our work we tend to hire locally. A recruiter made a mistake and arranged an interview for me in the wrong city, and I was hired as the only fully remote employee for a local team.
Does it have challenges? Yes. Am I a valued employee? Yes, I am potentially one of the most valuable employees after my first year in my team. Easily top 20%.
I visit my team every few months for a week. Mostly the point is so we can go out for dinner and I get to have some drinks with them. The workday itself is changed very little by being in person.
This is true, and still true to some extent once you compensate you can't compare the two numbers. There are large costs associated with living in the US like health insurance that just don't exist in the UK where I live.
Paying a given salary in Germany is a lot more expensive for a company than paying the exact same salary in America. There are both more taxes on the employer side and more labor regulations that cost money to comply with. The number of hours worked tends to be different, too.
That would only really make sense for the location of the sales office, I guess?
Where you put your developers shouldn't make much of a difference to how much business you have?
However you are up to something: big cities tend to be more productive. That's the reason people and businesses put up with the higher rents and other inconveniences. See https://en.wikipedia.org/wiki/Economies_of_agglomeration
> It should be about the value I bring to the company, not where I live.
What, no! It should be about what offers you can get from other places. If your offer is close to your local salaries, then that mean the company thinks you would have a hard time getting a better offer from somewhere else.
That depends entirely on how unique my value proposition is to the company making the offer. If I'm a commodity, yes, salary offers will trend to cost of living.
For example, I can get x$ from Google, but that doesn't mean SAP or ASML should also pay me x$: I don't know anything about their respective ecosystems, so I wouldn't be able to contribute much of value.
This is underselling the value of economic clustering. Even if everyone works from home, there are advantages to drawing from local talent pools (people know people and can vouch for their work, cultural norms make it easier to work together, there are less labour law difficulties, there is less geopolitical risk of parts of your team being sanctioned because you hired Chinese or Russian programmers, etc, etc).
All else being equal, the only reason to hire a distant programmer is to pay them less. From the firms perspective they can't easily tell if a distant programmer is more effective than a local programmer so it is a struggle (market-for-lemons style) to justify paying the same amount. If the costs are equal, may as well hire local.
It starts to make sense when you realise salaries are driven by the cost to replace an employee (including the risk of a bad hire), not the value they provide. Companies can't measure the value individual programmers provide anyway.
> Even if everyone works from home, there are advantages to drawing from local talent pools (people know people and can vouch for their work, cultural norms make it easier to work together, there are less labour law difficulties, there is less geopolitical risk of parts of your team being sanctioned because you hired Chinese or Russian programmers, etc, etc)
You could reframe these points so that they look like advantages of global businesses... you'll have someone to vouch for and evaluate people across multiple talent pools (increasing talent supply), the majority of your team will never be sanctioned simultaneously (diversifying that risk), and as for cultural norms, don't we all know that diversity is strength.
Saying there are no advantages to global remote first besides cost is underselling it; there are important advantages, for one
> It starts to make sense when you realise salaries are driven by the cost to replace an employee
asynchronous remote makes documentation and written communication central, which at the end of the day makes it easier to replace employees.
Cost is important too, if you can literally hire 50% more workforce that's one hell of a deal.
That's pretty normal, isn't it? Many services do location-based pricing, a friend of mine just sets his location to Turkey to get rebates from Adobe, Microsoft etc.
I think it is complicated because a large number of management jobs are "bullshit" (see [1]). I.e. they could be eliminated, and productivity would not be affected, or it could even be improved.
Remote work does an exposé on the usefulness of these roles. And of course, those holding them, would be eager for everyone to return to the office work theater.
Whether we hire a dedicated manager or have the responsibility rotate among teammates really depends on a bunch of factors both internal and external to the team / company.
Most people who get a job in America (can't speak for other places) are not interested in managing. It's too messy. If more doers took on management work - we'd be able to push out shitty managers. Until that happens though, my recommendation is to immediately move to a different team or company as soon as a shitty manager is installed.
There certainly are bullshit jobs and people doing valuable roles in bullshit ways, but Graeber’s claim that more than half of societal work is bullshit is also clearly bullshit, and not just because I read some of the book and sighed heavily before putting it down, but also because of claims like this that I didn’t see in the book but are in the Wikipedia page:
> duct tapers, who temporarily fix problems that could be fixed permanently, e.g., programmers repairing shoddy code...
To think that code can be “fixed permanently” shows a complete lack of understanding and insight into programming, and brings to mind the Gell-Mann Amnesia Effect - if Graeber is so wildly wrong about a subject I know well, why do I trust him on those I don’t?
MVP's are supposed to be temporary, that's a weird cherry pick. Regardless, code is contextual and relies on so many things other than its own quality at the time of that assessment being made that to say it's been fixed permanently, as if there's some Platonic ideal code that can be written, is, in my view, something I'd only hear from someone new to the industry or not in the industry at all, like Graeber. The job is about solving problems in the clearest way possible over time, not once. Managing change is of central importance. If your product is good, it will change. If it changes, bugs will inevitably be introduced. That's not shoddy practice or the fault of some poor architecture decision.
I imagine that the only bug that gets fixed "permanently" is in a product that nobody uses enough for it to need change. Like some failed MVPs.
I've been in the industry over 20 years, and in my experience agile steers everything to be MVP in the pursuit of velocity, even on projects where they are replacing an existing platform and there is no time to market benefits to rush it.
And it looks great at the start, the project is making great progress until people start to leave and the tech debt starts to kick in. By that stage all the "high performance" agile rock stars have pissed off to another company and left behind their legacy.
And then its death by 1000 cuts, things aren't logged correctly, no proper exception handling rather just do a print(e) and falling over, any integrations with 3rd parties aren't documented when they break and its just a mess.
There's always the human factor in capitalism. And with the human factor comes ego.
IIRC, Graeber roughly compares CEOs to feudal kings. You want more people under your rule as a metric of success. Also, the "king" often seeks to have a big "court" (top-level managers) to reflect their prestige.
The effect is cascading. The "king's court" members want their own smaller courts (second-level managers) and compete with their peers for power, as measured by the headcount. As we go down, unecessary hires will start to occur, only to justify a title.
And everyone involved in the theater has an incentive to turn a blind eye on the situtation.
> … some stated that they cannot pay the salary I was asking, because i don't live in a high-density, high-cost-for-living area, while others argued that they have to respect their local salaries, which are below what I would expect in my area.
Keep in mind that not all companies are competing for talent globally. [1]
The real question is whether companies that compete in a local or regional market will be able to continue to pay local rates to anyone with specialized skills who can also go remote, or if they’ll just give up and find some other solution.
> It should be about the value I bring to the company, not where I live.
It's a balancing act. If companies pay based on value added to the company, they will wind up paying more than average in low COL areas, and less than average in high COL areas; so they won't be able to hire people in high COL areas at all. If they scale pay based on COL, they'll be able to hire people in both areas. So yes, it's not "fair" to people in lower COL areas, but it's not arbitrary either.
> [...] so they won't be able to hire people in high COL areas at all.
You say it like it's a bad thing. If they can hire people for relatively cheap purely from low COL areas, and make the company work, they should totally go for that. That's the whole reason behind having offices in even cheaper areas like Vietnam, instead of just the American Midwest.
Of course, if you can't actually run your business purely on people from low COL areas, that means there must be something the people from the high COL areas bring to the table that's worth it for your business. And that's proves the original commenter's point that the company should pay you according what value you bring to the company.
Maybe "Where do you live?" should be one of those questions employers shouldn't be allowed to ask? Like what's your religion or what's your sexual orientation?
So long as there are governments involved in the employee-employer relationship, this can’t happen. I don’t actually care where you live, but I do care that I can legally employ you, pay you, pay taxes/social charges, and that I understand the obligations of the arrangement we’re contemplating entering.
It could be set up completely differently. Employer could pay 100% to the government and government could pay employee after properly taxing the income. But that would require work from the government that it doesn't want to do.
Which government(s)? Taxes and social charges can vary by city, county, state, and country. If I'm going to hire scotty79 with no knowledge of where in the world they live, which governments would I coordinate with and how would I know that?
Employment rules, customs, and laws vary by at least state and country (and minimum wages vary by city). How would I know what laws applied to the employment relationship?
Federal obviously. Somebody has to know what's up with all this mess. If I'm from another country government should know that and tax accordingly. I have no idea how placing burden of knowing all this on every single employer helps anybody (except IRS).
In fact, it's much more at the state level. I owe the IRS the same no matter where I live in the US (leaving aside deductions for state and local taxes). But I need state residency for my driver's license and state taxes. The IRS doesn't care if I live in Nevada or California. But California certainly cares if I claim to live in Nevada and actually live in California for 8 months out of the year.
Great so Califonia has business in knowing if some worker lives in California. So they should be the one to ask. Employer doesn't have to know.
Do you report and pay federal taxes and state taxes separately? Or do you just deal with IRS and they forward the docs and the money to the state you live in?
>Do you report and pay federal taxes and state taxes separately?
Yes. They are separate sets of forms that you pay (or get refunded) independently. They're basically unrelated exxcept to the degree that deductions/refunds may come into play.
The employer is making various deductions and payments, e.g. into unemployment, based on the state you live in. So your employer really does need to know your state of residence.
This just wouldn’t work in the US. The regulations vary greatly from state to state and even city to city. Choosing to employ a person in a state for the first time can be a very costly decision (in both time and $$$) for a small business. The second, third, fourth, etc. employees are marginally less expensive but “breaking the seal” and hiring that first employee in a new state isn’t something that every business takes lightly.
The question is, should it be like that? Shouldn't government handle the legal differences between states so that employers don't have to deal with that?
If you're going to have a republic of states, those states are going to be able to have different laws. The minimum wage in New Hampshire is $7.25/hr, while it's $15/hr in neighboring Massachusetts. If I'm an employer in New Hampshire hiring remote workers for $12/hr, that's legal if they work in NH, but not legal if they work in MA.
NH has sovereignty to set their minimum wage (subject to the limit of the federal minimum wage). They might do that to attract business there. Massachusetts has the same sovereignty to set their minimum wage. Which state should give up their sovereignty so that an employer [possibly out of state] could practically hire people without knowing where they live?
So if I'm in NH and scotty80 and scotty81 agree to work for me for $12/hr and I am structurally precluded from finding out where they live or work, what happens if it turns out that scotty80 is in NH (above minimum wage) and scotty81 is in MA (below minimum wage)? Is it legal?
My idea is that you report to the government that you want to hire me. And I contact the government with the information where I live.
You suggest how much you are willing to pay me to the government. And I get information how much I'll be earning after taxes and required social security fees.
If I don't agree or the amount you proposed is illegally low then I can't work for you until you decide to bump up the salary.
If I agree I start working. You pay to the government the full amount. Government taxes it and transfers the rest to me as a salary.
If you pay too little or too late you are on the hook with the government. But you don't need to know where I live or what the taxes are.
With electronic system the whole procedure of hiring could probably take an afternoon or less and zero knowledge.
I’m with you here. When I want a process to be completed in less than an afternoon, I often add several interactions with a governmental agency to the mix in order to speed things along.
You might not have much of it in the US but once those interactions are moved online they can be very quick and effective. Tax forms for example. It's common in other countries for the tax to be calculated for you, then you can just log in, chcek it out and confirm or adjust, which can be done for free in about 10 minutes while eating a burger.
You're kind of asking what's the point of having states and that's a fair question, but one that's been long decided. As long as you've got states with the power to make their own rules, people who want to live in and do business in those states will have to follow those rules (this is theoretically one of the biggest benefits of states existing).
Having states and different rules is fine however if you have that, single point of contact which knows all the rules for you might be immensely useful.
No. Because the system of government in the US is such that states have the responsibility for lots of things rather than the federal government. However, that has the side effect of making the state you live in actually matter. I can't (or am at least not supposed to) just establish an address of convenience somewhere that has the lowest taxes.
Fwiw, about 6 years ago I was working for a company that addressed this is a really solid way.
They had a main office in South Carolina in an area with very low cost of living and salaries that matched. They had an office in Phoenix and an office in Seattle.
Ended up standardizing pay based on Phoenix since it was in the middle. This was actually a really big deal because the majority of the company was in South Carolina while only about 40 people were split between Seattle and Phoenix.
The cost of living isn't the employer's problem, it's the employees. The cost of living can eventually drive up wages, but only in so far as other regions draw away labor with a better wage to cost ratio.
An employer, especially one that isn't just a Human being but a company, will only pay you enough to make you sign and incentivize you to work. They don't care at all how you make your living.
Your salary is the cost to replace you with someone else.
In person jobs have a smaller market. Everyone is subject to the same COL, so the min salary the employer must pay has a certain floor to it.
Remote jobs have a larger market. If you're remote, your employer may as well hire someone from Ohio that is willing to work for half your salary. You have to compete on cost with those cheaper employees.
> It should be about the value I bring to the company, not where I live.
It's called the "job market" for a reason. Both sides (employers and employees) are trying to maximize their returns. It's never going to be solely about the value we as developers (or any other occupation) bring to the company.
I don’t buy it. Most of their reasons are why it’s better for them and not why it benefits the employees. The employees are still being discriminated against for living in low cost of living areas by being valued at less, regardless of what their final disposable income is.
For example, moving to a low cost of living area is something I did as a choice so that I could save more, and this came with a cost: my friends live further away now. They’re saying I should be penalised for this by not being able to save more compared to their employees who stayed in the high cost of living area.
And if someone moved to a high cost of living area because they wanted to make more, is that different in some way? Would not paying them the amount for a similar quality of life not be the same type of discrimination?
> "It’s something that kind of happened organically," Sid says. "Every time we hired someone, we’d discuss what a reasonable compensation would be. And many times, it came back to what they were making beforehand, and that really depended a lot on where they were.
What a bunch of hypocrites. The perfectly know that what a person is currently making does not come "organically" into the conversation. The employer does whatever is in its power to have this information from the candidate.
Why limit yourself to the CoL due to geographical location? How about the CoL of someone who is single and someone who has 2 kids in college? How about the CoL of someone who needs expensive drugs as opposed to someone healthy?
Oh you adjust to CoL? Well, then I expect my salary to be indexed on the inflation. Oh no? You only do the standard 3%? But what about CoL?
As a side note, a salary is not about the value you bring to the company either. It's just how much they have to pay to find someone with your skills.
Do you want to play that game? Because if location doesn't matter then there are a billion people in India who are willing to do your job for much much less.
In salary per value to the company you are extremely overpaid, assuming you live in the west.
I don't think you want to open that can of worms.
Edit to add:
All those people moving from India to the US for the money could then stay in India.
You're not competing with the remote work crowd. You are competing with local cost of labor. If the market switches to just value added, unrelated to location, then you're screwed.
Yes, I want to play that game. I want people in India to be paid more, if possible. I want to open that 'can of worms'.
The big problem is that labour in India isn't all that productive. Offshoring isn't some magic bullet. Companies have tried that and are still trying.
Google, Microsoft etc have offices in India. They also keep their offices in the US and Europe not just out of imaginary obligation to westerners, but because it makes economic sense.
See also how Apple still does lots of the design work in the US, but manufactures in China. They would off-shore more off the design work as well, if they could. (And if Apple could but would not, someone else would do it and eat their lunch.)
There are great people in India. It's just more conducive for them to get better pay if they manage to get an H1B and move to the US.
If they could just "work remote", then you (as an American, or at least someone who can and does work in the US? Well, applies to any western country) are no longer competing with "people from India who manage to get an H1B and have a family situation compatible with moving countries", but suddenly with ALL qualified workers in India.
Big tech in the west employs HUGE numbers of expats from lower paid countries. A very large portion of which Big tech paid for the H1B (or equiv) and relocation costs.
If you are remote, then you're only valued on your output. And I'm not saying you're in a poor position against a random engineer from India (nor presumably from a random engineer in the US), but you'll be in a poor position against the equivalent of your amazing local coworker who moved from India (or hell, any European country with less pay) because that's where the job was.
If the job is "anywhere, because it's remote", then I'm saying that you may not be on the winning side of this change.
Opening up "work from anywhere" is not like offshoring to save costs. More like given two equally valuable people, why should an employer pay a premium to one, just because they chose to live in a higher cost of living country?
> Opening up "work from anywhere" is not like offshoring to save costs. More like given two equally valuable people, why should an employer pay a premium to one, just because they chose to live in a higher cost of living country?
Sure. I just mostly see this argument made by silicon valley people moving to Texas or whatever, and asking why they should not continue getting silicon valley comp.
Most just think they're clever and exploiting the system, and the thought that they'd get paid lowly Texas (or Ohio) salaries never occurred to them.
Though I do think 'off-shoring' from California to the Ohio vs off-shoring from California to India have important aspects in common.
For better or worse, agglomeration effects are real, and for some ineffable reasons software people are more productive when located in Silicon Valley, rather than Ohio. See https://en.wikipedia.org/wiki/Economies_of_agglomeration
However the pandemic forced an investment in making remote-work work. That's not even so much an investment in technology (hardware or software), but more taking the time and effort to figure out what works and doesn't work. It's full of soft factors.
There are time zones issues, communication issues, and culture issues that are difficult if not impossible to cost-effectively overcome for offshoring to countries like India.. Otherwise all jobs would have been offshored already, whether local employees "wanted to play that game" or not. Employers aren't hiring locally out of the goodness of their hearts.
Yes please. If companies could replace highly paid Americans with lower paid Indians without hurting the bottom line they should do so without hesitation.
Unfortunately it's not that simple. It usually turns out that these lower paid employees are significantly worse, and Indian nationals who are highly competent demand salaries similar to Americans.
My current employer uses a formula that adjusts between NY cost of living and local cost of living, half way. Found it super generous (unexpected) to be honest...
> It should be about the value I bring to the company, not where I live.
But they are not hiring you for "value", you are just a body in a seat filling a "role".
Real game to play is: you ask for X money, they propose Y money, agree and do Y amount of work and not the X amount of work. It's entirely reasonable to "quite-quit" even at non-minimum-salary compensation levels.
Germany. Prices went through the roof last year, and are currently capped by the government at 0.40 € per kWh. But only for 80% of your average consumption per year. So 8 hours work a day cost me roughly 0.50 € in electricity. Same goes for gas prices, they also went quite high.
But then again, I'm grateful that we are in the position to get support from the government.
I got interviewed a few times, and some stated that they cannot pay the salary I was asking, because i don't live in a high-density, high-cost-for-living area, while others argued that they have to respect their local salaries, which are below what I would expect in my area. I'm yet to meet the employer that can truthfully deduct the cost-for-living from the compensation they are offering. It should be about the value I bring to the company, not where I live.
Also, from my personal point of view, it's the time I'm saving for myself, not the money. Electricity is quite expensive nowadays, and my standing desk and audio/video equipment also wasn't payed by my employer.
What annoys me the most is that there are still companies out there stating that remote is "complicated". It's different, and you need to adjust your processes, but it's not "complicated".
//edit: fixed typos and added a/v equipment to my ramblings