I bet a lot of companies will try this kind of pay policy for a year or two, and then discontinue it.
Even Zillow is only committed to doing it until the end of 2021, according to the article. It is pretty hard to justify paying Silicon Valley or Seattle salaries to people who move away, when other remote workers will accept less. It is likely a bad business decision to do that, given how big the pay differences are.
I think remote work has been subject to a massive hype cycle lately and won't pan out the way the optimists seem to expect. Flexible working arrangements, e.g. spending a few days a week at the office and a few at home, is the most likely outcome for most workers. Living near the office will still be important.
> I think remote work has been subject to a massive hype cycle lately and won't pan out the way the optimists seem to expect.
100% agreed. Work from home is likely to see an uptick in companies that permanently allow it (or are open to it), but I very, very much doubt it will be the norm.
> Flexible working arrangements, e.g. spending a few days a week at the office and a few at home, is the most likely outcome for most workers
This is exactly what I want once I'm allowed to go back into the office. The isolation of working from home sucks, and the communication barriers even more so. I'd be fine going in all the time too, but living withing walking/bus distance of my office would be far more important to me then. I do not enjoy being fully remote, and short of long-term travelling, would never willingly do it again.
People should be paid according to the value they bring to the company. With limited exceptions, a tech worker's location has zero affect on their value to the company.
Strictly speaking, this could also imply that in places where the cost of living is excessively high (coughSiliconValleycough) people are getting paid too much. The implications for where people chose to live if they get paid approximately the same no matter what could rock the residential real estate world the way COVID-19 blew up the commercial real estate world.
A key nuance often lost in this discussion is that most companies have a mix of engineers along an interesting dimension: those competing locally and those competing globally. When everyone is local, it easy to conflate the two. When everyone is remote, you suddenly have a bimodal wage distribution if you are in a tech hub.
Some people are paid a lot for where they are (like truck drivers in the North Dakota oil fields) and other people are paid a lot for their skills (like professional athletes), and most are paid for bits of both. Some skill sets are rare and in high demand globally, concentrating in places like Silicon Valley and Seattle because that was where you could get the best compensation if you happen to have those skills. There is no implication that a large pool of cheaper but similarly skilled people exists elsewhere — professional sports would look very different otherwise.
Ironically, I’ve lived in Seattle but worked remotely for European companies for years. It has always been highly competitive with the best that FAANG/unicorns have to offer in terms of compensation, which surprises people but I’m not compensated for where I live — that is incidental.
I will make an observation based on experience I’ve seen few people make: there are many companies not located in SF/Seattle/NYC that would pay almost anything for a rare-skill engineer but they are located a long way from a major tech hub and they would never be able to convince a rare-skill engineer to move there. If you have these skills and the world goes remote, that suddenly becomes part of your buyer market. It works both ways and this isn’t theoretical. There are a lot of opportunities in places few engineers look because they don’t want to move there.
As an engineer, positioning yourself to operate in the global market does not imply a race to the bottom. For the highly skilled, it can often imply the opposite.
But if this change occurred then likely more businesses based in different regions would end up being able to compete (it living costs and wages stabilised more across the nation over time) and you'd actually end up with more options of places to work including startups that might have an office in a place you specifically want to live rather than having to move to a giant hub city.
It doesn't mean all tech jobs have to be 100% remote.
That's true, but if everyone, or the majority of tech workers, are remote, again you have a level playing field.
The fact the videoconference and online collaboration is still a dumpster fire of crap is both a cause and a symptom of companies insisting on an in-person workforce. Look at how the videoconferencing market has been juiced into improving their products by the necessities of the pandemic and imagine what they'd do if there was consistent global demand.
Yeah that's mostly what I was getting at. If a company insists on an in-person workforce then there's a the local/remote dichotomy, but if everyone is remote then who cares where you live, as long as the internet isn't potato quality.
If I owned a company, I'd probably pay people what it cost to retain them with a sufficiently high likelihood for the purposes of their particular role and the quality of their work. This amount would certainly not be permitted to rise above the value they bring to the company, but I'd feel no obligation to pay them exactly their marginal value to me. If I did, there'd be little profit in owning the company.
I don't really see why I should be expected to do otherwise. The value a person brings to the company cannot be separated from the company's capital and the person's employment of that capital. An ML engineer would be of little use without the company's cluster of GPUs on which to train models. So what brings the value? The cluster or the engineer? Which came first, the chicken or the egg?
It really doesn’t matter what one thinks should or shouldn’t happen. The best mechanism to determine the price of something is for the buyer and seller to agree on a number. AKA supply and demand.
Try operating a business otherwise, and you’ll get steamrolled by others allocating resources more productively.
Obviously this is subject to government regulations, but the context is outcomes between competing entities in the same framework, who aren’t making life or death decisions like in the emergency room of a hospital.
That's sort of true in ideal circumstances, but when you get to a point where you have a Wal*Mart of Amazon vs. small independent retailers, they have so much money compared to competitors that they don't have to be especially efficient. Megacorps can even undersell competitors and take a loss until the competition taps out, and now they have no incentive to respond to demand efficiently because they are the only seller.
Yes, you need multiple sellers, multiple buyers, transparent information, and time to negotiate for it to work properly. That usually applies though in the context of tech employers and employees regarding pay.
I have had this discussion so many times with employers. It makes little sense that the company should earn more from some employees than others for the same work.
I get it that often companies are specifically trying to encourage people to live near their office in expensive cities, but from a standpoint of value created for the company it seems irrelevant what an employees outgoings are.
Presumably greater competition from more places around the world would eventually drive down developer wages in major cities. I do hear a lot of justification in terms of market costs for labour varying by region, but it frequently comes from people who benefit from stock market prices that are not priced depending differently on region.
Maybe it's naive and unrealistic but I'd actually like to see it cause cities to get too expensive and actually create benefit for bringing economic activity to places with lower market wages.
I know the UK most intimately, and I can only imagine how areas like the North East might look if money had flown out of London and allowed more people who can work remotely to live there at higher wages. Would it have caused rifts and gentrification? Would the additional money have made it into the local economy and created more local businesses and a better economy?
There are a lot of open questions and I'm certainly in the camp that supports non-regionalised pay - to the extent I'd sooner work for someone else than accept a pay cut for doing exactly the same work.
> to the extent I'd sooner work for someone else than accept a pay cut for doing exactly the same work.
Obviously. An employer performing pay cuts is betting that the employee doesn’t have a better option, and/or they are betting the can replace them if they did leave at a cheaper price and still derive the same utility.
Whether or not this pans out is never certain, but it’s no different than the risks of a business changing to a new supplier offering better prices or putting out contracts for a bid.
"It makes little sense that the company should earn more from some employees than others for the same work."
So when I need to hire an attorney or a plumber, should I shop around, or pay as much as possible, so that i'm not paying one less for the same amount of work.
Employers choose who to hire and fire, they do shop around. I didn't mean wages should all be flat. I meant that if I'm of equal value to employer, why should they pay me less or more dependent on variables external to my actual work.
> why should they pay me less or more dependent on variables external to my actual work.
They won’t pay you more in the long term. In the short term, they may be trying out candidates willing to work for cheaper. If they notice cheaper employees are available and providing the same utility, then I would bet the more expensive employees are on the chopping block.
Cost of living in Silicon Valley is high because highly paid people are competing over a limited supply of housing. If large numbers of Silicon Valley engineers move to other places and continue to earn Silicon Valley salaries, those places will also see their costs of living increase. It has already happened in Austin to some extent, and people in Portland have been unhappy for years because Californians move in and bid up prices.
In which case the cost of housing will level out across the country and again you end up with people being paid roughly the same amount no matter where they live.
Which doesn't seem bad. That would massively increase people's freedom to move around and to work for different employers based in different regions and probably work out well for everyone in the long run.
Very rich hub cities seem to draw so much money away from less wealthy cities. Certainly in UK London has much greater spending and better public transport than basically the entire rest of the UK.
It might be a first step to more equal competition for labour (and naturally for jobs) around a country.
I’ve found the high concentration of opportunities in the Bay Area to be very valuable, enough so to relocate once and take full advantage for half my career. Spreading them thinly around the entire country (or the world!) will add a lot of friction and leave more people stuck in poor fits.
If everyone goes fully remote permanently, this isn’t an issue, but I don’t think a temporary pandemic will lead to that.
The problem is, in most parts of the country that will mean cost of living will increase. People who can't do their jobs remotely will suffer because of that.
That would depend on whether or not local pay ended up increasing more generally or not. It makes sense this would actually lead to greater spending in localities that didn't have it before.
Admittedly that could lead to the more toxic gentrification form that you mention, but it could make it more possible for local people in an area like that to start businesses due to the larger local economy. Really depends on so many factors it's hard to be confident.
I think the premise of your argument is people move in large clusters, obviously if people are spread out across multiple states, then the original argument stands
> With limited exceptions, a tech worker's location has zero affect on their value to the company.
Disagree. In most teams 1+1 = 11 happens only with f2f interactions and physically next to each other. AFAIK there is no substitute for human interactions.
Managing remote teams is hard. Maybe some day we will get there, but thus far our preference is to have a blend of home + office work.
I agree that question is difficult to answer, but it still exists even if everyone lives in same area and earns the same amount.
The question is better backwards I think. Should your personal cost of living be factored into your wage for the same work?
And the truth is there is a market rate for labour (usually regionally) and that affects the viability of businesses where they fail if market wages are too high for them to make a profit.
So likely if you work for an established business, you're getting paid less than the value you're creating, and if you work for a startup that question has not yet been answered.
> Should your personal cost of living be factored into your wage for the same work?
Debatable, do you see cost of living and food as a personal expense? To me they’re basic human rights that every person deserves, if you hire a worker in an expensive city, then the basic cost goes up. Likewise if you hire someone in a place where the cost of living is cheaper, then that basic cost goes down.
But now the question is, what happens when you hire a worker in an expensive city, but then allow them to work remotely from a cheaper city, should that affect his/her salary?
One thing where I can give Microsoft credit for is that when relocating from WA to CA, they gave me a pay bump in the same amount of money that I was losing to state taxes (so that I had the same takehome pay). Considering WA doesn't have a state income tax, and CA has a high one, it was a nice gesture. Not sure if they are still doing this. But I think the future will be standard pay no matter where you work. At least, I hope so. I can't stand to go to an office that is louder and more annoying, with a network that frequently has problems and firewalls that get in the way of my work.
One thing that cost of living calculators don’t account for: “living” isn’t the only thing you’re doing. You’re also saving and investing. Companies should probably adjust your pay by a fixed amount, rather then by a percentage.
Realistically, companies should probably pay what the market demands. The engineer with ties to Wyoming is used to making $50,000 per year. You offer him $60,000 – a substantial pay bump – and he's over the moon, ready to jump ship from his current job. Why pay the former SV engineer who moved to Wyoming $200,000 when you can get the same thing for $60,000?
When we used to think being in an office in the heart of the Valley was important, $200,000 was the cost of getting someone into the office. But now that we've decided the office wasn't all that important after all, the rest of the country (and world) are ready to moderate things.
Even Zillow is only committed to doing it until the end of 2021, according to the article. It is pretty hard to justify paying Silicon Valley or Seattle salaries to people who move away, when other remote workers will accept less. It is likely a bad business decision to do that, given how big the pay differences are.
I think remote work has been subject to a massive hype cycle lately and won't pan out the way the optimists seem to expect. Flexible working arrangements, e.g. spending a few days a week at the office and a few at home, is the most likely outcome for most workers. Living near the office will still be important.