Posting from a throwaway since I use my real name (and reference my employer) on my primary account...
Is nobody else worried that policies like this are going to end up penalizing workers who genuinely prefer living in an urban, high-COL area? I'm not sitting here in Brooklyn eagerly awaiting a chance to move to a cheap giant home in the suburbs - I genuinely like walkable communities, and moved to one, and found a job there which paid me enough to justify the high COL.
This feels like a regression-to-the-mean sort of move, where the net effect over time will be all tech salaries becoming reduced as the labor pool spreads to cheaper areas and the national average market rates become depressed. It'll be great for those who genuinely like living in small towns in the midwest, they'll probably still be doing well relative to the local average. It'll be horrible for those who genuinely like living in expensive coastal areas - the pressure to move to a cheaper place will be enormous.
(And thats not to say anything about my belief that a lot of low-COL areas afford to be cheap by providing poor social services, which feels like we're diminishing the ability of high-COL areas to apply social pressure to elevate the standard of living of other states and regions...)
Am I thinking about this the wrong way, or are high-COL urban workers going to take a hit here?
It could always end up having the opposite effect (over a period of time, anyway): the reason NY and SF became high cost of living was because everybody wanted to move there because that's where all the jobs were, in a vicious cycle. If, say, Manhattan loses its primary advantage of proximity to jobs and has nothing to offer besides walkability and population density, I can imagine it becoming a lot more affordable.
It's hard to see how New York becomes more affordable without a bunch of serious knock-on effects that would make it a bad place to live.
During "White Flight" New York lost a substantial, but not enormous number of people, but still the effects on the city budget caused quality of life to plummet, as crime spiraled and infrastructure crumbled.
I was reminded of this after reading this recent New York Times article about the current massive budget shortfall as the tax base flees the city:
In addition, high CoL areas have (mostly) self-inflicted their high CoL; nothing prevents them from building more housing and dramatically lowering their CoL! https://news.ycombinator.com/item?id=16704501
I don't know anything about this but I am incredibly skeptical that there's a magic silver-bullet solution with no side effects. I would imagine that there are a lot of factors that lead to this working in Tokyo.
I'll be happy if those changes that you're worried about will happen.
If you're working remotely, why should your employer pay you more just because you prefer more expensive cities? Should you also get a pay raise for preferring more expensive cars, or having expensive hobbies?
It would be great to have more good salaries and good jobs available nationally.
Sometimes living in a high cost of living area isn’t optional. For example, I have to do a lot of elder care for family members who live in a major urban center. They’ve lived there for all their lives, and the doctor suggests it would be pretty mentally harmful to forcibly uproot them at this point. I need to be super physically close to them, so I have to live in an urban center. I would not consider working for an employer that acted like this was my “choice” and expected me to take lower net pay as a result.
The same could be true if someone has a family member incarcerated at a certain prison and needs to live close by for visits or to help with legal procedures.
Yeah, I completely agree. I am all for companies abandoning the dumb idea that pay should be tied to geographic market rates, and especially for workers to turn down those employers and just say no to job offers that aren’t competitive on a global basis.
Couldn't you argue the opposite: that current policies penalize workers who don't want to live in an urban high cost of living area? Is there a solution that doesn't penalize one or the other?
That’s penalizing those living in a lower CoL area. “Here’s a giant paycheck for those of you who want to live in the Bay Area where you can eventually buy a $2 million house.”
Subsidizing high-CoL people who get the advantages of being in a city is not fair at all. It’s only tolerated because high-CoL cities tend to be where the talent is most concentrated so you have to compete for them.
For example, Google will not pay Zurich engineers Bay Area equivalent salaries despite there being similar CoLs.
I’m a programmer living in a low CoL area. My salary (for 25 years now) has reflected that. I think it’s fair. I don’t make the same money as I would in an urban center, but, then, my longest commute during that time was 20 minutes. Usually about 5.
Why do you think that’s fair? Why should you be expected to subsidize a co-worker who does the same thing as you but demands to live in a super expensive city?
Would you think it’s fair if you lived in the same city but your company paid more money to people with more expensive houses?
Google actually pays Zurich engineers more than Bay Area, something like +15% IIRC. I was close to moving out there at one point and know a few people who did.
No, not when it comes to TC. L5 TC when I left Google was just under $500k once stock and target bonus were counted (for new stock grants not counting appreciation). Zurich TC was like $250-300k USD for L5s in my same group.
Wouldn't the neutral solution be to pick a target standard of living (roughly approximated by something like a 75th percentile market rate salary, or whatever metric you chose) and pay that for any given location?
I'm aware of several teams that have done this with success in the past. Everybody, no matter their region of choice, gets compensation enough to enable an appropriately comfortable standard of living desired based on the actual costs of living where they choose. This is what we're talking about when we advocate for adjusting salaries for COL. It creates incentive for your employees to live where they actually want to live, work, and be happy - rather than wherever they feel like they can extract the most cash value from the company.
Those measures tend to be pretty dumb though because “comfortable standard of living” is very subjective. I know people who think a 2BR apartment in Manhattan is awful compared to an acre on the edge of a town with a manufactured 3 bed/2ba home, 2 car garage, and a workshop.
So the equivalent “comfortable standard of living” they’re used to in Manhattan would require a $5 million annual salary.
It could happen, and you will need to adapt to it. Change happens all the time, and only those that resist change will suffer from it, while those that bend with it will benefit from it.
That said, I really don't think remote work will be permanent. Once the Pandemic is over, people will relish going into the office. Most people WANT to work at an office, regardless of the commute. It runs between 60-75% of all people want to work from an office, and it is more efficient.
Some will but the percentage remains to be seen. I hope we get to a place where people can choose what they want and aren't forced to adopt someone else's preference.
It also all depends on the office setup and where people reside. If someone has a casual bike ride to an office they probably don't mind the commute, v.s. if someone has to take an hour + BART ride without seating, packed like sardines and some homeless junkie smoking crack, they probably feel differently.
> prefer living in an urban, high-COL area? I'm not sitting here in Brooklyn eagerly awaiting a chance to move to a cheap giant home in the suburbs - I genuinely like walkable communities
There is nothing physical that makes it more expensive to build dense, walkable communities. On the contrary: Shorter distances mean less roads, less pipes, and apartment buildings (and smaller apartments) mean less heating costs. It should be cheaper, from the material point of view.
The problem is political: People already living in walkable communities tend to vote for keeping newcomers out of moving into their walkable communities, vote against building more homes in their communities or expanding the walkable communities at their edges. This shortsighted selfishness, pull-the-ladder-up-behind-you-attitude of people already living and voting in walkable communities is doing the penalizing. And potential newcomers don't have the right to vote in the local elections of the walkable communities they are only aspiring to move in to.
I feel like you're kinda right. at least I expect that in the medium term, the average SWE salary will be what it is now (plus inflation), but the regional spread will be much lower. in the long term (and regardless of WFH), I expect software engineers will become more like accountants: valued professionals, but not superstars pulling $200k+.
I also don't think this is unreasonable. we're not entitled to live in the most expensive corners of the world just because we want to. currently engineers in high-COL areas get paid a premium because the company sees value in having offices there and having most people work in the office. once that perceived value-add no longer exists, what entitles you to get paid much more to enable your lifestyle than joe schmoe in iowa who does the same work? if this feels unfair, it sorta calls into question whether it's fair for SWEs to get paid so much more than other professions in the first place.
I totally agree, and am trying to balance my desire to preserve my career and standard of living with what - logically - makes so much sense.
I previously worked for an all-remote team that, over time, shifted from mostly within the US to HQ'd within the US on paper, but with just a few employees left in the country. When I left to take a local job, the guy who replaced me in Latin America was every bit as talented an engineer and tech leader, but for less than a third of the cost to the company compared to what I was making in NYC.
I get the feeling a lot of people are looking at this as their first step towards more tech jobs in cheap parts of the US, but the reality will probably end up as more tech jobs offered to people from much cheaper parts of the developing world - also a great thing... but with potential impact to those of us in the country if wages move faster than COL does.
My justification for finding my walkable community in one of the only places it exists in the US was always high wages, but if that changes, there's little reason to not pursue parts of western europe with a much better social climate and lower wages - but also lower wages. Who knows what will happen post-pandemic though, and how much of this will stick outside of a few SV companies.
Software engineers are more like creative staff (being a "creative" accountant is a negative!), one discovers value, the other transmutes it into cashflow, the incentive structure for both shouldn't be the same.
maybe accountant was a poor comparison. I chose it because (AFAIK) the barrier to entry for a career as an accountant is similar to that of a SWE. there aren't many fields these days where completing a four-year degree gives you a good chance at a steady job with good pay. SWE is definitely an outlier when it comes to pay vs credentials. when I got my cs bachelors and starting working, I instantly hit the 90th percentile income for a person my age. a CS major is relatively difficult, sure, but it's not that difficult. I have to assume that over time pay and opportunities for people with CS degrees (at least at entry level) will converge with pay for other similarly difficult STEM degrees.
> Is nobody else worried that policies like this are going to end up penalizing workers
But what is your solution to this? If companies can make this work, why should they ignore the huge talent pools that exist in the middle of the country? That said, I think there will always be employers who prefer to have most everyone sitting in the office.
To be clear, I'm not opposed at all to remote work - but it feels weird to me to ignore cost of living where your people are when setting their compensation if you aren't deliberately trying to incentivize people from (or relocating to) low-COL areas.
But from the company's perspective, why should they care? If they are hiring remotely, shouldn't they optimize for the best employees at a given price?
I think people focus too much on money. Yes, someone could take a HCOL salary and move to a LCOL area but they might not actually like living there. Quality of life does matter and I don't see a meaningful number of people moving to a place they hate just to save some dough.
Companies that pay more based on a worker's unnecessary location are subsidizing the worker's lifestyle at the expense of their customers and/or shareholders.
I think you're probably right in terms of the trend. But at the end of the day, the decision of where to live is ours (as workers living in high-COL areas), and companies don't owe us any special treatment so that we can live in cities. We benefit from the fact that we can do our jobs completely remotely, but of course from a job security perspective there are some tradeoffs (ones that I am very glad to have made, given global current circumstances).
My suggestion: join your local YIMBY group and work toward making cost of living more affordable in your area.
A relatively small number of cities in the US and Europe have been the big winners over the past few decades while smaller communities have struggled, it's no bad thing if an increase in remote working allows that trend to be slowed down, or even reversed a little.
Cities like New York (and SF, London, Berlin, etc, etc) still have a bright future and are still going to attract large companies - and most of those companies are likely to remain predominantly office based for the foreseeable future.
I always like to view this stuff through a supply and demand lens.
As it is, you could already work full time remote and get much higher salary than those companies that adjusted for COL and publicly advertised their pay scales(Gitlab, Stack Overflow, etc). If you were interested in money, and willing to get after it, those salaries were laughably low for someone with the talent and history to back it up.
So now what? The same as always, get paid what you can get paid? If you want X money go get X money. If you can't, maybe you don't have what it takes to live in a high COL city(is that so different from now)? Perhaps the COL will come down to reflect a reduced demand for those particular urban centers. Or to reflect ability to pay high rents and prices?
IMHO the potential downsides are more social; risk of increased social/economical stratification. Maybe the cities end up even more packed with a certain "type" that can pull the big money while everyone else is servicing them on scraps. IDK.
I don't agree with the premise of your argument. I think you currently get a very nice luxury benefit, and stoping that isn't "penalizing" you.
I think it is a little silly that companies pay someone more just because they like living in a city. I admit that I have a strong preference for rural areas, but I don't expect an employer to pay me more (or less) because of that. I am constantly surprised that more companies don't setup in lower COL areas, but I guess that much of the in-person talent desires that enough to make it work.
Most people agree that it is good to treat people equally regardless of their background, and this policy seems to promote that.
Reddit has another benefit to this-- by having employees around the country, they'd also be more representative of the country as a whole in terms of "viewpoint diversity", instead of being in a liberal bubble.
There’s a feedback loop here. When many companies scale up compensation for areas they are contributing to higher expenses in the area. I think in the long run this will certainly have the effect of making desirability a key factor in how expensive an area is, but without the feedback mechanisms causing costs to get out of control as companies increase pay more and more to keep up with rising costs resulting from increased pay (mostly realized as increased rents, driving up the costs of all local services, employee rents, and office rent).
High-COL areas will take the hit as the Professional Class moves out. Ultra-high -COL areas will be fine... they are mostly full of executives anyway, who will continue to need an office location from which to operate. No CEO wants to spend the rest of their life planning strategy and entertaining clients in generic hotel ballrooms.
COL adjustments don't make a lot of sense when you dive a little deeper. Just because you reside in a HCOL area doesn't mean you actually encounter high costs. If you happen to have family in the area and you live for free, you still get paid a high salary without the expenses. Similarly, if you choose to have 5 roommates you also don't encounter the high costs. Why should someone be penalized if they simply choose to live somewhere else geographically? If you work remotely, where you work shouldn't affect your compensation, compensation should be based on value added to the company.
Well said. My lifestyle choices have incurred a high cost — I’ve always lived alone when possible.
The idea of an employer daring to adjust my pay because they think I should get a roomie (or make any other decisions about my cost of living) is crazy.
Over the years various employers have entered into negotiations, mid employment, to change the terms of my contract. More often than not it’s been a good opportunity for both parties to seize the opportunity for some fresh air — new job for me somewhere else, new chump for them!
I'm basically operating with the assumption that with the expansion of programs like this, enough tech workers would be willing to leave high-COL tech labor markets to reduce the average tech worker pay nationally as NYC/SF are no longer hyper-competitive, but not so many as to meaningfully reduce the cost of living in those areas, especially in NY where the COL is driven by many other industries.
The end result (as I'm imagining it) would be that these new national-average tech salaries can still provide a very comfortable living in low-COL areas, but are no longer comfortable in high-COL areas.
The salaries are already not comfortable in high-COL areas, at least for a lot of developers. That's why HN has had these discussions about remote work compensation.
Realize with areas like SV you're also competing because of desirability not related to job market. If you want to live in certain parts of CA it's going to cost more.
If what you are worried about does happen I suspect it would take on the order of a decade to show up. But regardless of timespan, I must say I don't care. Your post is just crocodile tears.
It's possible that there are walkable communities outside of NY and SF. I don't know if anyone has ever thought to check, though.
It might even be that if a bunch of people who value things like walkable communities move to a place and get involved, they could even make one. It's just crazy enough to work.
Keep in mind that even cities that have lower scores overall often have some very walkable neighborhoods. For example, Los Angeles has an overall walk score of 68, but has several neighborhoods that score 90 and above.
Is nobody else worried that policies like this are going to end up penalizing workers who genuinely prefer living in an urban, high-COL area? I'm not sitting here in Brooklyn eagerly awaiting a chance to move to a cheap giant home in the suburbs - I genuinely like walkable communities, and moved to one, and found a job there which paid me enough to justify the high COL.
This feels like a regression-to-the-mean sort of move, where the net effect over time will be all tech salaries becoming reduced as the labor pool spreads to cheaper areas and the national average market rates become depressed. It'll be great for those who genuinely like living in small towns in the midwest, they'll probably still be doing well relative to the local average. It'll be horrible for those who genuinely like living in expensive coastal areas - the pressure to move to a cheaper place will be enormous.
(And thats not to say anything about my belief that a lot of low-COL areas afford to be cheap by providing poor social services, which feels like we're diminishing the ability of high-COL areas to apply social pressure to elevate the standard of living of other states and regions...)
Am I thinking about this the wrong way, or are high-COL urban workers going to take a hit here?