Because they don't have to. Peoples' expectations of salary are likely in line with their local job markets, so even great developers living in a rural area will likely either accept the average base salary for their locale, or move to SF for the larger payday (and all of the expenses that come with it).
This should be reversing because the internet grants us easy access to this data, so market signals should be forming, but it isn't reversing, which is suspicious. Getting the data is harder, but we do already have data sets to compare to (and can apply inflation, CoL, other adjustments as time goes on).
The only real reason for zip-code adjustments would be some labor-related, CONUS, or state laws that I'd be unfamiliar with.
If I deliver the same business value as a Silicon Valley engineer, and you're paying me less, I'm getting arbitrage'd.
I agree, if we're getting paid differently based on zip code but producing the same business value we're getting arbitrage'd. The question is; how do we as developers make money off this market inefficiency?
We have a few options.
1. Negotiate better salaries. This is only possible when the purchasing price of the next best developer also increases. This already happens in the Bay area market. It is happening slower outside the Bay.
2. Start own our business. We hire the best developers at a higher rate which raises the market rate for a developer. This is happening in the Bay but much more slowly outside.
3. Move to a better geographic market. A lot of people who can chose this.
Developers probably can't exploit/correct this market because we have no way of directly/quickly making profit from the price difference.
I would love for developers to capture a larger share of the value they create. Does anyone have any ideas on how to restructure the incentives of the market to make this happen? (Cooperatives?)
Depends on the company. At my previous one you were locked in to where you started so I left after moving to a more expensive city and they refused to adjust it.
Also if the hire is living on a ranch in Montana then at least as of today they don't have that many companies to choose from if they turn you down for a lower salary than Bay Area engineers get. In SF they can just walk down the street to the next place but there aren't that many really remote companies out there.
I mean companies that you don't transition to remote but start off as remote and are treated as a first-class employee the whole time and that the workflows are remote-friendly.
There are a lot of bad managers who style themselves as feudal lords and one of the known ways to get them to give up on that model is offering to save them a bunch of money. Pay someone a bunch of money and I don’t get to yell at them? No thanks.
Because they don't have to. Peoples' expectations of salary are likely in line with their local job markets, so even great developers living in a rural area will likely either accept the average base salary for their locale, or move to SF for the larger payday (and all of the expenses that come with it).