> People there would be in "golden handcuffs" and burn out instead of changing job when it's time to go

Good ol' "we can't pay you that much, because what if we wanted to stop paying you that much. It'd be bad for you if we handed you this pile of money, you might hurt yourself. We're helping you by keeping it to ourselves, trust us."

They actually do not hide the main reason and state it first: "If we start paying everyone the highest wage our compensation costs would increase greatly, we can hire fewer people, and we would get less results." That's why I like their approach and communication. As a Ukrainian, I would be happy to work for CA salary here, but I do understand that a good local market rate is enough for me if the job is great.

EDIT: and one more thing to add here: as an employer, you usually prefer to hire people whose motivation is not only money. You want to work with people who like the job and their colleagues. The current market practice is to pay local rates. Thus any company that pays much more, has to address the challenge of filtering out people with "incorrect" motivation.

I think there’s at least something true hidden in the post you’re responding to. While I don’t necessarily think it’s a strong enough point to base salary decisions on, nor do I think it’s the actual reasoning behind GitLabs policy, I can for sure see how being overly paid for a job that you’ve grown to hate produces poor results for the company and possibly the employee

> Imagine they would pay Bay Area salaries everywhere including Philippines or Ukraine

That would be absurd.

But what if they paid Philippines or Ukraine salaries everywhere instead? They wouldn't hire Bay-area engineers. Okay. And maybe the offshore has too much language/timezone friction. Okay. So choose a different price point, whatever is the cheapest to get engineers who match your condition, regardless of what their steet address is.

> Imagine they would pay Bay Area salaries everywhere including Philippines or Ukraine. People there would be in "golden handcuffs" and burn out instead of changing job when it's time to go.

You're saying that as if companies retaining employees is a bad thing. Stock options are already a form of widely used "golden handcuffs". If people want to keep working somewhere, compensation should only be one decisive factor among many others.

> And of course, if they chose to pay some kind of world-median salaries, then they wouldn't hire people in California or London at all.

Why not? People in London or California would have to compete by the same criteria as people in Ukraine or the Philippines. This is only a good thing, as it opens up the talent pool to a global market.

The point of fair compensation is not about giving everyone the _same_ salary. It's about removing the location aspect from affecting compensation, and making it more of a merit-based system.

Especially for a remote-first company like Gitlab, where people are free to work from anywhere. It's ridiculous that employees are encouraged to live in countries with high compensation just to take advantage of this system, and are penalized for working from countries they actually want to live in.

Not to mention that it makes the lifestyle of a digital nomad much more complicated. What if I want to live 3 months in London, and 3 months in the Philippines? That kind of lifestyle would involve messy contractual changes and salary adjustments.

This system makes no sense, and is a remnant of traditional corporate structures. Of course companies love it, because they can get the same quality workforce by hiring internationally for much cheaper. Offshoring is an old corporate tactic, and needs to be abolished. It's shameful and hypocritical that remote-first companies like Gitlab still cling to it.

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Taking a look at the article you linked, it's quite clear:

> If we start paying everyone the highest wage our compensation costs would increase greatly, we can hire fewer people, and we would get less results.

Translation: it would cost us more to hire quality people everywhere, and we'd rather hire them cheaply.

> A concentration of team members in low-wage regions, since it is a better deal for them, while we want a geographically diverse team.

Thinly veiled diversity claim. The same thing happens with the current system, where people are encouraged to concentrate in higher-wage regions. Removing this only gives them the freedom to live anywhere.

> Team members in high-wage regions having much less discretionary income than ones in low-wage countries with the same role.

So? Since when is a company concerned about how much "discretionary income" employees have? Your only job is to compensate people fairly for the role based on their abilities.

> Team members in low-wage regions being in golden handcuffs and sticking around because of the compensation even when they are unhappy, we believe that it is healthy for the company when unhappy people leave.

Addressed above. This is BS, since you already give them golden handcuffs in the form of stocks, perks, benefits, etc. Compensation shouldn't be the only "handcuff".

> If we start paying everyone the lowest wage we would not be able to attract and retain people in high-wage regions, we want the largest pool to recruit from as practical.

Again, entirely backwards. It's not about paying everyone the "lowest" or "highest" wage. It's about paying everyone fairly for the role and their experience/merit. You don't need to choose either Bay Area salaries or Ukraine salaries, but come up with your own compensation structure.

Buffer has been doing this for a long time now, and they have cost-of-living location bands, but have removed two of the lowest ones in 2022[1]. I would go a step further and leave only the highest band for people who want to live in the most expensive regions in the world. But then again, since you've made yourself more attractive for world-class talent, it's likely that you won't have a large concentration of people living in these places anyway. So there's your diversity.

And even if you remove the entire concept of location bands, and people in these expensive regions get paid less than other opportunities in their region, they'd likely still want to work for you because you give them much more than just a fair salary, right?

All I read are excuses the company made up to avoid just saying: we want to hire talented people and pay them less. At least have the decency to be honest about it.

[1]: https://buffer.com/resources/location-independent-salaries/

You actually quoted that they are very open about their main reason for paying local rates: they want to be competitive as a business, and if for the same amount of money they can hire more good employees, there is no reason not to do this:).

> Your only job is to compensate people fairly for the role based on their abilities

So it's about definition of fairness. You think it should be some universal measure regardless of location, they think it is a good market rate. And job markets in each country even after COVID are still different, that's why a "fair" amount differs across locations.

One more important consideration here is local laws regarding taxation and employment. People in EU get less than in the US, but generally it is much more difficult and expensive to fire them as an example. Would it be fair if a person with employment-at-will contract who can be fired tomorrow with zero severance and has 14 days of vacation had the same salary as the person who has 30 days of paid vacation and minimum severance or notice period of 6 months?

Well, it's also complicated for tax and labor law reasons. Being officially a digital nomad is probably already problematic for, especially large, companies that can't really look the other way even if salary adjustments aren't part of the equation.

That's true, but a digital nomad could choose to work as an independent contractor, where tax burdens are mostly on them. They can choose to manage their finances in one country, while living in another. Or work as part of an umbrella company, which simplifies legal aspects for their clients.

I agree that it's a somewhat complicated issue, but there are solutions to it if the company wanted to solve it. Besides, these cases are rare and not many people will choose to live this way, so it's not the most pressing matter in this discussion.

Sure, a company can hire you as a contractor although that probably comes with downsides from benefit/stability/etc. perspectives. It's probably how you have to do things though if you really want to be a digital nomad.