They are compensated according to locale. Our Google sheet of offer anecdata contains a few entries for Stripe, some remote and some SF. I’ve seen a salary difference of 30%. I don’t know the people who entered them personally so I can’t speak to how well they performed during the interview, so take that with a grain of salt.
If a company knows how to get choose a USD200k engineer in SF and get a good return for the company off that engineer, then why wouldn't you pay USD200k in all areas?
USD200k is a good carrot where I live, so you would be able to attract the best engineers living here (with far less competition and far less churn).
I get it that SF has network effects, but good remote engineers also tap into the same network.
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.
> If a company knows how to get choose a USD200k engineer in SF and get a good return for the company off that engineer, then why wouldn't you pay USD200k in all areas?
If you're willing to buy a $2 million property in Palo Alto, would you pay $2 million for the exact same property in West Mississippi?
To a company an employee is a commodity investment only - no matter what the culture manifesto says. There are a lot of factors that determine who gets paid what.
In addition to what kossae said, overpaying for the market is not good for Stripe. The flip side of massively reducing churn is that it also means people wont leave even when they want to, because of the golden handcuffs. Stripe doesn't want demotivated employees who are only staying because they'll have to take a 50k pay cut to work anywhere else.
> If a company knows how to get choose a USD200k engineer in SF and get a good return for the company off that engineer, then why wouldn't you pay USD200k in all areas?
If they can get those other people to join paying 100k, why wouldn't they want to save 100k per engineer?
Companies pay you what they need to in order to get you to join and unfortunately, market rates are still largely decided by location.
I know, why wouldn't a company pay more. When I go buy something, I always insist on paying double for it. It just makes sense to pay more when you don't have to.
People don't get paid more in San Francisco because they deliver more value than a worker in New York City or London. San Francisco rates are high because of geographic scarcity of talent in that location. Over the long term remote is going to reduce SFBA rates, not propagate them.
I’m not sure this says anything about the wages being equal. The remote wages are anecdotally lower. Judging by the offers I’ve seen coming out of SF compared to some of their other hubs, it’s significantly lower. Not just in salary, but in equity as well.
Remote wages are surely lower than SF today, but so are non-remote wages everywhere as well.
From a non-Bay Area company point of view, it simply doesn't make any sense to hire remote employees that are in the Bay Area, when you can pay above market rates for top-talent employees in Chicago, Vancouver, Berlin, London, etc. and still pay less than half the going SF rate. I think this is also why Bay Area employees are still dismissive of remote, it's taking off everywhere else but the factors that are making SF the highest paid area are also what makes it the least attractive for remote hiring.
But I think what we'll see is, as SF companies themselves slowly start hiring remotely it will push up both remote and local wages globally. Non-SF and non-remote companies will have a harder time competing as their local employees now also have high-paying remote job opportunities from SF companies to consider.
It's certainly possible that Stripe is offering productivity as the reason for their embrace of remote work when it's really about cheaper labor, but I'm hopeful. I know there are other companies where those decisions are transparently about lowering costs, but if what you say about remote workers typically getting less equity is true, too, that's pretty disappointing.
Buffer (which has been remote-heavy for a long time) handled this by explicitly breaking their salary assessment into multiple elements. In addition to base salary-for-role and various experience adjustments, they have a public "price sheet" describing the cost of living adjustments they apply for different locations.
It's not a perfect system, I'm sure. CoL is reduced to three fairly broad bands, and other pay elements like experience and performance are potentially skewed by remote status. But I think it's an appealing approach in general. Candidates know in advance what to expect and can move somewhere more expensive without needing to find a new job. Meanwhile, the company saves some money, but still gets access to remote candidates in expensive cities where they don't have offices.
I suppose it would drive away any remote worker who's consciously living somewhere cheap to increase effective salary, but presumably that's offset by getting access to people in DC, NYC, Boston, etc. who aren't open to other cost-saving remote jobs.
Why would the cost of living factor into salary at all?
I write the code. I offer architectural decisions. I'm working on the most demanded features by the customers, bringing more value to the product.
What if I pair program on a feature from a person in SF? My efforts are still paid less.
Who cares if I wrote the code from SF or Vietnam.
I wish more remote workers would stand up to these businesses looking for a way to lower their costs.
As for the engineers, the whole "midwest nice", "flyover feebleness", "sure is great to just have an opportunity to work remotely" mindset has to change. Don't let them discount your value.
Honestly I don’t know how fair businesses can be with respect to this while being economically rational. Differences in markets are very real, and if you can get good developers who can’t work in the US for less, why not? It’s not surprising the Zoom founder tried so hard to make it to America.
Sometimes a driver is that you may pay lower wages than an in-office employee in, say SFBA, while still higher than average in the area the employee works in, so win-win. Similar to the logic that drives some remote/satellite offices to places they can grab some of the best local talent by paying above local-market, and still save quite a bit on salaries.
