The Case for Location-Independent Salaries(revenuecat.com)
revenuecat.com
The Case for Location-Independent Salaries
https://www.revenuecat.com/blog/the-case-for-location-independent-salaries
9 comments
The more companies that do this, the faster the playing field will get a bit more levelled between places like the Bay Area vs everywhere else.
Both for companies (not having to pay increasingly ridiculously high salaries to compete for Bay Area talent, due to more and more talent appearing elsewhere) and for employees (not having to move to the Bay Area or sacrifice part of their salary/leave money on the table).
Both for companies (not having to pay increasingly ridiculously high salaries to compete for Bay Area talent, due to more and more talent appearing elsewhere) and for employees (not having to move to the Bay Area or sacrifice part of their salary/leave money on the table).
Location-independent salaries are actually a great deal for employers who are willing to go remote.
I hired several extremely talented developers with 8-15 years of experience in foreign countries with total comp in the $200K range. They were extremely grateful, very dedicated, and were always going the extra mile to do a professional job with their work. In many cases we were more than doubling their previous compensation and none of their local opportunities could compete, so they were very committed to doing their jobs well.
That same $200K total comp in an expensive location (basically San Francisco Bay Area) would often get us a less experienced person who saw our job as a stepping stone to FAANG. $200K sounds like a lot until you're opening levels.fyi and browsing Blind every morning while you eat breakfast, then it starts to look like you're leaving money on the table.
It's strange to see semi-disgruntled young people in one location getting $200K working side by side with more experienced, more professional, and frankly more friendly peers in another country producing better work for the same pay. Needless to say, we gradually did more hiring in foreign countries and low cost of living US locations.
I hired several extremely talented developers with 8-15 years of experience in foreign countries with total comp in the $200K range. They were extremely grateful, very dedicated, and were always going the extra mile to do a professional job with their work. In many cases we were more than doubling their previous compensation and none of their local opportunities could compete, so they were very committed to doing their jobs well.
That same $200K total comp in an expensive location (basically San Francisco Bay Area) would often get us a less experienced person who saw our job as a stepping stone to FAANG. $200K sounds like a lot until you're opening levels.fyi and browsing Blind every morning while you eat breakfast, then it starts to look like you're leaving money on the table.
It's strange to see semi-disgruntled young people in one location getting $200K working side by side with more experienced, more professional, and frankly more friendly peers in another country producing better work for the same pay. Needless to say, we gradually did more hiring in foreign countries and low cost of living US locations.
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You enable a certain amount of profit for your employer, regardless of what you do with your pay. Regardless of how much rent or mortgage you pay, and regardless of where you pay it.
Possible minor exception being employment tax?
Possible minor exception being employment tax?
> You enable a certain amount of profit for your employer, regardless of what you do with your pay. Regardless of how much rent or mortgage you pay, and regardless of where you pay it.
Then why would companies bother hiring people in expensive locations if they can hire another developer in a foreign country for half the price?
In practice, companies that adopt location-independent salaries don't automatically pin their compensation to the most expensive locales. They pick a midpoint compensation that is good enough to attract remote workers who can't do any better locally, but they turn away a lot of developers in expensive places like Seattle or SFBA who know they can do better locally.
Then why would companies bother hiring people in expensive locations if they can hire another developer in a foreign country for half the price?
In practice, companies that adopt location-independent salaries don't automatically pin their compensation to the most expensive locales. They pick a midpoint compensation that is good enough to attract remote workers who can't do any better locally, but they turn away a lot of developers in expensive places like Seattle or SFBA who know they can do better locally.
We do use SFBA but the median salary, which isn't super competitive in those locales. Most top tech firms pay 75th %-ile+, so yea it makes SFBA recruiting challenging. This is def a downside because a lot of the scaling experience is still localized in those places, but that will trend down over time. We've had enough success picking up people as they leave the Bay Area.
That's a good point. It's easy to think location independent salaries means paying everyone as much as a FAANG engineer living in California, but the median salary even in HCOL locations is much lower.
When you have an employee who is performing well and wants to move cities and you cut their pay, you’re basically telling them one or more of: - I don’t trust that you’ll do a good job remotely/in your new location/timezone, so I’ll pay you less. - I value remote work less than in person, so I’ll pay you less. - I am paying less or intend to pay less in the future people in your new location, so I have to pay you less too so that it’s “fair” to the other employees in that location.
In short, you’re giving the employee an really big push to shop around for other jobs, and that never ends well for the company. As an employer, why take the risk?
And that’s looking at the case of an existing employee who is moving. But even with new hires, I’ve been told all kinds of bogus reasons for why it’s the best (or only!) system, when there is only one reason, and that is saving money. Same reason companies have their customer support in Philippines or their sneaker factories in East Asia. Leveraging differences in market prices in a global environment. But it’s just cold economics, it has nothing to do with fairness.