How to Pay Remote Workers

https://npf.io/2019/07/how-to-pay-remote-workers/

by rusrushal13 • 7 years ago

63 76 7 years ago

Hard_Space• 7 years ago

As a remote worker, I think there is an assumption of 'necessary common suffering' which continues to make remote work a 'privilege' rather than a simple logistical alternative. So long as there are on-location cubicle-dwellers who might get disgruntled to know that other employees are living some kind of fantasy high life from home (working in PJs, etc., all the tropes), then providing any remote working options becomes a potentially destabilizing force for a company.

Making a remote worker's income less attractive is one way to redress that balance of perception.

I'm not sure how much progress we are ever going to make towards remote working as core practice, since the last decade has re-built a collapsed economy on the basis of hyper-inflated urban property values in 19thC-style urban conurbations such as NYC, SF, Tokyo, London, etc (and, increasingly, smaller satellite cities that had not benefited in this way until recent years, but have now become super-distant commuter communities).

The net-enabled, 'dispersed' society is probably further away than it has ever been because of these factors.

buboard5• 7 years ago

Making a remote worker's income less attractive is one way to redress that balance of perception.

That sounds wrong, and there are now plenty of companies that are fully remote , for which it is the stationed-worker who are a burden

stakhanov2• 7 years ago

First: It's just horrible to build a company culture around assuming pettiness. I'm not saying that it isn't true that human beings are often petty. But you shouldn't optimize around being a great place for petty people to work at.

Second: Being forced into an onsite job in a city with high rents and bad traffic is bad. Being taken advantage of on salary for living in a low cost-of-living area is also bad. One badness doesn't cancel out the other. There are just so many instances I can think of of going to a manager and making some argument that's a variation on the theme "Can you please stop treating me badly?" and the response being "We treat all these other people badly, so if we stop treating you badly, that would be unfair to them!" Well, that's just not a valid argument! I don't want to be treated badly, and if not treating me badly implies not being able to treat these other people badly, then maybe that's the route you should be taking, goddammit!

barry-cotter• 7 years ago

I'm not sure how much progress we are ever going to make towards remote working as core practice, since the last decade has re-built a collapsed economy on the basis of hyper-inflated urban property values in 19thC-style urban conurbations such as NYC, SF, Tokyo, London, etc

Tokyo’s rental prices and house prices have moved very little in the last twenty years while the population has gone up by half. If you let people build housing you can have huge increases in population without increases in property prices.

The net-enabled, 'dispersed' society is probably further away than it has ever been because of these factors.

Fully remote companies exist and their numbers will only grow. There were very few of those ten years ago and there will be a lot more than double the current number ten years from now.

buboard5• 7 years ago

If anything remote workers should be paid more for being environmentally friendly

reportgunner2• 7 years ago

Where will the extra money come from ?

bomdo• 7 years ago

Saved real estate cost for one less desk at the office, productivity gains [1].

That said, companies that are fully remote (e.g. Gitlab [2]) tend to actually adjust your wage for having similar purchasing power wherever you choose to live. This then encourages the company to hire from inexpensive countries, which has it's own pros and cons.

[1] https://www.forbes.com/sites/abdullahimuhammed/2019/05/21/he...

[2] https://about.gitlab.com/handbook/people-operations/global-c...

goatinaboat2• 7 years ago

There are costs associated with working in an office - consider rent, cleaning, furniture, power, a receptionist, maybe an entire facilities management department, security and so on. These costs are split amongst the revenue earned per worker in that office. But homeworkers provide all those things for the company “for free”. And even more the homeworker might even provide the PC, the phone line, any tech support they need, all “for free” from the perspective of the company beancounters. In a fair world homeworkers would be paid this differential.

buboard5• 7 years ago

they save the company a ton

mjlee• 7 years ago

They are, in a way, given that they'll spend less on tax than their commuting colleagues - assuming that taxes are used as a method for government to incentivise behaviour.

blaser-waffle• 7 years ago

Mr Money Mustache (MMM) estimated that you saved something like $700 bucks per mile per year you don't drive.

I've been remote for ~5 years, haven't owned a car for ~3, and I've saved a bunch of money. Uber and public transit handle most of my needs, and even after monthly passes and uber surge rates I estimate I save close to $500-600 USD a month in car payment/insurance/maintenance.

The main downside is that I'm in Canada, and being carless in the winter can get ugly.

gjulianm8• 7 years ago

Salaries based on cost of living are always a mistery to me. If the company wants to have an honest relationship with the worker, the salary should be based on the value the employee is bringing, and that does not depend on where they live. Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate.

romanovcode2• 7 years ago

Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate.

Seems like you solved your mistery after all! As abusiness you want to spend as little as possible.

cyborgx77• 7 years ago

Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate.

Where do you think profits come from? Profit is the difference between what you pay your workers and the value of their work.

oAlbe4• 7 years ago

That's not the point though. Having an honest relationship with your employees and treating everybody fairly doesn't prevent you from profiting.

It think this point is explained really well in the article: why should someone who lives in a city with a high cost of living be paid more than someone who lives in a low cost of living one? Effectively, what you are doing is giving the person in, say, SF, more money to be able to afford a better lifestyle than the person in rural Ohio (to use the same example of the article). Why is that fair? And also, if that is fair, then is me moving to live on a yacht in Montecarlo a reason for the company to pay me 500k a year to afford that lifestyle?

Workers should be paid fairly. And to do that you have to pay everybody the highest salary you are paying for that position. I think Stackoverflow does that now, I remember reading an article on their blog about it.

dustinmoris• 7 years ago

No value comes from many different reasons and one of those is a new value generated from the combination of efforts of many individual contributors. The individual value which someone brings doesn't equal the end value which is being delivered to a customer. The essence of a business is generating new value to end consumers which an individual couldn't do on their own.

onion2k2• 7 years ago

Where do you think profits come from? Profit is the difference between what you pay your workers and the value of their work.

I don't think the OP is refuting that. Paying someone 50% of the value they generate is fine. That's how businesses work. Paying someone 2% of the value they generate because they live in <place with a low cost of living> is much less easy to justify.

gjulianm8• 7 years ago

I am not that naive, thanks. One can understand that you generate X value in part due to your own skill and time, in part due to the company environment. You get a percentage of that value as a salary, the other part goes to the company as profit in a more or less fair partition. But if another developer receives less for the same work you're definitely making it unfair and taking advantage of the fact that the business has more negotiating power than the employee. That's why I say it's cheating and dishonest.

jacknews2• 7 years ago

indeed, in some ways 'profit' is tantamount to 'cheating the people who made that profit (employees) out of their fair share' - certainly when it comes to many big tech companies.

pfisch2• 7 years ago

"the salary should be based on the value the employee is bringing"

This is really so vague as to be meaningless. A McDonalds can't operate without someone at the drive through. So isn't the value of the drive through worker incredibly high since they are essential to the operation of the business?

No. Labor Economics tells us that an employee will be paid at the market rate. They are paid based on how many other people are willing and capable of doing the job and what rate they will accept.

gjulianm8• 7 years ago

Not necessarily. The drive through employee is essential, but the cook is also essential, and the restaurant manager is also essential probably... The value is shared among them.

Also, Labor Economics tells us what happens, and I do not argue with that. I am saying that we should take more into account actual value and avoid extreme profit-driven views, such as reducing someone's salary for the exact same job just because they live in X country instead of Y.

biblytens• 7 years ago

Salaries are based on supply and demand. Think this one through with that in mind and it'll make more sense.

ehnto• 7 years ago

It still doesn't make sense, because the remote worker pool is global. If that were supposed to make sense then we would all be getting paid third world rates and cost of living would still have nothing to do with it.

buboard5• 7 years ago

Then it makes even less sense, for a remote company.

spurdoman777• 7 years ago

So, how do you calculate value for developer?

malux85• 7 years ago

There isn't a deterministic formula that you can code, but the market generally does this.

A good backend python developer working for a London company here can get 80-100k GBP, if company X wont pay this, then company Y will. The developer goes to company Y.

If the job can be done remotely, and everyone is happy, then who the hell cares that this developer lives in an area with low cost of living? He's fulfilling the contract (quality work in exchange for money) and where they are physically located is irrelevant in determining their compensation.

gjulianm8• 7 years ago

That's a whole different question and I don't think nobody has a definitive answer. Market rate seems to be a "consensus" of how much does a developer add to a company. But paying less to a developer just because they live in a different country throws that out of the window completely.

em-bee• 7 years ago

not only that, the cost-of-living estimates are often wrong. sure, it is cheaper to live in some places, but then you spend a lot more traveling to other places to get things that your local place doesn't have. in some places the cost-of-living also depends on your life-style.

if i live in a country where the average cost-of-living is low, i find that it's because of a generally poorer living standard and i have to spend a lot more compared to the local average to get the same standard that i'd have elsewhere.

romanovcode2• 7 years ago

Why on earth would it matter where your desk is?

It matters to product managers. Managing remote team is more difficult therefore PMs will always push against this.

oAlbe4• 7 years ago

Why is it more difficult? Do you have some data or anecdotes to back up your claim? I'm really interested.

I've been working remotely for years now, and my relationships with the various PMs I've had has always been: talk about what needs to be done, and then be left alone to actually do it, check back when I have progress or if I have outstanding questions that arose from better understanding the problem domain. Plus the daily stand up meetings that have always been optional to attend. Done, nothing else, nothing complicated.

Is this uncommon across the industry?

ta980345• 7 years ago

I've been working for a company where people optionally do remote work from home; the difference in communication and team cohesiveness is stark to me.

When people are colocated in an office (and I guess this is a generalization), there are more incidental chats, knowledge-sharing, status-updates, stress/challenge-sharing etc.

I do better work and get more done at home though, and from an environmental perspective it seems like an obvious choice.

notacoward2• 7 years ago

Why is it more difficult?

First, I think it's important to point out that there's a difference between a fully distributed team and a mostly-local team with some remote members. A lot (not all) of the problems have to do with the disparity between the colocated and non-colocated workers. For example, the colocated majority in a mixed team will often cling to old habits wrt soliciting or providing feedback/approval on commits, conveying important news, etc. Just turn your head a bit and speak a bit louder; everyone will get the cue and listen in. Ditto for learning new tricks by hearing or seeing someone near you. There's no incentive for them to do anything but what works for them. On a fully distributed team people do develop alternatives because they have to.

Other things that are more difficult remote include anything involving a whiteboard, from design discussions to planning sessions. Online alternatives are never as good. Inability to participate in group social activities, or to detect nuance in conversation based on tone of voice (where a fully distributed team would come up with textual alternatives) can lead to a surprisingly quick erosion of mutual trust. This is why people who do work "full time" remotely - like me BTW - still benefit from frequent in-person visits.

Is this uncommon across the industry?

I think your experience sounds a bit exceptional, but there's probably a lot of variance according to technical area and project characteristics. For me, working on a large codebase with lots of hidden coupling so that no individual project can be accomplished without tight collaboration at least across the dozen-person immediate team (if not the broader 40-person team), being remote is a real handicap. Can/should the codebase be fixed? Sure, but that project itself requires even tighter coordination until it's done. Were I to attempt it, I'd have to be on-site for months.

I think there are more bad codebases and weak teams than there are the opposite, so my guess would be that my experience (and this is not the first team in which I've been a remote minority) is not far from the norm.

isostatic• 7 years ago

I know two product managers, both are remote.

jon_remote• 7 years ago

Product manager feels like he/she needs to micromanage 9-5 standing next to your desk? Sounds like someone is trying to do or justify a job that is not really needed in 2019.

You could easily manage people in distributed teams and a lot of companies are doing that. How else you manage a team in a company that is operating in 5-10-20-30 countries? :-D

tom_mellior2• 7 years ago

Even if this were true, the only reason to pay remote workers less would be if they directly paid the difference to the PM as compensation.

armonge• 7 years ago

Used to work in Nicaragua for a US company with a local office. We were definitely being paid a lot less than our peers working directly in the US locations, at the same time we were being paid what was at the moment a lot more than the standard for other devs in the country.

There would have been no incentive for that company to open an office in Nicaragua if they would have had to pay similar salaries than what they were paying in USA, i mean, we have a lot more employee benefits and protections. Of course i would have loved to get more money out of it, and i feel we were delivering equal value than our peers, but if i think about it, the economics wouldn't have made sense.

stakhanov2• 7 years ago

I think that one of the greatest structural deficiencies of our economy is that high salaries are tied to onsite jobs in a few cities and that, therefore, real estate owners in those cities get to participate in that wealth creation that they are not actually a part of. So they reap where they didn't sow, and that's just unfair.

By working remotely, companies and workers are working together in cutting those landlords out of the equation, and that leaves a huge pile of money on the table that landlords are now not taking away from companies or workers (depending on how you look at it).

The question is: Should it be the worker or the company getting that pile of money?

My feeling is: It should be shared as companies and workers have to work together to make it happen.

If the whole pile of money goes to the workers, then companies are not incentivized to do anything to drive forward the remote work revolution.

If the whole pile of money goes to the companies, then workers will have an incentive to continue to play the old game whereby, if they want to earn more, they have to move to the valley and take an onsite job.

If the pile of money is shared somehow, then both sides have the right incentives to drive forward a real change for the better, and it's a win-win situation for everybody involved (except the landlords).

I'm not saying the split has to be 50/50. Realistically, the split will be determined by market forces like supply and demand around the particular job role. We're already seeing this play out: For job roles that have low barriers of entry and for highly commoditized types of work, a greater proportion will go to the company, like what we are seeing on Upwork where everybody gets paid what an Indonesian freelancer gets paid. For jobs where it really matters to get the best people and where these people are hard to get, a greater proportion will go to the worker and you will see everybody around the world doing that kind of work earning as much as they would earn if they were doing that job onsite in the valley.

angarg12• 7 years ago

You might not need to compete with Google, but I see an opportunity there.

Pay average Bay Area salaries to full remote workers in low CoL areas. Most likely top tech companies have no offices there, and even if they do, chances are you pay more.

notacoward2• 7 years ago

I've been a fully remote worker for almost a decade. I appreciate the fact that my compensation is on a scale implicitly tied to a higher cost of living than where I am. Nonetheless...

Companies don't set pay to be fair. They set pay to attract and retain the talent they need. Otherwise, companies that employ people in India wouldn't have a 3x pay spread for people doing the same work (hi Red Hat). Software developers in general wouldn't make more than, say, plumbers. The potential employees' perception of fairness does come into the picture a bit, but that takes a distant back seat to good old supply and demand. If a company needs to pay more to attract and retain talent in area X, they pay more. If they need to pay less to attract and retain talent in area Y, they pay less. This is just basic business. Companies pay local prices for real estate or electricity, and they pay local prices for personnel.

The only thing different about remote workers is that there's no single local standard to measure against. So you have to tailor things more specifically to the individual. But if you think that you should pay remote workers more or less because they're more or less productive, or because you're saving money by not having to provide them an office, you're forgetting the purpose of pay. Attract and retain. Supply and demand. That's it.

P.S. I'm not trying to make a moral argument here. I'm certainly no laissez-fair "markets uber alles" greed funnel. Quite the contrary. Companies are free to make their decisions on some different basis and more power to them, but there's no escaping the fact that most will cut costs wherever they can. Of the places they might cut corners, geographic salary differences are far from the worst option. If and when salary fairness gets to the top of the list, I'd start with not paying women less.

protomolecule• 7 years ago

As a remote contractor, I'm strongly against this idea.

Living in a country with the cost of living lower than in the US allows me to take a job of an equally qualified American programmer by working for a smaller salary which is still twice as big as the highest offer from a local company.

The downside is that an equally qualified programmer from Egypt or Bangladesh can easily take that job from me, but I can find solace in the fact that this reduces the global poverty :)

hajimemash2• 7 years ago

One way that in-office workers can be more valuable is more accessible and a higher quality of communication.

Being able to discuss things face-to-face gives us more and higher quality (diagramming, eye contact) communication channels, in addition to avoiding things like bad audio, bad video, etc.

There is also lower friction in haphazard discussions; someone can overhear things and chime in a thought that could turn out to be useful. Sometimes, the effort of messaging or calling someone will cause us to not bother to include someone in the conversation for a chance that they could contribute.

If different timezones are involved, then a remote worker's value is lowered due to the higher friction in addition to the round trip time for communication.

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