Stripe Employees Who Relocate to Get $20k Bonus and a Pay Cut

https://www.bloomberg.com/news/articles/2020-09-15/stripe-employees-who-relocate-to-get-20-000-bonus-and-a-pay-cut

by siftrics • 6 years ago

63 59 6 years ago

tempsy• 6 years ago

good deal if you were looking to quit soon so long as there’s no vesting period but i’m guessing there’s a one year term on it.

Hydraulix989• 6 years ago

You can come out ahead if you relocate to a lower taxed state like NV or TX.

Traster• 6 years ago

Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible.

Barrin92• 6 years ago

it wasn't obvious that the market doesn't run on labour theory of value? Of course a company is going to pay you as little as you're willing to sell your labour for. That's why the exact same dinner costs less in Brunswick Georgia than it does in Palo Alto

s1artibartfast2• 6 years ago

I'm not sure what exactly you are critiquing here.

Doesn't this just make it a little too obvious that the company is more interested in paying you as little as they can get away with rather than paying you for the value you bring. You are payed your replacement cost. If you bring more value, you are harder to replace. It has nothing to do with total value, if this was the case, no company would ever make a profit.

Is there anyone who thinks that a company pays employees $1 more than they have to? I haven't met anyone who thought otherwise. Afterall, they aren't a charity.

The employee equivalent of this is accepting the wage they're offering and then optimizing to do as little work of value to the company as possible

I also haven't met anyone who goes above and beyond out of some sense charity. I know people who work hard because they enjoy their work, or think they will get more pay, but not simply for the sake of the company value.

jo0323• 6 years ago

Maybe not at Stripe, but a lot of big tech employees (especially at Google and Facebook) would get substantial paycuts if they got paid for the value they brought to the company rather than the market price ("as little as they can get away with").

the average FAANG engineer does a shockingly small amount of work that has any impact on revenue

mrkstu2• 6 years ago

The average FAANG engineer is partially being compensated for NOT working at a competitor- i.e. the best talent is also the biggest threat and if there isn't a salary cap then the NY Yankees are sometimes going to sign redundant players just to keep them from improving competitive teams.

ianmobbs• 6 years ago

Sure, if you treat and account for engineering like a cost center. The reason big tech companies are so successful are precisely because they treat engineering like a profit center. Though sales may be the organization actually bringing in revenue, without a product, they wouldn’t have anything.

s1artibartfast2• 6 years ago

I can almost imagine a clawback clause on salaries for products that don't launch. Haha

awinder2• 6 years ago

“the average FAANG engineer does a shockingly small amount of work that has any impact on revenue”

In stark contrast to the average pre-ipo company engineer who has rarely discussed this “revenue” business and certainly not its even more shy friend, “profit”

didibus• 6 years ago

This doesn't line up with my mental logic. If the companies are paying X amount, they have to be getting at least that much value back, or they wouldn't have that position.

Now sometimes after a new CEO or an acquisition you do see some internal shuffle and some positions deemed redundant are removed, but that's rare, and generally the positions are transfered from one less profiting category of the company to another.

So from my point of view, you could argue that the employees are worth ("value of company" / "number of employees") - "value of patents" - "value of brand recognition" - "value of production equipment".

I would bet that, especially at FANNGS, that equation would result on a much higher compensation per employee then what is currently given.

The reason people arn't being paid that amount though I believe is due to investors having the option to invest in someone else.

As an investor (an employer is an investor into an employees career). You always take a bigger cut of the value of what you invest in, and you're allowed that leverage because you tend to have the option to not invest in some particular X, and have a plethora of alternatives you could invest in as well.

Thus as en employee we tend to be paid market rate, instead of by value, because there are other possible employees who could provide similar value that be willing to undercut you.

If companies go full remote, it could mean that there are even more options for employers to hire someone who could provide the same value and is willing to undercut you, for example if they have a much lower cost of living, they might be happy with a lot less money.

My bet will be that if remote dev work becomes the norm in the industry, you'll see compensations level off, Bay Area compensations will go down as employer can hire from cheaper places, and places that currently had low compensations will increase, because local companies will now have to compete for talent with big companies like FANNG.

onion2k• 6 years ago

Tech companies aren't charitable foundations designed to help developers. They're businesses. They aim to maximise profit. If they can lower wage costs of course they'll do it.

I suspect this is just the beginning of the move away from the Bay Area. Give it twenty years and small offices and remote workers distributed across the country will be very normal. Wages (and Bay Area house prices) will reflect that.

kgin• 6 years ago

Nobody gets paid for the value they bring. People get paid by how much it would cost to find and onboard a qualified replacement.

lbotos3• 6 years ago

People paid on commission do. That said, I'm not going to advocate that we all get paid on commission.

austhrow7432• 6 years ago

Too obvious? It can’t be more obvious enough. I’m sick of this weird phenomenon where people talk like it was maybe some other way. See: hn and every thread that touches on pay.

Might as well say it’s a little too obvious that shoes go on feet.

notyouravgdoge4• 6 years ago

What's missing in some salary discussions on HN:

Compensation Trajectory: Sure, I can relocate from [HCOL city] to [LCOL city] and come out ahead today after factoring taxes, home prices, etc. What happens in the long term? Will I have a harder time getting promoted because of lower visibility? Will my annual raises and stock refreshes be lower than my counterparts who did not relocate? In tech-dense areas like the Bay Area, I can switch jobs and negotiate a substantial salary increase. Will LCOL areas allow me to substantially increase my salary when I switch jobs?

Home Prices: Folks often cite cheaper housing as a reason for leaving HCOL areas. I generally agree with that. But housing is an investment, not necessarily an expense. You might be paying seven figures for a small townhouse in the Bay Area. However, you'll get your money back when you sell your home in the future (assuming a sufficiently long time horizon and the ability to wait out dips in the housing market). Like any other investment, there are risks associated and ROI is not guaranteed, but my point is that spending $1M on a house is not the same as spending $1M on a luxury car.

Purchasing Power: Earning more money in a HCOL city (relative to earning less in a LCOL city) goes a long way once you leave your local economy. Want to send your kids to a private university? Most tech employees won't qualify for financial aid regardless of where they live. In that case, tuition for [private university] is the same regardless of whether you live in San Francisco or rural Oklahoma.

awinder2• 6 years ago

The problem in my mind is that while homes are investments they’re not great investments (they’re rather illiquid, they’re not diversified, they’re multipurposed when a domicile and that makes valuation and decisions messy). They carry a lot of benefits too though, so it’s a worthwhile asset, but having to put a larger % of your wealth into that asset would be suboptimal. In my experience the delta on home prices (and then down payments) is in excess of the salary deltas but however that math breaks down individually seems like the right thing to focus on.

Oh yeah and then after that you can choose where to live for whatever reasons work for you :-)

notyouravgdoge4• 6 years ago

My understanding is that you can "liquidate" by taking out a home equity line of credit or by doing a cash out refinance. Both of those options only work if your home has appreciated in value.

kingnothing• 6 years ago

Historically, nationwide, housing is not an investment. The average house in the US appreciates at approximately the rate of inflation, perhaps a bit better. And you always need somewhere to live; unlike stock or a business investment, you can't sell your house without needing to buy or rent another one. Your money should be put elsewhere for investment purposes. There are certainly some hot markets where this isn't true, however.

djhn• 6 years ago

But they offer 10x leverage with the right first time buyer incentives. Invest 50k, earn 4-12% in appreciation on 500k.

ideals• 6 years ago

Not to take away from your comment but a $1 million car is very likely to be a great investment.

Cars turn into solid investments after a few hundred grand. People even make money selling their wait-list spots on some new cars.

yellowapple3• 6 years ago

But housing is an investment, not necessarily an expense.

This attitude is exactly why HCOL cities are HCOL cities, and why said cities have been pushing their low-income residents further and further into the suburbs (or into entirely different metropolitan areas!).

The sooner we can do away with this attitude of land being something to hoard instead of something to be used, the sooner we can start actually addressing things like income inequality. And in the process, doing away with this attitude will almost certainly put a massive dent in the NIMBYism that plagues a lot of these same HCOL cities.

notyouravgdoge4• 6 years ago

Hah, that's an interesting point. How exactly do you expect to get people to change their attitude?

I don't own a home and I've spent a nontrivial amount of my net worth paying rent in HCOL areas, including the Bay Area. Renters want prices to go down. Homeowners want prices to go up. And the world is round.

Perhaps some legislation and removal of zoning restrictions would help.

rdtwo• 6 years ago

If you move to a non tax state then you might come out ahead. Cali taxes are killer

kdamica• 6 years ago

Cost of living adjustments are nothing new, so I'm not sure why people seem surprised by them. If a person moves somewhere with lower taxes or housing costs, they'll easily come out even after a 10-15% pay cut. Also it sounds like only salary is affected, so it's an even smaller percentage of total comp.

jlizzle303• 6 years ago

So should Oakland residents be paid less than San Francisco residents?

GhostVII2• 6 years ago

Oakland residents and San Francisco residents are in the same job market, so they have the same salary.

shajznnckfke2• 6 years ago

Companies with HQ in Oakland do tend to pay less. For a company with HQ in SF, I think they consider the employee pays for the Oakland savings with a worse commute, and since the employee is willing to work in SF they have to compete with SF salaries.

akhilcacharya• 6 years ago

This is real strange to me especially, since at my company I believe all of SFBA and NYC is +15% TC, but the rest of the country from Madison to Tempe to Boston are all the same TC band.

ffggvv• 6 years ago

equity is only the same for existing employees... which is standard practice. but usually it would be lower for new employees who start remote

brown9-22• 6 years ago

It’s not surprise, but anger that companies with skyrocket valuations are looking to cut costs this badly.

GhostVII2• 6 years ago

I think if you are making 200k a year (which you almost certainly are at Stripe) you probably aren't in a position to complain about salary. I don't have much sympathy for someone complaining that instead of making an absurd amount of money in an expensive area, they are now making a slightly less absurd amount of money in a cheap area.

NetBeck• 6 years ago

Will employees who stay have the option of paying Stripe $20k for a 10% raise?

jlizzle303• 6 years ago

In the context of a 100% remote company, 'where I live' feels like it's none of the company's business. The parallel is a non-remote company paying you less to commute from Oakland than San Francisco.

Tying pay to location makes sense in the short-term as the industry transitions, but I don't see these policies holding over the longer-term.

hevelvarik• 6 years ago

I’m reading on hackers news that in SV engineers are making 200-400k, geez, suck it up, stay put and get paid, my friends

Waterluvian• 6 years ago

I don’t get why where I live is any of their business. Why on earth does it matter what it costs for me to live the life I want? All that should matter is what they need to pay me to compete with other companies who want to hire me too.

If the act of paying remote people differently based on where they remote from is successful then it means the free market isn’t working right and engineers for these jobs are commoditized.

shajznnckfke2• 6 years ago

If you live in SF, your job market includes non-remote SF jobs. If you live in Idaho, it doesn’t. Therefore your market wage is lower in Idaho even if you are doing the same work. Seems pretty clear-cut to me.

Justin_K• 6 years ago

I think the reason is because cost of living adjustments were built into the salaries being offered. It would have been smarter for companies to offer jobs as X + Cost of Living Adjustment = Y. Instead, they just offered a salary of Y. I also think part of it has to do with an expectation of higher productivity when working out of an office or headquarters.

itsoktocry• 6 years ago

It's weird that they are cutting pay to these employees.

Wages will naturally trend downward as you're now competing with developers everywhere.

viraptor• 6 years ago

Even though this is the same thing as pay cut, it makes more sense to me when described as: company pays you averaged living expenses + extra depending on position. It's in company's interest that you live in a low cost area. It's in your interest to make sure the "extra per position" doesn't go down when you move. As long as both sides are happy here, I don't see an issue.

bleah1000• 6 years ago

It's weird that nobody talks about what it means when you relocate. For Stripe it might not be an issue, but large companies probably have people in all different locations. This means that if you relocate to a place where someone else is already working, is it fair if someone moved there and is now being paid much more than you?

Also, what about if you had all women at a location and a man relocates there and gets to keep their higher salary. I think the women would feel that this is not okay either. This applies to any other protected categories where legal issues can come up.

There are other considerations when talking about salary, and whether people can keep higher salaries when they relocate from a place where there is high competition for employees and a high average salary to a place with lower competition for employees and lower average salaries.

Stripe Employees Who Relocate to Get $20k Bonus and a Pay Cut

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