Should you get paid based on where you live?

https://www.bbc.com/worklife/article/20200928-should-you-get-paid-based-on-where-you-live

by sjperez • 6 years ago

2 5 6 years ago

Much of this discussion focuses on how already existing companies handle the transition to remote work. This necessarily involves subjective perceptions of fairness.

But if you start a new company that's remote from day one, why on earth would you pay people based on location?

kostarelo• 6 years ago

GitLabs' founder explains it best. I personally stand by that choice and it totally resonates with me.

That's not to say that either is wrong/right.

https://about.gitlab.com/handbook/total-rewards/compensation...

amadeuspagel2• 6 years ago

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

Why would you want a geographically diverse team? If anything, it seems like a disadvantage if people are in different time zones. Are ordinary companies suffering from the lack of geographical diversity? And even if it has some advantages, is it really worth it? According to their compensation calculator[1] an intermediate backend engineer would earn $76,939 in Armenia and $142,085 in Hong Kong. That's almost twice as much. Is an engineer living in Hong Kong really worth two engineers living in Armenia because he ads geographical diversity? And even if geographical diversity is important, couldn't you get plenty of it from various low income countries on different continents?

[1] https://about.gitlab.com/handbook/total-rewards/compensation...

mytailorisrich• 6 years ago

why on earth would you pay people based on location?

Because a company always tries to spend less, however they try to put it.

That's exactly why Stripe is offering a pay cut to employees who volunteer to move to cheaper areas: Cheaper cost of living is an argument to lower salaries and thus to cut costs.

I think that the move to remote work, if it is here to stay, won't be good for people who leave in expensive areas and/or have high salaries. Suddenly they are in direct competition with people who are willing to accept a lower salary because they live somewhere cheaper.

A company has a financial interest in paying remote employees based on location. This is the same as opening an office in a cheap location/country in order to save on salary costs.

The problem is a human one within the team, let's call it 'fairness', indeed: People may object if some of their teammates (not some distant employee) make more than them simply based on where they live.

sjperez• 6 years ago

So long as there is transparency about how pay changes based on location, it is possible to do this fairly. The US Government civilian pay scale is a good example. If you are a GS-12 step 1, your base pay is $66,167, but that goes up with locality pay. A GS-12/1 in New York earns $88,651 but a GS-12/1 in Tucson earns $77,541. It seems like a big difference, but based on cost of living, the GS-12/1 in Tucson probably has a bigger house and fewer expenses. You could argue whether those numbers are right, but at least it's fully transparent. Companies that are moving towards this model should make transparency a priority. Perhaps you can negotiate for base pay and know that it will be adjusted by a certain percentage based on where you decide to live.

Should you get paid based on where you live?

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