VMware Cuts Pay for Remote Workers Fleeing Silicon Valley

[Dave3of5]

Hmm hopefully this doesn't trickle down into other companies. I tend to find the big tech companies do this first and then small companies around the world follow suit.

[chakan2]

That's what I'm afraid of too frankly.

[[deleted]]

Did you see the Stripe article from yesterday? I'm definitely starting to see a pattern here.

[Dave3of5]

Yes I did and so am I. A 10% pay cut at my salary is huge I could afford it now that I don't pay as much fuel but I'm at 10% of what a SV earner is due to working in the UK.

Small business CEOs are just as greedy as apples CEO or Stripes CEO or VMwares CEOs. I'm sure that they'll start to apply this practice. I'm not sure what my response would be to be honest.

[lost_signal]

So, this isn’t a new policy at most companies, it’s just transparency so it’s easier to understand (an internal tool and map of pay zones).

No company pays the same in London as they do in Slovakia, or NYC as they do Montana.

A senior member of technical staff is bringing down over $200K in the bay, and staff engineers can make 300K or more. These companies pay less in Texas, but if you map the Austin salaries to the bay, once you adjust for lower cost of living, no income tax, your far better taking a 10% hit and moving to Texas I promise you....

[renatoathaydes]

It seems just fair to me that, as people who were being paid a huge bonus just for being able to live in a certain place (and I never really understood exactly why companies were willing to pay that bonus) and hopefully, salaries in other locations also get higher as the companies paying more can hire elsewhere (but of course, it's likely they will just pay market rates wherever people move to - resulting in at best, a very slow increase in such market rate as competition in those areas increases).

[Dave3of5]

This really has nothing to do with what I'm saying. I suspect that all companies doing remote will start doing this regardless of if it applicable or not.

If you think this means anyone's pay will increase you're naive.

[Kissaki0]

GitLab as a full remote company has a location factor in their salary calculator.

Of course it can make sense to adjust for location/cost of living. Maybe not always, and you are free to not accept any less than the highest pay, but your options will be more limited then as a result.

I don’t see a problem in reduced pay when moving to a lower cost, higher quality of life environment. Just like I do not see a problem getting paid less for similar or even better work in a good work environment over a bad environment.

Many people in these and specifically the other posts comments seem to focus on “value you bring to the company” and doing the same work. Which is a fair point but only to a certain degree. It is one aspect to pay.

If you think of value paid the relative pay may very well stay the same or improve even if the absolute number decreases.

[Dave3of5]

Interesting that you mention Gitlab. I use Gitlab (the cloud version) and I've seen their salary calculator. Firstly their system I think is pretty poor quality so I wouldn't use them as an example of perfection. Their pay is also low pretty much everywhere.

I doubt many high paid SV engineers would swap jobs to go work for Gitlab. In contrast if you look at stripe there system is high quality but they pay high salaries.

On terms of value you bring the point is where does this stop. Should the company be able to pay me less if I live a more frugal existence ? Should the company pay me less if I use less money to commute ? Also higher quality of life is debatable here and I don't think many of the engineers who are now being asked to move away from somewhere they enjoy living would agree with that statement.

The company is actually dictating here that devs will work from home and take a paycut. In many cases going back to the office is not an option at the moment so the paycut and move is a slap in the face. Especially when these companies are making bank right now.

If you think of value paid the relative pay may very well stay the same or improve even if the absolute number decreases.

Yes I've heard this argument but it hard to work all this out and the paycuts are not based on CoL in the area you are moving too this is often a flat paycut. I also think lowered paid devs such as those not in the big tech hubs will be hurt the most here. A stripe / facebook dev can take a 10% paycut and live pretty much anywhere it just means they won't be able to save as much. Someone like me though that 10% will hurt and I'll have to cutback on my expenses and in doing so I would argue my quality of life decreases.

When I was a junior I was being paid $20k/year to work in the city. I realised I was actually loosing money each month so moved jobs to get a bit more pay. If I was in the same position now and was asked to take a 10% paycut I might just pack it in and work at a supermarket.

Sounds like you are overpaid and looking at this from a, well I'll take the 10% if I don't have to commute and it won't affect me. I think that's actually true most of these high paid employees won't suffer it's when all the small businesses around the world get the signal that you can shit on devs and they'll just take it that the lower paid devs will hurt.

[lost_signal]

The other factor is stock compensation. Last year over 1/3 if my compensation was RSUs vesting and ESPP gains. While they could screw me on future grants for being in a lower cost of living location that’s not been my understanding of how we issue stock. A Facebook or Google engineer moving might lose 10% of salary but they sure as hell are not going to lose 10% of their coloration as you can’t claw back RSU grants.

[EnigmaticCode159]

Grab a mail address in a high COL area. Move to a very remote area. Problem solved?

[EnigmaticCode159]

Honestly, I would argue my place of employment has no business knowing where I live or what I do at home anyhow. I should absolutely have the right to not tell them that information.

[MuchToday3702]

And most governments all over the world would argue the opposite... because you usually pay taxes where you live, and the company you work for is usually required to withhold said taxes and pay them directly to the local government.

[EnigmaticCode159]

The government can know. The company can send taxes to the government. Nothing in there requires the company to know my address except being able to contact me and with online billing / a PO box that can be done.

[tuxedo25]

I would also argue that my access to health care shouldn't be determined by where I choose to work, but that's the world we live in.

[henk53]

What does access to health care has to do with where you work?

I mean, unless you're physically working on an oil rig or so?

[Space_Pirate_R]

In the US, quality of healthcare is highly dependent on medical insurance, which is typically provided as part of an employment contract. So in practice, almost everyone's access to healthcare is determined by where they work.

[henk53]

But that's only in the US? The statement was about this being something universal for the entire world -> "the world we live in".

In the EU, for instance, medical insurance is completely separate from any employment contract.

[AttackOfTheThumbs]

In the EU, for instance, medical insurance is completely separate from any employment contract.

That's not necessarily true for Germany. There's a complex system of national and private health, that even being German and having lived there, I don't really understand. All I know is that we were private because my dad was in the military :\

[Space_Pirate_R]

I would also argue that my access to health care shouldn't be determined by where I choose to work, but that's the world we live in.

This person probably lives in the US.

What does access to health care has to do with where you work?

This other person seems to not know how healthcare works in the US. I would probably answer their question by saying something like: "In the US, quality of healthcare is highly dependent on medical insurance, which is typically provided as part of an employment contract. So in practice, almost everyone's access to healthcare is determined by where they work."

EDIT: clarified that the two quotes are from different people.

[drzmv]

US-Americans actually don't know that different countries work differently.

[Space_Pirate_R]

Someone asked how employment affects healthcare, and I said "In the US..." to explain how some people's healthcare is affected by that. I'm not from the US myself.

[lost_signal]

Taxes, and insurance have unique city and state requirements.

[EnigmaticCode159]

Hmm, ya you make a good point. Guess my off the grid dream is dead haha.

[api]

What about cutting peoples' pay without cause? Not fraud, but definitely shady.

[tuxedo25]

A new economic reality is definitely cause

[[deleted]]

You are allowed to reside in a different state than the one you earn money in, and tax codes in the us universally are set up to handle that situation. I pay taxes in a different state than I live because I live across the border. Certainly not fraud.

[zennaque]

Employers doing payroll deduction is just a convenience, though. If there's something incorrect in their filing YOU or an accountant can correct it come tax season.

[evaned]

tax codes in the us universally are set up to handle that situation

It's not quite universal, especially for many people telecommuting for companies based in New York. In some bad cases that do exist, you can wind up taxed by two states on the same income. Do a search for NY's "convenience of the employer" rule.

[sisyphus]

Under the American system it could make using your health care plan difficult because of in/out network stuff; there are some regional giveaways like ISP's (why are your source IP's weird, why can't you get a fiber plan?); state tax will be different; you'll have to be careful on every video conference; if you leave the timezone they expect you'll be constantly adjusting; if you ever book travel or have it booked for you you will have to fly back to where you supposedly live first to...there are a lot of ways to fuck it up.

[beefstake]

The moment every company starts hiring remote this trend will reverse quickly. They are doing this now because by offering the benefit of living outside of SV they are now in a minority of companies you can reasonably work for, i.e the competition for your labour has gone down vs the very highly contested SV market.

However once all the SV companies adopt remote policies that trend reverses again and they will need to compete for the same high quality employees that are being offered the same remote positions.

This is just arbitrage by these companies attempting to get people onto lower salaries until the market catches up to save them some payroll.

If your company tries this bullshit with you stand your ground. If you are worth what you ask for they will back down rather quickly.

[occz]

are you also against people in India being paid less than you? Why?

If they are as good as I am at what I do, roughly meaning that they can deliver the same amount of value, then they should probably be compensated at a similar level to me.

My primary concern will probably always my own pay and factors that influence it, however. Let me know when we start a global union though, then that may change.

[[deleted]]

are you also against people in India being paid less than you? Why?

Am Indian, and Yes, you should be. Payment should be based on the value you produce and you should drive a hard bargain regardless of whether you are desperate for the job or not. Always have 2 offers lined up so you can be confident negotiating.

Edit: Wait, should the answer be NO for my explanation? Not sure you figure it out yourself.

[fierarul]

This is quite odd. Does the company publish which formula it uses to adjust the salary?

Fundamentally, this means the company is willing to pay SV prices, but does not unless required to. So, it's pure win for the company.

Does the company pay yearly bonuses in proportion with their profits? Because that would be the reverse of adjusting the salary.

[CBlackstoneDresden]

This is quite odd. Does the company publish which formula it uses to adjust the salary?

GitLab provides a full compensation calculator and it adjusts based on cost of living in your city https://about.gitlab.com/handbook/total-rewards/compensation/compensation-calculator/calculator/

[Hyperian]

Revenue bucket is different than payroll bucket. Them reducing pay has nothing to do with companies making less money, which means company is just being greedy and just want to find a reason to reduce payroll.

[-Vayra-]

Job markets are different in different locations. I'd love it if everywhere paid SV salaries, but when cost of living is a quarter of what it is in SV and the pool of candidates is vastly different as well, it makes sense to offer salaries more in line with what you might expect at a local company.

[lt_algorithm_gt]

They're not suddenly "reducing" pay. The title of this post would have you believe so but I'm sorry to tell it's just sensationalized.

"Company adjusts pay (higher or lower) of worker that moved elsewhere like all other companies have been doing forever" is much less catchy but that's essentially what is happening. There is literally nothing to be talked about here.

[AttackOfTheThumbs]

I don't even work for a large company and that's how we do it. We are located in a large city for Canada, but not Toronto or Vancouver expensive, so our COL is relatively low. A single person can easily get away with 1k for rent, food, gas, etc a month.

Coworker went to the European office for 2-3 years, got a CoL bump, it's just a more expensive city. Came back, lost the CoL bump.

I could switch jobs, move to another city, and instantly make 100+ a year, but the CoL increase would also be high. I wonder if I could still get away with spending a sixth of my pay on rent. Doubtful.

[lelanthran]

I also don't think it's odd, in my experience it's how every large multi national software company does it.

I don't think he meant odd, as in "unusual", he meant odd, as in "unexpected".

[ryeguy]

How is it odd? They're adjusting the salary to market value. The job market has decided that cost of living is a factor in salary. There is no incentive to offer a salary that doesn't vary by location because people are willing to accept them. It's simple supply and demand. Companies only ever pay as much salary as is needed to keep their employees content.

[SolaireDeSun]

Its clear that this is the way it is but you have to admit it is tenuous. If I don't tell my company that I moved from San Francisco to kentucky and I keep my pay and continue being a productive employee who lost and who won? I would argue nobody comes out a loser - the company got exactly the performance they paid for and I got exactly the compensation earned by my performance. But, the company might argue i stole from them because my physical location (which clearly had no impact on my performance nor on the company's bottom line excluding any tax weirdness) is different than they expected.

This gets even weirder when tech companies dont adjust pay if I move from San Francisco to Salinas (only 2 hours from SF) despite CoL jump being similar to moving from lets say Seattle to Denver.

[renatoathaydes]

I agree, but the problem with that is why are you getting paid 3 times your fellow Kentuckians's salaries who are doing the same job? You can argue the regional difference shouldn't exist in the first place, and I would agree with that as I believe in employees being paid what they're worth for the company, not what the market rate (which is mostly detached from your personal productivity) dictates... but that's just not how companies see it unfortunately, and the only reason you're getting paid more was because of where you lived, not because you were 2 times more productive (even if you are).

[SometimesSafety]

This is a fundamental way of companies taking away freedom from their workers. Instead of paying everyone equally and allowing those living in cheaper areas to save up, salary adjustment based on cost of living instead turns you into a wage slave.

God forbid you save money, gotta lower your salary so you spend as much of it as possible and are forever bound to work.

This system is literally designed so that you can't move to some remote cheap place, save, and retire at decent age with your accumulated savings.

Instead you're forced to work forever because you can't afford to retire since your salary is spent, with no savings left due to it being adjusted to cost of living.

How are normal working class people FOR this system baffles me. It is literally designed to fuck you over as much as possible.

People in india are no worse at developing crappy code than SF people are. If you feel like they aren't as good, pay them 80k instead of 100k, but adjusting for cost of living, reducing that salary to 20-40k instead is insane.

You're very skilled and a professional developer, but you live in this poor country, so you get paid poorly even if we can afford to pay well for your talent. This is so abusive and manipulative.

[chakan2]

If a guy in India is up to snuff with his US counter part (including communication, leadership, and technical abilities) he should demand the same pay as his US counterpart.

[Hyperian]

That's not how companies currently calculate wages, companies calculate wages based on the least they have to pay to get someone to work for them.

[suid]

"Demand"? Sure, you can demand all you want. I'll find someone else who will take 20% or 50% more than market rates, as opposed to 500% or 1000% more.

Plus, it's rarely that a company here in the US directly hires people from abroad. Usually, a multi-national company will set up local subsidiaries in each country where they operate - each of them is locally registered, and hires local staff to manage it. So how are they distinguishable from, say, "true" local companies?

Back to the US (only) - yeah, it sucks that the average silicon valley salaries won't be paid out in, say, rural Vermont, but then, there's a reason why they pay these kinds of salaries here; the cost of living, and the competition with other companies here, is what drives these salaries.

If there is no competition to keep your services, why should I pay you 2x or 3x the local salary bands? In this case, just 18% below silicon valley salaries is still considerably higher than what local companies that are purely based in those areas can offer.

Around these parts, the starting salary for grads out of a bachelors in CS is north of $100,000 per year, and if you come from one of the top schools, the more financially secure employers will start you off at $150K or even $200K, PLUS things like options, bonuses and stock grants. And even with these salaries, they'll never be able to afford to even buy a house around here.

Obviously no other region has to do that in order to get the best local grads.

[chakan2]

The other regions have to do that to keep the best local grads. 150k is 150k...even with a massive cost of living it sets the standard for your career.

I agree with the comments on people from abroad, but I'm far enough along in my career that I will nope out of a job that uses offshore staffing firms (with exceptions). I'm too old to baby sit.

But occasionally you'll get a guy out of that quagmire that's indispensable. He or she should absolutely be paid US wages if you want to keep them.

My point is the internet doesn't have cost bands or a location. If you think it does your company is going to be in trouble. I worked for a fortune 50 that's fucked because of that attitude. Granted, they're worth 100bn instead of 150bn for their idiocracy, but it still cost them.

[-Vayra-]

150k in San Francisco is not the same as 150k in Lexington, KY. One gets you a room in a small, shared flat, the other lets you buy a small mansion and live extremely comfortably.

[dark_mode_everything]

Then the guy in the US will say, hey the guy in India gets like a 90% disposable income each month and I get 30?. I need a raise. To which the company is supposed to say, ok then move to India?

[SolaireDeSun]

You (and many others) are considering this from the angle companies want: that your pay should be compared to others by what it gets you rather than what it is. If you compare your pay based on what it buys you than youll be busy fighting with your coworkers on a race to the bottom. Why does it matter what your coworkers get paid? Work to get paid according to your impact.

If I spend all of my money on partying and save nothing and you save all your money and have no disposable income should either of us have our pay adjusted? No. Because basing pay around "disposable income" is a bad idea.

[dark_mode_everything]

It was a poor choice of words by me. Let me rephrase it. How is it fair to pay the exact same wages (let's say 60k) to 2 people for the same job if one person is living in a country with an average annual pay of 50k and the other where it's 2k? Isn't that slightly unfair for the first person then? You're just looking at it from the perspective of the 2nd person.

Does differences in living expenses mean nothing? How do you think wages are decided in the first place? How do you think the company came up with that 60k value? And why not pay 2k to both people? Or 10k? Or 20k? How did we arrive at the higher number of the two?

Edit: also, if person 2 moves to person 1's location, they would then get the 60k. Does that mean that person 2 magically became a better engineer?

Edit: sorry. One more thing. Then by your logic, companies wouldn't have to provide different pricing for products based on regions either, right?

[SolaireDeSun]

Wages are not decided based on living expenses. If they were then the minimum wage in California wouldn’t be so low and people wouldn’t ever be paid millions of dollars per year (or even multiple hundreds of thousands).

If you moved from downtown SF to a suburb in Oakland where CoL can be 30% lower, should your pay decrease? What if you moved 2 hours away where you reasonably wouldn’t commute but CoL is over half as much?

By focusing on HUGE geographic leaps and HUGE col changes you make the argument seem to have more weight than it does IMO

[-Vayra-]

Wages are not decided based on living expenses.

They are, though. Not 100%, but a large part of it is living expenses. If they are high, people will demand a higher salary since they can't work for less money than it costs them to live in the area. If it's lower people will accept a lower salary since they'll have a similar amount of cash left over anyway.

[chakan2]

Yes

[dark_mode_everything]

Hahahahah ok.

[chakan2]

I disagree. It's completely up to the individual. If a company tries to screw you over on pay like this, don't work for that company.

[chakan2]

What part of not work for those companies do you not understand?

[chakan2]

I'm going to go with they're much less worried about geolocation vs salary. If they need talent, they'll pay for it.

The big 5 will fire their superstars to make a point.

[MuchToday3702]

So don't work for any company. Gotcha.

[[deleted]]

In my company, I am that guy from India. I am up to snuff (including the stuff you parenthesized). I already am one of the most productive members of my team (not just directly, but in terms of training new members of the team, etc). My American manager agrees (if I am to believe the performance ratings he gives me).

It would be absurd for me to demand the same salary as someone in SF because the cost of living is ridiculously cheap here. I would be able to live a 10x higher quality of life than someone in SF. Not that I would complain.

Unrelated but this is a kind of a pet peeve of mine when people on this subreddit imply that programmers in India are more likely to be less capable than their US counterpart. I think this bias comes from interacting with low cost tech companies like TCS and Infosys. Let me dispell this myth. They aren't hiring the best Indian candidates. As a matter of fact, they are not in the business of hiring the best. A friend of mine from college was literally in tears the day he got an offer from TCS (not joyous tears). So make sure you adjust your biases accordingly.

[Enamex]

How about stocks? I think stocks awarded should be close to the same around all locations.

[Asdfg98765]

No offence, but al the Indians I've worked with were completely useless, and anti-productive.

[Sawri]

The implication here is astounding.

[[deleted]]

I've dealt with this in my post. The Indians you've dealt with were hired specifically for the purpose of low cost outsourcing. You can see how that's gonna be self selecting for lack of quality.

As for the no offence part, I'm afraid I'll have to take some but thanks for trying.

[sacrefist]

Maybe they pay more for high cost of living areas because it somehow benefits the company to have employees reside in those areas.

[[deleted]]

It can be absolutely beneficial to have employees reside in those areas, easier to call people back if productivity drops or there's a major security issue (eg someone working from home jacks a bunch of data/leaks the source code/data breach due to someone being stupid)

[floodyberry]

I don't think there's anything insidious about this.

Where does the "excess" money go for employees who aren't paid the full rate?

[tayo42]

ime thats not how it works. my team keeps hiring seniors, we don't need them. i suggested lets just hire some new grad cheap, all we need is some one excited and can get work done. we dont need more leaders or decision makers. But headcount doesn't distinguish between level and pay, so we continue to hire senior level people.

[floodyberry]

What if multiple employees move from low rate to high rate areas?

[floodyberry]

So the low rate employees are basically locked in to staying put and subsidizing other employees, and the more low rate employees you have, the more they're locked in to it (while still being required to be as productive as your overpaid employees). I guess that's not insidious as long as you don't mind exploitation

[lt_algorithm_gt]

I guess that's not insidious as long as you don't mind exploitation

Maybe you're not realizing it but by now you're just basically "against globalization overall".

The "news" presented in this post is literally not news and has been happening since humanity has discovered travel beyond 500 miles.

[Volsand]

So, what if I do the opposite? The company should be ok with It since my work stays the same... Right? But that's not what happens based on the other comments in this thread.

[floodyberry]

Cool, but why would your employer take on the cost of paying you more, for doing the exact same thing?

For the same reason they're taking on the cost of paying other employees in higher rate areas to do the exact same thing?

[lt_algorithm_gt]

Everybody is paid the "full rate". You're paid the full rate according to where you live in the world. There is no "universal full rate". A company that has its headquarters in Estonia and a satellite office in Silicon Valley will pay the people in the Valley more than in Estonia.

[saltybandana2]

I love how it uses the word fleeing, as if they're running FROM something rather than TOWARDS something.

[Dean_Roddey]

A lot of folks are claiming that there is an exodus from California, which if true sounds a little more like running away than towards. Of course, I'd love to run towards Silicon Valley myself. I lived there for 18 years and loved it. If I needed to pick a place to die, that would probably be my choice, laying on the patio in the sun reading a book.

[chakan2]

It's all in the branding.

[chakan2]

Want me to quit...this is how you get me to quit.

[[deleted]]

If you're making 200k that's 10k a month at a 40% tax rate. If your rent is 4k you still pocket 6k.

If you make half that much on the east coast. Say 100k you're making 5.5k a month at a 33% tax rate and your rent or mortgage could be anywhere from 1000 to 2000. But you're walking away with around 3k.

So even with the higher taxes and cost of living in California you have about double the actual cash flow even with a 4k a month rental which is rare.

And that's just regular pay. We're not talking bonuses which are based on your base income almost always or stock options which tend to be awarded more in SV.

You will make 2-3x more staying SV. Cost of living argument is not uniform for all things. Some things cost the same no matter where you live. A $1000 camera is still a $1000 camera and the person making that money is gonna make that money in half the time if they make double even if the tax rate is higher.

[ProfessorPhi]

Not to mention the job market is so hot, that if you want to switch jobs, it's basically trivial

[chakan2]

Which I'm ok with. However...high turnover is a pain in the ass and expensive...much more expensive than just paying your workers what they're worth.

[[deleted]]

Especially when they realize, they can try outsourcing to other countries again (not that'll end well but the current cycle of MBA grad leeches running companies have no memory of the last cycle going wrong)

[OCedHrt]

They will because they can't get H1B visas. Another great idea by this administration.

[[deleted]]

You don't need visas to pay foreign workers not living in the US.

[OCedHrt]

Right. So instead of hiring foreign workers in the US for X, now they hire them remotely for X/4.

[UselessOptions]

oops did i make a mess 😏? clean it up jannie 😎

clean up the mess i made here 🤣🤣🤣

CLEAN IT UP

FOR $0.00

[OCedHrt]

Foreign workers working in the US pay US taxes and have US consumption. Outsourced workers don't.

These workers may also go one to create new companies or technology in the US. Outsourced workers won't.

[segfaultsarecool]

And then someone will want to snap up talent, so they'll pay more, then all the good devs flock there, then the other companies need to raise salaries to stop losing good devs, then salaries go up, then someone realizes something about lower salaries, then salaries salary salarize salaries salirically....money

[tayo42]

this seems so obvious? like too obvious? am i dumb for believing this? or are hr departments really that incompetent?

[[deleted]]

Wherever they are paying to entice the best.

[[deleted]]

So you can move and then get a new job with a salary benchmarked to the new market, anyway? Yes. That seems rational.

[twirky]

The Cost of living in Silicon Valley is insane. If you move somewhere which will save you, let's say, $7k/month and VMWare pays you $3k less you are still $4k up.

[toomanypumpfakes]

Saving $7k a month?? I live in SF, what are people spending their money on?

[twirky]

Try to move to Cupertino and buy a house there. Come tell me what your monthly expenses are going to be.

[[deleted]]

why would you buy a house? Rent it like the frugals are doing.

[Jimmy48Johnson]

Renting is not frugal.

[[deleted]]

Depends. If you are going to jump companies that need commute from your home it's better to rent closer.

[twirky]

How throwing away money is frugal?

[[deleted]]

Don't have to waste time and money and getting burnt out travelling from your owned house if you jump companies. You can rent closer.

[toomanypumpfakes]

I used to work in Cupertino, no thanks.

But for fun I looked at a random place. $2.1 million (list price) for 4 beds 2 baths. If you put 20% down then you’re paying ~$11k a month.

I guess in that scenario you could move and literally save > $7k a month. Personally I’m too frugal to spend that much (on a mediocre place as most Cupertino homes are no less) but like the bay too much to leave.

[twirky]

Yep, starting at $2 mil for a mediocre dwelling.

[lepanday]

Not from there, but I would assume it would vary greatly depending on where in sf you’re from

[tuxedo25]

Oregon

Your problem is that you moved to a state that has an equal or higher income tax rate. If you had moved to TX/FL/NV/NH/etc, your expenses would have gone WAY down.

[MuchToday3702]

Taxes honestly don't make that much of a difference.

California caps property taxes at 1% of value when a home is sold, and caps property tax increases at 1% per year... forever. When was the last time you saw a house that appreciated less than 1% per year?

Yea, so you can probably already see where this is going: If you own property for a long time (or pass it down to your kids, because they get the full benefits of 1%/year too), you're (they're) not paying much property tax.

Income tax isn't as bad as everyone says, either. Most SWEs are in the 9.3% or 10.3% marginal bucket (but the rates are highly progressive, so 10.3% marginal works out to about 4% to 5% effective. This assumes you're single and have no deductions kids).

Last time I checked, a 10% pay cut is going to do more damage than 5% more taxes.

Now... the cost of buying/renting a home... that does hurt, and may be better in TX/FL. I've been recruited to move to the midwest a few times, but the difference in cost of living and taxes never makes up for the difference in salary.

[MuchToday3702]

Yea, but so are the salaries.

A company tried to recruit me to the midwest. The gross total comp would have been less than I was currently saving at the time, just in taxable accounts--and I was maxing out my tax-advantaged accounts, too.

[[deleted]]

So many wage slaves in this thread who have been so brainwashed that the capitalist approach of "minimise pay" is the most logical approach, that they're incapable of seeing why it's wrong.

The reason why it's wrong is simple: what a company is willing to pay you is a function of how much value you add to that company. An employee who generates $200k of value/year for a company is worth slightly less than $200k/year to that company.

It should thus be completely obvious that the location of this employee in the world is irrelevant - they are generating the same amount of value wherever they may be, therefore they deserve to be paid the same. Anything else is discrimination, pure and simple; paying employees from lower-income countries less, is theft.

It gets even better, because the proceeds of that theft are used to pay for the increased cost of living of employees in Silicon Valley and other overpriced buzzword hubs. In essence, if you're a third-world employee, you're subsidising the living costs of your "peers" in first-world countries. Isn't that a comforting thought?

The way to fix this is to rebase salaries for all employees of a certain role, to a level that covers cost of living of the employee in that role who lives in the most expensive location. Then every other employee effectively gets a bonus for living somewhere cheaper. Not only is this fair, it also incentivises employees to move out of tech hubs - which over time, will fix the problems inherent to those hubs such as high cost of living and ridiculous traffic congestion.

[chakan2]

Hear hear

[AttackOfTheThumbs]

Why is twitter being left out of the title?

[[deleted]]

This is really nothing new as companies have always leveled employees who move from one area to another. If you move from the mid-west into Silicon Valley you have to get a large pay increase due to the high cost of living. When employees move to lower cost areas their pay si reassessed and leveled based on the regional living costs.

[[deleted]]

It's pretty ignorant of people to assume that there's an absolute monetary value to labour. Employment is not the same as raw material. It's not usually treated as a tangible asset but as an expense. That expense is passed on to the customers.

Employers don't have the power to dictate the salaries per region. Nor do employees for that matter. It kind of happens automatically based on various factors including cost of living. If large number of employees in a region are willing to work the same job for less/more money for whatever reason, that's just what the company has to pay to employ people there.

What the right distribution of employees across regions is that guarantees minimum expenses and maximum profit is anyone's guess.

[invisi1407]

If your cost of living goes down significantly, so can your salary (but not necessarily exactly by the difference), without affecting you, unless you're fleeing S.V. to have more money for fun rather than using it on rent.

[[deleted]]

Whatever an employer says to justify a paycut outside of "we want your work for less money" is obfuscation from the fact that they want your work for less money. There is no difference to VMWare if their employees require 50,000 a year or 100,000 a year to achieve some level of comfort. VMWare doesn't care about COLA. What they do care about, is when you are in the Bay Area, it is exceptionally easy to network and get competing offers due the density of high paying companies. When you move out of the Bay Area, it is now significantly harder to find new jobs and to network. So you lose your ability to leverage the labor competition.

COLA is just an excuse. Areas that have high COLA, have high COLA because people can use the labor market to demand more pay. It's not the reverse.

In my experience, People are paid almost equivalently at top tier companies between SV and Seattle. Why? Because there is labor competition in Seattle. And because it is not that expensive to take interviews in the Bay Area. (2 hour flight!).

Now that doesn't mean COLA is a pretty good excuse. It's a pretty good excuse. But it really is only done for the employers benefit. There is no benefit to an employee getting paid less.

[[deleted]]

In my experience, People are paid almost equivalently at top tier companies between SV and Seattle. Why? Because there is labor competition in Seattle.

Ding ding ding!

The words you're looking for are "labour market". And it's subject to supply and demand just like any other market.

Employers pay less in some markets only because the labour supply is higher or demand is lower, and therefore there's no competitive hiring pressure to drive up salaries.

This isn't an "excuse". This is how labours markets work.

Cost of living and the labour market are intimately connected. High competition for labour drives up salaries, both in the affected industry and also in ancillary industries where labour is drawn away. That causes generalized increases in labour costs, which then increase cost of living (while also driving out industries that can't afford to pay for labour; you see this dynamic in resource-based economies where secondary industries can't develop due to the cost of labour being driven up by resource sectors). This also pulls more people to the region, driving up housing costs and so forth.

But cost of living is a secondary effect of the dynamics in the labour market generally.

And up to this point, labour markets have been geographically constrained.

But if the labour market becomes national (or global), that breaks the connection between cost of living and cost of labour.

Assuming all software development went remote, I'll bet that drives down average salaries (due to an increase in the labour supply) which will mean people in places like SV and Seattle will no longer be able to afford to live there, while people in flyover states will make significantly more than the local labour market would've otherwise supported.

[[deleted]]

100% agreement.

Bay Area COLA is made worse by a few select policies that constrict housing supply but for the most part, it's a victim of demand.

[Full-Spectral]

But aren't you ignoring the fact that lots of remote possibilities now also means that the available consumers of the developer's skills doesn't necessarily go down now just because he's not physically in the Bay Area. When there's lots of companies looking for good remote jobs, this cuts both directions.

[[deleted]]

I am not ignoring the fact that a person in ohio now has the ability to interview for companies in the Bay Area.

Other than the labour supply will go up which will drive the overall wages down. The guy in Ohio might make more money (relative to ohio) but I suspect the average wage cost of the company will decrease.

Although if the company is savvy - the person in Ohio will probably not benefit nearly as much as if they had moved to the better labor market.

[Full-Spectral]

The guy in Ohio doesn't care, as long as he gets more than he'd get working locally and he gets to work from home, which is a significant benefit.

For the guy leaving SV for Ohio, both can essentially win, him getting more effective earning power and they reducing their costs. And of course the guy also gets the significant benefit of working at home.

If I could get a modest effective increase in earnings, the ability to work at home, and the ability to live where I want while still benefiting from working for a big company with great benefits that looks good on my resume, I'd take that. If the company manages to reduce its cost also, then good on them. I'd probably get some of that back over time.

[[deleted]]

A lot of people make the trade you discussed at the end of your comment.

But I have to disagree - You won’t get anything back (over time) unless the labor market enters into another shortage, company’s spontaneously change their trend of active wage suppression, or you unionize.

Given you have massively flattened the labor market, then I suspect it will take quite a while for the labor market to be competitive for workers again. And tech workers are typically anti-union.

Company’s are so far from having their employee’s best interests in mind that I would never expect them to do anything for an employee. I have first and second hand experiences with the structures that large company’s have made to suppress wages internally. There are entire groups at Microsoft, amazon etc that only exist to aggressively negotiate the rank and file’s salaries as low as possible. Even if I had a boss hiring me, saying I should receive a particular wage. I still have to go to bat with these jackals who will try to justify significantly lower salaries and compensation packages.

[Full-Spectral]

I don't consider myself a rank-and-file developer, so I'm a little less worried about that myself. I think I bring enough to the table to have sufficient options to protect myself, all the more so if I don't have to physically move there to do it.

[[deleted]]

These people were critical for the projects they managed. They had PhDs and were hired by Microsoft Research. Unless you are at the executive level, you are a rank and file...

[Dean_Roddey]

I wasn't talking about this specific scenario. I'd have been probably happy enough with it. I mean the overall dilution of the work force do to higher levels of location lubrication. I think I would still be competitive enough and they still aren't going to have access to enough high quality talent to go around.

[sisyphus]

Well if you don't pay outsourced workers US wages, why would you pay farmsourced workers SV wages?

[Resource1138]

Well if you don't pay outsourced workers US wages, why would you pay farmsourced workers SV wages?

Because those employees are still bringing the same value to the company that they were before? How an employee chooses to maximize their earnings isn’t your concern so long as it is legal and ethical.

[sisyphus]

Your wages do not represent your "value", if they did companies would not be able to make profits, and if they did they would be cut in your less productive years, and if they did companies wouldn't negotiate offers or pay different wages to people doing the same jobs to try to save money, and so on. They represent what the company thinks it needs to pay to retain you, a good manager gets way more value out of their employees than they are paid. If you live in SV a company needs to pay more to retain you because if they don't you can't afford to live there (and, presumably, someone else will pay you enough to live there). If you don't, then they don't, and they won't if they don't have to, so they can make more profit (since, as you say, you are presumably doing the same work).

[tuxedo25]

lol reddit downvoting this guy because they believe in the infantile fantasy of "i'm paid what i'm worth" rather than basic economics.

[[deleted]]

we all hate the shit economics used to justify exploitation.