This makes no economic sense; Tech companies will reduce your pay by 18% if you move away from San Fran

It's a cost of living adjustment. Simple as that.

seikosha wrote:

It's a cost of living adjustment. Simple as that.

Yeah, COLA is a pretty simple thing. My guess is that the OP isn't actually an ivy econ grad.

Free market. If the people don't like the deal find a new company. If they accept it, that's what they're worth. No ones holding a gun to their head saying they have to stay with the company.

I guess if you started in SF or a high cost of living city, you feel like you are getting dinged, but I really benefited in the reverse a few years ago. I went to work for a company where the position was work from home except travel and I supported a region around NYC. My guess would be the company is paying me probably 50% less than they would have to pay someone living in NYC, but I'm making about 10-15% more than the market in my city. Even if they flew me up 8 times a year, they'd still be ahead. They love it because they save money and I'm not trying to leave. Economics will eventually equalize the situation for the tech companies with a competitive market.

After a year of the WFH, I almost relocated to another state. One of the key factors is the taxes I would pay in that state living in a downtown region was about ~$7000 less than I was paying for my state/city taxes. I think this is something that states and cities may have to deal with as the mass of white collar high paying jobs realize they can work anywhere.

You're either still in highschool or you have never worked in corporate America.

Companies don't care about rewarding productivity or paying you what you are worth, there goal is to pay you as little as possible to do the job they need done.

FWIW every tech firm already does this. When I worked at a ride-sharing company different cities had different 'Tiers' based on the COL. Tier 1 cities paid the most, and so on.

Nothing new here, it is only becoming novel as more workers leave SF.

I didn’t read the article, but would people really get a massive pay cut if they move to higher COL areas? I have spent many years in Manhattan and SF, the former is at least as expensive especially compared to non-SF parts of the Bay Area. Seems ridiculous to make someone take a pay cut when they relocate to somewhere like NYC.

Cost of living adjustments make no sense if your employees are working remotely. Living in a high COL area is of no benefit to the company anymore. I can't expect a raise just because I chose to move to downtown SF.

This sounds like an outdated policy on the books that will eventually go away.

zizek wrote:

Companies don't care about rewarding productivity or paying you what you are worth, there goal is to pay you as little as possible to do the job they need done.

Senior Management, Shareholders, Large Volume Customers, Board of Directors, Politicians, Bureaucrats and far back, finishing dead last..............Employees.

zizek wrote:

You're either still in highschool or you have never worked in corporate America.

Companies don't care about rewarding productivity or paying you what you are worth, there goal is to pay you as little as possible to do the job they need done.

FWIW every tech firm already does this. When I worked at a ride-sharing company different cities had different 'Tiers' based on the COL. Tier 1 cities paid the most, and so on.

Nothing new here, it is only becoming novel as more workers leave SF.

I think the OP is pointing out contradictions in the free market. Obviously companies are not going to pay any more than they have to. However when right wingers explain to us what we can do to improve our salaries, they say we should work hard and be as productive as possible and you will be rewarded.

If you are not being rewarded for worth or value added then this invalidates one of their key arguments about how resources are allocated in our economy.

18% is a pretty steep cut, but this is a step in the right direction. The past 20 years have seen tech, finance, energy and other major white collar employers dedicate themselves to cramming as many people as they can into about a dozen US cities. The result has been the cost of living skyrocketing in already expensive cities like NY, LA, Seattle, San Fran, etc. and cities that used to be a bargain, like Dallas, Houston, Nashville, etc. are now seeing property values double over the past two decades (my house in Houston doubled in value from 2010 to present). Meanwhile, some very lovely small towns and mid sized cities are falling apart because everyone has moved out. Cost of living in these cities is cheap and there are great schools. Letting people work remotely from wherever in the US could be a huge opportunity to rebuild many of these places that were left behind when manufacturing offshored after NAFTA and other free trade agreements. In fact, one of the biggest problems behind long term unemployment in these forgotten towns and cities has been the fact that people are not willing or able to relocate to more expensive cities where there are job opportunities. Tech companies should be recruiting in these markets for remote employees. And an exodus of tech employees from markets like Seattle, San Fran, etc. would help bring back down housing costs and homelessness.

You do realize there is no contradiction? Companies are going to pay as little as possible but the more skills you have the higher you will get paid. Both can be true at the same time.

The scary part of course is when instead of doing a pay cut they just lay you off and hire some russian guy at 1/3rds the price. After all once you realize distance doesn't matter, why stop at denver when you can go to Moscow or Mumbai....

ivy econ grad wrote:

Isn't a company supposed to pay you based on your productivity and worth to the company? Now they are going to cut your pay if you move away from San Fran?

Look-- if your job can be 100% done working remotely, the person who is is going to end up doing it will live in India, not Boise or Columbus or El Paso.

Employees in the Bay Area are worth more to their employer than employees elsewhere. That's kinda why the whole "Bay Area" thing exists in the first place.

Looking at a computer screen and talking on your phone is not work. It’s hard to believe people get paid for that.

Making and fixing things is work. It’s time to cut the fat and pay skilled workers the big money.

I'm assuming this is based on the office(s) being open/re-opening.

If not, how would they know you aren't in San Fran/Seattle/Wherever that the office is located in and therefore still get that huge check? All you'd have to do is connect thru a VPN that has servers in one of those cities and use a PO Box mailing address that is also located in the city.

18% is a pretty fair deal to not have to live in San Francisco.

This doesn't make sense when everyone is working remotely. But these companies already have employees in Denver, Austin etc who don't get the same COL adjustment as the SF based employees. So it wouldn't be fair if the guy who moved from SF to Denver keeps the COL adjustment but the Denver employees don't.

4runnerII wrote:

ivy econ grad wrote:

Isn't a company supposed to pay you based on your productivity and worth to the company? Now they are going to cut your pay if you move away from San Fran?

Look-- if your job can be 100% done working remotely, the person who is is going to end up doing it will live in India, not Boise or Columbus or El Paso.

Employees in the Bay Area are worth more to their employer than employees elsewhere. That's kinda why the whole "Bay Area" thing exists in the first place.

Time zone and skill differences matter for highly skilled labor (not people making low six figures but the very top talent that these companies need to attract are concentrated in the US). A lot of these jobs can be done remotely but it needs to be similar time zone (I’m in meetings 3-5 hours a day with colleagues and senior leadership is often 6-8+).

Agreed but they really need to stop the rhetoric about free market economics rewarding the most productive, useful people. Maybe I should have called it insincerity. They will happily go to Moscow or Mumbai and pay less. Any ambition you have for a good life with a high salary will negatively impact your ability to be hired.

That has already been going on for over 20 years. Usually lead by bean counters that think workers are interchangeable. Typically results in train wreck projects and an eventual change in course. Watched this unfold in several companies.