Great article. I especially loved this bit:

> Ford employees would be “demoralized by this sudden affluence,”

I am always amazed at the ability of people to rationalize fucking over others as somehow good for them.

It's like how GitLab justifies paying people less in lower cost of living areas by saying that they don't want unhappy employees to feel like they should keep working there just for the money.

I always love it when companies act like you shouldn’t be working there for the money. That’s the whole point of having a job! If you want people who aren’t in it for the money, you should post your ad under “volunteers wanted.”

It matters how much they are paying everyone though. You can also spin it as Gitlab is subsidizing people in high cost of living areas... which is more the truth than your spin since in the end, if the lower cost of living person is being underpaid they wouldn’t be taking the job anyways.

You can read why GitLab pays local rates on our blog post [1]

[1] - https://about.gitlab.com/2019/02/28/why-we-pay-local-rates/

I’d just go buy a PO Box, or some sort of mail forwarding service, in the most expensive post code I could find.

Yea, and so would everyone else, and you’d be competing against them for the salary still. Your PO box doesn’t merit you the job in the end.

If the work is sufficiently profitable to the employer that they can afford to shell out a SV salary for someone in SV then they can afford to shell out that salary for someone not in SV.

But no one is forcing the other guy to take the job?

I expect salary to be the same for same-skilled remote workers no matter where they live. I would expect that to result in most remote workers not living in Silicon Valley.

Why would you expect that?

It would certainly be nice if I was paid based on value generated (it would mean a big raise even in SV), but that's not normally how economies work.

Equivalent products have equivalent prices, barring transportation expenses. With remote employees, transportation is irrelevant.

Only within the same market.

The same apartment in Manhattan will cost more than in Houston. The same mixed drink costs more at a fancy restaurant as at a dive bar.

Demand is as relative to price as supply is. There is a lower demand for developers in Topeka, and so the cost of developers is lower as a result.

There’s no “in Topeka” for remote developers, though.

If you could materialize a drink from a distant bar in your kitchen, and the drink from the dive bar was identical to the one from the fancy restaurant, would you pay more for the one from the fancy restaurant?

Consider a real-world example. You go to the grocery store and buy some strawberries. Some of the boxes are from a place where they’re cheaper to grow, and some are from a place where they’re more expensive to grow. Would you pay more for the latter? This sort of intermingling is common, and every time I’ve seen it, the prices are the same. The store doesn’t even consider them to be separate products. They have the same bar code and ring up identically.

Barring difficulties with international borders or time zones, there is only one market for remote workers. It doesn’t make the slightest bit of difference if the remote employee is in Topeka or Manhattan. Why pay more for the latter?

But remote developers aren't the only kind of developers, and people do pay more for strawberries grown locally.

The remote developer market is a piece of the developer market, and the developer market pays more for developers in SF than in Topeka, same as remote strawberries cost less (often because cost of labor is lower).

As a remote dev, you're competing with other remote devs who can out price you. If I can offer someone else 10k less for the same product, why wouldn't I?

People who want local strawberries pay more for them. People who just want strawberries and don’t care where they came from won’t pay more.

We’re specifically talking about remote workers here. The fact that some companies pay more for non-remote people doesn’t really come into it. If you’re hiring remotely, it makes no sense to pay more for an equivalent employee who lives in a more expensive area.

Price discrimination often makes sense.

If you have two offers, otherwise equal, and one pays more, will you refuse it because that offer is less than what you would have been paid in another location?

If you're a remote dev with skill x, unless you want to take less money, you're going to compete with the many more remote devs with skill x in other more expensive locations. So you accept less money because you can afford to, and that's better than no offer at all (because it went to a different person).

As long as skilled, unemployed remote workers exist in cheap areas, I’d expect the salary to be lower than that of non-remote workers in expensive areas, and I’d expect remote workers in expensive areas to be unable to compete. Once you run out of remote workers in cheap areas, I’d expect salaries to rise enough to start attracting the ones in more expensive areas. But salaries would naturally rise for all of them, because they’re all ultimately in the same market.

This is true if Gitlab is being rational. If they can afford two cheaper (but equal quality) engineers outside of SF, then why hire the SF person at all?

I think that’s a bit backwards. The question is, if they can get the people they need at a lower salary, why would the SF person accept a job with them?

Considering that they are criticizing the increase, I would hope that was obvious.

This is a great article. It is crazy how little things change in a hundred years. Hopefully we aren't on the brink of a 1930s type correction

It took a Great Depression to get the original New Deal. I think there’s enough political headwind still from the Recession to afford another ND, but just saying.

The crazy thing is there was a big market correction in the early 1900s. I’ve read it helped create the environment and had many of the same bad market actions that eventually brought about ‘29. History might rhyme sooner than later. There are definitely worrying trends too.

This is a great article! I wonder how this would contrast with Japanese automakers (in & outside JP).

What is also striking is Ford's understanding of how 'money' works.