How to Pay Remote Workers
Jul 26, 2019Series: Remote Work
Pay remote workers the same as you’d pay local workers. Or vice versa if your local workers are cheap.
That’s it. That’s the blog post.
It’s 2019, folks. Average home internet speeds are more than enough for video conferencing and every single laptop has a built-in video camera. Conference room video hardware has come way down in price and gone way up in quality. Everyone collaborates via Slack and email and Jira and wikis and shared documents in the cloud anyway. Our code is hosted in the cloud, ci/cd in the cloud, deployed to the cloud. Why on earth would it matter where your desk is?
The truth is, it doesn’t matter. With extremely low effort, any company can hire remote folks and have them be productive, collaborative members of a team. I should know, I’ve done it for the last 8 years.
One thing that always comes up with remote employees is “how much should I pay them?” I’m not exactly sure why this is even a question…. actually, yes, I am sure. Because companies are cheap and want to pay employees as little as possible. They are, after all, a business. So I guess the question is more accurately asked “How can I justify paying my employees less while still getting great talent?”
The answer is always the same - cost of living adjustments. The theory is that you pay everyone equitably, so they all sustain the same standard of living. i.e. you pay the person in San Francisco enough for rent and food and spending money for a new XBox every month. You do the same for the person in rural Ohio - rent, food, Xbox every month.
Just like a meritocracy, on its face, this sounds perfectly fair. But peek under the surface, and it’s easily dismissed as false equivalence. Why is a SF apartment four times the cost of the same apartment in rural Ohio? Because of supply and demand. Because people believe the apartment in SF is worth more, so they’re willing to pay more. Why do they believe that? Because the apartment in SF is near awesome restaurants, easy public transportation, lots of great similar-minded folks, etc. etc.
These are attributes of the apartment that don’t fit on a spreadsheet of square footage, number of bedrooms, and lot size… but they have a huge effect on the price of the home. Clearly, that is what you’re paying for when you buy a $500k studio in SF.
So, if the house in SF is clearly more valuable than an equivalent-sized one in rural Ohio… why should the company subsidize paying for those invisible benefits that come with a house in SF? Would you pay someone more who lived in a bigger house in the same city? Why not? Why is it ok for companies to subsidize the location-based value of a home, but not the value derived from square-footage or lot size?
To put a finer point on it… would you pay someone less who lives on the wrong side of the tracks in the same city? That’s still location-based, isn’t it?
The thing is, the value of money isn’t actually different in SF and rural Ohio. Buying an XBox from Amazon costs the same in both places. $3000 a month in rent for a studio or $3000 a month in mortgage for a 4 bedroom house…. still costs you $3000. If you live in SF, you’re saying that studio’s location is worth $3000 a month to you. If you live in rural Ohio, you’re saying the extra bedrooms and big backyard are worth $3000 a month to you.
…so why would you pay the person in Ohio less?
Someone on Twitter mentioned they understood paying people more who live in high cost of living areas, but thought it would be weird to pay people less who live in low cost of living areas…. but it’s really the exact same thing. You pay the person in SF more, and you’re just paying everyone else less. You can’t have it one way and not the other.
Does this mean you have to compete with Google’s salaries if your company is in rural Ohio? Yes and no. It’s true that Google and the other big-five tech companies pay people a lot more. But that’s true even in Silicon Valley. I’ve interviewed at lots of SF companies that weren’t able to compete with those kind of salaries either, but they still get to hire a lot of great talent. The big five may have a lot of devs, but they can’t hire all the devs. And since hiring is really hard, they don’t even get all the best devs. The big five mostly pay a lot of money to keep the other four from poaching… i.e. they’re really only competing with each other.
So, you might not have to compete with the Googles of the world, but you probably do have to compete with the Salesforces, Stripes, and (previous to acquisition) Githubs. While those companies generally pay more than some random tech company, it’s not double or triple. It’s like 30% more. And honestly, developers are worth that much. Basically every company in existence needs developers, or needs to pay a service vendor for specialized software.
Hiring managers - the onus is on you to stop this predatory and unfair hiring practice. Don’t accept it as “just the way things are”. Speak up against it. Fight to get your remote developers the same salary and benefits your on-site folks get. Their work is just as valuable to the company as the local folks, paying them less is unfair, insulting, and wrong.
This is a post in the Remote Work series.
Other posts in this series:
- Jul 26, 2019 - How to Pay Remote Workers
- May 14, 2019 - Hiring Remote