Should remote worker salaries be based on location?

I haven't made my mind on this yet tbh. I tend to not agree with the argument that workers are bringing the same value to the company no matter their location. What about doctors that live outside major cities. Should they be compensated the same as the doctors in the centre of NY? I think that's a utopian state where it just can't co-exist with the current way of how markets work.

On the other hand, I totally agree with Sid (from GitLab)[1]:

> "If we pay everyone the San Francisco wage for their respective roles, our compensation costs would increase greatly, and we would be forced to hire a lot fewer people. Then we wouldn’t be able to produce as much as we would like," Sid explains. "And if we started paying everyone the lowest rate possible, we would not be able to retain the people we want to keep.

> "So you end up in a place where the compensation is somewhere in between. And that would cause us to have a concentration of team members in low-wage regions because it’s a better deal for them. They’re getting more than the market rate, so they’re more likely to apply and accept an offer. And they’re more likely to stay regardless of how happy they are, which is not healthy for them or the company."

That makes sense! Both company and the employees are equally happy. I don't find anything wrong with that.

I think choosing an "above the local rate" rate to pay your employees is the way to go. Rate them based on the criteria you think it's best and put that in perspective against their local rate and the rate ofc that they want. They are going to be some that live in Greece and want to be compensated with SF rates. That's fine and they are probably able to do it. But that shouldn't affect your own strategy.

1: https://about.gitlab.com/blog/2019/02/28/why-we-pay-local-ra...

It should be of no concern to the employer where I live; that's my decision and deciding my salary based on that is nothing but pure discrimination, no better than discriminating based on race or ethnicity. If you can afford to pay a certain amount of money to someone living near you then you can afford to pay the same amount of money to someone living in Romania. There's also the issue of calculating the cost of living - why should I trust a US based employer to be able to correctly calculate my cost of living if I live in Saudi Arabia?

Don't listen to what others think. As the hiring manager or business owner, you ultimately decide what's it worth to you. Also, not all candidates are equal. Just because someone is remote doesn't automatically make them special and vice versa.

Decide based on merit of the candidate. If they are remote BUT are worth paying $x/Year, pay them. If they are not worth paying, their location doesn't matter. If that $x/Year s good enough for both parties, who cares what the number is compared to say US salary or Silicon Valley.

I think paying less than you would pay locally based on the location is kind of a discrimination.

In fact, simply paying your local salary to remote workers opens a pool of really experienced people from all over the world for you. In many cases probably even superior in experience than you would be able to find locally with your local average salary. So you are already winning big here, why would you want to screw that by assuming their worth based on where they live?

How can one even calculate that? For example, cheaper/poorer countries might have a worse healthcare system without insurance, so people would need additional money saved aside for health emergencies (like cancer or similar) for themselves and their family. And this is just one example.

Selfishly, no, you should offer to pay what you think is fair for the exchange of service you receive. If you get the same quality work from a person who lives in NYC as a person who lives in Ohio, the pay should be equal.

But, as a business person, you should pay the lowest amount you possibly can while maintaining the level of quality you require. People who live in LCOL areas are more likely to accept a lower bid to do the same amount of work, which opens the pool of labor up enormously for a lower price point.

What you absolutely shouldn't do imo, is set up a job req for a price point, then negotiate a candidate down because of where they live.

If you can only pay 80k / year, then offer 80k. If you get a candidate from somewhere that 80k is above average, isn't that just a win/win?

Pay based on location & candidate, I have been doing it this way for years, it works and is the most fair and proper method. That doesn't mean you lowball people or that you don't pay fair wages or that you overpay, it simply means that you are taking into consideration the local economy and cost of living differences in areas. It is an unrealistic notion to say everyone gets the same pay regardless of location. Basic economics tells you this is not a sustainable model.

Buffer and Gitlab are pretty open about their methodologies, where they use pay bands for a position and then the do a location & experience adjustment. Essentially this is how I have done it in the past (typically as the team gets larger), you set pay bands per country per position, then do location & experience based adjustments. You can see how gitlab does it if you check out one of their open positions there is a salary calculator and it shows you the basics (they even show how options work). That said, you shouldn't rule someone out just because their pay request exceeds your defined band/location/experience calculation if their experience/expertise justifies their ask. To me the banding is there to set a starting point and make things open and transparent to the best of your abilities without publishing peoples individual pay rates.

Why should it be? The work I do and the value I provide is the same regardless of location. Oftentimes, remote work is even more valuable in terms of productivity gains so they should be paying me even more than locally.

this is obviously a divided topic. I think that the most important things that you ensure you are paying a fair wage. one advantage to location-based income is that you can provide a more than fair wage in lower income areas. it's hard to know how much to pay if you do this, I have been musing about better understanding living expenses with respect to region. I think finding a stable location under the currency of your employment is an interesting way to look at this. living expenses under the US dollar for Delaware grow very slowly and steadily. you can fix an income and a raise rate to that area, then determine projections to other areas by your preferred method. this may mean that certain regions become prohibitive. The major downside, is that this is considered an invasion of privacy. many of the remote workforce don't want to have to ask their employer before moving. you will have to change their wage when they move if you adopt thes sorts of method.

I think the first question is:

- Do you want to pay fair

- do you want to maximize value for your money

- or do you want to hire from the pool of the top 10% world wide?

max value: you hire for little money from poorer nations

top 10%: you adjust to local rates

fair: here it gets philosophical... I'll probably go with you pay everyone the same, which probably again means you'll not hire from rich countries.

Compare not absolute numbers but the quality of life - aim for the equality of it.

E.g. if you pay local market rates for someone based in Seattle and another one based in Zimbabwe - I'm pretty sure that former's quality of life will be much better.

It's all about base living costs and how much change is left over as an approximate percentage of income.

Are you going to pay them more later if they then choose to move somewhere more expensive?