You can't make a statement like that without facts to back it. The truth is that companies do this all the freaking time. Besides that, it has also been common for a decade+ for CA-based employees (both LA & SFBA) to sell their artificially inflated house and quit their job to move a lower COL state (often Texas, Washington, Oregon, or North Carolina, all of which are much cheaper and have lower income tax schedules). If they stay with their existing company, their salaries are frequently decreased based on COL calculations. Otherwise they use the previously mentioned tactic and quit for something different, using their current salary as a negotiating point.
Exactly this. I work for a FAANG and live in Texas. If employees leaving the bay area could leave and maintain the same level of pay, I'd expect a bay area salary as well. With the lack of a state income tax and relatively low housing costs I'd be living like a king! According to NerdWallet's COL calculator I could pay off my house after a year with just my salary increase.
Edit: And if I moved to the bay area I would absolutely expect a COL increase
I mean if you look at it from the other way… they agree to pay $X for the work but give you an increase of $Y to support a higher cost of living in certain areas to be near the office.
This is being spun as a decrease instead of seeing that people actually have had an increase because of CoL. which no longer applies if you move.
If you agreed to $X and then move to say the Bay Area would you expect them to keep your salary the same?
If the company just keeps paying the Californian salary but offers relocation to e.g Texas, it may be a significant direct benefit for the employees, worth the move. Just compare:
But that isn't how it works, at least at any company I have seen that implements remote relocation (and I assume FB too).
If you move to a place with a 50% COL as NYC or SF, you retain 70% or so of your salary. You still come out ahead. I think you've set up a strawman fallacy here. People come out ahead financially when relocating to lower COL, even with the downward salary adjustments.
It's not just adjusting salaries based on location. It's slashing people's salaries by quarters and halves even if they have been working at the company for years just because they moved somewhere cheaper.
Your value hasn't decreased just because you live in Wisconsin instead of California. Your contributions are the same and you are just as productive of an employee. They have no right decreasing your salary just because they can get away with it.
In most cases, companies aren't actually able to adjust point-for-point for CoL.. it just isn't possible in any market with local opportunity. If remote markets ever see dramatic expansion/acceptance, CoL won't even be a mentionable factor.
CoL might be N-300% higher in SF but salaries (thank wage-fixing companies) are not. Salaries are (necessarily higher) but it's easy to dwarf the spread in normal, requisite expenditures.
CA has a high state income tax, relatively higher sales tax (than most midwest areas), and in the case of SF, the oh-so-obvious (self-inflicted) real estate problem.
It's bizarre considering that the company benefits as well when you move to low cost of living areas. Those tend to be low tax states so the state tax burden associated with employing you that the company has to pay goes down. Its absurd that they demand additional savings on top of that.
>It's a bit strange that they cut or raise your pay by that calculator when you move cities."
That is odd. Usually if you make more based on your previous location a company won't actually claw anything back you just will likely not be getting any raises.
Sorry to be cynical but I assume its just profit driven, keep in mind not all companies employee these bands. For those that do their rationale is why pay a employee more than the region dictates? I think an employee needs to figure out if the COL drop still makes sense to where they move. Say you make 200k in the bay area and move to san diego, which I was told is about a 10% to 15% paycut, you still make 170k and a typical engineer there makes alot less than this, so basically its all down to how bad you want to move to an area and if it makes financial/career sense.
Many companies will want to adjust your salary downward if you are moving from the Bay Area to a lower cost of living location. This article seems to gloss over that fact.
Sure. I just mostly see this argument made by silicon valley people moving to Texas or whatever, and asking why they should not continue getting silicon valley comp.
Most just think they're clever and exploiting the system, and the thought that they'd get paid lowly Texas (or Ohio) salaries never occurred to them.
I agree. This type of action is signalling the company doesn't actually pay you for your knowledge or output. It pisses me off. Flip the argument around; if FB hired you to work remotely from Montana, then you decided to move to San Francisco, would they INCREASE your pay based on COL?
If the answer is "no, of course not", then why is it okay for them (or any company) to pay you less, if you move to a lower COL area? It absolutely isn't fair, and companies want to eat their cake and have it too.
You're right, the real reason is the high density of companies and the talent they attract to the Bay Area. My point with cost of living was that companies need to pay $(CoL + X + Y) for people to be willing to move out here. Where X is whatever they need to pay to entice the employee away from the other companies. And Y is the amount of savings/discretionary spending the employee wants to have.
I always wondered why the FAANG companies don't move their main campuses to somewhere with a lower CoL (call it CoL') so they only need to pay $(CoL' + X' + Y) to keep the employee. Paying X' (where X' probably less than X) because they're no longer in local competition with the other companies. I wonder how long it would take to recoup the cost of moving the company in savings on compensation. There are countless places which have better quality of life than the Bay Area, while also having lower CoL. I chose to move to the Bay Area because Y was greater than what I could get anywhere else.
Thank you for this. I don't understand why people have such a hard time thinking this way. Many people are very elastic and flexible about where they live (especially when it's 'anywhere in the US') and as someone with a job in the bay area, I don't understand why I should take a pay cut to move somewhere cheaper to do the same job. The employer ends up incentivizing me to stay in the most expensive area that also happens to be the easiest place to get a competing offer... makes no sense
But the property taxes paid by the companies are relatively trivial, as compared to the property taxes paid by the EMPLOYEES. Shouldn't the property taxes paid by the employees be what's shifting employees to other cities?
Of course, you could argue that the salaries are raised to compensate for cost of living, but then you're back to saying that the companies are footing the bill anyway, and apparently happy to keep doing so.
Incidentally, property taxes are fairly low in the Bay Area. My house cost more than 5x what my sister's house in Ohio did, but my property taxes are less than half.
I don't understand this rational at all. If a developer in SF is worth x dollars to you, why are they suddenly worth less if they move to a lower CoL area? If you're paying salaries that are livable in a high CoL area, you aren't discouraging people living there, you're freeing people to move wherever they want.
I'm a Silicon Valley based dev who really wishes he could move far, far away from here without taking a huge pay cut, so I'm obviously biased. That said, in my view as an employee, the value I create for the company isn't based on my physical location, so why should my salary be?
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