Richard Bergmair's Blog


==> Pedro and Henrique of Brex wrote a detailed blog post about Remote-first at Brex.

For a remote company to adjust pay to an employee’s geography: so not cool.

Offering remote and paying people based on what they’re worth to the company: Part of the solution!

Offering remote and paying people based on where they are: Part of the problem!

So, what is the problem?

  1. Wealth creation done by tech companies and tech workers ends up in the pockets of Bay Area landlords instead of those who take risks and do work.

  2. Other geographies besides the Bay Area invest heavily in getting their young people some top-notch education (like Europe). Instead of earning a return on that investment for themselves, they see their young people relocate to the Bay Area and contribute to the tax base there.

  3. If you’re a top-notch tech professional and want to earn money commensurate with your value, you have to go through the hardships of the immigrant situation. You have to be part of a culture and economic system that you may not like and subject yourself to political leadership that you may not approve of.

What will happen if efficient markets do their thing? Some remote companies will be making geographical adjustments to pay. Some will not.

  1. The best workers in low-COL areas will end up with the companies not making adjustments. So making adjustments will leave you stuck with the worse workers. So, you will get what you pay for: If you pay little, you will get low-quality work even in low-COL areas.

  2. People in high-COL areas will realise an opportunity to have more disposable income by relocating away from high-COL areas and taking remote jobs with companies not making adjustments. The only people who can’t do that are those whose work is so low-quality that they can’t compete internationally. Hence, their high-COL postcode is their only viable argument when negotiating high compensation. So, paying higher compensation to people in high-COL areas will become detached from the narrative that those also happen to be the best people. It will come to mean nothing more and nothing less than making donations to those poor, needy Bay Area landlords. I doubt that this is a cause that many tech companies will be getting behind, instead of using their money to do actual tech.

#business   |   Sep-14 2020