Equal Pay or Location Pay? The Remote Work Dilemma
I talked to one of my colleagues recently about a very sensitive topic — salaries. He’s moving from a country in the Middle East where the cost of living, and subsequently the wages, are relatively low, to Europe, where his salary would be enough to barely cover all the expenses his family would have. So he asked me a fair question — will his salary be adjusted after he moves?
A controversial topic
This is an extremely controversial topic that was debated a lot during the pandemic. Suddenly, remote work, that was quite something niche even in the tech world, became the reality for a lot of people and companies across all industries. Most of the time, this migration happened in the other direction — software engineers who were getting paid a salary in San Francisco were moving to Ohio, Nebraska, or North Carolina and reaping the benefits of much lower cost of living.
Each company solved this problem differently at the time. As far as I remember, Google decided to adjust the salaries based on location for everyone. Other companies, like Reddit, which has 100x fewer employees than Google, did it the other way around — they were paying everyone the same salary regardless of the location. Maybe it’s the scale that matters; maybe it’s the nature of greedy large corporations, but everyone made it work.
My company is 100% remote since day one, so this wasn’t a problem — we all were in Eastern Europe with a few people in the Middle East or Asia, either traveling or living there permanently. And even though everyone lived in different countries and cities, there was no problem with paying everyone the same competitive local wages while keeping the company profitable and making the cost for our partners in the US competitive. It all changed as the company started growing — we needed access to more talent and specialized skills, so there was no other way than starting to hire in Western Europe as well. That’s where we felt the difference.
Global market for everyone
Even though I’m not writing code much for the past 8 years, I still think of myself as a software developer. My career developed the way it is because of the emergence of the global market. I started working on Upwork in 2011, and I benefited from living in Europe and being paid a salary of a developer from the US for years. In fact, that’s what I’ve built my company around.
But I would argue that this was because of the location. I worked as a software developer in the US in terms of time of availability or the level of communication — I lived in the US before, so my English is fluent. For the companies I worked with, there was no difference — I simply adjusted.
If you’re working in tech, you have access to the global talent market. If you can win the competition and work for a company that is willing to pay you more regardless of your location and that’s what you want, then I think you should do it. But as much as companies are competing for talent on a global market, you, as a potential employee, also are competing on a global market. And as much as there are companies that are willing to pay more, there may be someone else who is willing to ask for less.
People are everything
I am torn between two things here. I am not a greedy corporate guy who wants to pay as little as possible and make a huge profit. Quite the contrary, I want my team to earn as much as possible. Ideally, I want them to worry about the financials as little as possible and focus on the innovation and creative work we do. There’s a reason for that, and it’s not just about being altruistic.
I’ve heard from some managers about how easy they let people go. They don’t care if a person stays or leaves because they can publish a job posting and will have tens if not hundreds of applications in a few days, especially now when we are in a recession and a lot of companies are laying off people.
It was always hard for me to understand this approach. It takes so much time to find, hire, onboard, and train people up to the point that they are productive. It takes time to build trust, connection, understanding up to the level where the whole team is productive and works as a unit. It’s like saying that children’s lives do not matter because it’s so easy to make them — it is, but if you say this, you’re kind of missing the whole point.
Don’t get me wrong, I get it that everyone is replaceable, including me and you. It’s just replacing us takes a ton of time. And it’s expensive. So I think the ultimate goal for the company is to make sure that people who join the team stay for as long as possible. This can only happen if people are getting competitive pay and are happy with it.
I haven’t solved this challenge yet, unfortunately. Most likely, the ideal approach lies somewhere in between. My hope was that remote work would become a normal thing for large companies and our industry as a whole would work out a solution, but this doesn’t seem to happen with so many companies announcing that they want everyone back to the offices recently.
Living in Portugal, where the average wage is 800 Eur while the cost of renting an apartment is relatively the same, I feel the discrepancy. We have digital nomads here spending 100 EUR for dinner, while locals can’t afford health insurance. It’s not that remote work is to blame for this; it’s the unevenness of the global economy.
I’m not in a position to argue about it, but I think we as people should try to make the lives of those we touch a little bit better. And a good start is making the lives of people we work with a bit better as managers or CEOs, and the local communities we live in.
