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    I appreciate the move, but “we’re paying wages based on a place and we found out it’s kind of arbitrary, so we now pay wages based on another, even more arbitrary place” is a weird argument.

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      Not more than “we want to pay you less because you currently live in a cheaper place” as if any company has any business dictating what my appropriate level of living standard should be.

      I somewhat disagree with San Francisco being another arbitrary place. It is probably the most expensive city with significant number of well paid developers which seemed to be the reason why they picked it.

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        They spend quite a bit of the blog post arguing that picking a place for a distributed company is a little arbitrary. Then they pick another place. They could have just placed themselves on the wage scale at the price where they want to be.

        That’s independent on why San Francisco wages are high. It’s just as much a place as Chicago is.

        To make it clear: the argument amuses me, nothing more, nothing less.

        I’m fully on board with the whole “wage depends on where you live, not the value you bring” stuff being completely off, I think the freedom to chose a different place of living also for financial reasons is important. Everyone talking “my employees should think business” and then pulling stuff like this is not practicing what they preach.

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          We were sold the line that in the Real World, one’s salary is reflective of the value they bring to the company.

          Then remote work enters the picture, along with the opportunity for employees to take part in arbitrage, and the line suddenly changes to talk about standard of living and other nonsense. It struck me as odd how quickly the Real World changed once employees had the potential for an upside.

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          I don’t think they’ve now chosen an arbitrary place. Remote work is steadily gaining in popularity. Bay area companies pay the most, and make their salaries increasingly available (or within 10%) to remote devs. Basecamp is not picking a city out of a hat, they’re putting themselves at the top of the American market they’re competing in. It used to be that the market rate for remote work included a location adjustment, but the market is moving. (Moving slowly and incompletely, of course, as wages are illiquid and sticky.)

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            I would expect to see compensation regress towards the mean in a national or international labor market. If the supply of labor changes without a change in the demand, wages should decrease.

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              There’s a bunch of factors and I tried not to nerd-snipe myself. I’d predict that on the balance that there’s enough increasing demand to pull up salaries outside of the bay area, but I didn’t run the numbers.

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                Great list of factors in the third tweet.

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                Sure - but this isn’t “the market”, it’s a founder-controlled company.

                The decisions are informed by the market, but not controlled by it.

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                  I would expect to see a decrease in compensation not because the market controls market actors but because free-ish markets tend towards economic equilibrium. I wasn’t referring directly to the actions taken by Basecamp but instead to “…the market is moving” in the parent.

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              I’m with you. It’s nonsense trading place for place. I’ll add they have the better method built right into this article. Let me put it simply:

              Goal: Pay workers really well.

              Problem: Industry pays based on location. Capitalists also try to push wages down.

              Solution: Look at pay ranges in IT, identify a pay rate for various job positions that meets their goal for baseline, and set starting pay for those positions to those points.

              Done! Didn’t even need anything about location to pick a nice pay rate for programmers. Just need the national (or global) statistics on pay. They already did this by picking a number in the high end. They can finish by dropping the location part. Result is still the same.

              Personally, though, I find the approaches that combine cost of living with a base pay for a position to be interesting. Example here. They may be more fair depending on how one looks at it in terms of what people are keeping after basic bills in exchange for their work. I’m far from decided on that topic. Far most businesses’ goals, getting talent in areas with lower cost of living will let them invest that savings back into their business. That can be a competitive advantage with more people getting stuff done or better tools for those they have. If not needing more programmers, quite a bit of QA, deployment, and marketing goods can be bought for savings of a few programmers in cheaper areas versus expensive ones.

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                Goal: Pay workers really well.

                I don’t think this is any real goal. The goal is more likely boost reputation and attract the best works.

                Goal: Happy (productive) and skilled workers.

                Actually, even then I don’t think it is right, if a company could operate effectively without staff it would.

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                  Their workers were already happy and skilled. Certainly a top priority for them. Although, the author writes as if having core principles about business on top of that. Putting their beliefs in practice to set an example is also a goal.

                  I’m just using pay because it’s an objective value that can be measured. They wanted that value to go up. I proposed a different method to make it go up.

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                If they don’t use SF as their template they miss out on anyone living there as a potential employee as they’ve priced themselves out

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                  Honestly, Basecamp doesn’t feel like the company to me that would actually care that much about that. They’ve managed to be highly successful without.

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                    Really? Basecamp is all about making the best product possible. It’s not about SF per se; SF just happens to be the top of the market for developer pay. They explain in the article:

                    But in what other part of the business do we look at what we can merely get away with? Are we trying to make the bare minimum of a product we can get away selling to customers? Are we looking to do the bare minimum of a job marketing our business? No.

                    Do better than what you can get away with. Do more than the bare minimum. Don’t wait for the pressure to build. Don’t wait for the requests to mount. The best time to take a step forward is right now.

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                      I read the article. But if your point is “top of the market”, just say “top of the market” and be done with it.

                      IMHO, Basecamp is pretty good at giving their employees a fair share of their successes, and that’s fine. SF or not.

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                  I believe the logic here was “the place distinction is arbitrary, so we’ll take the most expensive place so that people can go anywhere with ease”

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                  I’ve been listening to Adam Smith’s 1776 classic on the Wealth of Nations, and just passed through the chapter on how the market is set by masters trying to get away with paying the least possible, and workers trying to press for the maximum possible. An antagonistic struggle, surely.

                  Glad Basecamp is doing well enough that this guy is in charge of salaries?

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                    If you’ve read rework the founder posits it is precisely because of these attitudes that they are doing this well.