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It’s not about “market rate” but personal leverage. Sofia gets a lower salary because the presumption is that fewer jobs, and at lower salaries, are available to her than is the case for Ann, and that’s usually true. Firms don’t care either way about their workers' lifestyles or goat-affordance, to use the OP’s metaphor. In general, they want to pay as low as they can get away with. If Sofia developed an international reputation (which is substantially harder from Argentina than from California) and could demonstrate that others would readily pay her $170,000, then she’d get a comparable salary.
In other words, geographic location is used as a proxy for the individual’s leverage, and it’s pretty accurate in most cases.
It actually gets worse than the OP suggests. Sofia isn’t only going to get a lower salary because of her presumed lower leverage, but she’s going to get worse work assigned to her, slower promotions, and less respect within the organization. At this point, her lower salary will be justified using claims of “meritocracy” when, in fact, the situation has more to do with her inferior leverage than any meaningful definition of merit.
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So, throwing the word “leverage” around doesn’t change the fact that Sofia is just as qualified (valuable) to do the job as Ann is. The work she creates is the same.
From that perspective there actually is a market, and it’s not based on geography but on skill. The market includes Ann, Sophia, and everyone else with approximately the same skill level. Sophia could argue this point quite convincingly in a negotiation with the company.
If Ann is unavailable or more likely to become unavailable due to her presence in Silly Valley, that also becomes a leverage based argument in favor of Sophia. Sophia could get the same pay as Ann, she just needs to convince the company of this. The logic is sound, but whether or not the company will buy that logic is a different question. cc @ernie
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More to the point, I believe that as remote-first work becomes more common, we will (and should) see a reduction in the power that geographic location has to affect salary. We can’t get away forever with saying our market is global and our team is distributed without acting like it. This congruency won’t happen overnight, but I believe that it will happen.
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Hey, all. Post author here. Thanks for the upvote love. :D
The post is over on that “other site” as well, and it’s really interesting to see the different tone that this community takes. I think I’ll be coming around more often. :)
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Running into Ernie on IRC (not in #lobsters) was the last straw that prompted this issue.
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I love the Marxist undertone of the article mixed with a bit of Capitalist confusion about what a market is.
There is a common confusion about what pay should be and how it works in the real world. The confusion is this. People think companies pay you what you are worth. This is a confusion prominent among engineers.
You are not paid what you are worth to a company, you are paid with what a company can get away with paying you.
This is obviously not right and goes against what people feel should be right. Capitalists don’t believe in the value theory of labor while most people do.
I, like most people, believe in the labor theory of value and agree with the post’s main point. However I also disagree with the author about what fairness is. Fairness is not treating everyone the same at the surface rule level. Fairness is treating everyone equally on the human level.
Hey, @mempko! Thanks for the comments.
You might be surprised to notice a few things:
Anyway, I just wanted to point out that, viewed from another angle, these views might be considered extremely capitalistic – we own our own means of production and determine the price at which we’re willing to provide our goods and services. I’ve often said “we are the product, which means we are our product manager.”
Do you also want to own not just your own production, but a group of people’s? Then that is just plain “capitalism”. If you believe the people who create the surplus should decide what to do with it, then that is socialism.
If you believe people shouldn’t be able to group together and that everyone should be individual contributors, then Marx already had a term for that, Primitive Accumulation (I feel most right wingers are basically primitivists)
I called your article Marxist precisely because it dealt with arguing who should own the means of production. Which is what Marx concerned himself with.
I’m not sure it’s productive to spend time applying a label to my views. I don’t have a background in economics, nor an interest in debating the finer points of where my views lie on the spectrum.
My reason for replying was that bit right in the middle of your initial comment that seemed to think I was “confused”…
…along with what I believe then followed from the perceived confusion, that I was making a point regarding “fairness”.
I’d hoped by sharing the response in the comment to make the point that the article was more than the entitled whining of a clueless, entitled developer caste, and not about what’s “fair” so much as shining light on the question of what determines our value, the merit of having some ideas about what your value should be, and owning the consequences of choices we’ve made.
To be very clear. I like your article.
I want to clear up what I thought you were confused about. I dont think you were confused about where value comes from and how you are payed. I said it was a common confusion, which you acknowledge in your article.
What I think you are confused about is what a market is. Let me ask you a question, do you really think we are in a global market?
I don’t think it really matters what I think.
I think it matters what a company that is running a distributed team and selling to a global customer base thinks. They are selling their product anywhere. They are hiring from anywhere. Based on their behavior, they don’t believe their product’s value differs from place to place based on where it’s being offered/consumed. I find this inconsistency worth remarking on.
At the very least, I believe that the competition for employees looking for remote-first positions is a superset of the group of all companies hiring for remote-first positions that includes companies local to the candidate who are looking for non-remote positions, assuming the candidate is willing to work primarily in an office environment for a local company (I am not, but am perhaps an exception in that).