Computing fair salary for foreign worker (currency etc.)

In My Humble Opinion
1

I’m working for an American company located in New York City, and we have an employee – me – who works out of Europe.

My employer doles out the cash in USD, which has two problems:

  1. It’s not stable. The dollar currency value fluctuates all the time. Some months I will lose $100s, some months I will gain $100s. In general, however, I lose more than I gain.

  2. It does not reflect local purchasing power. Stuff is just cheaper in the US. One reason is that my country has a serious sales tax (24%), but it’s just more expensive to live here.

Norway is something like the number 3 most expensive country in the world, after Iceland and Switzerland, according to one widely-reported analysis, and my city is something like the fourth most expensive city in Europe.

I know nothing about economics. Hypothetically speaking, is it possible to take into account certain economic factors to somehow make the salary more “fair”?

(I use the word “fair” in quotes as I realize there’s no moral responsibility on my employer’s part to treat me any differently than a US worker.)

One way to do would be to sample the prices of a range of goods in each country and computing a ratio that can be used to derive a salary. For example, pick a range a basic foods, clothes, electronics, whatever. If it’s on average 1.5 times the equivalent in NY, the salary should be multiplied accordingly.

Obviously this is too impractical to be a viable solution, but it should give you an idea about how I’m thinking.

I realize New York is also an expensive place to live, especially in terms of real estate, but I just notice certain things are incredibly cheap there. For example, I compared Subway sandwich prices recently, and ours is about 30-50% more expensive than NYC.

I also realize there’s no way to make it completely fair; the only way to do that is for us to all live in the same city. I would greatly appreciate ideas on how to improve the paying scheme, though.

2

the problem is, either you receive a variable salary (while the company pays a set salary in USD) or else the company pays a variable salary (in USD) while you receive a set salary in Norwegian (umm…? Kroner?).

I think you can instantly see why paying an employee a variable salary is problematic for the company from an accounting perspective, if nothing else.

You knew when you took this job that they paid in dollars, right? You really should have talked this over before taking the job. I really don’t see how you have any recourse at this point.

Bad news is, the dollar is often down in an election year, which 2004 is.

3

I co-founded the company. If I can think of a different, economically sound way to compute my salary, I should hopefully be able to convince my boss.

I didn’t know this. Why this trend?

4

IANAEconomist, it’s just something I heard. I do remember that I was traveling in England during the 1992 election year. It was $1.98 to the pound, can you believe it? It sucked.

This article, however, seems to imply that the Bush administration has recently intentionally weakened the dollar, partially in order to stimulate the American manufacturing industry:

Anyway, good to know you’re in a solid position re: salary negotiations. :slight_smile: Maybe you’ll find this Cost of Living Index thingy helpful:
http://www.finfacts.com/costofliving.htm

5

Hello Again’s second link is very interesting and relevant but it might not help your case any…it shows that if New York City is 100 on a scale of cost of living, Oslo is at 92.7! It also shows how much Oslo has gone up in the last year, though, in 2002 it scored 77.1.

I am sorry I don’t have any advice for you…every solution I think of has drawbacks.

6

Lagomorph, indeed. I suspect that real estate property prices may account for much of the difference in the numbers. Renting and owning in Oslo is significantly cheaper than on Manhattan, for example. From the article:

And most interestingly:

So somebody out there is thinking along the same lines as I, and doing what I’m describing.

Unfortunately, according to these numbers, I should be earning less than my colleagues in NYC. Funny, that.

7

jesus, man, this is really straightforward. Any number of prof services firms, and google searches will pop up a “cola” or cost of living allowance guideline for your country.