I didn’t put much thought into my ad hoc tier ranking.
Ref this cite, greater Chicago ranks #3 in the country and greater St. Louis as #22.
But you’ll notice that greater Chicago at #3 is just over 50% the size of #2, greater Los Angeles. Big percentage break there. Probably amounting to a tier break in at least some folks’ thinking.
After that as we work down to St. Louis at #22 there are a couple of 25% breaks, but not an equally obvious place to draw another bright line boundary. But for darn sure it’s somewhere between #4 Washington DC / Baltimore at 9.8M and pipsqueak St. Louis at 2.9M.
Using Cost of Living Plus Rent Index as a measurement, the Bay Area is the top in the US (occupying spots 2, 4, and 11) and Chicago is number 18. So definitely well down in the list. St. Louis is #98. Houston is #77.
Many years ago, I decided I needed to find new employment. One of the labs I interviewed at was in Pittsburgh, PA. When they sent me their offer, it represented a significant cut in pay (I was working in San Diego at the time). So I called the HR contact listed on the offer letter and explained that their offer represented a pay cut for me, which made it hard to keep their offer in consideration, since if I took the job and it didn’t work out, I’d be handicapped in joining a lab elsewhere. But, if the offer could be raised to my current salary (which I provided at that point), I’d give their offer serious consideration.
About a week later, the HR person contacted me and explained that they couldn’t match my salary. In order to do that, they’d have to pay me the same as the Director of their lab! So, at that point, we regretfully parted ways (I was serious about considering them if they just matched my salary, and I was getting offers at 10-25% over my current salary elsewhere.)
Great cite. Thank you. And on your suggested metric it shows St. Louis about 25% cheaper than Chicago. At least nowadays.
Their list of “cities” don’t seem to track with the Census Bureau’s official groupings, so I wonder how much they’re talking about true city limits pricing versus greater metro area pricing. It sort of looks like they are using US metro counties and renaming them for their principal city. A useful enough method, but distorts a bit on the high side in areas with a distinct and good sized high dollar residential downtown.
Santa Barbara is #4 in the Cost of Living Index, but I cited the Cost of Living Plus Rent Index. It’s #5 on that one.
I think the index has some utility in setting expectations. If you are determined to find work in a specific city, you could be unaffordable at your current salary (though my anecdote is from more than 20 years ago, so it isn’t reflective of the two cities current positions).
I notice that relatively isolated cities occupy higher positions than one might naively expect from there relative “business hotbed” status (Honolulu, Santa Barbara, Anchorage).
I’ve worked full-time remote as a contractor, and now this last year or so as an actual employee. When I’ve worked remotely, I’ve always figured my minimum would be the local equivalent of the salary I’d be drawing at the location the company is in… however, that’s the minimum, because that’s what I need to make to survive. If I don’t negotiate enough to survive off of, that’s on me.
If the company wants to pay me less because I live in a cheap location, does that mean I should automatically get a raise because I’d really like to move to, say, the Bay Area? Of course not- my employer isn’t going to pay me more money to live in a more expensive location. So why should they get to pay me less because I choose to live in a cheap location?
I’m still not getting the outrage. So you would have no problem with the company saying, a straight pay for remote workers no matter where you live? Fine.
But the company does its employees one better. It says that if you as a remote worker choose to live in an expensive market, we will give you a cost of living allowance without which you would be unable to live in these areas.
Maybe the issue is that while I view it as an increase, you view it as a cut. But it is the same thing depending on the perspective. But the differential has always been there. A job that might pay $60k in West Virginia would pay $130k or more in the D.C. suburbs. Are the West Virginia workers getting cheated, or are the D.C. workers getting a cost of living allowance?
I think the longer term answer is that the employer will stop paying for for the expensive location and will instead pay some number based on average US minus their costs for operating in new states. They won’t pay you less if you choose to live in a cheap location they will just pay everyone the same rate as if they lived in a cheap location. This will take some time because wages are sticky but if your hiring pool is national there is no reason to pay a premium for local (higher cost) people and maybe a city like Spokane (99th largest city in the US) will be the national baseline. So all of the people living in expensive locations that choose to work from home will eventually get the same pay cut that people choosing to move somewhere cheaper now are.
Exactly! It makes sense for in-person workers, but it absolutely does not for remote workers, and it’s especially terrible to apply it retroactively to workers who are now remote after the pandemic.
It’s one thing if they did what @Oredigger77 suggests and comes up with a “remote” rate that’s neither here nor there for remote workers- in fact, making it some kind of national average would even incentivize people to work in less expensive areas, which could be an economic boost if enough did that.
But telling a worker who say… made 100k in-person in NYC that they’ll still get 100k working remotely in NYC, but if they work remotely in Rochester, they only get 75k because Rochester’s cheaper is inexcusable. It’s basically making the pay about the lifestyle the company feels they want to afford you, not about the job you’re doing and your performance at that job.
My outrage comes from the fact that as a remote worker, it shouldn’t matter where you’re working from. Your job performance and pay should be the same if you live in the Upper East Side, or if you live in Lusk, WY, regardless of whether one is expensive and one’s cheap or not.
That’s the only fair way to do it- why SHOULD someone working in rural Wyoming get less pay for the same job, any more than a woman should get less pay for the same job? Both are entirely arbitrary and discriminatory- one based on where you live as a remote worker, and one based on your genitalia.
I can totally see companies saying “Job X pays $100k in person in NYC, 80k in person in Kansas City, and 75k for remote work anywhere.” And I’m fine with that. What I’m not cool with is if they said “100k in person in NYC, 80k in person in KC, 90k for remote in NYC, and 60k for remote in Hiawatha, KS.” Why should the remote worker in NYC make more than the remote worker in Hiawatha, or for that matter, more than the in-person worker in NYC? There should be ZERO difference in their ability to do the job remotely based on where they are, and the pay should be equal regardless of where they are.
I think the part you are missing is that these employees were not always remote workers. They were originally in person workers and after the pandemic, the company decided that they could still do their jobs remotely. But some people uprooted their lives and moved to the NYC metro area to do their jobs in person. The company is trying to be fair by saying that we won’t require you to move out of NYC (which would be a requirement if not for the increased pay) after we just brought you here.
They could do what you suggest, but I see that as a worse deal for the employees. As far as paying women less, come now. That is simply invidious discrimination with no purpose at all. Realizing that a person needs more money to live in NYC than in Kansas is very rational.
“Why should” questions already have minimal value in a debate. But again, there is no “should” here. Beyond what the employer needs to shell out to retain talent. Turnover is disruptive. If the remote NYCers will quit over a pay cut, but the Hiawathan won’t, then differential pay might make sense on the short term. If that does happen (I’m not sure it will), I expect that only to be a transition period to a longer-term, location-agnostic salary schedule.
What you describe is basically the essence of outsourcing.
It works both ways. "If you want me to show up to the office every day in NYC (with the required commute and/or overpriced shoebox apartment), you need to pay me $100k. I’d be willing to take $90 or even $80k if I can work remotely from my beach house.
Also, you have to think in terms of real purchasing power. I have some friends who moved out of Manhattan to North Carolina a few years ago. For the price of their 1BR condo they bought a 10 bedroom mansion.
IOW, would you take a pay cut if it would allow you to spend more time with your family in a much larger space where you actually want to live and may actually cost less in terms of parking, commuting, eating lunch, etc?
I suppose it is… and in a sense, remote work/telecommuting is closer in concept to being a contractor or outsourced job than the traditional 8-5 in-person job, which is what I’m trying to get across. You’re being paid to do a job, not show up, not adhere to a dress code, or any of that other stuff.
As always what anyone gets paid is really a negotiation between the company that wants to pay as little as possible and the employee who wants as much as possible.
For many cube droids and factory types, the “negotiation” is laughable: management offers and the applicant can take or leave it. But collectively over enough droids/workers, if management goes too cheap the jobs don’t get filled.
The idea there’s any intrinsic connection between the value of what the worker delivers and what they’re paid for it is laughable. The value forms a very loose upper bound on what management is willing to pay for most droids. the actual wages are generally far, far below that break-even number.
A lot of remote work does require you to show up at specific hours, ie. 8-5. Sometimes it’s for practical reasons and sometimes it’s someone in upper management not trusting their workers, but it happens.