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Discussion on: Why (I think) "Cost of Living" pay for remote workers is BS.

preciselyalyss profile image
Alyss 💜

Do you think it is possible to create a fair pay structure that considers the cost of living (or even just rent)?

As an example:

  • All employees above X internal rank will be subject to pay bands that don't fluctuate with cost of living.
  • Employees living in lower CoL areas may receive X% more 401k match
  • Pay is based on a pay band + a maximum CoL allocation (where the CoL allocation doesn't change with promotions)
sam_ferree profile image
Sam Ferree Author

I think the most fair thing is for employers to offer what they think the employee will accept, have the employee to decide what he's willing to accept and then negotiate compensation from there.

If they do some COL calculations behind the scenes to get their number that's fine.

If the employee lowers his number because his rent is cheap (or maybe he lives in NYC, but inherited a paid off house from a dead relative) that's fine too.

What they agree on is between those two, and nobody else's business.

But I'm not sure an explicit policy, of devaluing employees based on address will ever be "fair" simply because cost of living is already a function of quality of life. The same salary buys a bigger house in farmville, Minnesota than Miami, because Minnesota has winter and winter sucks. So you get 4 bedroom house and a boat, because you choose to deal with winter. So maybe you can only afford a studio in Miami. But how much time do you spend there? You get to enjoy the city (and beaches) of Miami year round. It's a tradeoff people make for a virtually uncountable number of reasons.

Some people prefer vibrant urban communities and variety of cultural experiences, some people prefer to have a lot of stuff in the middle of a corn field. A COL pay policy rewards employees who prefer the former.

Maybe people live in low COL areas not by choice (or by very difficult ones). Taking care of a sick or elderly relative? Being near their children whom the other parent has custody of. Visa issues. COL Pay policies effectively say "This is fair because square footage of living space is equal, I don't care what your situation is."

preciselyalyss profile image
Alyss 💜

Paying based on what employees are willing to accept feels somewhat contradictory to your earlier sentiments about the moral implications of zipcodes affecting CoL and, consequently, pay. And there will be a variety of circumstances that employees face with regards to taking care of relatives, et al. I think there's a question about social programs there, but that's a deep tangent to go down.

It is a fair assessment to question how a company values their employees when they are entirely remote and doing a CoL based pay. I'm left somewhat unsatisfied by it because I feel there is somewhat more, but I can't quite put my finger on it.