3. "Compensation should be based on output performance and the difficulties and complexity of the work being done." => Opinions differ about this across companies and some of them like Basecamp use your method. For our take Please see the section "Standard pay eats away at production and personnel" in https://about.gitlab.com/2019/02/28/why-we-pay-local-rates/
The justification in the link essentially sounds to me like, "If you worked in the office at another company and moved to a lower cost of living city you'd also get your pay docked. We do the same because we're following the precedent and because you don't have other options."
This fails to mention the flip side - we developers do have other options. There are certainly SF companies I'm aware of that will be happy to outbid Gitlab's desire to pay a software engineer $75k because they moved to rural Nebraska.
I agree that more and more companies will start hiring remotely and the market will get more competitive. As I said in the blog post: "I hope the distance between those stances becomes smaller as more companies offer remote work opportunities."
I understand the reason and how it is a necessary evil. But it's still an evil. Simply put, it is discrimination.
Paying the poor less and the wealthy more.
It makes no sense that two employees with the same workload and same credentials would get a different pay based on their primary address' geolocation.
Just off the top of my head :
- Employee resides at their rich parent's home and get a higher pay vs. employee move near their mother's elderly care center in a ghetto and dock their pay.
- Employee lives alone with no dependents in a high pay area vs. employee being a single-parent in a low pay area.
- Employee lives on a native reservation and get less pay.
- Employee lives in a co-location in a high pay area vs. employee lives alone in a low pay area.
- Employee has impressive credentials in a low pay area vs. employee with no credential living in a high pay area.
- etc.
This is nothing more than a loophole that allows you to give a bonus to employees living in high pay areas while keeping a clear conscience.
If anything, kudos for being open about the whole situation.
In other words: "we pay less because we feel that's what we can get away with. if we face more competition in the future, we might have to pay more, but right now we don't see that competition".
Interesting, but admittedly honest perspective from a CEO.
It is competitive, but you don't see that competition because you flat-out tell people you won't pay them competitively. I would never consider Gitlab for that reason, it just doesn't make financial sense.
Money isn't everything, I've certainly taken a significant paycut to take a job I wanted and believed in. But I'd have to take a 50% paycut to work at Gitlab, so... no thanks. And worse yet, you'd openly pay a city dweller on my team twice as much to do the same work.
They most likely pay competitive rates if you ask for them. They can't really lose anything by having a document with compensation rules for the gullible folk that fall for the "rules apply to everyone" spiel.
> 1. "change their mailing address to that of a friend living in a high income area and have a better pay" => that would be fraudulent
Would it be though?
If my legal address is a small apartment shared with 5 other individuals in a city I never go to, there's no legal reason pushing me to disclose any secondary housing I might own.
Another reason for such as situation is someone being homeless/nomad and having their address set to some organization or PO box in the city.
An employee at GitLab clearly knows that their compensation is based on their address, and is done so because the compensation is matched to local cost of living. Doing anything (including giving an address, even a legal one) that artificially changes their compensation so that it doesn't match their local cost of living is knowingly deceptive, which is the definition of fraud.
To be clear, I wholeheartedly disagree with GitLab's practice of docking people's pay just because they live somewhere cheaper (are they charging less to companies who are based in cheaper COL areas? no), but their policy is still their policy, and fraud is fraud.
> It’s not that we want to pay you based on your rent or compensate your cost of living. We want to make sure that we pay at or above market.
The blog post is very clear, and supported by the CEO's post above, that they are interested in paying the lowest amount they can get away with- that which they think is "at or above market". They don't care about cost of living. This is also made clear in their relocation policy, wherein they require you to get their permission to move to a different area, and you run a real risk of being denied/fired if you want to move to a higher cost of living area (The CEO has to approve such a move).
I really like that Gitlab and their CEO are so open about their true motives like this. If they didn't pay so poorly, I would consider sending them my resume!
It is true. The things you pointed out in GitLab's post don't disagree with my points, they just go deeper. GitLab's 'market rates' are based on, at least in part, cost of living calculations. They are simply saying they go one step further and try to pay you above the standard cost of living, and hopefully above what others pay as well. It is completely missing the point to say they "don't care about cost of living", because while it may be true that their objective isn't to match COL exactly, COL is a major factor. In their actual compensation principles guide [1], they specifically state that the location factor component of their compensation is almost entirely based in Numbeo data (numbeo is a site that quantifies regional cost of living).
Huh, I directly quoted them saying that it wasn't true! They explain in their post that they found that market rates correlate with rent costs, and that is why their pay correlates with rent costs.
Would this be any different if the employee actually lived there?
Say they own a house in a rural town that has been handed down from their parents, yet they decide to live in an apartment in some big city. They receive an interesting job offer and start working remote at Gitlab but haven't changed their legal address.
Suddenly, they paycheck is reduced unless they disclose their secondary address and somehow make it their main address.
Should that employee be required to sell their house? I would say no.
Well, it's no different if you live in a big apartment out of town and decide to rent a cheap broken down apartment in the city.
What if the employee does not have a fixed address? Are they fired on the spot? Perhaps never hired out of discrimination? Is their pay adjusted for each city they drive their van to? Do the employer require them to stop travelling? What if that person's fixed address is already registered at some organisation or mail center in a "high pay area"? Should they be required to change it to a "low pay area" to be ethical?
Having any kind of 'secondary address' doesn't matter. Nobody is saying anything about selling a house. There are many, many people who own multiple residences. That's not what matters here.
All that matter is what your actual cost of living is (measured by proxy via where you actually live) versus what you tell GitLab your cost of living is (measured by proxy via where you say you live (regardless of if its your primary address or a secondary address or whatever)). If you knowingly tell GitLab that your COL is higher than it actually is so that GitLab gives you higher pay, that is the very definition of fraud.
> What if the employee does not have a fixed address? ... Is their pay adjusted for each city they drive their van to?
Yes, it is adjusted by each new place's COL. GitLab details this out in their compensation handbook, if you're really interested.
> What if that person's fixed address is already registered at some organisation or mail center in a "high pay area"? Should they be required to change it to a "low pay area" to be ethical?
They should tell GitLab that they do not actually live in the high COL area and should be paid accordingly to the low COL area.
I think you're getting hung up on some sort of strict 'legal address' definition. In this discussion about compensation, I don't think GitLab gives a damn what your "legal address" is or where you get your mail delivered to. They care about your actual cost of living, and they use an address as a convenient way to measure that. If your actual cost of living doesn't match where your 'legal address' is or where you get your mail delivered, you would simply tell them "My legal address is X, but I actually live in Y".
Except they don't. If they cared for that they would ask for your rent and economic situation.
They are not asking your cost of living to help you, they are asking which hiring pool you belong to in order to cut on operational costs.
You could be living rent free & debt free in a high pay area and still get a higher pay than someone with dependents, debts and a high (for their area) rent.
This is the part that disturbs me.
Being born in a good situation and staying with your parents without any costs would mean your paycheck is bigger than someone born in a worst situation that is also living at home.
You might as well build your class barriers out of concrete at that point. Postal-code discrimination is something that should be removed from our lives. Remote working is one solutions to this issue. I really hope that this practice doesn't become a trend.
>Except they don't. If they cared for that they would ask for your rent and economic situation.
I think you misunderstand what "Cost of Living" actually quantifies. It is not meant to quantify your personal economic situation, and is far more than just rent. COL is meant to quantify how much it costs to afford a basic standard of living, such as the cost to buy a basic meal or afford a basic apartment. It is not meant to quantify each individual's specific economic situation, living arrangements, debts, dependents, etc.
Cost of living is difficult to accurately quantify, and the most accurate proxy is geographic location. I'm sure GitLab et al would give some adjustments to compensation based on extraneous personal factors, but it's not up to the company to hold your hand and make sure every employee is making exactly enough money to pay all of their bills. At some point that becomes the employee's responsibility.
>You could be living rent free & debt free in a high pay area and still get a higher pay than someone with dependents, debts and a high (for their area) rent.
Are you suggesting that someone who is debt free and rent free should be punished via a lower wage for their choices which led to them not being in debt? Conversely, should someone be paid a higher wage just because they made bad decisions earlier in life and have mountains of credit card debt?
As mentioned above, debt is specifically not included in COL calculations for these reasons. COL also doesn't change based on if you decide to live in a high rise condo or a camper van. Yes, if these people are doing the same work and live in the same area, someone living rent free and debt free should still get the same pay as someone with dependents and high rent. Their personal situation may be different, but their standard cost of living is the same.
And this isn't any different than any other company in the world, nor is it the business of any other company in the world to solve. I know someone who used to work at Google making a very high salary, but paid no rent and only minimal bills because he lived at his parents. And by the way, other companies adjust their pay geographically, too. A cashier at a McDonalds in rural Kansas gets less of an hourly wage than a cashier at a McDonalds in SF. This already is the norm, and though it isn't perfect, it isn't nearly as disastrous as you make it sound.
>You might as well build your class barriers out of concrete at that point.
I'm not sure how I see this is a class barrier. This is not saying "if you grew up in Compton, we will not pay you a high wage and you will never have the opportunity to move to a better area". This is saying "if you currently live in a low COL area, we will pay you accordingly. And we will pay you more if you make the decision to move somewhere with a higher COL". That is almost exactly the opposite of a barrier, as it is clearly saying we will up your pay if you choose to take on higher COL.
Many people view this as a matter of "two people performing the same work deserve equal dollar amounts". Other people (presumably like those who make the decisions at GitLab) think that "two people performing the same work deserve the equal quality of life", and the dollar amount required to obtain a standard quality of life is variable depending on where you live. Someone making $80k/year will live decently in SF, while someone making $80k/year will live an luxurious, king-like life in rural Laos. Assuming they are performing the same work, why should the Laotian enjoy a higher quality of life than the San Franciscan?
2. "What about when moving, are employees' pays docked too?" => Please see https://about.gitlab.com/handbook/people-operations/global-c...
3. "Compensation should be based on output performance and the difficulties and complexity of the work being done." => Opinions differ about this across companies and some of them like Basecamp use your method. For our take Please see the section "Standard pay eats away at production and personnel" in https://about.gitlab.com/2019/02/28/why-we-pay-local-rates/