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A recent post on Hacker News prompted me to revisit What Does a Wage Gap Look Like?

What has changed in the past 5 years? Unfortunately not much. The point today is the same as it was 5 years ago. Location based pay is still the norm and is still hugely unfair. That last point is not shared by everyone of course. People exploiting the current status quo for profits, and employees who are afraid paying fair salaries to everyone would negatively affect their total compensation obviously have very little interest in acknowledging the situation. Let’s look at some other excuses.

1. Discriminating salaries based on location is not an equal employment problem because one can change locations

If we look at some equal employment opportunity directives they cover traits like race, color, religion, sex, national origin, sexual orientation, veteran status, disabilities etc. Indeed, some of those are set in stone, but others are not so much. If someone was asked to e.g. change their religion or renounce their nationality for a better salary that would be ridiculous. Yet asking people to severe cultural and social ties and uproot their whole families to move thousands of miles away is still perfectly normal. Obviously this only applies when an opportunity for relocation is presented at all.

2. People are paid what a replacement would cost

Let’s suppose for a moment that employees are interchangeable resources without discernible differences and companies are profit maximizing entities. How is it possible under such assumptions that 2-5-10x salaries exist when 1x replacements are readily available elsewhere? To argue that people are only paid what their replacement would cost also requires an explanation why a garden variety remote employee (or a team of four experienced veterans) is not a replacement for locally grown organic talent? So far there is no convincing explanation to back that up.

3. You get what you negotiate

Negotiation can move the needle in a narrow salary band, but it does not change the fundamentals. There is no way to negotiate against a glass ceiling. It is simply impossible to negotiate a salary that is not on the table. Unless we want to pretend whole countries are good/bad at negotiating, arguing getting paid a fraction of your coworkers is a failure in negotiation is insincere.

+1. Location based pay protects local economies and thus GOOD for employees

Yes, you read that right. Some folks indeed suggest wages should be suppressed out of kindness, bless their hearts. The poor should stay poor for their own sake (not for their sake). Frankly this is an insult to injury.

5 years. Remember 2017? Trump has just entered office, market was booming, the start of the covid pandemic is still 3 years away, no war in Ukraine. Now consider since 2017 people having the same title, working the same job within the same company still have not earned the same money their colleagues made just in 2017 alone, just because they live somewhere else. Let that sink in for a moment.

tldr; after the acquisition of a R&D startup based in Europe by a Fortune 20 company, people on the team now working on a joint project remotely,  earning 1/2 – 1/5 as their  new colleagues.

Mind the gap

Overseas workers are not a particularly protected group and they are routinely screwed over. Even though people work for the same parent company, developing the same product, committing to the same repositories, using the same issue tracker, deploying on the same servers (working according to US timezones more often than not), they are being paid less than half of their US based coworkers. What gives?

This kind of discrimination is called paying according to external market rates. One needs to pick an index according to their bias to shift the blame to the market. For example you can look at the formula GitLab* uses here and see it in action here. Looking at the numbers for e.g. Seattle and Croatia, there is a ~2x multiplier for the same position. For cities like NYC or SF the gap is getting wider.

In the age of distributed software development there is no valid reason to justify lowballing remote employees. It is very hard to argue against that equal work should be ~equally compensated. Why should geographic location play a part in the salary for remote work** in the first place? How is it the someone’s fault they live in a low GDP area? Yes, housing is expensive and costs more in the US (though food, gas, work equipment, electronics, transportation etc. cost less). But legal matters aside, why should a company decide whether their overseas employees could afford moving to the US if they want? Sending their children to an Ivy college? Afford the same healthcare as US residents? Buy a Tesla or an iPhone? Going on a vacation to Florida? Pointing fingers at the market probably works legally, but from the moral point of things it is very much not OK.

* GitLab is a great product, and this example is for illustrational purposes

** as used in the actual meaning of the words and not as in a reduced payment context

Working class employees should share as much information about their compensation package with their peers as possible, seeing lowballing is the favorite pastime of most managers. They just love to come up with excuses for the borderline insulting raises.

Only the ruling class benefit from keeping salary information secret. Rest assured, they tell everybody their compensation is above average. Still, even if you happen to be well compensated, you are never overcompensated. It only means you are worth having on the team for your agreed salary. It is not a zero sum game, no one will get a raise because someone is paid peanuts and vice versa. There are different degrees of lowballing, and it is everyone’s moral duty to eliminate them as much as possible.

Transparency is good.

Every employee should aim for the absolute minimum work they are compensated for. Always, no exception. It is not even malicious, just the nature of the business. Going over the required means free work, and working for free is charity. Favors should be kept to friends, and your employer is not your friend, don’t treat them as one. You are a cost row in a data sheet. If you can be replaced effectively (by a machine, someone willing to work for less, outsourced etc.) including the cost of switching, you will be out of your job. This one thing is guaranteed. Don’t be fooled, you are not in a happy family, they are not looking out for you. You are there for the money and it is called being professional.

I frequently hear misconceptions about what a flat organization means. People often think it means there is less administration and reporting to the managers (even meetings) and more individual freedom. They often think it is a net positive. Truth is, they are very wrong.

Working in a flat organization means exactly one thing, there is no formal hierarchy. There are less people with titles like CxO, VP and manager sure, but the name of the game is still office politics, only difference it is now played according to a unknown ruleset. It takes a bit more time to learn the office food chain and whose wrong side you should not get on.

It also doubles as a kindly reminder that you are a cog in the machine and should be grateful for your 5% raise. Promotion is not something you have to worry about in the Flat Organization.

Even if things are going smooth, anything you say may be used against in the future. You only tell her what she wants to hear. You don’t complain about your coworkers or the working conditions, everything is nice and dandy, even if you are broadcasting your CV replying to recruiters on LinkedIn. Unless of course you don’t care about your job anymore, then you can go all in.

It is simply the most viable survival strategy. You might complain to your colleagues, but never to the person who has power over you. She is not your friend and not loyal to you, but to the organization that pays her. It is office politics 101. You have been warned.