S/O Public Salary/Taxes: COL and virtual jobs

[heat40]

call it an unpopular opinion but I agree with the CEO. He definitely came off like an ass, but if you're in NYC you get base plus a bump to cover for COL. if you are no longer in NYC, why would you need that extra bump? It's not a pay cut to work somewhere else. It's that you get a premium to work in a city like NYC, or SF precisely because of the cost of living.

[macmars45]

My H is making his Seattle wages and we moved to my hometown almost a year ago. His whole company is in the process of going fully remote though so they don't care where you live. Also, they're a global company with offices outside of the US.

We are priced out of owning a SFH in the Seattle area, we wanted to be closer to family and get away from the terrible traffic. So we moved. H wasn't the first to move out of the Seattle area while working fully remote for his company. He got the idea from two other coworkers doing it first (pre COVID).

ETA: we moved to a very red city and county.

[rupertpenny]

Jun 17, 2021 10:06:41 GMT -5 lemoncupcake said:

Jun 17, 2021 9:41:18 GMT -5 rupertpenny said:

A person's work has the same value to the company whether it was done in NYC or rural Oklahoma or something. I think it is disingenuous at best for a company to give someone a pay cut based on location if the work being produced is the same. I know some people move certain places for purely financial reasons, but I don't think NYC would empty out if everyone could make the same money working remotely from somewhere much cheaper, I know I wouldn't leave.

There are definitely a lot of complications and things to consider with the explosion of remote work, but at the end of the day the if the same work is being done the same compensation should be given.

The work has the same value, but if they’re able to attract talent from a LCOL area, they can pay a lower salary for that business value.

So if they need an employee to build 400 widgets a month, they need to pay a NYC local $80k, but they could get someone equally qualified in Alabama to build the 400 widgets for $60k. Win-Win for the business to save $20k and the Alabama employee to get a job that may pay more than their local market.

Yeah, I get that. I wasn't thinking about this in a free market kind of way, I just believe that labor has inherent value that is not determined by markets or location. I'll admit that this is a pretty black and white (and possibly red) way of viewing the issue, but this is how I think of it, especially as someone who has never worked in a for-profit institution and who's career is chronically undervalued and under paid. 

[wildrice]

Jun 17, 2021 10:29:08 GMT -5 rupertpenny said:

Jun 17, 2021 10:06:41 GMT -5 lemoncupcake said:

The work has the same value, but if they’re able to attract talent from a LCOL area, they can pay a lower salary for that business value.

So if they need an employee to build 400 widgets a month, they need to pay a NYC local $80k, but they could get someone equally qualified in Alabama to build the 400 widgets for $60k. Win-Win for the business to save $20k and the Alabama employee to get a job that may pay more than their local market.

Yeah, I get that. I wasn't thinking about this in a free market kind of way, I just believe that labor has inherent value that is not determined by markets or location. I'll admit that this is a pretty black and white (and possibly red) way of viewing the issue, but this is how I think of it, especially as someone who has never worked in a for-profit institution and who's career is chronically undervalued and under paid. 

I see your point, but that is generally not how compensation works or (IMO) should work. It's one thing to say that someone making 250k in a HCOL city should still make 250k when they move to a LCOL. But what about the person making 40k in a LCOL area who moves to a HCOL area? Suddenly the lifestyle they may have been able to afford in rural Mississippi won't even allow them to rent a 1 bedroom apartment in a major city. Should we just leave their salary alone if they are working the same job and say "too bad, you chose to move so accept the consequences! You're doing the same work and it's worth the same no matter where you live!"

Salaries support your lifestyle and savings options. I don't think it would be ok for everyone everywhere to get paid the same amount for a job when their costs of daily living vary so much. Typically compensation is based on a number of factors, including the local market. If the person lives in a different local market from the employer, I don't really think they should be penalized OR rewarded for it.

Though certainly some of these high income employers CAN afford to just keep paying folks the same if they move, and they could do so to retain or reward their employees. But I don't think that's necessarily realistic for every organization. 

[goldengirlz]

Jun 17, 2021 9:24:07 GMT -5 taratru said:

The CEO of Morgan Stanley is so cute in his assumption that living in Colorado is some kind of adorably affordable adventure.

(not the point, I know, and I also know NYC is ridiculously more than anywhere, but that kind of statement makes him look, at best, out of touch)

I think this touches on a good point about runaway salaries. Cities like NY and SF have always been expensive. But the prices started getting truly ridiculous in the ‘80s thanks in part to financial deregulation, and the industries that benefited from it.

The “job is a job” argument ignores how destabilizing it is when local economies that aren’t used to having tons of people making over $250k suddenly get flooded with them. My company is adjusting salaries if you move away from SF and I’m not mad about it.

I quoted the example above because Colorado sure used to be the place where NYers and Californians were like, OMG, so cheap! But that hasn’t been true for at least a decade. It’s still cheaper but I don’t hear people waxing poetic about moving to Denver/Boulder “to finally be able to afford to buy a house.”

[TR]

So it seems like it's less of a pay cut for moving away, but taking away the extra incentive to live in a VHCOL city because you have to be close to the office to go in person. You used to have no choice but to live in proximity to the office so the salaries reflected that extra. It wasn't that the work was worth that much, it was the work + COL. Now the COL is going away.

[amberlyrose]

Jun 17, 2021 11:41:42 GMT -5 goldengirlz said:

Jun 17, 2021 9:24:07 GMT -5 taratru said:

The CEO of Morgan Stanley is so cute in his assumption that living in Colorado is some kind of adorably affordable adventure.

(not the point, I know, and I also know NYC is ridiculously more than anywhere, but that kind of statement makes him look, at best, out of touch)

I think this touches on a good point about runaway salaries. Cities like NY and SF have always been expensive. But the prices started getting truly ridiculous in the ‘80s thanks in part to financial deregulation, and the industries that benefited from it.

The “job is a job” argument ignores how destabilizing it is when local economies that aren’t used to having tons of people making over $250k suddenly get flooded with them. My company is adjusting salaries if you move away from SF and I’m not mad about it.

I quoted the example above because Colorado sure used to be the place where NYers and Californians were like, OMG, so cheap! But that hasn’t been true for at least a decade. It’s still cheaper but I don’t hear people waxing poetic about moving to Denver/Boulder “to finally be able to afford to buy a house.”

This conversation also has to include issues with gentrification when these smaller communities are flooded with people that can offer over locals. 

Denver is a prime city that this has happened. Yes, the city has been revitalized downtown but at what cost? Almost every new neighbor on my block works from home and moved here from Chicago or the east coast. 

[theoriginalbean]

We moved from MCOL Cincinnati to HCOL just outside of Seattle, but it was by choice, so I'm still making Cincinnati $$. My direct report lives and works in DC and his salary is pretty close to my own. I know it's because of the COL issue, but it drives me crazy every time I see it in black and white.

I think it makes sense to have a base pay + a COL adjustment, but only when the location is being dictated by the company. I think that's the direction my organization is moving in post-COVID. I don't think that current salaries should be cut when someone moves to a lower COL area, though. Those should be grandfathered in.

[downtoearth]

Jun 17, 2021 10:29:08 GMT -5 rupertpenny said:

Jun 17, 2021 10:06:41 GMT -5 lemoncupcake said:

The work has the same value, but if they’re able to attract talent from a LCOL area, they can pay a lower salary for that business value.

So if they need an employee to build 400 widgets a month, they need to pay a NYC local $80k, but they could get someone equally qualified in Alabama to build the 400 widgets for $60k. Win-Win for the business to save $20k and the Alabama employee to get a job that may pay more than their local market.

Yeah, I get that. I wasn't thinking about this in a free market kind of way, I just believe that labor has inherent value that is not determined by markets or location. I'll admit that this is a pretty black and white (and possibly red) way of viewing the issue, but this is how I think of it, especially as someone who has never worked in a for-profit institution and who's career is chronically undervalued and under paid. 

It's been common practice in business, even huge places like IBM for decades to close whole departments in high COL areas and rehire in lower COL areas (Connecticut say for their whole HR staff in the early 2000's and rehire or move that whole group that can work remotely to Florida where they can pay less and get the same level of work). Labor is a commodity for most large businesses. Someone I know in HR who was in CT at that time ended up having to take a less prestigious and lower paying job b/c there were thousands of former IBM human resources people looking for jobs at that time and there was high competition for even the lower paying HR jobs. It sucks, but is true that capitalistic business does not really value individuals, but instead looks at it as a "labor force." It's why we still need federal and state labor laws. 

[downtoearth]

Jun 17, 2021 12:15:42 GMT -5 amberlyrose said:

Jun 17, 2021 11:41:42 GMT -5 goldengirlz said:

I think this touches on a good point about runaway salaries. Cities like NY and SF have always been expensive. But the prices started getting truly ridiculous in the ‘80s thanks in part to financial deregulation, and the industries that benefited from it.

The “job is a job” argument ignores how destabilizing it is when local economies that aren’t used to having tons of people making over $250k suddenly get flooded with them. My company is adjusting salaries if you move away from SF and I’m not mad about it.

I quoted the example above because Colorado sure used to be the place where NYers and Californians were like, OMG, so cheap! But that hasn’t been true for at least a decade. It’s still cheaper but I don’t hear people waxing poetic about moving to Denver/Boulder “to finally be able to afford to buy a house.”

This conversation also has to include issues with gentrification when these smaller communities are flooded with people that can offer over locals. 

Denver is a prime city that this has happened. Yes, the city has been revitalized downtown but at what cost? Almost every new neighbor on my block works from home and moved here from Chicago or the east coast. 

So true... this needs to include that when an influx of people who have inflated salaries compared to the area move there, they do bring more $ to the community, but they also can be pricing people who have lived there for decades out of homes and it doesn't help the community's salaries, does it? I guess it takes time to adjust, but I'm wondering how quickly smaller communities can adjust. 

And COL is going crazy right now, mostly because of real estate... not transportation or taxes or food. I just looked at my Denver Zip code and it says that $425,000 is a median house cost right now, but when you look in that zip code for houses for that amount, you get only two really small houses. I thought, well, let's see what $425,000 buys in my MT town now... we have only 10 on the market at or below that price... four are 2-bedroom houses like the ones in Denver, four are 3-bedroom houses, and 2 are 4-bedroom houses. But that still are not very many houses for sale in that amount or lower. So yes, there are 5 times more houses for sale at that level here than Denver. And then I was surprised that my old zip code's median household income in Denver is $57k and my MT city equivalent is $53k. So buying a $425,000 house with the median salary of $53k or $57k would be really hard either way. I guess there isn't a way to make housing more affordable in a quick period of time - but several articles I read said that we don't need affordable housing so much as we need luxury (nicer 4+ bedroom houses) right now b/c people are buying the affordable houses and remodeling them into luxury houses. 

From here: www.theatlantic.com/ideas/archive/2021/03/why-are-housing-prices-and-rents-down/618212/

In almost any other year, a weak economy would cripple housing. But the flash-freeze recession of 2020 corresponded with a real-estate boom, led by high-end purchases in suburbs and small towns. Even stranger, in America’s big metros, home prices and rents are going in opposite directions. Home values increased in all of the 100 largest metros in the U.S., according to Zillow data. But in some of the richest cities—San Jose; Seattle; New York; Boston; Austin; San Francisco; Washington, D.C.; Los Angeles; and Chicago—rent prices fell, many by double-digit percentages. In many cases, the gap was absurdly large. In San Jose last year, home prices rose by 14 percent (the sixth-largest increase in the country) but the area’s rents fell 7 percent (the sixth-largest decline).



“I can’t think of a time when anything like this has happened,” Jeff Tucker, the senior economist at Zillow, said of the divergence between rental and home prices. “This is unprecedented.”

...In the last year, a lot of middle- and high-income households took advantage of the pandemic to accelerate their plans to buy first homes, second homes, and vacation homes. The typical 2020 homebuyer made nearly $100,000, a significantly higher income than the average homebuyer had in past years. “The pandemic and the feeling of not having enough space combined with low mortgage rates gave a lot of higher-income families a reason to pull forward home purchases that they were thinking about making in the next few years,” Tucker said. Plus, many of these families were competing to purchase the same sorts of houses: Something bigger with extra rooms to convert into work-from-home offices, a large outdoor space, and, whenever possible, a pool.

Also this article is good: www.theatlantic.com/ideas/archive/2021/05/us-housing-market-records/619029/

With prices headed to the moon and listings blinking in and out of existence like quantum particles, nobody seems to know exactly when this is going to stop. “In my time studying housing markets, I’ve seen bubbles and I’ve seen busts,” says Bill McBride, an economics writer who famously predicted the 2007 housing crash. “But I’ve never seen anything quite like this. It’s a perfect storm.”


So what exactly is happening? The short answer is: supply and demand. The longer answer is also supply and demand.

On the demand side, demographics are the big, invisible engine driving the machine. Millennials are the largest generation in American history. Having been too financially constrained to buy houses at a normal rate in the previous decade, many of them are now storming into the housing market. Some might feel a desperate need to escape their current apartment, basement, or home after the coronavirus pandemic closed much of the world for more than a year and led to an outbreak of mind-numbing cabin fever. To make things even wilder, homebuyers are flush with cash after a year in which the national savings rate soared to its highest level in decades. On top of all that, interest rates, having basically declined for most of the past 40 years, recently touched new lows, luring more buyers into the market and encouraging higher bids.

[irishbride2]

Jun 17, 2021 9:24:07 GMT -5 taratru said:

The CEO of Morgan Stanley is so cute in his assumption that living in Colorado is some kind of adorably affordable adventure.

(not the point, I know, and I also know NYC is ridiculously more than anywhere, but that kind of statement makes him look, at best, out of touch)

Honestly, it’s probably because the other higher ups are using this as an opportunity to stay at their aspen homes lol and that’s all he hears about.

[laurack]

The problem like previous posters have said is you keep paying someone a big city wage when they move away, they then have the buying power to outbid everyone in whatever smaller town they move to, driving up those median prices. Pretty soon people who have lived in that smaller town for their whole lives cannot afford to stay.

I’m not that far from a big city, (20 miles from Boston) but I’m seeing this now a bit- people are moving from Boston and they have higher buying power. This drives up the costs for everyone else, people can’t buy homes and now rents are going up because landlords know Boston people will pay more and non-Boston people can’t afford their rental anymore and have to move their family.

Now it’s not as drastic here as most people who live 20 Miles from Boston already make a “Boston” wage for their position. But it used to be that if you work in Boston but can’t afford to live there you can live 30-45 min from Boston on the train. But now you maybe have to be an hour+ from Boston, or maybe you can’t be on a Train line any more and have to commute by car in rush hour traffic.

I imagine as the disparity between the “big city” wage and the average wage in the area these folks move to grows, so do the problems around this.

[sillygoosegirl]

Jun 17, 2021 11:41:42 GMT -5 goldengirlz said:

Jun 17, 2021 9:24:07 GMT -5 taratru said:

The CEO of Morgan Stanley is so cute in his assumption that living in Colorado is some kind of adorably affordable adventure.

(not the point, I know, and I also know NYC is ridiculously more than anywhere, but that kind of statement makes him look, at best, out of touch)

I think this touches on a good point about runaway salaries. Cities like NY and SF have always been expensive. But the prices started getting truly ridiculous in the ‘80s thanks in part to financial deregulation, and the industries that benefited from it.

The “job is a job” argument ignores how destabilizing it is when local economies that aren’t used to having tons of people making over $250k suddenly get flooded with them. My company is adjusting salaries if you move away from SF and I’m not mad about it.

I quoted the example above because Colorado sure used to be the place where NYers and Californians were like, OMG, so cheap! But that hasn’t been true for at least a decade. It’s still cheaper but I don’t hear people waxing poetic about moving to Denver/Boulder “to finally be able to afford to buy a house.”

Do they adjust based on COL or based on you no longer being local to come into the office?  Like, do people still get a pay cut if they move somewhere else expensive, like NYC?  

[amberlyrose]

More on the Colorado situation, with links to the WSJ

"A law requiring companies to post pay ranges for jobs in Colorado — including remote work — has put the state in their sights. Dozens of employers are including disclaimers in postings for remote jobs that effectively say residents of the state won’t be considered. The corporate backlash against the law, aimed at reducing gender gaps and opacity around pay, has spurred one resident to build a site, ColoradoExcluded.com, that tracks such efforts by employers."

www.linkedin.com/news/story/coloradans-need-not-apply-5482122/

[keweenawlove]

Jun 17, 2021 11:41:42 GMT -5 goldengirlz said:

Jun 17, 2021 9:24:07 GMT -5 taratru said:

I quoted the example above because Colorado sure used to be the place where NYers and Californians were like, OMG, so cheap! But that hasn’t been true for at least a decade. It’s still cheaper but I don’t hear people waxing poetic about moving to Denver/Boulder “to finally be able to afford to buy a house.”

According to my SIL who's trying to buy a house in Montana now, Missoula is where they're going now. They're getting quickly priced out of the city. Salt Lake City seems to be on a similar trend. 

[goldengirlz]

Jun 18, 2021 15:22:48 GMT -5 keweenawlove said:

Jun 17, 2021 11:41:42 GMT -5 goldengirlz said:

I quoted the example above because Colorado sure used to be the place where NYers and Californians were like, OMG, so cheap! But that hasn’t been true for at least a decade. It’s still cheaper but I don’t hear people waxing poetic about moving to Denver/Boulder “to finally be able to afford to buy a house.”

According to my SIL who's trying to buy a house in Montana now, Missoula is where they're going now. They're getting quickly priced out of the city. Salt Lake City seems to be on a similar trend. 

Ha, yes, Montana was the precisely example I was going to mention as the next hot state. Everyone is talking about Montana, and not only Missoula. I know a bunch of people who are either spending the pandemic there (before they get called back to the office) or have bought second homes there. (I don’t know anyone who plans to stay permanently yet, but I assume it’ll happen eventually.)