I work in oil and gas, by no means the epicenter of innovation and many of these companies are talking about a moving to a mostly remote work force to save on real estate expenses.
By a long shot, the largest expense for large companies in employee salaries - rent, by comparison, is a drop in the bucket. What follows is that companies should be most concerned about employee and team productivity rather then office expenses.
Salaries do get affected by WFH policies, since if you move to a cheaper state/country, a company will often do a pay adjustment. So, from a cost savings perspective, it becomes a question of how much a company thinks being in the Bay Area brings in terms of attracting talent, vs how much they can save by having their employees work from Pennsylvania or Canada or India.
I know companies in Canada that are way ahead of the curve on this: they've been consulting for American companies for years, meaning they can afford way more person hours than american counterparts given a US dollar contract size solely because of the salary gap difference.
I am skeptical that the labor market for high quality tech talent is as large in the rest of the country or that it is that tied to COL. The US vs not US gap seems much larger than the HCOL vs LCOL for senior IC jobs.
Maybe not 10 months ago, but a lot of people have dispersed to various places in the US, and that may continue as companies relax their in-person work requirements. Talent still has its concentration points, but its less concentrated than it was, and I expect that trend to continue.
The US vs. not-US gap is certainly larger, but I expect that US-based companies would much rather hire someone 3 timezones away than 8 or 12. Having to be on conference calls at 7am or 8pm gets old real quick.
Do you know of any remote-first tech company that pays Bay Area salaries regardless of location?
I haven’t heard of one, and I would think this would be a huge selling point so anyone doing it would want to advertise it to engineers.
On the other hand there are plenty of companies transparent about their policy to match pay to cost of living, for instance gitlab publishes their conversion percentages for different cities. Many places in the US they pay ~60% of Bay Area.
There's like a $25k difference between Google L4 in the Bay vs in Boulder and with considerably less average years of experience. That's less than the COL difference.
> companies should be most concerned about employee and team productivity rather then office expenses.
Can companies measure productivity of knowledge workers to that granularity?
Office expenses make a relatively small fraction of employee overall expenses. Say 10% to be extremely generous. NYC five-borough average back in 2015 was around $15K per year [1]. A fully-burdened employee expense is around 2X base salary, so a $100K salary position clocks in around $200K fully-burdened, or around 7.5% of that 2015 NYC average figure. I don't currently see companies wholesale changing employment strategies for 10% differentials.
I'm not sure companies can measure productivity down to that expense detail level for knowledge workers.
True, but if giving up that office also means you're more amenable to hiring employees in LCoL areas for 30% less, then you start to see some savings. Ditto if some of your existing employees move somewhere cheaper and you cut their pay a bit.
It seems like this argument is easily dismissed when you look at the push away from offices and cubicles into cramped tables with no visual separation. Fitting more people into less space has been the trend for a while, despite study after study demonstrating that it’s less productive.
It's very difficult for a corporation to measure changes in employee or team productivity in many white collar professions ..specifically software development.
I personally don't know of any large corporations that track it well enough on a corporation wide level to be able to tell you if any change significantly affected developer productivity.
But the check they write every month for rent is very easily measured and reduced.
Also I was specifically told by the VP who was in charge of making the decision for his division why he was doing it, and it was costs savings.
