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A recent study by Carta said that around 84% of startups adjust compensation based on location. My deep, considered analysis is as followed:
This is a colossally fucking stupid idea.
Despite writing about a hundred thousand words about management, both on this newsletter and for The Atlantic and Business Insider, it is not quite as complex an issue as it’s made out to be. If you pay someone a certain amount for a role, and adjust that pay downwards based on where someone lives (and yes, it’s the same if you adjust it upwards too), you are effectively saying that a person is worth more based on their location, which they are not if they are using a computer connected to the internet. If your company is remote and you’re paying someone more because they’re based in San Francisco, you may as well start paying people based on the speed of their internet connections, because that has more bearing on their actual work than their physical location.
The only exception to this is if you have a reasonable reason for that person to physically be at the office, and I can 100% guarantee that anyone doing this kind of sliding pay-scale bullshit does not. San Francisco’s high-paying tech jobs exist both as a symptom and root cause of the massive rent increases — people move for high-paying jobs, get nice places, and prices begin to rise as greedy landlords realize they can gouge thousands more dollars out of everybody because some people can afford to live there.
