You Should Expect Equal Pay for Equal Work at Your New Remote Job
By: Nityesh Agarwal
Tags: Remote Work, Software Development, Startup, Work, Programming

#2. Differences in government spending across countries

Public spending enables governments to produce and purchase goods and services, in order to fulfill their objectives — such as the provision of public goods or the redistribution of resources like social protection, education, and healthcare.

Recent data on public spending reveals substantial cross-country heterogeneity. Relative to low-income countries, government expenditure in high-income countries tends to be much larger (both in per capita terms, and as share of GDP), and it also tends to be more focused on social protection. — Our World in Data

In India, the government spends about 1,700 US dollars per head (adjusted based on Purchasing Power Parity) in the year 2015; while in countries such as Norway, that figure is over 30,000 US dollars (adjusted based on PPP) and in USA it is over 21,000 USD.

This lack of government spending is ultimately passed on to citizens who have to pay for it with their own money — so it’s reflected in their cost of living.

A poor public schooling system means that employees need to send their children to expensive private schools. A broken public hospital infrastructure means that people need to use expensive private hospitals for healthcare. And many of these private enterprises are not above profiteering in times of crisis.

How does cost of living based compensation take into account differences in government spending across countries? Shouldn’t the employees be compensated for this difference?

#3. Relocations get complicated at best and unfair at worst

What happens if I relocate to a lower-paid region? Will I be compensated differently?

Companies like GitLab are pretty transparent about this. “Yes, you take a pay cut”.

But what happens if I was living in a cheap city and decide to move to a more expensive one?

I asked the CEO of Gitlab. Here’s what he replied:

Coming from India, I know for a fact that a lot of people in lower-income countries will jump at this opportunity.

What happens if I choose to be a digital nomad changing cities every couple of months?

What if I choose to get an official address in some expensive city while I actually live in the suburbs?

#4: Loose Definition of “cost of living”

The most common argument against equal pay for equal work for remote employees is the difference in housing prices across cities or countries.

So how do you define the “Cost of Living”? Is it just the housing prices? And groceries? Restaurant bills, maybe?

All that seems incomplete — it’s only a small percentage of many people’s actual costs of living.

What about the costs of caring for an elderly parent? What about living a single life versus being married? For that matter, how about having a stay-at-home spouse versus having a spouse in a high-paying job?

What about the number of kids one has? Number of dogs? Cats?

What’s included in the cost of living?

More importantly, who defines it? Should it be the employee who’s actually incurring these costs? Or should it be the employer who’s paying the employee?

Other tough questions

Who dictates the proportion in which I should be spending my money?

Electronic devices from big brands are priced the same regardless of whether they are sold in the USA or Brazil. A Macbook would cost you the same every city of the world (except for the import duties that people outside the USA probably need to bear).

So, what if I choose to spend just 10% of my income on housing expenses and 30% surrounding myself with the latest tech gadgets from the world? And maybe another 40% investing in NASDAQ stocks?

It sure doesn’t make sense to have a 100% of my salary reduced based on just 10% of my expenses.

Where does the leadership in the company live?

Leadership in companies that offer COL based compensation, often live and work in high-wage markets but they might feel differently if they were subject to lower pay for the same work.

How do you account for the costs of reduced opportunities that employees, who don’t live in primary talent markets, incur?

People who don’t live in the tech hubs of the world might have to bear costs in terms of reduced networking advantages and lesser alternate job opportunities.