[lukemercado]

> You are paid based on how difficult you are to replace. Hence the location based pay

You're partially right. Pay is very much about how difficult you are to replace. However Location in many industries is no longer the dominant input.

Location is the dominant input in an office-centric model, but isn't in a Remote model. In an office centric model, the company would have to pick where to locate the office and that location would have a "commute radius" in which they could effectively expect their employees to willingly come in to the office from. This meant that any physical office's "commute radius" was effectively its talent pool.

So if you put your office in a high cost of living area, you now have to pay enough for people to live in that area or be willing to commute in from lower cost of living areas. This reality is the foundation for the "location based pay" detente between Labor and Capital.

It's worth noting that these things are also interdependent and self reinforcing. Eg: An area (like Silicon Valley, or any other business cluster) has a higher density of talent, which is more attractive to employers, which means more employers want to be in that area. More employers means more competition for that talent, which drives wages up. As those wages then filter into the market you see the price for supply constrained necessities (houses typically) go up, and often times that will drive cost of living up.

In a remote work world, this entire cycle is dramatically disbursed and the core foundation of the "location based pay" detente between Labor and Capital is shattered. What this ultimately means is that Capital no longer pays for Talent + Location + Competitive wages within that location. Instead they pay for Talent + Availability (timezones mostly, but internet connectivity is in there as well). This should, in theory, drive a larger talent pool, which, depending on demand for that talent, might lower wages in a given "Availability". If it does, then the cycle starts anew as Employers start to seek out ways to be in that "Availability".

The big question one needs to ask is whether there is enough demand to suck up all the talent within the workable "Availabilities". If there is, then wages stay the same or go up. If there isn't, then wages go down.

My personal opinion is that any company doing "location based pay" in a remote work world is shooting themselves in the foot (unless they have market power in those locations).

[Bakary]

Everything you've said is logical, but the radius you are describing is multifaceted. There are regulations, inertia, cultural and ideological factors, and all sorts of other considerations that come into the capital vs. labor struggle and recreate the radius even with remote technology.

In our current world, American salaries are inflated for macro reasons, but the shift you are describing may very well flatten the skilled salaries for currently wealthier regions and increase those for poorer regions.

[lukemercado]

> Everything you've said is logical, but the radius you are describing is multifaceted.

No disagreement there.

> There are regulations, inertia, cultural and ideological factors, and all sorts of other considerations that come into the capital vs. labor struggle and recreate the radius even with remote technology.

No disagreement there either.

> In our current world, American salaries are inflated for macro reasons, but the shift you are describing may very well flatten the skilled salaries for currently wealthier regions and increase those for poorer regions.

Seems we agree. A pleasure chatting with you.