No really. There is a difference.
This came to an amusing yet frustrating head recently when I had the audacity to share an amazing post from my friend Dan (DanFromHR). You can read it for yourself HERE. The heart of Dan’s post was a factual explanation of how many companies navigate high cost of labor (HCOL) areas. To recap, in the US at least – there are going to be higher paying markets (most notably NYC, Bay Area, Boston) that will have a premium adjustment based on the COL in that area.
This is a FACT.
I know this is a thing that is known or proven to be true because I have worked for numerous companies that have created pay ranges and COL adjustments based on location for years. I have made PLENTY of those offers. I’ve even in rare cases been able to offer someone the choice between locations – many opted for the lower COL areas (Seattle vs Sunnyvale, for example) because the 10% or so premium wasn’t worth the lowered buying power. Cost of LIVING (not to be confused with cost of LABOR) is definitely a factor those new hires took into consideration before choosing their final offer location. I respect that choice.
What does this look like in action? Let’s say a national company is hiring in Kansas City. They also have offices in Ft. Lauderdale and NYC. Most of the country is probably going to be in what we call “standard” comp ranges. The average compensation for a marketing manager is 80-120K, with 100K being the “midpoint” or 1.0 compa ratio. (Here’s a great video on compa ratios from my pal Jessica from Workology)
It would not be crazy to assume that the 80-120K range is used in both Kansas City, Ft. Lauderdale, and many other areas. Where folks land in that range of course is subject to a WHOLE LOT OF THINGS I talk about in this 2nd of a 3 part video series on compensation. Now let’s also assume that the company has done their due diligence re: COL (high, low and standard) and that range for those areas is pretty darn great.
Oh – but now we’re expanding in NYC…. and the market laughed at our range. More due diligence is done, and a new “premium” is established – the range for that same role, level, and job family is now 96-144K (a premium bump of 20%) and a midpoint of 120K in NYC.
Now someone moving from Boise has interviewed and been given the opportunity to select their next location. We’ll happily hire in KC or NYC – and we’re approved to make a stellar 1.05 CR offer! That would be 105K in KC, or 126K in NYC. Both offers (in our hypothetical yet fact based scenario) would be strong offers for the role, level and markets.
Of course cost of LIVING is a whole other personal topic and one job seekers should definitely consider before choosing which location / offer makes sense for them. I just ran these calculations this morning and y’all….
YIKES! Now there are a thousands of reasons why folks would prefer one location over another, and there are no “wrong” answers to your personal life choices – just what works best for you. For me, being a Midwest native who doesn’t particularly enjoy big cities, I’m taking KC all day long. The fact that I would have SO MUCH MORE buying power is an absolute plus.
I’ve seen cost of labor premiums average between 10-40% from the lowest to the highest. I’ve NEVER seen on at 69% and certainly not 189% – which is what folks would need to make to maintain the same standard of living AND keep up with housing costs.
Yet with all these FACTS – I’m still expected to believe that companies are wrong for having premium locations based on the cost of doing business in said locations?
But I digress. Let’s get into OPINIONS.
Folks had some strong opinions about my post. There is absolutely nothing wrong with hating this concept. I get that remote work has thrown some complications – and many orgs still honor whatever geographic ranges they’ve established. For example, a company is authorized to do business in every state east of the Mississippi – they’ll likely have a range established for the Eastern half of the US and maybe a “Virtual-NY” range for the higher COL areas. Is it “fair” to pay someone in Bentonville 105K and someone in Brooklyn 126K for the same role and level? I have no idea. But it can definitely be “factual”.
I find it fascinating and a little sad when people start losing their minds over these concepts. I was called rude, dismissive, told the recruiting org at my ENTIRE COMPANY was not “trustworthy” – all because I dared to speak FACTUALLY about how compensation is structured in many orgs.
Can you imagine? I mean even just writing it out I’m struck by how sad and hilarious that is. Being literally angry at a stranger you’ve never met because they dropped a FACT?
“But I don’t like it” – you’re entitled to that opinion
“It’s not fair” – you’re entitled to that opinion
“Companies should do this other thing instead” – also entitled to THAT opinion!
There’s nothing inherently WRONG with disliking the way this company or that operates. There’s nothing wrong with expressing those opinions, asking WHY, and making suggestions about how you’d like things to be.
There’s something VERY wrong with attacking the messenger because you don’t understand the difference between facts and opinions.
Interestingly, no one bothered to even ASK my opinion. Nope – they jumped straight to insults and accusations. At least a couple of people think I’m some sort of corporate bootlicker who supports suppressing wages. Because… I provided… factual…. information.
Here they are – the opinions NO ONE BOTHERED TO ASKED FOR.
- Everyone deserves an opportunity to earn a living wage.
- Compensation ranges and inputs used to determine offers should be fair and transparent.
- Virtual compensation ranges need some inspection and explanation.
- No single person, company, or team has this all figured out.
- Taxes and inflation are too damn high.
Finally, I REALLY believe most recruiters who talk about these topics are genuinely doing our very best to provide insight and information to help job seekers navigate this stuff more effectively.
Oh and honorable mention to the assclown who went on a “liking” spree of all the comments attempting to hurt my feelings (lol as if I had any left) and who ALSO made a snarky comment about my “influencer” status. Imagine the hilarity that ensued when I went to check if we’d interacted previously (we’d been 1st level connections). I found an unread message from this individual… wait for it…. asking me to USE MY INFLUENCE to get eyeballs on one of his posts.
You can imagine how I responded to that.
