Cost of living, metro pay and the remote salary question
Employers increasingly price a role by location. The legitimate version pays a premium for a metro where the same skills cost more to hire. The illegitimate version discounts a remote worker's pay for a cost of living they chose, on the theory that the employer is entitled to the arbitrage.
Why cost of living indices mislead
- They are built on a basket, and your basket is not the index basket. Housing dominates, and housing choice is personal.
- They cover a metro, not an address. A commutable suburb and a downtown address in the same index can differ by 40 per cent on rent.
- They ignore the pay side. A low-cost metro is cheap partly because wages are lower, so a discount can double-count the same fact.
- They are backwards-looking. Rent rose fastest in the metros the indices still call cheap.
What location pay actually reflects
The usable signal is the market rate for the role in the location, which is about scarcity. Two facts drive it: how many people nearby can do the work, and what competing employers nearby will pay. Neither is your rent, and both are arguable with data.
If you are remote and paid to a low tier
- Find the posted band for the same role in the employer's high-cost site, and the band for a similar company hiring in your own metro.
- Argue from either side: match the high band because the work is identical, or match your local market because that is where you could be hired tomorrow.
- Name the switching cost. Replacing you in a high-cost office is more expensive than the tier delta.
- Ask for a tier review on a schedule, annually, and get it in writing.
Move-and-adjust clauses
Check whether relocating triggers a pay cut, and whether the employer will keep your rate if you move to a cheaper area. A remote employee who moves from a high tier to a low tier and keeps the salary is, in effect, taking a raise, and the reverse happens too.
The number that matters
Compare net, not gross, after state and city income tax, and after the commute if the role is hybrid. A $10,000 premium in a high-tax, high-commute metro is often $3,000 in hand.