Calibrating software engineering compensation for a remote workforce

Pave Data Lab
August 5, 2021
min read
Pave Data Lab

As companies of all sizes increasingly embrace remote work, it’s more critical than ever to set competitive compensation across multiple geographies. 

But how much should you pay a software engineer in Austin versus one in the Bay Area? 

More and more, we’re hearing from companies who are struggling to make compensation decisions with a newly remote workforce.

Sure, you can implement a cost-of-living adjustment to your HQ salaries, but how do you know that rate is going to be competitive in your local market?

In the face of the Great Resignation, Pave’s customers use our benchmarking data to not only ensure equal compensation across departments and personnel within their company but also to pay employees appropriately based on their location.

So what are your options?

When hiring a remote team, you have a few options:

  1. Pay the local rate for talent.
  2. Set a company-wide salary band, irrespective of location.
  3. Set a company-wide salary band, and adjust per employee based on the cost-of living in their respective cities

There are pros and cons to each of these approaches. This is an important question we’ll be tackling in a future post. For the purposes of this conversation, let’s look into compensation based on an employee's local salary.

Enter the data

We pulled the data for entry-level software engineers across our 900+ participating companies. 

Our real-time HRIS / payroll integrations ensures our data stays up-to-date and reflective of what companies are paying, even in the face of a rapidly developing market.

Across our six largest hiring metros, there is an unsurprisingly wide range of entry level salaries.

New York and San Francisco top the charts at $135K base salary for a new hire software engineer, the range extending downwards to $114K in Boston.

While we’ve heard anecdotes about lower-priced cities seeing salary inflation at a rate that surpasses San Francisco and New York, the data isn’t conclusive just yet.

A turning point for remote work compensation

Up until recently, compensation was stuck in the dark ages. Today, the remote workforce is emboldened and empowered unlike ever before––casting a spotlight on how base salary, equity, and total compensation attract and retain top talent.

HR and talent acquisition teams can no longer rely on location-agnostic historical records and spreadsheets. CompTech is fostering a new era of API-driven compensation platforms. Look for compensation platforms that offer seamless integration with your systems of record to ensure that you can stay competitive in the market and keep your talent engaged.

Access all of our benchmarking data now.

Learn more about Pave’s end-to-end compensation platform
Pave Data Lab
The Pave Data Lab
The only data-driven blog powered by real-time HRIS & Equity integrations.

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