NCPA - National Center for Policy Analysis

Wage Rates For High-Tech Jobs Across Borders

May 24, 1999

Most people's pay is still largely determined by the local job market. Telephone operators in San Francisco, for example, command $10,000 more a year than those in Seattle -- where demand for their services is lower.

But in some cases the growing ease of communications is changing that -- rewarding workers at global rates. With the advent of the Internet, people with scarce skills can live in one country and work in another, commanding an international rate of pay.

Take the following example of employees in Finland and Estonia, who work just across the Baltic Sea from one another.

  • Finnish dock workers are protesting that their jobs are in jeopardy because their Estonian counterparts are paid only one-quarter the amount they receive.
  • This is an instance of location determining pay rates.
  • But Finish and Estonian information-technology specialists command almost the same pay -- about $2,700 a month.
  • When higher Finnish tax rates are factored in, the small difference vanishes.

Moreover, as companies invest more abroad and move their staffs from one part of the world to another, they must align at least some of their pay. So people are increasingly being rewarded more by what they do than where they do it, observers point out.

Source: "Pay," Economist, May 8, 1999


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