The Location Pay Adjustment Reference, One Row per Employer Method

This is a lookup reference for anyone reading a remote or multi-city posting that splits its pay range or says pay "depends on location." It names the six methods employers use to move pay by address, shows the posting wording each one produces, and walks you through turning public wage and price-level data into the percentage of anchor-market pay you should expect where you live.

Which location pay method is this employer using?

Nearly every location pay policy reduces to one of six methods, and the posting wording plus the number of ranges usually tells you which one. Each method is defined by what it does to the anchor market, which is the single baseline location (usually headquarters or the largest office) that every other location is priced against.

Two terms carry the whole guide. Cost of labor is what an employer has to pay to hire for a given job in a given labor market. Cost of living is what housing, goods and services cost there. Employers mostly pay by the first. Candidates mostly reason with the second, and most of the confusion starts there.

The tier figures come from Pave: its salary data shows a -11% discount for Tier 2 and -16% for Tier 3 against the Tier 1 metros of New York, San Francisco and Seattle, and its guidance puts Tier 2 at 90-95% of baseline and Tier 3 at 80-85%.

Cost-of-labor tier

The employer groups metros into a few tiers from market wage data and pays each tier a fixed share of the anchor. This is the most common structured method. It proves the employer has done labor-market work. It misleads when your metro sits at the edge of its tier, because one percentage covers every city in the group.

Cost-of-living multiplier

The employer scales pay by a price index. It is rarer than candidates assume, because employers have told surveys that cost of labor matters more than cost of living in setting policy. If a recruiter says "cost of living" loosely, ask whether they mean prices or market wages. Many say one and mean the other.

Metro-specific band

The employer prices each city on its own instead of grouping. One survey summary (Culpepper, via Deel) reports 60% of employers pricing by individual city and only 24% by zone, which conflicts with sources that describe tiers as the default. Treat both as possible and read the posting.

Nearest-office anchor

Pay follows the office you are attached to, not your home address. Federal pay works this way: locality is set by the official duty station. No public survey shows how private employers using this method adjust pay after a move, so get that rule from the employer.

Flat national remote rate

One range for the whole country, tied to headquarters or to the national median. Payscale reports 26% of organizations paying this way. The catch is the anchor: a flat rate tied to a national median is not the same number as one tied to a top-market headquarters.

Location-agnostic top-market pay

Everyone is paid as if they lived in the top market. Basecamp's stated target is "the 90th percentile, or top 10%, of the San Francisco market rates, regardless of their role or where they live." No one has published how many employers do this, and lists of such employers are often wrong (see the failure modes below).

How employers build geographic pay tiers

Comp teams pick an anchor, measure each location's market rate as a percentage of it, then usually round those percentages into tiers before the posting is written. Knowing the sequence tells you where your number was decided and which step to question.

ERI documents the differential step plainly: divide the branch labor market rate by the base location's salary and multiply by 100. Its rounding convention uses 10% increments. That rounding is where a metro whose market rate sits at, say, 86% of the anchor can land in an 80% tier or a 90% tier depending on the employer's cut points.

Here is how published tier conventions compare, each expressed as a percentage of anchor base pay.

The Pave salary and equity rows are derived as 100 minus Pave's published discounts. The Ravio row is a global scheme, which is why its Tier 3 floor drops to 0.4x of headquarters; do not apply it to a US-only role.

The best-documented formula in public is GitLab's, and it shows how many layers sit between the anchor and your number.

GitLab's formula was salary = SF benchmark x Location Factor x Level Factor x Compa Ratio x Exchange Rate. GitLab has since retired its compensation calculator and is moving to market-aligned ranges built from local market data in local currencies. If the most transparent location-factor employer changed its method, any published formula you find for another employer may already be out of date.

Cost of labor vs cost of living: which one moves your salary?

Cost of labor moves your salary; cost of living moves what your salary buys. Price-level ratios between cities fall faster than wage ratios, so a cost-of-living calculator will usually predict a deeper cut than an employer actually applies.

Two public datasets let you see the difference. Regional Price Parities (RPP), published by the Bureau of Economic Analysis (BEA), measure price levels by state and metro area across 387 metro areas. Federal locality pay, set by the Office of Personnel Management (OPM), is a public cost-of-labor differential for 57 named areas plus a Rest of U.S. catch-all. Converted to a percentage of San Francisco, they disagree in instructive ways.

Both columns are derived. The RPP ratio is the metro's RPP divided by San Francisco-Oakland-Fremont's 115.6. The OPM ratio is (1 + the area's locality rate) divided by 1.4634, the top locality area (San Jose-San Francisco-Oakland) at 46.34%. The two San Francisco geographies are not identical, which is one more reason to treat these as cross-checks rather than answers.

What the table shows:

• The low end is flatter on labor. Wages in occupations that compete nationally do not fall as far as rents do. The cheapest metro on prices sits at 72.3% of San Francisco; the federal floor for everywhere outside a named area sits at 80.0%.
• Big metros can swap order. Los Angeles prices are 98.3% of San Francisco's, but its federal pay ratio is 93.3%. Price data alone would overstate an LA candidate's expected pay.
• Expensive is not the same as well paid. Houston carries a 35.00% locality rate, among the highest named areas, which works out to about 92.2% of the top area. That comes from its labor market, not its prices, and it is the mechanism behind cost-of-labor tiers.

When the federal locality table helps, and when it lies

It helps because it is public, metro-specific, and built on labor costs. It misleads in four ways:

• It follows duty station, not home address. It models the nearest-office method, not tiers.
• The rates can be frozen. In the table used here, locality percentages stayed at the prior year's levels while base pay rose 1.0%, so the spread reflects policy as much as markets.
• There is a pay cap. GS pay is capped at $197,200 (Executive Schedule Level IV), which compresses senior pay in high-locality areas and flattens the ratio at the top of the scale.
• Rest of U.S. is one bucket. A single rate covers every place outside the named areas.

Sources also disagree on the current figures: one lists 46.01% and 17.57% for the top area and Rest of U.S., against 46.34% and 17.06% elsewhere. Check the current table on opm.gov before you rely on any locality number.

What a remote posting's location wording tells you

The number of ranges and the location language together usually identify the method. Pay transparency laws are why this works: several of them reach remote postings, so employers that pay by location have to show it.

The coverage rules that force tiers into view:

• Colorado: a covered employer's remote posting is covered even if the ad says Coloradans won't be considered.
• New York City: Local Law 32 applies to any job that can be performed in the city, explicitly including remote roles.
• New York State: a range is required for any role that reports to a New York supervisor or office, even if the work is done entirely out of state.
• Washington: remote postings that could be filled by Washington-based workers must include a wage scale or salary range plus a benefits description.
• California: Labor Code § 432.3 applies to any role a California worker could perform, including remote roles posted by out-of-state employers.
• Size thresholds vary: Illinois applies at 15+ employees, Massachusetts at 25+, Washington at 15+.

One law firm's advice to employers is direct: "If pay varies by location, say which range applies where." Whether a single broad range spanning several tiers satisfies each agency is not something I could verify from agency text, so do not read a single wide range as proof that the employer pays one rate.

How to work out your expected gap from the anchor market

You need about ten minutes to match the posting to a method and about thirty to compute your own ratio. The tool is the BLS Occupational Employment and Wage Statistics (OEWS) program, which publishes wages by occupation for the nation, states and approximately 530 metropolitan statistical areas (MSAs, the federal definition of a metro) and nonmetropolitan areas. A SOC code is the Standard Occupational Classification code that identifies your occupation in that data.

A few rules make step 4 and step 5 hold up:

• Same SOC code, same wage measure, same release. Mixing a median from one release with a mean from another gives a ratio that means nothing.
• OEWS is not cost-of-living adjusted. That is what you want here; it is a labor-market figure.
• OEWS is smoothed. Current estimates pool six semiannual panels collected over three years, so a fast-moving local market will show up late.
• BLS has published its own method for this. Its jobseeker guide by Ben Cover, "Wage differentials: how jobseekers can use them to analyze occupational wage and cost of living data by U.S. area," walks through the same comparison.

Worked shape, using the federal ratios above as a stand-in for OEWS: a remote engineer in Denver applying to a San Francisco-anchored employer sees a federal pay ratio of 89.2%. That sits right on Pave's Tier 2 salary figure of 89%. If the employer uses tiers and places Denver in Tier 2, an expected base of about 89-95% of the San Francisco range is reasonable. If the posting puts Denver in a Tier 3 band at 80-85%, your own OEWS ratio is the evidence to bring to the recruiter.

Posting:
Anchor market:
Ranges listed (count and labels):
Location wording (verbatim):
Method matched / runner-up:

SOC code:
OEWS release and wage measure:
My metro value:
Anchor metro value:
Wage ratio (mine / anchor):

RPP ratio (my RPP / anchor RPP):
Federal locality ratio ((1 + mine) / (1 + anchor)):
Gap between ratios, and why:

Method convention applied:
Expected % of anchor base:
Implied base range:
Equity adjustment confirmed? (same as base / different / unknown):
Relocation rule confirmed?:

Where the location pay read goes wrong

Most bad location pay reads come from using the wrong data, trusting the wrong number in the posting, or assuming base and equity move together. Each failure below has a false positive that looks convincing and a check that catches it.

1. Using RPP as if it were pay

• What it looks like: a cost-of-living calculator says your city is 72% of San Francisco, so you expect a 28% cut.
• Why it lies: employers mostly price by labor markets. Monroe, LA prices sit at 72.3% of San Francisco's while the federal cost-of-labor floor sits at 80.0%.
• Check: compute the OEWS wage ratio for your SOC code.

2. Assuming the equity discount matches the base discount

• What it looks like: you compare base pay across offers and conclude the location gap is about 16%.
• Why it lies: Pave's new-hire equity discounts are -29% for Tier 2 and -36% for Tier 3, roughly twice the base discounts. Base-only comparisons understate the location gap.
• Check: ask for the equity grant and confirm which location adjustment it uses.

3. Reading a multi-state range as your number

• What it looks like: a "Remote - US" posting shows one wide range and you anchor on the midpoint.
• Why it lies: a range spanning several tiers puts most non-anchor metros at the bottom.
• Check: ask "which range applies to my location?" Colorado-style guidance expects the posting to say so.

4. Mismatched tier boundaries

• What it looks like: you assume your metro's tier reflects its own market.
• Why it lies: Culpepper's Pay Zone 3 puts Atlanta, Research Triangle, Los Angeles, Chicago, Philadelphia and Austin in one tier. Your metro's OEWS ratio can sit well outside its tier's percentage.
• Check: compare your computed ratio with the tier band and raise any gap.

5. Trusting the Rest of U.S. bucket

• What it looks like: you use the federal Rest of U.S. rate (17.06%, the lowest in the table) as your area's labor cost.
• Why it lies: one rate covers every place outside the named areas. It overstates pay for rural areas and understates it for unnamed metros.
• Check: use OEWS, which covers about 530 areas.

6. Relying on stale lists of location-agnostic employers

• What it looks like: a blog list says an employer pays top-market rates everywhere.
• Why it lies: these lists go stale and are often disputed. One forum reply to such a list: "GitLab is wrong. Pay is location based."
• Check: read the employer's current postings for multiple ranges or location wording.

7. Building on weak secondary statistics

• What it looks like: a confident figure such as "68% of employers adjust remote pay, per a LinkedIn report."
• Why it lies: that claim has no primary source behind it.
• Check: drop any figure you cannot trace to a named survey.

8. Leaving your metro off your profile and resume

• What it looks like: your profile says "United States" or "Remote" and you assume that keeps you in the top band.
• Why it lies: when the recruiter cannot see a metro, they assign a tier for you, and a default is rarely the anchor.
• Check: state your metro explicitly everywhere a recruiter looks.

Stating a metro on every application is tedious when the right answer changes with the posting. Refolk tailors your resume to each posting you apply to, so the location line can name the metro that matches the range you have read as applicable, and the cover letter it drafts is a natural place to say which range you expect.

How common each method is, and what is not established

No reliable public figure tells you how many employers use each method, and the available figures conflict. Treat the base rate as unknown and identify the method from the posting in front of you.

What the surveys say, and why they disagree:

• Payscale: 26% of organizations pay one flat rate tied to headquarters or the national median and do not adjust for location.
• Payscale, separate page: almost a third (30%) pay according to headquarters location, down from 37% before the pandemic.
• Census Bureau business survey: only one in six firms where location-based salary could apply adjust pay by geography.
• WorldatWork: the widely repeated 62% figure comes from an older study, more than three years old.
• Not established: the share of employers paying top-market rates regardless of location has not been published.

The surveys measure different populations (comp-mature employers versus all firms), which explains much of the gap. A survey of firms that run formal comp programs will find more location adjustment than a survey of all businesses.

Refolk's index gives a sense of who is on the other side of these policies. These counts come from Refolk's index of professional profiles and are published nowhere else.

Three readings, with their limits:

• Remote engineers often hide their metro; comp staff almost never do. The people who assign tiers state where they are. The people being tiered often do not.
• The tier-builders are a large, real population. 4,872 US profiles carry compensation titles, and the sample includes people at Figma, Meta and Okta. Location pay is a staffed function, not an afterthought.
• US remote profiles outnumber Canadian ones about 12.4 to 1. That is one comparison pair only, so do not generalize it to other countries or roles.

Keeping your location pay read current

Every input in this guide updates on its own schedule, so re-run the worksheet when the data changes, when the employer's postings change, or before you move. The mechanism matters more than any single value.

• RPP: BEA publishes on a fixed release calendar, with the next release date shown on its Regional Price Parities page. Check it before you rely on a price ratio.
• OEWS: estimates pool three years of panels, so check which release you used and refresh your ratio when a new one appears.
• Federal locality: rates can be held flat while base pay rises, so check the current table on opm.gov rather than a third-party summary.
• Employer formulas: GitLab replaced its San Francisco-anchored calculator with local-market ranges, so re-read current postings before trusting any published formula.
• Your own move: GitLab requires approval before any relocation, and location factor changes greater than .2 need direct manager, VP and e-group approval. WorldatWork found almost all organizations somewhat or moderately flexible about voluntary relocations for full-time remote workers, but flexible is not the same as pay-neutral. Get the rule in writing before you move.

When you take the read to a recruiter, ask in a way that names the method, so the answer tells you more than a number.

Thanks for the details on the [role] opening. The posting lists [ranges as written]. I'm based in [metro, state].

Before we talk numbers, could you confirm four things?
1. Which of the listed ranges applies to my location?
2. Is that set by a pay tier, a city-specific band, the nearest office, or a single national rate?
3. Does the equity grant use the same location adjustment as base pay?
4. If I relocate within the country after joining, how is pay reviewed?

Knowing this up front will help me give you a realistic expectation.

When the recruiter replies, the fit score Refolk gives you for the posting and your location pay read answer different questions. Keep both, because a strong fit at the wrong tier is still a negotiation you need to prepare for.