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I wish to acknowledge the help of Luke Eure whose thoughts and insights greatly challenged my initial ideas while writing this post.

  1. Introduction

The career guide from 80,000 hours provides many insights for people who aspire to have a positive impact with their work. It offers various career advice, tailored for people who intend to work on global challenges such as pandemic preparedness, climate change, nuclear war, and risks from artificial general intelligence (AGI), as well as others that are not yet known. It also provides abundant resources on how to gain career capital to make a difference, with a job board for high impact jobs. A brief look at the salaries offered for positions in these places reveals that the location of the employees, rather than their value, determines how the listed organizations such as GiveWell and multi-national companies like Google and Microsoft pay them. This is not the main focus of this post, but the debate between location-based salary and value-based salary has been discussed elsewhere and is probably useful for giving this post context.

A large number of job opportunities on 80,000 hours’ job board are from organizations located in developed countries. This means that international applicants might be more interested in those that allow working remotely, unless immigration is facilitated by the employee or employer. However, most organizations may adopt location-based salaries as a compensation model, which takes into account the differences in living costs and market rates across regions. For instance, if you work for a high-impact organization such as GiveWell in New York, you will earn more than if you work for GiveDirectly in Kenya. But is this fair? And more importantly, is this optimal for maximizing your impact as an effective altruist in a developing country somewhere in Africa? The issue of fairness has been addressed elsewhere, so I won’t drag out that argument here. It is important to also note that this post does not in any way imply that all multinational enterprises in EA only offer location-based salaries. 

The intention of this post is to find out whether, value-based compensation models can help Africans achieve more direct impact. Hinged on Stefan Schubert’s incentives argument that “higher salaries will make it more appealing to do high-impact direct work”, I also envisage more Africans taking on high-impact jobs in the EA space if there are enough incentives to do so. Also, I attempt to explain how paying Africa-based employees the same as those in developed countries does not affect their giving potential but affects their ability to make a difference in their local contexts.

     2. A brief overview of the case against location-based salaries

The main argument for location-based salaries is that they ensure that employees have a similar standard of living and purchasing power across different regions. This is supposed to prevent unfairness and resentment among employees who work for the same organization but live in different places. However, this argument assumes that employees who are effective altruists value their own consumption and comfort more than their impact. One might eventually feel compelled to strike a delicate balance between lower standards of living and higher costs of living to ensure most good can be done with their resources [money, time and energy].

Moreover, location-based salaries create perverse incentives for employees to choose less impactful locations over more impactful ones. For instance, if you are an EA who wants to work for GiveDirectly, you may prefer to work in New York rather than in Kenya, because you will earn more money and have a higher quality of life and give more to organizations that are working on more pressing problems. But this means that you will miss out on the opportunity to have direct impact on the ground, to learn from the local context and culture, and to potentially start new initiatives or projects that could benefit the people you are trying to help.

   3. Value-based salaries would allow effective altruists in Africa to have more direct impact

Paying Africa-based and New York employees equally would not change their giving, but their impact. If you are an effective altruist who works in New York and earns $100,000 per year, you may be able to donate 10% of your income ($10,000) to effective charities. Ideally, on the other hand, if you are an effective altruist who works in Kenya and earns $100,000 per year, you may be able to donate a significant amount of that money. Ideally, let’s say 90% of your income ($90,000) to effective charities [these are very rough numbers, and can be tweaked to any percentage above 10%]. This is because the cost of living in Kenya is much lower than in New York, and you can live comfortably on $10,000 per year – at least in principle. But this does not mean that you are giving nine times more than your New York counterpart. This is because the marginal value of your donations depends on how much money is already available for effective causes. If there is already a lot of money flowing into effective charities, then your additional donation will have a smaller impact than if there is a scarcity of funds. For example, if GiveWell has already raised enough money to fund all of its top charities for the next year, then your donation will not make much difference. But if GiveWell has a funding gap and needs more money to support its top charities, then your donation will have a bigger impact.

Paying EA organization employees the same salary regardless of their location would also essentially allow them to save more money and donate more effectively. For example, if an EA organization started paying 70k per year instead of 100k per year to its employees, but paid that amount regardless of where they lived, then they would be saving 30k per year per employee. This could be used to fund more projects or hire more staff. However, this argument assumes that the living expenses and personal obligations of the employees are similar across different locations. This may not be the case [consider the case scenario between NYC and Kenyan-based employees highlighted earlier in the post]. However, the Kenyan-based employee may also have to give 10k per year to their family in "black tax", which is a common practice in some African cultures where relatives expect financial support from those who are better off. This leaves them with 50k per year to save or donate.

Now, compare this to an employee who lives in NYC. The living expenses of the person in NYC are maybe 60k per year - that gets them a decent but not luxurious quality of life. They may not have to give any money to their family, or only a small amount. This leaves them with 40k per year to save or donate. In this scenario, the employee in Kenya can still donate 20k per year - more than the 10% someone would be donating in NYC. However, they may also face more challenges and risks in their work and life, such as political instability, corruption, violence, disease, etc. They may also have less access to opportunities and resources that could help them advance their career or personal goals. 

I submit to the counterargument that paying employees the same salary regardless of their location may not be as simple or fair as it seems. It may overlook the differences and trade-offs that employees face in different contexts. It may also create resentment or dissatisfaction among employees [and this might also be true for location-based salaries] who feel underpaid or overworked compared to their peers. I am no expert in economics, labor laws neither do I claim to know the operation costs of organizations that employ people in the global market, but I think it is extremely important that a more nuanced and flexible approach may be needed to account for these factors and ensure that employees are motivated and effective in their work.

   4. Location-based salary supporters often overlook that many employed Africans remit black tax

As I had highlighted earlier, the arguments in favor of location-based salaries ignore the fact that many Africa-based employees have to support their extended families financially, often out of obligation. This is known as "black tax", a term that originated in South Africa for money that black professionals provide to their family every month outside of their own living expenses. Black tax is caused by continued economic imbalance that can be traced back to apartheid and slavery. Therefore, an Africa-based employee who earns $100,000 per year may not be able to donate 90% of their income to effective charities anyway, because they have to pay a lot of black tax and $10,000 would not afford the comfort they [including extended family] would like.

   5. Some reflections on the fairness and efficiency counterargument

The obvious counterargument that claims that location-based salaries are fair and efficient, because they reflect the different costs of living and market rates in different regions has several flaws, and I intend to highlight some of them in this section of the post. 

First, this viewpoint wrongly assumes that employees who live in expensive regions have higher expenses and face more competition for jobs. This is not always necessarily the case. Some employees may have lower expenses due to factors such as family support, housing subsidies, or lifestyle choices. Some employees may also have more job opportunities due to their skills, experience, or network. These "reliefs" may lack in developing countries in Africa. Although I do not assume that there are privileged people in Africa [whether because of their skills, money, or networks], but this is a blanket statement that covers a majority of situations for people in the continent.

Second, it ignores the potential benefits of paying employees based on their value and performance, rather than their location. This could motivate employees to work harder, improve their skills, and contribute more to the organization or company's goals. It could also reduce turnover, increase loyalty, and attract talent from diverse backgrounds.

Third, it overlooks the possible drawbacks of adjusting pay to reflect the cost of living in employees' new locations. This could discourage employees from moving to cheaper regions where they can have more impact with their donations. It could also create resentment, confusion, and inequality among employees who do similar work but receive different pay. Location-based salaries may seem fair and efficient at first glance, but they are not the best way to compensate workers.

   6. What using the value-based salary model would look like for effective altruism

But what if we reversed this situation? What if we paid equally to all employees regardless of where they live? Then we would have more money available for effective causes by paying less to employees who live in expensive regions and more to employees who live in cheap regions. This means that there would be more money left for donations and grants, and that the marginal value of each dollar donated or granted would be higher.

And this is not all, equally paying Africa-based employees the same amount as those living in New York would also increase their impact by enabling them to have direct impact on the ground, to learn from the local context and culture, and to potentially start new initiatives or projects that could benefit the people they are trying to help. For example, if you are an effective altruist who works for GiveDirectly in Kenya and earns $100,000 per year, you may be able to use some of your income to fund local entrepreneurs who have innovative ideas for improving the lives of the poor. Or you may be able to use some of your time and skills to mentor local staff or volunteers who work for GiveDirectly or other effective organizations. Or you may be able to use some of your connections and influence to advocate for policy changes or systemic reforms that could have long-term positive effects.

These are just some rough examples of how an Africa-based employee could have more impact than a New York-based employee with the same salary. Of course, this does not mean that every effective altruist should move to Africa or work for an Africa-based organization. There may be other factors that affect your personal fit and comparative advantage as an effective altruist. But it does mean that high-impact organizations should not use location-based salaries as a way of attracting or retaining talent. Instead, they should use value-based salaries that reflect the impact potential of each employee regardless of where they live.

   7. Conclusion

Here, I have argued in favor of value-based salary for African effective altruists, with the projection that this would help in achieving direct impact on the causes they deeply care about and even chose to work on more pressing problems by pivoting to an effective career. Employees would also ideally have more incentives to perform well and align their goals with the organization's mission. Value-based salaries could provide them with more resources and autonomy to pursue their altruistic endeavors by using their extra income to fund their own projects, donate to effective charities, or upskill if they are already working in a high-impact career. Value-based salary could also increase their motivation and satisfaction, as they would feel more valued and recognized for their contributions. Also, value-based salary could attract more talented and passionate people to join the effective altruism movement in Africa, creating a positive feedback loop of impact and growth.





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Sorted by Click to highlight new comments since: Today at 3:45 AM

Thanks for the post nice one! I appreciate the thought process and strongly upvoted, but strongly disagree with this argument.

I live in Uganda, and (disclaimer) am a strong advocate for the opposite - for NGOs to pay their workers less, and even wrote about it 5 years ago.

Here are my arguments specifically against this (aside from the general ones George already mentioned)

1. The extra money won't get given away. We already have strong evidence that paying high salaries for "do gooding" jobs doesn't attract do-gooding people. NGO workers here earn the highest salaries already, and there is no association between people wanting to do good and these working for an NGO - These are simply the highest paid jobs and everyone clamours for them. Many people even pay bribes to get the jobs in the first place. There's just no way you will be able to ensure that the people you pay the very high salaries are likely to do good things with the money. 

2. Cost of living should be considered. A $40,000 salary in New York might give you $0 disposable income, whereas in Nairobi it might give you $30,000. I think to some extentwe do have to pay living wages based on context. I think its better to take advantage of the lower cost of living, and for EA orgs to spend money more effectively by hiring more people from low income countries. 

3.  I'm not sure there is a meaningful culture of "earn to give" from a truly "effective altruism" perspective yet in Sub-saharan Africa. People are extra-ordinarily generous and donate large amounts of money to lots of local initiatves and to struggling family members which is fantastic, but I haven't yet met anyone here in Uganda at least who aims to fund the "most effective" charities. I think resources to build EA these ends might be better spent on EA  community building in capital cities, rather than on higher salaries. I would be interested to hear from George if he is part of an EA community which has members who give a lot of money away to effective charities

4. You could easily cause counterfactual harm by pulling someone away from a more important job. If you offer 70k salaries here, you really will get the best of the best applying for that job. The kind of people that could be local Governers, or running  effective local businesses that employ a lot of people. Unlike in high income countries where there are many jobs with higher salaries and more prestige, jobs with these kinds of salaries in places like Uganda barely exist. If you actually hire the best candidate, there's a decent chance that they were already doing a job with influence and power which might be higher net good than the EA job, or that they were planning on doing something higher net good in the future.

5. Effective use of money - get 3 for 1. Why pay for 1 EA job for 60k and hope that someone will give away half of it, when in Uganda you could pay 3 people 20k, still get amazing quality workers and get almost 3x the EA work? (or less, that's a HUGE salary here). This might seem like the obvious alternative to paying one higher salary, but I think its still worse saying

Two side notes

First side note, I don't like the negative "black tax" framing of the cultural norm of rich people generously sharing money with worse off family members. It seems to me am unnecessarily negative framing of a hard and messy yet often beautiful cultural norm.  Richer Ugandans share a LOT of their income with poorer family members yes, to pay school fees and medical bills and other  important things. A lot of the time (especially when the money is going to very poor family members)  this can actually be a very effective use of money - often well targeted and of course with no overheads. This so called "black tax" can often be a better use of money than either if those richer people spent the money on themselves, or if they gave to the plethora of largely useless NGOs here. 

Second side note, the OPs suggestion to provide "income to fund local entrepreneurs who have innovative ideas for improving the lives of the poor."  is not necessarily a good use of money. There's not good evidence this is an important cause area, nor is it neglected - very many NGOs already fund entrepreneurs in East Africa, I'm not sure we need more of that.

Thanks Nick for the insightful comments you've shared!  I greatly appreciate your well-thought-out perspective. I would like to address some key considerations based on your points:

  1. Regarding the remuneration system, it is indeed debatable whether most of the extra income would be donated. I understand your viewpoint on this matter. However, I believe a more nuanced approach is necessary when designing remuneration systems. Organizations should strive to encourage their employees to contribute a portion of their additional earnings to effective charities, such as 10%. This approach becomes especially important in areas where Effective Altruism (EA) is not widely embraced.
  2. Considering the cost of living is essential, and it would be unfair to disregard its impact. I agree that an employee's location and the associated cost of living should not be used against them, particularly in low-income areas.
  3. I acknowledge your observation that the giving culture in Kenya, where I am currently located, may not be as prevalent in other African countries. It would be presumptuous to assume a uniform situation across all African states. Efforts are underway within the EA Nairobi and EA JKUAT communities in Kenya to expand the reach of EA and foster a stronger giving culture. While I cannot provide specific details on the donations made by EA Nairobi, it is an area I am personally interested in exploring further.
  4. Concerning the impact of attracting professionals away from their current impactful jobs, I respectfully disagree with your perspective. In the long term, I believe it is crucial to provide professionals in Africa with equal opportunities to compete for impactful positions. Additionally, a significant number of highly competent and dedicated individuals are already working on effective causes, and this trend is not expected to diminish anytime soon.
  5. In terms of cost-effectiveness, I agree that allocating extra funds to employ more highly skilled individuals is important. However, it is crucial to ensure that employees receive adequate compensation to prevent a situation where their productivity is compromised due to unfavorable conditions resulting from low salaries.

While the term "black tax" may sound negative, I personally view it as a positive phenomenon based on my own experience as a beneficiary of financial support from my well-off extended family. I have had the opportunity to attend conferences outside Kenya solely due to their generosity. Therefore, I believe that targeted financial support within families and communities can be an extremely beneficial force.

Your concern regarding the sustainability of communities after NGOs cease their activities or funding is no longer available is valid. Often, when NGOs implement successful programs, such as feeding initiatives or distributing mosquito nets, communities struggle to maintain those advancements once the programs end. I share your belief that entrepreneurship should continue regardless of external funding. It is through a combination of financial resources and locally developed solutions that many of the challenges in Africa can be effectively addressed.

Thank you again for your thoughtful comments. Your insights have added depth to the discussion, and I value the opportunity to engage in this conversation.

Lots of good points here!

Just to isolate and respond on the "black tax" comment: The perspective I have heard from talking to Kenyan entrepreneurs about this is I have a familial financial obligation that expat  entrepreneurs do not have. It prevents me from being as risk-taking as I might otherwise be

Here is a direct quote from an entrepreneur I interviewed for a project: "there's so many cool, really smart Kenyans and local entrepreneurs. But then there's the sort of like 'black tax'. It's family, and there's all this stuff. And the pressure to make it I think, pushes people to more safer choices, as opposed to picking something that's a little bit more high risk"

Whatever you might think about the effectiveness or the cultural value of this expectation, I think the term "black tax" does capture that this is a financial obligation for some.

This is a secondhand viewpoint - I am not black nor African. I'd love to hear opinions on this from people with firsthand experience.

Thanks for the response man, the phenomenon 100% holds back entrepreneurs, I've heard that many times as well and agree with that! And its definitely an obligation no disagreement there which I agree "black tax" captures. 

My inclination though is that despite that the obligation may actually well be net positive, as it forces many people to spend money on things which are better for the world than if they spent them it on themselves.

The obsession with entrepreneurship here is very interesting, its a huge discussion we won't have right now but I've got mixed feelings about whether its necessarily something that leads to good outcomes and should be strongly encouraged.

Nice one.

Nice one George. Some thoughts:

  • My naïve intuition is that it would be good for many EA orgs to decentralise further and/or move bases out of expensive areas, due to lower operating costs and I think better optics leading to greater cost-effectiveness. But after considering that many smarter and more knowledgeable people think otherwise, I would be slightly surprised if this intuition was correct (having tried to comprehend everything in a GiveWell model, I can see the benefit in people regularly being in the same room). 
  • Would you agree that location vs value-based is a false dichotomy and they represent two extreme ends of a spectrum? In reality, I understand the majority of companies benchmark using local competitive rates, but this does not have to be the case. My intuition leans towards a norm of using both location and value-based components in deciding salary. This would mean a worker based in San Francisco would be paid more than one in Nairobi, but less relative to local cost of living.
  • On #5, I think these salaries need to consider averages, not exceptions. Also, I believe it is greater job opportunities that lead to organisations needing to set higher wages.
  • The example of the Kenyan employee effectively redistributing their disposable income seems a bit idealistic to me. Offering high wages for the region would attract a greater proportion of less-altruistically minded people who would not necessarily redistribute generously and impartially. In addition, GiveDirectly (and other NGOs) have developed their own ideas on how these funds could effectively be used. Even with the individual's advantage of being in the region, the NGO must view this as an expected cost to their broadly-defined goal of global development. There are likely overall benefits to the NGO in terms of image and employee morale, but (I think) not in the explicit benefits from philanthropic investments made by the individual.

To repeat myself a little. Thanks for the post and perspective. My admittedly uniformed hunch is that it would be great to see more EA-aligned orgs hiring remote workers in less developed and expensive regions. I think ideal remuneration for the positions would involve location and value-based components.

Thanks Scott for your comment and thoughts!

  • I truly appreciate your perspective on the decentralization and relocation of EA organizations. It's an interesting idea that many of us might instinctively consider beneficial due to lower operating costs and potential improvements in optics and cost-effectiveness. I think it is important to acknowledge the diverse viewpoints of experts in the field, who may have a more nuanced understanding of the situation. Having looked into the GiveWell model myself, I can comprehend the value of having people regularly gather in the same physical space for collaboration and synergy, which might not be easily replicable in a decentralized setup.
  • Regarding the interplay between location and value-based considerations in salary determinations, I agree with your notion that it is not a matter of choosing one over the other. Rather, it's about finding a balance and establishing a norm where both factors are taken into account. While it is common for companies to benchmark salaries based on local competitive rates, your intuition of incorporating location-specific and value-based components resonates with me. This approach would ensure that a worker in a city like San Francisco, for example, receives a higher salary than someone in Nairobi, while still accounting for the local cost of living.
  • Your emphasis on considering averages rather than exceptions when contemplating salaries is noteworthy. It is essential to look at the bigger picture and consider the overall job market and opportunities available. Organizations often find themselves needing to offer higher wages due to competitive factors, as they strive to attract and retain top talent in the field.
  • Regarding the example of a Kenyan employee redistributing their disposable income, I understand your skepticism. While offering higher wages in the region might attract individuals who are not as altruistically inclined and may not generously or impartially redistribute their income, it is crucial to examine the broader impact. NGOs like GiveDirectly have developed their own strategies for effectively utilizing funds and addressing philanthropic goals. Even if the individual's philanthropic investments may not directly align with the NGO's objectives, there can be overall benefits in terms of organizational image and employee morale. It is indeed a complex balance that requires careful consideration and evaluation.

By incorporating both location-specific and value-based components in remuneration decisions, we can strive to strike a harmonious balance. I find it crucial to approach this endeavor with empathy and an understanding of the potential implications, ensuring that the overall impact aligns with the organization's goals and respects the humanity of all involved. Once again, thank you for sharing your valuable perspective.

I read it and I liked it. I have questions though; whilst it looks 'fair' on the face of it to pay everyone the same salary, don't you think the aspect of locations should be considered? I mean, what if we paid the same amount of salary to people working the same job but different hardships, would it be fair? We do not consider whether their lives are in danger or not? What if these differences in salaries are actually incentives to encourage people to work in rather expensive or hardship locations?

I think this viewpoint is an important aspect to delve into, but you may benefit from other sources I have included in the post. Some thoughts on your comment:

  • While it may seem "fair" to pay everyone the same salary on the surface, it is crucial to recognize that different locations can entail varying degrees of hardships and challenges. Ignoring these differences could lead to a lack of fairness in compensation. It would not adequately account for factors such as danger, safety concerns, or the cost of living in different regions. I have made some distinctions between living in NYC and Nairobi - very different conditions for employees working in the same organization.
  • I actually think offering higher compensation for positions in expensive or hardship locations can act as an incentive to attract and retain individuals willing to work in such challenging environments. It recognizes the additional burdens they face and compensates them accordingly and can help address the inherent inequalities arising from differing circumstances.
  • It is important to strike a balance between promoting fairness and incentivizing individuals to take on difficult assignments. By taking into account location-based factors when determining salaries, organizations can acknowledge the varying hardships people face, ensuring that they are appropriately compensated for the challenges they encounter.

It is obviously a delicate balance that organizations need to navigate, considering both fairness and the need to provide incentives for individuals to work in challenging locations. Thank you again Tekin for raising these thought-provoking questions.