Yes, I think that is an ignorant assumption.

I've hired extremely responsive, very good freelance developers on elance for less than $35p/h.

Although I do agree with the positioning of the site as a 'premium' experience.

If anything, for PR purposes, I'd focus a lot on how difficult it is to get accepted into the site as a developer. May be good to push the rate higher and only accept developers who have a personal recommendation from an already accepted developer. For example, make it similar to how http://www.dribbble.com/ handled their initial invitation process.

This keeps the perceived quality high and will ensure the site has a key marketing differentiator from other outsourcing sites.

Our idea was to tie the minimum rate to an acceptable monthly income in the US/West for decent living standards.

$35 * 160 hours per month = $5600 a month

Of course, there is nothing stopping consultants charging more. The idea was simply to do away with ridiculously low rates.

This approach isn't perfect, as people have pointed out, but I think its better than the alternative. A lot of freelance coding sites are practically unusable from the employer's side because every yokel can give a low rate and not even read the project description. I think forcing those people to try to prove their worth and getting rid of some riff-raff employers that underpay is a net gain.

This is a ridiculous claim!!!

Wold class talent should not settle down for "acceptable monthly income" and "decent living standards", that's what we reasonably competent talent do. And even the reasonably competent freelancers should be charging twice as much, just to compensate for the lack of benefits, the depreciation of their infrastructure, and the fact that they will not likely be able to book 4 x 40hr-solid weeks month after month.

The whole point of your little startup is to cut off the people who leaves in countries with lower cost of living. You should rename it as WeCantCompete.us

It really is an ignorant assumption.

I am skilled and work for less as an employee (before tax) in Romania.

If the plan is to include more countries e.g. Israel, 35$ makes sense - average salaries for programmers are different in different countries.

Hmm. That would imply that either I'm not skilled, or I'm not charging enough. :-/