Covid-19 has accelerated relocation plans across all demographics. Anyone thinking of relocating within the next few years, all have been compelled to move now. Encouraged by the Stamp Duty Holiday and the desire for larger gardens and greener spaces.
The question is, should companies be implementing cost-of-living-salary adjustments for these employees who choose to relocate? Should a marketing manager be paid the same amount if they are based in London as they are if they are based in Cheltenham or Nottingham?
Back in May 2020, Mark Zuckerberg shared Facebook’s lessons and strategy for transitioning to remote work. He spoke of creating a “thoughtful and responsible” work-from-home culture, however, the company’s new salary policy has come under criticism. He announced that Facebook employees who move out of the Bay Area during the pandemic will face a cost-of-living salary adjustment. In other words, those who move from the Bay Area to say Ohio or Omaha will take a pay cut.
"Our policy here has been for years—is already—that [compensation] varies by location," Zuckerberg said. "We pay a market rate, and that varies by location. We're going to continue that principle here.”.
Twitter has put in place a similar pay policy. A Twitter spokesman said the company has a “competitive” approach to localising compensation. Payments platform Stripe said it will offer employees $20,000 to help with moving costs but will then cut pay by 10%.
There has been strong criticism against such policies, noting that ‘salaries based on where they live rather than their experience or output is illogical’. Moreover, that in the new ‘world of work’, companies with workplace flexibility will attract, retain and engage better talent and hence cost-of-living-salary adjustments will undermine recruitment efforts.
Reddit took a decisive stance on the issue, announcing that it would not cut the pay of its 600 U.S. employees regardless of where in the country they choose to live.
Adam Jackson, CEO of talent network Braintrust, says: “Companies looking to cut pay for employees who change geographic locations when their job can be done just as well remotely as in person (an important criteria) are essentially telling those employees they were overpaid before Covid and this is a ‘fair market adjustment’ of their pay.
Some argue that remote workers should be paid more not less. Companies are saving money in that they do not have to provide office/desk space for remote workers and therefore they have the funds to pay remote workers a premium. That is what Zapier did back in 2017 when they offered employees a $10,000 “de-location” incentive to move away from the Bay Area.
The argument over remote worker pay post-pandemic will continue to rumble on as companies are forced to rethink their compensation strategies in response to the new era of remote work.