Industry Analyst & Strategist
Matt Mullenweg, Distributed, writes Another year of distributed work. A brand new set of questions.: “[Tax and ongoing support] questions go well beyond the productivity and collaboration topics that typically accompany any discussion around distributed work. And the answers are more important than ever as companies that want to return to the physical office look at another year away from it — and for others that plan to permanently embrace distributed work.”
A number of Fortune 500 companies across industries are considering potential pay changes if an employee relocates from a city like San Francisco to Texas, says Jimmy Etheredge, chief executive of North America at the consulting firm Accenture PLC.
“Almost all of them have a cost-of-living element in their compensation,” he says. “As they’re thinking through this future of work that may involve more remote working, that may involve talent in places that they did not necessarily have before, they will look to make adjustments.”
Other tech companies are continuing to pay people the same regardless of ZIP Code. Spotify Technology SA, the audiostreaming company based in Sweden, recently told its employees, which it calls “band members,” that they could work from anywhere within their assigned country and maintain their same pay.
I have a very gut reaction to these pay changes, and that is that pay should be tied to the value an employee provides to the company. In the above scenarios this would mean that whether you live in San Francisco or now Peoria, your value should not be magically diminished. If your company goes fully remote, then everyone is providing the same value with the same changes in environment. Companies can reduce significant expenses in real estate and infrastructure, yes there will be an added cost to managing remote however that should be a net gain for the corporate bottom line.
I also have a very mental reaction. There can be significant regional differences in pay for the “same” work, that’s why offshoring/outsourcing exists in the first place. The logical brain in me says that existing pay should never be decreased for the remote reasons, however, future increases could absolutely be tied to one’s cost-of-living. Additionally, new employees could be pegged to cost-of-living quite easily.
What about a question that people aren’t talking about in these articles? What if my partner needs to move to Chicago or New York for their career? Maybe I need to take care of a parent that doesn’t live in a cabin in the woods like I do. Do I get a sudden increase in pay? No one would expect that so I feel a little consistency in the “remote reduce” argument is only fair.