Will Companies Decrease Salaries for Remote Workers?

Tech companies suggest Remote Working pay cuts

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Unified Communications

Published: January 25, 2021

Rebekah Carter - Writer

Rebekah Carter

Remote working is the new normal for most companies these days. Following the COVID pandemic, companies are re-assessing how important the physical office really is for business productivity. As we move into the future following 2020, many businesses agree that they will be continuing to offer remote working opportunities to staff. But there may be a catch.

Across the tech world today, various well-known companies are beginning to consider lowering the salaries of their remote employees. Specifically, employees who choose to live in inexpensive areas won’t earn as much as those living in places like Silicon Valley.

While it’s fair to say that location has been a component of salary decisions in the past, it seems bizarre that companies are now giving this factor more weight, particularly as people continue to work for businesses regardless of their location.

Where are These Pay Cuts Happening?

It’s difficult to say for certain how many companies share the same opinions about remote working and salary cuts. However, some high-profile brands have already caught the attention of the media.

Facebook’s Mark Zuckerberg, says that 10 years from now, around half of all employees will be working from home. However, anyone outside of Silicon Valley should expect a pay cut. During a video conferencing session with employees, Zuckerberg announced a decision to aggressively increase remote worker hiring, but that those living in low-cost areas would be paid less.

Zuckerberg isn’t alone in this decision. ServiceNow, the cloud-based software company, has also come under fire after CEO, Bill McDermott, indicated that they would also be paying their remote team members a lower wage.

Elsewhere, VMWare is one of the more recent brands to say that employees will have an opportunity to work from home when employees can return to the office. However, employees who choose to move to a place that enjoys a lower cost of living will also receive an adjustment in pay.

A New Era for Location-Based Pay?

Rich Lang
Richard Lang

So, what do these decisions around location-based wages mean for remote workers? Is this just something that’s going to affect remote employees living in low-cost areas, or will people who live in expensive towns and cities get an increase in their wages too?

According to the VMware VP of Human Resources, Richard Lang, that’s exactly how things will balance out. Employees moving to more expensive cities could potentially get a pay rise compared to those who are living in lower-cost areas. The idea is that these employees will need higher wages to accommodate for more expensive rent and mortgage prices.

Whether companies balance out the payment strategies with higher wages for people in expensive areas or not, it’s likely that many people will be unhappy with the changes in salaries. Although figuring out what each person should be paid for their job has always been a tricky practice, remote workers may not respond well to the idea that they get paid less just for working from home.

 

 

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