Like most tech companies, Facebook sent a lot of their employees to work from home when the Coronavirus struck. Now Mark Zuckerberg says they can stay–but there’s one catch: If they move out of a high cost of living area, they’ll likely see a pay cut.
Zuckerberg says that by January 1, 2021, people who are approved for full-time remote work will have to notify Facebook of their new location, and their pay will be adjusted accordingly.
This is not a shocking business move. Many businesses pay people differently based on their local cost of living. Most of us can agree that jobs in New York City generally pay more than jobs in rural Idaho.
I think this move by Facebook is a great thing.
To keep reading, click here: Why You Should Follow Facebook and Pay Remote Workers Less
31 thoughts on “Why You Should Follow Facebook and Pay Remote Workers Less”
Work is worth what work is worth. Deciding how much an employee is worth based on their personal needs harks back to the not-so-long-ago bad old days when women’s lower salaries were justified by the assumption their husbands supported them.
If an employee has the moxie to use geoarbitrate, good for them!
Companies already save money on remote workers because they don’t have to provide them with workspaces. What’s next? A return to the Triangle Shirtwaist Factory model when seamstresses had to supply their own thread?
So you’d be totally against a company paying me more to live in a high-cost-of-living area, right? I mean, the company shouldn’t care what my expenses are; I was hired at X, I get X, regardless of where they move me to! The logic is exactly the same for a COL adjustment up as it is for a COL adjustment down; the only difference is that people like to see numbers rise (even when actual purchasing power reduces, as happened to me when I moved from a cheap place to an expensive one).
I came here to say the exact same thing as DY.
Another thought on this occurred to me this morning: What about seniority? Should we factor that into pay? A field tech doing soil sampling is a field tech doing soil sampling; why should I have to pay one more just because he’s been doing it for 30 years? Does using experience to evaluate salary “hark back to the not-so-long-ago bad old days”? If not, you agree that more than just the nature of the work goes into determining salary. And at that point, the burden of proof is on you to demonstrate that downward COL adjustments (which often lead to increased buying power and quality of life to those taking the pay cut–see downthread) are exceptional.
It can be a little more complicated than ‘work is what it is worth’. Salaries are also based on what the *market* rate is for a certain job. I have a job that is absolutely essential for my company, although my job doesn’t directly add to the bottom line-I’m an auditor in a heavily regulated industry, the company can’t stay in business without someone in this role. Salary is based on what the average salary is for someone with my training in this location. The company would have to pay a lot more if they wanted someone in this role in NYC, because I wouldn’t be willing to move there and the market rate there is higher. But if the role can be made remote, then they can find lots of skilled people willing to do the job for a lower salary. That’s not the same as paying people for their needs, it’s paying what the market requires.
Nope. This is ridiculous. As a business, you decide what the work is worth to you and you pay someone accordingly, based on their ability to do the job. What if an employee moves to a more expensive area? Do they get a pay increase? I doubt they have it set up that way. I agree with you, Dorothy Young!
I have the same question. So should they pay the national average and then let the employee decide where to live?
Personally, I think it stinks. When the employees were hired, was it spelled out to them that part of their salary was wages and the other part was locality pay (like it is for Federal employees)? If not, these are just pay cuts, based on factors that have zero to do with the quality of the employees’ work. In fact, since telecommuters tend to be more productive that site-based workers, it’s a pay cut despite the fact that the employer is receiving more. Would Zuckerberg also cut an employee’s pay if one of their dependents died? Bad question; yes, Zuckerberg probably would. But, it’s bad policy to renege on the original hiring decisions and agreements, bad for morale, likely to decrease productivity and increase turnover. Employers are free to change their compensation policies. But, if they do, it’s wise to “grandfather-in” their existing employees and make the changes applicable to new hires going forward.
You’d think someone would know better. The average IT salary in San Francisco is $145K, in Austin TX $125K. HOWEVER, adjusted for the cost-of-living, the effective Austin salary is $208K! So old Mark Z wants to pay his Austin staff the “cost of living” equivalent of SF — he’ll only offer $74K? Hey, good luck with that!
What about other expenses? Large family, spousal support payments, heck annual European vacation? I can’t see how these are any different than housing expenses. Any company that is prepared to adjust pay based on location should also adjust pay for these other things as well.
Ok Evil, you’re living up to your name this time. 😉
This is wrong. I guess it must be legal (?), but throwing in with Mark Zuckerberg at a time like this is tone-deaf and definitely not in the spirit of We’re All in this Together. As mentioned above, there are economic benefits to employers with remote workers, and unless we’re going to start adjusting all salaries whenever anyone makes a move, just ripe for discrimination complaints. Redlining, anyone?
This, and then some. What Zuckerberg is doing is to arrogate to himself the benefit of the employee’s move to save money — thus making it no longer beneficial. Why should I be punished for something that is none of the boss’s business?
If Zuck feels that way let him hire someone in Bangalore.
For those that disagree…I’m in Kansas. We have a lower cost of living around here..generally speaking than many states. I know I can’t live in NY for what I make here and I would expect a bump. Why not the reverse? KS pay scales are adjusted to comps in our area NOT for New York or California. We aren’t fighting for talent from those states. Maybe just moving to a suburb doesn’t matter as much but if you live states away then, I agree the salary scale can and should be adjusted as well. That is a sound financial decision to make.
If a company requires someone to be able to come into the office then the pay needs to be enough to induce people to live near to work. If the work is done remotely then the pay can be whatever amount draws in people with required skills.
I do agree that when an employee goes from working on site to remote or to a different office, then a change in pay might be warranted. The value the employee provides may have changed, so adjusting salary up or down accordingly could have merit.
This is a good idea? Really? Can’t help to see the irony… Is this article saying that employees from all companies should move to rural Idaho (or India or China or anywhere where is ‘cheap to live’, for that matter) and earn less despite their experience and credentials, and despite market conditions, and despite job requirements, and despite job offer and demand? Then based on an increase of population, Idaho could become more expensive with real estate prices and COLA increasing. Will Facebook then account for it by adjusting everyone’s salary and giving them increases, accordingly?
And if an employee lives in Massachusetts and moves to Rhode Island, does this employee should get a salary Decrease?
Does this article imply that an employer should pay an employee based on the zip code that they reside?
What if an employer travels? Would employer calculate salary based on the percentage time spent at every zip code? What’s the going rate for international waters when traveling abroad for work, does anybody know?
When most companies look to hire someone, they do salary surveys. These surveys are based on responsibilities and the average salary for the responsibilities in the area and additional data. The key is location is a top 3 factor.
Unlike most I’ve gone through this. I moved from California (high cost of living) to Alabama (low cost of living) and took a pay cut. One of my superiors apologized, but I laid the facts out on the table: housing, gas, food, and taxes are all lower, so even with the pay cut I had more disposable income, more equity, and a better quality of life in Alabama (a major contributing factor to moving out of CA). To give one example: in CA I was living in a two-bedroom apartment in an area routinely raided by the police for drugs and gang activities. In AL I’m paying a third the cost for housing, have an acre of land, and haven’t seen a drug deal in ages.
I’m not saying this is always a good thing. Obviously it’s dependent on the situation. But as someone who’s been through it, sometimes a pay cut is worth it to move to a lower cost-of-living area.
We’re doing the same move: Silicon Valley to northern Alabama. For the people who don’t understand why tech people are paid more in Silicon Valley, you truly don’t understand the cost of living here. If you’re being hired to be here in an office, you need to be able to afford to live near-ish the office. We have 2 children and have them sharing a room so we can just rent a 2-bedroom apartment. That’s still well over $3k/mo. Buying a house is just not practical here, as small houses start at $1M. We have accepted that we may end up having pay cuts when we move, but even if that happens, we’ll be living somewhere with housings costs that are 90% lower than Silicon Valley.
What is it with people moving from CA to Alabama? I did the exact same thing about 16 years ago. Yes, I took a pay cut. However, due to the pay cut my boss also agreed to a cut in hours. I am salaried and my normal hours were 40 hours per week. I went to 35 hours per week with the proportionate pay cut.
My mortgage is 1/2 of what my rent for an appt was there.
I had the same experience as James… However I think that is a bit different then what Mark is doing. In our cases we had employment and were offered a salary change prior to moving.
Mark is changing salaries after the fact. It’s possible his employees have bought housing, etc. based on their current pay rate. To suddenly change the nature of their employment so drastically is much different then simply offering pay rates based on competitive market rates.
I can see both sides of the argument. I started working remote 9 years ago when I moved from Massachusetts to Argentina. My company transferred me kept my US salary but I had significantly increased my responsibilities.
Since then, I’ve been working as a contractor for several companies. To keep myself marketable (pick me living far away) I’ve had to significantly cut my salary. The win win for these companies is they get me for 1/2 the price and I get to stay in my lovely home down in Argentina. The dollar to the peso fluxes but it is always very much so in my favor. I don’t really mind.
I also recruit for global remote companies. I create my recruiting strategy based on the location of the talent and the cost of living. I’ll recruit developers in Romania instead of in UK because they are cheaper and I can hire 3 for the cost of one in UK.
Is it fair? Depends how you look at it. People who live in areas with low cost will find it fair. They rarely have opportunities that the pricey locations enjoy. If you move from SF or NYC to work at an actual office in the Mid-West, you would experience a pay cut. Plus, if everyone moves to low cost areas with large city incomes, we will turn those areas into costly areas too.
It is harder to develop a cohesive team with remote workers, but only because doing that is a 21st century professional skill that many employees and managers haven’t yet mastered. It’s easier than transitioning from typewriter and file cabinet to computers, and some people balked at that too. I’ve worked in a very cohesive worldwide remote team that met electronically but for a brief annual group meeting. We bumbled through learning various remote work tools and experimented with how to have team building and celebrations and water cooler chats remotely and we found ways to make it work really well. The biggest thing that stands in the way of effective remote teams is the certainty that they’ll never work.
Kathy, I so agree with you and am happy to hear you say this! I’ve worked through the transition from file cabinets to computers, and I’m excited to be working during this transition, despite the nature of the extreme events that are making it possible. When I was hired at my current job 4 years ago, I was given severe side-eye whenever I promoted remote work in any way. Impossible, they said!
Congratulations, you’ve made a clickbait type of post that garners yet another view. I could see this being a fair argument given compensation structures and surveys that build the total rewards team routinely factor cost of living as well. Perhaps the whole system should be restructured when talent becomes mobile but that’s another argument for another day.
What makes this apprehensible is that asking an employee to work in a lower cost of living and taking a pay cut is also somewhat of an opportunity in a long run for companies to cut their fixed expenses and save on otherwise expensive travel and relocation costs.
If companies plan to cut their pay to factor in lower cost of living, I much rather think its smarter to put that difference in pay in to long term incentives and have a cliff schedule to defer that payment overtime to reward retention.
I don’t think so.
If the average market value for my skills is $65K, then I should be able to make that whether I’m remote or not. If those skills and the benefits I can bring to the company are worth $65K in Los Angeles, then they’re worth $65K in St. Louis.
Corporations don’t take living expenses into account. They just don’t. If they did, Walmart employees wouldn’t need food stamps. They pay workers as little as they can get away with and buy politicians to make sure that amount stays as low as possible.
Besides, Facebook is a horrible company, Zuckerberg is a horrible person, and I really don’t think he should be the one to set employment standards for the rest of us.
Corporations pay what it takes to hire people to do a job… anything else is just fodder to argue about on the internet.
I work in tech and live in a high cost area, and I’d happily take a paycut and live in a cheaper area.
My current pay rate is quite comfortable for my high cost area, but I don’t live in SF. If someone wants me to move to the Bay Area, they *are* going to have to pay significantly more than I’m making now.
The average market value–WHERE? The national average is completely useless in determining local pay. The average market value for my skillset is much higher in CA than in AL. Even there, the average market value in the LA Basin is much higher than the average market value on the CA side of the Pahrump Valley.
Averages are mathematical abstractions, nothing more. They do not, except by random chance, represent reality. And the concept of an average presupposes variance.
I worked as a Federal employee for about 12 years and got locality pay, because it was relatively difficult for the Federal government to recruit in my area. However, my sister worked for the Federal government near Washington, DC, and said that she did not get locality pay, despite the high cost of living, because the Federal government did not have trouble recruiting employees in her area. My understanding, then, is that locality pay in the Federal government has to do with the relative scarcity of employees willing to work for the Federal government–not the cost of living.
I’m having a tough time with this. The GS pay scale (how most feds get paid) very much does have a locality adjustment for the DC metro area. The coverage region for “DC” is actually quite big. So either your sister lives far enough way from DC such that “near DC” is not accurate or she’s confused about something else.
Our company has always done this – there are base rates for our skilled workers and it is the base rate no matter where you live – but some markets have a differential. Hawaii, Santa Barbara, Alaska,Seattle are some. Perhaps this doesn’t sit right with people because it is happening after the fact. I am, in fact an IT worker that lives in Idaho – I could make much more than I do now if I lived in other areas – but would have to live in those (undesireable) areas and I certainly don’t expect my company to pay be what I ‘would’ be paid if I lived in California and worked for Facebook – that makes 0 sense. If Facebook workers do not like the change they will leave and the new workers will come in with this being known up front – that if they work for Facebook and live in Idaho they will make market rate for Idaho, not California.
As a tech worker who lives in an HCOL area, I think Evil’s piece is spot on. I don’t think Facebook is slimy in the least for trying this, and I think it’s a smart business move, especially for the diversity reasons she states. Facebook can only attract people willing to move to SF and deal with the HCOL issues there, and that’s not for everybody. And as an established mid-career professional, Facebook may not even be able to pay me enough to want to move to SF. My next career move involves a material upgrade to my standard of living, otherwise why bother with an “even exchange”? And it’s *hard* to get a true upgrade in SF, all things considered.
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