I’d say it depends on whether there is any value added to them living nearby where they work. 95% of the time, being out in Kansas is just as good, but very occasionally, it may be useful to have a physical presence here. The people who live in San Francisco aren’t being subsidised because they want to live in a more expensive environment, they are being subsidized because they are living in a more expensive environment in order to be useful to their employer.
Now, if the office is in New York, then it doesn’t make any sense to pay them to live in San Francisco, of course. I’d say that the stipend should be going to pay to live near where your offices are.
I suppose it depends on how fungible the workers are.
They can say, “Hey we need you to move out to Dubuque to work in our office there. Since we pay a cost of living stipend to those who live here in San Francisco, you will be losing that.”
You refuse, they say, “That’s okay, we’ll just hire someone else then. Thank you for your for your service.”
For the most part, labor is a commodity. There are exceptions, but generally, everyone is easily replaceable. You get paid what the market will bear, and the market is very location based. Why do you think that so many companies in the 2000’s offshored their back-office support?
I think you missed part - in my example, you transferred from Dubuque to NYC and effectively got a raise based on the location where you live and work. You didn’t get that raise because of anything particular to you like the quality of your work - anybody who transferred from Dubuque to NYC with your job would have gotten the same raise. Maybe it’s not even listed as part of your salary- maybe it’s a location differential which will change when your location changes, just as people who get a night differential lose it when they move to they day shift. And then after COVID turned your job remote, you move to Dubuque- you don’t go stay with your parents for a few weeks or months- you move there. Why exactly should you be paid more than the people who never left Dubuque- the justification for the increase was because you were going to have to work ( and live ) in NYC
I don’t think most companies are going to pay someone working 100 % remotely from SF more than someone working remotely from rural Kansas. for very long. Almost of all the reason it’s an issue now is because these were not fully remote jobs pre-COVID and there is still some expectation that people will go back to the office at some point for part of the week. And you can’t pay that SF person the same as the one in Kansas if you expect them to show up in the SF office twice a week starting in September.
But it’s not a raise. Your employer didn’t increase your salary any. Using that logic, your employer should be able to dock your salary if you downsize your house, or pay off your car note, or any number of things that increase your available cash. Maybe you have a kid graduate from college and cease being a dependent- should your employer lower your pay in that case? What if you just move around in your own metropolitan area- from somewhere expensive to somewhere cheaper?
What about the reverse? Let’s say your company is headquartered in Corpus Christi, and you are working 100% remote and move to NYC? Should your company now pay you more because you chose to do that?
I’d argue those are all your own issues, and they should pay you the same.
It would probably not be a raise on your base salary, instead, it would be a stipend that is in addition to your salary. So, not technically a raise, but you are taking home more money, so it’s pretty much the same thing.
When I worked for a catering company, they gave me a $40 a month stipend to have a cell phone, as it was a necessary tool for my job. That’s not technically a raise either, but it’s still more money that I am getting from them.
I’m not sure I follow your objection.
If they want you to live near where the office is, so that you are able to come in regularly, even if mostly WFH, then they may offer a stipend to help pay for living in a more expensive area.
If you choose to move to a more expensive area, that is not where the office is, then why should your employer care?
It’s not that they are paying you for you having a more expensive lifestyle. They are subsidizing a higher cost of living in a place that they have asked you to live.
Let’s look at it this way. If you travel for your company, not only does your company pay for your hotel room, they also will usually pay a per diem for meals, with the understanding that it’s probably cheaper to eat at home than on the road. If you stop traveling and return to your home, should your company be required to continue paying you that per diem?
Exactly- in the article, the employers were doing the opposite- they didn’t ask remote workers to move to cheaper cities, but were considering paying them less because they did. The first example was a woman who lived in NYC, went remote because of the pandemic, moved to Rochester near her parents, and then her company asked her to take a pay cut because she lived in a more inexpensive city now.
That’s what I’m against, and think the opposite shouldn’t happen either- had someone living and working in Rochester decided to move somewhere more expensive of their own volition, then they shouldn’t be entitled to more money either.
I don’t think there’s any “should” to any of this. My employer is free to cut my pay for any reason they want, and I’m free to tell them to fuck off. While location-based pay only makes sense if you need people in a location, we’ve all seen employers don’t always do what makes sense.
Now it may be that the employer is ok with a mixed workforce, but also finds that in-person employees provide more value. In that case a local vs remote pay difference could make sense. But I would advise a client against a cheap-remote vs expensive-remote difference.
The article wasn’t clear. Is the company now saying, “Covid is almost over, so we want our people back in the office. If you choose to continue to work remotely, then you may, but you will have to take a pay cut” or is it saying, “During Covid, we have found that your job works very neatly when done remotely, so that’s what we want you to keep doing, but you have to take a pay cut”?
Also, the article didn’t explain when the woman moved if she discussed it with her company what would happen after Covid, whether she was expect to return to the office.
Sounded more to me like “Covid is almost over, and now that you’re working remotely from somewhere cheaper than NYC, you have to take a pay cut to keep working remotely there.” The implication was that she was getting a pay cut strictly because Rochester has a lower cost of living than NYC, and that had she stayed in NYC, she’d have continued to get the same pay for the same job, even remotely.
ISTM that if businesses do embrace WFH, the rent they used to pay on the now-unused office building should be divvied up among the workers who’re now paying for office space in their homes.
It actually seems to me like it’s pretty clear the plan for Redfin is to have people return to the office at some point:
In June, Redfin told employees they wouldn’t be required to come back to the office for the rest of the year, and Kelman started working with his executive team on a longer-term plan. .
That’s part of why he set a new corporate policy in August allowing what Redfin calls “headquarters employees”—the 1,000 or so people who aren’t real estate agents or field operations staff—to work remotely full time as long as they accept “localized” compensation.
Two days later, Kelman sent an email to all staff outlining the new policy. He said he expected most headquarters employees to eventually come back to a Redfin office at least a few days a week, but they’d now have the option to work wherever they wanted full time if they got approval from their manager and a senior executive. Employees would also get six weeks of notice before offices reopened.
He also said those who moved only temporarily during the pandemic wouldn’t have their pay changed.
Redfin isn’t ( or at least wasn’t when the article was written) planning to allow their “headquarters” employees to WFH indefinitely. The plan was for them to return to the office at least a few days a week but they could WFH full-time with the appropriate approvals if they accepted localized compensation. If she returned to NYC, she would have been expected to return to the office at some point - so it’s really not a matter of “you can WFH forever, in NYC or Rochester, but we will pay you less if you live in Rochester”. It’s “You can work from home in Rochester forever if you take a pay cut, but otherwise we will expect you back in the office in NYC at least part-time when it reopens” , which of course will be difficult for her to do now that she has bought a house near Rochester.
My problem was that I thought the article ended with that giant graphic about moving to Houston. and didn’t read the rest of it.
It sounds like this company took this very seriously and offered the employees one hell of a deal:
Your job in here at the same pay and under the same terms as before (but even better as you only have to come in “a few days a week.”)
But unlike pre-covid, you now have the option of living anywhere you want. Absolutely anywhere. What a tremendous benefit. The only difference is that if you have moved to a place where you are unavailable to be in the office a few days a week and want to go fully remote, you can, but you pay will be based upon your locale. As we don’t get the benefit of having you in person, we don’t pay the local increase wage.
Many would kill for a choice like that, and again, they haven’t taken away anything from people.
Why she bought a house in Rochester when things were so fluid was her poor decision (the article notes that she isn’t sure her husband can continue to work remotely) and she can’t now claim that it is the company’s fault.
I get paid on the federal General Schedule, which sets a base pay and then a locality pay increase. I don’t think of it that way, of course. I don’t know what my base pay is; I look at the “Washington-Baltimore-Arlington” locality table to see my salary.
But it’s based on my duty station. If my office were to move, my salary would change (even if my job or my grade didn’t) and it seems reasonable that if I went to a completely remote job, my “duty station” should be where my home is.
Don’t these jobs have contracts?? If you sign on to a job at one rate of pay, then I’d have thought they’d need some justification to reduce your pay, and your own living costs going down isn’t a good one. Otherwise they could pay you less once you’ve paid off your mortgage or student loans.
If there’s a separate location-dependant section of pay, then it would be reasonable to stop paying that, with sufficient notice. And obviously new remote-working jobs could be advertised without the location bonus.
However, it’s worth bearing in mind that working from home is not free. You end up spending extra in utilities, your internet connection better be totally reliable, and you need the space to work in. I’m assuming employers will provide some working from home technology rather than expecting their employees to pay for their own, but they won’t be paying for everything needed to work from home.
If you’re self-employed in the UK you get to deduct some of those costs from tax, and that can amount to substantial savings. You don’t really get to do that as an employee (there is a laughable tax discount of £3.50 or so per week worked from home). That might be different in the US, and that would make the situation different too.
It’s wrong to assume that working from home is an automatic advantage; for many people it’s very difficult. I like it, but people I know in shared houses or with small family homes are having to work literally on their beds, or negotiate shared time at the kitchen table.
Not everyone can afford a separate office space, which is what makes working from home genuinely feasible.
Their justification is that you are in a work at will state, and if you don’t take the reduction, then they can simply fire you.
I suppose they could, but mortgage and student loans aren’t a part of what is taken into account with a cost of living adjustment of living in a city.
There is, and the notice is the notice that you give yourself about moving. It’s not like you are going to be suprised by having moved.
Yeah, but for the vast majority, it’s far less than the cost of commuting. Not to mention the opportunity cost of that commute.
You probably can, but it would go against the standard deduction, so would have to be reasonably substantial before it took effect.
Some like it, some don’t. If you want to be able to live outside of commuting distance of your workplace, then that alone makes it an advantage for you.
This argument has been made and I disagree with it. If I have a large mortgage or crippling student loan debt, then that is a choice I made that has no relevance to the employer at all, anymore than if I live in a home free and clear or have no student loan debt because I got scholarships or my parents paid for it.
What is relevant, and what any employer must pay to get quality employees, is that if they expect you to be in an office, then you must live within commuting distance of that office. And if that office is located in an area where housing is expensive, then to get anyone to work there, they must pay more to you than they would if they were located in an area where it wasn’t so expensive.
Likewise, if they do not expect you to be at the office, you can live literally anywhere in the world. It is not necessary that they pay you the increased housing rate for the locality that you don’t live in.
Thanks both - I knew US employment law was different, but didn’t know it involved there often actually being no contracts. That’s shocking. Even the lowest-paid jobs here have contracts.
Some people said the location element was separate, and some said it wasn’t. I don’t just mean for this specific company, of course - people were talking about different companies. If it’s not a separate element then it is a pay cut - justifiable, maybe, but still a pay cut.
And sure, you might have chosen to move, but that wouldn’t usually count as giving “notice” that you no longer needed the supplement. I mean, if you moved to New Jersey but continued to commute to New York, you’re no longer living in New York, but your work is still based there and you’d get the supplement. Where you live isn’t the key thing, ISTM. If it’s changed so that it is now based on where you live rather than where you work, then you should be notified of that.
I am probably coming at this from a UK-centric POV where many people can’t afford to set up a home office; homes with spaces big enough for that cost a lot more. (I’m lucky that I’ve managed to repurpose an area of my corridor, but I doubt many people looking at that 65cm by 100cm space would have thought “home office.” Lots of people would literally not fit in it.) However, that’s true of many people in New York or other large cities too. If they move somewhere they don’t have to commute but can fit in a home office, the saved commuting costs go on a place large enough to work in.
It’s not a zero-sum game with all the benefits going to the employee. And sure, the employer might not be able to instantly sell the office building they’re no longer using, but that’s a very employer-focused way of looking at things - employees might not be able to sell their home or get out of their rental contract immediately either.
Cutting pay because of letting an employee go work remotely in a cheaper region sounds perfectly fair to me. It’s a win-win; the employee gets to save money and so does the employer. Plus, a remote employee isn’t as accessible as an on-site one, to the employer, so the employer is at a bit of an inconvenience.
I worked in an expensive region, near Washington DC, from 2011-2013. At the end of 2013, my boss told me I could go work remotely, so I chose low-cost Texas, where part of my family was. My employers graciously didn’t cut my pay at all just because I went remote, but they would have been totally justified if they had.
and didn’t read the rest of it.