Pay cuts/"localized pay" based on where you live, not the job you do?

Great Debates
61

I doubt you represent the majority Oredigger77. It’s one thing to be a highly skilled professional in a competitive field where you have a reasonable expectation of being able to walk out one job and right into another. I know a couple of folks like that, but most people are not in that position.

Most people are at the mercy of employers to a greater or lesser extent. And I suspect a substantial majority of those might disagree with you on the above compromise. I sure would. As it happens I do have a contract (union - thank you lord) AND I can quit whenever I want. But if I didn’t one month’s notice would be worth it for not getting fired on a whim :slight_smile:.

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While this is undeniably true my experience is that minimum wage workers are the most likely to leave a job without notice. Every one of my server friends have walked off at least once in the middle of a shift and most of them never give more than a couple of days notice so they can catch the next weekend at the new job. From what I’ve read fast food is also high turn over with employees just deciding to stop showing up.

So you’re right the highly skilled people don’t care and from I’ve seen low skilled people don’t care so that leave a narrow window of skill people in low paying jobs. That’s why I said 2:1 basically assuming all 3 groups were equally sized.

63

Employers need employees, else they wouldn’t hire them. An employee leaving with no notice can often leave the employer in a bad spot.

As @Oredigger77 says, people in low wage jobs walking out or quitting without notice is a pretty common thing. As much as these employers consider their employees to be fungible, the employees often find their employers to be fungible as well. Except during a major recession like 2008-10, most low pay workers could walk out of one job and right into another.

That said, as an employer, if someone wants to walk out, or doesn’t want to be here anymore, then I don’t really want to force them to be here, as it is unlikely that they will actually be productive, and will often be counterproductive.

The voluntary 2 weeks is nice, it gives the employer a chance to make adjustments, and usually is on good terms. But I don’t demand it, and don’t really expect it either.

The only cost to the employee to walking out is having to find a new job, and the slight possibility that the new employer may contact previous ones and hold the walkout against them.

I’ve seen quite a number of people get fired, I even got fired once myself, and I’ve fired a couple few. But it was never just “on a whim”. Employers need to have employees, and hiring, training, and developing an employee is not cheap. If an employer fires someone, it is because they do not believe that that employee is a net contribution to their company.

As a WAG, I’d say that it’s the people in jobs like manufacturing and warehousing that would be in that third group. It pays pretty well, but there is still a bit more supply of potential workers than positions, making them easier to replace than it is for the employee to find an equivalent job. Maybe low end white collar jobs as well.

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I’ve certainly seen it done in low-wage jobs for what I considered pretty close to a whim. And even in skilled, reasonably well-paid positions - I have more than once seen a supervisor try to set up a (unionized, government) employee for termination due to their politics and outspokenness.

I’m suppose I take a much more cynical view of people and their motivations - I don’t trust everyone to take a rational approach to issues like employment. Human nature in my experience is capricious and I think petty factors like “I don’t like him/her” more than occasionally trumps “net contributor to the company.”

Well, I’m inclined to disagree with both your assessment and your figures. Instead of a narrow window, I think it is more likely a gaping cavern of the employed. As in a rather substantial majority. But since we’re both just trading opinions, I guess I’ll just leave it there :slight_smile:.

65

The only time I was fired it was specifically over a personality conflict between myself and the General Manager. I had no disciplinary issues, no attendance issues, and I was pretty much the best cook they had.

But I got into disagreements with the general manager quite often, as I thought I knew better than her how to run her store. It wasn’t entirely wrong that that sort of attitude is detrimental to the functioning of a business, so she wasn’t wrong to hide in the office while she had her AGM fire me.

The fact that I was right and she was wrong, and that the store closed a couple months later due to her failures as a leader doesn’t justify the disrespect I showed for her, and I would not tolerate an employee to undermine my authority in that way.

66

In the UK those jobs usually ask for a week’s notice and don’t necessarily expect you to serve it. I’ve quit at a moment’s notice from such a job, and there was no comeback and never would be.

67

Sure, and I don’t thik anyone’s arguing that. What the article was talking about was literally paying remote workers differently based on where they were working from. So if you’re working remote from NYC, then you’d get paid some amount, but if you are working the same exact remote job from say… Tupelo, MS, then they want to pay you less because it’s cheaper in Tupelo.

Which I think is the most egregious sort of bullshit; when they’re paying you to work remotely, it’s the most pure expression of being paid to do a specific job there is; WHERE you work remotely from shouldn’t even come into it; that’s none of their business if you’re remote only. Who cares if you get a RV and roam the country? Who cares if you summer in the UP in Michigan, and winter in south Texas? As long as you do the damn job adequately, they should pay you the same for the job regardless of where you work remotely from.

68

Interestingly, I’ve mostly worked “remotely” for years. My teams and clients have mostly been distributed all over the US and other countries while I’m based out of New York (or New Jersey for tax purposes, even if my actual physical office is in Manhattan). I suppose I’m paid what I’m paid because I’m in the market of people who go to places like New York to work for tech companies, investment banks, and consulting firms.

But then you have a whole other segment of workers (often people staffed on my projects) who are hired out of firms like Cognizant, Wipro, Tata, etc because of their “location”.

I mean think about it like this. When I started my career as a Deloitte Consultant, I lived in Manhattan but had to travel to more affordable states 4 days a week. I assume clients hired us because places like New York were the only places they could find the particular talent they needed. I don’t think my pay would have been reduced if I decided to fly out of PVD or ABE instead of LGA or EWR.

69

Exactly. I’m thinking about my current situation, where we have a contractor at work who actually lives somewhere in Michigan (we’re in Dallas). I don’t know where he lives in Michigan, and honestly didn’t even know he didn’t live in the greater Dallas area until a month or so ago, and he’s worked for us for a year at this point. I can’t imagine paying him less if for some reason he happens to live in a cabin in the woods somewhere, or paying him more if he lives in a mansion in Bloomfield Hills. We pay him because he does a fantastic job at what he does, not because of where he works. It’s not my business what the cost of living is wherever he chooses to work from, and certainly not my place to judge that he deserves less pay because he lives somewhere cheaper.

Extending that to remote workers seems natural to me; I would be monumentally pissed if a company that I worked for did that to me; it seems very much like the company’s saying “Well, we feel like your standard of living is higher than we’re willing to pay for in the cheaper place, so we’re going to knock your pay back”, which ultimately is none of their business.

70

Where you live matters to the company because they’re required to register with applicable state agencies and make sure they’re paying the correct taxes. And the employment laws that apply to you will be the ones from the state you’re working from rather than where your company is based. Of course that doesn’t justify paying you less for working in a less expensive area to live, but there’s a reason the company needs to know where you’re working from.

71

That typically is the case for people who were hired to work 100% remotely. I don’t see anything in that article and haven’t heard anything elsewhere about people who were hired to work remotely who are allowed to live in a wide variety of places being paid based on where they choose to live.* The article and discussions right now are based on the current situation, which involves people who were not hired to be 100% remote, suddenly became remote due to the pandemic and now want to stay remote.

Here’s another problem with “pay based on the job” in the current situation.( and only the current situation. People hired for 100% remote is different) So let’s say Redfin goes with eliminating location based pay for anyone who works remotely. They are going to pay everyone one of the lower rates- maybe not Tupelo, but they aren’t going to pay everyone the San Jose, San Francisco or NYC rates. So now you have people who are living in those cities because that’s where the in-office job was when they were hired getting paid the Rochester rate because that’s what all remote workers get. That doesn’t seem particularly right either.

72

After a lifetime in metro NY, I was recruited for a job based on SoCal, for an Indiana-based company. There were a lot of good candidates in the home office, but none were willing to take the financial hit of transplanting from IN to CA, but for me as a NYer, it wasn’t a problem - I was used to expensive housing.

Within two years, the HQ wanted me to move to Indiana, but it got hung up when they realized how much I was being paid for my role, relative to the higher-ups in IN. They tried to sell me on the low cost of having a huge house, but basically said, we won’t cut your salary, but you won’t be getting any raises until everyone else catches up.

I politely declined the “opportunity,” and in a few months moved to a new company.

73

I look at it differently. The company by all rights could have said, “Since you are working remotely, then nobody gets any cost of living increase because you could choose not to live in NYC.” But likely they realized that would require many valued employees to uproot their lives, so they did what IMHO is fair.

If you choose to continue to live where we brought you in the first place, or even choose to move to a higher cost of living area, then we have you covered. But if you live in rural Montana, then we don’t pay you the higher cost of living rate. That seems more fair.

74

Sure, but the whole point is that if you’re working 100% remotely, the cost of living part shouldn’t factor in at all either way. That’s one of the main advantages of remote work; you don’t have to work in the office from 8-5. You could hang out at your local library, or Starbucks, or while you watch your kids on the playground. Or like I was saying, you could be a nomad of some kind. Or you could live out in the sticks if that gives you the warm fuzzies.

I’m not advocating that they give you cost of living increases based on anywhere- maybe all remote workers get some generalized national level increase, vs. specific locality based ones. That would be fine.

But what I think really sucks is that people who basically want to work remotely now are getting differential pay cuts based on where they live. I wouldn’t even have a problem with them saying “If you want to work remotely, you have to take a 15% pay cut”, regardless of where you work.

But saying that your remote worker pay is based on where you work remotely? That’s terrible. It’s a transparent attempt to basically save a dime at their workers’ expense because they think that they can get away with paying less in cheaper markets. Which is shitty if you ask me. A remote worker at her farm in Dime Box, TX doesn’t deserve less pay for the same job than some guy who chooses to live in the Bay Area.

75

This in a nutshell. Salaries are and always have been based on supply and demand. Employers by default pay the lowest they can get away with in order to fill a position with performance of a desired level.
If the only way you can fill a position at your Manhattan firm on site job is by paying a premium salary then that’s what you have to pay.
If you suddenly find the position can be filled remotely then suddenly your supply of potential employees goes up along with a supply of potential employees willing to be paid less.

76

Oddly enough, my brother’s company pays people more to move to their headquarters in Ohio. Their logic is that they need to in order to entice them away from more expensive places like New York or Boston.

The thing is, I might accept a pay cut to move out of the New York area. If you aren’t living in the city or Hudson County (where you have no space unless you make a fortune), then you are looking at long commutes and overpriced housing.

77

I used to be in IT in St. Louis. IT is definitely an industry where people move all over the country following the work on 1 to 3 year stays then moving on. So it was/is common for small businesses like ours to recruit from all over the country.

St. Louis is a big, but definitely 3rd tier, US metro area. Our cost of living was about 10-15% less than the nearest 2nd tier city Chicago. Chicago is very similar to St Louis in culture, geography, politics, and climate. Cross flow of workers between the metro areas seems pretty natural and low-friction. But …

When we tried to recruit IT talent for working locally, not remotely, anyone coming from Chicago wanted the same dollar wages they had been earning. Essentially they didn’t believe the cost of living was lower and/or they believed that a resume’ or work history showing a nominal wage reduction would be detrimental to their future career and hire-ability.

Meantime folks coming from lesser cities or lower cost-of-living areas all wanted raises to offset the increased COL.

In the end, my firm wasn’t persuasive or attractive enough to persuade Chicago talent to take the cut, nor were we big enough to have the resources to pay the extra they demanded. So we ended up with almost nobody coming from larger cities.

Big picture any company needs to pay whatever it takes to get talent to show when and where needed to do the tasks needed. Back when doing work for an NYC company required living in NYC with all the attendant high costs there, they had to pay more to get folks to show up. Once the NYC company can get the same work done by folks living in Fargo willing to work for Fargo money they have no need to offer those folks NYC money.

The hard part is the transition, when folks hired at NYC money living in NYC move elsewhere but keep doing the same work. The other transition is when what used to be [gotta be in NYC work] suddenly is [can be done anywhere* work]. The employees were being paid a locality differential in NYC, even if nobody on either side of the bargain labeled it as such or recognized it as such.

The actual value of the work to the employer forms an upper bound on what they should decide to pay for it. But it is generally a very loose upper bound and they are often able to get the work done for far, far less than its value to them. This seems especially true in the middle layers of income from WAG 60K to 300K.

I say “should” above because we’re all familiar with the upper-middle and upper-upper management folks who’re adept at delivering negative value to the company while extracting vast sums for doing so. Meanwhile at the bottom of the wage scale it is very possible for marginal work to be priced out by high wages. Where the value to the employer is below the lowest wage they can pay and still get takers.

* Can you say "Bangla Desh"? I knew you could.
78

Wait, Chicago is a 2nd tier city? What is a first tier city if the 4th largest city isn’t on it? I guess I’m assuming you’re talking national tiers not international.

79
  • Third
80

New York City is the only first tier US city. Everybody knows that.