I don’t know if companies do this anymore, but the Bell System had salary adjustments based on the location of the facility where you worked. People in Oklahoma City got less than those in the same jobs who worked in New York.
I worked just outside of Princeton (by a couple of hundred feet) but our area for salary was Trenton. Which we always complained about.
So the Facebook policy is kinda reasonable.
Lots of large companies do salary adjustments based on where people live but the difference has mostly been that the job exists at a specific location.
I am somewhat skeptical that Facebook is going to easily make such adjustments stick. The market for software developers is pretty competitive, and people don’t get worse at writing code when they move to Boise.
They may more easily be able to apply it to new hires, but giving someone a pay cut for any reason is a morale killer, and plausibly not worth it in the long run. Saving 10% on the Boise workforce is not going to net out well if the best of them get pissed off about it and go work for the competition.
I have a hard time with this. Say I’m working from home for the company nearby. If I move 1000 miles away, they can cut my pay?
No. The company downsizes first, so that they can get rid of well paid people, then it hires someone willing to work in that new location for a lower pay.
From LSLGuy’s link:
In my scenario, people who have been made redundant will have to accept lower salaries as well eventually because otherwise they won’t be able to get hired.
The best part is that companies don’t even need to do all this. They can simply talk to their employees about this scenario and advise them to accept lower payments when they relocate. Especially because rents, school fees, and living costs in general may be more advantageous at the new location.
That assumes the competition doesn’t follow the same policy - which I expect will not take long.
I can kind of understand this. Let’s say you make 100k a year in Silicon Valley or NY. And would rather move to South Dakota anyway. Living expenses will be much, much lower for you.
It’s still a sucky thing to do though. If I’m worth this much, I’m worth this much. The more I think about it, the more I think it sucks. Facebook ain’t exactly hurting for money.
I’m getting paid another $50 a month to work from home. But WFH is now required. So they are essentially saying “If you need to upgrade your home workspace, or buy a new monitor or whatever, that’s on you”. I could go grab my office chair or something though. My workstation that I remote into stays there though (it has to).
The thing is, though that most people don’t really think “If I’m worth this much, I’m worth this much.” I don’t know what you do or where you live, but I suspect that if you earned say $50K in South Dakota and your company transferred you to NY, you’d expect a raise to go along with the transfer. It’s very common to be paid based in part on your work location - and the only differences with remote work are that the employee gets to choose the location and the employee doesn’t have to live within commuting distance of one of the employer’s physical locations.
I’m not one of those people I suppose. I’ve been working from home since March 15th. I get my job done. Doesn’t make any difference where I do it from.
Yes, right now you’re working from home and it doesn’t matter where you do it from*. Pre March 15, when you were working from an office, would you have expected to be paid more if you were transferred to a higher cost of living area and had to move there?
- Which is why I suspect that companies that can and do go to fully remote work will phase out higher salaries for higher cost of living areas - which means that you will be worth what you’re worth, but it will eventually be the SD salary that everyone gets.
Sure, but there is pressure the other way too. Facebook doesn’t pay software developers $200k+ a year because they want to spread the wealth. They pay that much because otherwise those developers will go work for other companies or themselves and make more money (at the margin).
Obviously, there’s some room for adjustment, but I expect the adjustments are going to be modest.
I expect a bigger downward pressure on salaries to be on the supply side. In the past, Facebook would generally only hire people who lived in or were willing to move to a few large cities where they have offices. But if everyone’s working remotely, there’s no particular reason to do so.
Gonna be a lot easier for Facebook to hire someone in Omaha for $140k a year than to convince someone who was making $200k+ who moves back to Omaha to take that pay cut.
One way to think about this is that the lesson here is that you don’t get paid what you’re worth, you get paid based on what you’ll accept. And when you move back to South Dakota, you’re probably willing to accept less because you don’t need as much and you have fewer options for other work outside of the cities. This is the logic that says that the market equilibrium for wages will drop for full-remote knowledge workers who move out of expensive urban areas.
But but, traditionally the reason that you had fewer options for other employment in lower cost of living areas was that there weren’t that many jobs there. The company can say, look, you can take a 10% cost of living adjustment or, I dunno, good luck, maybe there’s some jobs in retail until Amazon eats them, or try your luck in the downsizing manufacturing sector, or whatever.
But if all knowledge-work jobs essentially go full remote, then you have just as many other options as before. In the fully-remote pandemic employment landscape, everyone with an internet connection can work for any company in the country. Which gives remote employees in lower cost of living areas more leverage to keep high wages.
The quality of life improvement in Omaha is worth way more than $60,000. They call us the Silicon Prairie. There’s a reason Warren Buffet still lives here.
If they are paying based on location, your location hasn’t changed so your pay wouldn’t. If they force you to move, then maybe. But I agree you’d probably get laid off unless you had a critical skill.
When I moved from NJ to Silicon Valley for a new job, it was disruptive. When I moved from one Silicon Valley company to another, my family hardly noticed, and my commute decreased. It’s called changing parking lots.
That’s the advantage to the employee of living in a place with lots of applicable jobs. I was pretty specialized, and if I had stayed in NJ and waiting for the company to fall apart I would have been hard pressed to find another without moving.
It will be interesting to see if the talent pool becomes global.
That’s going to be true for some people and not for others.
Presumably in this employment climate, people moving to lower cost of living areas of their choice are going to be happier with the pay cut than people who get transferred against their will.
Technically they can do what they want with your pay, unless you are under contract. The question is will you accept it or take another job.
The market works both ways. If a data scientist working for Facebook can do his job 1000 miles from Menlo Park, he can also do it for Amazon in Seattle, Bank of America in New York or Target Corporate in Minneapolis.
Isn’t it already? Quite frankly, I’m surprised “work from home” is such a disruption for most people. I’ve worked from home for a decade. Not all the time. I had an office I could go to. But there was usually not a need to other than to socialize with my coworkers and get some free snacks. My clients would be in Chicago or Atlanta or some other city, my corporate leadership might not be in Manhattan, my manager might be traveling to Japan, my development teams are in Poland or Argentina or Dubai.
I had one client where I was commuting 2 hours each way to meet with one manager to hold video conference calls with people scattered across Atlanta and San Francisco. And she traveled 90% of the time anyway.
My only concern is that all work will become so transactional that we just become a society of people living in isolation doing relative rote tasks that can’t be automated for one reason or another.
I think a lot of it has to do with not having a dedicated space to work from and simultaneously not having school or childcare for children.
Someone who works from home and has long done so has presumably figured that stuff out. Everyone getting thrown into it with other disruptions to their lives is tricky.