(Some) Tech Companies Don't Get It
Tech employees have not only embraced the remote work revolution, they want it be the norm.
In a study by Prudential Insurance, 87% of them want to remain as remote workers. That’s why 81% of tech workers who live in the Bay Area, Seattle, New York, and Boston are considering - or have already made plans - to move to a more affordable city.
If you don’t have to go to an office, you can live anywhere.
In their grand wisdom, firms like Facebook, Twitter, VMware, and many others say they will reduce salaries of remote employees who move to areas with a lower cost of living.
Their reasoning? Salary should be adjusted to align with one’s cost of living. Move from San Francisco to Des Moines and your salary should reflect what it takes to pay the bills in your new city.
So let's get this straight. You've reduced your living expenses and your employer thinks that's justification to pay you less? Talk about warped logic.
Historically, compensation has been determined by your relevant experience and education, never on your personal financial situation. An employer would never ask to see your latest bank statement, if you’re financially responsible for an ailing parent, or what types of investments you may have. How much you pay for housing and food (two aspects of a formal cost of living calculation) shouldn’t be any of their business either.
Besides, basing salary on cost of living for a specific geography assumes that all employees make similar financial choices, especially when it comes to housing. An employer doesn't know if you pay $4,000 a month for a studio in San Francisco while living beyond your means, or $750 to share a house in Richmond (17 miles north) so you can save for the future.
Why should you be penalized for being smart with your money? If you're doing your job well, who cares where you sit all day?
And contrary to what they claim, many tech companies don’t necessarily base salary on cost of living. As Peter Cappelli writes in Human Resource Executive, “The reason the tech people in Silicon Valley make a lot of money is not because their company thought it would be nice to bump up their pay to cover the expensive housing. It is because the company had to pay that much to get them, because they wanted the best talent, and if they didn’t pay that much, someone else would.”
Indeed, tech workers are recruited based on the potential value they can provide to a company. They didn’t move to San Francisco, Seattle, Austin, Portland or New York to chase their dreams of being actors, musicians or chefs. They moved there because companies lured them with high salaries and generous benefits packages.
The threat of reducing salary will backfire. Companies who do so will end up with unhappy employees, reduced productivity, more turnover, and potential damage to their reputation, making them less attractive to sought-after tech talent.
That's something they can't afford; there’s simply too much competition for the cream of the crop. The best engineers, for example, can essentially choose their employers, and most will go with the option that provides the most autonomy. And more and more, evolved companies realize that they’re paying for the skill, not for the zip code.