There has been a lot of talk about whether technology workers who live in less expensive places should have their salaries adjusted to account for the lower cost of living. A recent article, “Google’s Plan to cut pay for remote workers who relocate is a bad idea” (https://www.vox.com/recode/22691275/googles-remote-work-home-pay-cut-location-real-estate), lays out the standard argument: One should not be penalized by lowering their salary because they move to a less expensive location. I believe that this argument is flawed. It focuses on the person who has chosen to move and says that it is unfair that they take a pay cut for moving. If instead you look at the person who doesn’t move, you might say that they are taking a pay cut relative to the person who is moving because (in real dollars) the person who stays in the more expensive location has fewer discretionary dollars to spend relative to the person in the lower cost location.
I argue that people should make the same money (in real, not nominal dollars) independent of where they live and that means adjusting for cost of living. That said, I think it is great that we have gotten to a point, both psychologically and logistically, that we can let people live where it makes sense for them. I believe that when people can live where it “works” for them they are happier and therefore more productive.
I close with a caution. “Remote work” is a complicated thing. There are many not so obvious (on first glance) traps that one needs to account for prior to jumping in with both feet. For instance, we found that people at “headquarters” were as interested in getting out of the office and working at home as the “remote” workers we were hiring around the country. In the end we could not think of a reason to keep them in the office (this was prior to COVID) and ended up (not a bad problem) with quite a bit of unused office space. Making sure that the culture, processes, and technology are ready (and tested) prior to a full launch of a remote work initiative is a good idea too.
We believe that the remote work initiative allowed us to attract better talent and was a win/win. We were early adopters (but, not first movers) and still needed to adapt as the program rolled out. So, if you are planning to adopt remote work, plan upfront, be agile implementers and be prepared to adapt. It is worth the effort.
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