These technology companies pay workers the same rates in the US

Some large technology companies, including Facebook Inc.

it was clear at the beginning of the pandemic that people moving away from the Bay Area to less expensive cities could reduce wages. Stripe Inc. payment platform offered unique bonuses for workers who moved from San Francisco, Seattle or New York – and accepted a pay cut of up to 10%.

But a pay cut for any reason could be bad for workers’ morale, said Jake Rosenfeld, a sociology professor at the University of Washington in St. Louis. Louis, who is researching payroll. “Employers have to do a dance to justify it to workers,” he said.

Workers who consider work scenarios more flexible are themselves divided. A November survey of 600 technology employees by the job search platform found that 60% of respondents would be willing to take a pay cut to work remotely permanently, over time. what 40% said no.

Zillow, a Seattle real estate search firm, told the 5,600 employees in October that if they chose to move out of their current city, the salary would not be adjusted. “We are not making this change to save money,” said Dan Spaulding, Zillow’s chief officer. “We are making this change to keep our employees.”

Since the announcement, about 50 employees have decided to move to a different state. The company has decided to try this payroll model at least until the end of 2021. With new hires, Zillow intends to work towards a nationalized pay scale over time.

“If people think the world will return to where it was 18 months after the pandemic started, I don’t think it’s realistic,” Mr Spaulding said. “Your best talent will have options that will come out of this.”

The social media platform Reddit, which has about 700 employees, made a similar move to get rid of US geographic wages in late October, after productivity remained high while people were completely removed.

The company wanted to “eliminate the compromise that employees should make if we reduced their compensation if they moved to a lower-cost area,” said Nellie Peshkov, head of the culture department and head of Reddit culture.

Reddit previously had three payment zones in the US, with the vast majority of its employees – those based in New York and San Francisco – being the best. Some Reddit employees in other cities are receiving salary increases as part of the exchange, Ms Peshkov said.

In addition to retaining current talent, Ms. Peshkov said the company anticipates that the movement will contribute to the development of a more diverse workforce.

Employers tend to combine the cost of living with the labor market rate in a particular area, said Peter Cappelli, a professor of management at the Wharton School at the University of Pennsylvania. “The reason they make a lot of money is because that’s where the competition is,” he said. “If you haven’t paid them that much on Facebook, someone on the street on LinkedIn will hire them.”

While keeping salaries the same could help keep employees, Mr. Cappelli said, you can’t get people who have moved to sit next to colleagues to do the exact same job while earning less. Alternatively, people who stay in a high-cost area may be upset with those who have moved in and keep their salaries.

“Employees might say, ‘Hey, you pay me the same as someone who lives in a cheaper place,'” he said. “Their salary goes further than for me.”

Ms Peshkov and Reddit said she had not yet heard complaints from workers in San Francisco who considered the move unfair because of the high cost of living in the Bay Area.

“Actually, there was no negative reaction,” she said. “He appreciates this general philosophy of paying people for impact and not where they live.”

In addition to employee sentiment, paying workers regardless of where they live can bring significant costs, according to Tauseef Rahman, a partner in labor strategy and analysis with Mercer.

“Because you pay national tariffs, you undoubtedly pay more than the local labor market would have demanded,” he said. Companies will need to determine if there is a financial advantage to being competitive nationally in terms of wages, he added. He believes that one result is that companies locate pay only for certain roles, not others.

“The extent to which geography has an impact on pay is not the same in all types of jobs,” he said. “If you think about the really demanding types of roles where there aren’t just a lot of people who can do something, you’re going to pay that continuous rate.”

So far, those who escape the geographical wage scales seem to be in the minority. Some do the opposite: in June, Slack Technologies Inc.

it has gone from two national pay levels to five as the company expects more employees to be established outside of San Francisco and New York, a company spokesman said.

“We created these troops to provide transparency and fairness to our employees,” said Nadia Rawlinson, Slack’s chief executive. The company decided that adjusting the salary based on the local cost of living of the workers would help it to avoid inequities.

Sahil Lavingia, founder of the 24-person Gumroad startup, has heard from hundreds of job seekers after tweeting that he would no longer take geography into account when determining wages.

However, even within his relatively small team – which has been completely removed since 2016 – the movement has not been without complications. He said he eliminated the highest level of pay for the following employees, contributed to an employee and imposed caps on the weekly hours worked to compensate for the salary increases of some employees.

Mr Lavingia said many of the tech workers he had heard of were outside the US – in India, Nigeria, Singapore and Eastern Europe. He anticipates that as more people compete for completely remote jobs, the continuous rate for technological work will eventually decline.

“In the long run, this leads to better rates for almost everyone, but for a select few,” he said.

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