It appears like the proper arbitrage alternative: Go away your crowded metropolis for an even bigger place within the ‘burbs, however maintain your massive metropolis wage.
However now, a new study by international advisory agency Willis Towers Watson exhibits that many employers aren’t essentially planning to allow you to maintain your full paycheck for those who transfer. The survey of 344 employers in North America confirmed that almost 20% of employers are “setting pay ranges by first figuring out the market worth of an worker’s abilities after which making use of a geographic differential based mostly on the place the worker is situated.” Nevertheless six in 10 employers say they’ll proceed to pay distant workers the identical as in-office workers “irrespective of the place they work.”
Whereas Twitter has been on the forefront of decentralizing it’s workforce (and paying them partly based mostly on the place they reside), different tech firms have just lately taken the same path. Facebook made headlines this spring when it introduced that beginning in January 2021, “worker compensation will probably be adjusted based mostly on the price of dwelling within the areas the place staff select to reside. Facebook will make sure that workers are sincere about their location by checking the place they log in to inside techniques from,” in keeping with the New York Instances. Bloomberg reported in September that workers at VMWare who selected to maneuver may additionally anticipate pay cuts. “Staff who labored at VMware’s Palo Alto, California, headquarters and go to Denver, for instance, should settle for an 18% wage discount, individuals accustomed to the matter mentioned. Leaving Silicon Valley for Los Angeles or San Diego means relinquishing 8% of their annual pay, mentioned the individuals, who requested to not be recognized discussing inside insurance policies.”
However the motion in direction of “pay localization” might be fraught as nicely. As an illustration, what if an organization opened up jobs to staff unfold out across the nation, and ladies or candidates of coloration started to be employed at a better fee? Would the corporate nonetheless pay its San Francisco-based workers extra, even when they had been disproportionately male or white?
Some additionally query whether or not the narrative about individuals “fleeing cities for good” will maintain up as soon as the pandemic is below management or there’s a vaccine. Jonathan Miller, who writes a well-liked publication about New York actual property told Fortune‘s John Jeff Roberts this summer that he thinks the flight from massive cities is actual—but it surely received’t essentially stick. “He likens what’s taking place with COVID-19 to occasions just like the Lehman Brothers collapse in 2008 and the 9/11 assaults. These occasions likewise triggered a flight from New York, however solely a short lived one; a lot of those that left returned in a yr or two. Miller expects the same phenomenon to happen with the pandemic.”
That could be one motive many employers are nonetheless grappling with whether or not—and the way a lot—distant work to permit. The Willis Towers Watson survey discovered that 37% of firms “don’t but have a proper coverage or set of rules to handle the preparations, though 60% of these presently with out formal insurance policies are planning or contemplating adopting a proper coverage by subsequent yr. Almost two-thirds (64%) of these with insurance policies are planning or contemplating revising them this yr or subsequent to adapt to the altering nature of the place work will get executed.”
Extra must-read finance coverage from Fortune:
- Hyped for years, hydrogen is finally having its moment
- The cashless economic system: How fintech is approaching the future of finance
- “Challenger banks” are on track for a record year at the same time as enterprise mannequin stays unsure
- “We had been making it up as we went.” Kohl’s CEO on weathering the COVID storm
- What companies slammed by the pandemic can study from America’s champion car salesman