Should compensation in a hybrid work environment consider location?
Charthop has one of the better overviews [1] of the different policies of a few of the more well-known companies, and it's apparent that there's a philosophical divide on what is "right". Assuming of course that the articles are arguing in the best interests of workers as the highest priority.
The major argument for removing location based compensation considerations (from the workers' perspective) seems to be: "what does it matter where I live, as long as I produce the same results?"
There is merit to that question, and based on other related articles that I've read, it's most frequently asked by people who either have since moved out of high cost of living areas or were already working from a low cost of living area to begin with.
I come from the other perspective: I live in a high cost of living area (if I give you 2 guesses, you'll probably get it right), have done so for more than a decade, and can't easily move, even if I wanted to. My company recently announced that it is enacting a new compensation policy that dramatically simplifies location-based salary-bands by country. Our office and pre-pandemic team are based in the same high CoL area where I live. I can't help but feel that this new policy is massively unfair to myself and the other employees who live in high CoL areas - we're taking home significantly less than our remote colleagues, given the same compensation rate. My modest condo can be traded for a free-standing house and Olympic sized pool in other markets.
A less self-interested argument can be made too. Remote workers with "Silicon Valley equivalent" salaries disrupt local economies. We're seeing this first hand in more rural US states with hot housing and rental markets, such as Idaho. The incumbent population is being displaced because their compensation hasn't improved at a rate that can compete with all of the new money that is moving in. It's breeding resentment - initially at Californians, and now more accurately at remote workers.
With that said, I'd like to slightly modify my remote worker straw man argument from earlier: why does where I live affect what I take home, if I produce the same results?
[1] https://www.charthop.com/resources/blog/best-practices/location-based-salaries-value-based-salaries/
4 comments
[ 4.3 ms ] story [ 23.2 ms ] threadThat's really all it comes down to - what the employer is willing to pay and what you're willing to accept. Value for what they get is secondary to that conversation.
The best argument I found is that it expands the hiring pool. I think there's some issues in practice long-term with that argument, but regardless, they are voluntarily spending more on compensation for existing employees without getting any additional value out of it.
People's circumstances are different, that's life.