The first company to do the right thing
Reddit announced permanent work from home this week. They also stated that they wouldn’t reduce their employees’ compensation if they choose to move away from the Bay Area of California.
“Many tech companies have taken this step amid the pandemic, but few have eliminated geographic compensation adjustments. Reddit said they will not lower the pay of employees who choose to work remotely; instead, all U.S. compensation will now be tied to pay ranges of high-cost areas such as the Bay Area.”
If you’re not familiar with the “cost of living adjustment,” employers often pay employees more to offset the higher cost of living in some locations (e.g., New York, San Francisco, London). If you already live in a location with a higher cost of living, guess what happens if you move somewhere with a lower cost of living?
That’s right. Many employers will cut your pay if you move away. 😫
For example, Facebook announced that employee compensation would be adjusted based on the cost of living in the locations where workers choose to live. Reading between the lines, expect to have your base salary reduced if you move out of the Bay Area.
Reddit’s announcement is huge. Now you can live anywhere and get paid for the value you deliver vs. being paid because of where you’re forced to live.
Someone told me that it was impossible. I guess not. So, I guess I wasn’t naive or stupid to predict this shift?
“With this change due to remote work and WFH, jobs, wealth, and economic opportunity will be more broadly distributed into smaller communities and formerly-dying cities across the world. You no longer have to “move away from home” to find work, like I did when I was young.” — Larry Cornett, May 12, 2020
I hope more companies follow this model. Pay for value delivered, not an employee’s zip code.
Equitable pay across geographies will create loyalty. People will feel that they can grow and thrive within a company, no matter where they choose to live.
But, if you screw people over with pay cuts when they move? Be ready to lose them to enlightened employers.
The global war for talent has begun!
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Larry Cornett is a Leadership Coach and Career Advisor. He lives in Northern California near Lake Tahoe with his wife and children, a Great Dane, and a rabbit. He shares advice that helps you become an opportunity magnet for the best things in life! You can also find him on Twitter and Instagram @cornett.