[REN #963] Job Market: Pay Cuts Could Influence Remote Worker Moves

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Job Market: Pay Cuts Could Influence Remote Worker Moves, Real Estate News for Investors Podcast Episode #963 Header

The pandemic has turned many office employees into remote workers, and for some, that could mean the freedom to move to a new, less expensive location. Some businesses are even encouraging employees to move, with a bonus. But there is a catch. Employees who move to a place with a lower cost of living, may also get a pay cut, and that’s not sitting well with some of them. (1)

Payment processing company Stripe is one company that is encouraging employees to move. It has offices in 16 cities around the globe and almost 3,000 employees. It’s giving $20,000 to employees who move from some of the bigger cities like San Francisco, New York, and Seattle, but is also telling them they’ll get a 10% pay cut. The pay cut will correspond to a lower cost of living in the city they move to.

VMware also announced a similar pay cut plan for workers who move to less expensive cities. Fox Business offered an example, saying a VMware worker who moved from Palo Alto to Denver would get an 18% cut in pay. (2) VMware says, it is working on a plan to provide flexibility for employees, and it says it is dedicated to “equitable pay for its workforce.” Facebook, Twitter and others may also do the same thing.

Surveys Show Many Say “No” to a Pay Cut

But, there are a few new surveys that show employees may not be willing to accept a pay cut when they move. Job search marketplace Hired conducted a survey recently among 2,300 tech workers. 99% of them said employees should receive the same amount of pay for remote work as they do for the same job done in an office. 40%, said they do support location adjustments if an employee moves to a less expensive area. More than half of the survey participants also said they are considering a move away from a big city if their temporary remote jobs turn into permanent ones.

Another survey by professional networking website Blind, had similar results. Of the 5,900 people who participated, 49% said they should not get a pay cut if they move, so long as they are doing the same job. 44% said they would accept a pay cut. The rest were undecided.

The concept of pay that corresponds to a local area’s cost of living is nothing new. Facebook said in a statement, the company has always used a ‘market-based’ approach to its pay scale. It says, “This is our current practice and has been for years. It applies to all workers, including remote workers.”

But it appears that Facebook employees who started working remotely because of the pandemic are still earning the same pay. CEO Mark Zuckerberg told them in a video that their paychecks will be adjusted according to the employees’ location this coming January. He also said, “There will be severe ramifications for people who are not honest about this” implying that there’s concern about remote workers not accurately reporting their home addresses.

Twitter also says, pay adjustments are common for workers who move to a new location, and it plans to do that if employees move to a less expensive location. Twitter is based in San Francisco, and is also encouraging people to work from home with a $1,000 bonus and extra vacation days.

The Value of Work

Some people feel it’s wrong to adjust pay according to location. O’Reilly book publisher president, Laura Baldwin, told S.F. Gate, “If you expect similar results and outcomes from everyone on your engineering team, for example, how can you pay one engineer less than the other for the same value of work?” She says, “Does it matter if your team lives in California or Utah if they are expected to deliver similar results?” (3)

The answer to that question may come down to supply and demand for tech talent, and the ease with which a remote employee can switch jobs. We will also need to wait until the pandemic is over to get a good look at the new workforce landscape, and whether companies turn temporary remote positions into permanent ones. In the meantime, if you are investing in rental property, this is just one aspect of the local workforce that you should check as part of your due diligence. You’ll find a due diligence checklist on our website at newsforinvestors.com.

And while you’re there, you’ll also find a list of metro areas that are attracting tech talent today, and are also very affordable, like Atlanta and North Dallas. And if you prefer to own brand new homes under the $200,000 price tag built specifically to be used as rental properties, be sure to sign up for our live virtual event this Saturday, Sept 26th. I’ll be hosting a panel, interviewing some of our members who will share their experience investing out of state. We’ve also invited property managers and builders from  Jacksonville, Orlando, Tampa, Atlanta, Houston, Dallas and Cincinnati.

Links:

(1) Employers Encouraging Moves

(2) Fox Buisiness Article

(3) SF Gate Article

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