Tech companies are starting to let their employees work from anywhere — as long as they take a lower salary (TW, VMW)

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As tech workers continue to leave Silicon Valley for more space and a better cost of living, the companies they work for are responding with a change of their own: cutting salaries. 

Over the past six months, many employees living in major cities like San Francisco have uprooted their lives in favor of less densely populated areas with a lower cost of living and more space. While some workers intend to return to the Bay Area once offices reopen, others are making a permanent change, with the intention to work from home indefinitely. 

In response, major tech firms have begun scrutinizing the pay of employees who have permanently left the Bay Area. According to a recent report from Bloomberg’s Nico Grant, Sophie Alexander, and Kurt Wagner, software company VMware has decided to reduce the salaries of those who have moved to less expensive cities. While employees can permanently work from anywhere, their salaries may now be lower if they leave the Bay Area — an employee who moves to Denver, for example, will see an 18% reduction in their salary, according to Bloomberg.

Even a move within the state of California will result in lower pay: workers who decamp for San Diego or Los Angeles will take an 8% pay cut, Bloomberg reports.

VMware isn’t the only company evaluating how employees will be paid if they leave Silicon Valley. In late May, Facebook announced that it would allow employees to work from home on a permanent basis, but that beginning in January, their pay will be adjusted based on where they choose to live, according to The New York Times’ Kate Conger.

At Twitter, pay localization has been top-of-mind for years. Back in early May, Twitter CEO Jack Dorsey was the first major tech CEO to announce that employees have the option to work from home forever, with no expectation to return to the company’s San Francisco headquarters when the threat of the virus is diminished. While the move was in response to the coronavirus outbreak, it was part of a larger plan to decentralize the company’s workforce.

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Dorsey said on “The Boardroom: Out of Office” podcast in August that Twitter had been moving toward a distributed workforce for “a year, if not two years” before the pandemic. As a result, the company already had a compensation plan in place.

“We have always had a competitive approach to pay localization and are proud of the many ways we are supporting our employees during this challenging time,” a Twitter spokesperson told Business Insider.

The pay localization policy would apply to employees who move outside the Bay Area to less expensive cities, Twitter said. The company’s other coronavirus-related benefits, including company-wide “days of rest,” a $1,000 work-from-home allowance, parent resources, and wellness programs, apply to all employees, regardless of where they live.

But tech workers may not necessarily view a pay cut as a bad thing — in fact, some seem to view it as a small price to pay for a lower cost …read more

Source:: Business Insider


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