Tech | December 30, 2020 11:46 am

Why Some Tech Companies Aren’t Localizing Pay for Employees Who Move

A few larger firms and startups are keeping salaries stable, even when workers move to cheaper areas

home office
Mikey Harris / Unsplash

While WFH — or work from anywhere — has become a popular and sometimes necessary option during the Covid pandemic, there are drawbacks.

For one, several tech companies want to “localize” pay, meaning that white-collar workers leaving expensive coastal markets may see a cost-of-living reduction if they move, in some cases up to 18% (even if they’re simply moving to a less-expensive area within the state). Facebook, Twitter, Redfin, Slack and Stripe are some examples of companies that are buying into this cost-cutting measure.

But a few start-ups and bigger firms are keeping salaries stable no matter where their employees are based. As the Wall Street Journal reports, companies like Reddit and Zillow plan to keep salaries of relocated employees the same, but may restructure pay for new employees.

While one survey found 60% of workers would accept pay cuts if they could be flexible about where they work, some experts believe the practice is bad for morale. “Employers really have to do a bit of a dance to justify it to workers,” as Jake Rosenfeld, a sociology professor at Washington University in St. Louis, told the Journal.

One good example arrives via Reddit; representatives for the company say productivity has remained high during the pandemic. The social media site even plans to offer pay raises and thinks their increased use of a remote workforce increases diversity.