Following the discussion of Google cutting wages to workers who go remote online and through discussions at work certainly has been interesting.
It's not just Google. Many other companies are now doing this. Mine included.
People have mixed feelings about this, and their feelings are very generational.
For example, Boomers are most likely to be on the side that it doesn't make any sense for a company to pay a "San Francisco" salary if the employee works remotely and has moved to "Lake Tahoe".
There argument is that shareholders have been companies justify and defend why they are located in a high cost of living area. While it is good for companies as the talent pool is best for staffing levels, it is widely hated by shareholders who would like to see reductions in salaries and rent to turn higher profits. With more people working remotely these days it's harder for companies to justify.
For the last hundred years or so businesses priorities have been with the shareholders over their employees.
It doesn't make sense for a company to keep a "San Francisco" salary for a worker that chooses to work remotely when they could just higher a remote worker from Detroit and pay them two thirds as much or less. Especially with the pressure coming from shareholders and it high salaries being harder to justify. The perceived value of an employee to the company is diminished if they are working remotely.
The companies are doing the responsible thing for their shareholders, and that is looking at the metrics for what a salary should be for where a person is living if they are working remotely. That includes looking at prevailing wages and cost of living of the area and setting salary accordingly.
But people have mixed feelings about this. Is it right for a company to cut an established salary? Should existing employees salaries be cut when the company can recruit new full time employees as fully remote and give them salaries higher than a "San Francisco" salary if they are having trouble filling the position? Especially when the employee still lives within commuting distance. Not to mention the company has cost savings in terms of requiring less office space, lower utilities and what not with more employees working from home.
Others are like most employees would gladly take the pay cut to not have to commute 90+ minutes each way to work everyday.
One issue with prevailing wages is a lot of places where people are working remotely from do not have competition. The competition is in the cities. So if there is no competition to compare wages too, the prevailing wage is set at the lowest level. So people living in the suburbs and more rural areas are getting fucked. The numbers companies have for cost of living of areas are also outdated. Much of the data dates back to 2018 or a couple years older. So for the example, someone moving from San Francisco to Lake Tahoe, the cost of living companies are basing salaries off of is way off. In 2020 Lake Tahoe saw 4 digit percentage increases in the cost of living as people left the cities when working remotely became an option. Surges like this in the cost of living have not been accounted for when setting salary.
In many cases, peoples cost of living is the same. They just have a house now instead of an apartment. Yet they are seeing as much as a third of their salary being taken away. So in many cases, after pay cuts, the cost of living is more expensive now compared to their salaries than it was previously.
When it comes to Millennials. They think that these pay cuts are complete bull shit. They are also more likely to jump ship and move between companies to get that higher salary than eat the pay cut.
Working remotely is more widely available in the tech industry than others. But the tech industry has been notorious for collusion for keeping wages down. This includes Google, Apple and several other large names where they were caught in collusion of keeping wages low and not poaching from each other. Two seperate class action lawsuits took place back in around 2008 for this collusion and anti poaching. The practice of keeping wages low is still a strong trend in the industry. So it's no surprise they are taking advantage of remote work to lower wages.
Another trend is companies are setting policies on the states you can work remotely in. They are finding that payroll is more expensive having to deal with tax code from multiple different states. So they are trying to limit what states they offer remote work from and crack down on "digital nomads". They have to pay taxes and follow tax codes of wherever you are working from. So they are making policies such as you can only work remotely from the state listed on your permanent address with HR.
Isn't it funny how you see the divide between generations?
Wages for white collar workers didn't go stagnant until 2000. That means that boomers were able to take advantage of the professional world to the fullest, get compensation that exceeded inflation, and take advantage of a stock market that wasn't insanely overvalued and decoupled from the real economy. They had crazy interest rates in the 70's for sure, but housing costs only ate into about a third of their salary, even with the interest rates being high (in fact, part of the reason housing was so affordable was because of high interest and lower rates of lending). They didn't have to worry about student debt because they could swing college on a part time or summer job pay. They don't get why young people wouldn't do it like they did because it worked out well for them.
Millenials on the other hand (and as a person on the tail end of Gen X), have seen their housing prices jump, their medical benefits cut, and their wages have only ever really been stagnant--which is something that we were told wouldn't happen if we just went to college and got a degree. They are looking at not being able to afford rent in a high priced city like San Francisco because they also have to pay off their student loans. Often times, they have increasingly more issues with being able to afford a place to live near a place that has a lot of jobs available.
Take me for instance, I almost doubled my salary overnight when I took my remote position nine years ago. If I had to move to Hartford, CT to do my job, I wouldn't be able to move. I have a family and we require a certain amount of space. My $150K house here, would be over a half million there. We would have to squeeze into a much smaller place (and our house is only 1400 sqft) and then I would have to be able to afford the clothes, the wear and tear on the car/gas, etc. There is no way that my family and I could live in a higher COL on my current salary, which is commiserate with the national average. It's the housing that more and more younger families are having problems affording which is why they are all for remote work (and why I am too), because I can live in a lower COL and we can have a gym membership and my kids can have piano lessons and be on soccer teams. I can live near family which is helpful if I need something for the kids or if I need to park them somewhere. I'm not wasting over 2 hours a day commuting and I've started waking up early to paint. For the late Xers and Millenials, if they could conduct their lives in HCOL cities, they might move there, but if it's a choice between living life and scraping by, I choose to live.
The other thing that I find very different is the idea that you are not your job in younger people. I think this has a lot to do with the way employers treat employees. Back in the days of the boomers, they were much more valued as employees, and they felt they needed to show their appreciation to their employer. Now, every year, I wonder what medical benefits they cut from our health insurance this time around. We have a much more adversarial relationship with our employers than our parents ever had. When employees are constantly frustrated because they feel that their employer sees them as expendable, it's much easier to tell them to pound sand. We are not our jobs because our jobs don't care about us. This attitude never helps any organization.