Is it Fair for Companies to Slash Pay for Remote Workers?

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With the pandemic slowly receding into the rearview mirror and earning an average of…hmmm, let’s see…0 out of 5 stars on Yelp for, and I quote, “sucking ass,” now seems to be a good time to sit back and reflect on why none of us want to ever do this ever again.

But even though the pandemic was (and in many parts of the world, still is) a horrible experience for everyone, there are a few rays of positive change that managed to sneak their way through the gloomy, COVID-infected storm-clouds.

I’m talking, of course, about all the socially accepted day drinking.

No wait, that’s for another article. What I meant to say is the explosion of remote work.

Working from home was a huge shock for many people, and I think it’s safe to say that when they got the email in March 2020 to stay home for the next few days, nobody expected to be out office for over a year. I got a chance to peek inside my old office during the lockdowns and it was like a scene out of a science fiction movie. People’s desks still had old cups of coffee on them, their calendars were still set to the last day of in-office work, and it was like the normally bustling cubicle farm had this weird invisible fog of silence shrouding the entire floor. It was real creepy, is what I’m trying to say here.

Well, those days are coming to an end.

Companies are starting to recall people back to the office. Normalcy will mean being able to go back into a restaurant or a seeing a concert without wearing a full haz-mat suit anymore, but it also means good-bye to wearing half a suit to work, not needing to do a morning commute, or masturbating furiously during a Zoom meeting (looking at you, Jeff Toobin).

That being said, some people aren’t willing to give all that up and want to continue working from home even after the pandemic is just a distant, red-wine-stained memory.

So how will companies react to this new dynamic? CEO’s by and large want their workers back in the office. And at least some workers want to the continue working from home because they can now use their dreaded commute time for, you know, actual work. But corporate America being what it is, I’m sure they’ll work out a compromise that will leave everybody happy…

Oh wait, nope. They’re threatening to cut remote worker’s pay. Super.

[Google] recently announced they’re planning to cut remote workers’ salaries by a quarter. Reuters revealed that workers with longer commutes to the Google office would receive the highest pay cuts.

Google Plans To Cut Remote Workers’ Salaries By 25%, Forbes

Well, I’m sure they have their reasons, right? Riiiight…

If you can’t tell, I’m just a little skeptical of their rationale for doing this, but you know what? Let’s explore some of the arguments for and against slashing pay for remote workers and see if we can make sense of it, shall we?

Pro: Cutting Remote Worker’s Pay helps women

No, wait, where are you going? Sit back down. They’re being serious here. Try to keep a straight face while I explain it.

OK here’s how the theory goes.

Prior to the pandemic, remote work was heavily favoured by women, as they usually have to shoulder the higher workload of child care, housework, and the burden of taking care of elderly parents. And while everyone was forced into remote work over the last year-and-a-half, economists are predicting that women will be the predominant demographic demanding continued access to working-from-home going forward.

So, the theory goes, if companies continue to encourage remote work, they will be encouraging the gender pay gap that has long plagued women in the workforce.

And before you get mad at me, this is coming from the same Forbes article that I quoted above. Check it:

Remote work intensifies gender inequality across the spectrum by reinforcing domestic roles, and stalling women’s earning potential and prospects for career advancement-many of which are positively correlated with in-person work.

Google Plans To Cut Remote Workers’ Salaries By 25%, Forbes

Riiiiight. So companies expect us to believe that they care so much about women worker’s rights that the solution is to…cut their pay even further? To encourage them to come back into the physical office so that they can compete with their male colleagues while doing nothing to alleviate the actual problems that are keeping them at home in the first place?

Yeah, good thing FIRECracker isn’t writing this article, because it would just be a string of capital-letter filled expletives from here on in.

So let’s go ahead and toss this argument on the “Heaping pile of bullshit” pile and move on, shall we?

Pro: Remote Work is Bad For Innovation

Here’s one that’s a little less steeped in bullshit.

The theory, which originated from tech CEO’s like Steve Jobs and Marissa Mayer, was that a big driver of innovation comes from co-workers bumping each other in the halls or the break room and casually discussing what they were working on, and sometimes the random collision of ideas creates new innovation and, potentially, new products. Remote work flies in the face of this because people can’t randomly bump into each other. Hence, the argument goes, remote work is bad for innovation, so people need to get their keisters back into the cubicle farm.

OK, I can kinda understand this one, because that’s what working at my old engineering job was like. I would often bounce ideas off my friends and co-workers, scribbling on each other’s whiteboards as we worked out ideas for solving whatever engineering challenge we were working on, and vice versa.

My problem with using this as an excuse to ban remote work is that it puts the onus of innovation completely on the workers and none on the managers. You say that your company is the leader in high-tech and innovation? Well then prove it by coming up with a way for workers to innovate without being in the same physical location!

The really funny thing is that the companies that are proposing these pay cuts for remote workers like Google and Microsoft are the very companies that specialize in software to help remote teams communicate with each other. Google built a suite of workplace collaboration tools called Google Workspace, and Microsoft has a tool literally called Microsoft Teams. Gee, if only a solution to this very difficult remote work problem existed on your own servers already.

So while I understand this argument, I don’t sympathize. Because these same tech companies that claim remote work impedes collaboration already have the means and the expertise to fix this. They just don’t want to.

Pro: Companies Have to Pay More in High-Cost Areas

But wait, companies say, we’ve long ago had to pay more to attract talent for those who live in high cost areas like New York City or San Francisco. If you no longer live in those high cost areas, why should we continue to pay you a NYC salary if you now live in Mexico?

OK, I get that. When I was visiting our San Jose office my eyes would often bulge at just how damned expensive things are in Southern California. Houses there were unaffordable decades ago and going out to a restaurant cost an arm and a leg. Even highly paid senior engineers were living with each other as roommates and carpooling to work to save money. If I had to move there for work, I certainly wouldn’t do it for the same salary as I made in Canada.

Of all the arguments I’ve read about for cutting remote worker’s pay, this one makes the most sense. If you were paid a premium to live in a high cost area, why should the company continue paying your inflated salary if you move to small town, USA?

Con: Companies are paying for skill, not location

However, you can also see why this would stick in the craw of many remote workers. In the post-pandemic economy, companies are paying workers for their skills and output, not their location. If I’m doing the exact same job, working the exact same position, and my productivity hasn’t suffered from working from home, why should I be forced back into the daily grind of $25 breakfast burritos and endless traffic jams just to keep my current salary?

Central to the question of how much remote workers deserve to get paid is how much of a worker’s expenses should factor into their compensation. Because if moving to a cheaper area means they should get paid less, should those engineer co-workers of mine who decided to rent a house together be paid less as well since they found a way to reduce their expenses through creative living arrangements? And conversely, does that mean that if I’m bad with my money and spend like crazy, should I be paid more? Where do you draw the line?

Con: Remote Workers Already Save You Money

The truth is, we can argue the issue of remote worker salaries from a philosophical standpoint forever and never get anywhere. But if the strongest argument for cutting the pay of remote workers is financial (i.e. Companies need to pay more for workers in high-cost areas), the strongest counter-argument of keeping their pay the same is also financial.

And that is: Remote workers already save companies money.

If you don’t come into the office, you don’t take up space. That means you don’t need a desk, you don’t need a computer, you don’t need to supply as many snacks or drinks in the break room, and if enough people do it, the company could downsize their office and slash their rent, heating, and utility costs.

When FIRECracker was working, she spent some of that time as a contractor rather than a full-time employee. And as we all know, contractors aren’t entitled to the same benefits like health care or pensions as other full-timers. To compensate for that, contractors would get paid more per hour to entice them to take the job.

Adopting that already commonly accepted practice to this situation, remote workers should actually get paid more than in-person workers for exactly the same reason. Companies are saving money by hiring remote workers, so they should pay the employee more to offset part of those savings. It’s only fair, right?

The fact that nobody is (yet) asking for a pay raise to be remote, and simply asking that their pay remain unchanged is already a massive concession from remote workers to their corporate overlords. And yet, not only are those corporate overlords not happy with this offer, they want more. They want the savings from your empty cube and they want to pay you less. How is that even remotely fair?

Conclusion

These last 18 months have been tough for everyone, and I get both sides of the remote work debate. I get the desire for companies to restore things back to the way things were. But I also get how typing on a laptop on a beach in Thailand is pretty freaking sweet.

You know who the pandemic hasn’t been tough for, though? Tech companies’ stock price.

If remote work truly had a detrimental effect on productivity or innovation, you would expect profits of these big tech companies would have taken a dive in March 2020 and never recovered. Instead, we saw this…

Google’s stock price has been on a pretty much uninterrupted tear after April 2020. If there were any indications that remote work was bad for the company, it’s certainly not reflected in the stock price. In fact, a study run by Stanford showed that remote workers are more productive, less stressed, and happier than their in-office counterparts.

So tech companies like Google are finding themselves in a strange situation where they’re making more money, yet their employees are happier and more productive. So of course their first reaction is to say “We’ve got to put a stop to that.”

After spending 5 years as a digital nomad, I believe remote work is the wave of the future, especially for fields like software engineering or writing. It has the potential to transform the nature of work for the better, and doing so while saving the company money. And thanks to the pandemic, companies have realized this too.

And all they have to do to harness the power of remote work and keep the party going for their stock price is to, just this once, not be a dick to their employees.

Is that too much to ask?

What do you think? Should remote workers be allowed to keep their salaries or should they be forced back to the office? Let’s hear it in the comments below!


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41 thoughts on “Is it Fair for Companies to Slash Pay for Remote Workers?”

  1. If you can’t say something nice, say nothing.
    Fuming but will say nothing. Short every mega firm planning to make these “adjustments” to save women.

  2. I was lucky enough to land a remote job because of the pandemic. Prior to this, I always worked either on-site or hybrid (a few days in the office, a few days out). I don’t mind the hybrid approach but I do feel as though working on-site is such an antiquated idea. What difference does it make where you work?

    While I think the whole idea of reducing salaries for remote workers is BS, I also don’t think I have much control over this idiocy. While commuting expenses are lessened, eating out is non-existent, most moms still have to put kids in daycare so they can get things done.

    The person that came up with this idea that women can have kids running around while they are trying to work apparently does not know what it’s like to wrangle kids (kind of like herding cats) all day while fielding zoom meetings, so the argument is a moot point. Things cost more, housing is expensive, and you still need some kind of daycare.

    I love working remotely. I am much more productive. If I made less money to work remotely would I take it, heck yea. Do I have a choice, probably not? I think their justification to make more money by reducing salaries and then saying, oh well you will benefit in the end is ridiculous.

    1. It remains to be seen whether this is something that companies will do industry-wide or not. If just a few companies decide to not pay less for remote workers, then they may end up poaching a lot of talent…

      1. There’s already a decent number of largish companies that are going to allow remote working without cutting. Additionally, there’s a lot going on under the covers that you don’t see. For example, my employer initially indicated that everyone has to go back to the office. Reality is that this is unlikely to happen. There’s a huge worker shortage in tech shaping up right now (eg: I expect to have my pick of next jobs and am aiming for $400-500k), so companies may not have the leverage they’re hoping for.

    2. “ The person that came up with this idea that women can have kids running around while they are trying to work apparently does not know what it’s like to wrangle kids (kind of like herding cats) all day while fielding zoom meetings”

      No one is forcing them to have children and a career. It was their decision, and it is not the companies responsibility to cater to them.

  3. It just screams to me poor management! I retired earlier this year, but my manager checked in on us as a team each day and we had to show progress on what we were working on.
    He was against me even working at home one day a week and had grudgingly agreed to one afternoon a week – next month Covid hit 😜🤣🤣
    Now HE loves remote work and even moved to a lower cost State.

    I think it’s a control thing and if your manager manages to figure out how to make sure you are still producing then they ‘usually’ see the light. Course I worked at one of the more progressive tech companies anyway so that helps!!!

    1. There was a lot of suspicion that remote workers were goofing off all day. Before the pandemic, the only people my old engineering company let work remotely had to practically quit before management allowed it.

      1. There are some people who can work remotely just as efficiently. My experience is that these people are very few. Most people I know, including me, need physical separation from home chores/kids/pets to focus.

  4. The future is in remote work and working from home. The costs of living will continue to go up and up because corporations can mark up anything and get away with many things and do as they want because they are too big to fail.

    I will not return to the office ever and prefer working remotely.

      1. Good chance that may happen. The reverse is that I can stay in one physical location and work remotely many different places.
        The economies are global nowadays that learning how to work remotely is important in developing one’s skill sets to meet demands.

  5. Hiring remote has been a huge pro for us in software since it drastically expands our talent pool into 49 of the 50 states (California excluded) instead of the immediate vicinity of our office locations. Given the talent shortage this has been a great strategic advantage.

    Also, when all participants for a video conference are remote it evens the playing field for meeting participation since usually the group that is in the office together dominates the conversation.

    Although I personally prefer to be in the office, I have not seen a con for us as a company.

  6. Is this an updated article? I clicked on it because I remember hearing this at the start of the pandemic (I have several family members who work in tech) and we were worried. When I clicked through, the Forbes article seems more focused on why this is a Terrible Idea and basically gives three bullet points with elaboration why.

    From what I vaguely remember, I thought Google (and a couple of other companies) had tried this and seen a wave of workers jumping ship to other companies who would pay them their existing rate or better.

    1. I’m sure the issue has been discussed throughout the pandemic, but as offices start preparing to open back up again this debate is going to become really relevant really soon.

  7. Speaking from the perspective of someone who has worked ~10 of the last 15 years remote… remote positions already paid less prior to covid, it was a concession we took for the flexibility.

    If you had a high-tech job in NYC or LA and moved to the middle of Kansas for cost savings… Great! Just realize that over time companies will not want to spend the regional cost difference to continue to pay NYC salaries and you’ll likely be one of the first gone if you have a distributed national team.

    Having been remote prior to the pandemic, if I was informed they would be cutting my salary because I was remote… I’d be highly annoyed. But that’s because I’d already taken the concession to work remote and they were already paying for just my brain. I would then communicate with my feet, and find a different role.

    Just realize that since they’ve commoditized roles, there is a baseline cost associated with a role. They then add in additional compensation for high cost regions based on the cost of living. It’s why California pays more than Kansas.

    As the world continues to adjust, it’ll be interesting to see how business moves forward. Maybe I’ll get a pay raise to level-set expenses based on an increased baseline cost! One can hope! 🙂

    1. I like the communicating with your feet idea. Theoretically, if they cut your pay you could then move to an even lower cost location like Mexico and not even tell them. How would they know as long as you were in the same/similar time zone, right?

  8. The news keeps talking about there being a labor shortage and we hear stories about how labor costs should rise on account of this. I have been receiving calls from recruiters beating me down on price per hour. They have been using the excuse that you don’t have to travel to work. And I tell them they should pay more because the companies are saving in costs of providing an office. Amazing that companies are using the pandemic as an excuse to beat down on employee wages. BTW, when I ask the recruiter if they would be willing to do their job for their company while taking a 20K pay cut they always reply with no. Yet when they ask me for my salary requirements they also ask if there is room for negotiation. I have learned that these calls always go nowhere so I reply with “yes it is negotiable. I will accept more.”

    Companies should be happy with reaping the benefits of drawing from a larger pool of talent and saving costs in the office.

  9. Demand. Supply. Know your worth.

    If you understand the three items above, this whole topic becomes a nothingburger. The only employees whom this impacts are the losers that companies can do without regardless. A company will never flush or piss off its winner employees. Never.

    1. You’re probably right, it’ll be really interesting to hear what happens if they try this to someone who has a lot of leverage at the company. They’ll probably belly laugh and offer to hop over to a competitor.

  10. I’m a huge fan of making employees return to the office. Finally my wife says she will retire!!! Best thing ever. Be an ass, get ass results.

  11. Great post. I went remote last year and never plan to go back. The company seems to have noted that many workers prefer this and responded by offering full time remote as an option, even for people who still live in the same city. Our downtown office building is still closed and it’s unclear whether or when they will reopen it, especially if most people are working from home.

    One small note – San Jose is in northern California, not southern California. 🙂

  12. While I also think it would suck to have my salary cut due to remote working. What are you opinions on the overall effect of inflation in lower cost areas and pricing locals out of the area. For eg, if so so many people are now allowed to remote work. There could be mass migration to places such as small cheaper towns in the midwest US, or maybe Halifax where properties are low and people might work in other industries. But with a huge influx of people with high salaries this could push these houses up, essentially pricing locals out of these areas. I see pros and cons of this also. It could also provide more services in these smaller towns that richer people are willing to pay for and therefore providing locals with more jobs as well, such as spa’s, highend coffee shops/restaurants and more. It would be interesting to delve into more the changes that these lower cost areas might have in the future. However, if the big companies are to cut salaries for those working remote and basing the salary off where they live this might help out the locals in these areas.

    One thing I noticed over many years of travelling Asia. Is certain beach towns that used to the “The quaint little fishing village” and then a big influx of backpackers would come in, and then some westerners would purchase properties and then more and more hostels would come and eventually it would become resorty and eventually pricing some locals out. I read an article abou this in Vang Vieng in Laos, but have seen it in a number of beach towns in Thailand/Cambodia/Vietnam/Mexico!

    1. Price inflation will probably happen as money flows out of cities and disperses across the country, but you that should also reduce the cost of living in those big cities too, so it’s not necessarily a bad thing.

  13. I don’t know what it’s like to be a remote worker. (I am a nurse in a regional hospital in the rural south.) However, I think that if you are remote or in person your pay should not be cut unless it is across the board. All the way up… All the way down. Because I would be willing to bet that the CEO, CFO, etc., work many days remote and yet they are going to receive their full pay with a healthy benefits package to boot.

  14. Remote work is the future and it’s AWESOME. Seriously, I can’t believe how much my quality of life has improved since I’ve become a remote worker. I used to sit in traffic for 1 hour and 15 minutes in the morning (could be as long as 2 hours if there was an accident… even on an interstate I didn’t frequent due to the poor planning of the roads in my city) and 45 minutes minimum in the evening. Now I don’t have that and it’s amazing. I definitely don’t think remote workers should have pay cuts. Pay should be based on YOUR contribution to the company / fulfilling the requirements of the role, not where you live.

    Also, I hate the argument that people have to be in the office for *~innovation~* and *~new ideas.~* That’s total rubbish. I worked for a manager like that. The whole culture of that office was “butt in chair for the entire day (and then some).” Guess how much innovation we had? Zero. People were demoralized because we had zero flexibility and we all couldn’t wait to get out of there. I jumped ship after a year. I’ve heard that now, seven years later, the old clique is still there, still doing things the same idiotic, inefficient way. And yes, that department was one of the first to go back after lockdowns last year.

    1. Ugh, I hate that argument too. If you want to innovate, hire innovative people and build in opportunities to come up with cool ideas! The funny thing is that one of the companies with the best track record of doing this was…Google! With their 20% innovation day thing. And yet they’re one of the loudest voices wanting to cut people’s salaries. I wonder if their management changed from then to now…

  15. Hell, my first thought was “who are these lucky bastards that are just now being asked back into the office?” My job made us go back in August 2020, before we could get vaccinations. Had we not also had a flood in June, I’m sure they would have made us go back sooner. When cases rose in the winter, I managed to go back to remote for a bit, but was forced back into the office by February 2021. Been stuck here since and the company has banned all remote work in the future.

  16. I think it’s absolutely fair in terms of the market perspective.

    Don’t get me wrong, I’m definitely way happier working remote and don’t plan to return to work any time soon. And if they do force the issue either by lowering my pay or forcing me to go back, they can go ahead and lose the millions of dollars I provide for my company, conservatively.

    But with that said, I think how a company abuses their employees (this is nothing new and companies will forever abuse their employees) is up to the employer. They’re the ones forking out the money and I don’t feel that “big companies” are obligated to give us employees anything just because they are big and rich and their stocks are rising. As employees, we are free to go job hunt and swap jobs. The next job might not allow for remote work, but could pay a ton more. Or vice versa. But the choice is ours.

    1. Absolutely. Companies love talking about how great the “free market” is, but when it works against them they’re all like “NO NOT LIKE THAT”

  17. Hi,

    My view is “no” to slash pay. Corporate overlords do not care for their employee. It makes sense for one to focus on planning and taking action towards reaching FI. When one reaches FI, one will not be at the mercy of these overlords and have the option of taking the risks either by retiring or changing new employers.

    One takes charge of own destiny which is more practical.

    WTK

  18. I’m a firm believer that any job that can be done remotely should be done remotely…. but, given human nature, I have no doubt that in-office people will do better in the long term.

    Here’s a thought experiment: Take a new start-up that hires ten developers, each at identical pay. Also, all the devs have the choice of working on-site, remotely, hybrid, or any combination they choose. Over time, a core group of these ten devs will choose to be on-site and will ultimately be deemed “higher performing” than the remotes. After a couple years the on-site’s will have higher pay… it’s just the way it is.

  19. “Google Workspace, and Microsoft Teams” will be even better when their own employees use it remotely (test drive) before Customers being to use ’em.

  20. Folks working in the Software Industry might know this. There are employers that expect remote employees to be available for longer durations and accessible for meetings that may happen early in the morning or late into the night. These employees must be paid higher given the amount of hours they put in. Heck, think about how companies can deal with their own employees working overseas that are innovative and productive? If companies can handle those kind of remote workers, it can and should support remote workers here in the US as well without pay cuts. Companies will tolerate remote overseas workers especially when they have to pay less considering the lower value of foreign currencies compared to USD.

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