These Tech Firms Are Reducing 15% Salary For Work From Home Employees! Worth It?

These Tech Firms Are Reducing 15% Salary For Work From Home Employees! Worth It?
These Tech Firms Are Reducing 15% Salary For Work From Home Employees! Worth It?

IT professionals moving away from Silicon Valley for remote working can face up to 15% pay cuts. 

Read on to know more…

Pay Cuts Based On Where You Are Locating!

Being a global center of technological innovation, Silicon Valley has a relatively high cost of living with employees having access to state-of-the-art remote-work tools. 

The COVID-19 pandemic has caused the companies to reconsider traditional working modes and formulating future plans with decentralized staff.

Till now, Silicon Valley employees have enjoyed way more corporate benefits ranging from free food to in-house yoga studios.

The wage cuts can cause a clash and amongst profitable firms and employees with high salaries.

It is a standard practice to change wages based on the local cost of living and other factors, say the companies.

The decision of salary cuts does seem logical. While living in the Bay Area is expensive, the cost of living in small towns and cities is quite cheap. Also, you can’t possibly find a job paying the same high wages as Bay Area anywhere in the small cities. If the companies do pay the same wage, it would be unfair to the people working in that area with low wages.   

What Do Experts Have To Say?

Cutting pay for workers who want to move to cheaper areas can lead to unhappy workers who quit in high numbers, said Kevin Akeroyd, CEO of the contingent-workforce-management company PRO Unlimited and a former executive at several large tech companies.

A survey by Blind for the month of September stated that over 48% weren’t in favor of pay cut if moving to a city with a lower cost of living, while 44% said they would be.

Brian Kropp, research chief of the human resources practice at Gartner Inc said, “The cost of living usually falls more than the paycheck.” Kropp said the negative response can “more emotional than rational.” Even with a pay cut of 10%-20%, software engineers can live a lavish life in low-priced cities, said Kropp.

Which Companies Have Said Will Resort to Pay Cuts?

According to a survey by a tech consulting firm Sequoia, wherein 240 U.S. tech companies were surveyed 33% weren’t sure about their policies for employees who would relocate permanently. Around 22% of companies are readjusting salaries and 20% are not going to.

Twitter Inc., was the first to announce it would allow remote working permanently. It also said it would take a competitive approach to pay localization.

In May, Facebook Inc. announced a shift toward a substantially remote workforce over the next decade. It had also stated that the work location would affect salaries. However, Facebook didn’t reveal salary data. Facebook has asked its employees to report the company of relocation plans by Jan. 1.

Last week, Microsoft announced its ‘hybrid workplace’ through a blog post. It also said that benefits and pay enjoyed by the employees will vary as per the geographic location and the company’s geopay scale. 

Stripe Inc, a payments company, is awarding its employees a one-time relocation bonus of $20,000. However, the employees are subjected to a pay cut of 10%.

Employees of  VMware Inc., a cloud software provider, moving from the Bay Area to Denver can face pay cuts of up to 18%.

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