Paying Remote Workers Less. Does it make sense?

Some companies have been threatening workers who choose to remain remote with pay cuts. And the primary justification appears to be cost of living. Personally, I think that this is BS. I think it is much more about wanting to control the workforce or preferring them in the offices.

Basically, in my experience there is no direct correlation between software developer wages and cost of living. I don't deny that there may be an indirect one. But, I think that the facts point out it is secondary at best and more likely even lower. Furthermore, the company stands to benefit from the arrangement (if not more) than the employee. On top of that, there is much simpler, much more rational reason for the pay structures.

Reasons wages don't appear to be tied directly to cost of living; commuting and housing markets. Wages seem driven by where the office is. NOT where the employee is. Employees can commute and I've never seen someone penalized for living in a cheaper part of town. But, perhaps where these companies are shoving their foot in their mouths the most is by attempting to link wages and cost of living in the first place.

Some of the biggest names weighing in on this operate out of some of the most expensive cities on Earth. Seems to go hand in hand with the high wages. Except one thing. Those base wages don't really move. And, when they were introduced, these cities were MUCH more affordable. And housing remains the single largest expense most employees face. So, it stands to reason that if you're living in a housing market which grows less affordable on a monthly basis and your employer CLAIMS that your wages are linked to cost of living that there should be wage increases on a regular basis which keep pace with cost of living.

That isn't happening.

Furthermore, it is clearly in the employers best (financial) interest for employees to work from home. They can either downsize when leases run out, or have more employees without increased rent costs. Also, all operating costs go down; insurance, energy, and so on.

Trying to turn around and then penalize an employee for saving you money seems stupid.

Lastly, however, is that there are simpler reasons for prices. Yes, cost of living factors in. But, as I said, indirectly. Primarily, these larger cities tend to also have more competition and a greater number of talented resources, but not enough to go around. When you have a lot of wealthy people vying for the same in demand highly skilled individuals, wages tend to go up.

I don't expect this trend to last. And, I expect at least some companies to reverse course. Basically, as long as someone else decides NOT to pretend wages are based on cost of living they will be readily able to scoop up highly talented resources. And, they may even get away with on boarding them at closer to base rates, thus effectively stealing skilled workers at a discount.

Companies like Facebook, Microsoft, Apple and Google spend SOOO much on their employees because they often provide a lot more than just grunt labor. And it will hurt them over time if they lose those resources.

If you don't believe me, Amazon's hiring process seems to frequently involve problem solving questions related to real world problems they are currently tackling or have tackled in the past. They aren't looking for developers to write code. They are looking for software architects who can also code. Losing these resources, and losing them at a discount? They may not notice it right away, but it will hurt them.

Other things which are going to back fire; long distance hires who still WANT to move to the area around the office. A lot of these companies, in an attempt to attract the best talent offer to pay for some or all of the moving expenses. With remote work on the table, it may be hard to convince the people making decisions to leave those offers on the table. But, this may crater access to talent even further.

I think working from home is a privilege in most cases and should be earned. I also think some strict requirements should be enforced. Like access to a dedicated office space. Where an employee can perform their role adequately existing employees should not be penalized for doing so.

I've always agreed with the sentiment that compensation is about more than money. In an industry where talent is already a very expensive resource, perks like working from home can be worth more to an employee than thousands of dollars annually. That it also saves the employer money makes it a no brainer. You can use it as a perk to lower your base wage offerings, or in the place of raises or bonuses.

While I am paid well and enjoy my work at present, the scarcity of jobs even in programming which allowed working from home made it almost a guarantee that I wouldn't easily leave my current employer unless things went incredibly bad.

It is THAT BIG OF A DEAL.

To understand. I used to commute about 1 hour each way to work. The office was in a suburb of Toronto. People questioned why I would come so far for work. But, when I asked them how long it took them, the average was about 45 minutes. And these people lived a fraction of the distance I did. Even commuting from almost 100KM away didn't land me a much inflated commute time. So, what comes next applies on almost the same scale to just about everyone in that office.

When I was able to work from home I gained back 2 hours a day. Every day. If you assume 8 hours of sleep then 2 out of the remaining 16 hours is 1/8th of my waking life during the work week. On top of the half already consumed by actually being at work. It made HUGE impacts on my quality of life.

It also skyrocketed my productivity. I was happy to work. I was happy to work early or late as needed as well (provided it wasn't a regular thing). It is no big deal to work past 5pm if I'm in the middle of something. There is no looming traffic apocalypse to worry about or worry of not getting in until after 7pm if something goes wrong. And, extra 5-10 minutes here or there is just that.

When I worked in the office I would find excuses to duck out early. If I couldn't do that, I'd drop what I was doing, mid line of code sometimes. It would then waste productivity in the morning when I got back in and needed to get back into that same frame of mind.

BUT. While it IS that big of a deal. I wouldn't have taken a pay cut. I'd have accepted the privilege in lieu of a raise maybe. But, I have bills to pay already. My cost of living is set, and it has adapted to what I bring home on a regular basis.

And, if something like that happened in the post COVID-19 world, I would just seek an employer who would pay comparably AND allow remote work and never turn back.

A lot of that is predicated on experiencing what a drain on your time working in an office is first hand. Which is why I think it should be something earned. And I think employers are within their rights to demand people come into the office. But, making anything more than periodic attendance mandatory is pushing it.