Some Silicon Valley companies are suggesting workers who relocate to remote locations should have their pay reduced to reflect their new lower costs of living — and employees are none too happy about it, the Wall Street Journal reports.
“In an era where companies rain free food, massages and yoga studios on their software engineers, the cold rationality of geography-based pay risks alienating employees used to being courted,” the WSJ article states.
COVID-19 has added added fuel to a worker exodus from Silicon Valley that was already underway due to the region’s stratospheric housing costs.
The WSJ quoted a corporate headhunter who questioned whether the practice is good for employees over the long term, especially if it impairs their future ability to earn high salaries.
“The cost of living usually falls more than the paycheck,” Brian Kropp, research chief of the human-resources practice at Gartner Inc., told the WSJ, and even with a 10 percent or 20 percent pay cut, software engineers can still live a more opulent lifestyle in Austin, Texas, or Nashville, Tenn., than in San Francisco.
Employees have a negative response to the practice, though it is often “more emotional than rational,” the WSJ quoted Kropp as saying.
The federal government has long paid employees at different rates based on geographies’ cost of living. For the top-paying federal pay grade, G15, workers in the area deemed most expensive make 16 percent more than for the average of the 54 geographies — $154,687 rather than $133,101 — prior to any additional compensation. The top federal pay location is San Francisco.
New York is second, with a G15-grade worker making $146,529. Houston is third, at $145,807. Los Angeles and Washington D.C.-Baltimore follow close behind.
The lowest-paying regions for G15-grade workers are in the Southwest and Midwest and make around $127,000.
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