Wage Changes For Remote Workers: How Big Corporations are Planning Pay Cuts Across the Board
The threat of remote worker pay cuts is upon us — what can we do?
Now that 55% of companies offer remote working in some capacity, some companies don’t want to shell out for expensive office spaces (including megacorporation campuses like Facebook Menlo Park and the upcoming Google mega-campus) and big-city wages to folks living in small towns.
We have already seen that American corporations like Google, Facebook, and Twitter have slashed their employee wage packets because they have adopted remote work full-time. But is it right that remote work employees should face wage discrimination simply because they don’t live in such an expensive area?
As remote workers and freelancers alike start to worry about a potential pay cut in the future, we investigated how big business is planning to bite back.
Why Do Corporations Want Pay Cuts for Remote Work Employees?
Why are wages getting cut when stocks prices rise higher and higher?
There are a number of reasons for the proposed pay cuts that companies like Google and Facebook are rolling out, but should remote workers meet their employers in the middle? When companies are boasting record profits, why are some of them asking employees to reduce their wage demands?
Compensation packages
If an employee lives outside of a high-cost area, they don’t need such a large wage package to account for the cost of rent, a mortgage, and other living expenses. For previously people commuting into these areas, they no longer need to pay tolls, buy train tickets, or account for fuel in their workday.
Cutting the supposed equivalent out of an employee’s usual paycheque means that the company only cuts what we might call “a compensation package” instead of just slashing the overall wage.
The Expectation of a Longer Workday
Although this does not technically change employees’ pay, it does mean that salaried workers are paid less overall. They are doing the same job for longer without appropriate compensation. Over the long term, this leads to corporations getting more from employees without fairly compensating them.
Covering for the Non-Remote Workforce
Security guards, healthcare workers, tradespeople, fast food workers — these jobs cannot be done remotely. Because not every job can be made remote, there is a growing sense of unfairness sweeping the remote work debate.
For Goldman Sachs, for example, the wages spent on security guards and cleaners are now largely wasted. If mega-corporations don’t need those employees, we could see growing unemployment as less privileged workers find themselves laid off.
Control?
According to some (especially the workers’ rights-orientated subreddit, /r/antiwork), there is a more nefarious reason — control. Multiple hostile attitudes have cropped up since remote work became the new norm, including Goldman Sachs CEO David Solomon describing it as an aberration, not the new norm!
Forcing people to go back to the office gives CEOs exactly what they want. Are remote workers prepared to give that up?
A Case Study: Google Employees in the US
Google faced controversy in August 2021 when it came to light that Google employees doing the same job may be paid differently depending on their area. Google doesn’t seem like the kind of company that needs to save money, so why is its pay now determined by location?
Google’s internal salary calculator showed one Google employee that they would lose up to 10% of their paycheque by choosing to work fully remotely instead of commuting to Google’s Seattle office.
One employee from Connecticut would receive a 15% pay cut to their prior wage if they chose not to commute to New York. For a locally-based worker, there would be no plans for cutting pay, however.
What does Google have to say about this?
A Google spokesperson came out to say that Google’s compensation packages have always been based on the local market rates, but why? Sociology professor Jake Rosenfeld said that Google can obviously afford to pay the full rate and had no problem doing so while an employee works on site. Why cut pay now?
Is Google the Only One Trying This?
Google is not alone in pursuing reduced wages and compensation packages. Facebook, Slack, Gitlab, and Twitter have also explored cutting existing wages or using local-market-based wages for those working remotely. For those who choose to stay at home permanently, this could lead to long-term consequences if they lie in an area with a weak local market.
What Can Remote Workers and Freelancers Do?
For people determined to leave the two-hour commute behind them, standing up to remote work pay cuts is a key concern. Depending on where you live, you might find that you need to change your approach to work in order to get paid what you deserve while you continue working remotely.
Look for Location-Agnostic Companies
Some companies describe themselves as location-agnostic — they don’t care where you live, this is what you get paid. Many companies (especially those that have a history working with freelancers) take this employee-friendly approach.
Be open to working with smaller companies such as Reddit or Zillow to work around location-based discrimination.
Job-hopping 101
Climbing the corporate ladder has always been hard, but now moving from job to job seems a fundamental part of increasing your wages. Remote work has made it easier for people to find a new job without worrying about distances to offices or even relocating to a new city.
Avoid the bureaucracy of promotion schedules or potential wage cuts. Find a new company that isn’t trying to nickel and dime you.
The Legality of Sudden Pay Cuts
Despite an unnamed member of Parliament in Britain stating that “if people aren’t going into work, they don’t deserve the terms and conditions they get if they are going into work”, a sudden pay cut could be illegal.
Using the UK as an example, sudden and forced pay adjustments can lead to lawsuits concerning unlawful deductions from wages. Read up on your local legislature and find out what rights you have to stop mega-corporations from playing with your wage packet.
The Freedom of Freelancing
The Covid-19 pandemic has shown us that freelancing is a breath of fresh air for people who are tired of this type of corporate politics. Many people have found greater job satisfaction in being directly paid for all that hard work they put in over the course of a week.
Although freelancing needs responsibility, grit, and determination, being able to walk away from unsatisfactory wages (especially those determined by location!) is a bonus for those who are sick offices and commuting into the city.
Resisting Pay Cuts in the Remote Work World
Whether you’re working in a New York City Office or in a digital nomad hotspot like Azerbaijan, Georgia, or Estonia, the possibility of having to take a pay cut is a real worry for remote workers right now. When even a Google employee isn’t safe, we need to think about the knock-on effects for remote employees at smaller organizations.
From the remote employee perspective, instigating work from home permanently brings a myriad of life-improving factors. Because workers around the world are more prepared to tackle the big issues with their employers, the pay cut question might be more difficult for employers to bring up.
With the continuing growth of freelancing and digital nomadism, maybe now is the best time to break out on your own. As more people go remote, more people get to decide how they work.
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Originally published at Upstack.co on Feb 6, 2022, by Austin Miller.
