Should your salary be set according to the area in which you live?
This was the question raised earlier this week when Facebook founder, Mark Zuckerburg, discussed the organisation’s plans to move towards remote working in the post-pandemic era. In a public livestream, Zuckerburg explained that over the next five to 10 years, Facebook could see 50% of its workforce move to working remotely. Around 40% of its current workforce are interested in working remotely full time, with 75% of this group saying they might want to move to another location if they are no longer tied to a physical workspace.
For those employees who move away from Silicon Valley, however, the organisation has indicated that salaries could be based on an individual’s location. Those that opt to move to areas with a lower cost of living, therefore, could earn less than colleagues in more expensive locations.
But how sustainable is this as a long-term strategy? To some degree, this approach already exists in the UK with many London-based employees receiving the London weighting and the London living wage set at a higher rate than for the rest of the UK to reflect the higher cost of living in the capital. But could this be implemented more widely across a nation in line with regional differences in the cost of living?
On one hand, freeing individuals to live wherever they choose, rather than being tied to specific locations for work, could help to boost smaller local economies. There is also the motivational aspect to consider. Employees who are able to live and work where they choose, with the flexibility to organise their working lives to suit their personal circumstances, may be more likely to demonstrate higher levels of engagement, productivity and loyalty to their employer.
However, on the other hand, how could organisations justify paying colleagues of equal standing, doing the same work, different salaries purely due to where they live?
This also begs the question would this make it easier for competitors or other employers in the area to poach employees? If a region is known to be an area in which a specific employer deems it appropriate to set lower levels of pay, could this open the door for others to offer higher salaries to remote workers who are based there?
As Zuckerburg himself said, it is still very early days in the move to greater remote working for many organisations and, within Facebook, there are a number of complex issues to work through before a final policy can take shape. It will be interesting to watch how this unfolds and whether pay variations based on employees’ locations has a place in its final policy. But, where Facebook leads, I have no doubt other organisations will follow.