These Tech Companies Want Pay Cuts for Remote Workers

In the wake of the COVID-19 pandemic, many companies may decide to make work-from-home a permanent option for employees. After all, remote work offers benefits to employees and employers alike. However, some of these firms may attempt to force those remote workers to take a pay cut of some sort, and it’s an open question how those workers will react.

VMware is the latest company to offer its employees the chance to work from home, even after the pandemic subsides and employees nationwide begin heading back into the office. However, if those employees choose to move to a place with a lower cost of living, they’ll face an adjustment in pay. According to Bloomberg, which quoted anonymous sources within VMware, an employee moving from Palo Alto, California (where VMware is headquartered) to Denver would need to take an 18 percent salary cut; moving to Los Angeles or San Diego would translate into an eight percent cut. 

VMware senior vice president of human resources Rich Lang defended the practice by saying that employees who move to more expensive cities could get a raise to compensate for pricier rents and mortgages. When it comes to the U.S., though, Silicon Valley and San Francisco are generally viewed as the most expensive places to live (with New York City close behind), so any adjustments will likely be cuts. Will employees who previously made a certain salary in Silicon Valley see any kind of adjustment as fair? 

ServiceNow, which makes cloud-based enterprise software, is also considering whether to adjust the salaries of employees who move from Silicon Valley. The company’s CEO, Bill McDermott, defended the potential to cut salaries. As quoted by Bloomberg:

“I don’t believe we should have an environment where management is not involved with those determinations, because what you could get into here is a situation where employees then become the decision-maker in working literally from anywhere, and you would have a hard time organizing and holding together a culture if that was the case.” 

If we’re following McDermott’s logic correctly, not cutting salaries for remote workers in cheaper cities would somehow translate into a weakening of corporate culture. 

Meanwhile, Facebook was one of the first tech giants to announce that its employees would no longer have to head into the office on a daily basis; it also stated that employees who moved away from Silicon Valley might need to take that cost-of-living cut. Contrast that with Twitter, which announced its own remote-work plans at roughly the same time—but hasn’t yet said whether employees will see their paychecks reduced if they move away from the West Coast. 

And here’s where things get interesting: According to Dice’s ongoing COVID-19 Sentiment Survey, technologists everywhere are very highly opposed to taking any kind of pay cut in exchange for remote work, especially since the majority have already been doing so for months. In survey after survey, roughly 3 percent have said they’d be willing to take a 15 percent salary cut, while only 1 percent would take a 25 percent cut. Around 76 percent, meanwhile, have said they wouldn’t take any kind of cut in exchange for remote work. 

Those numbers suggest that any company trying to take pay away from remote technologists will have a fight on its hands, especially if those technologists have in-demand skills that a company can’t afford to lose. Combine that with the cost of living on the rise in many cities, and things get really complicated. 

“It doesn’t matter that ‘pay is always based on location,'” an anonymous technologist at Hulu recently told Blind, which surveys technologists about current issues. “That old way of thinking needs to die because it exploits labor. The employee’s labor provides the same value regardless of working location. The circumstances changed, so we need to force things to change as well. Don’t accept a pay cut for changing your location. Ask the company tough questions. Is my value to the company less if I live in North Carolina or Colorado? If they won’t budge, quit.”

But some technologists are willing to consider a company’s offer of lesser pay for more geographical freedom. “I’ll gladly do this,” a VMware employee also told Blind. “It’s only a reduction on base, and base makes up half of my TC [total compensation]. So a net 6.5% decrease in my TC to move to a place where houses are 20% of the price and taxes alone make up ~5-6% difference? Sign me up.” 

9 Responses to “These Tech Companies Want Pay Cuts for Remote Workers”

  1. …would need to take an 18 percent salary cut;

    I see it the other way. The company is using my space, utilities and equipment. I figure that would mean about an 18% increase in salary to properly compensate me.

  2. If they are that desperate for cost savings, they should get rid of the real estate and all the utility bills that come with it. The job is worth the pay, not because the person is traveling to some distraction-riddled torture chamber called an “office”, but because the person doing the job is worth it. Remote work has proven to be a much better dynamic for human psychology and the people who work from home do a noticeably better job in most fields. You want to pay
    less, you are going to get an inferior product as more people start splitting their time to make up the difference in pay.

  3. Annie Wallace

    It is quite logical for corporations to reduce pay for WFH (work from home) aka ‘remote’ workers. In fact, they should reduce the pay by following COLA stats. That is, if a tech worker is being paid “big city pay” because it costs $3800/month for a one-bedroom apartment in a ‘big city’ and that tech worker chooses to relocate to ‘small town america’ or a farming community where a 3-bedroom HOUSE rents for $300-600/month, that’s a built-in benefit not only to the employee but the corporation as well. True, the employee is using his or her own space for work-related activities, but as a longtime leader (Director to VP to C-level executive) I can tell you that the only person I ever knew who could REALLY work from home without CHEATING the company for a full eight-hours work is, well, ME. I’ve been WFH (remote) for more than 12 years now. It’s true I often wear, for days or weeks at a time, the same T-shirt and shorts or jeans ripped, not by ‘fashion’ but by ‘old age’ and worn-out material when I pad, in my slippers, from my bedroom to my office (my living room) but hey that’s another savings for me, not the company. My good clothes are now 12 years older but they typically hang inside suit-saver bags in my closet for years at a time. Ditto for those corporate-type shoes. (Say, do women wear stockings any more? I just don’t know.) When necessary, for a skype or zoom meeting, I put on my ‘corporate hair’ (a rather expensive wig which is quite reminiscent of Hitlery C.’s hairpiece), and a silk blouse but I keep the shorts on. Oh and I still have a tube of lipstick for really ‘formal’ C-level board meetings. (Insert smirky-face icon here) Now, should the corporation pay for the fact that the remote worker is using his/her own space, utilities, and drinking their own coffee? Yes. I think that a typical remote worker should pay for ‘basic’ wi-fi and the corporation should foot the bill for ‘highest available’ wi-fi or satellite connectivity for remote workers. Coffee? Who the bleep drinks coffee (which is extremely bad for the human body) when they don’t have to? I have set my own work hours since 2008. I never schedule meetings before 10:00 am (my time zone) but I WILL schedule meetings for 11:00 pm (my time) for international meetings. Early in the morning, I work on my own projects (novels… I am halfway through a 5-book series), articles and my political blog; I grow my own organic vegetables, I swim one mile a day, I practice my music (harmonica, trumpet, guitar) and I teach a course on Software Test Engineering (that I wrote) to Wounded Warriors and Wounded Police Officers… for free. BUT my employer gets far more than 8 hours/day work from me. I live alone so this absolutely works for me. BUT it is my experience that workers who are young enough to have children under 18 living in their home, or old enough to have their kids’ children living in their home, DO NOT GIVE EIGHT HOURS WORK FOR EIGHT HOURS PAY. You can argue with me, you can bristle, but I’ve been managing teams for several decades now and I know the truth. Those of us who are ‘without children at home’ are the REAL workers who have no distractions and can work their paid-for-hours with wiggle room for their own avocations and projects. I get an hour’s swim and a 2.5 mile exercise walk five days a week AND I have enough time for writing and making music. AND I do it without shirking on my paid-for-work duties. I’m relaxed all the time, I’m never yawning and needing to inject caffeine to keep the edge sharp. So I was quite willing to cut my own pay, voluntarily, in exchange for getting to work from home. I don’t live in a big city anymore, my horse can stick his head into my living room (my work space) any time he wants to socialize with me or will me to give him a carrot, my dog is sleeping at my feet, and my pet ferret is curled up between my dog’s paws. He’s also sleeping. I’m wide awake and now it is almost time for that first Thursday meeting (set for 10:00 am). Life is good. PS I haven’t been to the hairdresser in 12 years. PS I have 10 minutes to post this comment in a slightly revised format, on my blog. BuhBYE

  4. Nope. Salaries are compensation for the work performed. Where the employee does the work from should have no bearing on salary as long as the work is done and done well.

    It’s just one more way (in addition to H-1Bs) to screw over workers, put a damper on social and economic mobility, and add more lining to shareholder pockets.

  5. Kansas Dave

    To those who are currently working at these listed companies, understand this….you all deserve to be paid less. Why? Because none of you has any sense of standing up for yourselves treats you as the Serf you are. It’s obvious to them that you’re more than willing to do whatever they say, they don’t ask you they tell you and they know it. They don’t see you as anything other than a depreciating asset. So go on down to a sporting store and grab yourselves some well fitting knee pads because you deserve to know your place, on your knees and bring some Vaseline because you should pay for that experience also.

  6. Kansas Dave

    The main article mentions “quit.” You can qualify for unemployment benefits due to a “Constructive Discharge.” Meaning, you can quit because of this. But I recommend to get as much interesting company information and post it on the internet and perhaps consider really making it an endeavor to find things or untangle a 300 mile ball of string, you know exactly what I mean. For the group who created this proposal, well they need a special party where they are the guest of honor. One where they are bound, blindfolded and let your imagination go from there. Get their names, figure out there travel habits and go right for them. Yes, you will feel so much better and they will understand how much you appreciate them for proposing and implementing this awesome savings reduction. But don’t stop there, go for the Board of Directors as well. Be sure not to leave the ones who approved and support the idea as success has many children.

  7. The company is actually saving money already if you are working from home since they don’t have to pay for the space you occupy, or the electricity used to run your computer, lights, HVAC, etc. They don’t have to pay for your office or cube since you aren’t there anymore. You, on the other hand, have additional expenses, since you probably will upgrade your internet connection, plus you now need to provide your own office space and the IRS no longer allows you to take a deduction for it! They should give you a raise, or at least reimburse your expenses. OR… You could become a contractor (like me) and factor these expenses into you bid rate.

  8. The one overlooked problem is that no one would apply for jobs except at companies located in high cost of living areas. Why would I apply for a remote position here in my city making 70K when I can get hired from a company in the Bay area and make well over 100K(while still living here)? It would even be worth moving to live in that area for 6 months or so and then leave after I met whatever requirement a company puts on working remotely.