Spotify Remote-Work Policy Highlights Debate Over Tech Salaries

As more tech companies embrace remote work for all employees, a key question is arising: Should those companies cut the salaries of technologists who decide to move to areas with a lower cost of living?

Facebook kicked off this debate last year when it announced that nearly all employees would have the option of remote work, even after the pandemic ended. However, those Facebook employees who wanted to move from, say, Silicon Valley to Boise would need to take a cut in compensation commensurate with their new residence’s cheaper costs.

Soon enough, news leaked that other companies were considering similar measures. VMware, for example, reportedly told employees that moving from the company’s Palo Alto, CA headquarters would result in pay adjustments; for example, anyone moving to Denver would need to take an 18 percent salary cut.  

ServiceNow CEO Bill McDermott suggested in public comments that not cutting some remote workers’ salaries would weaken corporate culture: “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.” 

But technologists, as you might imagine, absolutely hate the idea of taking a pay cut. According to Dice’s ongoing COVID-19 Sentiment Survey, conducted during Summer 2020, technologists everywhere are very highly opposed to taking any kind of pay cut in exchange for remote work. In survey after survey, roughly three percent said they’d be willing to take a 15 percent salary cut, while only one 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. 

Given the apathy toward any kind of pay cut in exchange for remote work, it stands to reason that any firm promising to avoid such cuts will have an advantage when it comes to recruiting remote talent. Spotify, for example, just announced that it would give all employees the option of full-time remote work; and according to Business Insider, the company won’t cut those remote workers’ current pay rates. In other words, a Spotify employee in San Francisco could move to Louisiana or Oklahoma without having to sacrifice a portion of their paycheck.  

If more companies embrace paying remote workers the same salary regardless of location, that could give technologists a lot of leverage when it comes to negotiations over compensation and work modes. If you have the right mix of skills and experience (especially in a specialized arena such as machine learning and A.I.), you might have the leverage to make virtually any company bend to your compensation needs.