Is Remote Work Shrinking the ‘Geography Gap’ in Tech Pay?

For the past two years, businesses everywhere have adapted to the rise of remote work. For technologists, the ability to work from anywhere has opened up new opportunities—and the chance to re-establish some vital work-life balance. But has widespread remote work also helped equalize tech salaries between geographies?  

For decades, a “geography gap” ensured that technologists in major tech hubs such as Silicon Valley and New York City often earned more than their professional colleagues in smaller towns such as Kansas City or Phoenix. A handful of factors went into the gap, including major tech hubs’ extraordinary cost of living, the presence of high-paying companies, and relative demand for certain tech skills.

According to some number-crunching by Protocol, remote work has indeed narrowed the gap. “For senior software engineers, the pay gap between the most expensive U.S. cities and the least expensive shrank by two-thirds between 2019 and 2021, according to data from the compensation data provider Pave,” the publication wrote. “By the third quarter of last year, the gap between Tier 1 salaries and Tier 3 salaries had narrowed from 18.1 percent to just 5.9 percent.”

Data from Payscale came to a similar conclusion: Although engineer pay has risen noticeably in San Francisco and New York over the past few years, it’s risen even faster in cities such as Dallas and Minneapolis, which until recently weren’t widely viewed as bastions of tech talent.

While many companies are requiring their employees to come back to the office for at least a few days per week, many others have decided to institute an all-remote policy for at least some employees. For companies, that’s potentially a game-changing move, as it allows them to source talent from anywhere; but to prevent internal drama, they often must equalize pay across departments and roles. That trend is potentially leading to the data sourced by Pave and Payscale.

For those technologists who don’t live in major tech hubs such as Silicon Valley, this “geo-equal” trend is definitely a good one so long as it helps lift their salaries. For companies everywhere, shifting to a remote-work model can open a fresh pool of talent—so long as they have the budget to pay for it.