The Bay Area’s tech companies, among the region’s largest employers, were swift to send employees home to work as the coronavirus pandemic’s menace grew. They are equally slow to bring them back. Some may never require them to return.
Remote work, in the Before Time, was seen as a response to the Bay Area’s unsustainable housing prices, soaring office rents, and lengthening commutes. Equally qualified workers could be found elsewhere, or allowed to live elsewhere, and — here’s the key thing — paid less, given the region’s sky-high cost of living.
Now, distributing your workers seems like a smart response to the global pandemic. When Facebook CEO Mark Zuckerberg announced that his company would allow most of its workers to go remote, the offer had a big asterisk: Employees who moved to cheaper locales would have their pay “adjusted” (read: cut) come Jan. 1.
It seems absurd: They’re the same employees, doing the same job. If — as Zuckerberg said — you believe work can be liberated from the confines of a physical office, why does it matter where the employee lives?
This debate has been raging in the remote-work world for some time. There are two warring philosophies: One is that pay should be based on the employee’s actual location, and the other is that location shouldn’t matter.
GitLab, one of the foremost examples of an all-remote company, sets salaries based on location and cuts or raises pay if an employee permanently moves. The software company has open-sourced its formula, including a “location factor,” so other companies can copy its pay system. San Francisco, the company’s nominal headquarters, is at the top of its scale.
Some remote-work advocates say paying based on location, when modern collaboration software makes physical location all but irrelevant, is ridiculous.
“DO NOT let them ‘adjust’ your pay. You are doing the same work. Now for less?” Think3 chief marketing officer Adam Singer wrote on Twitter.
George Mathew, CEO of drone analytics company Kespry, plans to make his company all-remote or mostly remote when the lease runs out on the company’s Menlo Park office. About half of his 50 employees are based in the Bay Area; the other half are already remote. The company started hiring a distributed workforce a while ago to tap experts in fields like machine learning, Mathew said.
He doesn’t plan to adjust salaries if his Bay Area employees move, but he does consider the cost of living at a job candidate’s current location when making offers. “In all cases, we’re going to be competitive about finding the right candidate and paying accordingly,” he said.
That’s the rub for Facebook: It may seem fair in an abstract sense to cut salaries. But it’s also not clear why an employee who chooses to move should bear the sunk costs of the social network’s fancy offices in Menlo Park and San Francisco.
When Google slowed down hiring and cut perks during the Great Recession, Facebook pounced and freely poached employees. If Facebook carries through on the threat to cut salaries, employees may grin and bear it until the moving vans pull away. When the economy improves, recruiters will be pouncing on those “adjusted” Facebook employees.
And what if Google or Microsoft or Amazon or Apple or the next richly funded startup decides not to match Facebook’s pay-cut policy? You can practically hear the roar of unfriending.
In Zuckerberg’s defense, the alternatives are not particularly desirable. His workforce was already riven by the company’s 2012 IPO, with early employees becoming millionaires and new hires watching the stock price anxiously as they waited for their shares to vest. Will Bay Area refugees continue to get paid Bay Area rates, while new remote hires get paid less? That doesn’t seem right either. Even out salaries, and the astronomical cost of living near the company’s ostensible headquarters becomes a barrier to hiring. There’s no easy answer.
“It’s a whole lot more straightforward for an earlier, mid-stage startup” to go remote, Mathew said. “For Facebook, it’s a different set of questions,” he added.
— Owen Thomas, firstname.lastname@example.org
Quote of the week
“We found the old name was a little too close to the name of the Libra payments network.” —Novi payments chief David Marcus, posting on Facebook about the Facebook-owned payments business’ attempt to disentangle itself from the Facebook-backed payments network.
Earnings look cloudy: HP Inc. and Box Wednesday, followed by Salesforce and VMware Thursday.
What I’m reading
Alex Kantrowitz on Facebook’s dilemma with coronavirus misinformation and anti-vaccine proponents. (BuzzFeed News)
Chase DiFeliciantonio on how robots will rejigger work, not just replace jobs. (San Francisco Chronicle)
Richard Nieva details Google’s plan to return to the Googleplex and other offices. (Cnet)