Major Companies Will Cut Remote Workers Salaries

Man taking money out of his wallet

A year ago, most companies started working remotely because of the quarantine. Now, after a successful remote year, a vast majority are announcing that they’ll permanently allow their employees to remotely if they wish to do so. However, the consequence of this decision might be a salary cut off.

The pandemic and the fact that most countries went under lockdown impacted the way people worked and lived. Many employees working for big companies in cities such as New York or San Francisco paid exorbitant rent for a small space to live.

When the pandemic hit, many Americans stuck in their apartments decided to move out as soon as the pandemic regulations were more flexible. Instead of living in a small expensive apartment, they could pay the same or even less for a house in the suburbs or even in other states allowing them to have a better quality of life.

A survey conducted by GOBankingRates found out that 45% of Americans have moved since the start of the pandemic. The majority of the respondents correspond to the younger generation. 8% moved to a different state, 15% in the same city, and 16% in the same state. Only 5% moved internationally.

What Companies May Cut Salaries for Remote Workers? 

Now that offices are slowly starting to re-open, the work-from-home rate has begun to decline. But the majority of employees refuse to get back to the office, and many companies have already announced their new flexible arrangements and remote work policies.

However, major companies such as Facebook, Slack, Redfin, Twitter, Strip, VMWare, among others, announced that they’d be cutting salaries off from those employees who moved away from their head offices in the San Francisco Bay Area.

For instance, Stripe said they would provide those employees who want to move out with $20,000 to help them with their moving costs, but after that, employees will receive a pay cut by 10%.

Furthermore, Facebook was one of the first companies to take action when it comes to remote salaries. According to CNBC, Facebook’s CEO, Mark Zuckerberg, stated:

 We’ll adjust salary to your location at that point for taxes and accounting purposes. There’ll be severe ramifications for people who are not honest about this.

Mark Zuckerberg

This type of measurement is not only taking place in the U.S. but also in the U.K. According to a Citrix survey that interviewed 1,000 UK office workers, 27% are willing to accept a pay cut between 15-25%, with a similar number (26%) willing to take a pay cut over 20%.

The Regional Vice President of Citrix in the U.K. and Ireland announced:

We’re now in a world where employees have seen the potential that remote working holds to improve their work/life balance – so much so that they’re willing to forgo a significant portion of their salaries to achieve this on a permanent basis.

Darren Fields

Hiring remote workers has been an attractive option for startups and companies who want to hire talent at lower costs. They can look for cities with a low cost of living and pay an employee accordingly. However, now that on-site employees experienced the benefits of working remotely, they want to continue that way. Consequently, companies are indeed providing remote work arrangements, but they have also started to make salary adjustments. 

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