When we look back, 2020 will certainly be the year that technology companies finally had a necessary reckoning with the concept of remote work. For years, many technologists insisted that they could do their jobs from home, even as their employers spent millions of dollars—sometimes billions—on fancy offices designed to keep them at their desks for as long as possible.
The COVID-19 pandemic changed all that. In its wake, Facebook and other companies have announced that technologists can now work from home—but if they move to an area with a lower cost of living, they’ll face a pay cut of some sort. In addition to Facebook, VMware and ServiceNow have either implemented or publicly mulled the idea of compensation reduction for some remote workers.
Not all tech firms are tying remote work to salary reductions. Twitter, for example, was one of the first companies to announce that the majority of its workforce would now operate from home—but hasn’t (yet) said that it would cut the pay of an employee in San Francisco who decided to move to, say, Boise.
So here's the question: Would you take a pay cut in order to work remotely?
Now let's look at the broader picture: How would such a pay cut (hypothetical or otherwise) actually impact currently software engineers’ bottom line? As an example, let’s look at how much entry-level software engineers get paid at Facebook, VMware, ServiceNow, and Twitter, the companies we mentioned above; for that data, we’ll turn to levels.fyi, which crowdsources compensation data from employees. Yes, that’s not the most scientifically accurate way of determining salary, but the data from levels.fyi usually aligns strongly with other crowdsourced-salary sites (such as Glassdoor), which suggests it’s in the right ballpark:
None of these companies have offered guidance on how much they’d potentially cut the salaries of remote workers, although the ultra-high cost of living in the Bay Area (where these companies are located) suggests those cuts could be quite deep and still allow technologists to maintain the same standard of living in many cities across the United States. Last year, Business Insider used an online cost-of-living calculator to show that, in a number of cities, the cost of putting a roof over one’s head was 10 percent to 25 percent less than in San Francisco.
Now take a look at the numbers in the chart above—and keep in mind that, for experienced technologists at those companies, total compensation can easily go twice as high, especially when the firm’s stock is doing well. A 10 percent or even 25 percent cut likely wouldn’t impact them materially if they moved to an area with a lower cost of living—the question is, would they willingly submit to such a reduction?
All polling data suggests the answer to that question is “no.” Throughout Dice’s ongoing COVID-19 Sentiment Survey, technologists said again and again that they were 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 total, 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.
As Blind (which anonymously surveys technologists about a variety of issues) recently reported, a notable portion of technologists would be willing to take a pay cut in order to relocate and work remotely:
However, virtually none were willing to take a pay cut of more than 20 percent, and relatively few were open to even a 10 percent cut. Again, there’s a general sentiment among technologists that they’re more than capable of executing on their daily tasks from home, and there’s no real reason why they should be financially penalized for that.
If companies want to pay their technologists less for remote work, in other words, they might get away with a slight reduction, but it’s very clear that employees are unwilling to suffer significant cuts, even if their salaries are quite high. Would you take a pay cut to work remotely? (We'll publish the results of the above quiz in a future article.)