should employees be paid differently based on where they live?

by Alison Green on August 4, 2022

It’s the Thursday “ask the readers” question. A reader writes:

I’m curious about your thoughts on a question some of the smartest people I know fundamentally cannot agree on: should a salary be based on the value of the labor, or the subsistence of the laborer?

For context, I recently left my last job after 5 years — a large national nonprofit with competitive salaries in a high cost-of-living area. Prior to Covid, in-person work was very much the norm, and most employees lived within commuting distance. During the pandemic, the vast majority of employees went fully remote, with the exception of a few designated “on-site essential” technical staff. When it became clear that Covid wasn’t going away, the company formed a committee (that I served on) to help come up with equitable policies that would reflect the “new normal” of flexible and remote working for the future.

While evaluating the financial implications of remote work for the company, questions around salary came up, and sharply divided committee members’ opinions. It boiled down to: If an employee living in a high-cost area was hired at a certain salary, elected/got approved/was required to begin performing work remotely during the pandemic, then chose to move to an area with a lower cost of living — with no other changes in the terms of their employment — should that employee be asked to take a pay cut? Think Google vs Reddit.

Rationalizations in favor:
– Location-blind salaries could create a perceived inequity between remote positions and hybrid/in-person positions, with remote employees able to get more “bang for their buck,” so to speak, by moving to a much cheaper location that wouldn’t be possible for an employee that needs to commute.
– Labor is already regionally banded across many (if not most) industries — a project manager in Arizona is not going to make the same salary as a project manager in NY — so the “market value” of a job changes when employees move.

Rationalizations against:
– A salary should be based on the value of the labor being provided to the company, not what it costs for any given person to survive while performing that labor; you’re paying for work, not a person.
– It’s inequitable and demoralizing to pay employees differently based solely where they live. And where does that calculation end? At a state level? City? Zipcode? Is is fair to pay residents of poorer neighborhoods less than those in wealthy neighborhoods, because it’s cheaper to buy a house there? Seems like a minefield of DEI issues at play in that evaluation.

Honestly, I’ve heard really compelling arguments on both sides of the coin. On principle, I firmly believe in paying people what their work is worth, no matter what. But real-world application can make things really hairy in practice, and I know it’s not always helpful or wise to ignore reality in favor of principle.

I honestly don’t know; like you, I think there are compelling arguments on both sides. So let’s throw this out to everyone for opinions in the comments.

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  1. Less Bread More Taxes*

    Why not both? Establish ranges for different locations and then pay based on employee value within those ranges.

    1. Less Bread More Taxes*

      I want to add a bit more context. I am American but live in Europe. Half of my team is local and half is in the US. The US half is paid probably double what my local colleagues and I am paid. Sometimes I feel an extra squeeze because I have US-sized student debt while my local colleagues do not. However, I am an exception. In general, I think everyone on the team has roughly (when you conpare people of similar levels) the same amount of spending money when you include taxes, healthcare, childcare costs, education costs, housing costs, and food costs. In that sense, it is fair.

      The way I view it, my salary affords me the same amount of spending money that my US-based colleagues get, and *that’s* what’s important, not the number on my paycheck.

      1. frame*

        oh man, i feel for you. when i graduated i got an offer in Vienna i would have loved to take, but i had student loans so i just couldn’t make the numbers work.

        1. Less Bread More Taxes*

          Yeah it’s hard to pull off. I tried to live and work abroad right after college and it wouldn’t have been feasible at all. I have a bit more experience now and can get a higher wage which is workable. I also am on a payment plan which depends on my income, so that helps.

          1. No Longer Looking*

            If only they would provide an interest-rate plan based on your income, people might be able to someday pay off their loans.

              1. Lanlan*

                I think it’s more that the interest rates stay the same while the repayment rate is based on income.

                1. nora*

                  indeed. this is how someone like me now owes more on my loans than i started with, even after ten years of payments.

                  another insult to injury is that the loan incentive programs for public service *require* you to be in an income-based plan, which is not the best choice for a lot of people is basically the only solution offered (and very rarely thoroughly explained).

      2. Sparrow*

        Yeah, this is the mentality in my brother-in-law’s company, and honestly it does make sense to me. They’ve essentially decided that the appropriate post-tax pay for a position is X; if someone in that position is required to move to a HCOL area for their job, a premium is added to their overall salary to account for the difference in living expenses. If they transfer back to a lower COL area, the premium is removed. The aim is for individuals in the same roles to have roughly the same take-home pay, regardless of where the job is located.

        I do think OP’s situation is more complicated because the company is not dictating where the employees are located. It’s also tricky to implement this kind of policy retroactively. If people are choosing to move out of a HCOL area knowing that their salary will dip, I think that’s fine, but springing it on them after the fact is not cool.

        1. Alan*

          That’s what my employer says too. They pay more to cover the high cost of living where the company is located. But if move away (more than about 100 miles away right now I think) you take a cut because the cost of living is much less.

        2. NotATerribleRecruiter*

          This is essentially what the State Department does as well, and it’s always made sense to me. They have a base salary but depending on what embassy you are assigned to you can get hazard or COL adjustments. For example: if you are assigned to Switzerland you will get a quote a large COL adjustment as it’s phenomenally expensive to live there.

          My old company had well established pay zones that were based on local market and COL, and I always thought it was fair (although there will always be some blind spots – e.g. one complaint I heard from a fellow employee: NC and SC were different zones but if you live in certain SC cities, you’re in suburban Charlotte, so the COL is more in line with NC than SC. This employee wanted to move 5 miles across state lines but her salary would have been adjusted.)

          To me the biggest problem with not adjusting pay for location, is that is can really harm the local job market/economy. If you live somewhere with a reasonable COL where a family can buy a decent home on a 75,000 salary and then people with the opportunity to working remote move there and make 150,00, there are going to be substantial cascading effects (just google what’s happening in Boise).

          1. Clemgo3165*

            This makes sense to me. A standard range for X position with a COL adjustment for a requirement to work/live in a high COL area. In this instance, anyone who is required to work at the office and remain in the local commuting area should see the COL adjustment rather than adjusting wages down for those who WFH outside of the area.

            The State of Virginia does this. A basic standard for various roles, but an adjustment for those who live and work in higher cost areas. It’s always made sense to me because the COL is significantly different in Northern Virginia vs. Southwestern Virginia.

            1. Chilipepper Attitude*

              I think the idea of a base pay with a premium or COL for location makes the most sense.
              You don’t “lose” pay if you move to a cheaper area, you lose the premium.

              1. Ellie*

                I agree. My company has employees across multiple states, and pays them all the same wage. It makes it easy when people relocate, but it is fiendishly difficult to hire staff in a couple of locations, because the company does not pay an adequate wage there. Its not as fair as they like to make out. A location bonus makes the most sense.

          2. CommanderBanana*

            This is a great comparison, but this model is for organizations that are sending their employees to specific places. If that’s not the case, how does that work? I think this question is going to come up more and more as remote working becomes (maybe?) the new normal.

            1. JM60*

              I think if it genuinely doesn’t matter where the employee lives for the position, and the employer doesn’t make an employee live in a high COL area, then the employer should pay the same regardless of whether the employee lives in a high or low COL area.

          3. Completely Catty*

            This is also the case for US-based positions in other federal agencies. You get a base salary, then locality pay. If you are approved to move to another area, or your position is already fully remote, then you get the locality pay based on where you actually live. I have a friend who negotiated a move from a high col area to an even higher col during covid when everyone was fully remote, and their locality pay was adjusted.

          4. HR in the City*

            I live in Montana and this what has happened here. Missoula is being called the next San Francisco because of the cost of housing has gone up so much in the last two years. If I had to sell my house now there is no way that I would be able to stay living where I am and that means I would be quitting my job. In addition to not being able to buy anything the rent is so might it would at least double my monthly housing (going from $1,000/month mortgage to a $2,000/month rental). Missoula wasn’t known for the greatest wages to begin with so this makes it worse.

            1. Smithy*

              I used to work for an INGO that also had US offices in a range of cities including Missoula. When COVID hit, a lot of HQ staff left their high COL cities for a number of cities including places where the organization had other offices and paid on a different scale.

              Because there was a very clear internal organizational case to be made of someone who’d been hired in NYC/SF moving to Missoula and then what their salary would be like compared to Missoula staff – when they did ultimately implement bands there was some (if begrudging) acceptance.

              Where I think that employers totally forgoing this kind of process really need to be careful – especially NGOs that may ultimately have tighter budgets – is how truly remote remote can mean. I was hired in September 2020 by another nonprofit that told me I could live anywhere in the US. By this summer, we’re listing metro areas where someone can live. Enough business travel and in-person gatherings are back, and while we’ve decided a certain list of cities work – none of us want to be caught evaluating whether or not Honolulu, Bangor Maine or any other given rural location actually works on a case by case basis.

              Certainly some individual jobs/teams can be 100% remote with minimal to no travel ever – but as a whole organization – I think before committing to that level of flexibility, I’d ask whether you’re really going to have almost no jobs that are location dependent and if “anywhere” actually means “anywhere”. Or just relatively close to a selection of lower 48 international airports….

            2. Anon 4 now*

              I’m in Rapid City, SD, and just moved here this summer. I’m paying $500 more in rent a month for a place 800 sq ft smaller than I had in San Antonio, TX. We moved because of the Air Force and the COL adjustment did NOT accurately reflect the exponential increase in rent over the last two years. The market is also tight enough we had to begin renting two months prior to the move so that we would even HAVE a house. It’s been ridiculous.

          5. KM*

            You articulated my thoughts exactly, especially your comments about the impact on the local job market/economy. I grew up in a very low COL area and I’m hearing about the remote work/relocation impacts frequently from friends and family, especially as it relates to the real estate market. I do think the LW’s situation is different as it appears that her organization didn’t previously have established salary bands/COL adjustments and I don’t necessarily think it’s fair to current employees to implement those retroactively. However, I think this makes complete sense on a going forward basis.

          6. Pete*

            The whole US Government does this. The General Services Administration (GSA) sets base pay for every role in the Federal Government, and then applies locality adjustments for regions/cities based on cost of living. This actually helped me negotiate a higher salary when I moved from DC (gov job) to Seattle (private sector job), because I could point out that DC and Seattle pay is the same in the eyes of the government. For all the governments shortcomings, they do a lot of research to set and update these pay and locality adjustments.
            https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2022/general-schedule

        3. Person from the Resume*

          It’s tricky because what if it’s the reverse of the example in the letter. What if you hire someone at X salary which is fair and reasonable market value where your company is located and the remote employee decides to move to New York City because they want to live in NYC. Is your company required to pay them a lot more because NYC has such a high cost of living even though your company is getting no value from his location.

          1. Clisby*

            I, personally, think the company should pay a lot more in this case only if the company requested/required the move.

            1. Ophelia*

              Yes, agreed. I live in NYC, but work for a company in another state; I moved here for my spouse’s job (a long time ago now), and did not expect a COL change because the move was for personal reasons, not at the request of my job.

            2. Cthulhu's Librarian*

              Then the same logic should hold in the reverse direction – reductions to salary based on the employee moving to a lower cost of living area should only happen if the company has requested the person relocate to that area.

              1. Sola Lingua Bona Lingua Mortua Est*

                Do me a favor and record the meeting to post on Youtube anytime I need a good laugh.

                “Mr. Smith, as a reward for your 15 years of work for the firm, we’re promoting you. You’ll now work out of our facility in Dumpwater and will be required to live nearby. The new position carries a 50% pay raise, but as this is a low cost-of-living area, we’re adjusting your new salary down 75% per company policy. There’s a nice motel by the tree where you can stay until you find permanent lodging.”

              2. Yeah, nah*

                And screw up the economy of the LCOL areas they’re moving to just for the lols?

                The base salary is whatever you’d be paid if you lived in the middle of nowhere. The difference between that and what you make in a HCOL area is the bonus. If a company required you to live within commuting distance of headquarters back when everything was butts-in-seats, that’s why you were making so much money. Take away that requirement, well, you don’t get to make a San Francisco salary if you’re choosing to live in rural Arkansas.

                1. Stunner266*

                  I live in the UK in a LCOL area (although it is coastal and very beautiful). The problem we have had during covid is that so many people earning the big money in HCOL London have been told they can work from home so they have started buying houses and moving to my area. They are throwing down tens of thousands over asking price, and now the locals can no longer afford to buy.
                  So I 100% agree with you.

                2. pancakes*

                  Stunner266, a lot of people in upstate NY would probably agree with you on that. There are ways to address the cost of housing, though. I saw an article just yesterday — and haven’t had the chance to read it yet — about Kingston NY being the first upstate town to introduce rent control (and a rent stabilization board to review increases). It’s been a popular destination for city people who want to get out of the city, and that seems like a smart move.

                3. JM60*

                  But so many San Francisco based-companies were okay with still paying $X after their employees transitioned to being fully remote. Once the employer tells them “We’re okay paying you $X in your forever fully remote position”, they shouldn’t adjust pay based on the COL of where you choose to live.

                  It would be another thing if working remotely was just a temporary measure for the pandemic, with them being required to return to being in-person as a condition for maintaining their pay level.

            3. Chilipepper Attitude*

              If the job can really be done remotely, why limit where people can move? I get that it is extra cost to the company but they have lower costs because other employees live in lower-cost cities.

              1. Zephy*

                Even once you’re past the dinosaur micromanager with the butts-in-seats attitude, and before even considering COL-based adjustments to pay scales, the reason jobs that can be done fully remotely can’t be done from just any ol’ where has to do with the fact that the United States is really 50-odd small countries in a trenchcoat. Alison has talked at length about it, if you search “business nexus” you’ll find more info.

                Basically: if your company is based in NYC, they’re beholden to NY labor laws. If you move to Chicago and work remotely, the company is also beholden to IL labor laws, so they need to be set up to conduct business within the state of Illinois in addition to New York, with whatever licensure/registration/compliance/documentation/whatever else that entails. Most companies are not going to do all of that just for one employee. So yes, even though from your perspective your job could be done just as well and just as easily from a cabana on Miami Beach as from a cubicle in the Bronx, from the company’s perspective it’s not that simple. (If you’re not trying to work from a Miami Beach cabana, just from your living room that is also in the Bronx, the problem there lies with your Jurassic management and their lack of object permanance, not anything to do with labor laws.)

                1. LinuxSystemsGuy*

                  Yeah, we almost lost one of my employees that way. We all knew he was selling his house. We all knew that he lived close to the Connecticut border. He told everyone from me to my boss’ boss that he found a really nice place in Connecticut. We all congratulated him.

                  Then he moved and submitted his address change to HR and all Hell broke loose. Eventually it all got figured out (it was mostly state income tax issues), but it was closer to a serious problem than anyone had remotely expected for moving a half hour away from his old house.

                2. Littorally*

                  Yup.

                  I work in a regulated industry with state-by-state licensing requirements. Our field employees are licensed in the states they provide services in plus surrounding states only, because licensing someone in all states costs $$$ and an employee in California isn’t expected to have a book of business that extends to Maine. Even if they’re meeting with clients remotely (which they have been, because covid), they must be licensed in both the state in which they are physically sitting while doing their work as well as the state in which their client is physically sitting while receiving their work.*

                  Someone who ups and moves to a different state, intending to work remotely, must be licensed in that state before they can lift a finger for regulated work. We as their employing firm must also be licensed in that state. No ifs, ands, or buts.

                  *There are established industry exceptions for clients who are travelling, but these are strict and based on the time the client is out of the licensed area. No exception for the employee out of their licensed area. Covid has played hell with client residency requirements as well.

                3. J*

                  Yup. I’m lucky (?) that my employer is in NY and I’m in MO because they’ve basically agreed to do a nexus with states with worse labor laws. My team is one they couldn’t find at their price point in NY but they didn’t want a nexus with a ton of states so my team is Midwest based. If I moved across the border to IL, they’d likely decide to let me go because the labor laws are burdensome to follow for a company with HR the size of ours. So in the meantime I get the sick leave as if I lived in NY which isn’t something I get as a guarantee in my state. I’m lucky I also had a boss who advocated for me. But this is all very outside the norm, I’m just lucky to work in a niche area that is in high demand where their HQ is.

        4. Susannah*

          Yes, that makes sense – if you are asking people to move to a higher COI area, add a supplement, with the foreknowledge that it ends if the employee moves back. But you don’t just impose a pay cut on someone for moving their HOME. Even if they work from there.

        5. Lizzie*

          My company does that as well; I am in one of two HCOL areas; our other offices are not. So someone at the same level as I am, but in a lower COL area makes less than I do. And if they were to move here, they’d get a salary bump, but if I moved away, mine would go down.

        6. Drago Cucina*

          That’s what my big boss US Fed employers do. If you are hired for HCOL there is the base pay and a COL premium. But, there are categories for teleworking and remote working. If you choose to live more than 50 miles from “the office” you are remote. If you go remote to lower cost area than you knowingly give up the COL premium.

          We did have some people who chose to move to a HCOL area and wanted the COL premium. They were almost 100% told “no”. It was not a job requirement, but a personal choice.

        7. Turtles All the Way Down*

          But what if a person in the HCOL area lives with their parents, rent-free? Or chooses to have a roommate? Or is a DINK? That comes pretty close to micromanaging a person’s life choices.

          1. Nina*

            All of those things are choices about their life that they can make regardless of whether they live HCOL or LCOL…? If the company is requiring them to live in a HCOL area, it’s on the company to make sure they have roughly the same set of options as staff the company requires to live in a LCOL area, so that ‘lives with parents, has a roommate, is a DINK’ are, as far as possible choices and not the only way to survive.

          2. Lanlan*

            “lives with their parents, rent-free” — ask yourself if that’s because they can’t afford rent on their own. Ditto with the roommate. And do NOT ever penalize an employee for having a spouse but no children.

      3. Alexander Graham Yell*

        Are you me?

        So, I moved from the US to a major European city doing the exact same job. I took a pay cut to do this (approx. 1/3 of my salary) but because of benefits/lower transportation costs/etc. my quality of life/fun money budget is about equal if not slightly better.

        Based on that I’m of the same mind on how to structure this, as well – the role I perform in my company affords me a certain quality of life, not necessarily a certain salary. So if your employer is x% above market price for your high COL locations, it should be x-ish% above market in lower COL location.

        1. Less Bread More Taxes*

          That’s a great way to put it – jobs pay you a certain quality of life. I also feel very content with my quality of life right now, and I’m glad you are too!

      4. Hats Are Great*

        “Sometimes I feel an extra squeeze because I have US-sized student debt while my local colleagues do not.”

        This was a huge drag on a regional law firm’s attempt to hire for its smaller offices, early in my career. They paid Big City employees $130,000 and Small City employees $90,000, on the theory that cost of living in Small City was basically that much lower than big city. WHICH WAS TRUE … but all the new lawyer graduates had the same amount of student debt, which was often a bigger chunk of their paycheck than rent or a mortgage, and taking the $40,000 paycut to live in Small City meant 10 extra years paying off law school loans. So they really struggled to hire early-career lawyers to Small City, and clients complained about lack of service in Small City and partners complained about lack of associates to do their busywork. They had no trouble hiring paralegals, support staff, etc., in their many smaller-city offices — they were a very attractive employer! — but they couldn’t get the new lawyers they needed with the qualifications they wanted, because nobody could afford the lower-cost-of-living paycut *until they paid off their loans.*

        But the firm wouldn’t raise the Small City salaries because the managing partners had all graduated before 1985 with minimal student debt (if any!) that they’d paid off in their first year employed, and just refused to understand the AVERAGE law graduate debt is now comfortably over $100,000. (If someone had to take out loans for undergrad and law school, they might be staring down $300,000.) They said, “But we’ve always used these federal cost-of-living comparison statistics, for the last 40 years! It wouldn’t be fair to do it differently!” And then just complained that they couldn’t hire any early-career lawyers to smaller offices.

        I always thought if they had paid, say, $110,000 for the smaller cities, so there was still a cost-of-living differential but it respected the non-adjusting student loan amounts, they could have hired a lot more people. And they could have been very up front about it! “Junior associates in smaller cities get X amount to help with law school loan payments, which do not adjust to local COL. This means slower raises as you approach the 5-year mark, and we return the scale to a more accurate local COL.”

        Having lived in smaller US cities for a lot of my career — ones that are homes to companies like Dow Corning or John Deere or Rockwell Collins — I felt like they were really struggling with recruitment of employees with advanced degrees, between the thinning out of the rust belt, the reduction in educational quality in struggling districts, and in some cases the political divide. (Where a rural regional center might lean very red in general, and the only other “blue” folks would be some of the other engineers at the company.) And because fewer young adults live there, the dating scenes are really thin — I had more than one hiring manager friend complain to me that they were losing candidates because they wanted to meet someone and get married and didn’t think moving to Cedar Rapids would be conducive to that.

        Anyway, from the side of a company in a smaller-city area, I think they should really look at whether they’re recruiting locally or not — some jobs totally are recruiting local people, but some jobs you’re trying to hire someone with specialized training from a competitive regional market, and I think those companies need to look beyond simple localized COL adjustments since those employees might have non-adjusting costs (student loans) or additional costs to bear by living in a smaller, less-convenient city.

        For companies in high COL areas that are letting employees go remote, I don’t know the answer. :) But I do know that living in a smaller city can involve costs that aren’t reflected in COL statistics (convenience costs, opportunity costs … but also literally “this costs a lot more” costs), that make straight COL-adjustments less attractive than they might otherwise seem.

        1. Alara*

          Thank you for this insightful comment! I hadn’t considered the impact of student loans, etc, and it gave me something new to think about.

        2. Gem*

          This comment was so fascinating. I hadn’t really thought of this perspective before. Thanks!

      5. HA2*

        How does this look from the business side? Your conclusion makes sense, but it feels like there’s got to be some other reason too – why would the business want to pay twice as much money for half the team, when they could instead hire all-europeans and save all this money? They’re probably getting some value out of the extra investment in foreign employees? Probably?

        1. Hats Are Great*

          I work on a half-EU/half-US team, and all of us are budgeted at the same cost to the company — we in the US just have more take-home pay than our counterparts in the EU do, because more of their salaries go to taxes and state healthcare. More of our salaries go home with us, but then we have to pay out-of-pocket for healthcare, daycare, etc., that our European colleagues receive through their governments. I don’t know all the specific details of how it breaks down, but that’s the gist.

        2. Nina*

          my company is about half US and about half ‘elsewhere’ – in this industry the benefit of having US employees is that international treaties brokered by the government of Elsewhere with the US government allow only US citizens to handle certain types of data and hardware, so the way we work it is to have most of the work requiring actual expertise and creativity done by people from Elsewhere (or other countries entirely!) and the specific tasks that require handling controlled data and hardware are done by US citizens (some at our offices in the US, some in Elsewhere) who may or may not be trained or able to do much else.

          It’s a giant pain in the ass and it’s not great for the morale of the US citizen employees in Elsewhere because we all know we’re using them as a pair of very expensive tongs to handle the controlled hardware for us.

      6. Jennifer*

        I think it’s a bit different to compare American workers to European vs within the same country. While there are differences in COL, everyone in the US has to pay for healthcare. Most of us also are more likely to have student debt. If you live in a rural area, your house might be cheaper, but you will spend significantly more on gas trying to get to the grocery store (or anywhere). I’ve also found that COL estimates are often years behind. Ex: my house has doubled in value in the past 5 years, but my city is still considered a low COL city… even though my monthly payment on my mortgage is more than my rent was in a high COL city (and I don’t have a massive house).

      7. allathian*

        You mentioned healthcare, but what about other benefits? Are you taking all the PTO your European coworkers are entitled to by law or mandatory collective agreements that individual employers can’t opt out of? I do realize that these benefits don’t help you pay for your student loans, but they go a long way towards explaining why the salary range for employees is much smaller than in the US, particularly when you factor in heavily progressive taxation.

        For example, I work for a governmental agency in Finland. The president of our organization only earns about ten times as much as the lowest-paid intern (our salary bands are public information). The private sector is a different matter, but even there, compensation tends to be a lot lower than in the US, even for executives.

        1. Less Bread More Taxes*

          I didn’t go into all the details, but there’s obviously a reason that I’m choosing the lower salary in Europe – the quality of life. In my specific circumstance, I do feel that I have a better quality of life than my US-based coworkers have, based solely on vacation time. I think every time that the US/Europe differences come up, healthcare and vacation time get talked to death a bit, so I didn’t see the point in talking about those but tried to stick to salary only.

          But yeah, given the choice (which I do have), I’d much rather take the benefits with the lower salary that I get here.

      8. chewingle*

        That’s an interesting point. My UK-based colleagues make less than I do, but they get double the vacation time, so it evens out.

    2. Grits McGee*

      This is what the US federal government does- there are 15 levels of pay for general civilian competitive service positions, and then a percentage increase for localities with a higher COL than the “base”. I’ll include a link to the pay scales and locality adjustments in another comment.

        1. skunklet*

          sure…but let’s remember this… the entire Bureau of Naval Personnel was BRAC’d from DC to Millington TN in the 90s due to cost of living…

          the way the gov’t does it would not be a panacea for most companies.

          1. Elizabeth West*

            This is why I’m skeptical of it. If the company decides that having workers live in a lower-COL area, they could move the entire operation to a hellstate and then everyone who wants to keep their job is forced to go live in Gilead. This happened to my sister—she had a great job in Chicago and the company she was working for moved all its operations to Tennessee. She and her husband did not want to move there so she had to get another job.

            Besides, wages need to be higher across the board overall; they have not kept up with the cost of living in general in any location. Hellstate legislatures are also notorious for suppressing wage increases, particularly for lower-income workers, and railing against unions. Sky-high rent is a different issue but is increasingly the case even in lower-COL cities.

            1. Yeah, nah*

              Companies have this option already, though. The reason they don’t is that there are enough people who would switch to working for a competitor rather than live in Gilead that it’s not usually worth it.

              Even when they do end up moving to a LCOL area, they generally have to have at somewhat above average wages for that area in order to attract high-quality workers in the first place.

      3. Abogado Avocado*

        Grits is right! Additionally, location differences factor into travel costs that are reimbursed when federal employees travel.

        Which makes me wonder — and this is way off point — what life would be like if we all had the same standard of living, costs, etc. Interesting thought experiment, that.

      4. Former Gifted Kid*

        I think this also answers the question of “where does the calculation end?” US gov’t locality pay tables are easily available online (I think someone already posted the link). Just you those.

        2. Grits McGee*

          Yeah, I think you would need a pretty robust research/statistical program in order to calculate a “fair” COL differential for employees. The vast majority of businesses just don’t have the resources to do this.

        2. ope!*

          They would need approval from their “duty station” to move to begin with (there is a distinction in the fed system between “remote” and “local remote” where the bulk of the work can be done remotely but still requires occasional onsite visits, and where the employee lives impact if the govt is obligated to pay for their travel to the duty station) and yes, it would decrease their locality pay.

          1. ope!*

            ETA: the idea is not that is would be a “pay cut” though, in theory, the locality pay keeps their buying power roughly the same as someone in that higher COL area.

            That being said, inflation moves a lot faster than the locality table adjustments, so it’s not a perfect system. but that’s the *idea*

        3. Former Gifted Kid*

          Basically for the federal government, there is your salary and there is locality pay. Some locations don’t get any locality pay, some get a lot of locality pay. When to move to a new area, your salary stays the same, but your locality pay changes. If you move to an area with a higher locality pay, your total pay goes up. If you move to an area with a lower locality pay, your total pay goes down.

        4. Ann Perkins*

          Yes – it’s based on your duty station, so if someone is 100% telework and their duty station is their home, then where they live will dictate their locale pay.

          1. Old Fed*

            Yes, and in my situation, my duty station is my home, but I live within the local commuting area so my pay did not change when my status changed.

        5. morethantired*

          Yes. My mom was moved from Boston to Omaha and her salary was decreased in accordance to the payscale in that location, even though she was doing the same exact work on the same exact project. She knew this would happen going in, they were very transparent about it. She decided to go because if she works for this government org for 10 years, she gets a great pension and retirement benefits from the federal government. To her, it was worth the decrease in pay and they paid for all her moving costs.

        6. Rain's Small Hands*

          The company I worked for did. We had locations in the Bay Area and locations in places like Oklahoma. If you moved to Oklahoma to do the same job, your pay was adjusted downward. They didn’t generally let people move to the Bay Area – they were actively trying to move jobs to places like Oklahoma. The benefit you got was that even with the downgrade in pay, your money still went farther, and you were less likely to get RIF’d.

      6. Nynaeve*

        As long as when the company does this they are frequently updating salaries based on it. I worked for a company who had offices in the DC area and New Orleans. Prior to Katrina, the DC folks got a CoL bump to their base pay over what the NOLA folks were making. After Katrina, when the CoL in the NOLA area dramatically increased (rents more than doubled in most parts of the city), they never updated the salaries to reflect that for either office. It caused SO MUCH resentment among the NOLA staff as they saw their spending power whittle away and not be able to afford their homes anymore that almost everyone ended up quitting over it, after making multiple appeals to the owner and board about needing to have the entire pay scale system looked at fall on deaf ears.

        1. MsM*

          I really wonder whether we’re going to see similar COL bumps in some of these currently cheaper locations as remote employees move in and settle.

          1. MigraineMonth*

            It’s already happening in many smaller cities. I think it’s part of the reason that high housing prices aren’t confined to a few super-popular cities anymore.

            1. quill*

              Yeah, there’s housing speculation everywhere. I think that if a company does COL adjustments as people move to remote work they’ve got to commit to reviewing it frequently, at minimum every five years.

      7. Queen of the Introverts*

        Yup, once my sister went remote for USAID she wanted to move out of the DC area. For awhile she was trying to decide where she wanted to move to based on where she could keep her HCOL bonus (Denver? Chicago?) but in the end moved back here to Milwaukee and forfeited it.

      8. Person from the Resume*

        However I think there’s still an possibly incorrect assumption that federal employees are not remote. They pay locality pay because the organization/company requires you to live within commuting distance of the location.

        It’s a different calculation if the employee is choosing the location and the company doesn’t care except when salaries rise because employees are choosing to live in high COL areas. And then they start hiring people only living in low COL areas to save money.

        Basically it depends at least somewhat on who is choosing where the employee lives, and it’s fair that the company may say we don’t pay salaries for people to live in the highest COL areas because we aren’t based there.

      9. Storm in a teacup*

        This is similar to what the NHS in the UK does. There are standard pay scales nationally but then if you are hired to work in a job based in a high COL area then you get a supplement to your base pay to account for this. I think in this situation it may be easier to decide that your current salary scale is the base scale and for those staff who have to be onsite and therefore have to live nearby, offer a supplement to cover this.
        This way, if they change jobs within the company and can work remotely they just get the base pay.

      10. Fed-o*

        Yes, but it’s not based on COL. It’s based on what it costs to hire someone in the private sector in that market. So–Houston, for example, has a higher locality pay than Denver, where I live, even though Denver is much more expensive these days. All those petroleum engineers really tilt the scale.

      11. ThisishRightHere*

        I came to say exactly this. The FedGov locality pay format makes perfect sense to me.

    3. Charlotte Lucas*

      I worked somewhere that had offices in multiple locations. Pay was within ranges based on COL in the area you worked.

      A good idea implemented poorly. The office in an area with a lower COL than mine was calculated based on the “nearest metropolitan area,” which was 2 hours away (nobody lived there – they all lived in or near town). So, people in that office were paid more than in ours. And we had a higher COL than that town.

    4. Canonical23*

      I like this a lot. My husband works for a government agency and they have a base range for all positions and then a cost of living adjustment depending on where you live. So a project manager in California will be offered the same range as a project manager in Kentucky, but there is a spreadsheet based on which state you live in (and whether or not you live in a metro area in that state) and whatever amount is assigned to your state is the additional cost of living bonus that is added to your salary range.

    5. Legal Rugby*

      I know of at least two large multistate non profits that do this – there is a range for the type of work, and bands within it for experience, and then the employee recieves a locality pay for where they live. That locality pay is set by the US government’s locality pay for the area. So for instance, my friend and I both do the same government job, but I am in a rust belt city and get 20.78% locality pay, and my friend lives in denver and gets a 28.1 locality pay

    6. Warrior Princess Xena*

      Yes – as nice as it would be to have flat salaries for positions, the end result is that you will then be paying unequally based on purchasing power. Until and unless all locations country-wide (and world-wide) come under the same general COL (which I do not feel will be feasible until teleportation becomes our primary method of transportation, among other things) even if you pay every single worker the same wage it will result in pay inequity. And it has devastating results on low COL economies as locals get priced out.

    7. Michael Kohne*

      I think there’s two issues here, and if you separate them you’ll have an easier time of things.

      The first issue is ‘should we pay based on employee’s remote status and address’. I’m against it, but I can see the arguments on the other side.

      The second issue is ‘should we adjust the pay of existing employees downwards based on the previous decision’. This one is actually easy: NO. DO NOT change existing employee pay for any reason not related to performance or job change!

      If you take money away from an existing employee, it’ll feel like a slap in the face, ESPECIALLY if they’ve been doing good work, or even getting more productive during the pandemic. You’ll lose a massive amount of good will, and almost certainly a lot of employees that you do this to.

      I can say that I would very much start job hunting if my pay got cut for any reason – this particular reason would provoke me to try to move on as quickly as possible.

      2. TechWorker*

        Whilst I agree with this, I don’t think that fully solves the problem! Either you end up paying remote employees the top of the range, or you end up with arbitrary pay disparity based on where people were located at the point they accepted the job. Sure, you could try to even it out by giving smaller pay rises to your remote employee after they’ve moved, but even that should really be something explicit else it’s pretty unfair on the person moving without the knowledge their pay will now stagnate.
        Plus you have issues that the remote employee may choose/need to be in another HCOL area (say due to partners job or caring responsibilities). Does that person keep getting normal pay rises? It’s a whole minefield, horrible problem to resolve.

      3. Tinkerbell*

        YEP. There was a great study about a decade ago that I can’t find now but it basically came down to “If I offer you $20, how long would you be willing to stand in line for me?” vs. “If you got overcharged by $20, how long would you stand in line to get that corrected?” Logic says the answers should be the same, but people are willing to wait MUCH LONGER to get “their” money back versus money they don’t consider theirs yet. Lowering existing wages – even for employees moving somewhere cheaper – feels worse because we’re protective of what we’ve already got!

      4. Antares*

        That is interesting, because at my husband’s company, they didn’t adjust salaries when 2 devs moved out of state to a low COL area during the pandemic.

        Six devs in the HCOL area have now left the company since they don’t think it’s equal (and don’t want to move because their family is here.)

        1. Hiring Mgr*

          Do you mean six people left because the company didn’t lower someone else’s salary?

    8. Lucy P*

      The company I work for has a technical office in the eastern part of the world. The work is high-level, with some of the workers even having masters degrees relevant to their field. The salary for the entire office for a month is equivalent to the net payment of 2 people in the U.S. office on a bi-weekly basis. Still, they are all considered highly compensated for the part of the country they live in.

    9. Non-techy tech editor*

      Good question. I almost wonder if OP and I work for the same company. I’m about to move to a lower COL area, but nothing about my job will change. I always have been and always will be fully remote. (Even pre-Covid). I hope I won’t be taking a pay cut…

  2. raincoaster*

    Unless minimum wage is a living wage, which it isn’t and hasn’t been since the 70’s, this is just rearranging the deck chairs on the Titanic. All wages should be living wages. Then we can start tweaking.

      1. Antilles*

        I’m also not sure how it’s relevant for purposes of the question.
        The concept of “how do we handle that one area is 30% higher COL than another area” is pretty similar regardless of the raw numbers – whether we’re talking about the difference between $50k and $65k or the difference between $100k and $130k.

        1. raincoaster*

          Do San Francisco or Manhattan need minimum wage workers? And do they pay more than minimum wage for them? They do not.

          Change needs to start at the foundational level or it’s going to be unsustainable.

    3. MK*

      The issue is that a living wage in location A might not be so in location B, and living wage in location B might be over the top in location A.

        1. Anon all day*

          It’s honestly not that simple. The value of money is based on the amount needed to buy things/live your life. You can’t separate the two. If I have twenty bucks, but I have to spend $10 to buy a gallon of milk, that twenty bucks is a lot less valuable to me than someone who only pays $2 for a gallon of milk.

          1. RagingASD*

            The market really doesn’t take in to consideration COL. If people are willing to accept a job that pays $10.50 than that’s what the job will pay.

            1. zinzarin*

              The market absolutely takes into consideration COL. COL *is* the market. A cheeseburger costs more in NYC than it does in Albany. That’s COL, and it’s driven by the market.

      2. raincoaster*

        Yes, I know. Which is why minimum wage should be a living wage in the place the labour is performed. Unlike trickle down economics, this will actually make the labour market fairer for people at all salary levels.

    4. to varying degrees*

      But wouldn’t a living wage also be location influenced? Not being a smart-ass, I truly don’t know, but it seems like it would be, for example from what I have been told San Francisco would, I imagine, be a much higher cost of living than were I am at (small city in Florida, lots of ag), so would the “living wage” be different?

      1. LadyJ*

        One way to explain and I say this as a former caseworker. It may seem good to offer a so-called lower living wage but there are often trade-offs. Lower rent costs can be offset in some areas of the USA by the lower quality and not heavily enforced code violations which mean higher utility costs in housing. Also transportation. Lack of public transportation or good public transit means commuting costs go up. The bottom line is it can come out in the wash as six of one and half a dozen of the other.

        1. Divergent*

          Yes, I moved to a rural area where I could afford a house. My mortgage is less than half what it would be in the city, but my maintenance costs, transportation, house insurance (required for a mortgage), expensive internet, groceries, etc more than make up the difference. I still like it out here, but it isn’t cheaper.

          1. A*

            Same! Cheaper in many ways, bust mostly at the surface level. For example – my mortgage is about a quarter of what it would be in the HCOL city I moved from, but I’m over an hour away from closest trauma center so any severe injuries require an absurdly expensive medivac. Material costs are the same, but labor costs are overall higher for construction etc. because there are less licensed professionals overall so it’s more competitive. Everything outside core errand locations is 30-50 minutes away and there’s no public transit, so I spend more in gas etc.

            It’s definitely cheaper for me, but not nearly as much so as it appears from the outside looking in!

          2. Eater of Hotdish (fka jitm)*

            Bingo. I moved to a rural area for the first time about a year ago and it’s really been eye-opening seeing which costs went up. I’ve put more miles on my car in the last year than I would have in three or four years back in the day, simply because every time I have to do any errand, it’s at least 45 minutes in the car each way. And there are “smaller” costs that add up that I’d never even considered: the chest freezer we bought because sometimes in the winter you can’t get to the grocery store, the shipping on items we buy online that used to be trivial to get in person, and so on.

            I know people who regularly drive 2+ hours each way, every week or every other week, for chemo/other medical treatments. That’ll put a dent in your bank account. But there’s no other option. Nowhere closer has the facilities. This is the choice we make to live out here, and someone has to, because agriculture.

            1. pancakes*

              Agriculture is often heavily subsidized. Healthcare facilities could be as well, similar to the way airline routes are. A brief summary of how that works from Transportation dot gov:

              “The Airline Deregulation Act (ADA), passed in 1978, gave air carriers almost total freedom to determine which markets to serve domestically and what fares to charge for that service. The Essential Air Service (EAS) program was put into place to guarantee that small communities that were served by certificated air carriers before airline deregulation maintain a minimal level of scheduled air service. The United States Department of Transportation (the Department) is mandated to provide eligible EAS communities with access to the National Air Transportation System. This is generally accomplished by subsidizing two round trips a day with 30- to 50-seat aircraft, or additional frequencies with aircraft with 9-seat or fewer, usually to a large- or medium-hub airport. The Department currently subsidizes commuter and certificated air carriers to serve approximately 60 communities in Alaska and 115 communities in the lower 48 contiguous states that otherwise would not receive any scheduled air service.”

              The idea that people who live in remote places should just have to fend for themselves in terms of getting access to goods and services isn’t something we have to just accept, and in various forms of regulation we don’t just accept that.

        2. Hats Are Great*

          Also educational quality — giving up high-quality public schooling means a lot of parents have to decide between paying for private school or attending low-quality public schools, which may involve major opportunity costs for the children. (Which isn’t as simple as an urban/rural divide, or a HCOL/LCOL divide, but small cities in the Midwest do often have to deal with recruiting people to small cities without a lot of K-12 educational options who are coming from big cities with LOTS of options (even if some of them suck) or wealthy suburbs with lots of GREAT options.) I have a lot of opinions on funding inequalities in American schools and on how people’s judgment of whether a school is “good” has a more to do with race than with educational attainment, BUT a lot of early- and mid-career professionals are going to make decisions about whether they move based on schools.

      2. Academic Fibro Warrior*

        The EPI and various research orgs do these calculations. Some are more up to date than others. I’ve seen it drill down to county and town levels but companies take whatever is cheapest for them usually.

        But my experience in a supposedly low COL state (yes the assumption was the entire state was cheap) for both a large Corp and government/state jobs was that as companies closed taxes climbed then housing climbed and then everything else but nobody refigured their own internal scales. Housing was cheap, you could get a nice place for $75k vs the 250k in a growing town but there was literally almost nothing there and within a couple years sales tax was 12%. Plus all the speeding tickets to fund minimal local govt services. Plus of course everyone assumed young women would be married at 19 or still living with parents so there was a default that certain jobs didn’t need to be upped in pay or older wives followed their husband’s around and only needed part time work at $8 an hour anyway….there was a lot of salary compression. The paybands at large company meant I was at a permanent 10k or more deficit pay wise starting out whether I lived in Layfayette or Birmingham because ‘the state is so cheap to live in’ so while I get what you’re saying I ended up leaving that company because my earning power over a career was permanently damaged no matter how high I rose in the company and I did have to get a second job to make actual COL. The whole why don’t you just get married if you want more money made it worse of course, but those COL bands restricted salaries so much (not like that company paid a dime in state taxes either). Even our managers were at a permanent deficit, except of course the legacy ones who were being paid more fairly when the forced mergers took place. They closed a site in Vermont and moved that manager to Alabama and forced him to take a pay cut his last 3 years before 65 ‘because you at least have a job and Alabama is so cheap! You’ll end up making more money!’ He did not. He left for another company after a year. The university in that area pays on similar logic so they can’t attract talented faculty. I don’t plan on ever going home for any job for those reasons. I’m bitter about it obviously so I’m glad LW and company are taking the time to consider an equitable decision rather than deciding top down what is fair for everyone.

        1. Not Your Southern Belle*

          As someone who spent far too many of my formative years in Alabama and got out when I could, I’m so glad to see someone else bring up the problems with living in that state. Sure, it LOOKS cheaper from the outside, but all the required daily costs (like having to drive farther to buy what you need, even if you live in an urban area, oh, and public transportation is almost non-existent) will absolutely more than offset what you think you’re “saving” by living in a so-called “lower COL” state.

          Also, people never want to believe me when I talk about how awful and open sexism still is in Alabama (and racism and other -isms). Last time I looked for work there–not very many years ago!–I was flat-out told in more than one job interview, “Your resume looks great, but we don’t hire women here.” Usually followed a ridiculous sexist explanation of why.* This is all still considered normal and acceptable, and it will hit you in what appear to be the most benevolent of places, by the kindest of people. So I’m glad to see someone else bring that toxic ish up. Yes, it’s illegal, but good luck finding anyone to help you with that.

          *(“If a man walks in with his wife to buy computer parts and you’re talking to the man, the wife will get jealous!” “It wouldn’t be Christian to make you do physical labor with the boys.” “You’re just going to get married and pregnant and leave, so why bother spending our time and money bringing you on?” [I’m in my 40s, aro-ace, and zero interest in ever having or raising children, BTW. They never believe this, because as a feeeeemale, my “biological clock” DEMANDS I will NEED to reproduce, and I can’t control the urge when it strikes! /s])

    6. Littorally*

      This is the dumbest possible response to the situation, and nothing but a justification for doing jack squat.

      The OP, or even their whole-ass company, does not have the ability to set regional or nationwide minimum wages. To say that any pay discussion that doesn’t address minimum wage is “rearranging deck chairs on the Titanic” is nothing but an absolute abdication of what power they do have, to adjust pay scales within their company. That is their scope. That is what they can address.

      1. Anon all day*

        100% This is the same as people saying that the system is the whole problem, so voting is pointless. (Shockingly, a lot of people who argue that online are actually trolls for other side – because they know that voting isn’t pointless, so let’s convince people not to.)

      3. A*

        Progress over perfection. I wish we could overhaul major systemic injustices overnight, but that’s not in the control of those on the ground floor on their own. Discouraging efforts in the name of progress because it isn’t the ultimately end goal is incredibly short sighted and becomes a self fulfilling prophecy.

      4. My Useless 2 Cents*

        A little hyperbolic but not the “dumbest possible response”. If it were federally mandated that each state’s minimum wage had to be a living wage it would go a long way to equalizing pay discrepancies across the US, thus minimizing the need for discussions like this.

      5. raincoaster*

        Yes, and an environment of fairer legislation would effect everyone. You’re so close to getting the point.

    8. Berin*

      I don’t think anyone here will disagree with you on this point. But given that this question has real world applicability, vs a thought experiment in an idealized world, it does seem like it’s worth discussing!

    9. Nicosloanica*

      Minimum wage is definitely a sticking point in this discussion. I live on the border between two states (literally a few blocks from the line), in the suburb of a big city that happens to fall in the other state. While I was unemployed I took a part time remote job teaching ESL to pay the bills. The hourly rate was state minimum wage. There is no difference in cost of living when you are a block away but I lost about $5/hr living in my state vs the other for the exact same work in the exact same location (and I don’t think income or property taxes are any higher there).

    10. Hamster Manager*

      Yeah something about this feels icky to me, ESPECIALLY “if you move to a cheap place you should earn less”. WTaF? If someone loses their home because they become buried under medical debt and has to move to a cheaper area, it would be cruel to inflict a pay cut. Whereas if a frugal person opts to live in a cheaper place but offers incredible value to the company, how is it fair to pay them less? Why should someone get a raise because they decide to move from Ohio to NYC without any change in their work quality?

      Pay what the work is worth regardless of locale and let people decide where they can afford to live.

      2. Anon22*

        I think what I don’t like about this idea is that people often move further from work in order to save money. I moved to a rural area because I couldn’t afford to live in the area where I worked. If they had cut my pay when I moved, I wouldn’t be able to live here either.

        1. Scarlet2*

          Exactly. In fact, as housing costs rise in many areas (and not just in big cities), it becomes necessary for people to move so their rents don’t eat up half their salary or more. That’s made even worse by energy prices skyrocketing.
          If you move to a lower CoL area just so you can *afford* to have a roof over your head and the company uses that as an excuse to pay you less, it sounds a lot like enforced poverty.
          (Not to mention that moving is not always a choice at all).

  3. Justin*

    I don’t really know.

    Location-blind pay might privilege people who can afford to move to cheaper areas (it costs a lot of money upfront to move!).

    1. frame*

      and have the negative effect we‘re already seeing on affordability in places well-paid remote workers want to live.

    2. Former Gifted Kid*

      Agreed! Or people who don’t have families to take care of or a number of other reasons it isn’t easy for a lot of people to just move to another area. I live in a fairly high cost of living area. I could probably move to a LCOL area (and probably will eventually), but right now I live here because it’s close to family. I have elderly relatives that are starting to need more and more care. Moving away would mean dumping all that care on my sister or other relatives. Moving with those elderly relatives isn’t feasible for me because there are too many of them.

      I do have friends that recently have become full time remote and have only one parent that is getting older. Both of said friends were able to get their parents to move with them, but that is definitely not feasible for everyone.

      1. Cee*

        I agree with what Frame is saying. In the long term, this would have the effect of just shuffling the high cost of living locations. Say if everyone realizes they need to move to Iowa to have a middle class life style, Iowa’s cost of living will go up because of demand and New York’s will go down if everyone has to leave because companies are no longer willing to pay higher salaries there.

      2. Lab Boss*

        Mentioning families also made me think of another complication- why is location the only COL factor to be accounted for? A family of 4 in a given city has a higher COL than a childless couple, so should the father be paid higher than his childless colleague? Should someone with a chronic illness be paid more than someone in good health because of their higher COL? Some things that affect your COL are fully voluntary, some fully involuntary, and many are somewhere in between.

        1. Former Gifted Kid*

          I am going to basically copy something I replied to someone else about why COL is different than just your individual expenses.

          Comparing COL is not about an individuals expenses, but overall expenses. It’s not can Joe afford the same size house as Mary. It’s about does in City X have the same purchasing power as City Y. A person with 3 dependents in a high COL place will have less purchasing power than a person in a low COL place. Just like a person with chronic illness in a high COL place will have less purchasing power than a person with a chronic illness in a low COL place. Locality pay, or regular cost of living adjustments for that matter, are not about subsidizing someone’s life choices or circumstances. They are about the value of the money the worker is getting.

          Another way to think of it is to think of different places having different currencies. We all know that 1 USD does not buy the same amount of stuff as 1 EUR. The value of those pieces of paper are different. Well, this is also true within a country. 1 USD in NYC does not buy the same amount of stuff as 1 USD in Omaha. That has nothing to do with the individual person using the dollar. It is about what the dollar is actually worth in purchasing power.

          1. Lab Boss*

            That’s actually a really useful distinction that hadn’t occurred to me, thanks! In my example the childless couple may be able to afford a more lavish lifestyle with an identical income to the family of four (in the same city), but there’s definitely a distinction between “The same number of dollars lets me live better because I have different expenses” vs “the same number of dollars lets me live better because dollars go further where I am.”

          2. Not Your Admin Ass(t)*

            This is a great way to put it! And honestly, it would super crappy to adjust someone’s pay to whether they have kids or medical expenses. Because you simply don’t know what other people are dealing with.

            I’m single with no kids, no debt, and no medical costs…that I advertise. In truth, I have a lot of medical expenses that I don’t make known because my issues could affect how I’m perceived and treated at work. I’d be pretty furious to find out someone else is getting paid more than I am just for having kids, which is generally optional (massive side-eye to the Supreme Court goes here), while I can’t control having my chronic conditions that are also not universally safe for me to disclose at work. Seriously, just pay people a fair damn wage that’s in accordance with what the position demands, and let people decide if it’s worth taking the job.

            1. Not Your Admin Ass(t)*

              (I’m talking specifically about base pay in my comment, not additions to base pay like COL!)

    3. Moonlight*

      That assumes you don’t already live in a lower cost of living area. Tons of people already like in places where the cost of living is lower (eg say they grew up in a remote town, went to uni to become an accountant, come back to that town to be near family, and apply for remote jobs)? So, sure, it might give an advantage to people who can decide to move somewhere purely cause it’s cheaper while keeping a higher paying job… but remote areas tend to have lower paying jobs, so on the flip side, it likely provides an advantage to people who already live in area where they’re destined to be paid less who now have the opportunity to make more.

  4. UKgreen*

    One of the two candidates for Prime Minister in the UK yesterday rolled back very, very rapidly on her plans to pay public sector workers in the North of England less than those in the south, which has higher cost of living.

    And quite right too. Pay people based on the work they do, not the place they live.

    (And frankly, for remote workers what’s yo stop them lying about living in a costlier area?? What if they move? Do they take a pay cut if they go to a cheaper area…!?)

    1. Less Bread More Taxes*

      My boyfriend and I moved to a cheaper COL area and he did indeed take a pay cut. So this is definitely a done thing.

    2. MK*

      Also, there might be other disadvantages with lower cost of living areas. Sometimes employers have to pay a premium to get employees in “undesirable” (usually remote) locations.

      1. LinuxSystemsGuy*

        That’s a good point. Alaska is a pretty low COL area, but a lot of skilled positions pay *very* well there. They have to pay well to get people with specific skills to come to and live in Alaska. That’s said, this question is primarily around remote work which is by definition location independent.

        I might pay you extra to get you to come to Alaska, but I’m not going to pay you extra because you chose to move there when you could have gone anywhere.

          1. LinuxSystemsGuy*

            Huh. I was going by anecdotes from some of my friends in government contracting. That said, they were getting like 100% anual salary increases to live there, so maybe it just seemed like COL was lower. It was higher, but not nearly *as* high as the pay raise to take the job.

        2. AllisoninAK*

          Alaska is…. not a low COL area. Salaries are fatter because it’s costs significantly more to live here. We currently sit about 27% higher COL than the national average. We don’t pay higher salaries to get people to come here! Re-Lo is an entirely different ball of wax, separate from COL. My husband was fully re-lo’d to AK back in 2011 for a mid-level engineering job, which was an approx. 15K outlay. We wanted to move here anyhow, and the full re-lo simply sealed the deal on accepting that particular position.

          1. LinuxSystemsGuy*

            Yeah, I was obvious talking out of my ass here. I was basing it on a story a friend told me about making bank doing a two year contract in AK. I was obviously misremembering details. He did make a lot of money doing government contracting out there, they paid him on the order of +100% of his normal salary. Don’t know where I got the low COL part of the story. Maybe they provided him housing?

            1. pancakes*

              He wasn’t necessarily misremembering. I’ve known people who went off to work in Alaska for a couple years doing really dangerous and relatively high-paying work (on a fishing fleet, for example) in order to be able to spend the next 10 years or so in a relatively inexpensive place (rural northeastern India, in the case of this one). If my friend had stayed in Alaska instead, her cost of living would’ve been way higher. If your friend did get some sort of deal on housing in connection with his work, his COL would indeed have been relatively low compared to other workers in the same area not getting their housing subsidized. You aren’t necessarily wrong and he isn’t either; it’s just that there are a number of moving parts to consider.

      2. anon for this*

        Yeah, I see this even independently of the current situation. I do a pretty portable job: I’m an accountant, and I work for a small local CPA firm in a small town. I sometimes surf LinkedIn looking at jobs in a major metro area where I used to live and would love to go back to. The cost of living there is half again as much as it is here, but (according to the pay ranges I see on those job listings) they are most definitely *not* paying Senior Associates at the CPA firms there half again as much as my current employer pays me for being a Senior Associate here! For the moment, being overpaid is a good enough incentive for me not to try to move away.

      3. Lab Boss*

        I think that would depend on whether the job specifically required you to do work AT the area you lived in, though. If you need your employees to go live in the middle of nowhere to perform some physical task there, you could be stuck paying a premium to get them there. If the work is fully remote and the question is just where they live while they do it, anyone moving to the middle of nowhere would (theoretically) have done that out of preference.

    3. Hlao-roo*

      And frankly, for remote workers what’s yo stop them lying about living in a costlier area??

      Everywhere I’ve worked, HR has had my home address on file. Every once in a while, I received benefits information or something else work-related via mail. I suppose someone could lie about their address, but they would not receive any work-related communications sent through the mail and they would also have to deal with the reputation damage if anyone ever found out they were lying (I imagine the fallout would be similar to or worse than the company finding out someone lied on their resume).

        1. Hlao-roo*

          I know that a business nexus is on the state level, so someone who says they live in Chicago, IL but actually lives/works in Podunk, IL wouldn’t cause problems (at least on the state level–there may be local tax/insurance/other things I don’t know about). It would definitely be a problem if someone tells their company they live in Los Angeles but they really live in Podunk, IL.

          1. Ranon*

            I think (from a company perspective) it makes way more sense to look at this from a recruiting perspective rather than a pay perspective. Can the company afford a flat wage that allows them to recruit from all the talent centers they want, or does going location specific allow them to use hire salaries to recruit from higher pay areas and is that where the talent they need is located?

            Pay is linked to supply/ demand of talent, not cost of living (or, frankly, value of work except that they won’t be higher than the value of work produced)- for example architect salaries in Austin, TX were lower (and may still be) than Dallas and Houston for ages even as it got more and more expensive to live in because it has a university that produces a lot of architects that like to stay in Austin even though they make less money.

      3. KayBeeTee*

        I know someone who has dual citizenship (US and other country) who moved to the other country during the pandemic, and didn’t notify the organization for whom she was remotely working, which happened to be located in a very high COL US city (and would not have approved the move). This required the assistance of a family member who remained in the city. I know this person got fired the minute her company found out (about 9 months later), by which point she’d lined up another job in her new country, but frankly, I’d be a lot more worried about the IRS and other alphabet agencies than I would about my company in that scenario. Some people just love thinking they’ve found loopholes…

    5. Goody*

      It sounds to me like the real question is “John used to be in-person, he has now switched to remote and moved to an area with a lower COL, can we make him take a pay cut because his bills are lower?”. And I would say absolutely NOT. The company already set a value of X for his work. Not for his lifestyle.

      I also very much disagree with the concept that remote workers should take a pay cut for the privilege/accommodation, unless their scope of work is demonstrably impacted by their location. (An example, I’m a lab tech. I can’t take lab equipment home, but I could still write reports and potentially handle client interactions from home.) A remote worker probably doesn’t have commuting costs, but they also have increased utility bills and office supply costs that would have been covered by the office if they were in-person.

      1. Former Gifted Kid*

        My partner is a US Federal Government employee. If we moved to a lower COL area, he would essentially take a pay cut. In point of fact, he would lose his locality pay. It is understood that a certain portion of his paycheck is to help offset the COL in the area where he lives, not his value to the company.

        1. Anon all day*

          I think that’s a good way to frame it. Because, logically, I would understand if my pay is tied to my cost of living, but emotionally, it would sting to get lower pay just because I moved. However, if I have a standard pay with an additional amount that fluctuates based on where I live, I think it would be much easier for me to swallow.

            1. Anon all day*

              Even if you know you’re paying 20% less for items than your colleagues? And your base salary isn’t affected, just the value tied to COL?

              1. Cee*

                This is anecdotal but I have a friend who moved to Denver from NYC and took a pay cut (same role, same company). She thought she would be salty about it for a while but she has found that she actually feels better paid at a lower salary simply bc COL makes that big of a difference on the way she lives her life.

                I used to think it would be annoying to be paid less if I left NY, but now I’m not so sure. Not paying 17 dollars for a cocktail would be awesome.

                1. Xakeridi*

                  If a company cut my salary for any reason I would quit. With little notice and no consideration for a counter offer.

                  When you hire someone you are essentially creating a agreement that I do X and you give me Y. If you unilaterally break that agreement you are fundamentally untrustworthy. Any company that does this deserves to lose its staff and institutional knowledge.

                2. Cee*

                  Xakeridi* I mean, they didn’t just cut her pay. She told them she wanted to move and work out of their Denver office, they said sure but this is the pay rate for your job in that area. She agreed to the the new rate rather than look for a new job since she likes her job. They created a new agreement, nothing untrustworthy about that.

              2. Elizabeth West*

                But what if the cost of living goes up in the new area? It’s not a static thing and housing costs are rising everywhere. So is the company then going to increase the pay proportionately? I’m thinking they won’t.

                1. Anon all day*

                  Why not? These are all hypotheticals about how a company should handle people living in different locations, so if they’re going to account for different COLs in the first place, it makes sense to me that they would account to COL adjustments as well. I mean, if the government can do it, don’t know why private businesses can’t.

                2. Cee*

                  Cost of Living annual increases are a thing ( I get one at my private employer). So I don’t think it would be unheard of.

        2. k bee*

          I think that if this is an understood industry standard and made clear at time of hiring, fine.

          What I’m hearing/seeing happen to my friends and family is large companies changing their policies mid-stream, causing significant financial losses to the worker. One of my family members left a job at a smaller company for a larger company, gaining an appropriate wage increase for changing jobs. About a year in, large company decides to change their pay policy to be location-based rather than skills-based, which would have resulted in a pay cut providing a salary lower than what small company had been providing for similar work in the same area of the country. He did not want to move, so he ended up leaving the large company job, even though he loved the work and would have preferred to continue there.

          1. JM60*

            I think location-based pay for fully remote work is definitely something that should either be setup and explained when hiring someone, or not at all. If I live in a high COL area making, and my employer has been happily paying me $100k/year in my fully remote position, I’d be very pissed off if they suddenly tell me I’d have to accept a pay cut if I want to move to a low COL area of my state. That would just be them using my lower COL lifestyle choice as an excuse for them to save money. If my labor was worth $100k/year fully remote in one location, then it’s also worth $100k/year fully remote in another.

            If someone would get a pay cut by moving – even though the new location doesn’t affect their ability to do the job – they need to know that before they accept the job offer.

        3. Lab Boss*

          I can’t tell whether there’s a genuine difference between pay cuts for low COL areas vs bonuses for high COL areas, or if it’s more of a distinction without a difference that just tricks our minds into thinking one is better than the other.

          But we see a parallel in shift work- my wife works at a hospital and when she worked night shift she was paid extra as a shift bonus (although that was to account for the undesirable shift, not for any higher costs associated with it). Still, that’s a pretty common example of basing pay on something beyond just the worth of the job as an absolute number.

        4. Tesuji*

          Locality pay is sufficiently weird that I’d say it more heightens the problems with this kind of system than anything else.

          The Washington DC locality area (or more precisely, the Washington-Baltimore-Arlington locality) includes DC and parts of four different states. The New York City locality stretches wide enough that a farm in Carbon County, PA is treated as having the same COL as an apartment in downtown Manhattan.

          So, for federal government pay, a portion of his paycheck may or may not have any connection to the COL in the area he lives.

          (That’s even before considering the politics of *which* areas they put the effort in to determine the right adjustment for, which is a whole separate topic.)

          1. TiredAmoeba*

            Part of why the New York locality is so far reaching is because of the number of people who commute to the city from PA and NJ. The government is directly competing for people who could just go to the city for higher wages; in fact it is a HUGE part of the economy of the Poconos, Stroudsburg and surrounding areas. A ton of people commute into the city to work since they can make 3x times the wages in the city. The local bus lines make a killing on the daily express busses that travel to and from the city daily.

        5. Critical Rolls*

          Yeah, this is something I think the federal government and the military actually approach correctly. You have base pay (value of the work) and then a cost-of-living adjustment (or not, based on your area). This is not about *circumstances* but about *buying power.* Whether they get the numbers right is another argument, but the predictability and transparency of the approach seem pretty solid. Of course, the government does this because they employ people literally everywhere. It gets a bit more complicated for smaller organizations.

      2. Julia*

        I’m guessing, though, that you also believe employees should get a COL raise when they move to a higher COL area. Am I right in that?

        If so, you are basically saying employees should pay everyone a New York rate, including people who work from Nebraska. And I don’t think you can have it both ways. Either salary depends on COL or it doesn’t; you can’t have it depend on COL for raises but not for pay cuts.

        1. Lab Boss*

          That’s the same trouble I have when people assume that companies should give raises fully pegged to inflation- if currency deflates, would they all want pay cuts?

          1. Ges*

            Sure. That would be a lot better than what we have now where workers keep falling behind inflation.

        2. JM60*

          I’m not the same person, but I think it depends on whether the person is taking on the expenses of a higher COL area because of the job. The employer should pay them more for living in the high COL area if they are requiring the employee to live there, but otherwise they shouldn’t have to.

          Since the question at hand is for fully remote jobs, I think the pay should be the same regardless of living location. If I make $100k/year living in NYC working fully remote, then I should continue to make $100k/year after moving to upstate New York. Otherwise, it’s just an excuse for the employer to cheap out on me, since my labor is worth at least $100k/year for them.

      3. Gumby*

        But it’s not a lifestyle. Like you just chose to wear certain clothes or eat certain food. COL swings can be really big. You can’t write them all off as “lifestyle choices.”

        I live in the SF Bay Area. Rent on a one bedroom apartment is generally over $2500/month. That is a mortgage payment on a 4 bedroom house in many areas of the country. And on a mansion in other areas of the country. Consequently salaries here tend to be quite high here. I stay in the area because I do need to be in person several days a week. But I would feel actually guilty accepting my current salary and living in an extremely low cost of living area.

        1. JM60*

          I think you have the cause and effect of SF Bay Area wealth and COL a bit backwards. To a certain extent, salaries are higher in the BA because of the higher COL. But to a greater extent, real estate is so expensive here because so many people with wealth want to live here. The BA street that I mostly grew up on had an average house value multiply into the multiple millions because wealthy executives, as well as people who luckily got “on the ground floor” of successful startups, want to live there. Those people (mostly) didn’t become more wealthy because they were paid more due to the COL, they became wealthy and drove up the COL.

          Even for normal tech industry employees who primarily get their wealth through W2 income, they are getting paid a bit more due to the high COL, but they also get paid a lot due to their in-demand skills. And having so many skilled, highly paid employees in an area with a mild climate and limited real estate drives up the COL.

          (There are some other factors driving up the COL in the BA, including lack of rail transport to cheaper areas outside the BA, foreign investments, etc.)

          1. JM60*

            I think a good case to look at was the gigantic Apple Park. Real Estate prices around Cupertino shot up when that place was built because those high paying jobs make nearby real estate in-demand among people with high paying jobs at Apple.

      4. Nina*

        I think the hinge of the decision is ‘who is choosing the area’? If the worker is fully remote and can work from anywhere they darn well please including a different country entirely, then no, the COL of the area they’re living in is not the company’s problem. e.g. if I, a theoretical chemist, am employed by a US company in San Francisco, I should be able to choose to live in Alaska, Kansas, or anywhere in between with no effect on my pay. If the company, for any reason whatever, is requiring the worker to live within commuting distance of any particular place, it’s absolutely on the company to ensure the worker’s pay is adjusted for the COL of that particular place. e.g. if I, a lab-based research chemist, am employed by a US company in San Francisco, I have to work in San Francisco and the company has to make it worthwhile for me to live in San Francisco… because otherwise I can’t afford to work for them.

    6. Lead Balloon*

      There are high cost area supplements though for NHS workers in London. So effectively they do get paid more (pay rates for the NHS are set centrally). The majority of NHS staff work in person, though some back office roles allow for remote work. Though I think they would be considered hybrid so you’d need to be within commuting distance, which would still put you in a high cost of living area.

      If the NHS didn’t do this I imagine it would be almost impossible to recruit for certain types of role

      I don’t think Liz Truss’ proposal was a sensible one however. A supplement is different to regional pay boards which is what she proposed.

      1. Storm in a teacup*

        To be fair I left the nhs a few years ago (after a couple of decades) because the inner London supplement (approx max 6k at the time) was not enough to account for my vastly increased cost of living in London, especially on a background of ‘austerity’ related no pay increases at all for years.
        So yes – the NHS offers it and it works but it’s not set at a level that’s enough to account for the difference in COL

        1. Storm in a teacup*

          Also the nhs stupidly still has inner and outer London weighting. So those DGHs in zones 3-6 you get paid less and they already struggle to recruit. There shouldn’t be a difference between London weighting’s at all. Before I left the nhs we had staff who were happy to work on 2 of our hospital sites (based in central London) but would not want to be rostered to work in our outer London hospital site (part of the same trust!) because it would adversely impact their pay.

          1. Cordelia*

            I agree, I think, but the difficulty is where do you draw the line? because there is outer London, and then there is Fringe – so commuter areas in, e.g. some parts of Essex and Surrey, which count as fringe, find it hard to recruit because people would rather travel in to get the outer London weighting, if not the inner London. And then I’m sure areas just outside the fringe struggle too, because of people travelling in – because it goes by where you work, not where you live
            The difference is small, but when you are not on a lot of money to begin with, it makes a difference. it doesn’t compensate for the cost of living in London though

        2. Storm in a teacup*

          Also the nhs stupidly still has inner and outer London weighting. So those DGHs in zones 3-6 you get paid less and they already struggle to recruit. There shouldn’t be a difference between London weighting’s at all. We had staff who were happy to work on 2 of our hospital sites (based in central London) but would not want to be rostered to work in our outer London hospital site (part of the same trust!) because it would adversely impact their pay.

    8. kanej*

      This is disingenuous – Truss was suggesting a turbo-charged version of what happens currently in the UK. Basically every job here has a London weighting, and civil servants in London are already paid more because it would literally be impossible to live in London without the London weighting.

    9. Bagpuss*

      Yes, although I think most public sector jobs do still have London weighting and I suspect that the rollback is due to the political backlash and has nothing to do with any conviction either way!

    10. Not A Manager*

      I find that there is a correlation between over-use of punctuation and knee-jerk online reactions. The answers to some of these questions can easily be googled or just figured out with a moment of consideration. Assuming that people who have a deep background in some issue can be easily stumped by a question requiring a series of exclamation points interspersed with the numeral 1 leads to science deniers and weird conspiracy theories.

      Your candidate might be on the wrong side of this issue, I have no idea, but I’ll bet that someone in her staff has a pretty good answer to “what’s to stop them lying about living in a costlier area??” and similar gotchas.

    11. Quay*

      London weighting is one thing – but given that one of the government’s big agenda items is to level up the country, so that opportunities in the north are comparable to those down south, it was not the savviest political announcement.

      People should be paid on the basis of the work they do. Women should be paid the same as men, northerners the same as southerners. If there is a systemic reason to provide additional weighting – for example, if the employer requires employees to live and work in somewhere with a ridiculously high COL, then a solution like London weighting is reasonable, but as basic government policy, it’s not a good plan.

    12. Student*

      Tax fraud is the main reason to not lie about where you are living, in the US.

      In the US, tax rules change based on your state, and your employer generally needs to be aware of which state you live in so that they can follow that state’s tax and employment laws correctly. Generally, your job will fire an employee if the employee’s lies about their residence cause the company to run afoul of tax laws or labor laws and thus lead to fines against the company. Individuals need to make sure they’re following state rules about tax payments on their end, too, or they’ll face individual penalties.

    13. Cordelia*

      I already am paid more as a nurse in London than I would be doing the same role in the North of England though. If I wasn’t, I wouldn’t be able to live in London. The NHS would struggle to recruit if it didnt pay London weighting.
      I have deliberately been ignoring the PM campaigns so don’t exactly know what she said though – please don’t think I am agreeing with her!

  5. remote34*

    I work remotely for a company based in NYC but live in a cheaper COL state. I make the same salary I would make in NYC, and if they ever changed that, I would leave. If my work would be worth X amount in NYC, it’s worth X amount where I am now.

    My industry is well-known for their wages being unlivable in NYC. Here, the salary they pay me is actually livable.

    1. Pool Lounger*

      Same with my partner. The only reason we could pay off debt and save money is because we moved from NYC to a much lower col place and partner’s salary stayed the same.

    2. Keeley Jones, The Independent Woman*

      Same for me. My issue is that no local company will ever come close to matching this salary. I’m very new to this job and don’t intend or leave any time soon, but if/when the time comes I’ll have to continue to look for remote positions or take a significant paycut.

    3. M.*

      Yeah, I really think this is what it should be, and I don’t fully understand the hemming and hawing. If you work for a company that pays more in one area than it does in another, then that’s what the position is worth.

    1. Loulou*

      It’s not an absurd issue at all. Salary adjustments based on location have long been a thing at the federal level — this isn’t something that OP made up.

      And “the job” doesn’t have an intrinsic monetary value…

        1. Anon all day*

          But COL is also quantifiable. Someone getting paid $70,000 in rural Arkansas is effectively getting paid a lot more than someone getting $70,000 living in NYC.

          1. Irish Teacher*

            Yup, I was once applying for jobs, one in an expensive area of Dublin, the other in a relatively middle-of-the-road area of Limerick. Looked online to see what housing was available in both areas and saw cost was at least an extra 50% in Dublin. What was available for €400 rent a month in Limerick was very similar to what was available for €600-€700 in Dublin. So I would have been much better off with the job in Limerick, even though both paid the same. So…I can see the issue.

          2. M.*

            Yeah, and what though? Work is moving online faster than the blink of an eye. If the specific job for that specific company pays $70K, then that’s what the job pays. The worker chooses to live in Arkansas or NYC on that salary.

            1. BubbleTea*

              This assumes that moving from Arkansas to NYC or vice versa is trivial, and that all work can be done fully remotely, neither of which is true.

          3. J*

            But on the other side, rural Arkansas is harder to recruit for than NYC where you have your pick of people. So while the salary might not reflect COL, it might reflect supply and demand. Are we going to break down every job’s salary to include those factors in an itemized way?

            1. pancakes*

              I’m not sure why anyone would have to attempt that on the scale of every job rather than the ones they as an employer pay people for. Employers already decide how much to pay their workers, and already decide what they do and do not value in candidates, and what skills and certifications, etc., they’re willing to compromise on. They don’t presently get to dodge making decisions on those questions. It’s just that the process tends to focus on how little they can get away with paying rather than what would be a livable wage for employees in any particular location. They will have itemized their balance sheet, and will know their own profit margins. They’re not currently working without a sense of those numbers.

        2. Mouse*

          Right, but “value” and “number of dollars” are two different things. $1 has a different value based on where you live. So if you’re paid based on the value you provide, I don’t see a problem with that being reflected in the value that you receive.

        3. Cee*

          Squidlet, its absolutely abstract. The value of everything is variable, thats what market value is. If all the accountants in the US except one retired tomorrow, do you think accounting work will still be worth 60k ( for example) and nothing more?

        4. Nina*

          Part of the ‘value’ the company gets and has to pay for is ‘person who works in person in a HCOL area’. If the company decides that’s not something that has quantifiable value to them, they can shift to remote work and stop paying the HCOL premium to get workers to be in person. What they can’t have without paying for it is the added value of having workers in person in a HCOL area.

      2. Gerry Kaey*

        You don’t think that the profits produced by labor have intrinsic monetary value???? Like, I’m sorry, what?

        1. ND and awkward*

          What proportion of jobs are actually labour that produces profit? Certainly not management, HR, IT, facilities, admin…

          1. Littorally*

            +1

            Every job I’ve ever had has been overhead. Valuable and necessary overhead, but overhead.

          2. LinuxSystemsGuy*

            That’s not really true. All of those things contribute to profit. Management and HR (in theory) provide rules and measures and quality assurance that the producers are producing, the sales people are selling, and the customers are getting quality products. IT and facilities (in theory) provide the tools and equipments that producers and sales people use to produce and sell the thing. Admin and payroll make sure that everyone is paid and has the support they need. All of these things support profit making activities and are thus part of creating profits. That said, there’s two huge problems with simply basing pay on how the work relates to profits:

            1) It becomes increasingly difficult to measure the impacts of a specific function on profit the further you get from producer and sales type jobs. The math on the exact contribution Bob the assembler makes to the bottom line might be doable, but what about his manager Sue? That’s even more complicated. And Sharon the floor engineer who keeps all the equipment up and running might not seem to do anything except stare at dials and gauges. Yet if she stops doing that, the whole line could shut down. So her impact on the bottom line is near zero, except when it’s 100% essential.

            2) Actual contribution to profit is not necessarily an indication of value. From my example above, Bob hugely and directly impacts profits. If someone isn’t standing where Bob stands everyday, screwing in the four screws that Bob puts into every widget, the company will go under. Sharon on the other hand, sometimes goes weeks between major impacts. If she’s doing her job well, she may never have to do anything obvious at all. But replacing Bob would take 10 minutes of training. Replacing Sharon would take a mechanical engineering degree and several years of experience with industrial equipment.

            All labor contributes to profit (or it should), but the value of labor is *much* harder to calculate than simply looking at how many things this person made or sold.

            1. ND and awkward*

              Everything you say is true, but I would argue that “contributes to” is a fundamentally different concept to “produces”.

            2. Humble Schoolmarm*

              This is a really interesting and thorough analysis! I’d also point out though, that the general concept of pay related to profit falls a part in several sectors, namely public service. I mean, technically speaking, I am helping to generate future income for my government as a good quality education should result in higher paid people paying more tax down the road (that’s the theory, anyway), but I have no idea how to quantify that. (Plus, maybe by that argument I should make more money because my subject area teaches a very nice to have skill at higher levels of our national government?)

            3. pancakes*

              “It becomes increasingly difficult to measure the impacts of a specific function on profit the further you get from producer and sales type jobs.”

              It’s true that this is difficult, but that doesn’t mean employers and economists don’t or can’t put numbers on those impacts. It’s also conceptually difficult for, say, life insurance actuaries to assign a dollar to an individual’s life based on various categories that individual fits into, etc., but they do in fact do so.

          3. Student*

            Spoken like someone who’s never worked in a place that decided to just cut the “unprofitable” things you list! I have. If you take those functions away entirely, you will see very quantifiable drops in company profits. You can at least make an effort to measure the impact of overhead functions on your company, even if it is imperfect and relies on some assumptions. You should be doing that analysis in order to figure out how much overhead to hire and maintain.

        2. Loulou*

          Well, this organization is a nonprofit. But also, a worker at a for-profit is not taking home anything close to the profit their labor is generating for the company. Like, at all. The discrepancy between what workers are paid and what their labor produces is how the owners make money…

      3. Warrior Princess Xena*

        Salary adjustments based on location, while less explicit than at the federal level, are really obvious if you look at any job that requires being on-site (customer service, manufacturing, professional services). Prices fall in lower COL areas. Consider the price of something like McDonalds in Seattle vs rural Montana. Big difference.

      4. Andrew*

        If the job requires you to be in a certain location, then it makes sense to adjust pay based on that location. You would need to in order to keep employees.

        If you can work from anywhere, it’s up to you whether you want to pay more to live somewhere more desirable. The employer shouldn’t care where you live.

        However, you should know that you’re now competing with people who are willing to live in more affordable locations and potentially work for less money, so over time, salaries may decrease.

    3. Nanani*

      In principle, correct. But in the real world, that already isn’t happening, and “but you GET to move to the CheapTown” is just the latest excuse to keep not doing that. Right along-side “but HE has a family to support” and “you’re getting paid proportionately to your salary history (with all the inequalities you ate when you had even less leverage)”

    4. Former Gifted Kid*

      But how much that pay can buy you (so how much that money is actually worth) changes depending on where you live.

      I used to work for a fully remote non-profit. Although it was remote, some employees (including me) had to be in a general geographic area in order to support a targeted population. No one got locality pay. Everyone was paid based on their job. It seems fair on the surface, but what can you actually buy with those same number of dollars changes depending on where you live. I just looked at a cost of living calculator and the geographic area where I worked had an average COL 15% higher than the area where the other geographically bound employee lived. Even though we were given the same number of dollars, I essentially was paid 15% less because those same dollars were able to be exchanged for less goods and services.

    5. Not A Manager*

      COL adjustments aren’t based on some philanthropic notion of fairness. They are based on supply and demand. If you need a particular skill in your high COL area, you need to pay enough to make it worthwhile for people to be willing to take the job. Otherwise you will lose some measurable amount of your talent pool to more affordable locations.

    6. Cascadia*

      My mom and I are both teachers. My mom has 40 years of experience and lives in a LCOL city. I have 10 years of experience and live in a very HCOL city. My salary is significantly higher than my mom’s, despite her 30 years of experience, because all of the teachers at my school are paid based on where we live, a very HCOL city. Also, my mortgage is more than double what my mom’s is, even though her house is bigger and in a nicer neighborhood (comparatively) to mine. I’m not sure how our exact take-home pay compares, but I know there’s no way she could afford to live in my city with her salary.

    7. M2*

      This is not absurd. This happens in many industries. I worked for non-profits and UN agencies abroad and you are given a different salary/ housing allowance/ hardship pay and rest and recuperation (R&R), flights home based on your location. You should get more benefits and paid more to live in Afghanistan than you would in Rome! The conditions are a lot harder and you are away from family. Before you say this sounds lucky many NGO staff get paid nothing but it’s the benefits (housing, R&R) that make it bearable.

      It should be based on the job but also the location. Maybe this will actually help companies allow more WFH or open offices outside of expensive cities. There’s an article about this in one of the main papers someone who worked in SF and Austin now lives in Oklahoma and owns property and loves it!

    8. Ann*

      What happens if they just outsource? It has to be cheaper to hire someone outside the US, assuming the job can be done fully remotely. Paying big city wages for people to work remote will likely end in this.

  7. TLC*

    I’d be curious to see if this has been studied by economists (probably has). A part of me wonders if continuing to pay different wages based on geographic region is going to continue to increase inequity between regions. Not to mention how it drives gentrification and other social ills…

    Plus, in my experience, salaries never keep up with fluctuating cost of living anyway. Employers would be quick to depress wages in “low cost areas” but not nearly as quick to raise them when inflation hits.

    1. WetPigeon.*

      You pay for work, not people.
      Why is a committee that is focused on “coming up with equitable policies” divided on what you rightfully identified as an issue of equity? That just sounds like you have bad actors on the committees who are advocating for the company’s $$$ and not equity.

      One is more equitable than the other. Period. Equal pay for equal work.
      If somehow the work is not equal (such as in-person client meetings are required and remote employees cannot perform that) then that should be reflected in job descriptions, titles, and salaries that way.

      1. cherub*

        equality is not the same thing as equity! If an entry-level job to a competitive field pays under a living wage for everyone, it may be equal, but it is likely not equitable, because only folks who are privileged to be able to survive on less-than-living wage (e.g. from family support) will be able to take on such a job and enter the field.

        1. Anon all day*

          Yup, insert picture here where everyone is given the same size box to stand on to look over a fence, but the shorter person still can’t see.

        2. GingerNP*

          This is absolutely what continues to happen in theatre – if you have parents paying your rent and living expenses, you can better afford prepping for and going to auditions, traveling for contracts, etc because you don’t have to take a second job to pay bills when you’re between contracts. It has gotten to a point where the people coming into the industry are largely kids whose parents paid for their schooling and are continuing to support them as they build their careers – and some really profoundly talented people are never getting seen.

        3. hamsterpants*

          But the other side of this coin is: do you pay people more when they have more dependants? Feels ooky to me.

          1. L-squared*

            Exactly. I feel this goes far too close to paying someone more/less based on their familial situation, which definitely isn’t good

          2. Anon all day*

            No, that’s not the other side of the coin – that’s another coin entirely. I don’t get all of these arguments that are basically slippery slope arguments that if we start factoring local COL into salaries, we’re going to start factoring in family situations. They’re just not tied to each other in any way.

          3. Former Gifted Kid*

            I don’t think this is the other side of the coin. Comparing COL is not about an individuals expenses, but overall expenses. It’s not can Joe afford the same size house as Mary. It’s about does in City X have the same purchasing power as City Y. A person with 3 dependents in a high COL place will have less purchasing power than a person in a low COL place. Just like a person with student loans in a high COL place will have less purchasing power than a person in a low COL place. Locality pay, or regular cost of living adjustments for that matter, are not about subsidizing someone’s life choices. They are about the value of the money the worker is getting.

          4. Nina*

            Does the company require you to have dependents or not? No. Not their problem.

            Does the company require you to live in a certain area? YES. They want it, they can pay for it. (If you’re a remote worker choosing to live in a HCOL area when you could equally live in a LCOL area without impacting your ability to do your job, again, not the company’s problem…)

          5. Parakeet*

            It is not the other side of the coin, because paying more or less based on location is about the purchasing power of the pay. There is no slippery slope here. A worker in Random City with two kids can buy the same things with $20 that a worker in Random City with no kids can, but they can’t necessarily buy the same things with $20 as someone in Different Random City with two kids.

        4. WetPigeon*

          No duh equality is not equity—no where was that confused in what i wrote.
          You cannot have fair and impartial wages if you are paying different rates for the exact same job; by its very inherent nature that is neither fair, just, or impartial.

    2. Spencer Hastings*

      Wait, what? When you pay the same wage regardless of location, I thought that’s when you get the Silicon Valley people moving to, like, small-town Oregon and gentrifying/pricing out the locals. No?

      1. Warrior Princess Xena*

        That is what happens. It’s what’s happened in Washington – a whole bunch of California folks and Seattlites have been moving to small-town touristy areas and definitely pricing out the locals.

      2. Analytical Tree Hugger*

        Yes, that’s a significant drawback go location-blind pay scales. At least, it is for anyone who considers and cares about the impact of gentrification.

        The suggestion above for a set salary band plus location adjustment makes the most sense to me, as that’s equal pay for equal work AND accounts for the impact of remote workers on local communities.

      3. k bee*

        Its not just the big tech folks, unfortunately. Silicon Valley is very hard to make work if you don’t have family there. As a nonprofit worker in Silicon Valley, I was qualified as very low income on a salary that would be decent elsewhere. As a nonprofit worker, though, I also received 0 pay adjustments for the entire 5 years I was at my previous job- no raises, no COLAs. I found a job in another state where COL is ~60% lower than SV but I’m getting paid 40% more (not comparing COLs, dollars-to-dollars). I came here with savings that didn’t mean anything in SV but give me a significant leg up here, and my brain is broken about money, so I likely fall into that excess spending group. If I could have afforded to stay, I would have, and it sucks to know that even with the success I’m having here, I’ll never have enough to move back.

        Coming back to the question, even with my experience, I’m pretty torn. It just varies so much industry-to-industry. The one I’m in happens to be chronically underpaid almost everywhere and I don’t know what would help fix that.

      4. Bagpuss*

        No, you’re right, that is exactly what happens.
        The problem is that these things are complicated and it is difficult to strike the right balance.

        For instance, i work in a smallish, rural town. We are situated between two larger cities.

        Our salaries are geernally a bit lower than companies doing similar work in those cities. So are the rates we charge.

        Our employees are, however, in general slightly better off in real terms than peole doing similar jobs for higher salaries in the cities, because they don’t have the same level of travel costs or, if they live more locally, housing costs.

        We’ve actually had people leave for higher salarlies and then ask to return as they find that the increase is more than swallowed up by the extra costs of travel and parking.

      5. Cascadia*

        Yes, and it’s a big problem! Google what is happening in Boise, Idaho or in many towns in Montana – especially Boseman and Missoula. People that have lived there for decades can no longer afford to buy a home because all of these remote tech workers from California have moved there during the pandemic and snatched everything up. It’s devastating to the local economy as most of the people who actually work in and support the town are not even making a quarter of the salary that the remote techies are making.

      6. someone*

        But is that really a bad thing? Isn’t that just how supply and demand is meant to even out the cost of living across the country? Low COL areas go up in price, high ones come down, and eventually it stabilizes out in the middle? Sucks for people who have been in artificially low COL areas, but they’ve been benefiting from a bubble anyway…

        1. Littorally*

          Unfortunately, it doesn’t actually work out that way, because the market isn’t perfectly efficient. A $1000/year rise in COL in one area doesn’t actually get offset by a $1000/year reduction in COL somewhere else.

        2. BubbleTea*

          It’s a bad thing for the people whose income isn’t high enough to cope with the increased prices of everything…

        3. Scarlet2*

          When do prices in high COL areas go down? It looks to me like housing costs have been steadily rising in a majority of places.

      7. starfox*

        Yeah, I don’t understand that comment. Paying different wages for different geographic locations would mitigate gentrification, not drive it.

    3. Captain Swan*

      Well , the US Federal Government has been giving locality pay for different geographic areas for decades. So I would think there is plenty of data to study. Now if there have been specific studies done, Google can probably find them. (Not being sparky, just no time to Google it now).

  8. MCR*

    The answer to this is easy – if a job is required to be in-person, it should pay a salary appropriate to the COL in that location generally. If not, then the job can likely offer a lower salary. If the lower salary is not enough to attract workers or causes existing workers to leave, the company has to pay more. I know there are a lot of anti-capitalists on this board, but the market really does solve for these issues….

    1. frame*

      sure. the market solves problems, as long as you don’t care about the externalities that are causing crises of the everything

    2. Mid*

      Not sure what anti-capitalists have to do with your point, and it seems like an unnecessary addition unless you’re trying to start an argument.

        1. len*

          MCR is describing the world as it is, I don’t have trouble accepting that just because I think it’s a shitty system.
          I also didn’t take his comment as a dig though.

        2. MissElizaTudor*

          Not all anti-capitalists are anti-market. Markets are not the same as capitalism. We have a capitalist system, but we don’t have a genuinely free market.

    3. OnlyALittleAnti-Capitalist*

      That works if people can leave for other jobs. There’s plenty of reasons people get stuck in areas where there aren’t any jobs that pay a salary appropriate to COL. If you’re operating a business with a lot of highly skilled workers who have a support network that would allow them to move and/or be without work for a couple of months, then your supposition is correct. Admittedly, that’s a pretty reasonable assumption to make about jobs that can be entirely remote, but it is an assumption that leaves people out.

    4. len*

      I’m anti-capitalist and I think this is accurate.
      I also don’t agree that “externalities” in terms of effects on previously low-cost areas of the country are a central issue here. I don’t think it’s more equitable for housing to be extremely unaffordable in certain cities only, rather than broadly unaffordable everywhere — people who are from NYC and San Francisco are getting priced out too, and it’s not any better for them to be forced to move elsewhere than it is for someone from Boise. Both are bad and the solution isn’t at the level of wages.

    5. Littorally*

      Eh, presuming a perfectly efficient market sure. But the market isn’t perfectly efficient.

  9. Anya Last Nerve*

    I think the problem with determining the “value of the work” is that the market necessarily requires you to consider cost of living for in person jobs. For example, if we decide that, without regard to location, we think the value of a receptionist’s work is $30k, we may find that we get almost no applicants in NYC or not the applicants we want. NYC is expensive so if you want a quality receptionist who will stay long term, you have to pay more than $30k. But if you are hiring in rural Minnesota, $30k may be perfect.

    That said, I do believe salaries for remote employees should not vary based upon location.

    1. Loulou*

      Right, the idea that “the work” has an ideal and fixed monetary value doesn’t make sense.

    2. Bee*

      Right, once you start trying to figure out the right pay for every location you stop making any sense at all! I think I feel like the remote workers should get the same, but the people who are required to come into the office should get a bonus for that – both because they are required to live in a higher-COL area and because they don’t have the flexibility/options the rest of the staff does.

      1. Cataclysm*

        I don’t agree that in office workers should get extra pay for not having the same flexibility — there’s benefits that in office staff gets that remote workers don’t have too. For instance, pre-pandemic, I worked at an office where there was a restaurant meal at least once a week and they had a fridge and cupboard of food that you could use to make basic sandwiches, etc. You could also take catering leftovers home. So my food budget was way down as a result of being in person. For less tangible benefits, it’s also been pointed out that the lack of face time as a remote worker can make it harder to earn promotions, recognition, and general connections

        Basically, there are pros and cons to both situations, so I don’t think unilaterally giving one a raise is fair. I do think though that hazard pay for COVID risk would be fair for in office workers right now.

        1. Bee*

          Ok, but the amount my food budget would be reduced by free lunch and the amount my rent costs would be increased by a requirement to live in San Francisco aren’t even remotely comparable in scale. This isn’t a generic pros & cons argument about in-office vs. remote work; this is about how to retain the handful of people they’re requiring to be there every day. (And besides, if most of the staff is remote, the in-office workers aren’t getting face time with their WFH bosses either.) This is “half of your coworkers are now paying $20,000 less in rent per year because of a choice that we will not allow you,” which absolutely engenders bitterness, even among people who might choose not to move. So if the company wants to keep those “essential” people, they should pay them more!

      2. J*

        Not every remote worker has flexibility other than location. My last remote role still required I bill 6 minute increments all day long because our funders demanded it. I was working remote because I’m high risk but I also had to subsidize my work setup at home because my industry deals with confidential data and I needed to build a private secure space out. We can’t assume every remote job has equipment fully paid for or flexibility. My current role involved getting at least more than just a laptop sent my way and I can pause long enough to put laundry in the wash but rarely could I get a dog walk in. I just log in from a different site in a different time zone so questions can be addressed during core business hours that our east coast people aren’t working.

    3. Antilles*

      For that first paragraph with in-person jobs, I have a personal example right from my own life:
      When I was first graduating as an entry level engineer from Ohio State many years ago, my graduating class had a career fair and the California Department of Transportation came in, interviewed a bunch of grads, and made a lot of offers. In raw dollars, the value they offered (~$45k) was right in line with what local companies were offering as a salary. But of course when you factor in the cost of living difference, the offers from CalTrans wasn’t remotely competitive – that $45k was equivalent to like, $30k in the Midwest and so laughably low that nobody in our graduating class considered it even though plenty of people got offers.

      But IF the job had been fully remote so people could still live in Ohio? Then their $45k offer would have been much more competitive and they might have ended up actually getting people to take it.

  10. Gnome*

    FWIW, the federal government has locality based payment to address the cost of living differences. There is a base pay table and different localities (mostly states, but some metropolitan areas) have different multipliers. So if you are an accountant and move from one area to another, your pay will likely change, but your relative income should not (with a progressive tax system, this really isn’t true, but that’s a different issue).

    2. Napster*

      Came here to say this from the military perspective, where fair pay has its own challenges, but at least it’s transparent.

    3. Bagpuss*

      Yes, I am in the UK and while formal adjustments for other areas are not all that common, ‘London weighting’ is very much a thing – and COL is part of ‘market rates’ calculations for practically any job.

      I think my view is that it is reasonable take COL in a particualr area into accounbt, but that employres should be trnasparant about it so that workers can factor in any likely changes to their pay if they do move – and of course greater transparancy about wages has lots of ther benefits as well!

      (Interestingly, there was a report published here today about someone who lost an employment tribunal after trying to claim that her employer was making unlawful deductions from her wages – after they stopped paying her the London weighting for her job becuase she was permanently working from home and no longer met the criteria. Her argument was that the work she was doing was on london based files, but her employment terms explicitly set out that the weigting was based on where she ws working, and her normal place of work had been agreed to be her home, which was outsidethe area covered (had she been regulalry travelling into the london area she would have been entitled to a separate london weighted payment, but she wasn’t)

      I felt slightly sorry for her as the employer made a mistake and didn’t adjust the pay when they should have done, so she had been overpaid, but the contract terms were pretty clear (and it looked as though they had done a lot to accommodate her when she needed to work remotely even pre-covid) )

    4. someone*

      At my company I was told there would be no salary adjustment if I moved to a higher COL area, like where their headquarters is. It feels blatantly unfair that I do the same work as someone who gets twice what I get and can thus afford to move to NYC or SF

    6. musician*

      Yep, came here to say this. I’m in the VA system, and there’s about a $4,000 range between the salaries of the several current openings for my position nationwide. I assume that range would be larger if there were any open positions on one of the coasts.

    7. Lina*

      Yes, the feds have worked this out possibly as well as it could be? Pre-COVID, and during COVID, your salary was based on the set pay band for your area plus the “locality adjustment”, or cost of living percent increase, for your duty location, which in most cases was the physical address of your agency’s office (I’m speaking civilian here, not military). If you chose to live in another location – which happened, but rarely – you would still receive your duty station salary, but had to physically visit the office at least two days per pay period (four days out of every four weeks). If you were assigned in another location, you would get that location’s locality adjustment.

      Example: I worked for an agency with an address in Georgia, but was assigned to work in Massachusetts. I received the same pay band in both places, but a different locality adjustment for GA vs MA.

      A colleague worked for the same agency in Georgia, but chose to live in North Carolina. They received GA pay and locality adjustment, but were required to travel on their own dime to the office in GA at least 2 days every two weeks (folks I knew did this as a Thurs/Fri in week 2 of the pay period, stay the weekend, at the office Mon/Tues in week 1 of the pay period, then home for 3 weeks and a day before doing it again).

      During COVID, some people fled Georgia for Tennessee, the Carolinas, or even further afield, but still were making GA salaries, while everything was up in the air for two years.

      Now that it’s become clear that permanent remote work is a thing, policies have changed. We are now able to work from anywhere (domestically – overseas is a bit more complicated). The “two days per pay period in GA” policy has been rescinded, but the tradeoff is now “your pay band stays the same but your total salary will be reset to include the locality adjustment for your duty location, which is your non-local commuting area home”.

      Yes, this means some folks have taken a pay cut in the last few months. Most of them feel like the tradeoff for being in a lower-COL area, near family, away from the big city, better job market for spouse, whatever their benefits are, makes up for the difference.

  11. Xavier Desmond*

    Well my political views skew incredibly left wing so for me “From each according to his ability, to each according to his needs” is the ideal but living under capitalism means there isn’t an ideal solution.

  12. Gregory*

    I work for a (small) company that is remote-if-you-want and based in a big, expensive city and we pay our workers the same wages regardless of where they live. From my perspective, this seems like the fairest option, especially since a company located in a lower-cost city wouldn’t ever adjust your salary upwards if you chose to live in a more expensive area – they would just tell you that the salary is the salary.

    1. ThursdaysGeek*

      And I’m in kind of the same, but opposite situation. Our large company is based out of North Dakota, and also pays workers the same wages. So in ND, the wages are really good. A co-worker from a more expensive location is moving to a lower cost of living location, which will give her an economic boost. But my wages are dismal for the area and cost of living, and moving isn’t an option for me. (I stay because everything else except pay is really good, and I’m about to retire anyway.) But will they be able to hire good people like me in my location? They need people here, but it’s hard to retain them.

  13. Justin*

    Of course, I’m saying all this theoretically. My current company pays the same regardless of location and most of us work mostly (but not entirely) remotely. And it’s a much happier place to work, so probably this is the best way.

  14. Windfalltax*

    Companies pay you for the labour that you provide. (Or should do, anyway. Arguable that they’ve actually been doing that.) That’s based on the value you provide to the company. I don’t see how in any way that should be tied to where you live.

  15. Former Retail Lifer*

    Before remote work became a thing, pay would vary based on where the work location was. Even within the same company, those that worked in larger cities received more than those that worked out in the boonies. I’d remove working in-person vs. remote from the equation and just ensure you’re offering a competitive salary for the market the physical location is in. If people are working remotely and can choose to live far away in a cheaper area, then that’s just a great perk. But I wouldn’t use that as a factor when considering what to pay people since their living situation could change at any time.

    1. Merci Dee*

      This is the biggest problem with paying workers based on where they live, as far as I can see — that their living situation could change at any time.

      I know that a lot of companies have run up against this issue since the pandemic and WFH became wide-spread. Many companies wanted to pay their employees lower salaries if they moved away from the home office location and lived in a lower COL area. That’s great for the company, but maybe not so great for the employee. But what happens if the employee moves more than once? Say that the employer is based on an area that has a pretty average COL, and they want to drop employees’ salaries if they move to an area with a cheaper COL. So . . . what happens if the employee then has to move to an area with a COL even higher than the one where the employer is based. For instance, what if the employer’s HQ is located in a mid-range city like Memphis (TN), and they drop an employee’s salary when they move to Auburn (AL), but then the employee has to move for family emergency reasons to NYC? Is the employer going to give them back their original salary, plus an additional adjustment because they’re now living in a way more expensive location than where they started? I haven’t heard of any examples of this from the past couple of years, and I’m not sure that I would have. But if you’re going to drop someone’s salary because they move somewhere less expensive, it seems like it’s only fair to increase it if they move somewhere that’s more expensive.

      1. Rach*

        My (very large tech) company just sent out documentation on remote work and it is based on location and will change within a band depending on cost of living in that area. It all seems pretty fair on paper as they’ll adjust up and down depending on location of the remote worker (similar to the federal gov). But, the area I live in was LCOL until recently and now it is mid-high cost of living. I’m 100% on-site and my raise did not keep up with inflation or the higher cost of living in the area. So now people working in Portland are making significantly more than me because their historic cost of living was higher, even tho the cost of living in my city has sky rocketed.

        My company is trying but still missed the mark.

      2. venicemenace*

        This *is* how it would work (salary may need to be increased to reflect a higher COL) but also, that relocation would need to be approved.

        1. Merci Dee*

          In theory, this is how it =should= work, salary adjustments should adjust up just as easily as they adjust down. But all I’m saying is, I haven’t heard of it actually working out like that for any of the companies that were highlighted during the early days of the pandemic for lowering their employees’ salaries when they moved to lower COL areas. Maybe it has; I sure hope that it has. But I haven’t heard anything about it if it has.

  16. Blisskrieg*

    I think a common-sense blend. I certainly would not walk back a salary for someone who moves or changes to remote–that would be highly demoralizing. However, I certainly would factor a high cost of living into the initial offer–that would help ensure attracting good talent. Like seniority, it shouldn’t guide the whole picture, but it should play a part.

  17. Oliverr*

    I recently got hired at a company that does location based hiring. I live in a place where cost of living has sharply risen in the last few years but isn’t on either coast so I don’t have the DC or SF salary band. It means that I am getting paid $3k less than others in my role. Having these salary bands I have found is really demoralizing in the organization. There is definitely the perception that they are staffing up in cheaper locations, and when do they decide a city/state has come worthy of an NYC salary? Also how much are they really saving by having such a small difference in salary bands? Someone in a Montana or Missouri making the same salary as a person in NYC, does not hurt the NYC person at all, as long as the company is paying their workers living wages.

    1. Alexis Rosay*

      The difference in salary bands is not always that small–a bunch of classmates just got hired at a place where the difference is almost $25k between high and low COL areas. This is at a company where the lowest end of the pay band is already quite high, so it’s not like anyone will be living in penury. However, it is already apparent that people hired in the ‘fully remote’ pay band are feeling a bit demoralized and they haven’t even started work.

      At the same time, I work at a global company that is doing tons of hiring in Europe and China and very little in the US because salaries in both those places are so much lower…so for me, paying people differently based on location just feels like a fact of life.

      1. Rach*

        I’m in a similar situation, the cost of living in my area has significantly increased but the people who work in a historically HCOL city make significantly more than me (probably around the $15-20k mark) and it is a little demoralizing. Tho I make a good income so it is difficult to complain.

        I think paying based on location is the only equitable way to do it but I also think we need assess COL more often and give appropriate raises (not going to happen but one can dream)

      2. I went to school with only 1 Jennifer*

        Europe is pretty big and housing prices are high in the big cities there. Is it being treated as a monolith (for salary purposes)?

    2. BugSwallowersAnonymous*

      I think this point is what’s convinced me after being on the fence – I don’t really trust my workplace to accurately asses the true COL in my area. My hometown, for example, isn’t a major city but everything is still so much more expensive now than it used to be, especially housing.

  18. michaela*

    Question: if I work remote from a cheap area and I move to an expensive city, am I eligible for a pay rise?
    If no: then pay cuts to people moving to cheaper areas are unfair

    1. President Porpoise*

      This is where I stand on it. If you want to do location based pay, it needs to go both ways.

    2. irene adler*

      Right- it should go both ways if the policy is to adjust pay for the COL where employee resides.

    3. Hodge*

      Yep, this is my question too. If my employer tried to cut my pay (for any reason, but especially for moving when it wouldn’t affect my productivity) my first question would be “what duties are you taking off of my plate?”

    4. Rach*

      Yes, my company just released information on fully remote positions and they will adjust pay up and down based on location. It’s more like you have your base pay and then a COL multiplier.

    6. WhatAMaroon*

      I continue to turn this one round in my brain and I think where I’ve landed is that I agree with Michaela with what I think an assumption probably everyone is making but I want to spell out so I can see what feedback other people have which is “and if you choose to move to a HCOL area that your job has not required you to move to they can make a decision that they can’t afford that and so can state that they won’t be able to give you that bump.” I think everyone’s probably been operating with this assumption in all of this but wanted to state what the other paths are

  19. Siege*

    While I really want to say you need to pay for the labor, the reality is that the pandemic has created a situation where people have moved to LCOL communities and are driving up prices there, to unattainability for locals. I like the idea of creating bands based on location and paying in that. But you absolutely will need to set a limit on how small the band can be; you can’t pay less for a poorer (more diverse) address in the same city.

    And you do need to add a DEI lens – it’s very unlikely that a BIPOC employee is going to be comfortable living to most of the LCOL regions of my state, which are largely wildly racist and right-wing, so you can’t expect that your BIPOC staff will lower their (and your) costs by picking up and moving to Marble, WA. It will take hard barriers to ensure that BIPOC aren’t “too expensive” for your company to hire.

    2. Gregory*

      This – I live in a HCOL place and as a black and gay employee, I’m not sure there are LCOL parts of the country I *could* live in comfortably.

      2. Spearmint*

        There are LCOL places that are majority PoC, but they’re places like Detroit and Cleveland and south Texas, but these aren’t the most vibrant and amenity filled places.

        3. Warrior Princess Xena*

          TBF even as someone who doesn’t face that sort of privilege barrier and can go wherever, LCOL places aren’t full of vibrance and amenities. Eastern Washington, which is the nearest one to me, is flat, boring, and has uncomfortable weather. That’s the tradeoff for LCOL – it’s LCOL because not as many people want to be there. Cities are more expensive.

          I’m not trying to downplay the DEI angle or the safety concerns, but there are going to be tradeoffs every time you move to a new place and level of fun vs COL is one that is common for everyone.

          1. Charlotte Lucas*

            Funny! The one thing this Midwesterner always liked about SE WA was the weather. (Real seasons with no real humidity, but I did miss trees. The area I was in was definitely not flat, either.)

        4. AY*

          Utterly beside the point, but I must stick up for Cleveland having a surprising amount of amenities: rapid transit, great arts and museums, beachfront, kickass library system, etc. Lived there for a year and could’ve stayed longer if not for work.

        5. Imtheone*

          Cleveland is great! Don’t know about the other examples.
          But good schools may require living in more costly areas/near Cleveland (which includes racially diverse areas).

      3. Ally McBeal*

        I read a fascinating article this week about a big employer (Pella) in small-town Iowa, and the headache they’ve been having trying to recruit people to work at corporate HQ. Part of the issue is how extremely Dutch that town is – very white and culturally conservative; a pastor is quoted saying some of his congregants are upset that new residents mow their lawns on Sundays. Imagine caring more about your neighbors doing chores on the Sabbath more than the ongoing survival of the town, and what that says to people with minority backgrounds/attributes considering a job there.

      4. The Original K.*

        Yep. I’ve had the same conversation with one of my best friends, who is a Black gay man. I have privilege as a cis straight woman but I’m still Black, and I take demographics very strongly into account when deciding where to live. It’s not just about whether restaurants stay open past 8 or if there are museums (although those things matter to me too); it’s a matter of safety. There are neighborhoods in cities that I avoid because I know I’m not welcome.

    3. Language Lover*

      This is where my thoughts are. It’s not the responsibility of this one company to fix this issue but if multiple companies start doing this, then higher-paid remote workers are going to flood LCOL areas and make them higher COL areas.

    5. A Person*

      I think the other big equity issue to paying based on where you live is that it’s easy to see it reinforcing existing privilege. Do you live in a mansion in Richtown you inherited from your your parents and pay no rent? Congratulations, you get paid more than the person who rents a shack in Poorville with no running water. It turns out your COL is lower when you don’t have access to basic services!

      Isn’t this how we end up with companies relying on sweatshop labour from less wealthy nations – pay the poor people less and keep ’em poor so you can keep exploiting them?

  20. Delphine*

    [I]If an employee living in a high-cost area was hired at a certain salary, elected/got approved/was required to begin performing work remotely during the pandemic, then chose to move to an area with a lower cost of living — with no other changes in the terms of their employment — should that employee be asked to take a pay cut? Think Google vs Reddit.[/I]

    Would you give this employee a raise if they moved to an area with an even higher cost of living?

    1. Alexis Rosay*

      For companies that have established pay bands based on location, the answer would be yes.

      1. Rain's Small Hands*

        Every company I’ve worked for you have to get approval to move to a higher COL area and get an increase in pay. You don’t just get to say “I’m moving to the San Francisco office, I’ve always wanted to live in California.” I almost did that with my last company because my husband almost took a job in the Bay Area and we had offices there. He didn’t take the job – it didn’t pay enough to make up for the COL – and it paid twice what he was making here – we would have taken a hit to our standard of living even if I’d been approved – which was in process. And there were two approvals – will they have a desk for me there (could they move the role) and would they give me a COL increase. They were separate decisions (obviously the first isn’t at play here)

    2. Two Chairs, One to Go*

      Great point! I’d be so pissed if moving meant taking a pay cut. A few years back one of my coworkers moved since her mom died and she had to handle the estate. Since the company didn’t do business there, she was paid through an agency. So while the benefits were different, her salary stayed the same. I can’t imagine having to deal with that AND a pay cut.

  21. Hermione Danger*

    The company I work for won’t charge clients less for my work based on where I live. Cutting my pay because I live somewhere less expensive would allow them to make more money while not changing any of their expectations for my performance. Unless that cost savings rolls back to the client, all I’m seeing when companies base pay on location rather than the value the employee’s work brings to the organization is another example of corporate greed.

    1. Siege*

      If the company OP works for doesn’t charge for individual contributor services, this is a non-issue. I’ve never worked anywhere that my work and the work of my colleagues was anything other than overhead.

    2. Doctors Whom*

      Do they charge only flat rate?

      Our billables are on actual cost. We have an overhead factor built in that gets adjusted each year, but I can tell you exactly what one day of effort from every specific engineer on my team costs when billed to an agency as part of work performed. The overhead factor is applied against all of our salaries as a percentage of the labor cost. And we do have COL multipliers for the areas in which we have a business presence.

      If my engineer in quiet Ohio town is working on your project, it will cost less than if an engineer of the same level living in Washington DC was working on your project. (We use blended rates for estimates but all charges are on actuals.) My client doesn’t get told “Ohio guy is working on this so it’s cheaper.” We staff work according to skill & availability, and then billing for effort is strictly a multiplier of the number of days and the daily rate.

    3. BugSwallowersAnonymous*

      This is also a great point. The savings are definitely going to the company, not the employee, if you pay by location.

  22. blupuck*

    I live in a low COL state. I previously managed an employee in a very high COL area (Bay Area, CA). Due to regulations regarding foreign workers, it was government mandated that she make a certain amount.

    My manager was so flustered when he had to tell me I managed someone making more than me.
    I did not care. I understood she was not getting rich off a few extra thousands when her housing costs 5 times what mine did.

    She later moved to a much lower cost of living area. We did not adjust her salary downward. She had proved her worth.

    Alas, when she moved again to a very low COL country, we could not retain her. Though we had a presence in her country, the salary adjustment required was too much to work around. It was sad and we lost a great worker.
    People understand COL and 1000 dollars buys vastly different amounts of goods and services based on location.
    There needs to be some appearance of equity, but your dollar does not always equal someone else’s dollar.

    1. mreasy*

      I was once denied a raise that I explained I needed in my extremely high COL location, which location was a big benefit to the company in my role. They said no, because people above me in extremely low COL location made just that and they “would have to give a lot of raises.” Well, I found a new job in a month and they eventually started basing salaries on COL where employees are hired, and later the head of the company told me they had made a mistake. Moral of the story, it’s about quality of life, not someone getting their feelings hurt seeing a number.

  23. Prospect Gone Bad*

    Should be (somewhat) location dependent. I think the problem is real estate. Home prices are based on the most recent highest paid comp. All it takes is one overpaid person from LA to move to a small town and overpay for a house without realizing it, and suddenly hundreds of people are priced out of a house. It’s not logical but it happens. This is happening in my large hometown area now. There was a spike in home prices with people leaving cities but now the market is frozen and houses are sitting for months so far, with sellers saying “but this is what the house is worth! Where are the buyers!”

    1. Siege*

      It’s gotten so bad in rural parts of my region that a fire department is going to build a dormitory because none of their employees can find housing. The real estate component is very real, and the solution isn’t to shout that everyone should be paid the same as the pandemic workers distorting the scale.

      1. Elizabeth West*

        Yes, and real estate developers are concentrating on high-cost investment properties instead of affordable housing. That makes the situation worse no matter where you are. It’s a multi-pronged problem that is going to require a multi-pronged solution.

  24. Jenna Webster*

    I’m sure there are plenty of reasons for both, but I know I would be much less likely to work for a company that paid me less than other people doing the same job because of where I lived. I can’t really see ever taking a job with a company that did that.

  25. Clefairy*

    Would employees be getting a raise if they moved to a higher cost of living areas? No? There is your answer.

    1. Alexis Rosay*

      If the company has established pay bands based on location, they would be getting a raise by moving.

      An acquaintance was just hired at a new company and was able to change her pay band from ‘remote’ to ‘near-office’ by moving, giving herself a significant raise.

    2. Raboot*

      I mean, a lot of companies with regional pay bands do that, yes. My company does that. I am seeing this argument all over this thread and it’s just not as much of a gotcha as people think.

  26. Anon for this*

    I’m currently wrestling with this. I was told there ‘is no room in the budget for a raise for you this year’. My boss was eventually able to wrangle a below average raise for me while telling me that my department (and a substantial portion of the company’s revenue) would not exist without me. She was not given an explanation for the no budget decree but thinks it is related to me being in a low cost area. The thing is – salaries in my area are high, not Silicon Valley high, but still high. I’ve recently interviewed for both comparable roles and roles that are a step down. Even the step down role was still offering $20k more. These roles don’t offer the same impact that I’m able to make now, so it’s a tough decision. I’m trying to work on a plan of attack since it does seem like I’m being underpaid, even for a lower cost area.

  27. Green tea*

    A lot of my family lives in a state known for beautiful scenery and very few job opportunities. Historically, it has been hard to buy houses because of competition from higher-paid out-of-staters buying vacation homes. Since Covid and remote work, however, the situation has gotten so much worse. The prices of homes have skyrocketed well beyond the national average of increased prices and locals now also have to compete against out-of-staters who can work remotely and want to relocate full-time. Rents are also rising very fast, and a lot of people who have lived in these communities for generations are being pushed out. I read an article about something similar happening in Mexico City as people who used to live/work in California temporarily moved there to save money.

    I don’t think there is an easy answer on whether employees’ salaries should have a cost-of-living adjustment, and I’m not trying to say that people from other states have less of a right to live in this state than the people born there do. But one additional factor to consider is the impact this will have on these communities people are moving to if remote salaries are kept the same.

    1. Analytical Tree Hugger*

      “But one additional factor to consider is the impact this will have on these communities people are moving to if remote salaries are kept the same.”

      Agreed! And I say this as one of those awful out-of-state people who moved and are likely making housing less affordable :/

      Makes me wonder if I should move away…

      1. Green tea*

        Speaking with all the caveats of being only one person from one of these communities and not currently living there, I vote no, don’t move away. Just try to be a good member of the community.

        This is a structural problem and not the responsibility of individual people who just want to live their lives to solve. And if all of the kind, respectful people originally from out-of-state move away again, you are just going to be replaced by less kind, less respectful people from away.

    2. John*

      Why is this a problem? If Bob and Joe both want to live in a beautiful state, I don’t feel like Bob has more of a right to live there than Joe just because he was there in the past or his family was there. Especially since, in most of the scenic states I can think of, the ‘traditional’ populations of those states are white and upper-class. Bob could also get a similar remote job to Joe, now that that possibility is open to all locations.

      1. Green tea*

        The upper-class people are not the ones being priced out of living in their communities. It’s the lower-class people – majority white but certainly not exclusively – who are being pushed out and they are being pushed out by almost exclusively white, affluent remote workers. The demographics are becoming wealthier and whiter through this process; I might feel differently if this was at least increasing the region’s diversity, but that is not what is happening.

        Why are any of the considerations in the pros/cons list worth considering? Because of what people think is important. If you feel that this not a problem, I certainly see no reason to argue with you about your feelings.
        That doesn’t mean how you see the world is universal – I raised it as a factor for OP to consider or dismiss as she sees fit.

        1. Fran Fine*

          It’s the lower-class people – majority white but certainly not exclusively – who are being pushed out and they are being pushed out by almost exclusively white, affluent remote workers.

          In my city, it’s poor black folks being pushed out of the neighborhoods they grew up in, not whites.

          1. pancakes*

            Rent control is a good way to protect either, both, or anyone else from being pushed out of their neighborhood.

          2. Green tea*

            Yes, I was speaking specifically of my community (and specified race only in response to John’s comment), but I agree that overall gentrification definitely impacts BIPOC more than white people.

  28. Not Tom, Just Petty*

    With all seriousness, in the discussions, did anyone suggest this:
    “If an employee living in a high-cost area was hired at a certain salary, elected/got approved/was required to begin performing work remotely during the pandemic, then chose to move to an area with a HIGHER cost of living — with no other changes in the terms of their employment — should that employee be GIVEN A PAY RAISE?”
    The hypotheticals are endless. For example:
    If it’s for a really valued employee who had to move because his/her child needed to be a specific school district that offered a program for a special needs child, or near a medical/nursing facility for an ailing spouse, would that influence the decision?

    How does one create a system that is fair to everyone, where fair doesn’t mean equal, but rather according to the value brought to the role?

    1. Warrior Princess Xena*

      It’s not going to be possible, at the end of the day, for companies to adjust for every single possible factor that happens in an employee’s life. People are going to have student debt. People will have nasty divorces. People will have family members die/be sick. People will have kids. Individual companies should not be responsible for every factor that happens in people’s lives, because the vast majority are not something they can control and are frankly not their business.

      You bring up the question of a system that is fair to everyone. Setting aside questions as to the feasibility of such a system, which I do not think likely (humans are not perfect and no matter how well-designed the system there will be points of failure), the most common way to set up an equitable system is to first find a way to measure the inequality, then adjust your calculations by that measurement. And while adjusting by COL does seem unfair on the surface – less money! – it does mean that there is more equity in terms of purchasing power. Which is ultimately what determines your comfort more than gross salary.

      1. Not Tom, Just Petty*

        Thank you for answering my question. Your second paragraph was quite brilliant to me. It clarified the issue for me and explained the reasoning behind the COL factor.
        I appreciate it.

    2. Rach*

      My (large tech) company will pay (both more and less) depending on where you move in a remote position. The move has to be approved so we shall see what happens in practice, but, yes, pay will increase (or decrease) if took a remote position (I’m 100% on site at the factory but I would be qualified for a remote position) and I moved from my current location and there was a different cost of living at my new location.

  29. 2ManyBugs*

    I’m strongly on the side of location-blind salary ranges, and if some employees take their SF salary to Arkansas, I don’t see it as an inequality/privilege issue, really. Companies pay people the smallest amount they can manage in exchange for the most work they can get out of them – talking about reducing salaries because they moved is the same red herring as claiming you shouldn’t have to pay single employees or childless employees less because they’re not “supporting a family”.

    Lowering someone’s salary because they moved doesn’t reduce inequality or increase fairness. If you work in-person in an expensive city, it doesn’t decrease your opportunities or help your life to have someone who lives somewhere else make less. It just pays people less overall. Wheras the societal benefit of increasing salaries in non-large city locations is: less housing pressure in big cities. More expendable income in small cities and rural areas. Better distribution overall of high-paying jobs in general. It’s a net benefit to the real economy, even if not to the 1%’s stock prices, you know?

    1. 2ManyBugs*

      ** typo: “You can pay single employees less…”, not “you shouldnt have to”, sorry!

    2. Nanani*

      This is pretty much where I fundamentally stand.
      It’s telling that this question gets framed as “but is it FAIR that bob gets to make Big City salary in Small Town” as an excuse to cut Bob’s pay, and pretty much never the other way around.

      1. OP*

        This is basically where I stand on principle as well! But honestly the discussion here mirrors all of the intensely complicated considerations involved in making this call. For context, I live in one of the highest COL cities in the country, which is why the post is framed in terms of pay cuts. I was really surprised that several colleagues I know and respect, who are otherwise pro-worker in stance, were completely okay with the idea of taking a pay cut to move to a different area.

        1. WomEngineer*

          If the employee is choosing to move and is willing to take a pay cut, that’s on them. Maybe they have a hobby that’s location-specific or family they want to be close to.

          But as a general rule, the business shouldn’t pay differently for the same work. You wouldn’t pay differently based on (for example) if they have kids or not.

    3. Mf*

      Yeah, we call come up with an individual scenario where location-based salaries seem more fair, but when you look at the big picture, it really seems like a location-blind salary system is more beneficial to our economy as a whole.

      1. frame*

        i think the opposite. in individual cases, location-blind pay is fine, but when you start having remote workers drive up COL and potentially forcing low-paid people to leave their homes it worries me.

        2. Siege*

          Yep. The bookstore in Pomeroy (population: 1400) can’t increase the pay they can provide just because there’s been an influx of remote workers who make more money and can snap up any house on the market. Pricing people out of their communities is a real issue.

          1. I went to school with only 1 Jennifer*

            If those new residents make an effort to spend their money locally, it would benefit that bookstore in increased sales. But that’s a biggish “if” because so many people are hooked on near-instant delivery. (I know that when I moved to this town with a single independent bookstore, I started buying from them specifically because bookstores are important to me. But I also know that other people don’t make the same calculations I do.)

          2. pancakes*

            It is a real and very important issue, and as far as I’ve seen I’ve been the only person here to mention the possibility of rent control as a way to stop people from being priced out of their communities that way. I’ll separately link to an article about Hudson NY doing precisely that very recently, in response to an influx of new residents from NYC. I think it’s a great idea.

  30. Remotestart*

    One thought to consider is that, at least in our industry, the amount we charge for services we provide are tied to our geographic location (Midwest). We can’t charge our Midwest clients east/west coast prices and still remain competitive locally. Therefore, our revenue (and salaries) have to be based on Midwest COL. Might not be totally fair, but I understand my company’s thought process.

    1. Hlao-roo*

      I think the “pay for the work” argument for this case is:

      Worker A lives in the Midwest and works with Midwestern clients and gets paid Midwestern wages.
      Worker B lives in the Midwest and works with NYC clients and gets paid NYC wages. The value of B’s work is higher because the company can charge more money to the NYC clients.
      Worker C lives in NYC and works with Midwestern clients and get paid Midwestern wages. Probably not a very good solution in C’s eyes, but I can see the fairness in the logic. (If I were C’s friend, I would tell them to lobby for NYC clients and wages, or to change jobs.)

      This may work well enough in a case like this, where the jobs in question service clients directly, but quickly gets more complicated when people work in roles that are more internal-facing.

  31. My Two Lincolns*

    Pay people less based on where they’re working from remotely if it’s cheaper. Then watch them go work remotely for another company that doesn’t have a policy that nickles and dimes its employees. Are these same companies discussing paying their employees more if they go to a higher cost of living area? No. The opportunities are greater for remote workers, and the talent pool is larger for companies that employ them- if their pay is competitive. I think it’s similar to problem minimum wage employers now have- they struggle to be fully staffed, much less with competent employees, if they’re only focused on a singular metric in isolation. Penny wise and pound foolish.

  32. Llellayena*

    What about something like this: Pick one of the higher COL areas to base your cross-company salaries on. For areas that are higher COL (San Francisco Bay? NYC proper?) have a “location bonus” to bring the salary up to the equivalent for that area. Separating it out in the compensation makes it obvious that that amount would go away if someone moves, but basing the salaries on something on the high side means you’re still competitive (and likely ahead) in the lower COL areas. But definitely base it on area/region, not on specific town/address/neighborhood. People still need to have some flexibility in finding housing in their budget (SF downtown vs. Oakland…).

  33. Squidlet*

    “If an employee living in a high-cost area was hired at a certain salary … then chose to move to an area with a lower cost of living … should that employee be asked to take a pay cut?”

    If the same employee moves to a higher COL area, are you going to give them more money?

    1. Squidlet*

      Also, would job candidates from higher COL areas then be discriminated against because the company will have to pay them more?

      1. Mf*

        Yeah, this is a bit potential issue, especially when you think about the fact that big cities (which are often high COL) tend to be more diverse than rural America. If you limit your candidate pool to low COL areas, that may translate to a whiter group of candidates.

        1. KatEnigma*

          I respectfully challenge your belief that poorer locations are only or primarily white. I come from the Rust belt – my parents’ house is worth about $40k. The school system is fully 50% African American. That number is even higher in the South, also adding large numbers of Hispanic persons in places like the rural SW or Florida.

    2. Curmudgeon in California*

      I actually couldn’t look at remote jobs in lower COL area companies because they paid as it everyone lived in that low COL area. I live in the SF Bay Area, one of the highest COL areas.

      I can’t afford to move, for a couple reasons. The lower COL areas are very redneck, and I’m AFAB married to another AFAB, and we’re both non-binary. But companies all over try to lowball me because if I’m remote I “could” move to a lower cost area, even though realistically it’s not feasible.

      Also, it is often unrealistic to work remotely from the really cheap areas. The infrastructure doesn’t support the network requirements. If I went to Florida, where my mother lives, I would be stuck on slow DSL, and with the company VPN it would be impossible to get enough bandwidth to RDP or even do Zoom meetings. Sure, some lower COL areas have good internet, but those are rapidly becoming medium to high COL areas.

  34. Alex*

    I think the market will shake this out. There will be companies that pay less for lower cost of living areas, and they will have trouble attracting the best people. This is more like a globalizaton of the workplace–the labor market used to be regional, and now it is much less so.

  35. ccb*

    One problem I see is that by paying people less who live in “poorer” or “low income” areas is that you are punishing them for that based on where they live when you hire them. You are keeping them in that neighborhood/area/etc. What happens when they person moves to a high COL area because of say…. a partner needing to move for their job. Are you then going to increase your employee’s pay? How do you prove that? For example, I live in a small town in New York State. The very fancy village close pay much much more property tax. We have the same zip code, I just live in the town not the high COL village. So do I show my employer my property tax bill to show what I should be paid?

    Ultimately, I think if your business is located in NYC (with it’s high COL) then you should pay folks accordingly. If your business is located in NYC but you have employees also living in say…. Albany NY and working remotely, they should be paid the same as those staff in NYC.

    1. Doctors Whom*

      In this scenario though –
      – the employee is moving for their convenience, not for a business need
      – you’re assuming the business will allow the employee to make a convenience move and retain the position

      There are plenty of reasons that the latter may not be true – just because a position can be done remotely there may be plenty of valid business reasons it can’t be done remotely just anywhere.

      We don’t adjust your salary if we approve a convenience move for you to a higher COL. We pay based on where we based your position when we hired you. (If we relocate you for a business reason, we adjust your salary.) We also can’t let people just go work wherever they want, so we do not have blanket approval to relocate. We base our salaries on our HQ location and then normalize with a COL table in the locations where we do business. If you are at the HQ in the midwest and want to relocate to NYC we might approve that if (set of specific qualifications) but we won’t pay you more for it.

    2. Rach*

      Yes, my company will increase remote workers salary if they move to a higher COL area (they have to get permission of course). The federal govt already has a system like this in place.

  36. Lorene Kennard*

    I would be interested to know from HR salary consultants what factor location plays in setting pay ranges. Do they calculate the value for the actual role and responsibilities then add X amount up or down based on cost of living in the area? Then, what value does the fact that position is remote carry? Does that make the position more or less valuable salary wise? How does it actually work?

    Also, I think it could be a big mess if I live in a rural area and decide to move to the big city. My employer does not have an increase budgeted for me. Likewise, if I move from the big city to a rural area, will they cut my pay?

    I would love to see some research on all of this.

  37. nnn*

    A thought without thesis or conclusion:

    If we’re going to talk about “the value of the labour” it’s not just the value of the labour to the company, it’s also the value of the labour to the worker.

    Just as an employer can decide “It’s not worth it to me to pay $X for this work – I’d rather do it myself or do without it”, a worker can decide “It’s not worth it to me to do this work for $X.”

    And dollar amounts don’t exist in a vacuum – a worker can decide “It’s not worth it to me to do this work if I can’t even afford my own apartment,” or “It’s not worth it to me to switch from a remote job to an in-person job unless I get paid enough to retire 5 years earlier”, or whatever the worker’s actual calculus is.

    And looking back at how I worded this post, I’m thinking what the labour is worth might be a much more nebulous concept to both parties than what the labour’s not worth.

    So maybe part of the question of location-based pay depends on whether the location changes the workers’ “not worth it” threshold.

    However, all of this is from a point of view of setting new pay rates. It’s out of line for an employer to ask an employee to take a pay cut because the employer believes that the employee’s expenses have reduced. That would be like asking employees to take a pay cut when they pay off their mortgage or one of their kids moves out.

    1. Hlao-roo*

      From what I remember of my Econ 101 class, you’re exactly right about the “price of labor” being set by both the employer and the employee! In the simplified Econ class examples, the hypothetical markets are all “this is a market for tomatoes, that are all perfectly indistinguishable from each other and eventually the buyers and sellers will all agree on one market price for a tomato and any buyer who thinks that price is too expensive will buy no tomatoes and any seller who thinks that price is too cheap will sell no tomatoes.”

      The real-life labor market is much more complex than the hypothetical tomato market because there’s differentiation in job type, worker skill level, how profitable a company is (profitable companies can pay workers more), and what the worker’s financial situation is. A company shouldn’t give a worker a raise because they just had a child, nor should it cut a worker’s pay when they pay off their mortgage. But a worker may decide to look for a higher paying job when they want to buy a house, or look for a lower-paying job when one of their kids moves out and that all makes it tremendously complex to set any sort of official “market salary” for a worker, even on the level of “an accountant in Cleveland, OH.”

  38. Roxy*

    Pay people what they are worth and if they are remote let them leave wherever they want. Also, the non-profit world has notoriously low wages. Imagine telling an already underpaid worker that you need to take a pay cut bc you moved to a more affordable city. It’s clear they already have the funds for this pay, I honestly don’t know what folks are thinking or do they really just hate keeping high quality workers.

  39. Quickbeam*

    I think the adjustment makes sense for New York City and west coast major metropolitan areas. Their day to day expenses are just screaming high. In my former company, if you moved to a similar state where we did business, your salary stayed the same. However if it advantaged the company to have you in NYC, SF or similar high cost places, they did a salary adjustment. They never did reductions, at least to my knowledge. If you did move from NYC to, say, Alabama….you lost the high cost adjustment.

  40. Abhorsen*

    Isn’t this basically why companies outsource their call centres to other countries where they can pay people less for work of the exact same value? It’s much cheaper for my bank to pay people to answer calls in a call centre in India, for example, than it would be to pay the equivalent UK worker. And I kind of think everyone loses that way. Except the companies’ executive staff.

  41. Nanani*

    Fundamentally, I lean toward Pay What the Work is Worth above the rest.
    Problem is that we don’t live in a world where most people are paid that – demographic factors, absolutely including location, affect salaries in the real world.

    I also don’t agree with cutting people’s pay based on where they live. Thats gross, in the same ballpark as paying men with wives and kids more “because he has a family to support”.

    The flip side factor is that if someone live in a low CoL place and accepts a salary, perhaps remote, that is lower than a peer in a high CoL place, then that someone can’t easily save up to move to the CoL place, even if doing so would open up different opportunities – like non-remote jobs.

    But ultimately, it’s hard to see this as more than hair-splitting in a world where the majority of people already aren’t being paid fairly and “you get to live in a cheaper town so we’re cutting your pay”feels like just another bullshit excuse to cut pay.
    Call me when someone does the opposite and *raises* someone’s pay because they moved. Not to attract them to take the job in the first place, but because they just happened to move.

    1. Anon all day*

      Call me when someone does the opposite and *raises* someone’s pay because they moved. Not to attract them to take the job in the first place, but because they just happened to move.

      I mean, there are multiple comments in this thread that have said that that actually does happen, so…hello.

  42. Hannah*

    I do not think you should cut the pay of existing employees – it’s not fair to them and you will lose good employees that way (though it may be reasonable to skip a salary increase to right size their compensation). But I think it’s reasonable to take COL of a prospective employee into account when determining what to offer them, among all the other usual factors (amount of experience, the overall salary range, what similar employees make etc.)

  43. bee*

    I think the crux here is that not localizing feels personally fair and localizing feels societally fair. People are really going to balk at getting paid less for moving to a cheaper area, and on an individual level that really does make sense. But someone (or really, lots of someone’s) moving to that lower COL area with a high COL area salary can be really devastating for locals. They’re still getting paid the in-person lower salary but the highly paid remote workers are going to drive up prices to levels they can’t afford.
    I’m from a small, touristy college town and I know recently the college has had trouble hiring because so many people have been buying high-priced houses that their prospective hires can’t find an affordable place to live—if it keeps up like this, all the things (and people that run them) that make rural vacation destinations appealing won’t be able to survive, because they’ll get priced out. And that doesn’t seem fair to me either!
    There’s not a solution that’s going to make everyone happy, but it does seem more broadly equitable to localize pay based on COL.

    1. Hlao-roo*

      I think the crux here is that not localizing feels personally fair and localizing feels societally fair.

      This very succinctly summarizes how I feel about this issue! Like the OP, I am conflicted about which side is “right” or “better,” and it’s because when I consider one hypothetical remote worker clearly not localizing the pay is the way to go but when I think about many remote workers, localizing the pay feels fairest to everyone (remote and in-person workers).

    2. Analytical Tree Hugger*

      “I think the crux here is that not localizing feels personally fair and localizing feels societally fair.”

      Ooh, this is brilliant! The latter is why I’m in favor of the model discussed in the first comment above, of “set salary band by role + location-based adjustment (that changes if employee moves).”

    3. Anyfizz*

      I love this take! And I do think that a lot of companies that are in some way interested in being good corporate citizens take this tack, in that they have set bands based on the jobs and then a separate locale-based addition to account for HCOL areas.
      I personally can’t even agree in theory on the ‘jobs should pay the same no matter where’ take. I want to think that the market would adjust to that sort of free market idea, but I can’t really think of a time when this actually worked out historically.

    4. Humble Schoolmarm*

      Yes, I totally agree! As someone in a ‘quaint’ tourist place that’s seen the cheapest housing prices in the urban area jump from about $200,000 to $400,000 over the course of the pandemic, a lot of people are really struggling (while the remote workers are really excited about the ‘cheap’ prices). Do I take issue with Sally, who is delighted to finally have a chance to purchase a home for less than 1 million, moving to my neighbourhood? Not in the slightest! But when I look at hundreds of Sallys, the condos flying up everywhere with little regard for affordable houses and the tent villages appearing in local parks, yup! Not so good.

  44. MsClaw*

    I have lived in places with radically different COL in the US. When I started working for my company, I lived in a low COL area. If I were paid the same salary in, say Chicago, I would have been making subsistence wages. Instead, I was making a comfortable salary. When I moved to a position in a higher COL area, I received an adjustment so that my compensation increased to reflect the increased cost of living.

    I understand people saying ‘you’re paying for the work and it doesn’t matter where’ but it does because the receiver’s estimation of the worth matters too. $65k/y in rural Kansas is very different from $65k/y in NYC.

    Everything is relative.

  45. Atlantic Toast Conference*

    I, too, am of two minds on this issue! Here’s a couple other considerations I can think of:

    (1) Would a COL-based pay scale work both ways? So, for example, if your company is based in DC and an employee moves to Alabama, the COL is lower and there’s an argument for paying a lower salary. But if an employee moves to NYC or LA (or you hire someone who lives there already), would your company pay them more to account for a higher COL?

    (2) Does your company value at all the ability to be occasionally in-person? In some remote jobs, there can still be value in being able to come into the office – I’m talking less than weekly, for things like very important meetings, ability to solve technology issues easily, etc. (This is the case for my workplace — I’m in public affairs, and have coworkers located across the country. It’s definitely possible to be fully remote. But sometimes, for example, you need to staff the ED for a media interview, and it’s really preferable for that person to be on-site for an hour or two.) If that’s the case, I do think there’s an argument to be made to pay a premium for folks who live in proximity to the office.

    Good luck!

  46. doreen*

    I think it’s an issue that doesn’t have a single answer. I think it’s one thing to pay someone who is hired for a remote-only job the same salary regardless of where they live and something different to pay someone who works out of the NYC office more than someone who works out of the Rochester office – and both of those may be different from how much to pay the person who worked out of the NYC office and moved to Rochester after the job went remote who wants an exemption from coming in to the NYC office once or twice a week.

    I often hear or read about people who basically say ” I should be paid for the job and if I move now that I work remotely I shouldn’t be paid less” and I don’t disagree entirely , depending in the details – but I really doubt anyone living/working in a low-cost of living area would have taken the same pay for the same job in NYC or Seattle and that’s really just the other side of the same coin.

  47. Nick*

    I think that pay should take into consideration the COL in an area. A good working model is the one that the federal government follows. There is base pay, which is decided the same for everyone across the country, and then there is the locality adjustment. For most of the U.S. the locality adjustment is 16.2%, but the highest is in parts of California at 42.74%.

    1. OP*

      This is an interesting idea that several other folks have mentioned, and I didn’t know about. I appreciate everyone who mentioned it! It’s not that different from a hypothetical a colleague and I had drawn out: that employers offer a base pay according to the value of the position, but the actual figure could fluctuate to accommodate state taxes, insurance, etc — other local-level financial implications for the company.

    2. just another queer reader*

      I looked the federal pay scale up and it’s fascinating!

      A GS10-1 job (“white-collar employees in mid-level positions”) would pay:

      $60k in “the rest of the US” (small cities and rural areas)
      $65k in a large Midwestern city
      $70k in NYC
      $74k in San Francisco

      Personally, I think the bump for working in NYC or San Fran should be bigger, but it’s pretty cool to see it all spelled out. Here’s the calculator if you want to play around more.

      https://www.federalpay.org/gs/calculator

  48. Ginger Pet Lady*

    I don’t think they should expect employees who move to a cheaper area to take a pay cut.
    First, they are likely moving *because* the salary no longer provides a livable wage. Inflation – especially housing – is going up WAY faster than wages. And companies are not motivated to increase pay for increased COL. For many, moving to a lower COL area is the only way to own a home or live somewhere with space to have a baby.
    Second, this very easily could lead to a trend of companies pressing people to move to a place where the company can then cut their pay. “Either move to a cheaper place so we can cut your salaries by 20% or there WILL be layoffs!”
    And if you don’t think companies would do this, think again. Companies will do ANYTHING to cut costs and increase profits. They don’t even care about ethics or treating employees right.
    Third, it opens the door for companies to decide what the cost of living somewhere really is. You think they’ll do it well?
    Fourth, it also opens the door for employers to say things like “Susie, you and Joe are empty nesters now, do you really NEED that big house and big mortgage? You don’t need a raise, you need a cheaper place to live! Go get an apartment or condo!”

    1. Mf*

      “ First, they are likely moving *because* the salary no longer provides a livable wage.”

      Spot on.

    2. Scarlet2*

      I’m so glad someone mentions this. A lot of people move to a lower CoL area because it’s becoming harder and harder to afford housing across the board. Decreasing salaries in that case means people have literally no options.
      (And yes, gentrification is a problem, but it requires complex, systemic changes. It’s not up to individuals to stay in areas where they can hardly make ends meet, even on an average or even “good” salary.)

  49. David*

    Agreed that for in-person jobs the COL definitely needs to be factored into the salary. Things get more complicated when you talk about the fully remote workers though. If you are hiring someone to work as part of a team based in one location, then that person should be paid similarly to their peers. If you have a truly remote position that really isn’t tied to a specific location, then you almost need to have a “remote” locality pay that falls somewhere in the middle of the locality pays associated with high- and low-COL areas.

  50. Atalanta0jess*

    I don’t understand how you can separate the two. Paying someone who lives in a low cost of living area the same as someone who lives in a high cost of living area is equivalent to paying the second person less. In the place where they are living and working, the money you are giving them has less value.

    1. Atalanta0jess*

      Also, we as consumers don’t have the luxury of paying what something is worth. I can’t just pay what my apartment is worth regardless of it’s location! In fact, that concept doesn’t even make sense!

      1. Alexis Rosay*

        Yes, that’s right. When I bought my house, the assessor determined the value of the house. 50% of the value was the materials, features, and quality of construction. 50% of the value was the location.

    2. Anon all day*

      Yeah, like, a lot of people in this thread seem to think that the value of money is this single, immutable amount when that’s actually the opposite of how it works.

  51. Thurs-YAY!*

    Keep in mind the cost of having to pay taxes in multiple states/cities can be high for the employees who do not live in the area where the employer is. Current business practices are often that business in HCOL locales take employees’ taxes out for the state the business is in (i.e. In NYC the employee who lives in NJ has to pay non-resident taxes to the city and state of NY, and resident taxes to NY and their current municipality). However, the businesses are under no obligation to take out taxes for the employee’s local city/state (hence the often heated history of commuter taxes between NY and NJ)–that burden (and costs) will fall on the employee (and will need to be paid out of post-taxed dollars). SO the lower COL in the LCOL local is not as “low” as folks may think.

    1. KatEnigma*

      Not every State has that requirement though. California doesn’t make you pay unless you live there, shockingly. Other States make you only pay in the location with the higher income tax. Others make you pay only the difference in income tax if you work and pay taxes in a State where taxes are lower. It’s ridiculously complicated.

  52. CTT*

    Hoo boy, I have a lot of thoughts on this! I’m an attorney at a law firm with offices in multiple locations spanning small cities to really big. Our salaries are based on our billing rates, which is tied to our location. This made sense 30-40 years ago, when most attorneys had a practice that was limited to their location. But now it’s so much easier to have clients all over the country you never have to see in person. I have almost no local clients, and it’s frustrating that I am paid Mid-Sized City salary when I am doing work with a much larger base than a Big City associate.

    But! If we say “fine, we’ll make everyone’s salaries equal,” our billing rates will have to go up to accommodate that (I just looked and it would be $70-$80 more per hour), which means all those people with local clients would lose that business because their clients won’t pay that rate. Or we could pay people with local clients less so their billing rate stays the same, which feels really gross.

    So I have a lot of thoughts on this as to my own industry but no answers. I do think we’re going to have an inflection point on this in the not too distant future. It’s made recruiting difficult – we can offer the top salary in our city, but it’s still not what they could make somewhere 100 miles away doing the same thing (I can only use “you never have to stand in line for brunch!” as a selling point so much!)

    1. General von Klinkerhoffen*

      Also law, and I have similar feelings.

      In my experience, COL adjustments have to do with the location of the *work*, not the worker’s residence. London weighting exists because the work is in London, for example, and the firm wants to be able to host meetings within walking distance of Covent Garden.

      So I don’t really think that COL should be a factor in pay for *remote* work even if it makes sense when discussing in-person or hybrid.

  53. Nowwhat465*

    I understand the argument, but people should be paid what the work is worth. I am currently happy with how my office does it. I can work mostly remote in a different state with a lower cost of living. However, I need to be in the office X days a month but the travel/hotel expenses are at my expense. If they need me to travel somewhere else (i.e. a different state for a conference or event) then they cover my expenses.

    The money/convenience factor levels out. I get to live where I want most of the time, but have the inconvenience of a long commute and not being home during busy times of the year where I have to be in the office everyday for a week. My coworkers live in a higher cost of living area, but have the shorter commutes, can take more advantage of the benefits at the office (on-site gym, local passes to museums/amusement parks), and get to sleep in their own home more frequently than me.

    It’s a different story for completely remote work; but if the best person for the job lives in Iowa and you’re based in San Francisco, them’s the breaks.

  54. KatEnigma*

    Forget fair- the question is always “fair to whom?”

    The pragmatic approach: Is there a labor shortage in this field in your area? Can you afford to have people quit who aren’t local?

    My husband is getting a Silicon Valley salary to live in not Silicon Valley because his former company was desperate to get him back in any capacity. He wasn’t going to take a pay cut or move back to California and made that crystal clear. When we first moved out of California, the new company matched his salary at the time, despite it not being the “market rate” in that location, and when he left that job, he only accepted at the new company for more money, again, despite it being well above market rate. A Fortune 500 and a Fortune 100 company both had to pay for skills, not local market. So if his current company wanted him back that badly, they had to offer a top Silicon Valley salary for remote work in a much less expensive market. HR tried to offer a much lower rate that didn’t even match his salary at the time, based on his location. He informed her that he had already been promised the top number by the Director, who had called personally to recruit him. She acted like the difference was coming out of her salary. He hates that this company has HR handle hiring offers. (They recruited him back once before and HR also almost made him decline then!)

  55. Language Lover*

    Alison talks about “market rates” all the time. So how is the market rate going to be set? Is it going to be set automatically at SF and NYC levels? Is it going to be set at Oklahoma levels? HQ levels?

  56. Don*

    The simplest capitalist principle here would be that you pay the least you can to get the result you need. So if you really can hire fully remotely and it doesn’t matter where those folks are, then your salary assumptions are going to start low in accordance with lower cost of living and accompanying cost of labor.

    But let’s get real here. This isn’t an employee fairness issue – you’re not messing about with employee salaries based on what other expenses employees choose to make. Do you have a premium you pay to folks who decide to have 3 kids rather than one? For folks who bought a slightly larger house? More expensive cars? Or does it happen that the folks who make choices to live more frugal lives are able to make their salaries go farther?

    The real pertinent question is “are we as an organization getting less for our dollar from these remote workers THAN WE WOULD GET IF WE HIRED SOMEONE LOCAL?” If the answer is no then leave your salaries as they are. By all means, you want to post that next job listing for 10% less, open to any and all locations? Do it. See whether you get the candidates you want.

    I mostly think this question is silly because “can I cut salaries” is a nutty question to ask yourself when the story du jour is how hard it is to hire anyone. All the stats indicate folks want remote capability and flexibility. Why would you put yourself at a competitive disadvantage over this? It’s the equivalent of putting up a sign saying “We never hire anyone in the top 10%” because you’ve made yourself a second choice for anyone who can appeal to a place with more flexibility and competitive pay.

  57. Cat Lady in the Mountains*

    My org also went fully remote during COVID and now defaults to posting jobs fully-remote, outside of a handful of roles that have to be done in-person in one of our home offices in high COL areas. My feeling is:
    – Use the salaries folks were at when you went remote (building in any adjustments you’ve made since then) as the baseline. That’s your pay scale for anyone who has a choice about where to live. Those salaries are already pegged at higher COL areas, so if someone who could be remote chooses to stay in a high COL area, they don’t get dinged. But if someone moves, they benefit.
    – For folks who have to be located in a specific place, pay an additional premium for it. So, like, if your average project manager who could be remote makes $75k a year (I’m making up this number), pay the one who absolutely has to be based in NYC $85k or whatever the COL difference is. Think of it both as a COL adjustment, and as a compensation for the fact that this particular role doesn’t get the benefit of being able to live wherever. You only get that benefit if you’re required to live in a high COL area for your role.

    Few small or midsized orgs really have the resources to do a deep dive into pegging salaries for the diversity of places staff have spread out to. I live in a state with a very low COL, but in a region that is uniquely high COL. If you pegged my salary to average wages, I would be job searching so freaking fast. But your “industry salary studies” for my state aren’t going to pick up on that nuance. Replicate those dynamics across 200 employees and you have a recipe for forcing people out of their jobs, for limited financial benefit to the org.

    Keep in mind location diversity has a whole bunch of benefits for the org — your candidate pools are huge, you have a greater diversity of perspectives on your staff (which has been proven to improve performance of teams), you can cover work across a broader array of time zones, you build a deeper presence and have champions in more communities across the country, etc. The, like, couple hundred thousand dollars you save from making remote staff take pay cuts is likely to be outweighed by the benefits of having happy location-diverse staff. And as long as you’re paying your in-NYC-by-choice project manager enough to comfortably live in NYC and in alignment with the market, IMO they don’t have a lot of ground to stand on in complaining if they have the same option to move as everyone else. There’s nothing wrong with enjoying living in a high COL city (or needing to stay there for personal reasons), but remote staff shouldn’t face consequences for that choice.

  58. Irish Teacher*

    Like others, I can see both sides and think it largely depends on rationale. If spending power is greater somewhere, it’s reasonable to pay enough elsewhere to give the same spending power. (And I do think it would be based on where the company is rather than where the employee lives.) However, I would have concerns about it being used in a “what the employer can get away with” way, with multinational companies, paying less in countries that don’t have a minimum wage or where the minimum wage may be lower.

    I also think there is a difference between basing the wage on say “how much it would cost to buy a 3-bedroom house in this area” versus “how much the average house in this area costs.” Because the latter would involve paying less to people in areas where the houses are smaller, cramped, older, etc and might prevent them from moving out of it. You would have to ensure you were comparing like with like and not just “oh, this area is full of bedsits so people can live cheaply there.”

  59. Raboot*

    To me the issue is do you want your remote workers to able to afford living in higher CoL areas. Like if tech companies paid all their workers SF/Seattle wages, then sure that’s groovy, and at that point it would be people’s choice to use the high wage to live somewhere expensive or not. Some tech companies do that already. But if my tech employer was like, we’re going to equalize on something based on nation-wide median CoL or anything along those lines, I’d leave. I’m not going to take a hit for living where I already do, especially since until 2-3 ago people were literally moving TO the expensive metros because of tech jobs. Would honestly be a slap in the face for the industry to be like “jk we’re not going to pay you tech hub wages anymore because you don’t have to live in a tech hub”.

  60. A Pound of Obscure*

    I don’t know, either, but I’d like to find out. I live in a rural state that still has good schools and many tech and engineering jobs. In fact, in a previous job in I.T., I worked for a large government contractor and our office was considered “on-shoring” because our cost of living was lower, and therefore so were our salaries. I’ve often wondered who was getting the better end of that deal. (Just kidding. The company was, of course. It could keep jobs based in the U.S. for contractual reasons while still paying us less than employees doing the same work but living in more expensive areas.) I can’t quite convince myself that’s a BAD thing, but it’s definitely worth questioning, as this LW has.

    My general sense is that the local market should dictate, and if people are (a) allowed or forced to work remotely and (b) they happen to choose a location with a (currently) lower cost of living, the company shouldn’t get in the business of quantifying whether that person truly has a “better bang for the buck.” They can’t know / shouldn’t ask about all the various factors at play, such as property tax and sales tax rates in the employee’s chosen location… Availability for other work for other family members contributing to household costs… The fact that relative cost-of-living is never static… etc. It used to be cheap(er) to live where I live; it is no longer the case because people moved here in droves during the pandemic, driving housing costs up for everyone. Transportation costs now are a bigger factor; just flying here from anywhere else can be expensive, we lack public transportation in most areas, and the sheer size of our state makes driving times and costs higher to get from Point A to Point B.

  61. Mid*

    If the job is not location specific, then the salary range should be the same for everyone. If the job necessitates being in a certain location, then COL and hardship of the location should be considered.

    Eg. if you’re a digital marketing person and can work from anywhere, then salary should be the same (obviously with room for seniority, etc.) for everyone in that role. If you require your marketing people to be located within 20 miles of the DC HQ, then you need to increase to compensate for the high COL. Theoretically the inverse could apply, but with the strong risk of losing a good amount of employees if its discovered that the people required to work at the OKC office are getting less than the remote marketing people.

    Basically, there should be a set pay floor, and adjust higher if the job requires you to be in a high COL area, but remote workers shouldn’t be punished for moving.

  62. Rake*

    If your engineer moves from Cincinnati Ohio to NYC of their own volition will you give them an automatic raise because of their new HCOL? If your answer is no, then don’t penalize the engineer who moved from NYC to Cincinnati either.

  63. EllyBell*

    I personally think it should be based out of where the company is located, because the COL there decides a lot of the company’s overhead right? My husband does engineering work where his firm gets contracted out to various clients all over the US. A company based in California is paying X amount more for utilities and salaries, but is also charging X dollars more per hour for contracted jobs, whether they’re doing work for a client in LA or Indiana. I think the onus of determining a market rate should be where the company is.

  64. Loz*

    It must be value provided to the company. The cost to provide that labour will change based on personal employee situation such as location/COL, kids, lifestyle etc. but it’s up to the employer and employee to decide if an agreeable arrangement can be met. As an employer you need to get some stuff done for no more than $X and as a human you will need at least $Y. Work it out. There is no reason that person A deserves more than person B because they choose to live in NYC vs Moose Knuckle, have kids, have a boat or whatever if they can provide the same value. They may need it, but they don’t deserve it by default. If there is a requirement to, say, meet clients regularly in NYC then sure, evaluate the cost and willingness to fly & expense employee B to NY 3x a week or whatever vs someone local who can visit ad-hoc during a working day.
    (This sounds like outsourcing T&M and it’s close, but it’s not the same).

  66. LCS*

    I think salaries should be the same, but with a clearly defined additional location premium for physical in-person work required in substantially higher COL areas. This way the base remains aligned and no one gets a “freebie” by taking the higher COL rate but staying remote, but there is a clear mechanism to attract and retain people in more competitive markets for those who have to physically live there.

  67. MuseumGal*

    I think you’re getting into dangerous territory when you pay people doing the same work within the same company at the same level differently based solely on their different needs. Parents often have more expenses than their single coworkers but that alone doesn’t entitle them to higher salaries. There’s also the issue of actually determining what the COL is in in different places fairly and accurately. I know in Canada, it’s been reported that the cost of living in mid and small size cities is actually rising faster than in big cities at the moment but that isn’t necessarily reflected in official COL indexes yet. The lifestyle of someone in New York/ Toronto compared to Alaska/ Yukon is so different it’s not really comparing apples to apples when it comes to COL and how that’s changing right now.

  68. Minerva*

    I don’t think you can separate “value of work” from “cost of living.” That’s why state minimum wages vary across the board and are generally higher than the federal minimum wage. A salary is only “worth” what you can buy with it. So there cannot be a blanket approach, but cutting pay is always demoralizing.

    I think the best approach is payscales based on level based on region you live. If you move from a high cost to low cost you can make it clear that opportunities for raises/bonuses will be limited due to the fact they are high end/above the scale. If they move from a low to a high it seems only fair that you bump them based on the work they are doing assuming you want to keep them.

    Obviously that is for discretionary moves. If the company requests a relocation that needs to be assessed on a completely different metric.

    1. M*

      I agree, when I followed my spouse to a high COLA, my employer agreed to let me move, but warned me that they would not pay me more as it was my decision. Conversely now that my spouse can work fully remote, we are considering a move to a lower COLA area. If we do make the move their employer warned their salary would be redlined until our new location “caught up”.

    2. Littorally*

      Right, yeah. It’s a big thorny issue and people are raising a lot of good points across the board, but I’m also seeing a lot of people treat “value of work” as being an objectively defined quantitative figure that can’t vary based on location, which…. well, it’s not! Save for very specific roles where you can easily quantify “this person earns $X per year for the business” via sales figures, billable hours, or what have you — which is far from the majority of jobs — the value of someone’s work is a nebulous figure.

      1. Minerva*

        Value of work is the most objective of things.

        I am still baffled that I, person who sits on my rear and looks at excel sheets all day is somehow paid more than a paramedic. Somehow society decided that “working with numbers” is “valued” more than saving lives.

        ¯\_ (ツ)_/¯

  69. Yeah summer!*

    I worked briefly for fed gov and I’m no expert on this but isn’t cola for this. I feel like there is a base for each position and then a cola (cost of living adjustment) for just this reason.

    1. Siege*

      The industry I support finally got a COLA last year (because we advocated for it to be included in the state budget). It was in fact geographically adjusted, with most people affected getting 5% but people in the three highest-COL counties getting 8%. Prior to that legislation, they hadn’t gotten a COLA since 2012. At private companies (the majority of the workplaces I’ve been in) companies gave under-COLA raises. So I think we can’t rely on COLA to catch up, but it would be great if we could!

  70. Sharon*

    I think it’s less about the COL in a particular area and more about supply and demand for workers. You need to pay enough to attract qualified workers that are able to perform the job. If you don’t care where the work is performed, you can probably get someone good for a lower rate in Kansas or India than you can in Tokyo or London. I expect that companies will be taking that into consideration as they hire new employees for jobs that can done remotely – sort of an extension of the “offshore to cut expenses” trend.

    On the other hand if the job needs to be in a certain location, you need to pay people enough to make a living in that location, or no one (or no one good) will take the job.

    We’re sort of in a transition period now as more jobs go remote. In general, giving existing workers pay cuts is really bad for morale so it’s probably better to continue to pay someone their agreed-upon salary if you want to retain people. But eventually, I think people living in New York or Tokyo or London are going to find it harder and harder to get the salaries they are used to unless the job must be done in those locations.

    1. Anon for this*

      My employer has always had a robust commitment to remote work, even before the pandemic, but I have noticed in the current labor market that they are recruiting for most positions that can be done remotely in lower cost of labor locations. Whereas pre-COVID they might have required someone to live in the Bay Area as our corporate office is located there, they are now wide open as to where the employee can live, as long as the position can be performed remotely. I suspect a lot of employers are now coming around to this way of thinking.

  71. A Genuine Scientician*

    I don’t think pay should be based either on what people need to live, nor the value provided to the company.

    I think pay should be based on what the market will bear (assuming it’s within legal boundaries — there are good reasons to have minimum wages, for example).

    That means that it will probably need to be adjusted for location. You’re almost certainly going to be able to hire a remote accountant for less than it would cost you to hire one who needed to work in person in SF or NYC.

    This is going to sound weird, but to me, basing it on what the market will bear actually includes more equity than paying big city wages to those who live in low cost of living locales (and I’m in one of those low cost of living locations myself). Most — though certainly not all — people consider remote work to be a significant perk. Shorter commutes, lower costs (whether public transport or parking), their own bathroom, not working in a cube farm, etc. Some people are going to have to go in anyway, just by the nature of their jobs. That’s unfortunate for them, but just the reality of the situation. But to then be told that their remote colleagues will continue to draw the higher city salaries even when they move to much lower cost locations — while the in person individuals are required to live close enough to get there in person, and pay for that in terms of higher cost of living and/or more extensive commutes — would be a significant blow to morale.

  72. Alton Brown's Evil Twin*

    I think part of the cost-of-living calculation gets buried into the way that employers have been competing for labor.

    Nobody thinks it’s weird when a company sets up a call center in Iowa instead of Connecticut, or India instead of Iowa. Ditto a factory in Mexico instead of Michigan. (I’m not talking about the macro-economics or politics of it, just the basic business logic.)

    But it feels weird after what’s happened in the last several years w/ WFH and the accelerated remote work trend, and when a company is dealing with individual people on a case-by-case basis, instead of a big facility decision.

    If people are now able to do something anywhere in the country, that used to traditionally be done with a physical presence in NYC (like, I dunno, book editing?), then it’s going to take a while for competition to wash its way through the overall economy. Whether people are willing to scale back their salary demands, because they’ve moved to a lower-cost-of-living locale, or if employers ratchet back their salary bands based on the availability of less-expensive labor, then eventually we’ll get to a new normal. Or maybe people won’t budge, and employers will adjust their budgets so more $$ go to labor, and less to facilities, or profits, or advertising, or something.

    So I think there’s not going to be any ‘standard’ approaches for a while. And the 2nd- and 3rd- order effects means that real estate costs in big cities may come down relative to those in more remote areas.

    1. Lore*

      In the case of book editing, it’s more like “the existing salary structures were never adequate to live in NYC but we’re definitely not changing that end of it so your best shot is to find an LCOL area to live on with that salary.”

  73. Sidonie*

    I don’t know my answer to this (agree there are good arguments on both sides!), but I’d add a related question: what about benefits? I work at an org that sounds very similar to OP’s except that pre-COVID staff were about evenly split between remote “field staff” and in-person staff at the headquarters. Up until recently we didn’t offer any form of paid parental leave … except in a couple states that legally require it, like California. When we found out that CA staff were getting a benefit others weren’t based solely on location it was enraging and demoralizing in the extreme, and helped contribute to the pressure that eventually led to the implementation of an org-wide parental leave policy.

    So we had a good outcome, but the fact that the uneven benefits existed at all was shocking to me. Interested to hear others’ thoughts about that and how national or international orgs handle operating across areas with very different labor laws!

  74. MistOrMister*

    I used to be firmly on the, pay high enough salaries for people to live in,the most expensive places and pay those salaries regardless of where the employee lives side of things. But I recently saw an article about how people working lower wage jobs in certain areas have effectively been completely priced out of the housing market due to an influx of remote workers and people buying up property for vacation homes due to covid. So now it’s not as black and white a situation to me. Because if you offer the same pay no matter what, certainly some people will move to where it’s cheaper. Which is all good and well until it makes housing costs skyrocket and prices out others.

    I think if a company did want to change pay based on location, at the vert least, people who are already in the company should keep their current rate of pay no matter if they live in a cheaper or,more expensive area. If I lived in Kansas and my employer said, well now if you’re on this part of kansas yoy get a 20% pay cut, I would be livid. But if I live in Seattle and they announce new salary bands based on location and I see it woulf be a 20% cut if I moved to Kansas, I could deal with that. I can’t imagine any one consensus will be reached on this one. I do wonder if the fact rhat the gvt functions with different pay for different locations if some places would find that a compelling reason to do the same.

    Also, people who say, well my work is worth X amount regardless of where I live…for a job that wasn’t remote before the pandemic that isn’t necessarily true. If one’s job, in person, pays $X in a big city and $X minus $20k in a small town, then efectively you are worth $X minus $20k if you move to that small town and it is not outrageous for your pay to change to reflect that.

    1. Charlotte Lucas*

      My city routinely gets on “Best Places to Live” lists. Real estate prices are through the roof. And now some of the previously lower-cost neighborhoods seem to be gentrifying. I’m afraid some people will be priced out of housing entirely. (My rent went up significantly in the past 2 years.)

    2. Fran Fine*

      If I lived in Kansas and my employer said, well now if you’re on this part of kansas yoy get a 20% pay cut, I would be livid. But if I live in Seattle and they announce new salary bands based on location and I see it woulf be a 20% cut if I moved to Kansas, I could deal with that.

      Yeah, I think I could too the more I think about this. I’m not here for pay cuts in general, but applying the new rate to new hires makes a lot of sense and then just eating the cost for the existing employees. Someone upthread even said employers could just give minor (or no) raises to the now overpaid for the area current employees to ensure they’re not being paid significantly over market rate for the LCOL location, and I could be okay with that too.

  75. Anon for this*

    Here is what my employer does:
    We have different salary bands for the same job based on the MSA that the employee works in, based on the cost of labor for that MSA. So if the employee will be working in the Bay Area, for example, that would be the highest salary band because labor costs the most there. If the same employee moves to a lower cost of labor area and will be working remotely from that location, their salary band will change. Their current salary wouldn’t be lowered, but they might be capped at receiving merit increases for a while, if their current salary is at the highest level of, or exceeds, the new salary band. The salary bands are reviewed every year based on available compensation data from similar companies in our industry, and adjusted as needed.
    It’s complicated, but the feeling is that this process is as fair as possible.

  76. Combinatorialist*

    I think I think you should pay people a fixed wage for remote work. If your office is in a high COL area *and* you require some people to come in, those people should get a bump to accommodate being required to live in a high COL area *or* you should pay travel expenses for when you want them to come in. I think if everyone can choose where to live, then it’s fine for people to make their own choices (including not taking this job because it doesn’t pay enough for where they want to live). If you require some people in office and others not, and the remote people can choose to live somewhere cheap but the in person people cannot, then I think you will get resentment.

  77. Sally Sparrow*

    I don’t know the correct answer but the Pay for the Work mindset seems to ignore the result would be that people living in NYC, SF, DC, etc. could then be getting paid Oklahoma wages for their work. Because THAT is also what the work is worth, so why would someone pay the higher amount (utopian version of everyone, everywhere getting paid NYC wages), and not the lower amount (dystopian of everyone, everywhere getting Oklahoma or Arkansas wages). Like on a level it’s the same as localizing but instead risks chopping everyone’s salaries down to the lowest common denominator.

    I think it also ignores the very real harm that remote workers can do to local economies that don’t normally support that kind of income and wealth disparity.

    I do think it’s hard when this wasn’t thought of before letting people work remotely in different COL from the original office. Because those people have made plans based off of their income and it does feel gross to remove that. But I don’t think it precludes grandfathering in those employees and setting in new standards going forward.

    1. Doctors Whom*

      The Angels have the blue box.

      (I agree with your points but wanted to also fawn over your SN. Carry on.)

    2. CR*

      I just don’t see remote workers like myself harming the economy of the town I was born and raised in.

      What I’ve seen is the ability to bring in money from other cities and states, through wfh income, has been a useful counterforce to the economic entropy that was destroying my community.

      Ten years ago, the options were “move or be poor.” Now, there’s a third option, and it’s really making a tangible difference. More people are earning wages we can not only survive on, but invest. The local economy is turning around.

      This bogeyman of six-figure tech bros moving here and driving up prices just hasn’t happened.

      Instead, what has happened is we have places to earn more for fewer hours than we would at Target, restaurants, and the other big employers in the region. Some of us reinvest extra money in starting our own businesses.

      Others reinvest time into childcare collectives, letting more people work and rest in a way that suits them best. We can prevent housing prices from soaring by passing rent control laws and zoning for cooperatives. My community now has double the number of cooperative housing options than we did ten years ago. Homelessness is less of a problem because there is a strong disincentive to buy “investment properties.”

      1. Siege*

        Plenty of people, myself included, have provided examples of remote workers on high salaries pricing out pre-COVID residents of LCOL areas. The fact that it’s worked out for your community does not mean that it’s worked out for other communities. There’s a lot to be done about the housing crisis that may ameliorate that issue later, but it’s not a right-now solution, and in the meantime people are moving to LCOL areas and creating housing pressure that wouldn’t exist if they were competing on the same playing field.

  78. Free Meerkats*

    Are you going to go the other way, too? Say you’re in the Denver area – high but not outrageous COL.) If you’re going to pay someone who moves to rural South Dakota less, are you also going to pay someone who moves to San Francisco more? Seems that parity and fairness say yes, but I doubt we’ll ever see any company do that.

  79. Richard Hershberger*

    In a perfectly efficient market with transparent pricing (i.e. salaries) this problem would take care of itself. Compare Employer A, who requires in-office work in a high cost of living area, Employer B, whose employees are hybrid and in an area with more modest cost of living, and Employer C, whose employees are fully remote and can live wherever they want. The three are seeking to hire employees for the same job. Employer A will have to pay higher salaries than Employer B, who will have to pay more than Employer C, simply to attract employees. This is simply how the free market works.

    This would be unremarkable for any expense other than employees. If the three companies all used pig iron as a raw material, with the cost of bringing the pig iron to their respective plants differing with location, no one would be mystified about the equity of paying different amounts.

    At most we have a transitional problem, going from in-office as the baseline assumption and the market forces working accordingly, to whatever it is we have today. Cut salaries for people who have moved to cheaper areas and they aren’t going to be happy about it. Raising salaries for people working in-office will be an easier sell, but is the company willing to do this?

    Down the road, expect to pay less (on the employer side) or earn less (on the employee side) for a genuinely fully remote job. This is not a matter of equity, but of competition among potential employees.

    1. CR*

      This makes sense to me. It seems likely that all jobs that can be done remotely will be done remotely in the future.

      Jobs that require people to be in person will have to compensate for that accordingly.

      I think it’s only unfair when remote workers are doing identical jobs, but one is based in NYC and paid double than the one based in, say, Idaho. But, I suspect that will work itself out. The Idaho worker will eventually quit and take remote work that pays more, or the company will realize it has to pay more competitively to attract competent employees, regardless of where they’re based.

  80. ND and awkward*

    If I were designing a pay system to address this there would be pay based on the role for an average COL area(? maybe? Or maybe a low COL area, would have to run actual numbers), and a bonus-type-element of pay based on the actual cost of living for the person’s [area]. You’d never go below the role’s base pay, but the COL element would change if you moved. They’d be separate lines on the payslip so the breakdown would be clear.

    1. CR*

      Could people apply for a “personal COL” bonus in this system if their personal life is more expensive than others?

      For example, having more student loan debt, having to take care of kids, or having to pay for expensive medical treatments?

      Or is the bonus solely based on geography, not other circumstances?

      I would worry that most of the bonuses would go to people who already have the most economic privelege, which is why they live in the most expensive zipcodes in the first place.

      1. ND and awkward*

        No, because it’s not about leaving everyone with the same amount of money left over after paying their bills, it’s about striking a balance between crippling local communities in low COL areas and allowing people in similar roles to afford a similar standard of living in high COL areas.

        Individual-level circumstances like dependents and medical bills aren’t the same as community-level circumstances like how much a pint of milk and a loaf of bread cost.

  81. Kimmy Schmidt*

    One of my biggest US-centric concerns is that two of the biggest potential expenses (healthcare and student loans), do NOT vary based on cost of living or location. Or I guess they do, but on a scale of thousands of dollars that really doesn’t matter that much in practice. So if I’m in the HCOL area making 100K, that 15K medical bill and 20K student debt looks a lot different than if I’m in the LCOL area making 75K with 13K medical and 17K student loans. It’s a higher percentage.

    1. CR*

      +1

      This is the biggest factor for me. The biggest expenses I pay are the same no matter where I live.

      In my experience, it’s easier to figure out how to pay less for housing than it is to pay less monthly on student loans and medical bills. There really are no options for some kinds of debt.

  82. JMR*

    I’ve also heard an argument for scaling pay based on location because it absolutely destroys local economies when they are suddenly swarmed by tech workers making multiple six figures. It drives up the local cost of living, kills the housing market, gentrifies neighborhoods, and destroys small businesses. The effect on the housing market is particularly bad. If a Google employee making a Bay Area salary wants to buy a house in Texas and can afford to offer 30% over asking, they will do it, and locals making Texas salaries won’t be able to compete.

    I believe our company tries to do it relative to the cost of living. For example, the company uses market data to determine that a certain role should be paid around the Xth percentile of all earners. And then that’s scaled to an actual dollar amount based on the cost of living in a particular area. That is, the relative “worth” of a role is inherent to the work, but the dollar amount that worth correlates to depends on the local cost of living. This seems fair to me.

    1. CR*

      A counterpoint – I’m living in a “low cost of living” area where most local jobs do not pay a living wage, even to live here. State minimum is roughly $9/hr. Most jobs pay about $11/hr. 1 BR apt rent low-end is $725/month. Not really doable.

      Our local economy is finally starting to turn around because enough of us (born + raised here) got wfh jobs based in other cities/states that we actually earn a solid income. We have income to spend locally, support local businesses that can now pay $14/hr or more– even $18/hr. More of us are in higher tax brackets now, so we pay more in income tax or property tax, to better fund local schools.

      Before this, if we had wanted decent jobs, we’d have to move pretty far away. Our community was dying because so many people moved away.

      Now, things are getting better. I don’t know that many people are moving here from more expensive places. But the people who currently live here can access better opportunities than we used to by a large margin.

      If these out-of-state businesses suddenly decide they can save money by paying us the normal rate of local businesses, we’ll lose all that ground.

  83. Mystic*

    What about different positions? If you have a lower level and a higher level employee, would you pay the lower level employee more because they’re in a high col area?
    I, while probably too young to know anything, lean firmly on the side of everyone should have a living wage and be paid what they’re worth, regardless of where they live.

    1. Doctors Whom*

      But a living wage is actually different in different localities.

      A living wage in Virginia, MN or Shawnee, KS will be different from each other and VERY different from a living wage in the Bay, or a living wage in Boston or NYC.

      We do have more junior employees in HCOLs who make more in absolute terms than people who are more senior to them in LCOL areas. But when you normalize the salaries for geography (we use a table with multipliers based on our HW Q location) you can see how the more senior employee is being compensated more “senior”-ly. All our salary bands and equity data is normalized to HQ first and then individual salaries are COL-adjusted for the areas in which we have a business presence.

    2. Littorally*

      What constitutes a living wage is highly dependent on local cost of living. Housing is generally the single largest line item in the household budget for the vast majority of workers.

      So you’re saying that people should be paid based on where they live, regardless of where they live. Is that what you mean?

  84. saby*

    With this conversation about “paying people what the work is worth”, just wanted to point out that if your job requires you to be onsite at least some of the time, then being onsite and therefore living in relative geographic proximity to the job is *part of the work you are being compensated for*. That means in a high COL area that aspect of your labour is worth more and in an undesirable or isolated area like the far north that aspect of your labour is also worth more. I don’t think that part should really be controversial but it kind of feels like it is in this thread?

    If your job is completely remote then none of that is a factor, so that’s where it becomes purely a conversation on pay equity. And in the OP’s case, equity between people who are required to come onsite and people who aren’t, which is a whole nother can of worms.

  85. Lobbyista*

    We increasingly see laws prohibiting questions about salary history and requiring postings to list salaries under the logic that a salary should be connected to an objective value add, as opposed to what the person made before. Under that logic, does geographic location somehow impact value add? I don’t necessarily think so.

    1. Hlao-roo*

      does geographic location somehow impact value add?

      For a fully-remote job, I think the answer is mostly “no.” The only potential geography based value-adds I can see for a fully-remote job are (1) living in a place with a good enough internet connection to do the work and (2) living in the same timezone (or a close-enough time zone) to fulfill any synchronous communication the role requires.

      For hybrid and on-site jobs, there can absolutely by a huge value-add to being in the same location as a customer, client, manufacturing plant, supplier, etc.

  86. CR*

    One thing that has always frustrated me about COL bonuses by region is they don’t factor in all costs of living. In some ways, geographic location is a cost of living one has more control over (as evidenced by those who choose to move because their area is getting to expensive).

    But, I have to work remotely due to a medical condition – one I can’t choose to not have. My biggest expenses, by far, are healthcare and medication. I will max out my deductible no matter where I live every year I’m hospitalized– even just once! My meds cost $400+/ month no matter where I live. I need certain adaptive designs in my home no matter where I live, which seriously limits my housing options.

    If an “affordable” apartment has no wheelchair accessible entrance, no elevator, then I can’t actually afford the toll living there will take on my body. So, it’s out.

    Knowing how much it costs *me* to live, when applying for work, I only apply for jobs that pay at least $X. I can’t afford to work for less than that, even if a non-disabled person in my location theoretically could.

    Finding out in a job interview that they automatically pay people in my location the lowest end of the salary band — when that is below $X — means I have to take myself out of the running.

    My work is just as good as that of a non-disabled person doing the same job. My disability is not usually obvious when I work from home, particularly since the nature of my work isn’t really face-to-face.

    But that doesn’t matter. Location is the only factor accounted for.

    Not only do these practices discriminate against disabled people, they discriminate against people whose “lifestyles” are more expensive for a wide range of reasons– most of which they cannot change as easily as people can move to a new location.

    People who take care of kids or elderly parents, people who want to actively practice a marginalized religion (that doesn’t have active temples in most cities), people who have a lot of debt because they had to escape an abusive relationship quickly, people who have high student loans because at 18 they were pushed to attend a $$$$ school — these are all costs of living that some people have, some don’t, which cannot be easily changed.

    Like OP mentions, many of these costs are associated with being marginalized. I have fewer student loans than my friends, because my parents could afford to pay a large chunk of college for me. People of marginalized genders are more likely to be caretakers. People growing up impoverished are more likely to stay with an abusive partner.

    As far as I can tell, the best policy is to be 100% clear on the salaries for each position up front. Then, trust people to make the best financial decisions for themselves. Many people, like me, will simply not pursue work that can’t pay for what they need to live.

    If someone in a “high COL area” pursues a position that pays less than what you think is affordable, consider that they may have privileges that make it affordable for them.

    TL;DR the best way to avoid discrimination is to pay what the work is worth, no matter where the applicant lives.

    1. Beebee*

      “TL;DR the best way to avoid discrimination is to pay what the work is worth, no matter where the applicant lives.”

      I think so long as the highest potential amount is what everyone is paid then it’s fair. Otherwise those in HCOL areas are either disadvantaged or will straight up not consider the company. If a tech company has offices in Milwaukee and SF and they want to pay everyone the Milwaukee rate, they can basically count on finding talent in SF to be near impossible because people just can’t afford to take that job. I’m sure the Milwaukee employees would love the SF rate, but whether or not a company would be willing to pay everyone that much is another question.

      I do think it’s worth considering COL isn’t just rent like you mentioned (ex NYC you don’t need a car but in LA you do, in Canada extremely northern communities have insane food costs). But for stuff like people having student loans, or kids, or taking care of family… at a certain point I don’t think it’s the employer’s responsibility to factor those into how people are paid. Like you said it then gets into discrimination territory.

      1. CR*

        “At a certain point, I don’t think it’s the responsibility to factor in how people are paid…it gets into discrimination territory ”

        My question is, how is it not already in discrimination territory?

        Once we say the value of a remote employee in NYC is more than that of one in Oklahoma, it’s discrimination based on geography. It’s not discrimination based on “cost of living,” despite the claim, because employers genuinely do not know how much it costs each employee to live.

        If an NYC employee cannot live on a wage set for remote work, they have choices. They could potentially choose to work in person, as there are more open jobs, total, in NYC than there are in other “low cost” regions. They might be able to move to a less expensive region.

        Of course, if the company is getting plenty of qualified applicants from NYC and elsewhere, then the wage is high enough. In which case, it’s wrong to offer less than that to the applicant you want to hire just because they’re based in a “low cost” region.

    2. Person from the Resume*

      TL;DR the best way to avoid discrimination is to pay what the work is worth, no matter where the applicant lives.

      This is impossible! Where people live affects the value of their work. Nurses in NYC are paid more than nurses Louisiana because a living wage in Lousiana is less than one in NYC.

      1. CR*

        It’s not impossible. I currently work for a company that pays all remote employees $X, regardless of where they live.

        Plenty of companies do this.

        Nobody’s talking about nurses. Nursing isn’t remote work. A single hospital doesn’t stretch from Louisiana to New York.

        A hospital in New York is going to pay what it takes to attract high quality applicants there. So will a hospital in Louisiana.

        But a company that employs remote customer service agents all over the country, yet chooses to pay some more than others simply due to location, is perpetrating discrimination. It is discrimination that will result in lower pay for those who are already marginalized, and already live in marginalized communities.

        That is wrong.

  87. The Ginger Ginger*

    This was framed in the context of paying an employee LESS, which makes me think it’s more about cost saving for the employer. But what happens if your employee moves to a place with higher cost of living? Is there a mechanism for them to request a pay increase solely for that reason? What if it’s somewhere significantly higher than your main location? My suspicion is that would be strongly pushed back on. And if that’s the case, I don’t think you can justify pay cuts for cost of living either just because it’s cheaper for the employer.

    Possibly. POSSIBLY, you could create bands for general COL up front and slot people in based on their location, but I don’t think that’s a change you can make across the org. I would not be okay taking a sudden pay cut based solely on my address and not because my work product had changed. It’s going to cause a lot of demoralized workers and turnover.

    1. The Ginger Ginger*

      Not to mention all the incredibly valid points that this can open your employees up to a lot of illegal discrimination.

      1. WillowSunstar*

        Right, zip code discrimination can also in some states be considered racist, I would think. There’s also the “good vs. bad” neighborhood thing going on, regardless of who lives there, based on property values and such. You can’t have any economic mobility if companies are going to actively keep the poor people poor just because they live in the only area they can afford.

  88. DG*

    This time last year I made it through the final rounds of an interview for a job that I really, really wanted at a fully remote company. I asked for $20-30K over my current salary. They told me because I live in a “Tier 3 city” based on their compensation models, the best they could do was $20K LESS than my current salary. I tried to negotiate and even explained that their offer would be a significant pay cut for me, but they stuck to their guns and insisted they had to abide by the “Tier 3 city” guidelines.

    It was just frustrating to know that if I lived 200 miles to the north (in the nearest major metropolis) they would have met or exceeded my expectations, despite delivering the exact same work and value to the company.

    I hope there will be some leveling out of salaries across geographic areas. At the very least companies should give recruiters the flexibility to go outside their range for a city/region if they really want someone for the job.

  89. L-squared*

    I’m against it personally. While I understand the logic, I also feel like if I’m performing the same job as my coworker, I shouldn’t get paid less because I live in Milwaukee and they live in San Francisco. Even if I get more bang for my buck, we are fundamentally doing the same work.

    And as you say, how far do you take that. Some cities have vastly different COL based on even zip code.

    1. Sola Lingua Bona Lingua Mortua Est*

      I’ve been that person living in the higher-cost zip to be near family and working in the lower-cost zip. I didn’t get a premium for it then. Depending on how you calculate the CoL basket, I could be anywhere from -25% to +25% of the CoL at my current employer’s headquarters.

      My employer resells the products of my labor for the same price independent of where I work, so I think my salary should likewise be independent of where I work. IMWO, the real discussion is about where that baseline should be–the high cost-of-living headquarters, a regional (e.g. state or states or nation or nations) average, the lowest-common-denominator, or something altogether arbitrary–and adjustments based on productivity and reliability, not where the employee is located.

    2. WillowSunstar*

      Not to mention, COL will vary from person to person. Someone who’s willing to live on rice and beans has a much lower COL than someone who eats out frequently. But also, the COL isn’t going to take things into account like a person’s student loans, car loans, and credit card debt, is it? People with more debt are going to have naturally a higher COL (unless they’ve decided to not pay it, but then I guess that’s their choice).

    3. Anon all day*

      But more bang for your buck is another way of saying that you are, functionally, getting paid more than the person in San Fran, if you’re both making the same amount. Be against it all you want but at least acknowledge that the value of a dollar DOES change based on location so the values of the same salary also change.

      1. Cee*

        Agreed, Anon all day. The actual amount of dollars you are paid makes no difference, if you want to be paid the same as your coworker, it should be based on buying power.

      2. L-squared*

        I mean, the US Dollar is the US Dollar. You are getting the same, you just can’t do the same with it.

        That said, I’m currently in the situation on the other side. I know me and a coworker make the same salary (we are in sales, so base salary is pretty standard depending on your level). He lives in a very low COL area. I’m not going to be upset that his money goes further there. Because the reality is, our dollars spend the same in many other ways. Want to travel? Plane tickets are the same. Order from Amazon? Again, its the same. He also has 3 kids and I have none.

        And again, how far do you take it? In the city I live in, my neighborhood is significantly more expensive than other neighborhoods. Should someone who starts and lives in one of those neighborhoods get paid less than me because of that?

    4. doreen*

      There’s also the other side of it – which is how much other jobs pay in San Francisco versus Milwaukee. If the other companies in Milwaukee pay Teapot Painters $50K, then I can also pay my Teapot Painters $50K. But if the other companies in SF pay Teapot Painters $70K . I won’t be able to hire anyone there for the same $50K I can pay people in Milwaukee. Now , if it’s a 100% remote job and it doesn’t matter where people work from, I can pay $50K and if that means I don’t hire anyone in SF, that’s fine. But if I need people physically in SF, there’s a good chance I won’t be able to get anyone for $20K less than other companies are paying – and if I can, it probably won’t be someone with the same qualifications as I could get for $50K in Milwaukee.

  90. The Other Evil HR Lady*

    “It’s inequitable and demoralizing to pay employees differently based solely where they live.”
    Well, not really, because that wouldn’t be what you’re doing. For better or worse, the cost to the COMPANY for the labor in wherever state/locale it is situated, costs *something*. For example: my company is in Florida. For each employee that WORKS in Florida, we only pay federal payroll taxes and worker’s comp, the latter is based on Florida rates. I know for a fact that worker’s comp rates are higher in Maryland. Maryland also has state payroll taxes AND “piggyback” taxes based on where the employee LIVES. Therefore, having an employee live ANYWHERE in Maryland will always cost more than having the employee live in Florida. But wages vary greatly within each state. A project manager in Miami may actually earn the same as a project manager in Baltimore, or maybe more! So if an employee lives and works from Baltimore County, that’s going to cost my company something different than an employee who lives and works from Miami.

    All that to say, you have to base wages on where the employee is actually performing the work. That’s the market you’re up against. That’s how the Federal government does it, and it’s for a reason. It’s not unfair – they get to commute to their living room, and that’s part of the perks of the job. I’d be okay if you paid me $100K in Baltimore, and only $80K in Sarasota. That’s fair for those markets. The ONLY unfair part would be if the employee doesn’t know this up front.

  91. Just Your Everyday Crone*

    I don’t actually think this is as binary as the LW puts it. Pay people for the role in a way that is equal in real dollars. The way the federal government does this is it sets up a base pay scale and then adds “locality pay” depending on what region the employee lives in, based on cost of living differences in those places. That makes everyone’s pay the same in terms of purchasing power for where they live. If someone transfers from one locality to another, they get that locality pay.

    1. JMR*

      This is where I fall too. You should be able to decide how much a role should pay relative to all earners, as a percentile. Should the person in this role be earning more than 20% of all earners, or 60%, or 90%? Then translate that to real dollars according to the employee’s location. If market rate for my role puts me in the 65th percentile, maybe that’s $120K in California and $85K in Austin. (I made those numbers up, but you kow what I mean.)

  92. Chris*

    Haven’t read the comments, so maybe someone has already suggested this, but what about treating in-office work like shift work? That is, some places pay an extra x% if you work the night shift, so why not pay an extra x% if you come into the office?

  93. Hog Wild*

    Why not set base salary based on performance and job description. Then add a separate from salary cost-of-living bump/bonus/adjustment/stipend when the company requires the employee to be based in a higher than average cost-of-living area.

    1. Person from the Resume*

      I think this is the method that will need to be used.

      But the question remains, if the employee is choosing where to live should a company pay more if they choose to live in HCOL area.

  94. Jessica Fletcher*

    Employees who moved during the pandemic weren’t trying to put one over on you. They were fleeing high density cities that were first to be overwhelmed by Covid. Their spouses lost their jobs, and the family couldn’t afford to live there anymore on one income. Their family members got sick, became disabled, lost employment, or died, and they moved to pick up the pieces. Don’t punish them by going back on your agreement now. Those employees should stay on the salary tracks they were already on.

    Understand that if you go back on your agreement with those employees, other good employees will see you as operating in bad faith. There’s a significant reputational cost to cutting those salaries. You’ll also end up paying to recruit and train replacements for high performers who inevitably leave over it.

    Also, don’t pretend the company didn’t benefit from moving to remote long term. Many companies have significantly reduced their overhead, while continuing to make the same or higher profits. Don’t pinch pennies if your company is rolling in the dough. My company, and my industry, have made record profits during the pandemic. That hasn’t translated into higher salaries for any of us! Departments that are forcing people back to the office or souring on remote work are losing high performers.

    Now, I think it’s ok to consider region of residence in new hires. The federal government and other national industries have always had salary variations based on US region. But, you’ll have to consider that you may not be able to attract the best talent in that region, if you aren’t paying more than other companies that *are* based in that area. Plus, if you base salary on region of residence, and you hire someone initially in Ohio at x amount, and they later move to New York, are you giving them a substantial raise simply because they moved? You’d have to, if you operate in good faith, because they now live in a more expensive area. It goes both ways.

  95. Alexis Carrington Colby*

    If you are currently in a state with no state income tax and you want to move to a state with income tax, (1) can you ask for a higher salary when you move? (2) How do you go about that?

    This would be for remote workers.

    What do you all think?

    1. Charlotte Lucas*

      I’ve lived in both. You pay higher consumer taxes, property taxe, & other fees when there’s no income tax (& often buy liquor from the state). And you often get fewer services. I don’t think there’s a case to be made here.

    2. Person from the Resume*

      Not on that. Nope. You should use COL factors which should factor in tax burden for citizens.

      States needs to get the taxes from somewhere. Not always from the citizens but aren’t the citizens generally paying higher sales tax, home taxes, etc in states without income tax?

  96. Beebee*

    Hmm this is definitely a tough topic. I would think the roles should all have a base salary band (based solely on labour value, not on cost of living) and then be adjusted based on if a worker is required to come in person. For example, someone required to work in person in NYC could be offered a bonus for that reason (as they must live in/close to the city) but the same position with a fully remote option would not have that in person bonus as the employee could in theory move anywhere else and are choosing to live in NYC (yes not everyone can choose to move but if you get too into the weeds about why people live where they live, I don’t think this issue will be solved).

    Maybe the adjustment could be tied to the cost of living of the location relative to the average of the country? And if it’s above average, there is an appropriate adjustment? And of course the base pay for the role should be more than enough for anyone to survive off of, regardless of where they live. If someone chooses to move to a HCOL area for a non-work related reason then I don’t think that person would get the bonus — it would just be for those required to be in the area for partial or full in-person work.

    I think where it would get tricky is if companies do not offer the bonus then they’d have to approve an employee wanting to move and still work remotely. For example, my current job can be anything from fully in person to fully remote depending on your preference but technically there’s no requirement to go in person. If my company followed the above suggestion, then I wouldn’t get the bonus as I’m choosing to stay in my city, but if I asked to move and keep my job they would have to say yes. If the company wouldn’t approve the move, then to me they are requiring me to stay where I am and I would need the COL adjustment.

    There’s also taxes to consider as part of COL. I’m considering moving to a new city in a couple years and while rent is about half of what I pay now, income tax is twice as much. There’s also a currency conversion question if a company is cross-borders; I live in Canada and our dollar is not very strong so if myself and a US colleague were both paid $75k it would be worth noting that $75k CAD is significantly less than $75 USD. I’m sure that would already be considered but it’s worth mentioning because I know sometimes people just see the $ symbol and think it’s all the same!

    I don’t think there will ever be a fully fair way to do this every time and I also don’t think that personal spending choices (which I would technically put student loans under this category) should factor in to adjustments like this.

    It will be interesting to see how this grows over the next few years!

    1. Beebee*

      *$75k CAD is significantly less than $75k USD (our dollar is bad but it’s not that bad haha)

  97. Liv*

    I think the problem is mostly that companies are figuring this out retroactively when they weren’t originally set up for remote work.

    Pre-pandemic, most companies required people to work in person. That meant they had to hire people who lived in or near their offices, which in turn meant they had to pay people enough to attract them to those locations (i.e. enough to live on). If your company/the role was based in New York or London or somewhere else notoriously expensive to live, you paid more. If your company/the role was based in a cheaper place to live, salaries reflected that. Everyone was on the same page.

    Post-pandemic, suddenly all these companies who never envisioned remote work are being forced to pivot. Now, they no longer have to pay people in order to attract them to a specific location, but it’s really hard to lower someone’s pay retroactively, even for logical reasons. That’s where this gets messy.

    Plus, it creates inequality between people who are able to move away from where their office was originally located vs. those who can’t. People have roots in places, and not everyone can (or wants to) up sticks and move.

    TL;DR – either system makes sense (pay based on location vs. pay based on job) as long as it’s clear from the offset. The problem we have is companies are having to change the rules half way through the game.

    1. Hlao-roo*

      I think the problem is mostly that companies are figuring this out retroactively when they weren’t originally set up for remote work.

      Yes, definitely this. Also, because so many jobs went remote in conjunction with stay-at-home orders and a general decrease in socializing for public health purposes, many of the people who moved were relatively high-salary workers moving to larger houses in relatively lower cost-of-living areas so companies could institute location-based pay measures and cut salaries to save money (at the cost of morale, of course).

      If jobs went remote hand-in-hand with factors that encouraged people to move to high cost-of-living urban areas, I doubt location-based pay would look very attractive to companies.

  98. Person from the Resume*

    I think a lot depends on if the company says someone has to live somewhere or if they allow full time remote employees. If the company is driving location, then, as now, they do adjust wages based on location. Someone who works in NY is paid more than someone working in a rural area.

    It also depends on the pool of workers. If there’s lots of potential employees for a WFH role all over the country, then the company can have a lower salary and only people living in LCOL where that’s a living wage will apply, but as long as they are getting enough good employees that way then they can do this.

    If they are offering WFH but qualified employees are congregated in HCOL area like silicon valley, the company will have to pay more. Maybe not silicon valley prices because WFH has value and the applicants may be job hunting in order to leave the area. But maybe they will have to pay high salary for a qualified employee with those skills.

    I think there’s no good answer. Probably pay at least somewhat based on where someone lives, but within reason. What within reason may be that a company not based in a HCOL may not subsidize people to to be able to afford that because the company doesn’t need them to live there.

    But the method should be done like the govt locality calculator. Base pay plus locality pay. So if someone moves to a lower COL area, their base pay doesn’t change but their locality pay does. A company can reduce the overall salary without a pay cut on the base pay, and it was always obvious that a employee’s work address was influencing that number.

  99. Whyblue*

    I think it depends on whether you require the person to be able to commute. If yes, you need to add a COL premium to the cost of labor / pay the local market rate. If the position is 100 % remote and you are prepared to pay the travel cost in case they do have to come in, you can go with the cost of labor. If it’s something in between, where they have to come in once or twice a month and you won’t be paying travel cost, maybe the COL premium can be seen as a compensation for the cost and hassle of the occasional commute. Just don’t have people take pay cuts over this. I think it’s easier to understand for a newcomer that some people may retain a high salary from a previous remuneration system, than for current employees to get less for the same work.

  100. librarianmom*

    There is a factor of location requirements of the job. If the job requires the employee to be present in person in a location (in the office, regularly meeting with local clients, soliciting or serving local businesses, etc.), then that should be compensated for. But if the job is totally remote and never will require the employee to do any location based work, then it is within the employee’s discretion where to live (and how much to spend on living expenses) and COLof a location should not be a factor.

  101. Thin Mints didn't make me thin*

    I don’t think location should be a factor in pay unless you are trying to incentivize people to come to the office. But don’t do that either, if their work can be done from anywhere.

  102. Aurelia*

    One thing we’ve been seeing in Canada since the pandemic started is housing prices increasing drastically in formerly cheap, rural towns. As people with big-city money take their remote jobs to other provinces, local people making $15/hr can no longer afford to live there. Not really sure what relevance that has to OP, but it’s something I’m increasingly concerned about as a professional in a field that pays decently but not extravagantly, and who is starting to be pushed out of the housing market by Vancouverites and Ontarians.

    1. Hlao-roo*

      I think this is very much relevant to the discussion. Commenter bee upthread wrote “I think the crux here is that not localizing feels personally fair and localizing feels societally fair.” The remote workers who are taking their big-city money and pricing out locals in rural areas show the societal unfairness of paying remote workers the same wage, even if that salary is personally fair to each individual worker.

      1. Aurelia*

        Yes, that makes sense. I was thinking maybe not relevant to the employer’s decision, unless they happen to be something like an NGO that deals with housing or income inequality.

  103. Mr. Cajun2core*

    Many, many years ago I moved from Silicon Valley to a small city in the Southeast. My boss really wanted to keep me so he offered me to work from home. Yes, I took a pay cut but I negotiated a reduced number of hours expected to work. I went from 40 hours a week to 35 hours a week. I was salaried-exempt. I worked in a call center so I only had to be logged in for 35 hours over the week instead of 40. If I did work over, I got comp time. My point being is that if one is forced to take a pay-cut some sort of reduction in duties should go with it.

    Alison talked about DEI concerns about living in poorer/cheaper neighborhoods. It wasn’t that long ago (and I am sure it is still true in many cases) where the common conception was that women (especially married women) could be paid less because they had a husband supporting them. Also, do you pay people without kids less than people with kids? Of course not.

    1. Dasein9*

      “Of course not.”
      Unless you are the US military. This actually a thing that is done.
      (No, I don’t think that it -should- be done either, but there is precedent.)

      I agree: the lower pay should be accompanied by some perk. Also, as Jessica Fletcher pointed out above, it’s a good idea not to penalize current employees for moving, even if a different standard is used for new employees. It’s demoralizing to take a pay cut, any way you slice it, and in all the economic turmoil we’re experiencing, it would be worth the goodwill generated to not make employees take a cut.

  104. PlainJane*

    I get both sides, but I have to come down on the side of the pay being the same if the job is the same. I feel like paying someone less because he or she works remotely from a farm isn’t that much different than paying a woman less because she’s married, and her husband is contributing to the finances. I say that as an unmarried woman who has looked bitterly at married women earning my same wage who can take expensive vacations and buy nice things and own homes–it sucks from my end, because I’m trying to make the salary cover everything, while for them it’s more or less mad money, but I can’t imagine it would fly to have a policy saying, “Well, clearly, if you have a second income in the house, you don’t need as much money as a single person.” The job pays what the company has determined that it’s worth; that can’t be based on lifestyle choices like location. If the company wants to move out to a LCOL area where the salaries are lower and hire from there, then it can pay the local average. But if you want to be in NYC or San Francisco or Seattle, that means you have higher labor costs.

  105. More Coffee Please*

    I have some firsthand experience with something like this pre-pandemic. My first job out of college was a rotational program where I worked at multiple company locations over two years to get experience, then decided on a permanent role (most common were management or strategy roles, but people also went into marketing, sales, operations, etc.). The company was very diversified, so you could do just about anything.

    During the permanent role selection process, each person would talk with the leadership teams from a variety of departments/locations they were interested in with the goal of finding the best mutual fit. The weird part (and where this becomes relevant) is that each role, no matter what it was or where it was, was paid the same salary.

    I think the company did this for a few reasons: to avoid giving the permanent role seekers too much negotiating power (pitting the departments against each other), to ensure salaries were higher than what we’d been paid while rotating (to improve retention), to avoid giving departments an edge over others if they were willing to pay more to get all the talent, etc.

    The actual effect was not great in my experience. I went to work for a team in a very high COL area, and my salary was relatively low there. I made it work, but I was not living the life that my coworkers (with the same salary) in the Midwest were. On the flip side, some companies in very low COL areas (e.g., rural Idaho) couldn’t afford to hire from this talent pool at all because the baseline salary was much higher than what they paid other employees.

    Ultimately, I left for another company in my local area that paid me (depending on how you factor in bonuses, stocks, etc.) 30-50% more. I think in cases like mine (underpaid for the high COL region), retention would be hard for any company because the appeal of doing the same work for more nearby is too great. I imagine retention would be great for the opposite situation, where someone was paid a lot more than they otherwise would get in a low COL area.

  106. Cee*

    “– A salary should be based on the value of the labor being provided to the company, not what it costs for any given person to survive while performing that labor; you’re paying for work, not a person.”

    I think at the end of the day there just is no fixed value of labor, the same way there is no fixed value of an apple. The conditions under which the labor is performed will always impact the value of the labor. So really when paying by location, you aren’t paying for a person, your still paying for work, the value of that work is just more in New York than Arizona. I don’t see how this argument against is that different than the pay banding argument in favor of location based pay in the end.

  107. Lora*

    Companies made a choice about where they were going to put their headquarters and where they were going to operate. When market conditions change, they’ll go overseas for arbitrage as needed and lay off the locals if they think they can get away with it. They can try to post jobs or hire McKinsey to do a market analysis to see what happens when you post jobs for low COL prices, whether they can still get an applicant pool that meets their expectations in terms of size / skill / bench depth. I think they’re just mad that some of the choice was taken away from their exclusive control. If they were so very urgently concerned about being compelled to pay Silicon Valley / NYC / major city hub prices for people, they were always welcome to move to economically distressed areas and create jobs, there was no shortage of tax credit programs on offer for this exact purpose – if they didn’t choose to do that, and still don’t want to do that (because it turns out low COL areas do not have all the amenities to which they have become accustomed, or do not have the same kinds of social interaction we’re told is critical to innovation or disruption or do not have the same applicant pool for in-person jobs), that is their choice.

    They didn’t think their choices through when it came to site analysis before choosing where to locate their business? Well, that’s a bummer, but they can fix it by packing up and moving to somewhere with a more acceptable COL and selling their headquarters to be renovated into low income housing or whatever.

  108. Just Me*

    My SO’s old job is fully remote and adjusted salary based on cost of living. Here’s how things got interesting.
    –Two employees moved to a very expensive city in the Eastern US. They received a cost of living adjustment. After a few years, they both moved to a much less expensive city in the Mountain West US. The leadership was then faced with the question–do they reduce the salary given how inexpensive it is to live in the new place. One of the managers told my SO that they would keep the salary the same, but “those two will never get raises as long as they work here again.”
    –One employee received a higher salary because he also lived in the aforementioned expensive Eastern US city. This employee is originally from an Eastern European country where the cost of living is very low. Without telling the company, he moved back to Eastern Europe while working on US EST and collecting quite a bit of extra money. The company eventually found out and for several reasons (taxes, visas, labor regs, etc.) said he would need to come back to work in the US. Employee just quit.
    –Employees felt incentivized to live in more expensive locals. That might not normally be an issue, but labor costs are now disproportionate to company revenues (this is due to other factors as well, but employee salaries are a big part of it). Consequently, a BUNCH of people are now being laid off.
    –Of course, cost of living adjustments are just based on geographic region, not necessarily an employee’s true financial needs. The employees in the less expensive areas are often the ones raising families, and while they’re not “struggling to make ends meet,” the costs related to taking care of children aren’t reflected in their paychecks. The ones living in the expensive big cities are usually unmarried, don’t have kids, and often have roommates, so they often end up being able to save more.

  109. Echo*

    If the position is being hired at 100% remote, yes, I think it would be fair to base the pay off of something closer to a national average for similar roles. But I don’t think anyone’s pay should be changed if they start in-person and switch to remote. It just feels demoralizing to cut someone’s pay, no matter what the reason. And if I decided to move to a higher cost of living city I’d be doing so with clear eyes and full awareness. (I’m in DC, though, so “a higher cost of living city” = Manhattan, SF, or Honolulu.)

    1. Echo*

      Oh, and this seems like a rarer situation but I do think someone’s compensation could be increased (but never decreased) for COL and commuting costs if they were required to switch from remote to in-person. If it’s a voluntary switch, no increase necessary.

  110. Blarg*

    Since I’ve seen Alaska mentioned a few times let me chime in as a person who worked for the State there.

    The State has geographic differential. Same job title, different locale, different pay. From 0% (Anchorage, baseline) to 60%. It’s a great system because when I lived in Nome (37%) my job and life were more challenging day to day than in Juneau (3% at the time), but not as much as Bethel (50%).

    It’s how you get people to do the same job in places with different costs and standards of living. Sure my rent in Nome wasn’t that bad. But my 6 mbps internet with a 40gb cap was $200/month. And the butternut squash was $20 and also rotten when you got home.

    1. Hlao-roo*

      This is a good point. Cost-of-living is one component of market-based or location-based wages, but not the be-all and end-all. For in-person jobs, companies may need to pay more in undesirable/remote locations like Nome or Bethel and may also pay less in highly desirable locations (don’t know if this happens but I can easily imagine someone being willing to earn slightly less money to work near a beach or near mountains).

  111. Governmint Condition*

    In my state, there are two geographic areas where salaries are adjusted. It is based on where you work. If you commute across one of these geographic lines, you are paid based on where your work location is. Remote workers are paid based on where they would be if they were working in-person. (The only full-time remote workers are those who need special accommodations for medical reasons.)

    I’m just a bit surprised that Alison has never formed an opinion on this in all the years she has written this blog.

  112. Jellyfish Catcher*

    Employees should have the right to make personal financial decisions, including where to live, without suffering payroll “adjustments”.
    Employers who allow remote work should still be expected to pay in relation to employees’ work and value, not location.

    Cost of living and pay comes into play when attracting employees to high COL areas, which is fair, and it’s also fair to choose a lower COL location, if possible.
    Pay adjustments based on housing (or other costs) open a huge can of worms: if a local employee buys a small modest house, below what they could afford, or moves in with their parents, should they get less pay?
    This also opens up the question of what other personal decisions beyond housing, should affect pay or even employment. We’re seen examples in AAM – religious pressure,
    contracts of loyalty, and even pressure to donate an organ.
    Let people make their own personal decisions.

    We all have personal circumstances that affect our choices and finances. None of us should have to worry about payroll punishments.

  113. HannahS*

    There seem to be two questions here.
    1. Should different employers in different locations pay different rates for the same job? i.e. a receptionist in NYC making more money than a receptionist in Little Rock, while a worker in the Arctic circle may be incentivized and make more than both.

    2. Should the same employer pay two employees different wages depending on where they live?

    These are really different situations. I think the first is, frankly, the reality. Employers have to pay more in high COL settings to retain staff; what constitutes a living wage (or a comfortable wage) is higher if rent and food cost more.

    In the second, I think it’s a bad idea for a single employer to start paying people differently based on where they live. That’s hardly equal pay for equal work.

  114. Manders*

    An important consideration here is that companies don’t set their salaries in a vacuum–employees always have the chance to look around and see what they’re worth on the market. There are definitely arguments in favor of setting salaries by cost of living where the employee lives, but since not all companies do that, there’s a risk of losing all your best remote employees to companies that have standardized salaries. And people have a pretty strong emotional reaction to seeing their salary drop, even if they’re coming out ahead because they’re paying less for housing.

    Plus, people move for a lot of different reasons, some of which aren’t fully in their control. If your remote employee in a low COL area suddenly has to relocate to take care of a family member in a high COL area, does their salary have to change? Will it mess up the department’s budget if several employees have to make moves like that?

  115. Craig*

    I have a weird situation where just after COVID when a lot of people were working remotely I was hired for a new job as 100% remote. Now at the time I was living in one of the more expensive areas in the U.S. however the rest of my team lived in another area of the U.S. that has a higher-than-average CoL but cheaper than where I lived. When I was offered the job I’m not sure if my salary was based on where I was living or where my “office” was. Since then I’ve moved to a different, much lower (for now) part of the U.S. I got permission from my manager beforehand that my salary would not be affected by the move. Recently our company has been a acquired by another company who typically pays their employees above average but does pay based on where the employee lives. Everyone else on my team expects that their salaries will increase after the acquisition. However since I’m in a lower-cost area and I think the agreement with my manager will be null and void after the acquisition, I fear that my salary will go down significantly.

  116. toolittletoolate*

    I don’t think you should change an existing employee’s salary because the organization has adopted new policies that allow remote work, when they didn’t before. We are in this spot because of one of the biggest unexpected shifts in work culture in decades. Don’t change the rules on those who are already in the game.

    But when that job turns over, the salary should be pegged to the prevailing market rate for the area where the person resides.

    Why do I think that? Because, if companies start offering above-local-market salaries to Little Town, USA workers, the cost of living just goes up for everyone in Little Town. People whose jobs are location-based are the losers in this structure. We see that already when people sell homes in high cost areas and move to lower cost areas, it drive up real estate prices for everyone, and really hurts the working class worker.

  117. Nikki*

    If you think about it, employers are not paying salaries based on how much it costs to live in a particular city. They’re paying the salary required to hire good quality candidates in specific locations. A candidate in an in-demand field is not going to take a barely livable salary in a high COL area when there are other companies willing to pay them more. Employers in these fields know this and adjust salary bands accordingly. There are plenty of jobs in high COL areas that get away with paying peanuts because it’s a field tons of people want to break into so they can find good candidates for very little money. I think a lot of employers will start tailoring their pay bands more towards the salaries that attract good quality candidates and take COL into account a lot less. My company has done this. For jobs that are required to be in office, COL is taken into account in the salary for jobs at that office so they can attract candidates who are willing to work at that job in that city. For fully remote jobs, salary bands are the same regardless of location, and as a result most of our remote employees are located in lower COL areas.

    1. Filosofickle*

      This is how my org works — midwestern HQ, medium sized with folks all over, and they seem to pay based on large city market value regardless where you live. I think one of the things that makes this calculation interesting is it really depends on what the company does and its size. Larger, high skill/revenue companies have to be flexible and will scale to the talent pool, and need to do what it takes to get top talent regardless where they are or what they demand. Or they may be so desirable they don’t have to compete at all. That’s what you’re describing. On the other end, big big orgs like the federal government have the volume to set uniform, defined policies around grades and bands (and offer the stability/benefits to make up for lower pay), that’s the other end of the spectrum. But a small company or one that has to set its prices to the local market doesn’t have the resources to achieve uniformity or flexibility. They simply wouldn’t have another 20K to give to an employee who lived in a higher COL city

  118. Midwest to West*

    I am employed by a Midwest company and used to office out of a Midwest City. I chose to move to California during the pandemic to be close to family. I fully do NOT expect them to pay me what my salary would be here in CA because I chose to move here and I do not make what I would make in CA in the same role.
    Now, if they asked me tomorrow to move and/or office out of one of our California locations, then I would expect them to adjust my pay to a California rate as opposed to a Midwest rate.
    To me that’s them saying THEY want me in CA vs right now where I want to be in CA.
    Does that make sense? I’ve made the choice to have a lower salary living where I want but if they dictate where I live I expect my salary to be competitive in the local market.

    1. fine tipped pen afficionado*

      Was literally just commenting a hypothetical like this. These convos only ever seem to consider people moving from higher COL areas to lower, not the other way around.

    2. A Genuine Scientician*

      This seems very reasonable to me.

      The company needs to pay for what it wants. If it wants someone in a higher COL place, it needs to pay more to attract good candidates for it.

      If they don’t care where you live, then they have basically no reason to pay you NYC wages when you live in Omaha.

      I’ve seen a lot of people talking about employees being demoralized if they have to take a paycut, but … do they assume that a new hire making 1/3 – 1/2 of someone with equivalent experience and duties isn’t going to be demoralized just because the previous person got hired just before the pandemic rather than during it?

    3. General von Klinkerhoffen*

      Yes, exactly. It isn’t about where you live, but why you live there.

  119. fine tipped pen afficionado*

    Pay based on the COL seems like adding an unnecessary amount of administrative work. What is the source for the COL data you base your pay bands on and how do you account for the fact that people of color are disproportionately renters because there are more barriers to home buying? How much effort are you going to put into the analysis every time an employee moves? The COL in an area may change while that employee is living there; are you going to give them a raise or pay cut because of that? Also how the hell do you budget for the possibility of an employee you hired at a low rate because they live in rural Indiana up and moving to San Francisco?

    It seems to me the better solution would be to keep pay the same and offer employees who are in the office X number of days a very healthy commuter stipend. You could have ranges for this. People who are hybrid and come in once a week would only be eligible for X amount but people who are required to be in office qualify for a higher Y amount. We already do travel and phone stipends. It doesn’t feel like a stretch to me.

  120. Susannah*

    Oh my goodness – you cannot ask people to take a pay cut because they chose to move to a lower COI area. What if they stayed in the area but downsized from a house to an apartment? Maybe they are taking their salary and using it for other priorities, like education or caring for elderly relatives. And should the people in higher-cost areas have to give back because they have access to things like national sports teams and theater the people in lower-cost areas might not get?
    It’s a frighteningly similar argument to the ones made back in the day about men and women – oh, he has a family to support and you’re just a single gal working until you snag a husband, so we’ll pay you less.
    This is not the same thing as having different pay bands (like the federal government) for jobs in different areas of the country. Not at all. And the federal gov’t differentials are based on where you work – not where you live.
    Now, you might be saying: but they work from home! Fair enough. Do you pay for their home offices – everything, including equipment, energy costs, space in the home? If not, there’s zero justification for any pay cut.
    This would be so demoralizing to me I’d quit if I had been asked to take a pay cut because of a personal decision. If there’s an issue of taxes., etc. for people moving and working out of state, with different laws and regs, that’s fair game. But otherwise, no.

  121. General von Klinkerhoffen*

    I’m amused by the timing of this given (1) that it came up as an issue in the UK party leadership/ prime ministerial runoff campaign and (2) yesterday’s announcement that another top exec at Meta is going (internationally) remote. For 2 it seems unlikely that anyone is being asked to take a pay cut even to move out of San Francisco.

  122. 3lla*

    I think the keys will be strong base salaries and transparency.

    So if you’re doing location based pay, I think the paystub should list salary and have a separate line item for CoL adjustment (additions only). And these items should be discussed separately as part of negotiation at onboarding and review times. And the way it’s calculated should be available to all employees at any time and not too hard to figure out.

    With all of that in place, I think there’s room for discussion. Without that I think it’s just a breeding ground for resentment.

    1. Person from the Resume*

      Why only additions? If you’re using a COL line then you can and should do additions and subtractions.

      I was in the military and now the federal government. Employees don’t usually get upset if when they move their pay check adjusts – even down. It’s hard to tell anyway as now you’re paying different taxes along with the COL adjustments. It’s just a fact of the system people understand and accept.

  123. N*

    But why wouldn’t people try to game the system or pay were based on location for remote work? If I lived in Cleveland but wanted an SF salary, couldn’t I just use a friends address or something? I am sure there are plenty of ways to do this, and even if it’s a little challenging, it would be worth the pay difference. I don’t even personally have ethical qualms with this if it’s for a for-profit company. The whole thing would feel like they are operating in bad faith.

    1. The Happy Graduate*

      If your address on your pay stubs doesn’t match the address provided then I believe you’re committing fraud. It’s something that would be caught pretty quickly come tax season.

      1. NewJobNewGal*

        If I wanted to game the system, I’d move a few miles into the fancy-pants neighborhood. I’d get the smallest house that exists there. My salary could jump 25%-50% even thought I only moved a few miles.

        If money is involved, then people will game the system.

        1. Person from the Resume*

          Not really. A lot of COL use broad metro areas and not specific neighborhoods.

      2. N*

        The likelihood of this getting caught based on taxes seems extremely small to me. Very few people are audited, it’s easy to get address forwarding, etc. The more likely issue seems to be health insurance, where you’d be provided with a plan in the state you listed but not the one you actually live in.

        1. doreen*

          I think the tax issue is less about auditing and more about withholding – for example, if my employer has an office in New York and I provide a NY address, taxes are going to be withheld based on NY resicdency even if I live and do all my work in Kentucky ( which might not be subject to NY income taxes depending on the specifics)

  124. The Happy Graduate*

    Personally I think a reasonable workaround is to pay a standard salary band for the work, but also offer a commuting stipend for those required for in-person work. Not fully paying for the entire commute, but say either we’ll cover X% of transit pass or up to $X per month for gas costs for those living between Y-Z km away. Have those people submit google maps from their address to the company as proof of commute distance and have that added to their monthly pay. This is something done in the CAF reserves and it’s a reasonable solution to this new private-sector problem

  125. NewJobNewGal*

    If salary is based on location then the employer will need to do neighborhood level annual analysis of COL. Neighborhood values change constantly. Consider:
    1. A low cost of living area is gentrified and employee’s rent goes from $500 to $1500 a month.
    2. Crime moves into a high COL area and an employee’s home value is cut in half.

    As an analyst, it would be tragic to collect personal data and create an algorithm to adjust salaries. I’d need to bring in a data scientist to create an algorithm that could withstand legal challenges, and the algorithm would need to be reviewed and adjusted regularly. Employees would need to submit their Real Estate Taxes, mortgages/ leases, change of addresses yearly. We would need to monitor state and local tax changes. How do you account for employees who purposefully move knowing that their salary would increase proportionally? Gaming the system would be expected. ( ie If I buy a little house in a high COL area then my salary will increase 50%. )
    Creating a fair, location based system would require a huge staff and very expensive talent to build and maintain. And you need to hire this staff without them knowing what they will eventually be paid! The idea of a location based system isn’t a reality.

    1. Person from the Resume*

      Not really. Many COL calculations use very broad metro areas; you/companies do not have to do into hyperlocal calculations. You can use broad government provided ones which already exists.

  126. MeredithX*

    I don’t think the issue here is the argument over giving people pay cuts. I think the issue here is you seem not to have a clear salary band structure that is based on educational and experience requirements for a job independent of location, and then, that can be supplemented with regional modifiers now that the structure of your organization has changed. It is not unusual at all to have regional salary band modifiers which give the base a boost when the home region is high cost. But these don’t usually go the opposite direction.

    My company has remote based field employees in just about every state of the US as well as multiple countries.

    Remote employees are paid a base salary within a banded range. Bands for the regional and local positions are based on fair market value for what’s considered their home office/base location. I have heard of employees being given cost of living increases if asked by the company to move to a more expensive location. I have never heard of employees being given job cuts when asked to move to a lower COL location, however, it’s explained to them transparently where they fall within the band for their level and if needed they are advised that they are unlikely to see any formal pay increases for a while (think: promoted to next level band, but already working at a salary that’s within that band, so there is little to no pay increase with the promotion).

    Still, I think there should not be any penalty for those folks by reducing current pay – that doesn’t seem in good faith. So if you make a band structure, make it transparent, then everyone will know where they fall within it, and if someone is at the top of their band they will be made aware they may not see any substantial pay increases for a time until the bands are adjusted when their is a fair market value reassessment or a job role redesign.

  127. Dawn*

    A lot of this is going to depend on whether they are able to hire and retain employees.

    Yes, in an ideal world we’d all be paid what our labour is worth, but we unfortunately live under Capitalism and it doesn’t work like that.

    So the question becomes: if we standardize our rates across the board, do we have difficulties hiring/retaining qualified employees? And does this mean we are paying drastically over/under market? And if you’re going to be paying a blanket salary for a position, unless that salary is very high everywhere, you are going to run into places where it doesn’t match up to the cost of living and employees deserve a living wage.

    That’s not even a matter of fairness: it’s acknowledging reality that, say, our employees in NYC need more money than our employees in Ozark County, Missouri, to have a similar or at least comparable standard of living.

    Cost of living is never not going to be a factor for your employees; it only makes sense to consider that in terms of pay as well (which the local labour market will OFTEN but not always do for you.)

  128. Reluctant Manager*

    This is a philosophical discussion, so interjecting a practical issue might be beside the point, but it doesn’t cost a company the same to have any employee anywhere. If an employee wants to move to a state where unemployment insurance or payroll taxes or higher, or where the company needs to establish nexus, or if your HR department is buried with managing regulations in different states, or your health insurance goes up, who eats *that* cost?

  129. Jake*

    I think you’re looking at this strangely. I’m a manager, and I will pay what I need to pay to fill the role with a competent person. If market rate to fill MY ROLE is $100,000, then why would I pay more or less than that just because the market rate to fill my role in another location is more or less? The fact that the candidate lives in a place where that role’s market rate is $150,000 is meaningless to me, if I can still find others who can fill the role at $100,000 effectively.

    As for people who moved to cheaper cost of living areas… as long as they still provide the same value, they should absolutely get paid the same they were before. The only exception would be if you discovered you were paying a lot more than market rate for the role, but then the location would be utterly meaningless, and the only relevant data point is that you are paying over market, regardless of location.

  130. Unseen*

    I would vote that new hires get COL pay, current employees get grandfathered in at current pay but COL is considered in annual raises. Bonuses are performance based exclusively.
    This isnt just about pay, but also employee morale and company culture.

  132. nnn*

    Also, I’m thinking that, quite separately from the question of where employees live, in some situations it may be appropriate to pay employees who are required to work on-site at the employer’s location more. This would reflect the essential nature of the on-site work and the additional labour, time and expense of commuting/not being at home.

    Since on-site employees have to live near the employer’s location, it might also result in employees who live there getting paid more than employees who live elsewhere, but it would be compensating them for the actual tasks they are doing, rather than paying people based on their perceived cost of living.

  133. George*

    Maybe it’s already in the thread but federal gov has a “locality pay”. You get your base pay for whatever the position is but, depending on where the office is located, an additional premium up to 25%. Not sure how that’s calculated but, in any event, it’s consistent and known ahead of any job offer or transfer. So, for instance, being based in Alaska gets you the full 25% as does, I think, being in the San Francisco Bay Area. Of course, this doesn’t take into account remote work but, even then and for the moment, it would still be based on where you’re stationed, not where you might actually live.

    https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2022/general-schedule

    I think basing it on where someone actually lives just goes down a rabbit hole of having to keep track of people all the time. Just base it on the person’s actual job, then add a premium pay for the office they work with. Yep, it can be exploited but, overall, everyone knows what they’re dealing with and can decide on jobs from there.

    1. Kayem*

      They’d also have to add in considerations, such as people who live in border cities between cities/countries, where they work in one and live in the other. Or bedroom communities where everyone works in a large city, but might have a long commute from a smaller nearby town that’s not incorporated and has a lower COL. And then do you change pay rate based on which section of the city someone lives in, or which neighborhood, etc.?

      I have a feeling the reason my company doesn’t do location incentives/disincentives is because they have over 30k employees and they don’t want to have to pay someone to figure this out. That and they’re cheap.

  134. Some-Schmuck*

    I think that if a position requires that you reside in a certain place (note that physical and remote jobs can have a location requirement), COL should be considered in your compensation. That isn’t because of ‘need’- it’s because in order to hire and retain good employees in a given location, you need to pay them competitively and in a way that, to most reasonable people, seems fair. I think the best way to do this if you’re an employer with people in stationed in different localities is to have a pay range for the position’s salary and then an additional adjustment for the location. This way, if you transfer to a lower COL area, your salary doesn’t get reduced, just the location adjustment. Positions that don’t have a location requirement will just have a pay range.

    Personally, I work on a team of fully remote employees scattered across the US. Despite being remote, our positions each have a location requirement. My position is in a famously expensive major city, but I make basically the same thing as colleagues whose positions are in much lower COL areas. I spend half of my income on rent alone, whereas my colleagues are able to purchase homes. From an employer standpoint, isn’t important because of my needs- it’s important because it gives me pause (due to perceived inequity and it being financially unsustainable) and is leading me to consider better paying positions in my area, or positions in lower COL areas so that I can move. It’s risking retention and, if I leave, may make hiring a replacement challenging.

  135. HA2*

    I think in the long run, it’s going to require companies to figure out how much value they get out of having on-site workers.

    If for some jobs, being on-site is entirely unnecessary, it’s just an optional thing that an employee can take or leave, then my guess is that in the long run, the pay for that job is going to be independent of location. After all, why would the business pay a premium for people in a high cost of living area when they could just hire people for less (probably people in a lower cost of living area)?

    For some jobs, being on-site occasionally is useful but not required. In this case, it’s likely that remote work is going to be treated as a perk – some people get denied it, some people get it instead of some amount of salary, some people are able to negotiate both. Sort of ad-hoc.

    And for some jobs, being on-site is an absolute requirement. I suspect those are going to have fairly rigid cost-of-living adjustments – if the job is hiring in New York they pay New York salaries, if they’re hiring in Wyoming they pay Wyoming salaries. The old-school sort of compensation structure.

    Right now, I think we’re in a transition period where people don’t REALLY know this stuff, so the discussion about salary for remote workers is also a guess at that – does the business need to REQUIRE people to live in particular areas? Or should it incentivize it, but not require it? Or transition to not caring about location much at all? We all started from the premise that you have to live where you work, and for some jobs that’s going to stay true and for some it might not.

  136. Ann Ominous*

    Pay them all the same, and provide an allowance to in-person employees to offset their commuting cost.

  137. Moonlight*

    So one case I can think of is if you’re trying to incentivize people to live in less optimal locations. Let’s say people generally get paid well for the work, and no matter what you’re getting paid X amount for Y service or Z skill, but let’s say we’re talking about nurses, teachers, and doctors, or other professions that are “essential” and the gov’t needs people to move to a less desirable part of a state to provide adequate coverage in that area (eg a really remote town), I think that’s one case where it might make sense to give people a “bonus”; so they are not saying “Sally’s work is worth more than Jane’s because of where she lives, we’re saying we need to do something that gets people to provide this coverage”.

    I guess you could then argue if you’re going to give people incentives to live in undesirable locations, you’d want to support employees who live in higher cost of living areas… but maybe in those cases maybe orgs need to pay for the job (eg if you have 10 nurses on staff and they make $50-$95k depending on skill, and you have to pay $5k more for HOC area, pay them all $5k more unless you can prove that the work is demonstrably easier in the LOC area). I’m sure there’s solutions but ultimately people paying less because of a lower cost of living area just comes off as corporate greed and people looking for reasons to pay people less money for the same jobs.

  138. H3llifIknow*

    If Job X is worth say $100K for a mid level engineer, then that’s what it’s worth. THEN you add in the cost of living. If it’s out of DC or San Diego or San Francisco, that is going to add in a lot of money that is NOT going to be salary; it’s going to be subsistence (think the way the military does BAH, etc… when you move to different areas of the country/world. The BASE salary doesn’t change. So, you figure out what each position is worth, and then you do the research on WHERE the work is being done. My cohorts in DC make 20% more than I do, but I don’t grumble about it because in Ohio the COL is at least 20% lower. And my commute is approximately 45 feet vs 2-3 hours! Just my 2 cents!

  139. Chauncy Gardener*

    My current company is in the US and everyone is fully remote. We set our compensation bands based on the role and national comp ranges.

    At my last company, also in the US and fully remote, we set compensation based on geography and if we requested someone to move to a higher COLA area, we would give them an adjustment.

    I personally prefer what my current company is doing. I think it’s more fair and pays people for what skills they have and what they contribute vs where they live.

  140. 1098, 1099, Whatever*

    Easy. Pay according to the job, with a location bonus or percentage on top of that, for those employees required to come in to the office/ live in an expensive area. Remote people don’t get a location differential because they can control where they live.

  141. 1098, 1099, Whatever*

    Establish a standard amount according to the job, with a location bonus or percentage on top of that, for those employees required to come in to the office/ live in an expensive area. Remote people don’t get a location differential because they can control where they live.

    1. Clisby*

      That’s pretty much what I think, except that if employees are required to live in a really remote area, they also should get a pretty hefty bonus. It’s not just cost of living – there are places where you’d have to pay me a bonus to go there even if the job came with free housing, health care, and food.

  142. LongtimeLurker*

    I’ve thought about this for a while and I think that location-based pay isn’t really fair to the employees. I can understand the frustrations of workers who are in person and must stay in an expensive area, but I would argue that the solution is to pay employees for their commute. Either some or all of their gas, or the time spent commuting, or a train pass, that way you address the additional cost of being in person without it being salary-focused.

    I think part of the problem is once you start looking at an employees personal expenses and factoring that into salary, where do you stop? If someone has kids should they be paid more? What if I have more student loans to pay off or other expenses? Or the opposite, if you have a partner with a well-paying job should you be paid less? What if you have inherited wealth? I mean what if you moved to an area with a lower cost of living to be closer to specialized medical care for you or a family member? What about the impact of the pink tax? As a woman many items are more expensive, should they be paid more than men?

    On the employers side, it’s simpler to pay for the value of the work, and avoids the potential for discrimination in considering factors of an employees personal life.

    1. Dawn*

      I dunno, if the area is across-the-board more expensive, you’re not exactly showing favouritisim, you’re acknowledging reality.

      That said, if you’re trying to hire in, say, NYC or Silicon Valley and you’re paying people the same as you would in Bottomsodom, Idaho, the market will let you know that they’ll go somewhere which DOES pay them in accordance with living in some of the most expensive places on the planet.

  143. TaxLady*

    If the whole company is remote (or mostly) then it should be location-blind. If the company lets you choose, remote, hybrid, or in office and it doesn’t matter to them either way, then location-blind. But if the company allows remote work but gets benefit from at least some people being in the office (to handle clients, physical things etc) then it makes sense to give some extra pay to people in office, especially if that office is in a HCOL area. And in companies with offices in different locations, it’s fair to have location-based salary adjustments. But it doesn’t make any sense to hire a remote worker in SF and pay them more than if you hire a remote worker based in Topeka. They should offer a salary based on offering enough pay to get the talent they need.

  144. Kiwiii*

    I don’t have strong opinions about this either way, but I can offer a data point that the non-profit I work for had a robust WFH/work remote system pre-pandemic and have a pay structure with 4 different COL areas delineated (if you live here, we’ll pay you X + 1.25% vs. over there we’ll pay you X + 1.1%). My understanding is that this is on a state by state basis OR in large regions around cities.

    I do believe this is only taken into account if we’re hiring from outside the company or someone moves to a higher cost of living area — I’ve never heard of someone taking a pay cut due to this, so maybe that’s the piece that makes it feel like less of a big deal.

    I will say, we hired someone more or less at the same level as our most senior team member earlier this year, at about 20% more than they make due to the COL in the new hire’s area and there has definitely been some Feelings about that from the senior team member, especially as the new hire is not catching on particularly quickly.

  145. xumi*

    This is a tricky one. I’ve been thinking about this a lot because we work with translators for our events and it’s crazy how much their fees vary depending on whether it’s a UN official language or not. I work for a non-profit that is supposedly all about equality, fair wages, and labour rights but when we hire translators, our TAMIL/ENG translators get paid ¼ of what our ENG/SPA translators get paid. I understand why but I still think it’s a bit unfair, especially because my boss justifies this by saying “well, we live in a world with income inequality, what can we do”. In this particular case, I think it would be good for an org that claims to be about equality to try and contribute to the change they want to see in the world, but I also understand that cost of living in Sri Lanka is much lower than in Western Europe, the US or even some Latin American countries.

    The other thing that bothers me is what happens when you work remotely from a country that has very strict policies and extremely high taxes for foreign currency. I live in Argentina but work remotely and it’s basically impossible for someone who doesn’t have a very deep understanding of my country’s economic policies to calculate my COL. If I were to receive my salary in USD in my bank account in Argentina, the government would be taking away about 60% in taxes, and I’m sure no company/workplace would be willing to pay 60% on top of your salary just to compensate for local taxes. We also have strict restrictions if we want to exchange ARS to USD, so the official exchange rate set by the government is actually not the real one, and you have to calculate based on the “blue” dollar rate (basically, the exchange rate for USD in the black market). AND there are many other exchange rates on top of those: one exchange rate for USD expenses when travelling abroad, another one for making online purchases abroad depending on the type of product/service you’re getting, another one for investing in bonds, ETC, ETC, ETC. We also have extremely high inflation (higher than Venezuela right now), and it’s actually crazy for us Argentines to see people in the Global North complain about inflation because this is what we have been dealing with for decades ☹ Anyways, if my current job wanted to pay me based on my country’s COL, they most likely wouldn’t be able to calculate it properly. But I also earn much more than employees who work for local companies because local salaries are extremely low and have really fallen behind, so comparatively I’m a high earner but taking into account what is usually paid in the field for my job, I’m actually underpaid.

  146. zlionsfan*

    It seemed to me like the headline asked a different question than the OP did – related, but different. For the question in the headline, yes, I can see arguments on both sides of paying someone a different salary for a particular job based on where they live … when you hire them.

    But to the specific wording from the OP, should an employee be asked to take a pay cut? Absolutely not. I’d rather end up paying employees “extra” for choosing to relocate to an area with a lower cost of living (which isn’t cheap to do) than create a situation where an employee has to leave our area because they can’t afford to live there and I make it worse by trying to pay them less because they tried to find a place they could afford to live on the salary I agreed to pay them.

  147. Zsazsa*

    So anti popular opinion here but I was a workforce tech conference earlier this year (I am in the U.S) and one of the presenters said something to me that really made me stop and think. Basically the presenter said we should be really weary of having full remote teams who live all over the U.S., the reason for that is what stops the employer from outsourcing to India, China, or other countries with cheaper labor and lax laws. Also, With Trade Act slowly sun-setting, what type of protection or resources will there be for workers.

    From that point forward, I have been a huge advocate for hybrid. Not because I want to force people into the office, but because I want to protect their jobs.

    1. Boof*

      I’m in the USA but strongly feel humans are humans and am not anti-hiring people in other countries. HOWEVER there is a cost to everything; if you provide service involving an english speaking customer base to a place where english is not a primary language, it probably shows, and quality will likely decline; plus all the hazards and burrocracy of starting up a business in a different country with different laws. And if you’re actually outsourcing (hiring a subcontractor) better be darn sure the working conditions are actually comparable to what you would want for your own employees in your own country. etc etc.

    2. Filosofickle*

      This is a concern, but I’m not that worried. I’ve worked in a few companies that tried to develop offices in other countries to replicate services on the cheap and they have honestly struggled to make it work. While other countries may have fantastic education and talent, it’s not so simple to collaborate and stand up teams globally. I once worked with a financial services company that set up creative satellites in Poland and India, not only hoping for cheaper talent but also for their ability to turn things around overnight — one team really found its niche and kicked ass, but the other didn’t work out and was shut down after a year. It’s a mixed bag. I believe off-shoring offers some opportunities for businesses to expand and/or cut costs, but isn’t going to put tons of folks out of jobs in the near term.

  148. Dasein9*

    This is a sticky ethical wicket, to be sure.

    What is a dollar, anyway? It’s generally understood to be a symbol of value. But the value it symbolizes is not static; the value of a dollar does change from one region to another. So a company may well be paying people at the same salary different value for the employees even if it’s the same value for the company.

    Whose experienced-value should be used to make such a decision, the employee’s or the company’s?

    What if a wfh employee moves from Kansas to New York for a year for their spouse to do a post-doc? Should the company pay them more or should the employee take the hit?

    It seems like both experienced-values should be taken into consideration when determining salary.
    Might it be fair to make a policy to pay whichever is higher?

  149. Cass*

    This is a great question. I work as a senior comp analyst for an organization with employees spread across the country. We have a traditional pay table with grades and ranges that are based on market value and jobs are slotted in accordingly. Within a given grade, however, we have varying schedules that are based on cost of labor for a particular area. I think you have valid arguments on either side. This way is objectively a bit easier to manage and to your point, a project manager with 10 years of experience working out of Phoenix, AZ isn’t necessarily going to earn what the same PM with similar experience would earn in NYC. But taking a geographic and cost of labor approach does create and add to DEI issues, which is something we’re working to control for. I love this question and can’t wait to read the comments.

    1. Kayem*

      Yeah, that’s another thing that bothers me about this. There’s already the problem with rent vs own, where the monthly costs for owning can easily be half of what rent is, but people can’t afford to save up for the down payment to buy a house because they’re paying so much in rent. So then if employers lower wages because someone lives in a town or neighborhood with low COL, that’s going to make it more difficult for people to move if they want/need to.

  151. Cat*

    If people have the ability to take HCOL area salaries to LCOL areas of course that would motivate some people to move. One potential problem that I haven’t seen brought up yet is how that could cause resentment for people who aren’t able to move because they can’t work remotely. This may or may not be relevant at all to your situation but I’m thinking of that letter from a few weeks ago where there was a certain amount of in office work that needed to be done and the letter writer was feeling resentful that they were being expected to do more of it because coworkers had moved farther out and didn’t want to come in or something along those lines. Also just in general many jobs that can be done remotely pay more than jobs that must be done in person so it’s possible that by allowing remote workers to move wherever you would effectively be giving a raise to all the people who already made the most money at your company. Of course that won’t necessarily apply to/be accurate for all companies but it may be something some should consider.

  152. Boof*

    I am VERY FIRMLY on the site of paying based on value to the company and not employee specific factors, including where the employee lives, whether the employee has a family to support, student loans, trying to catch up retirement funds, gambling debts… you get the picture.
    Someone’s value to the company LIKELY varies by region, so the employee’s location does impact pay a bit – as I understand it if someone moved out of state, the expense to properly pay that person’s income tax etc may go up a good deal for the company; I don’t know all the deets just that it either takes up more administrative hours to do (a cost to the company) or may involve a lot of extra fees (business hub) etc.
    Similarly, IT’S OK TO PAY MORE FOR IN PERSON WORK THAN REMOTE if there’s a lot of takers for remote work and much harder to find someone for in person!
    I do even think it’s ok for companies to provide incentives for modifiable health factors, within reason (ie, free gym memberships, free smoking cessation materials, etc), if it impacts the company’s health insurance costs – though companies really have to be careful about that and it’s probably best done by avoiding perverse incentives (not giving smokers extra breaks to smoke, for example) and prioritizing making it easy to do the desired thing (having on site walking track or healthy snacks available or again lowering costs/mental energy of exercise, help meeting health goals, etc)

    1. Boof*

      To clarify – employee needs are important, but their output should be what influences their total compensation. It is worth being able to modify the details of compensation to meet specific employee needs, however, and that is the negotiation – employee can work some but has some reason it’s hard to work full time? Or has to call out last minute? Less money for more schedule flexibility* or reduced hours. Someone really just wants all the money and loves to work all the time? Maybe they can pick up undesirable shifts for extra money or go for the productivity bonuses with extra hours, etc.

      *please be sure you are not disproportionately overvaluing the company cost of part time schedule etc – care providers, who are are more often women, tend to get overly dinged for prioritizing work life balance and leads to some of the pay disparities – make sure to periodically evaluate and adjust for equity various priorities

  153. Richard Altavista*

    So I work for an employer in the Los Angeles area in an Information Technology role. During COVID I moved to a much lower cost of living part of the country and at the same time my employer instituted local living cost based pay policy. Long story short I was informed that I’d need to take a 20+% pay cut. I immediately put my paperwork in to terminate my employment at which point the employer rethought their position and I am still working without a break in service. My take advice is 1) Understand the labor market for your profession/skills, 2) Be cognizant of the cost to the organization to replace your skills and institutional knowledge 3) Understand you relative value to the organization, are your skills and knowledge scarce in the market place, 4) Be aware of how well your employer has planned for your succession, 5) Any policy can be reevaluated, nothing is ever “written in stone”, all contracts can be negotiable if there is an opportunity present for both parties, and finally 6) Be aware that your worth is for the most part based on the market value of your skills, knowledge and your ability to delivery outcomes (the job you do) relative to your peers, not some point on a map.

    1. Academic Librarian too*

      exactly this. I moved from a high-cost-of-living city on the Northeast coast to a mid-sized midwest city with a much lower cost-of-living for a position. During the negotiations my ask was $30,000 more that was typical for the position. As they explained to me the cost-of-living , I said I wasn’t willing to take a pay cut and the ask was reasonable given the responsibilities of the position. (my ask was $5,000 more than my salary at the time.) They came back with an offer of the amount that I wanted.

  154. Cat*

    If you want to attract the best talent, then I would not suggest giving people that live in less expensive locations low salaries.

  155. Liz T*

    “you’re paying for work, not a person”

    Wrong! You’re paying for a person to do work.

    There’s a reason you do a hiring process, right? You want the person best suited for the job? If you want that pool to include people in higher-COL areas, offer the market value there.

    1. Liz T*

      (I think it’s fine to pay everyone the same, as long as everyone’s getting at least market value. If the people in lower-COL areas get a little more bang for their buck, I suppose that’s one of the trade-offs of living in those areas! Just as long as the higher-COL people are being paid enough to live well.)

  156. Koala dreams*

    I’m curious about the “value provided to the company” based pay scale. Does it exist in real life? Are there employers that do value based pay scales? The idea reminds me of management accounting and cost accounting, and I suspect it would have similar drawbacks as cost accounting. After all, someone needs to calculate the value before it can be turned into a pay scale.

    The conventional wisdom is that pay should be based on the market rate. The question is then what the market is. With non-remote work, it’s the local market. With remote work, the market is different. We can see the effect on housing prices. In some places, housing prices are stagnating, when remote workers move out, in other places they are rising when remote workers move in. I’m also thinking of the struggles of physical stores competing with online stores. The market is constantly changing, and if an employer wants to stay competitive, they can’t focus on just their own narrow slice of the market.

  157. pay the people*

    You should pay people a wage based on their value not on their location. People are underpaid as it is. If people started having the opportunity to make New York wages while being based out of Michigan, that gives NY the opportunity to attract national employees, which is of huge advantage to them. It also could boost pay locally. In general, people deserve to be paid more. I am always in favor of that.

  158. Keepinitclean*

    I work for the federal government. The pay is a combo of both. Example. Tea pot painters across the nation all have the same base pay. They get paid for the labor they provide. The difference is a “locality adjustment”. That covers the higher cost of living in some areas as opposed to others. Thats over the base pay and is based on where the job is located. My job cant be remote so I dont know how they handle that situation. But I know most of our remote workers do have to be in the office once in a while (once or twice a week).

  159. Chickaletta*

    TOTALLY depends more and more on location. It used to be that if you worked in a city where the cost of living was high, of course you made more money because you had to live there. Before Covid, if I moved to San Francisco or Seattle, I would have made more, that’s pretty given.

    It’s not fair to then take those wages from those kinds of cities and move someplace where the cost of living is a lot cheaper and live like a king, because you are messing with the local housing prices. I’m experiencing this myself right now. I literally cannot afford to make a lateral move into a different house in my city because people from other parts of the country have been buying up houses for cash at twice what they were worth just three years ago. I currently live across the street from a drug house and another one two doors down with a gang running a prostitute ring, but I cannot afford to leave to a different neighborhood, even in a lateral move, because housing prices have doubled but local salaries have not. I think people with high salaries buying real estate in parts of the country where their jobs aren’t based just because it’s cheap for them is unethical. Their salaries should 100% be adjusted for where they chose to live.

    And before anyone asks – it doesn’t work in reverse – I can’t just move to Manhattan working remote and expect a pay adjustment. The difference is that I already have the option of affording my current standard of living where I’m at.

    Despite what I think should happen, here’s what I think is going to happen in reality over the next 10-20 years: cost of living across the US will start to even out across areas, but the wage gap between high and low-income earners will widen and the middle class will shrink. We will see more poor people in expensive cities, and more of the very wealthy in average cities.

  160. Beth*

    I think the answer is that realistically salary doesn’t have much to do with either the value of the labor OR the cost of living for the employee.

    If we paid employees based on the value of their labor, we’d have seen wages go up much more over the last few decades than they actually have. Instead, we’ve seen productivity gains lead to increases in profit margins and C-suite bonuses, while wages for rank-and-file workers mostly stay relatively stagnant.

    Similarly, if we paid employees based on cost of living, we’d be seeing 10%+ raises for a lot of people this year. Obviously that’s not happening. We’d also see industries that headquarter in major cities paying consistently high wages, and that’s not necessarily true either–there was just a post recently about how high-prestige/glamorous industries in big cities tend to pay well below the cost of living.

    What salary is actually based on is less about value-produced or COL and more about “what is the minimum we can get away with paying for this?” I don’t think the shift to more widespread remote work is likely to change that. Companies struggling to fill a role will find themselves paying higher salaries for that role no matter where the employee lives–not because it’s needed for cost of living, but because if they don’t, they’ll lose their candidate to a competitor who will. On the other hand, I wouldn’t be surprised if we see salaries drop for roles that can be done remotely and have a lot of qualified candidates; as long as employers are finding people who live in lower COL areas and who will do those roles for less, there’s not much incentive for them to pay more for high-COL-area employees.

  161. McThrill*

    My big concern is that many (most) employers will be looking at this as purely a cost-saving measure – if a remote employee is living in a low CoL area, then of course they don’t need as high of a salary! But when hiring for an on-site position and the new employee previously lived in a lower CoL area and had had a lower salary as a result, how many companies do you think would use that as an excuse to offer less than they would have for an employee with a stronger salary history? Theoretically I’m all for basing salary on CoL but practically, until salary history becomes illegal for companies to take into consideration when making an offer I don’t trust them to use the CoL adjustments fairly.

  162. Holly*

    here’s an unrealistic but good solution: employer figures out the cost of living, then the worth of the job/labour. then they pay whichever is higher.

    employees get to make their own choices after that.

  163. Tussy*

    What you spend your money on is none of the employer’s business and downsizing so you have more expendable income is also none of their business, that’s just budgeting which could be for a variety of reasons from wanting to spend more on video games to needing to paying for your parents to go into a care facility. Employers making sure their employees are being paid a cost of living rate for their city is a market issue, you aren’t going to get people applying for jobs that they can’t make work if a city is more expensive and cost of living raises are retention strategies.

  164. Katie Impact*

    I think that *if* the job is fully remote and can be done equally well from anywhere, then it’s fair for the pay to be the same regardless of location. I’m a 100% remote worker with colleagues in countries like Brazil and Indonesia, where average incomes are much lower than where I live, and I wouldn’t feel comfortable at all about the idea of them being paid less because of that.

    1. Kayem*

      Agreed. A lot of my colleagues live in other countries that have lower incomes and COL than the US and I don’t want to see them paid less for doing the same work I do, even if their wages theoretically go further than mine.

  165. Lolo Jojo*

    In the federal government, everyone gets the same base salary dependent upon grade and then receives a specific percentage for locality. Maybe explore that option? It’s kind of like a housing allowance that the military uses.

    For example, base pay for a data analyst is $52k (or whatever agreed upon salary is given). If they live in Las Vegas, they receive an extra 17% locality. Dallas is 25% locality. Boston is 30%.

    That way everyone still receives the same base salary and depending on where they move depends on their locality rate so they are still compensated appropriately.

  166. Linda*

    I work for the United Nations. As you can imagine, this is a core issue for our staff around the world. The way it is dealt with is to have a base salary for each job and level within that job; and a cost-of-living adjustment which takes into account the difference between living in NYC and Bangkok. It works out quite well.

    1. Yellow Flotsam*

      But are those positions remote or do you have to live locally?

      Should I as an employee have to pay you more because you chose to move to NYC when you could do the job from somewhere much cheaper ?

  167. AYBY*

    One quick note on the rationalisations against: your employer is, in fact, not paying you for work performed but for your capacity to work, which is tied to your ability to live and continue working. It does indeed make sense from the point of view of economic relations to pay according to the cost of living, and this is why typically employers as a class are interested in reducing the cost of living. Or, in our case, they may be interested in establishing such insurmountable corporate power that they can just say there’s no more money for wages during an unprecedented cost of living crisis!

  168. Kayem*

    Yeah, I don’t know if I could get behind paying someone for their COL over the actual value of work they performed. Just because someone moves to a low COL area doesn’t mean they’re going to stay there and it doesn’t mean the COL is going to remain stable (as if COL raises that match inflation weren’t already hard enough to get). For one thing, we’re in the middle of an insane housing bubble right now. I’m in a more rural state with high levels of poverty and perceived lower COL. I moved here from a large city with exorbitant rent and high COL, expecting to find a lower COL here. According to all the guides, I should be spending half what I was before. But that’s not how it works in reality.

    In this state, I have to pay taxes on food. I’m also no longer in a major agricultural hub, so food prices in general are actually higher. There’s more food deserts, which increases the prices yet again. Utility costs turned out to be significantly higher because the utilities in the city I came from were all publicly owned, but here they’re owned by private companies, one of which is notorious for hurting customers. I’m no longer in a state that produces a lot of oil and gas, so gas prices are higher here and being more rural, I have to drive further, often to nearby larger cities, to get the same access to services I had before.

    And then there’s this housing bubble… The crappy houses across the street were renting at $400ish in 2020 and are now renting at $1000ish. Apparently the house we’re living in almost doubled in value in just two years. There’s no longer anything on the market in this area below $150k and in a state full of mostly people in poverty, that’s an issue.

    My entire division is remote. We have people working in cities of millions, people in rural areas of the mountain west, people in US territories, and people in places that are between high and low COL. We’re all doing the same work. If we were all paid differently based on someone’s PERCEPTION of our COL, I would likely be looking for a new job because I can barely make ends meet as it is. I seriously doubt my employer or others would raise salaries for those in high COL areas; most likely they’d reduce the salaries of others. After all, the LW stated as much.

  169. WheresMyPen*

    It’s interesting, I work for a London-based company which pays a London living wage. Before the pandemic I had to come into the office every day, so lived in London, but lots of other staff members lived in Cambridge or Bedfordshire. Not London, but still expensive areas. But during the pandemic many of us moved away. Now I live in the Midlands, but my wage is still slightly higher because of the London cost of living adjustment. Plus I’m not paying commuting costs. But I can’t imagine wanting to do my job for a lower salary, especially as my industry is overwhelmingly located in London anyway so I believe I deserve what I get. The stupid thing is, there are lots of cities that are as expensive as London, like Oxford and Bristol, that don’t pay an inflated wage even though it costs just as much to live there. Weird.

  170. Lauren19*

    There are so many factors to consider here, but ultimately I feel:
    – If the work requires the employee to live in that area — either because their office or clients/constituents are in the area, you must pay them a COLA.
    – If the employee works for you in a capacity that requires them to live in the area, then switches to a role within the organization that does not require them to live there, they get to keep the COLA. This is because the experience the received doing the in person work is relevant to the value they bring to the new role.
    – If the employee moves to a less expensive market for remote work, it’s fair that the COLA be readjusted. The only exception would be in the organization would make a similar readjustment if a remote employee moved to a more expensive market of their own choosing (not requested by the org)
    – If an employee begins a remote role at a new organization but lives in an expensive market, any pay increase should be tied to the relevant value the employee brings by having worked in that market. For example, a public policy director lives in DC but is hired remote by a company in Missouri. Their work is remote but their proximity to their field is relevant.

    I don’t think there’s a clear cut either or but I do think orgs need to figure out THEIR strategy, communicate it, and stick with it.

  171. Critical Rolls*

    People who are viewing a cost of living adjustment as people getting paid more or less based on location have got this all wrong. People who live in high COL areas have less buying power per dollar, so a COL adjustment is designed to equalize their buying power with employees in lower COL areas. So it’s actually about paying them *effectively* the same, although the dollar amounts look different on paper.

    This should be clearly spelled out and COL adjustments should be based on measurable factors like housing costs. The feds get this part right. If you are a federal Teapot Inspector II, your base pay is the same everywhere, and then you may get additional monies as a COL adjustment if the area warrants it. Does this mean you’ll receive an on-paper pay cut if you go from a high COL area to a lower one? Yep! And you know that, and you know how much it will be because it’s standardized and public. But this is where private companies have trouble, because instead of cribbing off the federal tables, they often do something more, hmm, feelings-based, and aren’t transparent and consistent.

    Also, some folks are comparing COL to circumstances such as student debt or family size. Location can be considered a choice for some people, but COL adjustments do not address this as a personal circumstance. They don’t incentivize high or low COL areas, they simply make pay equitable across locations.

    I think people are very focused on dollar amounts when the issue is buying power.

  172. Zee*

    I think for fully-remote jobs… it should be based on the job, not the worker’s location, because the location is not linked to the job and shouldn’t be a factor. If the worker chooses to move to/stay in a higher COL area, that’s on them.

    For in-person jobs that can take place at one of several offices, there should be a boost for higher-COL areas. (Like if you can choose to either work out of Portland or San Francisco, the SF person should get paid more.) That’s because being in that specific high-COL area *is* part of the job, so it should be a factor in compensation. But it should be made clear that the value of the job is $x and you’re getting a top-up for going to this specific office, and if you go to a different location that extra amount may change.

    This really only helps with new hires going forward though. I honestly have no idea how I’d deal with the situation where people went from in-person to remote and moved… Grandfather them in at their current salary, probably. I hate the idea of cutting someone’s pay, and honestly, you’ll probably lose the majority of those employees affected.

  173. Yellow Flotsam*

    I think in practice it needs to be a combination of the two. The location should come into play if a person is required to live locally. By required I mean from a practical perspective to do the job, like attending the office or nearby sites regularly. Simple reality is some places need to offer higher incomes to attract staff. That might be because it’s an expensive place to live, or it is undesirable or less desirable for some reason (beachside rural towns find it a lot easier to attract teachers than similarly rural towns without such draw cards, towns with high levels of violence struggle to get staff, places off the main transport route can struggle etc).

    If a position makes no claim on where you live, then you should be paid according to the work. The idea that you would pay a wealthy person more simply because they are wealthy is abhorrent – and that is exactly what would happen if this came in, those with inter generational wealth are more likely to live in affluent communities. It is also likely to involve indirect (but still illegal) discrimination, since where you live is linked to culture, disability access, race, and wealth (which is linked to all those things plus gender and sex as well).

    Now from a societal perspective there are many issues with a high proportion of residents who earn their money in a different market to where they live. You only need to look at some of the issues with FIFO workers. But that really shouldn’t be on individual companies to meddle with.

  174. Grumpy Old Sailor*

    For what it’s worth, the approach taken by the Canadian military is that there is one pay scale, applicable to all members of the service, with sections for enlisted specialist trades and specialist officers (typically pilots, lawyers, and doctors). However, where you live doesn’t enter into it. So how the military deals with it, since refusing a posting to a particular area is NOT an option, is there’s what’s called “Post Living Differential Allowance”, which is military-ese for “it costs more to live in Vancouver, BC, than it does in Thunder Bay, ON”. So if you live in Vancouver, BC, you are given an allowance – not extra pay! – of CDN$ 1,083/month. The reason it’s important to know it’s not pay is that pay cannot be reduced except by verdict of court-martial. Allowances, however, are not an entitlement the way your pay is, so adjusting them is simply administration. So when you’re subsequently posted from Vancouver to, say, Moose Jaw, your PLD allowance drops from $1,083/month to $284/month. Your base pay, however, remains the same.

  175. El l*

    If there was nothing retrospective about it, I’d say that it all depends on whether the expectation is that you live on site, be that either because of seniority or specific duties. Divide all jobs that way. For the truly remote, pay blind of location, regardless of where they move, and pay cost of living for the location tribe.

    Of course, that requires management to say and commit to what’s remote and what isn’t. Which is something that management everywhere will waffle over. Which might be the real issue in this case…a reluctance to resolve that issue.

  176. peopleperson*

    I feel like I’m commenting too late to be seen but want to give my perspective.
    My company pays dependent on geographic location but we are a remote first global start up so it’s dependent on what country the person lives in. We have transparent salaries that are based on the role and what country the person lives in. We have geo regions 1-6. The amount we are recommended we pay in geo 6 makes us uncomfortable because it’s so low, so we pay above that in those countries.
    If someone moves countries, their salary is adjusted.
    When we brought about this change no one got a pay cut however. Moving forward this is how we set pay. It enables us to be completely fair no matter someones race/gender identity etc.
    In countries where these people are technically ‘independent contractors’, we pay an Employer Mandatory Contribution towards costs that would be covered by an employer based in that country. It’s a percentage based on that country, like taxes, healthcare, pension etc.

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